Andbanc Advisory LLC

Item 5 - Fees and Compensation
Adviser’s Basic Management and Advisory Fees

The specific manner in which fees are charged by Andbanc are established in each client’s written
agreement with the Adviser. Generally, and pursuant to contract, fees for investment advisory services
will be based upon a percentage of the total assets in the account (including margined and cash assets).
All fees are negotiable. The Adviser typically receives an annual management fee, ranging from .50% for
some institutional like clients to 1.75% of the asset value of the account for other clients, subject to a
minimum fee of $500.00 per quarter. The Adviser can also enter into flat fee arrangements from time to
time, including arrangements for administrative services provided to clients or client accounts. When
using margin as part of the investment, the investment advisory fees are generally calculated on the net
account balance (rather than the total market exposure) in order to avoid any incentive for the Adviser to
use margin to potentially increase the fee paid by the client; provided, however, that if and when margin
takes place at the direction and express request of the client and not that of the Adviser, the Adviser will
be allowed to calculate the advisory fees on the gross account balance.

In proposing annual management and advisory fees, the Adviser considers the global relationship of the
client with the Adviser and its affiliates. For example, if a client opens accounts at Pershing LLC through
the Adviser’s affiliated broker-dealer, Andbanc Brokerage, LLC (“Andbanc Brokerage”) and is expected
to engage in a certain volume of brokerage transactions subject to Andbanc Brokerage fees (including
commissions, sales credits and distribution fees), the Adviser can offer its services at a reduced or
discounted rate, pursuant to the Adviser’s internal policies and procedures and in its sole discretion. Such
discounted or reduced management or advisory fees, when available, would offset the fees or
compensation payable to Andbanc Brokerage.

              Basic Advisory and Management Fee Schedule (Non-Institutional Clients)
                      Account Value                                Fee Percentage
                      Up to $500,000                                    1.75%
                   $500,000 - $1,000,000                                1.50%
                  $1,000,000 - $5,000,000                               1.00%
                 $5,000,000 - $20,000,000                               0.75%
                $20,000,000 - $50,000,000                               0.60%
                     Over $50,000,000                                   0.50%

By way of example, an account with a constant month-end value of $500,000 throughout the year and an
agreed 1.50% advisory fee rate would result in $7,500 per year or $1,875 billed quarterly (excluding the
effect of the actual number of days in the calculation period).

In addition, some portfolios of qualified or non-US investors can also have variable performance fee of
up to 20% (see the Performance-Based Fees section).

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Furthermore, the Adviser can agree to enter into compensation arrangements in which clients are assessed
a minimum quarterly fixed fee established under the assumption that the Adviser will dedicate up to a
maximum number of man-hours per quarter to be agreed upon with the client in writing. In the event that
the actual amount of time dedicated by the Adviser exceeds the maximum number of agreed man-hours
during any three- or twelve-month period, the Adviser will modify the fixed advisory fee (prospectively)
upon consultation and written agreement with the client.

Performance fees will not be assessed in connection with investments made through the Adviser’s
affiliated investment entities if such entities charge their own performance fees.

A client will pay more or less fees than similar clients depending on the particular circumstances of the
client, size, additional or differing levels of servicing or as otherwise agreed with specific clients. Clients
that negotiate fees, including a flat fee, can end up paying a higher fee as a result of fluctuations in the
client’s assets under management and account performance. In some instances, depending on the fees
agreed with specific clients, the same or similar services to those described herein are available elsewhere
to the client at a lower cost.

Calculation and Deduction of Advisory Fees

Unless otherwise expressly agreed with the client, investment advisory and management fees are billed
quarterly, in arrears, meaning that the Adviser will charge such fees “After” the quarterly billing period
has “Ended”. By signing the Adviser’s Investment Services Agreement, clients agree to have the Adviser
deduct the advisory fees directly from the clients’ custody account(s) that it manages or advises, including
accounts opened at Pershing LLC through Adviser’s affiliated broker-dealer, Andbanc Brokerage LLC.
Hence, advisory fees will be automatically debited from the client account(s) according to the quarterly
management fee billing cycle. If the client makes appropriate arrangements with the custodian, the client
can pay for the advisory fees from an account other than the advised or managed account(s).

Advisory fees are calculated based on actual number of days in the year. At the end of every calendar
quarter, the Adviser will calculate advisory fees based on a percentage of the total assets in the account as
follows:

   •   Assets Under Management. The month-end account value(s) for the three months in the quarter
       will be obtained from the client’s custody account(s), and the average of these values shall be
       calculated.
   •   Method of Fee Calculation. The advisory fee is calculated by multiplying your annual fee by a
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Item 7 - Types of Clients

The Adviser provides portfolio management and advisory services to individuals, corporations and other
entities. The minimum dollar value for establishing an account is generally $1,000,000. Initial investments
of a lesser amount are accepted on a case-bycase basis at the Adviser’s discretion.