Bay Capital Advisors LLC

Item 5 – Fees and Compensation

In addition to the information provided in Item 4 – Advisory Business, this section provides details
regarding Bay Capital’s services along with descriptions of each service’s fees and compensation
arrangements.

If a new client does not receive this Brochure at least 48 hours prior to signing Bay Capital’s Portfolio
Management and Consultation Services Agreement, also known as the Client Services Agreement, the
client may terminate the agreement within five (5) business days of signing the agreement without
incurring any advisory fees.

Effective the date of this Brochure, the fee schedule provided for the services described below will be
applicable to new clients. All prior clients will be grandfathered in and their Portfolio Management and
Consultation Services Agreement will remain in effect.

Portfolio Management and Investment Advisory Services
Bay Capital provides investment advisory services utilizing asset allocation strategies designed to meet
each client’s objectives. To preserve the customized portfolio management of Bay Capital, no typical
allocation software is used. Bay Capital will consult with the client on a regular basis, or as determined by
the client, to review the accounts managed or supervised by Bay Capital. Bay Capital will, when needed,
suggest changes in the selection of investment options to more effectively address each client’s goals.
Bay Capital provides portfolio management services, which can best be described as providing
continuous investment advice to a client (or making investments for the client) based on the individual
needs of the client. Through this service, Bay Capital offers a customized and individualized investment
program for each client. A specific investment strategy and investment policy is crafted to focus on each
specific client’s goals and objectives.

Typically, Bay Capital reviews a client’s portfolio on a quarterly basis and may or may not rebalance the
client’s assets at that time. Rebalancing is not a panacea for investment prudence, as it suggests rigid
adherence to Modern Portfolio Theory and its Efficient Frontier concept. During client reviews and
meetings, Bay Capital re-educates the client about prudent investing and may provide information on new
investment products and services, and new academic research that affects the client. Clients have the
responsibility to re-educate Bay Capital too, updating their financial status, objectives, and constraints,
and focusing on any changes since the last meeting. All of this is used to update the client’s portfolio
management strategy, which may include the risk tolerance level and the client’s written investment policy
statement. Finally, if it is expected to result in a benefit to the client, Bay Capital reallocates the client’s
portfolio. Bay Capital calculates an asset allocation designed for the client’s unique objectives and
constraints.

Bay Capital may provide portfolio management services through accounts maintained at a qualified
custodian recommended by Bay Capital or selected by the client. Bay Capital may also provide portfolio
management services to Client 401(K), 403(B) or other qualified retirement accounts maintained by their

Bay Capital Advisors, LLC                                                                     Disclosure Brochure

employers. Under this agreement, Bay Capital will be granted trading authorization on the client’s
account. Please refer to Item 16 – Investment Discretion for more information.

For portfolio management services, Bay Capital charges an annual fee of 1% of the client’s assets under
management, subject to negotiation. The annual fee is divided and billed monthly in advance and is
based on the market value of the assets under management on the last business day of the previous
month. Fees will be assessed pro rata in the event the portfolio management agreement is executed at
any time other than the first day of a calendar month. The annual fee is negotiable based on the client’s
amount of assets, financial complexity, and overall services needed. The exact fee charged to each
client will be stated in the client’s portfolio management and consultation services agreement.

Payment will be made via fee deduction directly from the client’s account provided the client provides
written authorization permitting the fees to be paid directly from their account to Bay Capital. Bay Capital
will not have access to client funds for payment of fees without client consent in writing. When fees are
deducted from an account, Bay Capital is responsible for calculating the fee and delivering instructions to
the custodian. When Bay Capital instructs the custodian to deduct fees from the client’s account; Bay
Capital will send the client an invoice itemizing the fee. Itemization shall include the formula used to
calculate the fee, the amount of assets under management the fee is based on, and the time period
covered by the fee.

Further, the qualified custodian will deliver, at least quarterly, an account statement directly to the client or
client’s independent representative showing all disbursements from the account, including the amount of
the advisory fee when deducted directly from the account. The client is encouraged to review their
account statements for accuracy. Bay Capital will receive a duplicate copy of the statement that was
delivered to the client.

For some select family members and close friends of Bay Capital personnel, we offer a reduced or
waived fee for portfolio management services. If a fee is assessed, it is an annual fixed fee of $100,
payable in arrears during the month of December. The $100 is due and payable upon the client’s receipt
of an invoice from our firm. An example of a client being charged the reduced fee is Joe Sallee’s mother.
The decision to offer the reduced fee is at the sole discretion of the client’s primary BCA advisor.
...

Item 7 – Types of Clients

Bay Capital generally provides portfolio management and investment advice, and as applicable financial
planning services to the following types of clients.

    •    Individuals (including Trusts and Estates)
    •    High-Net Worth Individuals
    •    Business Entities
    •    Charitable organizations

All clients are required to execute an agreement for services in order to establish a client arrangement
with Bay Capital.

Minimum Investment Amounts Required
Bay Capital normally requires a minimum investment amount of $1,000,000 for portfolio management
services. Exceptions to the minimum may be granted at the discretion of Bay Capital.

There is no minimum requirement for Investment Analysis and Corporate Planning Services.