Gagnon Securities LLC

ITEM 5: FEES AND COMPENSATION

Fee Schedules

Our standard fee schedule for non-retirement accounts consists of an asset-based commission and
transaction fees, as described below. These fees are for both the advisory and brokerage services we
provide. Clients who maintain non-retirement accounts are charged commissions on each buy and
sell transaction for their account equal to a maximum of 2% of the net trade amount. The
commission rate can, from time to time, be discounted in certain instances, including, but not
limited to, initial investments, liquidations, and tax-related transactions. However, the standard
commission rate is non-negotiable. In addition, these accounts will be charged a transaction fee
not to exceed $0.04 cents per share. It is the policy of Gagnon Securities that commission and
transaction fees are not refundable unless an error in the amount charged has occurred, at which
time we will promptly process a trade correction to reflect the correct amount.

Clients who maintain retirement accounts, and former clients of Townsend Group Investments
("Townsend") who maintain retirement and non-retirement accounts, are charged a management
fee equal to 2.25% (for long only accounts) or 3.00% (for hedged accounts) per annum paid monthly
at the beginning of each month in arrears for the previous month, calculated on the average capital
for the previous month. These accounts are not also charged commissions or transaction fees on
the trades executed on their behalf. A management fee is charged for both advisory and brokerage
services we provide. Management fees are non-negotiable and non-refundable.

Former Townsend clients who open non-retirement accounts will be charged an asset-based
advisory fee, consistent with their prior fee structure, even though it is Gagnon Securities' practice
to charge a transaction-based advisory fee for non-retirement advisory accounts. The asset-based
fee structure is being offered to former Townsend clients because it is consistent with the type of
advisory fees previously charged by Townsend and is consistent with the terms of the acquisition
between Townsend and Gagnon Securities.

Variables that affect the amount of trading in an account, such as account type, market conditions
and the portfolio manager’s strategy, can increase or decrease the amount of trading in an account.
Due to these variables, at times the asset-based advisory fees applied to retirement or non-
retirement accounts are more or less advantageous for clients, than the commission and
transaction-based fees paid by the majority of non-retirement accounts and also by employee
accounts. Generally, if there is a high level of trading activity in the account, an asset-based
advisory account has the potential to be economically more favorable for the client. However, if
the account does not trade actively, it has the potential to be economically more favorable for the
client to pay a transaction-based advisory fee. Clients are advised of their fee structure prior to
investing with Gagnon Securities.

Deduction of Fees

For clients who are charged the commission and transaction fee structure, these fees are deducted
from the account at the time of each trade and disclosed to the client on the confirmation for that
trade.

For clients who are charged an asset-based management fee structure, those fees are deducted at the

beginning of each month from the clients’ accounts. This amount is shown on each client’s brokerage
statement and, upon request, is available in invoice format.

Other Fees and Expenses

Margin Accounts: Clients who maintain margin accounts have additional funds available to
purchase securities through loans from our custodian secured by the securities held in the clients’
individual accounts at the custodian. Margin accounts allow Gagnon Securities to invest more
money on behalf of a client, but are riskier than cash accounts. Margin accounts are the only accounts
in which you can transact in short strategies. Because our custodian lends the client money, margin
accounts are subject to margin and short interest charges. Your account pays interest to the
custodian and a portion of that interest is credited to Gagnon Securities. With regard to short
positions, your account is charged for borrowing securities, but Gagnon Securities absorbs this cost.
However, Gagnon Securities receives a credit for the shorts that are maintained in the accounts it
manages. As a result, Gagnon Securities has a conflict of interest in connection with the
recommendation of margin accounts because it receives additional compensation in connection
with such accounts from our clearing firm, as compared to long only accounts/strategies. We
address this conflict by disclosing this conflict to clients. Further, we do not take such potential
revenue into account when making account-type recommendations. For a more detailed discussion
about our custodian, please refer to Item 15.

Additionally, accounts that participate in Fidelity’s fully paid lending program can receive an
interest rate-based fee, credited monthly to their account. Clients must be enrolled in the program
to participate, and securities must be fully paid for. However, it is at Fidelity’s discretion and needs
to dictate the security in which credit will be paid, the amount of payment and which accounts will
receive payment. This program creates a conflict whereby; it creates an incentive for Gagnon to clear
client transactions through NFS.

Prepaid Fees

There are no pre-paid fees at Gagnon Securities

Compensation for the Sale of Securities

Neither Gagnon Securities nor any of its representatives are compensated from the sale of products
or securities outside of the compensation and fees described above.

ITEM 7: TYPES OF CLIENTS

Gagnon Securities' core business is managing accounts on a discretionary basis for individuals,
retirement accounts, trusts, custodial accounts, and other institutions and business entities. The Firm
does not impose a minimum account size, however, our investment professionals may have each

his or her own minimum investment which vary, but are generally not less than a $15,000 initial
investment.

Gagnon Securities will, at times, have clients for whom we do not have regulatory assets under
management, but for which we provide investment advisory services. Gagnon Securities generally
shares the knowledge, experience, and perspective we have regarding the market and securities
with these clients. Gagnon Securities does not provide personalized investment advice to these
clients. The information that is shared does not account for the client’s financial circumstances or
investment objectives. This relationship exists solely because the client finds value in Gagnon
Securities' research-intensive approach to evaluating investments.