Kahn Brothers Advisors LLC

ITEM 5: Fees and Compensation

We provide investment advisory services to discretionary and non-discretionary accounts for
which we charge an advisory fee based upon a percentage of assets in the portfolio. We generally
charge up to 1% of assets under management, but the specific terms of each client’s fee schedule
are outlined in their investment advisory agreements. Fees are negotiable, may be larger or
smaller than 1%, and may, in some instances, exclude cash and equivalents, unsupervised
assets or other types of holdings. For the purpose of determining fees, assets are appraised at
market value at the close of each calendar quarter.

Advisory fees will generally be paid by you at the start of the calendar quarter. Your portfolio’s
assets are appraised at the market value at the close of each preceding calendar quarter.
Although not typical, you may pay advisory fees in arrears or at a cycle date mutually agreed
between you and us. Advisory fees are computed by applying one-quarter of the annual rate to
the preceding quarter-close market value. Advisory fees may be deducted directly from your
portfolio or can be billed to you and paid in a manner mutually agreed between you and us.

Although not typical, we may assess performance-based fees in some client accounts. If
applicable, such fees are negotiated per mutual agreement between you and us as a part of your
overall billing arrangement. For more information, please see Item 6: Performance-Based Fees
and Side-By-Side Management.

If you wish to terminate your advisory contract with us, you must present a written termination
notice to us. Our advisory contracts generally specify a requirement of 60 days’ advance written
notice to receive a prorated reimbursement of the current quarter’s advisory fee. However, at our
sole discretion, we may waive or reduce the required notice period.

You may incur additional fees or expenses charged by outside institutions in connection with our
services. These may include but are not limited to custodian fees from your custodian institution
and mutual fund expenses from any mutual funds you are invested in. We have no control over
these expenses, should they be charged. If you are not in a wrap fee program, you may incur
separate brokerage commissions or charges from your broker-dealer, pursuant to your agreement
with them, when securities transactions occur.

Although many of our clients direct us to execute securities transactions with our affiliated broker-
dealer, Kahn Brothers LLC, you may engage any broker-dealer of your choosing, including a
broker-dealer that is not affiliated with us. If you use the brokerage services of Kahn Brothers
LLC, that firm will receive commissions pursuant to the commission arrangement between it and
you. Neither we nor Kahn Brothers LLC charge “mark-ups.” For more information on our
brokerage arrangements, please see Item 12: Brokerage Practices.

If you employ an outside institution for certain bundled financial services like custodian, brokerage
and advisory services, you may be engaged in a wrap fee program. A wrap fee program is a
financial services product sponsored by a financial institution that generally carries a consolidated
fee covering a variety of “wrapped” services such as custodian, brokerage and advisory services.
We do not sponsor a wrap fee program, but clients participating in other firms’ wrap fee programs
may engage us as an investment manager or sub-advisor. We currently manage or sub-advise
accounts pursuant to wrap fee programs sponsored by Morgan Stanley Smith Barney LLC. We
charge all accounts subject to such programs our negotiated advisory fees in addition to any fees
charged by the institution sponsoring the wrap fee program. In addition to these types of accounts,
we manage portfolios at individually contracted rates for clients who have been referred by
financial consultants. There is no difference in the manner in which we manage accounts under
wrap fee programs or individually contracted rates and accounts without such programs or rates.

We and our affiliated businesses do not provide our employees with special compensation for the
sales practice of promoting particular securities or investment products.

When acting as investment adviser or in other fiduciary capacities, we may hold or invest your
assets in mutual funds, money market funds, annuities or other pooled investments (“Funds”).
Such Funds are generally bought and sold at net asset value, resulting in no direct sales charge
to the client account. The Fund management companies and their affiliates charge various
commissions or management fees for their services, as described in their prospectuses. These
commissions and fees are separate from, and in addition to, the fees that you pay to us.

For clients who engage our affiliated broker-dealer, Kahn Brothers LLC, a portion of the
commissions or fees charged by Fund management companies or their affiliates for investments
in certain share classes may be paid to Kahn Brothers LLC or to third-party service providers for
administrative services. Such payments are governed by Rule 12b-1 of the Investment Company
Act of 1940, as amended. The fees (known as “12b-1 fees”) are generally less than 1.0% of the
average annual share value of Fund shares. When 12b-1 fees arise from Fund assets, or assets
held in the subaccounts of annuities, life insurance policies or other similar products, they are
retained or credited to Kahn Brothers LLC or our third-party service providers, for our or their own
account(s).

For clients engaging Kahn Brothers LLC, we invest your assets in Funds carried on Pershing’s
platform. Currently, each Fund carried on Pershing’s platform in which we may invest your assets
has only a single share class available on the platform or a single share class for which your
investment is eligible. In the event that we invest your assets in Funds for which there are in fact
...

ITEM 7:      Types of Clients

We may work with a range of types of clients that may include individuals and high net worth
individuals and their families with personal, retirement, trust, charitable, and other assets, and
business and institutional clients, which may include pension funds and profit sharing plans,
foundations, endowments, investment partnerships, and other types of institutional and corporate
investors, among other types of investors.

Historically, we have low client turnover, and new clients are admitted at our discretion. Although
we have no formal restrictions on the size of new portfolios, we prefer incoming clients to have a
minimum of mid-seven-figures in investable assets. We may waive this policy at our sole
discretion and may also admit smaller accounts that are associated with an existing relationship.
Our incoming client policies allow us to continue to provide our current clients with personalized
service and valuable one-on-one meetings with our investment management team.