Skylands Capital LLC

FEES AND COMPENSATION

        In general, for advisory services provided to the Funds and the Sub-Advised Fund,
Skylands receives a management fee and a performance-based fee or allocation, and for services
provided to Separate Account Clients, Skylands generally receives the fees negotiated with each
such client, which typically includes a graduated asset management fee and, in some cases, a
performance-based fee. Under its current arrangements, Skylands does not receive a performance-
based fee from such Separate Account Clients, but it reserves the right to amend its current
practices to do so in the future. Investors also bear certain investment expenses. The Governing
Documents of each Fund describe fees, compensation and expenses in greater detail.

Funds

        Each Fund has entered into a separate investment advisory agreement with the Adviser
pursuant to which the Adviser receives (1) a management fee and (2) a performance-based fee or
allocation. The management fee of 1% per year is generally payable monthly (Harbour) or
quarterly (the other Funds) in arrears and is based on the end of month net assets of the Fund. The
performance fee or allocation is generally 20% of the net profit each year of the Fund’s series of
shares or the net appreciation of each investor’s capital account, depending on the terms of the
particular Fund’s offering documents. The performance fee and allocation are subject to a high
water mark, meaning the Adviser does not take a performance fee or allocation unless all losses
from previous years have been recouped. Any performance fees or allocations charged to the Funds
comply with the requirements of Section 205 of the Advisers Act and the rules thereunder or state
law equivalents, to the extent applicable. Management fees and any performance fees are accrued
and deducted from the value of the fund’s assets when determining Harbour’s net asset value.
Management fees and performance allocations are deducted from an investor’s capital account
when reporting an investor’s balance in Special, Special II or Quest. The performance allocation
is credited to Skylands’ capital account at the end of the calendar year or upon full withdrawal by
an investor.

        The advisory agreements with each Fund are terminable by either the Adviser or the Fund,
generally on prior written notice of at least 60 days (90 days in the case of Harbour). In the event
of termination, the Adviser will receive payment of any accrued but unpaid fees. Termination by
the client will not affect transactions the Adviser has initiated on the client’s behalf prior to the
effectiveness of the termination.

       The Adviser is permitted to waive any part or all of any management fee and/or
performance allocation for any member of a Fund. The Adviser currently intends to waive the
management fee and any performance allocation with respect to the Adviser’s interests in the
Funds and with respect to interests of certain of its current and former employees, their family
members and/or certain other persons associated with the Adviser.

       Principals or other employees of the Adviser generally receive salaries and other
compensation derived from, and in certain cases including a portion of, the management fees,
performance-based fees or allocation, or other compensation received by the Adviser.

        In addition to the management fee and performance fee payable to Skylands, each Fund
bears certain fees and expenses as set forth in its Governing Documents (or, in the case of Harbour,
the investment advisory agreement). Such fees and expenses generally include, but are not limited
to, the following: expenses of continuously offering Interests in the Funds and other routine
operating expenses, administration fees and expenses, legal and professional fees and expenses,
accounting and auditing expenses, tax and tax preparation expenses, custody-related expenses,
bank service fees, insurance expenses, regulatory expenses, blue sky and other corporate filing
fees and expenses, investment-related expenses, brokerage fees and commissions, expenses
relating to short sales (including dividend and stock borrowing expenses), clearing and settlement
charges, margin and other interest expenses and transaction fees, other routine and similar
expenses associated with the operation of a Fund and extraordinary expenses (the “Fund
Expenses”). Generally included in the expenses described above that are permitted to be borne by
a Fund are the fees, costs and expenses of other service providers (including suppliers, vendors,
consultants, lenders, law firms (including Fund or transaction counsel), transaction service
providers and their respective affiliates, personnel and related investment vehicles (together,
“Service Providers”)) to procure, establish, effectuate, review, customize and/or negotiate
relationships relating to the foregoing items, which can be significant. Fund Expenses with respect
to each of Special, Quest and Special II are subject to an expense cap agreed between the Adviser
and each Fund, as follow: (i) for Special II, the Fund Expenses are capped at 1.0% on an annual
basis of the Fund’s average net asset value, except the Fund’s investment related expenses (e.g.,
brokerage commissions, interest expenses and other transactions fees), and (ii) for Quest and
Special, the Fund Expenses are capped at 1.5% on an annual basis of each Fund’s average net asset
value, except the Fund’s investment related expenses (although, as a matter of policy, the Adviser
has informed each of Special and Quest that it will not incur such Fund Expenses on behalf of the
Fund in excess of 1.0%). In each case, each applicable Fund’s management fees and performance
allocation do not count toward the cap. In certain circumstances, Skylands reserves the right to
elect on behalf of a Fund investor to pay, or rebate through an offset of management fees, certain
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TYPES OF CLIENTS

        Skylands provides investment advice to the Funds, the Sub-Advised Fund and Separate
Account Clients. The Funds and the Sub-Advised Fund may include investment partnerships or
other investment entities formed under domestic or foreign laws and operated as exempt
investment pools under the Investment Company Act of 1940, as amended. The investors
participating in the Funds and the Sub-Advised Fund and the Separate Account Clients may
include individuals, banks or thrift institutions, other investment entities, pension and profit-
sharing plans, trusts, estates or charitable organizations or other corporations or business entities
and may include, directly or indirectly, principals or other employees of Skylands and its affiliates.

        Each Fund imposes certain minimum subscription amounts for investors to invest in a
particular Fund. These requirements vary by Fund, are disclosed in each Fund’s Governing
Documents and are subject to the discretion of a particular Fund’s manager or Board of Directors,

as appropriate, to accept lesser amounts. With respect to the Separate Account Clients, there is no
required minimum investment amount.

             METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

General

        The Adviser generally invests the assets of the Funds, the Sub-Advised Fund and the
Separate Account Clients in a varied portfolio of common stocks of U.S.-based corporations. In
addition, the Adviser expects to invest client assets in other eligible investments including, but not
limited to fixed income securities, convertible securities, preferred stocks, equity options and
foreign equity and debt securities. The Funds are allowed to engage in futures transactions, sell
short, employ leverage, purchase illiquid securities, trade IPOs and secondary public offerings,
write put and call options, and use various derivative instruments for hedging, managing risk or
enhancing returns. Certain Separate Client Accounts may make similar investments subject to the
investment guidelines dictated in their investment advisory agreement or as directed by the client.
The Adviser attempts to avoid investment practices that create unrelated business taxable income
in Quest, as the fund is intended for tax-exempt U.S. investors.

        When selecting companies to invest in, the Adviser generally looks at the company’s stock
valuation, liquidity, business model, growth prospects, and exposure to macroeconomic trends.
The Adviser meets with executive management teams of issuers and industry experts in analyzing
securities. The Adviser attends research conferences, reads third-party research reports, reviews
information from third-party databases and online services, and reviews annual reports, quarterly
financial statements and press releases issued by company management.

        When engaging in futures transactions, the Adviser must comply with applicable rules of
the Commodity Futures Trading Commission (“CFTC”). The Adviser is allowed to lend portfolio
securities to brokers, dealers and other financial institutions for those accounts that have a
securities lending agreement on file. The Adviser is also authorized to use additional derivative
instruments and other hedging, risk management and return enhancement techniques as new
opportunities become available and as regulatory authorities broaden the range of permitted
transactions.

Risks of Investment

        Investors in the Funds, the Sub-Advised Fund and Separate Account Clients bear the risk
of loss that the Adviser’s investment strategy for such client entails. Fund and Sub-Advised Fund
investors should review the applicable offering circular or prospectus for specific information
regarding the risks associated with an investment in that Fund. Some or all of the investment risks
described herein may also be generally applicable to investments made on behalf of Separate
Account Clients. Thus, for purposes of this section, “Risks of Investment,” the term “Fund” shall
be understood to include the Funds, the Sub-Advised Fund and the Separate Account Clients and
the term “Investor” shall be understood to include investors in the Funds, Sub-Advised Fund and
Separate Account Clients.

        Uncertain Economic, Social and Political Environment. Consumer, corporate and financial
confidence may be adversely affected by current or future tensions around the world, localized or
global financial crises or other sources of political, social or economic unrest. A climate of
uncertainty may reduce the availability of potential investment opportunities, and increases the
difficulty of modeling market conditions, potentially reducing the accuracy of financial
projections. In addition, limited availability of credit for consumers, homeowners and businesses,
including credit used to acquire businesses, in an uncertain environment or economic downturn
may have an adverse effect on the economy generally and on the ability of the Fund to execute its
strategies and to receive an attractive return on its investments. The foregoing can lead to an
unstable market environment and can result in pricing volatility and other difficult-to-predict
effects on securities and other investments in which the Fund may invest. Similar risks, volatility
and pricing uncertainty can result to the extent a group of investors coordinates in a speculative
trading strategy to target a specific security, including securities in which a hedge fund or other
collective investment vehicle has taken a short position.

          International Conflicts and Geopolitical Events. Wars and other international conflicts,
such as the Israeli-Palestinian conflict and the ongoing military conflict between Russia and
Ukraine, have caused disruption to global financial systems, trade and transport, among other
things. In response, multiple other countries have put in place sanctions and other severe
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