CAI Managers & Co LP

Item 5. Fees and Compensation
CAI generally charges the Funds an asset management fee for its
services, which fees are calculated and billed semi-annually, in advance.
The Fund’s pay an annual management fee equal to (a) 2.00% of total
commitments until the end of the commitment period, (b) thereafter the
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Funds pay 1.50% of funded commitments reduced by cost of realized
investments and all management fees, Fund expenses and offering and
organizational expenses paid (“Net Invested Capital”) until the tenth
anniversary of the management fee commitment date, and (c) thereafter,
the Funds pay 1.00% of the Net Invested Capital for any extensions of
the term of the Fund. Limited Partners will first be returned all
contributed capital and an 8% preferred return after which distributions
will be split 80% to such Limited Partner and 20% to the General
Partner.
Funds that are not open for a full semi-annual period will be responsible
for the pro-rata portion of the fee based on the number of days the
account is open during the semi-annual period. In the event that a Fund
were to terminate CAI’s services prior to the end of a semi-annual
period for which fees have been paid, CAI would calculate the amount
of any refund due and send a check or wire to the Fund. The amount of
such refund would be calculated based on the number of days remaining
after the date of withdrawal in the applicable semi- annual period.
Refunds would generally be paid within thirty (30) days after the
relationship ends.
In addition to the management fees paid by the Funds, Funds will incur
other expenses in connection with obtaining advisory services such as
the third-party expenses incurred in connection with the operation of the
Funds or the investment portfolio. These fees include the costs and
expenses related to the purchase, evaluation of, holding and sale of
portfolio investments (to the extent not reimbursed); expenses of any
agents, custodians, counsel and accountants (including audit, tax
preparation and certification fees); any insurance, indemnity or litigation
expenses, certain taxes, fees or other governmental charges levied
against the Funds; out-of-pocket expenses and other extraordinary
expenses associated with the management or offering of the Funds. All
such fees are discussed in the governing documents for each of the
Funds.
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CAI outsources much of the administrative work related to the Funds.
These responsibilities include routine legal, accounting, and
bookkeeping functions, preparation of firm tax returns, quarter end and
annual reports for the Funds, Portfolio Company summaries and other
progress reports, and the execution of the annual audit of the Funds.
There may also be other fees and expenses depending upon the
particular investments of each Fund. Investors and prospective investors
in the Funds should review offering documents for any particular
investment carefully before investing.
CAI does not typically invest in public companies or securities where
brokerage costs apply to the purchases or sales of shares, and as a result,
brokerage expenses are not typically imposed on Fund transactions. In
the event CAI does recommend such an investment, any brokerage,
transactional, custodial, transfer-agent or other cost associated with such
transaction will be paid by the Fund. CAI does not have any affiliated
brokers or dealers.

Item 7. Types of Clients
CAI provides Services to pooled investment vehicles. CAI has the
discretionary authority to select the securities to be bought or sold, and
determine the amount of securities to be bought or sold, without the
Funds’ consent. Each Fund may require that investors in the relevant
Fund meet a minimum capital commitment, typically $500,000. Such
minimums are established by the governing documents of the relevant
Fund, and the required minimum capital commitments for each Fund
may differ and CAI reserves the right, at its sole discretion, to reduce the
minimal capital commitments required. The offering documents for each
Fund set forth a minimum fund size, however, CAI will begin to manage
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a a Fund as soon as minimum capital commitments are met and will
continue to manage assets for the Fund until the Fund is terminated.

Item 8. Method of Analysis, Investment Strategies and
Risk of Loss
CAI’s method of analysis includes a thorough review of the
investments’ audited financial statements, budgets, forecasts, and market
comparable information before and investment is made. Due diligence
will also be performed regarding personnel records, insurance, legal, and
environmental aspects of the investment. Additional due diligence will
include site visits, customer feedback and management meetings.
As more fully described in each Fund’s offering documents, CAI’s
investment strategy focuses on making investments in established North
American middle market companies focused on the following industries:
(i) aerospace/aviation, (ii) specialized manufacturing, (iii) business,
consumer and financial services, (iv) healthcare, (v) insurance and (vi)
energy, utility and environmental services. CAI’s private equity strategy
is to buy middle market companies and help them improve their
operations and financial results. CAI believes that the following factors
are important in the successful implementation of this strategy:
           • Plentiful Deal Flow. CAI believes that its ability to pick
      and choose from the broadest variety of opportunities increases the
      chances for making a successful investment.
           • CAI Adds Value During the Holding Period. Having the
      experience and resources to work closely with management and
      add value during the holding period is an essential element of
      CAI’s strategy.
            • Appropriate Use of Leverage. CAI believes in utilizing a
      judicious amount of financial leverage for its middle market
      strategy, particularly in cases where a strategic business shift must
CAI Managers & Co., L.P. March 30, 2019                                       8

      be executed.
            • Entry and Exit Multiples. It is also important to maintain
      the discipline of not over- paying for investments.
             • Proper Structuring of Investments. Central to CAI’s
      investment philosophy is the balance between control and
      liquidity. CAI prefers to take controlling positions in companies in
      order to protect its ability to take action, as necessary, to achieve
      its investment objectives.
            • Exit Strategies. Throughout the holding period for each
      investment, CAI focuses on preparing for the most profitable exit
      by identifying potential industry buyers and monitoring capital
      market conditions. 
CAI devotes considerable attention to risk
      management when structuring investments. CAI uses limited
      amounts of leverage and seek to employ disciplined risk
      management strategies to limit an investment’s downside risk, both
      at the investment-specific and portfolio levels. CAI employs a
      number of key risk management strategies. These techniques
      include typically limiting investments to companies which have a
      recurring revenue business model, employing conservative levels
      of debt financing, scaling investment size according to the risk
      level of the transaction, limiting investments to companies which
      are not principally reliant on new or unproven technology, and
      having multiple exit strategies for each investment.

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Investing in securities, including in the Funds, entails a number of
significant risks, including the potential loss of invested principal, that
should be considered before making an investment. The possibility of a
partial or total loss of capital will exist, and investors must be prepared
to bear capital losses that might result from such investments. An
investment in the Funds should be considered only by persons who can
afford a loss of their entire investment. While certain strategies may
offer the potential for greater growth, these same strategies may have
greater potential volatility. While it is CAI’s intent to reduce risk when
possible, certain strategies may impose more risk than others. In
considering participation in the Funds, an investor should be aware of
certain risk factors, which include, but are not limited to, the following:
Business Risks. The Funds’ investment portfolios consist primarily, or
entirely, of securities issued by privately held companies and operating
results in a specified period will be difficult to predict. Such investments
involve a high degree of business and financial risk that can result in
substantial losses. Small and mid- capitalization companies may be
subject to higher degrees of risk, because companies of this kind may
have earnings which are less predictable, valuations which are more
volatile, and liquidity less than that of large-capitalization companies.
Concentration of Investments. CAI invests in a particular market sector
and in a limited number of investments. Thus, the performance of a few
holdings may substantially affect the portfolio’s aggregate return. As a
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