Item 5. Fees and Compensation
Management Fees
Cardinal receives a management fee for providing investment advisory and management services
to each Fund. The specific fee rate, payment terms, and other conditions of a Fund’s
management fee are set forth in the Fund’s Governing Documents, side letters, and/or fee
agreements. Management fees may differ from one Fund to another, as well as among investors
in the same Fund, and different classes or series of interests of a Fund may pay different
management fees.
Upon termination of Cardinal’s services to a Fund, appropriate treatment, including, where
applicable, returning prepaid management fees on a prorated basis, will be given to all
Alex O’Brien owns his interest in Cardinal through a holding company, O’Brien Cardinal Holdings 937 LLC.
management fees collected in advance. The management fee is generally subject to waiver or
reduction by the Fund’s general partner (or equivalent) in its sole discretion, including in
connection with investments made by Cardinal or its related persons.
In addition, please see Item 6 below regarding “carried interest” that each Fund may pay to an
affiliate of Cardinal. Certain Fund investors may negotiate Fund terms (including management
fees payable and carried interest terms) through negotiation of side letter agreements.
Other Fees and Expenses
Organizational Expenses. Subject to its Governing Documents, each Fund typically pays or
reimburses Cardinal or its general partner or manager for the Fund’s organizational, offering and
startup expenses. These expenses typically include legal, travel, accounting, filing, capital raising
and other expenses.
Operating Expenses. Subject to its Governing Documents, each Fund pays (or reimburses
Cardinal or its general partner or manager) for all costs and expenses related to its operations
(“Operating Expenses”).
The Operating Expenses paid by a particular Fund are set forth in the Fund’s Governing
Documents and/or side letters, and may include, without limitation, the following fees and
expenses: (i) management fees paid to Cardinal; (ii) fees, costs and expenses related to the
identification, evaluation, negotiation, acquisition, due diligence, restructuring, closing, holding,
monitoring and disposition of Fund investments (whether or not consummated) and other
assets, including, without limitation, travel expenses, commissions or brokerage fees or similar
charges and other similar third-party expenses in connection therewith; (iii) expenses related to
organizing and maintaining entities, including holding companies, through or in which Fund
investments are be made; (iv) expenses of a Fund’s advisory committee (or equivalent); (v) legal,
auditing, consulting, administration, accounting and other professional expenses (including
expenses associated with the preparation of the Fund’s financial statements, tax returns and
Schedule K-1s and other reporting and providing information to investors); (vi) insurance
premiums related to indemnification of Cardinal and its affiliates against any liability related to
investments in portfolio companies and operation of the Fund, including the cost of key-man life
insurance on certain key Cardinal executives, and directors’ and officers’ liability insurance; (vii)
all third party expenses in connection with transactions not consummated; (viii) indemnification
and indemnity contributions or reimbursement obligations of the Fund as set forth in the Fund’s
Governing Documents; (ix) taxes or government charges; (x) principal, interest and other fees,
charges and costs associated with permitted borrowing and guarantees; (xi) bank and custodial
fees; (xii) costs of any investigation or proceeding involving Fund activities as set forth in the
Governing Documents; and (xiii) costs and expenses for terminating, dissolving and winding up
the Fund.
Although Cardinal has not historically used securities broker-dealers for transaction-related
services, in the event that Cardinal chooses to use a broker-dealer for limited purposes relating
to a Fund, the Fund will incur brokerage and other transaction costs.