Item 5: Fees and Compensation
As compensation for its investment management services, MCA receives “Management Fees”
and an affiliated entity of MCA receives “Distributions” (as defined below). Investors should
refer to MCF’s Limited Partnership Agreement (“LPA”) for additional information regarding
the fees paid by MCF. Investors should also review the subscription agreements, operating
agreement, and private placement memorandum for further details regarding fees for
management services for MCF II.
Management Fees
In accordance with MCF’s LPA, the Firm is entitled to receive a management fee (the
“Management Fee”) equal to a percentage of investor capital committed through the fifth
anniversary of the final closing of MCF (the “Commitment Period”) and a percentage of
MCF’s aggregate capital contributions with respect to all unrealized investments after the
Commitment Period. The Management Fee is 2.00% per annum. As of May 1, 2017, MCA
waived and MCF no longer pays the Management Fee to MCA.
Medina Capital Advisors, LLC Form ADV Part 2A
For all periods through May 1, 2017, Management Fees for MCF were paid quarterly and in
advance. The payment of the Management Fees for any period other than a full three-month
period were adjusted (and to the extent necessary, refunded) by the Firm on a pro rata basis
according to the actual number of days in the period covered by such payment.
Generally, MCF II will not pay to MCA an annual management fee. MCA or an affiliate thereof
is anticipated to share, on a pro-rata basis with another independent private equity firm (based
upon MCF II’s equity investment in SIS) a structuring fee equal to one percent (1%) of the total
consideration paid towards the Investments as well as any break-up fees in connection with
the Investments. MCA’s pro rata portion of such structuring fee is anticipated to be
approximately 20% (or 0.2% of the total consideration paid towards the Investments and any
break-up fees which may be payable by the seller of the data centers in connection with the
Investments).
Distributions
Medina Capital Fund GP, LLC serves as the general partner to MCF (the “General Partner”)
and may receive incentive distributions from MCF (the “Distributions”) based on the net
cash proceeds distributed to investors by MCF. These Distributions will be equal to
approximately 20% of the total distributions made by MCF, after a preferred return to MCF’s
limited partners.
In our discretion, we may waive or reduce the Management Fees or Distributions of any
investor in MCF.
Distributions of net cash proceeds from the Investments, together with distributions in kind
of securities, any dividends, distributions or interest income received with respect to any
Investment and any other income received in respect of portfolio investments and other short-
term investment income (“Investment Proceeds”) generally will be preliminarily
apportioned among the Members participating in the investment in proportion to their
respective participation in funding such investment. Please see MCF II’s private placement
memorandum for more details on distributions.
Expenses
Each of MCF and MCF II generally bears all legal and other expenses incurred in its formation
and the offering of interests (the “Organizational Expenses”) up to an amount not to
exceed the threshold established in MCF’s LPA or MCF II’s operating agreement, subscription
agreement, and private placement memorandums.
Each of MCF and MCF II generally pays all costs related to its operation (the “Operational
Expenses”), including Management Fees (if any), any taxes imposed on the fund, commitment
fees payable in connection with credit facilities, accounting fees, third-party fees and expenses,
attorneys’ fees (including in-house counsel), due diligence and other costs related to the
acquisition or disposition of assets. For a more detailed description of Operational Expenses,
investors should review MCF and MCF II’s operating agreement, subscription agreement,
limited partnership agreement, and private placement memorandums. Each of MCF and MCF
II, as applicable, generally bears all third-party expenses incurred in connection with
transactions that are not consummated.
MCA will bear the costs and expenses associated with its normal operating overhead activities
(the “Management Expenses”) including, but not limited to, compensation of its employees
Medina Capital Advisors, LLC Form ADV Part 2A
and the cost of providing relevant support and general services (e.g., office rental, secretarial,
clerical and bookkeeping expenses).
Other Fees
For MCF II, except for the fees described above and in this paragraph, neither the Investment
Advisor nor any of its affiliates receives monitoring fees, advisory fees, directors’ fees,
financing fees, transaction fees, break-up fees or similar fees from any portfolio company;
provided that affiliates of the Manager who are directly employed by and/or serve as members
of the Board of Directors of SIS and/or its subsidiaries receive reasonable compensation (on
market terms) from SIS and/or its subsidiaries in connection with their service. In addition,
those affiliates of the Manager who serve on SIS’s senior management team participate in a
management equity compensation plan. MCA also shares pro rata in quarterly advisory fees
paid by Cyxtera Technologies, Inc. (a subsidiary of SIS and the parent company for the acquired
data center and cybersecurity businesses acquired by SIS) to SIS’s principal private equity
sponsors.