Item 5 – Fees and Compensation
The annual management fees are established in the LPAs of each Fund. In respect of Fund
III, Fund III’s General Partner receives an annual management fee to cover administrative,
management, investment management, and supervisory services it provides to Fund III,
and the General Partner in turn pays the management fee to SCGM.
The annual management fees for Fund IV have been waived effective as from August 12,
2020.
In respect of Fund V, SCGM receives an annual management fee to cover administrative,
management, investment management, and supervisory services it provides to Fund V.
Management fees are established in the respective LPAs, pursuant to negotiations with the
limited partners of each Fund. The annual management fees are generally 2.0% of
committed capital of the Funds, with a reduction at the end of the Fund’s commitment
period to an annual management fee of 1.5% of invested capital that has not been realized
or written off, subject to certain caps and adjustments as set forth in each Fund’s LPA. SCGM
and the applicable General Partner in their sole discretion, have the right to reduce or waive
the Management Fee chargeable with respect to any Limited Partner without the consent
of, or notice to, any other Limited Partner.
Management fees are payable on an estimated basis by Fund V quarterly in advance. The
fees are funded by capital calls to the investors and deducted from the investor’s capital
account in the applicable Fund. Under certain circumstances, the estimate of management
fees payable may result in an overpayment in which case the overpayment would reduce
management fees for future periods. SCGM generally does not collect fees related to
portfolio transactions or other services provided to portfolio companies, but to the extent
any such fees were to be charged, all such fees (or, in the case of Fund III, specified
percentages of such fees) are required to be offset against Fund V’s management fee.
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In respect of SCLAEF, SCGM receives an annual management fee to cover administrative,
management, investment management and supervisory services it provides to SCLAEF.
Annual management fee depends on the limited partner´s category as described in the
LPA and are: (i) 1.2% of the lower of (a) the principal amount of the promissory notes
contributed on its behalf to SCLAEF and (b) its pro rata share of the Portfolio Company’s
gross Net Asset Value; provided, that for each of the first two annual periods, the annual
management fee will not be lower than its pro rata share of $3,000,000 per annum (subject
to certain adjustments as provided for in SCLAEF´s LPA); or (ii) 0.86% per annum of its pro
rata share of Fund IV’s invested capital as of November 18, 2020, less dispositions and
permanent write offs following such date.
There are no management fees for Ancora and Polinvest.
SCGM utilizes the compensation received as management fees to (i) compensate the
members of SCGM’s investment committee (the “Investment Committee”), which, as of the
date hereof, consist of Norberto Morita, Ricardo Rodriguez, Raúl Sotomayor, Sebastián Villa,
and Diego Acevedo; and (ii) to retain the services of consulting and other services firms for
the identification of investment opportunities, market research, investment assessment,
board representation, bookkeeping and investor relation support, solely in relation to the
Funds. Through December 31, 2020 these business consulting firms (the “Affiliate
Consultants”) were controlled by certain limited partners of SCGM, including Marcos
Mulcahy, Jaime Besa, Agustín Sanchez Alcázar and Gustavo Santos (collectively with the
Investment Committee members and certain other executives, “SC’s Members”).
The Funds incur operating expenses, including legal, auditing and accounting expenses and
transaction-related costs, and potentially could incur brokerage costs (see Item 12,
Brokerage Practices). The Funds may also pay a performance-based fee which is described
in Item 6, Performance-Based Fees and Side-By-Side Management. The Offering and
Organizational Expenses, Investment Expenses, and Partnership Expenses of Fund III, Fund
V, and SCLAEF are set forth in the respective LPA and may include, without limitation, the
following fees, costs and expenses:
• “Partnership Expenses” of the Funds are generally all obligations, fees and expenses
incurred by the Funds or obligations, fees and expenses otherwise incurred by the
respective General Partner, SCGM or their respective affiliates in connection with the
relevant LPA or the activities of the Funds (other than respective General Partner
Expenses and Investment Expenses (each as defined below) and the obligation of the
Funds to pay the purchase price for any investment), including but not limited to (i)
Offering and Organizational Expenses (as defined below) up to an amount equal to
the threshold set forth in the respective LPA, (ii) audit and tax return preparation
fees and expenses of the Funds, (iii) all fees and expenses of the Funds directly
related to the operations, administration and regulatory compliance of the Funds as
set forth in the relevant LPA, (iv) management fees payable to SCGM, and (v) fees
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and expenses incurred by the Funds and the Funds’ allocable share of fees and
expenses incurred in connection with regulatory compliance, registration and filing
obligations of the Partnership under applicable U.S. and non-U.S. Law (including
FATCA and other applicable tax law and the European Union Alternative Investment
Fund Managers Directive).
• “Investment Expenses” of the Funds are generally (i) all costs and expenses incurred
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