since our inception in 2006 , we have adhered to a disciplined investment process that employs these principles with the goal of delivering strong risk-adjusted investment returns while protecting investor capital . we believe that our ability to directly originate , structure and lead deals enables us to achieve these goals . in addition , the loans we manage generally have a contractual maturity of between three and seven years and are typically floating rate , which we believe positions our business well for rising interest rates . the significant majority of our revenue is derived from management fees , which include base management fees earned on all of our investment products as well as part i incentive fees earned from our permanent capital vehicles and certain of our long-dated private funds . our base management fees are generally calculated based upon fee earning assets and paid quarterly in cash . our part i incentive fees are typically calculated based upon net investment income , subject to a hurdle rate , and are also paid quarterly in cash . we also may earn carried interest from our long-dated funds and contractual performance fees from our smas . typically , these fees are 15.0 % to 20.0 % of the total return above a hurdle rate . carried interest represent fees that are a capital allocation to the general partner or investment manager , are accrued quarterly and paid after the return of all invested capital and an amount sufficient to achieve the hurdle rate of return . we also may receive incentive fees related to realized capital gains in our permanent capital vehicles and certain of our long-dated private funds that we refer to as part ii incentive fees . part ii incentive fees are payable annually and are calculated at the end of each applicable year by subtracting ( i ) the sum of cumulative realized capital losses and unrealized capital depreciation from ( ii ) cumulative aggregate realized capital gains . if the amount calculated is positive , then the part ii incentive fee for such year is equal to 20 % of such amount , less the aggregate amount of part ii incentive fees paid in all prior years . if such amount is negative , then no part ii incentive fee will be payable for such year . as our investment strategy is focused on generating yield from senior secured credit , historically we have not generated part ii incentive fees . for the years ended december 31 , 2018 , 2017 and 2016 , 84 % , 90 % and 86 % , respectively , of our revenues were generated from management fees and carried interest derived primarily from net interest income on senior secured loans . our primary expenses are compensation to our employees and general , administrative and other expenses . compensation includes salaries , discretionary bonuses , stock-based compensation and benefits paid and payable to our employees . performance fee compensation includes compensation related to performance fees and carried interest , generally consisting of profit interests that we grant to certain of our employees . general and administrative expenses include costs primarily related to professional 44 services , office rent and related expenses , depreciation and amortization , travel and related expenses , information technology , communication and information services , placement fees and third-party marketing expenses and other general operating items . reorganization and initial public offering medley management inc. was incorporated on june 13 , 2014 and commenced operations on september 29 , 2014 upon the completion of its ipo of its class a common stock . we raised $ 100.4 million , net of underwriting discounts , through the issuance of 6,000,000 shares of class a common stock at a public offering price of $ 18.00 per share . the offering proceeds were used to purchase 6,000,000 newly issued llc units from medley llc . prior to the ipo , medley management inc. had not engaged in any business or other activities except in connection with its formation and ipo . in connection with the ipo , medley management inc. issued 100 shares of class b common stock to medley group llc ( “ medley group ” ) , an entity wholly owned by the pre-ipo members of medley llc . for so long as the pre-ipo members and then-current medley personnel hold at least 10 % of the aggregate number of shares of class a common stock and llc units ( excluding those llc units held by medley management inc. ) then outstanding , the class b common stock entitles medley group to a number of votes that is equal to 10 times the aggregate number of llc units held by all non-managing members of medley llc that do not themselves hold shares of class b common stock and entitle each other holder of class b common stock , without regard to the number of shares of class b common stock held by such other holder , to a number of votes that is equal to 10 times the number of membership units held by such holder . in connection with the ipo , medley llc amended and restated its limited liability agreement to modify its capital structure by reclassifying the 23,333,333 interests held by the pre-ipo members into a single new class of units . the pre-ipo members also entered into an exchange agreement under which they ( or certain permitted transferees thereof ) have the right , subject to the terms of the exchange agreement , to exchange their llc units for shares of medley management inc. 's class a common stock on a one-for-one basis , subject to customary conversion rate adjustments for stock splits , stock dividends and reclassifications . in addition , pursuant to the amended and restated limited liability agreement , medley management inc. became the sole managing member of medley llc . story_separator_special_tag base management fees are generally based on a defined percentage of ( i ) average or total gross assets , including assets acquired with leverage , ( ii ) total commitments , ( iii ) net invested capital , ( iv ) nav or ( v ) lower of cost or market value of a fund 's portfolio investments . these fees are calculated quarterly and are paid in cash in advance or in arrears . base management fees are recognized as revenue in the period advisory services are rendered , subject to our assessment of collectability . 48 in addition , we also receive non asset-based management fees that may include special fees such as origination fees , transaction fees and similar fees paid to us in connection with portfolio investments of our funds . these fees are specific to particular transactions and the contractual terms of the portfolio investments , and are recognized when earned . part i incentive fees . we also include part i incentive fees that we receive from our permanent capital vehicles and certain of our long-dated private funds in management fees . part i incentive fees are paid quarterly , in cash , and are driven primarily by net interest income on senior secured loans . as it relates to mcc , these fees are subject to netting against realized and unrealized losses . we are primarily an asset manager of yield-oriented products and our incentive fees are primarily derived from spread income rather than trading or capital gains . in addition , we also carefully manage interest rate risk . we are generally positioned to benefit from a raising rate environment , which should benefit fees paid to us from our vehicles and funds . performance fees . performance fees are contractual fees which do not represent a capital allocation to the general partner or investment manager that are earned based on the performance of certain funds , typically our separately managed accounts . performance fees are earned based on the fund performance during the period , subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund 's investment management agreement . prior to the adoption of the new revenue recognition standard on january 1 , 2018 , we accounted for contractual based performance fees under method 2 of asc 605 , revenue recognition , for revenue based on a formula . under this method , performance fees for any period were based upon an assumed liquidation of the underlying fund 's net assets on the reporting date and were subject to reversal to the extent that cumulative previously recognized performance fees exceeded the amount due to the general partner or investment manager based on a fund 's cumulative investment returns . effective january 1 , 2018 , we account for such performance fees in accordance with asc 606 , revenue from contracts with customers , and will only recognize contractual based performance fees when it is probable that a significant reversal of such fees will not occur in the future . the timing and amount of performance fees generated by our funds is uncertain . if we were to have a realization event in a particular quarter or year , it may have a significant impact on our results for that particular quarter or year that may not be replicated in subsequent periods . refer to “ risk factors — risks related to our business and industry ” included in this annual report on form 10-k. part ii incentive fees . for our permanent capital vehicles and certain of our long-dated private funds , part ii incentive fees generally represent 20.0 % of each fund 's cumulative realized capital gains ( net of realized capital losses and unrealized capital depreciation ) . we have not received these fees historically , and do not expect such fees to be material in the future given our focus on senior secured lending . other revenues and fees . we provide administrative services to certain of our vehicles that are reported as other revenues and fees . such fees are recognized as revenue in the period that administrative services are rendered . these fees are generally based on expense reimbursements for the portion of overhead and other expenses incurred by certain professionals directly attributable to each respective fund . we also act as the administrative agent on certain deals for which we may earn loan administration fees and transaction fees . we may also earn consulting fees for providing non-advisory services related to our managed funds . additionally , this line item includes reimbursable origination and deal expenses as well as reimbursable entity formation and organizational expenses . carried interest . carried interest are performance based fees that represent a capital allocation of income to the general partner or investment manager . carried interest is allocated to us based on cumulative fund performance to date , subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund 's governing documents . prior to january 1 , 2018 , we accounted for carried interest under method 2 of asc 605 , as previously described above . upon adoption of the new revenue recognition standard , we reassessed our accounting policy for carried interest , and determined that carried interest is within the scope of the accounting for equity method investments , and , as such , is not within the scope of the new revenue recognition guidance . under the equity method of accounting , we will record carried interest in a consistent manner as we historically had which is based upon an assumed liquidation of that fund 's net assets as of the reporting date , regardless of whether such amounts have been realized . for any given period , carried interest on our consolidated statements of operations may include reversals of previously recognized carried interest due to

make prepayments of junior debt . in addition , the credit agreement governing our revolving credit facility contains financial covenants that require us to maintain a maximum net leverage ratio of not greater than 5.0 to 1.0 , a total leverage ratio of not greater than 7.0 to 1.0 , and core ebitda of not less than $ 15.0 million . these ratios are calculated on a trailing twelve months basis and are calculated using our standalone financial results and include adjustments to calculate core ebitda . in september 2018 , we requested and received a waiver from city national bank that permits us to exclude the maximum net leverage ratio with respect to the fiscal periods ending on each of september 30 , 2018 and december 31 , 2018. as of december 31 , 2018 , we were not in compliance with the remaining financial covenants and had obtained a waiver covering the period then ended . our non compliance was attributed to the impact of costs associated with our pending merger with sic . as a condition to issuing the waiver , we are restricted to any borrowing of up to one times core ebitda . we are currently in discussions with city national bank to amend the covenants under the revolving credit facility which would be effective for us commencing in the second quarter of 2019 through the revolving credit facility 's maturity date . as of the year ended december 31 , 2018 , there were no amounts drawn under the revolving credit facility . our revolving credit facility contains certain customary representations and warranties , affirmative covenants and events of default . if an event of default occurs , the lender under the revolving credit facility will be entitled to take various actions , including the acceleration of any amounts due under the revolving credit facility and all actions permitted to be taken by a secured creditor . non-recourse promissory notes in april 2012 , we borrowed $ 5.0 million under a non-recourse promissory note with a foundation , and $ 5.0 million under a non-recourse promissory note with a trust .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```make prepayments of junior debt . in addition , the credit agreement governing our revolving credit facility contains financial covenants that require us to maintain a maximum net leverage ratio of not greater than 5.0 to 1.0 , a total leverage ratio of not greater than 7.0 to 1.0 , and core ebitda of not less than $ 15.0 million . these ratios are calculated on a trailing twelve months basis and are calculated using our standalone financial results and include adjustments to calculate core ebitda . in september 2018 , we requested and received a waiver from city national bank that permits us to exclude the maximum net leverage ratio with respect to the fiscal periods ending on each of september 30 , 2018 and december 31 , 2018. as of december 31 , 2018 , we were not in compliance with the remaining financial covenants and had obtained a waiver covering the period then ended . our non compliance was attributed to the impact of costs associated with our pending merger with sic . as a condition to issuing the waiver , we are restricted to any borrowing of up to one times core ebitda . we are currently in discussions with city national bank to amend the covenants under the revolving credit facility which would be effective for us commencing in the second quarter of 2019 through the revolving credit facility 's maturity date . as of the year ended december 31 , 2018 , there were no amounts drawn under the revolving credit facility . our revolving credit facility contains certain customary representations and warranties , affirmative covenants and events of default . if an event of default occurs , the lender under the revolving credit facility will be entitled to take various actions , including the acceleration of any amounts due under the revolving credit facility and all actions permitted to be taken by a secured creditor . non-recourse promissory notes in april 2012 , we borrowed $ 5.0 million under a non-recourse promissory note with a foundation , and $ 5.0 million under a non-recourse promissory note with a trust .
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 Suspicious Activity Report : since our inception in 2006 , we have adhered to a disciplined investment process that employs these principles with the goal of delivering strong risk-adjusted investment returns while protecting investor capital . we believe that our ability to directly originate , structure and lead deals enables us to achieve these goals . in addition , the loans we manage generally have a contractual maturity of between three and seven years and are typically floating rate , which we believe positions our business well for rising interest rates . the significant majority of our revenue is derived from management fees , which include base management fees earned on all of our investment products as well as part i incentive fees earned from our permanent capital vehicles and certain of our long-dated private funds . our base management fees are generally calculated based upon fee earning assets and paid quarterly in cash . our part i incentive fees are typically calculated based upon net investment income , subject to a hurdle rate , and are also paid quarterly in cash . we also may earn carried interest from our long-dated funds and contractual performance fees from our smas . typically , these fees are 15.0 % to 20.0 % of the total return above a hurdle rate . carried interest represent fees that are a capital allocation to the general partner or investment manager , are accrued quarterly and paid after the return of all invested capital and an amount sufficient to achieve the hurdle rate of return . we also may receive incentive fees related to realized capital gains in our permanent capital vehicles and certain of our long-dated private funds that we refer to as part ii incentive fees . part ii incentive fees are payable annually and are calculated at the end of each applicable year by subtracting ( i ) the sum of cumulative realized capital losses and unrealized capital depreciation from ( ii ) cumulative aggregate realized capital gains . if the amount calculated is positive , then the part ii incentive fee for such year is equal to 20 % of such amount , less the aggregate amount of part ii incentive fees paid in all prior years . if such amount is negative , then no part ii incentive fee will be payable for such year . as our investment strategy is focused on generating yield from senior secured credit , historically we have not generated part ii incentive fees . for the years ended december 31 , 2018 , 2017 and 2016 , 84 % , 90 % and 86 % , respectively , of our revenues were generated from management fees and carried interest derived primarily from net interest income on senior secured loans . our primary expenses are compensation to our employees and general , administrative and other expenses . compensation includes salaries , discretionary bonuses , stock-based compensation and benefits paid and payable to our employees . performance fee compensation includes compensation related to performance fees and carried interest , generally consisting of profit interests that we grant to certain of our employees . general and administrative expenses include costs primarily related to professional 44 services , office rent and related expenses , depreciation and amortization , travel and related expenses , information technology , communication and information services , placement fees and third-party marketing expenses and other general operating items . reorganization and initial public offering medley management inc. was incorporated on june 13 , 2014 and commenced operations on september 29 , 2014 upon the completion of its ipo of its class a common stock . we raised $ 100.4 million , net of underwriting discounts , through the issuance of 6,000,000 shares of class a common stock at a public offering price of $ 18.00 per share . the offering proceeds were used to purchase 6,000,000 newly issued llc units from medley llc . prior to the ipo , medley management inc. had not engaged in any business or other activities except in connection with its formation and ipo . in connection with the ipo , medley management inc. issued 100 shares of class b common stock to medley group llc ( “ medley group ” ) , an entity wholly owned by the pre-ipo members of medley llc . for so long as the pre-ipo members and then-current medley personnel hold at least 10 % of the aggregate number of shares of class a common stock and llc units ( excluding those llc units held by medley management inc. ) then outstanding , the class b common stock entitles medley group to a number of votes that is equal to 10 times the aggregate number of llc units held by all non-managing members of medley llc that do not themselves hold shares of class b common stock and entitle each other holder of class b common stock , without regard to the number of shares of class b common stock held by such other holder , to a number of votes that is equal to 10 times the number of membership units held by such holder . in connection with the ipo , medley llc amended and restated its limited liability agreement to modify its capital structure by reclassifying the 23,333,333 interests held by the pre-ipo members into a single new class of units . the pre-ipo members also entered into an exchange agreement under which they ( or certain permitted transferees thereof ) have the right , subject to the terms of the exchange agreement , to exchange their llc units for shares of medley management inc. 's class a common stock on a one-for-one basis , subject to customary conversion rate adjustments for stock splits , stock dividends and reclassifications . in addition , pursuant to the amended and restated limited liability agreement , medley management inc. became the sole managing member of medley llc . story_separator_special_tag base management fees are generally based on a defined percentage of ( i ) average or total gross assets , including assets acquired with leverage , ( ii ) total commitments , ( iii ) net invested capital , ( iv ) nav or ( v ) lower of cost or market value of a fund 's portfolio investments . these fees are calculated quarterly and are paid in cash in advance or in arrears . base management fees are recognized as revenue in the period advisory services are rendered , subject to our assessment of collectability . 48 in addition , we also receive non asset-based management fees that may include special fees such as origination fees , transaction fees and similar fees paid to us in connection with portfolio investments of our funds . these fees are specific to particular transactions and the contractual terms of the portfolio investments , and are recognized when earned . part i incentive fees . we also include part i incentive fees that we receive from our permanent capital vehicles and certain of our long-dated private funds in management fees . part i incentive fees are paid quarterly , in cash , and are driven primarily by net interest income on senior secured loans . as it relates to mcc , these fees are subject to netting against realized and unrealized losses . we are primarily an asset manager of yield-oriented products and our incentive fees are primarily derived from spread income rather than trading or capital gains . in addition , we also carefully manage interest rate risk . we are generally positioned to benefit from a raising rate environment , which should benefit fees paid to us from our vehicles and funds . performance fees . performance fees are contractual fees which do not represent a capital allocation to the general partner or investment manager that are earned based on the performance of certain funds , typically our separately managed accounts . performance fees are earned based on the fund performance during the period , subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund 's investment management agreement . prior to the adoption of the new revenue recognition standard on january 1 , 2018 , we accounted for contractual based performance fees under method 2 of asc 605 , revenue recognition , for revenue based on a formula . under this method , performance fees for any period were based upon an assumed liquidation of the underlying fund 's net assets on the reporting date and were subject to reversal to the extent that cumulative previously recognized performance fees exceeded the amount due to the general partner or investment manager based on a fund 's cumulative investment returns . effective january 1 , 2018 , we account for such performance fees in accordance with asc 606 , revenue from contracts with customers , and will only recognize contractual based performance fees when it is probable that a significant reversal of such fees will not occur in the future . the timing and amount of performance fees generated by our funds is uncertain . if we were to have a realization event in a particular quarter or year , it may have a significant impact on our results for that particular quarter or year that may not be replicated in subsequent periods . refer to “ risk factors — risks related to our business and industry ” included in this annual report on form 10-k. part ii incentive fees . for our permanent capital vehicles and certain of our long-dated private funds , part ii incentive fees generally represent 20.0 % of each fund 's cumulative realized capital gains ( net of realized capital losses and unrealized capital depreciation ) . we have not received these fees historically , and do not expect such fees to be material in the future given our focus on senior secured lending . other revenues and fees . we provide administrative services to certain of our vehicles that are reported as other revenues and fees . such fees are recognized as revenue in the period that administrative services are rendered . these fees are generally based on expense reimbursements for the portion of overhead and other expenses incurred by certain professionals directly attributable to each respective fund . we also act as the administrative agent on certain deals for which we may earn loan administration fees and transaction fees . we may also earn consulting fees for providing non-advisory services related to our managed funds . additionally , this line item includes reimbursable origination and deal expenses as well as reimbursable entity formation and organizational expenses . carried interest . carried interest are performance based fees that represent a capital allocation of income to the general partner or investment manager . carried interest is allocated to us based on cumulative fund performance to date , subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund 's governing documents . prior to january 1 , 2018 , we accounted for carried interest under method 2 of asc 605 , as previously described above . upon adoption of the new revenue recognition standard , we reassessed our accounting policy for carried interest , and determined that carried interest is within the scope of the accounting for equity method investments , and , as such , is not within the scope of the new revenue recognition guidance . under the equity method of accounting , we will record carried interest in a consistent manner as we historically had which is based upon an assumed liquidation of that fund 's net assets as of the reporting date , regardless of whether such amounts have been realized . for any given period , carried interest on our consolidated statements of operations may include reversals of previously recognized carried interest due to

