Item 5 – Fees and Compensation
A. Management Fee and Performance-Based Compensation
Sycale Advisors is compensated based on management fees related to the value of assets under
management (“Management Fees”) and performance fees related to gains in Advisory Client
accounts (“Performance Fees” and together with Management Fees are herein referred to as the
“Fees”). Management Fees for the Funds are in the range of 0.75% - 1.25% per annum calculated
based on the class of shares or limited partnership interests offered and payable quarterly in
advance as of the beginning of each calendar quarter (based on net asset value without deduction
of any accrued but unearned Performance Fees for the current quarter). In cases where capital
contributions are accepted after the commencement of a calendar quarter or capital withdrawals
are made prior to the end of a calendar quarter, a pro rata portion of the Management Fee will be
charged or refunded, as applicable, by Sycale Advisors. Investors in the Mercator Special
Investments Fund are not charged Management Fees. Performance Fees for the Funds are earned
either as a performance allocation or fee in the range of 10% - 15% based on the performance
achieved for each individual investor over a specified measurement period.
The Fees may be reduced, waived, or rebated, in whole or in part to, by Sycale Advisors for any
class of shares or interests, or for any investor, including without limitation, the Adviser, its
affiliates or employees, members of the immediate families of such persons or trusts or other
entities for their benefit, including during any wind-down of a Fund’s business.
It is critical that investors refer to their respective Offering Documents for a complete
understanding of how Sycale Advisors is compensated for its advisory services. The
information contained herein is a summary only and is qualified in its entirety by the relevant
Offering Documents.
B. Billing Method
To facilitate billing, the Fees charged to investors in the Funds are deducted directly from their
assets and then paid to the Adviser.
C. Other Costs and Expenses
Each Advisory Client generally bears all or a pro rata portion, as relevant, of its own operating
costs and expenses, including, without limitation, expenses incurred in connection with the
continuous offering of shares or interests in such Advisory Client; legal, accounting and audit
expenses; investment-related expenses such as brokerage commissions, research-related fees and
expenses, including, without limitation, travel expenses, quotation equipment and services,
expenses related to portfolio risk management, interest on margin accounts and other indebtedness,
borrowing charges on securities sold short, custodial fees and bank service fees; administrator fees;
directors’ fees and expenses; shareholder proxy voting services; printing and mailing expenses;
expenses relating to transfers, redemptions and withdrawals of shares or interests of such Advisory
Client; costs and charges for equipment or services used in communicating information regarding
transactions between the General Partner or Sycale Advisors and other agents; all costs and
expenses incurred as a result of the reorganization, liquidation, winding-up or termination of such
Advisory Client; any sales taxes or other taxes, fees or government charges of any kind which may
be assessed against such Advisory Client; due diligence expenses; expenses incurred in connection
with any distributions; expenses associated with preparation and distribution of such Advisory
Client’s financial statements; fees and expenses associated with securities law filings; the costs of
any liability insurance; the costs of any litigation or investigation involving the activities of such
Advisory Client; indemnification costs; and any other reasonable expenses related to the purchase,
sale or transmittal of such Advisory Client’s assets as will be determined by Sycale Advisors in its
sole discretion. Sycale Advisors is entitled to reimbursement from a Fund for any of the above
expenses that it pays on such Fund’s behalf. See Item 12 for further information regarding
brokerage arrangements.
The expenses identified above may not be applicable to all of the Advisory Clients. In the event
an expense needs to be allocated across multiple Advisory Client accounts, the Adviser will
generally allocate expenses pro rata amongst Advisory Client accounts participating (or proposing
to participate) in the related transaction based upon capital committed or expected to be committed
to the relevant transaction in which Advisory Clients have invested, or are expected to invest, as
appropriate, as determined by the Adviser.
As noted above, Mercator Onshore, Mercator Intermediate and Mercator Offshore each invests all
of its investable assets through a “master-feeder” structure. Each such feeder fund will thus
indirectly bear the administrative and other expenses of Mercator Master, pro rata based on its
interest in Mercator Master. It is anticipated that the majority of expenses will be incurred at the
Mercator Master level and therefore expenses incurred directly by each such feeder fund will be
relatively small. The Sycale Funds are each a “fund of funds” and are indirectly responsible for
the management fees, carried interest and other fees and expenses charged by the underlying funds
in which each Sycale Fund invests in.
It is critical that investors refer to their respective Offering Documents for a complete
understanding of other types of fees and expenses to which they may be subject. The
information contained herein is a summary only and is qualified in its entirety by the relevant
Offering Documents.
D. Prepayment and Refund of Fees
As discussed above, Management Fees are generally deducted quarterly in advance. Investors may
make withdrawals or redemptions from the Funds subject to the terms and conditions set forth in
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