Item 5 - Fees and Compensation
In consideration for AltaRock’s advisory and other services, AltaRock is generally entitled to receive
management fees, and may receive performance allocations, with respect to the Funds. While the fees and
compensation applicable to each Fund are described in detail in the applicable governing documents, an
overview of AltaRock’s basic fee schedule is summarized below. A potential investor should read and
review all governing documents in their entirety before making any investment decisions.
Management Fees and Performance Allocations
Investors in the Funds are typically charged a one percent (1%) annual management fee, payable monthly
in advance in such amounts as are set forth in the governing documents of each Fund. Management fees
are calculated on the net asset value of the investor’s capital account on the first calendar day of the month
and deducted directly from investor capital accounts by the last day of such month. Investors are not billed
directly for fees.
Investors in a Fund are also generally assessed a ten percent (10%) performance allocation, payable to
AltaRock GP, LLC, an affiliate of AltaRock, on all net gains in excess of the previous “high-water mark”
as of the close of business on December 31st of each year, or on the date of any withdrawal by a Fund
investor, as well as on the date of winding up and liquidation of the applicable Fund. At such times, the
performance allocation calculated will be equal to ten percent (10%) of the net gain (realized and
unrealized), allocated to the investor’s capital account in excess of the previous high-water mark for the
fiscal year or relevant period. In general, a “high-water mark” means that AltaRock GP, LLC will receive
a performance allocation only when the aggregate value of the investor’s account, at the time of valuation,
is higher than the value as of the date of the most immediately preceding determination of whether a
performance allocation was payable, or if none, the value as of the date such account was established. An
investor in a Fund making a partial withdrawal will be charged a performance allocation on the date of any
withdrawal of capital by such investor on a pro-rata basis. Performance-based allocations are deducted
directly from investor accounts.
AltaRock’s compensation and fees are generally not negotiable, although AltaRock typically waives fees
for employee accounts and reserves the right to negotiate its fees.
In the event a Fund terminates its investment management agreement with AltaRock, or if an investor
withdraws capital from a Fund prior to the last day of a calendar month, appropriate treatment will be given
to all management fees and other compensation collected in advance (e.g., the management fee would be
pro-rated based upon the number of days elapsed in the applicable period prior to termination and the
balance of the management fee collected would be refunded to the applicable Investor).
Other Fees and Expenses
In addition to management fees and, if applicable, performance allocations, the Funds (and hence the Fund
investors) are generally subject to other Fund expenses, including, without limitation, taxes, audit and legal
expenses, investment expenses such as brokerage commissions (Please see Item 12 – Brokerage Practices
of this Brochure for a further discussion of AltaRock’s brokerage and trading practices), research expenses,
including travel and due diligence expenses related to the analysis, purchase or sale of investments, whether
or not a particular investment is consummated, interest on margin accounts and other indebtedness,
borrowing charges on securities sold short, custodial fees, and any other expenses reasonably related to the
purchase, sale or transmittal of Fund assets. AltaRock seeks to allocate expenses that benefit more than one
fund in a fair and reasonable manner. AltaRock allocates common client expenses among multiple clients
on a quarterly basis pro rata based on average net assets. In some cases, an expense may be shared between
AltaRock and its clients, which represents a conflict of interest for AltaRock. In these cases, AltaRock will
make a reasonable allocation of the cost of the product or service according to its use. That portion of the
product or service benefitting AltaRock will be paid for by AltaRock.
More detailed information about fees and expenses of each Fund is found in such Fund’s governing
documents.
Miscellaneous
AltaRock and/or another authorized party generally have the discretion to waive or modify the application
of certain provisions of a Fund’s governing documents with respect to an investor (including those related
to fees, performance allocations, transparency, and withdrawals) without obtaining the consent of any other
investor. AltaRock and/or another authorized party may, in its sole discretion, charge lower management
fees and/or performance allocations or waive account minimums based on certain factors AltaRock and/or
another authorized party deems relevant.
Sales-Based Compensation
Neither AltaRock nor any of its supervised persons accept compensation for the sale of securities or other
investment products. This practice presents a conflict of interest and would give AltaRock or its supervised
persons an incentive to recommend investment products based on the compensation received, rather than
on a particular Fund’s needs.