LEH III Management LLC

Item 5: Fees and Compensation
Description
The Management Fee paid by some of the Funds shall equal 1% of capital commitments. One Fund
charges a 0.50% Management Fee calculated on the lesser of (1) a fixed amount or (2) the net asset
value on a quarterly basis.
LEH III does not charge Del Rio Holdings a management fee with respect to its’ equity interest in Del Rio
II. Investors in Del Rio Holdings do, however, indirectly bear the management fee charged by LEH II at
the Del Rio II level.

Fee Billing
Management Fees shall be due monthly in advance, taking the annual management fee rate and divided
by 12.

Other Fees
Funds shall pay for their own Fund Expenses, Organizational Expenses, Capital Expenses, and Operating
Expenses, if applicable. To the extent that LEH III or any of its affiliates pay any Fund Expenses or
Organizational Expenses on behalf of the Funds, the Funds shall reimburse LEH III or such affiliate, as the
case may be, upon request.

Capital Expenses include all costs incurred in respect of the oil and gas interests including the costs of
geologic consulting, drilling, reworking, deepening, completing, recompleting, equipping or the plugging
back of a well and the costs of the acquisition of leases, equipment and capital items (whether
capitalized or expensed), except Operating Expenses.

Operating Expenses include all usual and customary operating expenses related to the oil and gas
interests, including applicable ad valorem taxes, operating overhead charges, insurance (including well
insurance) and indemnity payments, contingent obligations or reserves related to the portfolio
investments but excluding other general and administrative expenses.

The Manager will pay all of its own standard operating expenses (including employee salaries, rent, and
communications). Details of all fees and expenses are fully disclosed in the Funds’ governing documents.

Item 7: Types of Clients
Description
LEH III only provides investment advice to pooled investment vehicles. The investors of the Funds must
meet specific qualification requirements.

Account Minimums
Each investor in the Funds must satisfy the eligibility requirements outlined in the applicable governing
documents or otherwise required by applicable laws. Investments in the Funds may also be subject to
minimum initial investment amounts per investor, which generally may be waived by LEH III.