Fees and Compensation
A. Compensation for Advisory Services
For certain Clients, quarterly or semi-annual management fees are charged by an advisory affiliate
of SPO on the date of a contribution by an investor into a Client and at the beginning of each subsequently
applicable period for management services provided to the Client. The fee is equal to one quarter or one
half, as applicable, of one percent of the capital account value of certain investors as determined under the
governing documents of the Client and is prorated for contributions made during the year. The fee rate for
certain Clients is reduced once the aggregate capital account value of the limited partners exceeds five
billion dollars. Management fees for certain Clients may be partially offset by directors’ fees from portfolio
companies and other transaction fees earned by SPO and/or its advisory affiliates. From time to time SPO
and/or its advisory affiliates may choose to waive receipt of director’s fees where it feels such decision is
in the best overall interest of the Client. See Item 6 in this Brochure for disclosure relative to performance-
based fees.
Fees are deducted from Client assets on a quarterly or semi-annual basis and on the date of a
contribution. Fees are not negotiable. Fees charged are not refundable, however see Item 6 in this Brochure
for potential adjustments related to performance-based fees.
B. Other Fees and Expenses
Management fees cover the fees and expenses relating to the ordinary business operation of SPO;
such expenses consist of SPO employee compensation and other overhead expenses, including rent,
utilities, and research expenses. The Client pays all other expenses incurred in the conduct of the activities
of the Client, including, without limitation, fees and expenses of legal counsel, interest charges, taxes and
other expenses of an extraordinary nature (including indemnification expenses), dividends on short sales,
brokerage fees and commissions, fees and expenses of custodians or depositories appointed for the
safekeeping of Client’s cash, securities or other property, and all other expenses incurred in connection with
acquiring, financing, holding and disposing of securities on behalf of the Client, accounting, bookkeeping,
auditing and other similar expenses, expenses of registering any securities, fees and expenses incurred in
connection with the investigation, purchase, proposed purchase or sale of securities, fees and expenses of
attorneys, business consultants, appraisers and accountants, investment bankers or other third parties,
whether or not such purchase is consummated, and premiums and other amounts associated with insurance
policies (such as directors’ and officers’ insurance).
Clients will incur brokerage and other transaction costs. See Item 12 in this Brochure for a
description of brokerage practices. SPO does not receive brokerage commissions.
Clients should refer to the relevant governing documents for a more complete description of SPO’s
fees.