***THE FOLLOWING DOES NOT CONSTITUTE A CAPITAL COMMITMENT BY UST*** 

UNITED STATES DEPARTMENT OF THE TREASURY 

CONFIDENTIAL

July 8, 2009 

[PPIF Sponsor] 

[Address] 

Letter of Intent

Ladies and Gentlemen: 

We are pleased to confirm our mutual agreement in principle to (i) an investment (the 

“Equity Investment”) by the United States Department of The Treasury (“UST”) in a Delaware limited 

partnership (the “Partnership”) to be formed by [Sponsor] or an Affiliate (as defined in the Equity Term 

Sheet referred to below) thereof (“Sponsor”) on the terms and conditions set forth herein and in the term 

sheet attached hereto as Annex I (the “Equity Term Sheet”) and (ii) a senior secured credit facility to be 

provided by UST to the Partnership (the “Debt Investment” and, together with the Equity Investment, the 

“Transaction”) on the terms and conditions set forth herein and in the term sheet attached hereto as Annex 

II (the “Debt Term Sheet” and, together with the Equity Term Sheet, the “Term Sheets”). 

1. Negotiation of Definitive Documentation. The parties hereto agree, subject to 

the terms and conditions hereof, to negotiate in good faith to execute mutually acceptable definitive and 

binding written agreements and documents with respect to the Transaction (the “Definitive 

Documentation”). The Definitive Documentation shall incorporate the terms and conditions set forth in 

the Term Sheets and such other terms and conditions agreed to among the parties hereto. 

2. Confirmatory Diligence. The obligations of the parties in Section 1 hereof shall 

be subject to completion by UST prior to the execution of Definitive Documentation of remaining 

business, legal and compliance due diligence and UST being satisfied, in its sole and absolute discretion, 

with the results of such diligence. UST intends, subject to applicable law, regulation or governmental 

order, to hold confidential all confidential information provided to it by Sponsor. 

3. Transaction Expenses. Neither party hereto shall be responsible for any expenses 

incurred by the other party in the event the Definitive Documentation is not executed. 

4. Entire Agreement; Non-Binding Agreement. This Letter of Intent constitutes the 

entire agreement between the parties and any of their respective Affiliates and supersedes all prior 

communications, agreements and understandings (written or oral) with respect to the subject matter 

hereof. 

For the avoidance of doubt, this Letter of Intent shall not constitute or give rise to an 

obligation by UST to make the Equity Investment or the Debt Investment or otherwise provide any 

funding. This Letter of Intent shall not be binding on the parties hereto. A binding agreement with 

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respect to the Transaction shall only be created by the execution of the Definitive Documentation. No 

oral agreements between the parties will be deemed to exist with respect to the Transaction. This Letter 

of Intent is solely for the benefit of the parties hereto and their respective successors and permitted 

assigns, and shall not be deemed to confer upon or give to any other third party any remedy, claim, 

liability, reimbursement, cause of action or other right. 

5. Assignment. Neither this Letter of Intent nor any rights or obligations hereunder 

may be assigned by Sponsor without the prior written consent of UST. 

6. Termination. This Letter of Intent shall terminate automatically upon the 

execution and delivery of the Definitive Documentation. In addition, this Letter of Intent may be 

terminated at any time upon delivery of written notice to the other party (i) by UST, in its sole and 

absolute discretion, or (ii) by Sponsor, if a change in any law, regulation, rule or governmental order (or 

change in judicial or regulatory interpretation of any law, regulation or governmental order) would 

materially adversely impact the Transaction, the Sponsor or the Sponsor’s ability to raise capital. 

7. Governing Law. This Letter of Intent shall be governed by and construed in 

accordance with the laws of the State of New York. 
If the foregoing terms and conditions are acceptable to you, please execute and return to 

us the executed letter. This Letter of Intent may be signed in one or more counterparts, each of which 

may be an original or facsimile and all of which taken together shall constitute one and the same 

instrument. 

UNITED STATES DEPARTMENT OF THE 

TREASURY 

By: 

Name: 

Title: 

[Letter of Intent] 
[Letter of Intent] 

ACCEPTED AND AGREED: 

[SPONSOR] 

By: 

Name: 

Title: 
ANNEX I

***THE FOLLOWING DOES NOT CONSTITUTE A CAPITAL COMMITMENT BY UST*** 

LEGACY SECURITIES PUBLIC-PRIVATE INVESTMENT PARTNERSHIP 

SUMMARY OF INDICATIVE TERMS AND CONDITIONS

THE PARTNERSHIP An entity formed by the General Partner or an Affiliate of the General 

Partner as set forth under “The Partnership” on Schedule A.

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THE GENERAL PARTNER2 As set forth under “The General Partner” on Schedule A. 

UST The United States Department of the Treasury (“UST”). 

THE PRIVATE VEHICLES As set forth under “The Private Vehicles” on Schedule A, whether 

privately or publicly offered and whether or not formed for the 

purpose of investing in the Partnership. Any Private Vehicle that is 

not formed under the laws of any State of the United States shall 

invest in the Partnership indirectly through an entity formed under the 

laws of any State of the United States. References herein to the 

Private Vehicles shall be deemed to include any feeder vehicle 

formed by the General Partner or any of its Affiliates (defined below) 

to facilitate the participation of an investor in a Private Vehicle. 

PARTICIPATION IN THE 

PRIVATE VEHICLES 

Limited partners (including UST and the Private Vehicles) are 

referred to as the “Limited Partners,” and together with the General 

Partner are referred to as the “Partners.” Partners will subscribe for 

interests in the Partnership, which are referred to herein as “Interests.” 

The General Partner and its Affiliates will be required to comply with 

strict anti-money laundering, know-your-customer and United States 

Federal securities laws screening requirements with respect to each 

investor in the Private Vehicles (which screening requirements will 

take into account whether the Private Vehicles are publicly or 

privately offered), including transferees of interests therein. The 

General Partner will represent to UST that all investors in the Private 

Vehicles have been screened according to these established polices 

and procedures. 

The offering materials and governing documents of the Private 

Vehicles, together with any side letters entered into with the 

underlying investors (each, a “Side Letter”) will be subject to the 

review and approval of UST. Any offering materials used to market a 

direct or indirect interest in a Private Vehicle or the Partnership shall 

include in a prominent place a legend in substantially the same form 

as the legend on Schedule B. Any amendment or supplement to the 

governing documents of the Private Vehicles that would adversely 

 

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 UST may determine, in its sole discretion, to invest in more than one PPIF formed by a particular Sponsor in the 

event that all of the Private Vehicles investing in such additional PPIF are publicly offered (each such PPIF, a 

“Publicly Offered PPIF”). 2

 Certain PPIFs may be structured to provide for both a “general partner” and an “investment manager,” in which 

case appropriate modifications will be made to the PPIF Equity Term Sheet. 

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affect UST, the Partnership or the Partnership’s investment activities 

will require the written consent of UST. The General Partner will 

provide written notice to UST of any proposed amendment or 

supplement to the governing documents of the Private Vehicles or 

any such Side Letter at least ten (10) business days prior to such 

amendment or supplement becoming effective, which notice will be 

accompanied by an officer’s certificate stating whether such 

amendment adversely affects UST, the Partnership or the 

Partnership’s investment activities. Any consent or approval required 

from UST pursuant to this paragraph shall, subject to applicable law, 

regulation or governmental order, not be unreasonably withheld. 

“Affiliates” shall mean, with respect to any person or entity, any 

person or entity directly or indirectly Controlling, Controlled by or 

under common Control with such Person. 

“Control” shall mean the possession, direct or indirect, of the power 

to direct or cause the direction of the management and policies of a 

person or entity, whether through the ownership of voting shares, by 

contract or otherwise. The terms “Controlling” and “Controlled” 

shall be interpreted accordingly.

INVESTMENT OBJECTIVE The Partnership’s investment objective is to generate attractive 

returns for the Partners through long-term opportunistic investments 

in Eligible Assets (defined below) (“Investments”). The Partnership 

may also invest in Temporary Investments (defined below). 

ELIGIBLE ASSETS “Eligible Assets” are commercial mortgage backed securities and 

non-agency residential mortgage backed securities issued prior to 

2009 that were originally rated AAA or an equivalent rating by two or 

more nationally recognized statistical rating organizations without 

ratings enhancement and that are secured directly by the actual 

mortgage loans, leases or other assets and not other securities. At 

least ninety percent (90%) of the loans and other assets underlying 

any Eligible Asset must be situated in the United States. The Eligible 

Assets must be purchased solely from Financial Institutions from 

which the Secretary of the United States Department of the Treasury 

may purchase assets pursuant to Section 101(a)(1) of the Emergency 

Economic Stabilization Act of 2008, as amended (“EESA”). The 

term “Financial Institution” means any institution, including, but not 

limited to, any bank, savings association, credit union, security broker 

or dealer, or insurance company, established and regulated under the 

laws of the United States or any State, territory, or possession of the 

United States, the District of Columbia, Commonwealth of Puerto 

Rico, Commonwealth of Northern Mariana Islands, Guam, American 

Samoa, or the United States Virgin Islands, and having significant 

operations in the United States, but excluding any central bank of, or 

institution owned by, a foreign government; provided, however, if 

foreign government ownership of otherwise Eligible Assets results 

from extending financing to Financial Institutions that then failed or 

defaulted on such financing, such assets remain eligible for sale to the 

Partnership. For the avoidance of doubt, Eligible Assets do not 

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include any securities backed by loans and other assets ten percent 

(10%) or more of which are not situated in the United States. 

CAPITAL COMMITMENTS The capital commitments to the Partnership (“Capital Commitments”) 

of the Private Vehicles will equal at least $500 million at the Closing 

(defined below). The General Partner and its Affiliates (other than 

the Private Vehicles) shall make a direct (through the Partnership) or 

indirect (through any Private Vehicle formed to invest all or 

substantially all of its assets in the Partnership) Capital Commitment 

equal to at least $20 million, which Capital Commitment may not 

exceed 9.9% of the aggregate Capital Commitments of the General 

Partner and the Private Vehicles. The Capital Commitment of UST 

will equal the lesser of (i) the Capital Commitments of the Private 

Vehicles and the General Partner and (ii) the amount set forth under 

“Maximum UST Capital Commitment” on Schedule A. The 

aggregate indirect Capital Commitments of any investor individually 

or together with its Affiliates to the Private Vehicles as a result of (i) 

any investment by such investor or any of its Affiliates in a vehicle 

(including a Private Vehicle) formed for the purpose of directly or 

indirectly investing in the Partnership or (ii) any other investment 

decision by such investor or any of its Affiliates to directly or 

indirectly invest in the Partnership, may not in the aggregate exceed 

9.9% of the aggregate Capital Commitments to the Partnership. 

DIVERSIFICATION AND 

INVESTMENT LIMITATIONS

The Partnership will not, without the written consent of UST: 

• Acquire directly or indirectly through a flow-through entity a 

residual interest in a Real Estate Mortgage Investment Conduit; 

• invest in any securities or assets other than Eligible Assets and 

Temporary Investments; 

• enter into any derivative contract unless such contract is intended 

solely to hedge the Partnership’s interest rate exposure with 

respect to any debt obligation; 

• hedge any credit risks arising from Investments made by the 

Partnership; 

• directly or indirectly lend Eligible Assets or any economic 

interest therein for any purpose (including to facilitate delivery of 

a short sale); or 

• violate the covenants set forth under “Diversification and 

Investment Limitations” on Schedule A. 

CLOSINGS An initial closing (the “Closing” and the date thereof, the “Closing 

Date”) will be held as soon as practicable; provided that the Closing 

may not be held prior to August 5, 2009. Up to two (2) subsequent 

closings may occur at the discretion of the General Partner; provided

that the final closing will occur no later than six (6) months after the 

Closing Date. 

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Partners admitted at subsequent closings or increasing their 

percentage Capital Commitments at subsequent closings will make a 

capital contribution to the Partnership equal to the difference between 

(x) their pro rata share of capital contributions previously made for 

any Investments still held by the Partnership at the time of their 

admission or increase in percentage Capital Commitment and for 

organizational expenses, Partnership Expenses and repayments of 

Partnership indebtedness and (y) any amounts previously contributed 

by such Partner therefor, less such amount as is necessary to take into 

account any distributions theretofor made, plus additional amounts 

(“Additional Amounts”) on amounts previously funded by existing 

Partners for Investments still held by the Partnership at such time, 

organizational expenses, Partnership Expenses and repayments of 

Partnership indebtedness at the prime rate plus 2% from the date each 

such amount was funded to the date of the subsequent closing (which 

Additional Amounts will not be treated as capital contributions), and 

will share in any subsequent distribution and allocation of income, 

gain, loss or expense of the Partnership that is attributable to any such 

Investments. Amounts so paid will be refunded to existing Partners 

(or returned by the Partnership on their behalf) and any such amounts 

in respect of Investments, organizational expenses, Partnership 

expenses and repayments of indebtedness (but not the Additional 

Amounts thereon) will be added to their unpaid Capital Commitments 

and will be subject to recall (or re-investment, as applicable). 

Notwithstanding the foregoing, if the General Partner in its sole and 

absolute discretion determines that a pro rata payment by Partners at 

a subsequent closing would not appropriately reflect a material 

change in the value of an Investment then held by the Partnership, the 

General Partner may either (i) adjust the payment required to be made 

by Partners at such subsequent closing to appropriately reflect such 

change in value or (ii) exclude Limited Partners at such subsequent 

closing from participation in such Investment; provided that no 

Partner may acquire an interest in an existing Investment at a discount 

to the original acquisition cost of such Investment at or in connection 

with any subsequent closing at which the percentage Capital 

Commitment of UST is decreased without the written consent of 

UST. 

INVESTMENT PERIOD The obligation to fund Capital Commitments to make new 

Investments will expire on the third anniversary of the Closing Date 

(the “Investment Period”). As more fully described in the Partnership 

Agreement, following the expiration or termination of the Investment 

Period, all Partners will be released from any further obligation with 

respect to their undrawn Capital Commitments, except to the extent 

necessary to: (i) cover Partnership Expenses, (ii) repay Partnership 

indebtedness (provided that any drawdown of Capital Commitments 

following the expiration or termination of the Investment Period to 

repay Partnership indebtedness shall be subject to the prior written 

consent of UST) and (iii) complete Investments with respect to which 

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the Partnership or the General Partner has entered into a legally 

binding obligation to invest prior to such expiration or termination. 

TERMINATION OF THE 

INVESTMENT PERIOD

UST may terminate the Investment Period at any time on and after the 

one-year anniversary of the Closing Date; provided that such 

termination shall not take effect solely in the case of any Investment 

with respect to which the Partnership or the General Partner has 

entered into a legally binding obligation to invest prior to such 

termination. 

DRAWDOWNS Capital Commitments will be called down pro rata to Partners’ 

Capital Commitments in tranches (with a minimum drawdown of

10% of Capital Commitments), with a minimum of ten (10) calendar 

days’ prior notice to the Limited Partners. 

Pending investment or distribution by the Partnership, monies held by 

the Partnership may be invested in (i) cash, (ii) UST securities or (iii) 

money market mutual funds that (a) are registered with the Securities 

and Exchange Commission and regulated under Rule 2a-7 

promulgated under the Investment Company Act of 1940, as amended 

and (b) invest exclusively in direct obligations of the United States of 

America or obligations the prompt payment of the principal of and 

interest on which is unconditionally guaranteed by the United States 

of America (“Temporary Investments”). 

RIGHT TO RE-INVEST CAPITAL During the Investment Period, proceeds distributable to the Partners 

may be retained and re-invested by the General Partner as permitted 

under “Investment Period” above; provided that proceeds actually 

distributed to UST may not be recalled. For the avoidance of doubt, 

all new Investments will be funded on a pro rata basis based on 

Capital Commitments. 

DISTRIBUTIONS Any income from Investments received by the Partnership, including 

interest payments, principal repayments and proceeds from the 

disposition of Investments, in each case net of payments with respect 

to indebtedness and Partnership Expenses (“Investment Proceeds”), 

will be distributed as soon as practicable after receipt thereof, but in 

any event no later than thirty (30) calendar days following the end of 

each fiscal quarter in which such Investment Proceeds are received by 

the Partnership; provided that the General Partner will be entitled to 

withhold from any distributions amounts necessary to (i) create 

reasonable reserves for Partnership Expenses and the making of 

Investments (provided that such reserves for Partnership Expenses 

shall not exceed 0.10% of Capital Commitments without the written 

consent of UST), (ii) create reasonable reserves for repayment of 

indebtedness and (iii) make Investments as permitted under 

“Investment Period” above. Each distribution of Investment Proceeds 

shall initially be made to the Partners in proportion to each of their 

respective percentage interests in such Investment. Notwithstanding 

the previous sentence, Investment Proceeds which would otherwise 

be distributed to the Partners other than UST will be distributed in the 

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following amounts and order of priority: 

(i) First, 100% to such Partner until such Partner has received 

distributions of Investment Proceeds equal to the aggregate 

amount of capital contributions made to the Partnership by 

such Partner; and 

(ii) Second, the Applicable Percentage (defined below) to such 

Partner and the Warrant Percentage to the Noteholder (the 

distribution to the Noteholder described in this clause (ii) 

being referred to as “UST Warrant”). 

“Applicable Percentage” shall mean the difference between 100% and 

the Warrant Percentage. 

“Noteholder” shall mean UST, in its capacity as a holder of a 

contingent interest promissory note (the “Contingent Interest 

Promissory Note”) with respect to the UST Warrant. 

“Warrant Percentage” shall mean the effective blended percentage 

equal to (i) (A) 1.5%, in the event the Partnership has made a Half 

Turn Election (as defined in the Debt Term Sheet) or (B) 2.5%, in the 

event the Partnership has made a Full Turn Election (as defined in the 

Debt Term Sheet), in each case with respect to the Capital 

Commitments of the Private Vehicles and the General Partner up to 

the Capital Commitment of UST and (ii) 0% with respect to the 

Capital Commitments of the Private Vehicles and the General Partner 

in excess thereof. For the avoidance of doubt, the Warrant Percentage 

shall be determined as of the Closing Date and shall not be adjusted in 

the event the Partnership makes a Full Turn Election as of the Closing 

Date and subsequently makes a Half Turn Election. 

Generally, any tax payments made by the Partnership or withheld 

from proceeds received by the Partnership will be deemed to have 

been distributed to the Partners to whom such taxes are attributable. 

Distributions of income from Temporary Investments will be made 

among all Partners in proportion to their respective proportionate 

interests in the applicable Temporary Investments, as reasonably 

determined by the General Partner. 

IN-KIND DISTRIBUTIONS Distributions may only be made in kind in connection with the 

dissolution and winding up of the Partnership. Distributions in cash 

and in kind shall be made in pro rata portions to each Partner. 

GIVEBACK OBLIGATION Upon liquidation of the Partnership, the Noteholder will be required 

to contribute to the Partnership the amount, if any, by which 

cumulative UST Warrant distributions received by the Noteholder 

with respect to the Partners other than UST exceed the Warrant 

Percentage of the cumulative net profits earned by the Partners other 

than UST. 

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ALLOCATION OF PROFITS AND 

LOSSES

The Partnership will establish and maintain a capital account for each 

Partner. All items of income, gain, loss and deduction will be 

allocated to the Partners’ capital accounts in a manner generally 

consistent with the distribution procedures outlined under 

“Distributions” above. 

UST MANAGEMENT FEE The General Partner will be paid an annual fee (the “UST 

Management Fee”), quarterly in arrears, equal to: 

(i) During the Investment Period, 0.20% per annum of UST’s 

Capital Commitment as of the last day of the period to which 

the UST Management Fee relates; and 

(ii) Thereafter, 0.20% per annum of the lesser of (i) UST’s 

Capital Commitment and (ii) the fair market value of UST’s 

interest in the Partnership as of the last day of the period to 

which the UST Management Fee relates. 

The UST Management Fee may be paid out of distributable 

Investment Proceeds otherwise payable to UST but not from 

drawdowns of UST’s Capital Commitment.

ORGANIZATIONAL EXPENSES Each Partner (other than UST) will pay its pro rata share based on 

Capital Commitments of all legal, accounting, filing and other 

expenses incurred by the General Partner and its Affiliates in 

connection with organizing and establishing the Partnership. For the 

avoidance of doubt, UST shall not bear any portion of the expenses 

incurred in connection with the organization of the Private Vehicles 

and the offering of interests therein. 

GENERAL PARTNER EXPENSES Each of the General Partner and its Affiliates will be responsible for 

the expenses of providing their services to the Partnership, including 

overhead expenses (including systems and technology), office 

expenses and compensation of their employees. 

PARTNERSHIP EXPENSES Except as noted above, the Partnership will pay all reasonable 

expenses related to the operation of the Partnership, including fees, 

costs and expenses related to the investigation, development, 

purchase, holding and sale of Investments (including Investments that 

are not ultimately consummated or closed), fees, costs and expenses 

of any administrators, custodians, attorneys, accountants and other 

professionals, fees, costs and expenses incurred in connection with, 

borrowings by the Partnership (including as described in the Debt 

Term Sheet), certain taxes, the costs of any litigation (but not, for the 

avoidance of doubt, any losses incurred by the General Partner, its 

Affiliates, or any of their respective officers, directors, employees, 

shareholders, members or partners), directors and officers liability or 

other insurance (provided that the Partnership shall not bear the cost 

of any incremental premium associated with the purchase of 

insurance designed to insure the General Partner or any other party 

for any liability resulting from fraud, bad faith, willful misconduct, 

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breach of fiduciary duty, gross negligence, a violation of applicable 

securities laws, conduct that is the subject of a criminal proceeding 

where the insured party had no reasonable basis to believe that such 

conduct was lawful or a willful and material breach of the governing 

documents of the Partnership) and any fees or other governmental 

charges levied against the Partnership (“Partnership Expenses”). For 

the avoidance of doubt, Partnership Expenses shall not include any 

fees, costs or expenses of any third party engaged to monitor, or 

provide investment advice with respect to, the Partnership’s 

Investments. 

ALLOCATION OF INVESTMENT 

AND DISPOSITION 

OPPORTUNITIES

The General Partner will adopt and ensure compliance with a fair and 

equitable trade allocation policy reasonably satisfactory to UST. 

CONFLICT OF INTERESTS The General Partner will implement a conflict of interest mitigation 

plan reasonably satisfactory to UST. 

ETHICS The General Partner will implement a code of ethics reasonably 

satisfactory to UST. 

EXCLUSIVITY Restriction on Competing Fund. Without the written consent of 

UST, none of the General Partner or its Affiliates will, directly or 

indirectly, form, close on or accept commitments to another pooled 

investment fund for which any of them acts as the manager or 

primary source of investments and which has the primary objective of 

investing in Eligible Assets (other than (w) any feeder vehicle 

(including a Private Vehicle) formed to invest substantially all of its 

investable assets directly or indirectly in the Partnership, (x) any 

private REIT formed to invest at least a portion of its investable assets 

directly or indirectly in the Partnership, (y) any publicly offered 

vehicle or (z) any pooled investment fund formed to invest 

substantially all of its investable assets in Eligible Assets pursuant to 

any other program sponsored by the United States Federal 

government or its agencies or the Federal Reserve Bank of New 

York, including a Term Asset-Backed Securities Loan Facility) (other 

than the entities described in (w), (x), (y) and (z), a “Competing 

Fund”) on or prior to the earlier of (i) the date on which the 

Partnership has invested 85% of its Capital Commitments or (ii) the 

one-year anniversary of the Closing Date (such earlier date, the 

“Lock-Up Termination Date”); it being understood that the General 

Partner and its Affiliates may continue to manage any existing pooled 

investment fund or separate account or other similar vehicle with a 

primary investment objective similar to the Partnership in existence as 

of the Closing Date and disclosed in writing to UST prior to the 

Closing Date (provided that no new commitments are accepted in 

violation of this provision), and may establish or close any separate 

account at any time prior to or following the Closing Date. The 

General Partner will promptly notify UST in the event the General 

Partner or its Affiliates forms, closes on or accepts commitments to a 

Competing Fund following the Lock-Up Termination Date and prior 

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to the expiration or termination of the Investment Period. 

Notwithstanding the foregoing, without the written consent of UST, 

none of the General Partner or its Affiliates will, directly or indirectly, 

form, close on or accept commitments to an investment vehicle or a 

separate account formed for the specific purpose of co-investing 

alongside the Partnership in specific identified Eligible Assets or a 

specific identified portfolio of Eligible Assets prior to the expiration 

or termination of the Investment Period (a “Co-Investment Vehicle”); 

provided that the foregoing shall not apply to a Co-Investment 

Vehicle to the extent that (i) (A) the Partnership is legally or 

contractually prohibited (including under the “Diversification and 

Investment Limitations”) from acquiring such Eligible Asset(s) or (B) 

the acquisition by the Partnership of such Eligible Asset(s) would 

unreasonably limit diversification in the good faith judgment of the 

General Partner and (ii) the General Partner provides information 

regarding the investments made by such Co-Investment Vehicle in the 

monthly report referred to under “Reports and Financial Information” 

below. 

Restriction on Hedging Products. Without the written consent of 

UST, none of the General Partner or its Affiliates will, directly or 

indirectly, form, close on or accept commitments to any pooled 

investment fund which as part of its investment program purports to 

hedge credit risks arising from all or substantially all of the 

Partnership’s or any other PPIF’s (as defined below) portfolio of 

Investments. 

Restrictions on Certain Transactions. Without the written consent of 

UST, the Partnership will not, directly or indirectly, invest in, acquire 

Investments from, nor sell Investments to, (i) the General Partner or 

any of its Affiliates (which, for this purpose, shall also include any 

entity in which the General Partner, Key Persons and their respective 

Affiliates hold at least 5% of any class of equity or debt securities), 

(ii) any investor that represents 9.9% or more of the aggregate Capital 

Commitments of the Private Vehicles or any of its Affiliates or (iii) 

any other investment vehicle formed pursuant to the United States 

Department of the Treasury’s Public Private Investment Program. 

Restrictions on Transactions with Affiliates. Apart from transactions 

the terms of which are expressly contemplated or approved by the 

Partnership Agreement, the General Partner and its Affiliates will not 

engage in any transaction with the Partnership without the written 

consent of UST, which consent may be withheld in its sole and 

absolute discretion. 

Allocation of Business Time. The General Partner shall, and shall 

cause its Affiliates to, devote to the Partnership and its Investments 

such business time as shall be necessary to conduct the Partnership’s 

business and affairs in an appropriate manner, including, without 

limitation, seeking to maximize the returns with respect to the 

Partnership’s Investments throughout the term of the Partnership. 

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REMOVAL OF THE GENERAL 

PARTNER

The General Partner may be removed (i) upon the election of UST at 

any time; provided that the written consent of at least a majority in 

interest of investors in the Private Vehicles is obtained; and provided 

further that the General Partner may elect to provide for removal of 

the General Partner upon the election of UST and such number of 

investors in the Partnership as would represent, together with UST, at 

least a majority in interest of investors in the Partnership (any vote 

pursuant to this clause (i), a “No Fault Vote”) or (ii) upon the election 

of UST following (A) the occurrence of an event of Cause, (B) the 

occurrence of a Key Person Event (provided that the written consent 

of at least one third in interest of investors in the Private Vehicles is 

obtained; and provided, further, that the General Partner has been 

given a thirty (30) calendar day grace period to cure such Key Person 

Event) or (C) the removal of the General Partner or an Affiliate 

thereof as the general partner of any Private Vehicle (a “Private 

Vehicle Removal,” and, any removal pursuant to the foregoing clause 

(i) or (ii), a “Removal Election”). Prior to the effectiveness of any 

such removal following a Removal Election, the General Partner shall 

consult with the investor advisory committee of the Private Vehicles 

to nominate a substitute general partner for approval by UST and a 

majority in interest of investors in the Private Vehicles. 

“Cause” shall mean (i) a breach of the General Partner’s obligation to 

make capital contributions or to bear the General Partner expenses in 

accordance with the Partnership Agreement that is not cured within 

five (5) calendar days, (ii) a finding by any court or governmental 

body of competent jurisdiction or an admission by any Relevant 

Person (x) of fraud, gross negligence, bad faith or willful misconduct 

by any Relevant Person, (y) of a material violation of applicable 

securities laws by any Relevant Person or (z) that the General Partner 

has otherwise committed a material breach of the Partnership 

Agreement, including of the representations and warranties contained 

therein, or (iii) a conviction of, or plea of guilty or nolo contendere by 

any Relevant Person in respect of a felony. The General Partner will 

immediately give notice to UST of the occurrence of any event 

constituting Cause. 

A “Relevant Person” shall mean the General Partner, any person that 

possesses, directly or indirectly, the power to direct or cause the 

direction of the management and policies of the General Partner, 

whether through the ownership of voting shares, by contract or 

otherwise, and any of their respective senior officers and senior 

executives including, without limitation, any Key Person. 

A “Key Person” shall have the meaning set forth under “Key Person” 

on Schedule A.

A “Key Person Event” shall have the meaning set forth under “Key 

Person Event” on Schedule A. The General Partner will immediately 

give notice to UST of the occurrence of any event constituting a Key 

Person Event. 

From and after (A) a No Fault Vote, (B) the occurrence of an event of 

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Cause, (C) the occurrence of a Key Person Event or (D) a Private 

Vehicle Removal, until the earlier to occur of (x) receipt of the 

written consent of UST or (y) the replacement of the General Partner, 

(i) the Partnership shall not directly or indirectly make any new 

Investments (other than Investments with respect to which the 

Partnership or the General Partner has entered into a legally binding 

obligation to invest prior to such occurrence or removal) and (ii) the 

Partnership shall not directly or indirectly dispose of any Investments 

except to the extent the General Partner determines in good faith that 

a disposition is necessary to avoid a material loss to the Partnership. 

The UST Management Fee shall cease to accrue following a Removal 

Election. 

TERM The Partnership will dissolve eight (8) years from the Closing Date 

but may be extended at the discretion of the General Partner with the 

written consent of UST for up to two (2) consecutive one-year 

periods. The Partnership is subject to earlier dissolution and 

termination (i) after the expiration or termination of the Investment 

Period, upon the liquidation of all of the Investments, (ii) upon the 

bankruptcy, dissolution or any similar event of withdrawal of the 

General Partner (unless UST agrees in writing to continue the 

business of the Partnership and to the appointment of another general 

partner) or (iii) if a change in any law, regulation, rule or 

governmental order (or change in judicial or regulatory interpretation 

of any law, regulation or governmental order) would materially 

adversely impact the General Partner, at least a majority in interest of 

investors in the Private Vehicles or their respective affiliates as a 

result of their management of, or participation in, the Partnership. 

The UST Management Fee shall cease to accrue upon dissolution of 

the Partnership. 

WITHDRAWALS Partners generally may not withdraw from the Partnership. Investors 

in the Private Vehicles may only withdraw for legal reasons and, 

upon any such withdrawal, an investor may only receive a note 

payable with distributions to the Private Vehicles. 

TRANSFER OF INTERESTS Neither the General Partner nor the Private Vehicles may, directly or 

indirectly, sell, assign, pledge, exchange or otherwise transfer its 

Interest, in whole or in part, without the prior written consent of UST. 

Investors in the Private Vehicles may, directly or indirectly, sell, 

assign, pledge, exchange or otherwise transfer their interest in the 

Private Vehicles provided that the General Partner ensures that each 

transferee is in compliance with the screening requirements described 

under “Participation in The Private Vehicles” above and each transfer 

is in compliance with applicable securities laws. 

REPORTS AND FINANCIAL 

INFORMATION

Monthly Reports. Within fifteen (15) calendar days after the end of 

each month, the General Partner will deliver to UST and the Special 

Inspector General of the TARP (“SIGTARP”) a monthly report, 

including: 

11 
• a description of the Partnership’s holdings (including CUSIP or 

ISIN, date of purchase, security description, par value, cost, fair 

market value and accrued income); 

• details of securities transactions (including purchases and sales); 

• details of capital activity (including contributions and 

withdrawals of securities and cash); 

• a summary of the change in the fair market value of the 

Partnership’s Investments; 

• performance data (including 1-month, 3-month, year-to-date, 

latest 12-months, since inception (cumulative) and since inception 

(annualized)); 

• management discussion and analysis of the Partnership’s 

investment activities; and 

• an analysis of current market conditions. 

The General Partner will furnish such additional periodic or other 

reports to UST or SIGTARP as may be requested by UST or 

SIGTARP; provided that if such requested report (i) is not (x) of a 

type customarily provided by investment fund managers or (y) 

required by law and (ii) will require the General Partner to incur a 

substantial expense to prepare, UST shall bear the reasonable 

expenses of the preparation of such requested report. 

The General Partner shall provide prompt written notice to UST and 

SIGTARP of the non-payment by the Partnership or any subsidiary 

thereof of any amount in respect of indebtedness. 

Financial Statements. Within one hundred twenty (120) calendar 

days after the end of each fiscal year, the General Partner will deliver 

to UST and SIGTARP audited financial statements of the Partnership 

prepared in accordance with GAAP. 

Within sixty (60) calendar days after the end of each fiscal quarter 

(except the last fiscal quarter), the General Partner will deliver to 

UST and SIGTARP unaudited financial statements of the Partnership 

prepared in accordance with GAAP. 

Annual Budget for Partnership. The General Partner will provide to 

UST and SIGTARP an annual budget of Partnership Expenses no 

later than thirty (30) days prior to the beginning of the next fiscal 

year. 

Access to Information. The General Partner will provide UST, 

SIGTARP, the Government Accountability Office and their 

respective advisors and representatives access to the books and 

records of the Partnership. The General Partner agrees to cause the 

Key Persons and other investment professionals to be available to 

discuss the Partnership and its activities at the request of UST. In 

addition, the General Partner and its Affiliates will provide UST and 

its advisors and representatives access to the books and records of the 

Private Vehicles, including any information in the possession of the 

12 
General Partner and its Affiliates regarding (i) the beneficial owners 

of interests in the Private Vehicles in their capacity as beneficial 

owners of the Private Vehicles or (ii) notices of events of default, 

material litigation or other material events. 

Notice. The General Partner will provide UST and SIGTARP notice 

of Events of Default (as defined in the Debt Term Sheet), material 

litigation, material regulatory investigations and other material events 

(including defaults or other adverse events in respect of Third Party 

Debt (as defined in the Debt Term Sheet)). 

Information on Eligible Assets. Following the Closing Date, the 

General Partner will provide UST, SIGTARP, the Government 

Accountability Office and their respective advisors and 

representatives a monthly report within fifteen (15) calendar days 

after the end of each month with respect to information regarding, 

allocation of investment and disposition opportunities among and 

purchases and sales of Eligible Assets by other pooled investment 

funds and separate accounts for which it or any of its Affiliates acts as 

the manager or primary source of investments (including CUSIP or 

ISIN, date of purchase, security description, par value, cost, fair 

market value and accrued income); provided that the General Partner 

will not be required to identify by name the investors in such pooled 

investment funds or the clients with respect to such separate accounts. 

In addition, the General Partner will provide UST, SIGTARP, the 

Government Accountability Office and their respective advisors and 

representatives access to any additional information requested 

regarding the subject matter of such reports. 

The General Partner shall maintain a document retention policy 

reasonably satisfactory to UST. 

BORROWINGS AND 

GUARANTEES

The General Partner will have the right, as its option, to cause the 

Partnership to incur indebtedness as described in the Debt Term 

Sheet; provided that the Partnership and its subsidiaries will not, 

directly or indirectly, incur, create, issue, assume or guarantee any 

Additional Debt (as defined in the Debt Term Sheet) without the 

written consent of UST, which consent shall not be unreasonably 

withheld; and provided, further, that if no Loans (as defined in the 

Debt Term Sheet) are outstanding, the Partnership and its subsidiaries 

will not, directly or indirectly, incur, create, issue, assume or 

guarantee any indebtedness unless on a pro forma basis the Leverage 

Ratio (as defined in the Debt Term Sheet) as of such date does not 

exceed the maximum leverage allowed pursuant to TALF Debt (as 

defined in the Debt Term Sheet). For the avoidance of doubt, the 

General Partner shall not have the right to (i) pledge the Capital 

Commitment or unpaid Capital Commitment of UST to any person, 

including a lender or (ii) otherwise assign the right to call capital from 

UST. 

TAX CONSIDERATIONS It is intended that the Partnership will be treated as a partnership, and 

not an association taxable as a corporation for U.S. federal income tax 

13 
purposes, and will be operated in a manner such that it should not be 

taxable as a corporation for U.S. federal income tax purposes. 

AMENDMENTS TO THE 

PARTNERSHIP AGREEMENT;

MOST FAVORED NATIONS

The General Partner shall not amend or supplement the Partnership 

Agreement without obtaining the prior written consent of UST. 

UST shall have the right to elect the benefit of any provision of the 

governing documents of the Private Vehicles and any Side Letter that 

has the effect of benefiting any investor in the Private Vehicles (other 

than the General Partner and its Affiliates and their respective 

officers, directors or employees) in a manner more favorable than the 

rights and benefits established in favor of UST by the Partnership 

Agreement, other than any rights or benefits established in favor of 

any investor in the Private Vehicles by reason of the fact that such 

investor is subject to any laws, rules or regulations to which UST is 

not also subject. 

VOTING The direct and indirect interests in the Partnership of the General 

Partner and any of its Affiliates shall be non-voting interests. 

COMPLIANCE WITH LAW Notwithstanding anything to the contrary contained herein, the 

Partnership, the General Partner and the Private Vehicles shall 

comply in all respects with (i) EESA, as implemented by any 

guidance or regulations issued and/or to be issued thereunder and (ii) 

all other applicable laws and regulations. 

For the avoidance of doubt, the General Partner will comply with the 

Investment Advisers Act of 1940, including, but not limited to, its: 

antifraud provisions and its rules regarding record keeping, contracts, 

advertising, custody of client funds and assets, disclosure and 

transparency. 

The General Partner hereby agrees based on its analysis and judgment 

and subject to the overall objective of maximizing the value of the 

Partnership’s investments and the General Partner’s fiduciary duties, 

(i) to consent, on behalf of the Partnership, to reasonable requests 

from servicers or trustees for approval to participate in UST’s Making 

Home Affordable Program (“Making Home Affordable”), or for 

approval to implement other reasonable loss mitigation measures 

(including but not limited to, term extensions, rate reductions, 

principal write downs, or removal of caps on the percentage of loans 

that may be modified within the securitization structure) and (ii) 

where the Partnership acquires 100% of the residential mortgage 

backed securities that are backed by a particular pool of residential 

mortgage loans, to instruct the servicer or trustee of such securities, if 

such servicer or trustee is participating in Making Home Affordable, 

to include such pool of residential mortgage loans in Making Home 

Affordable. The General Partner shall only be required to so consent, 

or instruct (as applicable) if it receives reasonably requested 

information from the servicer or the trustee (as applicable) and access 

to appropriate individuals at the servicer or the trustee (as applicable) 

which allow the General Partner to make an independent analysis that 

14 
15 

the consent or instruction (as applicable) is consistent with the 

General Partner’s duties to the partnership. For the avoidance of 

doubt, PPIFs are eligible to receive their share of any standard 

investor subsidies payable to them under Making Home Affordable 

and UST’s Home Affordable Modification Program. 

REPRESENTATIONS AND 

WARRANTIES

The Partnership Agreement or other mutually agreed upon document 

will contain representations and warranties by the General Partner, 

including with respect to matters set forth in the Preliminary 

Compliance Due Diligence Questionnaire, the Preliminary Legal Due 

Diligence Questionnaire and as otherwise deemed applicable by UST. 

OPINIONS UST will receive customary opinions from counsel to the General 

Partner reasonably satisfactory to UST. 

OTHER TERM SHEETS The terms and conditions of (a) the investment by UST in Legacy 

Securities Public-Private Investment Funds (“PPIFs”) formed by 

selected sponsors and (b) the senior secured credit facilities to be 

provided by UST to such PPIFs (other than any Publicly Offered 

PPIF), will be substantially similar in all material respects, except 

with respect to the terms and conditions set forth under (i) 

“Affiliates,” “Maximum UST Capital Commitment,” “Diversification 

and Investment Limitations,” “Relevant Person,” “Key Person” and 

“Key Person Event” in the Equity Term Sheet and (ii) “Maximum 

UST Debt Amount” in the Debt Term Sheet, which terms and 

conditions may be determined separately with respect to each PPIF. 

GOVERNING LAW The law of the State of Delaware (subject to applicable Federal law). 
SCHEDULE B

The United States Department of the Treasury (“UST”) has not participated in the preparation of this 

[offering material] or made any representation regarding, and expressly disclaims any liability or 

responsibility to any investor in the [Private Vehicle] for, the accuracy, completeness or correctness of 

any of the materials contained herein. Without limitation of the foregoing, UST does not approve or 

disapprove of any tax disclosure or advice set forth herein. 

1 
ANNEX II

***THE FOLLOWING DOES NOT CONSTITUTE A CAPITAL COMMITMENT BY UST*** 

LEGACY SECURITIES PUBLIC-PRIVATE INVESTMENT PARTNERSHIP

SUMMARY OF INDICATIVE TERMS AND CONDITIONS OF UST DEBT1

FINANCING OVERVIEW The Borrower (as defined below) will utilize the proceeds of 

the Capital Commitments and the Loans (as defined below) to 

acquire (either directly or through subsidiaries) Eligible Assets. 

Concurrent with the execution of the Letter of Intent, the 

Borrower will have the option to elect UST leverage of up to 

100% of the Capital Commitments (a “Full Turn Election”) or 

up to 50% of the Capital Commitments (a “Half Turn 

Election”) of all Partners. If the Borrower makes a Full Turn 

Election, the Warrant Percentage will equal 2.5% and no 

additional debt other than the UST leverage will be permitted. 

If the Borrower makes a Half Turn Election, the Warrant 

Percentage will equal 1.5% and additional third party debt will 

be permitted as described below. If the Borrower has made a 

Full Turn Election, at any time after the Closing Date during 

the Investment Period, the Borrower may make a Half Turn 

Election if, concurrently with such election, the Borrower 

would otherwise be in compliance on a pro forma basis with the 

provisions of the Credit Documentation (as defined below) that 

are applicable when a Half Turn Election is in effect, and the 

Borrower repays the Loans so that the outstanding Loans do not 

exceed the amount permitted to be outstanding if a Half Turn 

Election were then in effect. However, the Warrant Percentage 

will not be adjusted. The Full Turn Election will not be 

subsequently available if the Borrower makes a Half Turn 

Election. 

If a Half Turn Election is in effect, subject to compliance with 

the specified incurrence-based leverage test and the specified 

asset coverage test described below, the Borrower may also 

finance Eligible Assets using proceeds of borrowings of TALF 

Debt (as defined below) and proceeds of borrowings of 

Additional Debt (as defined below) (collectively, “Third Party 

Debt”). Eligible Assets financed with Third Party Debt must be 

financed, acquired and held through wholly owned financing 

subsidiaries of the Borrower (“Financing Subsidiaries”), which 

subsidiaries may be capitalized with proceeds of Capital 

Commitments and the Loans. Third Party Debt will be recourse 

 

1

 All capitalized terms used but not defined herein shall have the meaning given to them in the 

Legacy Securities Public-Private Investment Partnership Summary of Indicative Terms and 

Conditions (the “Equity Term Sheet”). 

1 
 

solely to the applicable Financing Subsidiary and not to the 

Borrower or any other Financing Subsidiary. 

Investment Proceeds held by the Borrower will be allocated in 

accordance with the Priority of Payments (as defined below) 

waterfall to pay certain expenses, interest on the Loans and 

subject to compliance with the specified incurrence-based 

leverage test and the specified asset coverage test described 

below, during the Investment Period, to acquire (including, if a 

Half Turn Election is in effect, through contributions to 

Financing Subsidiaries, to allow Financing Subsidiaries to 

acquire) additional Eligible Assets or to make distributions to 

the Partners and repay Loans. After the Investment Period, 

Investment Proceeds not required to pay interest and specified 

expenses will be allocated to repay Loans and to make 

distributions to Partners in accordance with an allocation 

formula described as part of the Priority of Payments waterfall. 

Investment Proceeds received from Investments held by 

Financing Subsidiaries must be utilized by such entities to 

repay Third Party Debt to the extent required by the relevant 

lender and any surplus proceeds, to the extent permitted by the 

terms of such Third Party Debt, must be distributed to the 

Borrower to be allocated in accordance with the Priority of 

Payments waterfall. 

Asset coverage shall be calculated by reference to the Market 

Value (as defined below) of all Eligible Assets and Temporary 

Investments held by the Borrower and the Market Value of all 

Eligible Assets and Temporary Investments held by a Financing 

Subsidiary net of the amount of Third Party Debt outstanding at 

such Financing Subsidiary. 

A third-party Valuation Agent (as defined below) will be 

responsible for calculation of the Market Value of Eligible 

Assets and Temporary Investments on a monthly basis. 

BORROWER The Partnership (in such capacity, the “Borrower”). 

ADMINISTRATIVE AGENT AND 

COLLATERAL AGENT

UST or its designee (in such capacities, the “Agent”). 

CUSTODIAN AND COLLATERAL 

ADMINISTRATOR 

An entity to be named by the Lender, subject to reasonable 

approval by the General Partner2

 (in such capacities, the 

“Custodian”). The Custodian will provide agreed-upon 

periodic reports and verification of applicable tests. Fees and 

expenses of the Custodian are to be treated as expenses of the 

 

2 If the Partnership has an investment manager, references in this Debt Term Sheet to the General Partner 

acting in a discretionary capacity shall be deemed to be references to such investment manager. 

2 
 

Borrower. 

VALUATION AGENT3 An entity to be named by the Lender, subject to reasonable 

approval by the General Partner (in such capacity, the 

“Valuation Agent”). The Valuation Agent will make the 

determinations as described in the definition of “Market Value” 

below. Fees and expenses of the Valuation Agent are to be 

treated as expenses of the Borrower. 

LENDER UST (the “Lender”). 

CLOSING DATE The Closing Date. 

TYPE AND AMOUNT OF CREDIT 

FACILITY

A senior secured multiple-draw term loan facility (the 

“Facility”; the loans thereunder, the “Loans”) in an aggregate 

outstanding principal amount not exceeding, on the date of any 

drawing, the lesser of (x) when a Half Turn Election is in effect, 

50%, and when a Full Turn Election is in effect, 100% of the 

aggregate drawn Capital Commitments of all Partners, as of 

such date and (y) an amount set forth on Schedule A of the 

Equity Term Sheet (the “Maximum UST Debt Amount”). The 

amount of Loans that may be borrowed on any date is the 

“Available Amount” on such date. Recourse related to the 

Facility shall be limited solely to the Partnership and its assets, 

and shall not include the Limited Partners or the General 

Partner, Sponsor, Advisor or sub-advisor to the Partnership. 

AVAILABILITY The Loans, up to the Available Amount, will be available to be 

drawn commencing on the Closing Date through and including 

the last day of the Investment Period; provided that Loans will 

not be available to the Borrower during the period that investors 

in the Private Vehicle(s) have voluntary withdrawal rights with 

respect to their respective capital commitments in the Private 

Vehicle(s) (subject to the exceptions in “Withdrawals” 

described in the Equity Term Sheet). Loans repaid or prepaid 

may not be re-borrowed and shall reduce the Maximum UST 

Debt Amount. 

MATURITY The Loans shall be due and payable on the earlier of (i) ten 

years from the Closing Date and (ii) the expiration, termination 

or dissolution of the Partnership (the “Maturity Date”).

PURPOSE To finance the purchase of Eligible Assets in a manner 

consistent with the “Investment Objective” described in the 

Equity Term Sheet. 

 

3

 The same Valuation Agent will be used for all PPIFs. Lender will also name a back-up Valuation 

Agent, subject to reasonable approval by the General Partner. 

3 
 

ACCRUAL PERIOD Initially the period from and including the Closing Date to but 

excluding the first Loan Payment Date, and thereafter each 

subsequent period from and including a Loan Payment Date to 

but excluding the next Loan Payment Date (the “Accrual 

Period”). 

DETERMINATION DATE The last business day of each calendar month; provided that the 

initial Determination Date shall occur in the month following 

the month in which the Closing Date occurs and the final 

Determination Date shall occur on the Maturity Date (the 

“Determination Date”). 

LOAN PAYMENT DATE The 5th business day following each Determination Date; 

provided that the final Loan Payment Date shall occur on the 

Maturity Date (each a “Loan Payment Date”). 

PRINCIPAL AMOUNT The aggregate principal amount of Loans outstanding as of 

any date of determination (the “Principal Amount”). 

INTEREST RATES As set forth on Exhibit A. 

FEES None. 

COLLECTION PERIOD Initially the period from and including the Closing Date to and 

including the first Determination Date, and thereafter each 

subsequent period from but excluding a Determination Date to 

and including the next Determination Date; provided that the 

final such period shall end on the Maturity Date (each a 

“Collection Period”). 

INTEREST AMOUNT For any Loan Payment Date, the amount of interest accrued on 

the Principal Amount from time to time outstanding during the 

preceding Accrual Period in accordance with Exhibit A (the 

“Interest Amount”). 

COLLATERAL The obligations of the Borrower in respect of the Facility and at 

the Borrower’s option, in respect of Permitted Interest Rate 

Hedges (as defined below) shall be secured by, in each case, to 

the extent owned by the Borrower (a) a perfected first priority 

security interest in all of the Investments, including Eligible 

Assets and Temporary Investments owned by the Borrower, (b) 

a pledge by the Borrower of 100% of the equity interests of the 

Financing Subsidiaries owned by the Borrower, (c) the 

Borrower’s rights under Permitted Interest Rate Hedges, (d) all 

other existing and future assets and property of the Borrower, 

including the Custodial Account and the Interest Reserve 

Account (as such terms are defined below) and (e) any and all 

proceeds of the foregoing (collectively, the “Collateral”). 

Notwithstanding the foregoing, (i) if a Half Turn Election is in 

effect, in connection with the incurrence of permitted Third 

Party Debt by a Financing Subsidiary, Eligible Assets may be 

4 
 

contributed to such Financing Subsidiary or may be acquired by 

such Financing Subsidiary and will not constitute or will cease 

to constitute, as the case may be, Collateral and will be 

available to secure such Third Party Debt and (ii) the Borrower 

may elect to secure Permitted Interest Rate Hedges with cash 

collateral on customary terms, in which case such collateral will 

not constitute Collateral and will not be included in the 

calculation of the Asset Coverage Ratio (as defined below) or 

the Leverage Ratio (as defined below). 

CUSTODIAL ACCOUNT Eligible Assets and Temporary Investments held by the 

Borrower will be maintained in a Custodial Account (the 

“Custodial Account”). All Investment Proceeds in respect of 

Investments held by the Borrower (but not the Investment 

Proceeds from Investments held by any Financing Subsidiary 

unless and until such proceeds are distributed to the Borrower 

by such Financing Subsidiary) received during each 

Collection Period shall be deposited into the Custodial 

Account for allocation and distribution in accordance with the 

Priority of Payments on the related Loan Payment Date, 

except in the instance of a withdrawal by the General Partner 

in accordance with the conditions specified therein. Amounts 

on deposit in the Custodial Account may be invested in 

Temporary Investments as determined by the General Partner. 

INTEREST RESERVE ACCOUNT The Borrower shall establish an interest reserve account (the 

“Interest Reserve Account”) with the Custodian for the benefit 

of the Lender. On the date of the initial Loan, the Borrower 

shall deposit into the Interest Reserve Account, which may 

include proceeds from Loans, an amount equal to the amount 

of interest that the Custodian reasonably determines will 

accrue on the outstanding Loans during the three Accrual 

Periods following such date based on the Interest Rate (as 

defined in Exhibit A) and taking into account the effect of any 

Permitted Interest Rate Hedges. On each Loan Payment Date, 

on each date any payment is made on the Loans and on the 

date of any additional Loan, the Custodian shall recalculate 

such amount as of the first day of the current Accrual Period 

or date of such Loan or payment, as the case may be. The 

amount so determined from time to time is the “Required 

Interest Reserve Amount”. Amounts in the Interest Reserve 

Account may be invested in Temporary Investments. 

OPTIONAL PREPAYMENTS Loans may be prepaid at any time in whole or in part at the 

option of the Borrower with funds available for such purpose as 

provided under the Priority of Payments or with capital 

contributions made by the Partners, in a minimum principal 

amount and in multiples to be agreed upon, without premium or 

penalty. 

5 
 

PRIORITY OF PAYMENTS On each Loan Payment Date, amounts on deposit in the 

Custodial Account allocable to the preceding Collection 

Period shall be applied in accordance with the priority shown 

in Exhibit B (the “Priority of Payments”). 

INITIAL CONDITIONS The availability of the Facility shall be conditioned upon 

satisfaction of, among other things, the following conditions 

precedent on or prior to the first borrowing date: 

(a) The Borrower shall have executed and delivered 

satisfactory definitive financing documentation with 

respect to the Facility (the “Credit Documentation”); 

(b) The Lender, the Agent, the Custodian and the 

Valuation Agent shall have received all fees required to 

be paid, and all expenses for which invoices have been 

presented, on or before the Closing Date; 

(c) Receipt from the General Partner of a representation 

stating that all material governmental and third party 

approvals necessary to be obtained by the Partnership 

and its subsidiaries in connection with the financing 

contemplated hereby and the continuing operations of 

the Partnership and its subsidiaries (including Partner 

approvals, if any) shall have been obtained on 

satisfactory terms and shall be in full force and effect; 

(d) The Agent shall have received the results of a recent 

lien search in each relevant jurisdiction with respect to 

the Borrower, and such search shall reveal no liens on 

any of the assets of the Borrower; 

(e) The Lender, the Agent, the Custodian and the 

Valuation Agent shall have received such legal 

opinions (including opinions from counsel to the 

Borrower), documents and other instruments as are 

customary for transactions of this type or as they may 

reasonably request; 

(f) The Partnership shall have raised a minimum of $500 

million in Capital Commitments from investors, other 

than UST, which shall be available under the terms of 

the governing documents of the Partnership to be 

contributed to the Borrower (through the Partnership); 

(g) The Lender shall have satisfactorily completed all due 

diligence including legal, compliance and business due 

diligence and shall have received copies of all 

governing documents and subscription agreements of 

the Partnership and related Side Letters (Lender 

intends, subject to applicable law, regulation or 

6 
 

governmental order, to hold this information 

confidential); 

(h) All representations and warranties of the Borrower 

shall be true and correct in all material respects, or, in 

the case of representations and warranties qualified by 

materiality, in all respects; 

(i) The Borrower shall have complied with all affirmative 

and negative covenants in the Credit Documentation 

and no incipient or matured Event of Default shall be 

continuing; and 

(j) The Lender shall have received an officers’ certificate 

with respect to the matters in clauses (c), (f), (h) and (i) 

above and such other documentation and certificates as 

shall be reasonably requested by the Lender to 

evidence satisfaction of the foregoing conditions. 

ON-GOING CONDITIONS The making of each Loan shall be conditioned upon: 

(a) Receipt by the Agent and the Lender of a customary 

borrowing notice; 

(b) The accuracy in all material respects, or, in the case of 

representations and warranties qualified by materiality, 

in all respects, of all representations and warranties in 

the Credit Documentation; 

(c) There being no incipient or matured Event of Default in 

existence at the time of, or after giving effect to the 

making of, such Loan; 

(d) The amount of Loans made on any borrowing date not 

exceeding the Available Amount; 

(e) The Asset Coverage Test (as defined below) and, if the 

Half Turn Election is in effect, the Leverage Ratio Test 

(as defined below) will be satisfied, on a pro forma

basis after giving effect to the borrowing to be made on 

such borrowing date and the use of proceeds thereof, 

and after giving effect to all distributions to be made on 

such borrowing date under clauses A.4, A.6, A.7, A.8, 

A.9 and A.10 under Priority of Payments; 

(f) Receipt by the Agent and the Lender of a certificate of 

the General Partner to the effect set forth in clauses (b), 

(c) and (e) above and setting forth, in the case of clause 

(e), in reasonable detail the calculations supporting 

such certification and certifying that the Borrower 

owns only Eligible Assets, Temporary Investments and 

7 
 

the equity interests of its Financing Subsidiaries; and 

(g) The deposit into the Interest Reserve Account of the 

amount if any that will cause the amount on deposit 

therein to equal the Required Interest Reserve Amount 

on the date of such Loan. 

CERTAIN DOCUMENTATION 

MATTERS

The Credit Documentation shall contain representations, 

warranties, covenants and events of default customary for 

financings of this type, with exceptions, baskets, materiality 

qualifications and grace periods, as applicable, satisfactory to 

the Lender and other terms deemed appropriate by the Lender 

with respect to the Partnership, the Borrower, its subsidiaries 

and the General Partner, including, without limitation: 

REPRESENTATIONS AND 

WARRANTIES

Customary for financings of this type, including: Financial 

statements; absence of material undisclosed liabilities; 

organizational existence; compliance with law (including, to the 

extent applicable, the Emergency Economic Stabilization Act 

of 2008, as amended (“EESA”) and the Employ American 

Workers Act (“EAWA”)); no government or third party 

approvals or consents required; organizational power and 

authority; enforceability of Credit Documentation; no conflict 

with law, Partnership organizational documents or material 

contractual obligations; no material litigation; no default; 

ownership of property and rights in Collateral; no liens or 

adverse claims, other than permitted liens; taxes; Federal 

Reserve regulations; ERISA; Investment Company Act; 

subsidiaries; accuracy of disclosure; USA PATRIOT Act and 

Anti-Money laundering; and creation, validity, perfection and 

priority of security interests. 

AFFIRMATIVE COVENANTS Customary for financings of this type, including: 

(a) Delivery of audited annual financial statements of the 

Partnership and its subsidiaries within one hundred 

twenty (120) calendar days after the end of each fiscal 

year, unaudited quarterly financial statements of the 

Partnership and its subsidiaries within sixty (60) 

calendar days after the end of each fiscal quarter, 

monthly reports (as set forth in Equity Term Sheet) 

within fifteen (15) calendar days after the end of each 

month, or if the Borrower is not in compliance with the 

Asset Coverage Test, weekly reports (including 

delivery of Market Value reports on all Eligible Assets 

and Temporary Investments owned by the Borrower 

and the Financing Subsidiaries and current calculations 

of the Asset Coverage Ratio and, if the Half Turn 

Election is in effect, the Leverage Ratio), annual 

accountants’ letters and reports, monthly officers’ 

certificates and other information reasonably requested 

8 
 

by the Lender; 

(b) Delivery of Eligible Assets and Temporary Investments 

to Custodian to be held in Custodial Account, together 

with certificate certifying as to ownership, CUSIP, par 

value, cost basis and Market Value as of the day of 

purchase; 

(c) Notices of Events of Default, material litigation, other 

material events (including defaults or other adverse 

events in respect of Third Party Debt); 

(d) Compliance with requirements of EESA (including, 

establishments of an expense policy and a 

compensation committee) and EAWA, if applicable; 

(e) Compliance with investment policies (including 

diversification) adopted by the Borrower as of the 

Closing Date, which shall be reasonably satisfactory to 

the Lender; 

(f) Implementation of a conflict of interest mitigation plan 

effective as of the Closing Date, which shall be 

reasonably satisfactory to the Lender; 

(g) Implementation of a code of ethics effective as of the 

Closing Date, which shall be reasonably satisfactory to 

the Lender; 

(h) Payment of taxes and other obligations; 

(i) Continuation of business and maintenance of existence 

and material rights and privileges; 

(j) Compliance with laws (including Investment Company 

Act); 

(k) Compliance with material contractual obligations; 

(l) Maintenance of property; 

(m) Maintenance of books and records; 

(n) Right of the Lender, the Special Inspector General of 

the TARP, the Government Accountability Office and 

their respective advisors and representatives, to inspect 

property and books and records and meet with the 

General Partner; 

(o) Maintenance of validity, perfection and priority of 

9 
 

security interests on Collateral; 

(p) Further assurances (including, without limitation, with 

respect to security interests in after-acquired property); 

and 

(q) Distributions of Investment Proceeds by Financing 

Subsidiaries to the Borrower, unless prohibited by 

Third Party Debt. 

NEGATIVE COVENANTS Customary for financings of this type, including limitations on: 

(a) The Borrower and its subsidiaries will not, directly or 

indirectly, incur, create, issue, assume or guarantee any 

indebtedness, with exceptions for: 

• Loans; 

• if a Half Turn Election is in effect, Indebtedness of a 

Financing Subsidiary under a Term Asset-Backed 

Securities Loan Facility (the “TALF Debt”); 

• if a Half Turn Election is in effect, Indebtedness of a 

Financing Subsidiary provided by other third parties 

(the “Additional Debt”), subject to prior written 

consent of the Lender, which consent will not be 

unreasonably withheld; 

provided that, in each case, (i) no incipient or matured 

Event of Default is continuing and (ii) after giving 

effect to the incurrence and to the use of proceeds 

thereof, the Asset Coverage Test and, if a Half Turn 

Election is in effect, the Leverage Ratio Test would be 

satisfied on a pro forma basis; and 

• Permitted Interest Rate Hedges. 

In addition the Borrower may be obligated in respect of the 

Contingent Interest Note.4

 

“Asset Coverage Ratio” means, as of any date of determination, 

a number, expressed as a percentage calculated by dividing (x) 

the sum of (1) the aggregate Market Value of all Eligible Assets 

and all Temporary Investments held directly by the Borrower 

(including those in the Interest Reserve Account) and (2) the 

aggregate Market Value of all Eligible Assets and all 

 

4

 The Contingent Interest Note evidences the Warrant Percentage described in the Equity Term 

Sheet and will not be taken into account in determining the Leverage Ratio or the Asset Coverage 

Ratio.

10 
 

Temporary Investments held directly by any Financing 

Subsidiary less the principal amount and any accrued and 

unpaid interest and other amounts due under all Third Party 

Debt outstanding (but not less than zero) in respect of such 

Financing Subsidiary, in each case as of the applicable 

determination date by (y) the Principal Amount and accrued 

and unpaid Interest Amount. 

“Asset Coverage Test” means a test that shall be satisfied on 

any determination date, if the Asset Coverage Ratio as of such 

date is equal to or greater than, if a Half Turn Election is in 

effect, 225%; otherwise 150%. 

“Leverage Ratio” of the Borrower and its Financing 

Subsidiaries at any time is the ratio of Total Indebtedness at 

such time to Net Asset Value at such time. 

“Leverage Ratio Test” means a test that is satisfied on any 

determination date, (i) if no Loans are outstanding, if the 

Leverage Ratio as of such date does not exceed the maximum 

leverage allowed pursuant to TALF Debt and (ii) if Loans are 

outstanding, if the Leverage Ratio as of such date does not 

exceed, if a Half Turn Election is in effect, 5.00 to 1.00. The 

Leverage Ratio Test will not be applicable if a Full Turn 

Election is in effect. 

“Net Asset Value” of the Borrower and its Financing 

Subsidiaries means, on any particular date, Total Assets minus 

Total Indebtedness, as of such date. 

“Total Assets” of the Borrower and its Financing Subsidiaries 

means, on any particular date, the Market Value of all Eligible 

Assets and Temporary Investments as of such date. 

“Total Indebtedness” of the Borrower and its Financing 

Subsidiaries means, on any particular date, the sum of the 

Principal Amount and the outstanding principal amount and any 

accrued and unpaid interest and other amounts due under Third 

Party Debt on such date. 

The market value (“Market Value”) as of any date of 

determination as determined by the Valuation Agent, 

(i) with respect to each Eligible Asset: 

 (A) the most recent bid-side price obtained within 

three business days of the related Measurement Date from an 

Independent Pricing Service; or 

 (B) if no price is available pursuant to clause (A), the 

average of three bid-side market values obtained from 

11 
 

Independent Broker-Dealers or, if three such bid-side market 

values are not available, the lower of two bid-side market 

values obtained from Independent Broker-Dealers, or, if two 

such bid side market values are not available, the bid side 

market value obtained from one Independent Broker-Dealer in 

each case obtained within three business days of the related 

Measurement Date; or 

 (C) if a price cannot be determined pursuant to clause 

(A) or (B), until the Measurement Date on which a price is 

available pursuant to clause (A) or (B), the fair market value of 

such Eligible Asset as determined by the Valuation Agent 

determined using a methodology reasonably satisfactory to the 

Lender (based on a pricing model driven by default, loss 

severity, prepayment and cumulative loss estimates); provided

that with respect to any Eligible Asset for which a price cannot 

be determined pursuant to clause (A) or (B) for more than 180 

consecutive days, the Market Value shall be zero until the 

Measurement Date on which a price is available pursuant to 

clause (A) or (B); and 

(ii) with respect to each Temporary Investment, its bid side 

price or, if such price is not available, 98% of its par amount; 

provided that prior to the initial Measurement Date with respect 

to an Eligible Asset or Temporary Investment, the Market 

Value shall be deemed to be the purchase price of such Eligible 

Asset or Temporary Investment. 

“Independent Broker-Dealer” means, any nationally recognized 

registered broker dealer making a market in the relevant 

obligation, other than (i) the General Partner or any of its 

Affiliates, (ii) other investors in the General Partner or their 

respective Affiliates or (iii) another Limited Partner or any of 

its Affiliates, whose aggregate Capital Commitments to the 

Partnership exceed 9.9%. 

“Independent Pricing Service” means, in respect of a particular 

type of asset, a customary pricing service for such asset that is 

not an Affiliate of the General Partner or of a Limited Partner 

whose aggregate Capital Commitments to the Partnership 

exceeds 9.9% selected by the Valuation Agent. 

“Measurement Date” means with respect to an Eligible Asset or 

Temporary Investment, each Determination Date commencing 

with the first such date to occur after such asset is acquired by 

the Borrower or a Financing Subsidiary; provided that during 

any period when the Borrower is obligated to furnish weekly 

reports, the last business day of each calendar week of each 

month (other than the last week) shall also be a Measurement 

Date. 

12 
 

(b) Liens and other adverse claims, other than liens 

securing the Loans, if a Half Turn Election is in effect, 

liens securing Third Party Debt and liens on assets 

owned by the Borrower or its Financing Subsidiaries 

securing Permitted Interest Rate Hedges; 

(c) Guarantee obligations; 

(d) Mergers, consolidations, liquidations and dissolutions, 

except that any Financing Subsidiary may (i) be 

dissolved or merged with or into the Borrower if the 

Third Party Debt incurred by such Financing 

Subsidiary has been repaid in full or (ii) be merged 

with or into another Financing Subsidiary if permitted 

by the terms of the Third Party Debt incurred by the 

involved Financing Subsidiaries; 

(e) Restricted payments, other than distributions made by 

Financing Subsidiaries to the Borrower or under clause 

A.10 or B.5, as applicable, under Priority of Payments; 

(f) Capitalization of subsidiaries, other than if a Half Turn 

Election is in effect, subject to pro forma compliance 

with the Leverage Ratio and the Asset Coverage Ratio 

and so long as no matured or incipient or matured 

Event of Default is then continuing, Financing 

Subsidiaries formed for the purpose of acquiring 

Eligible Assets using the proceeds of Third Party Debt; 

(g) Investments, loans and advances other than, (i) in 

Temporary Investments and (ii) during the Investment 

Period and subject to pro forma compliance with the 

Leverage Ratio and the Asset Coverage Ratio and so 

long as no incipient or matured Event of Default is then 

continuing, in Eligible Assets and, if a Half Turn 

Election is in effect, concurrently with receipt of Third 

Party Debt, in Financing Subsidiaries to be utilized by 

such Financing Subsidiaries, together with such Third 

Party Debt, to purchase Eligible Assets; 

(h) Transactions with Affiliates without the prior written 

consent of the Lender; 

(i) Negative pledge clauses or impairments of Lender’s 

rights in the Collateral or restrictions on subsidiary 

distributions other than in connection with permitted 

Third Party Debt or requirements of applicable law; 

(j) Modification of agreements with Affiliates and 

modifications of the organizational documents of the 

Partnership and, if applicable, the Borrower, in each 

13 
 

case to the extent adverse to the Lender in any material 

respect; 

(k) Interest rate swaps, caps and collars solely for the 

purpose of hedging interest rate mismatches between 

the Loans and Eligible Assets (“Permitted Interest Rate 

Hedges”); and 

(l) Engage in any business other than the purchasing, 

holding and disposition of Eligible Assets or 

Temporary Investments either directly or, if a Half 

Turn Election is in effect, through Financing 

Subsidiaries to the extent otherwise permitted. 

EVENTS OF DEFAULT Customary for financings of this type, including, without 

limitation, (such events, “Events of Default”): 

Non-payment of principal of the Loans at maturity; nonpayment of interest or other amounts owing on the Loans after a 

grace period to be agreed upon; inaccuracy of representations 

and warranties in the Credit Documentation in any material 

respect (or, in the case of representations and warranties 

qualified by materiality, in any respect); violation of Credit 

Documentation negative (but not the Asset Coverage Ratio or 

Leverage Ratio) and affirmative covenants (subject, in the case 

of certain affirmative covenants, to a grace period to be agreed 

upon); cross-default to the debt of the Borrower and its 

Financing Subsidiaries (a materiality threshold of which is to be 

agreed); bankruptcy events of the Borrower and its Financing 

Subsidiaries and the General Partner; certain ERISA events; 

material judgments (a materiality threshold of which is to be 

agreed); actual or asserted invalidity of any security document 

or security interest; event of Cause or Key Person Event (and 

such event of Cause or Key Person Event is not resolved in a 

manner satisfactory to the Lender within 30 days or such longer 

period as the Lender in its sole discretion may permit); the 

withdrawal, commencement of liquidation proceedings, 

insolvency or dissolution of the General Partner; the UST and 

the requisite private investors vote to remove the General 

Partner; and a change of control (the definition of which is to be 

agreed). 

VOTING Amendments and waivers with respect to the Credit 

Documentation shall require the approval of the Lender and the 

Borrower. 

EXPENSES AND INDEMNIFICATION The Borrower shall pay, on and after the Closing Date, (a) all 

reasonable out-of-pocket expenses of the Agent, the Custodian 

and the Valuation Agent associated with the preparation, 

execution and delivery of the Credit Documentation (including 

the reasonable fees, disbursements and other charges of 

14 
 

15 

counsel), (b) all reasonable out-of-pocket expenses of the 

Agent, the Custodian and the Valuation Agent associated with 

the administration of the Credit Documentation and any 

amendment or waiver with respect thereto (including the 

reasonable fees, disbursements and other charges of counsel) 

and (c) all out-of-pocket expenses of the Agent, the Custodian, 

the Valuation Agent and the Lender (including the reasonable 

fees, disbursements and other charges of counsel) in connection 

with the enforcement of the Credit Documentation. 

The Agent, the Custodian, the Valuation Agent and the Lender 

(and their affiliates and their respective officers, directors, 

employees, advisors and agents) will have no liability for, and 

will be indemnified and held harmless by the Borrower against, 

any loss, liability, cost or expense incurred in respect of the 

financing contemplated hereby or the use or the proposed use of 

proceeds thereof (with respect to the Custodian and Valuation 

Agent only, except to the extent resulting from the gross 

negligence, bad faith or willful misconduct of the indemnified 

party). 

GOVERNING LAW AND FORUM The law of the State of New York (subject to applicable United 

States Federal law). 

WAIVER OF JURY TRIAL All parties to the Credit Documentation waive the right to trial 

by jury. 

COUNSEL TO THE LENDER Simpson Thacher & Bartlett LLP. 

CONFIDENTIALITY The Lender, Agent, Custodian and Valuation Agent will keep 

confidential any information obtained from the Borrower, the 

General Partner or any of their Affiliates as part of this Facility 

(subject to applicable law). 

CONFLICTS OF INTERESTS The General Partner will implement a conflicts of interest 

mitigation plan reasonably satisfactory to the Lender. 

ETHICS The General Partner will implement a code of ethics reasonably 

satisfactory to the Lender. 
EXHIBIT A

Interest 

INTEREST RATE The Loans will bear interest at a rate per annum equal to the 

LIBOR Rate plus the Applicable Margin for each Accrual 

Period. If for any reason a LIBOR Rate cannot be determined, 

then the rate applicable to the Loans shall be equal to the Prime 

Rate plus the Applicable Margin (the interest rate applicable to 

the Loans at a particular time, the “Interest Rate”). 

As used herein: 

“Prime Rate” means the rate of interest per annum published by 

the Wall Street Journal from time to time as the prime lending 

rate. 

“Applicable Margin” means (a) initially, (i) in the case of Loans 

bearing interest at the Prime Rate, if a Half Turn Election is in 

effect, 1.00%, and if a Full Turn Election is in effect, 0.0%; and 

(ii) in the case of Loans bearing interest at the LIBOR Rate, if a 

Half Turn Election is in effect, 2.00%, and if a Full Turn 

Election is in effect, 1.00% and (b) on and after the date any 

Third Party Debt is incurred, the greater of (x) 2.00% and (y) 

100 basis points higher than the weighted average applicable 

margin applicable to all Third Party Debt outstanding. 

“LIBOR Rate” means the rate for eurodollar deposits for a 

period equal to one month appearing on Reuters Screen 

LIBOR01 Page or if such rate ceases to appear on Reuters 

Screen LIBOR01 Page, on any other service providing 

comparable rate quotations at approximately 11:00 a.m., 

London time on the date of determination. The LIBOR Rate 

applicable to each Accrual Period shall be determined on the 

second business proceeding the first day of such Accrual 

Period. 

DEFAULT RATE During an Event of Default, the Applicable Margin shall be 

2.00% above the rate otherwise applicable. Overdue interest 

and other amounts shall bear interest at the rate then applicable 

to the Loans. 

RATE BASIS All per annum rates shall be calculated on the basis of a 360-

day year for the actual days elapsed (including the first day but 

excluding the last day) occurring in the period for which 

payable. 

1 
EXHIBIT B

Priority of Payments

On each Loan Payment Date, amounts on deposit in the Custodial Account attributable to the related 

Collection Period (including amounts held as Temporary Investments) shall be applied in accordance with 

the following priority; provided that during the Investment Period the General Partner may withdraw 

funds from the Custodial Account for the purpose of making investments in additional Eligible Assets on 

any day so long as after giving effect thereto and to the use of proceeds thereof, (i) no incipient or 

matured Event of Default is then continuing, (ii) the Asset Coverage Test would be satisfied on a pro 

forma basis, (iii) there will be on deposit in the Custodial Account in the reasonable judgment of the 

General Partner sufficient funds to make the payments required under clauses A.1, A.2 and A.3 below on 

the next Loan Payment Date, (iv) the Required Interest Reserve Amount would be satisfied on a pro 

forma basis and (v) the General Partner provides certification to the Agent and the Lender to such effect. 

In addition the General Partner may withdraw funds at any time for the purpose of repaying the Loans or 

making scheduled payments on Permitted Interest Rate Hedges or Partnership Expenses provided that the 

conditions in clauses (iii) and (iv) above will be satisfied after giving effect thereto: 

A. Non-Default Waterfall

1. Administrative expenses of the Borrower (including the expenses of the Agent, Custodian, 

Valuation Agent, UST Management Fees, Partnership Expenses and management fees payable by 

the investors in the Private Vehicles, but excluding taxes); 

2. Payments on Permitted Interest Rate Hedges (other than early termination payments attributable 

to counterparty default); 

3. Payment of the current Interest Amount and any other amounts (other than Principal Amount) due 

to the Lender; 

4. To the Interest Reserve Account in an amount equal to the amount, if any, by which the amount 

on deposit therein is less than the Required Interest Reserve Amount on such date; 

5. If the Asset Coverage Test is not satisfied as of the preceding Determination Date, then to the 

payment of the Principal Amount to the extent necessary to cause such Asset Coverage Test to be 

satisfied as of such Determination Date or until the Principal Amount has been paid in full; 

6. Early termination payments under Permitted Interest Rate Hedges attributable to counterparty 

default; 

7. During the Investment Period and so long as no incipient or matured Event of Default is then 

continuing, at the option of the General Partner, for investments in Temporary Investments, for 

investment in Eligible Assets (including by way of contribution to a Financing Subsidiary to the 

extent then permitted by the terms of the Credit Documentation) or as an optional prepayment of 

the Loans (in proportions determined by the General Partner); 

8. Commencing with the Loan Payment Date occurring in January, 2010, so long as after giving 

effect to the distribution described in this clause A.8, if the Half Turn Election is in effect, the 

Asset Coverage Ratio is greater than 300% and, if the Full Turn Election is in effect, the Asset 

Coverage Ratio is greater than 200%, an amount not to exceed in any period of twelve months (or 

if shorter, the period commencing on the Closing Date and ending on the last day of the month 

1 
immediately preceding such Loan Payment Date), the lesser of (x) 8% of the funded Capital 

Commitments and (y) the cumulative net interest income of the Borrower for the preceding 

period of twelve months (or if shorter, the period commencing on the Closing Date and ending on 

the last day of the month immediately preceding such Loan Payment Date), to the Borrower for 

distribution to the Partners (to be allocated among the Partners as provided in the Equity Term 

Sheet); 

9. To the payment of the Principal Amount, in amount equal to the lesser of (i) the product of (x) the 

applicable Prepayment Percentage for either the Half Turn Election or the Full Turn Election, as 

applicable, multiplied by (y) the amount remaining on deposit in the Custodial Account available 

to be distributed and (ii) an amount which reduces the Principal Amount to zero (minus any 

amounts paid on such Loan Payment Date as provided in clauses 5 and 7 above); and 

10. So long as no incipient Event of Default is then continuing, to the Borrower for distribution to the 

Partners (to be allocated among the Partners as provided is the Equity Term Sheet) or as an 

optional prepayment of the Loans (in proportions determined by the General Partner). 

If on any Loan Payment Date the amount on deposit in the Custodial Account and available to pay the 

amounts described in clauses 2 and 3 above is less than the amount required to pay such amounts in full, 

the lesser of the amount of such deficiency and the amount then on deposit in the Interest Reserve 

Account shall be allocated to pay such amounts. If on any Loan Payment Date the amount on deposit in 

the Interest Reserve Account exceeds the Required Interest Reserve Amount, the amount of such excess 

shall be available for distribution in accordance with the Priority of Payments. 

PREPAYMENT PERCENTAGE The percentage set forth opposite the applicable period in the 

following table (the “Prepayment Percentage”): 

Period Prepayment Percentage for Half Turn 

Election 

Year 1 33.3% 

Year 2 33.3% 

Year 3 33.3% 

Year 4 50.0% 

Year 5 75.0% 

Year 6 100.0% 

Year 7 100.0% 

Year 8 100.0% 

Year 9 100.0% 

Year 10 100.0%; 

Period Prepayment Percentage for Full Turn 

Election 

Year 1 50.0% 

Year 2 50.0% 

Year 3 50.0% 

Year 4 75.0% 

Year 5 100.0% 

Year 6 100.0% 

2 
Year 7 100.0% 

Year 8 100.0% 

Year 9 100.0% 

Year 10 100.0%; 

provided that, the Prepayment Percentage shall be 100% during 

the occurrence and continuance of any Event of Default. 

 

3 
4 

B. Default Waterfall

Upon the occurrence and during the continuance of any Event of Default on each Loan Payment Date, 

amounts on deposit in the Custodial Account attributable to the related Collection Period shall be applied 

in accordance with the following priority:

1. Permitted administrative expenses of the Borrower (including the expenses of the Agent, 

Custodian, Valuation Agent and Lender, but excluding General Partner expenses and taxes); 

2. Payments on Permitted Interest Rate Hedges that are secured by the Collateral (other than early 

termination payments attributable to counterparty default); 

3. Payment of the Principal Amount, Interest Amount and any other amounts due to the Lender; 

4. Early termination payments under Permitted Interest Rate Hedges that are secured by the 

Collateral attributable to counterparty default; and 

5. To the Borrower for distribution to the Partners (to be allocated among the Partners as provided is 

the Equity Term Sheet) or satisfaction of other obligations of the Borrower.