EFTA00807591.pdf

EIIV Group Illustrative Proposed Fund Indicative Terms & Structur ') Indicative Term Sheet Investment Structure Total Size: $50MM Warehouse EIIV Funds, GP EIIV Manager Newly formed Special Acquisition Vehicle, wholly owned (Strategic — 20% Borrower: (Strategic — 20% / by the lender Bridge Investors — 20% / Management — 80%) Management - 60%) Acquisition of music catalogue and minority interest in Use of production company. Assets to be rolled in to permanent Proceeds: I capital vehicle upon completion of final raise. Security: First lien and first priority interest in acquired assets Acquired by EIIV Funds upon formation with a first closing Put / Call: at least equal to the acquisition price plus accrued EIIV Funds. LP interest, fees and expenses. 2% Management 20% Carry above Fee 8% Hurdle Tenor: 12 months with two 6 month extensions Assets Purchased $50MM from Pricing: 12% per annum, minimum of 6 months of interest wi Warehouse Fundraise Lender Origination 1.5% I Fee: I $50MM Warehouse Lender GP 20% of passive carried interest on music royalty assets in I (12% Coupon) Interests: to be formed vehicle, subject to dilution I MS Role: Placement Agent, Structuring Agent I I Newly formed entity led by Jon Jashni & Lylette Pizarro I Manager: and expected to be owned 20% by major music label and 9.9% by Morgan Stanley. I $24MM Music S3.5MM Stake in Additional Dry I Library Production Co. Powder (2) Tax A covenant shall be included requiring the parties to treat Treatment: the $50MM loan as equity for tax purposes I Holes: I. No runan--e: can be made that the proposed fund will launch Or achieve its ObECCOVOS al wan a:qui:dial el music %ray and minenty slake in predunen cencarry (-$I5MM) 2. WI el fees assooed EFTA00807591 EIIV Group Disclaimer You acknowledge and understand that: (i) the EIIV Investments MR-A M. and related investment vehicles (the "EIIV Fund") has not launched or begun investment activities and there is no guarantee that the EIIV Fund, or any other related investment vehicle of EIIV, will launch or begin investment activities; (ii) there is no guarantee that the EIIV Fund will be profitable and not incur substantial losses; (iii) the existence of any "carried interest" in respect of the EIIV Fund and its general partner is highly uncertain and subject to various risks, uncertainties and other factors that are outside Morgan Stanley and EIIV Group LLC's control; and (iv) there is no guarantee that any "carried interest" or other profit interest will materialize or have any value to any investors. The materials provided in the data room are provided solely for purposes of assessing an investment in the transaction proposed therein. No solicitation for the EIIV Fund should be presumed nor can any investment in the EIIV Fund be made without an offering memorandum with respect to the EIIV Fund. You hereby acknowledge that you will rely on your own assessment of the materials provided in the data room solely for purposes of the transaction described therein. You acknowledge that the sponsors and their agents have no liability for the contents of any of the information contained in the data room with respect to the EIIV Fund. The materials contained in this data room (the "Materials") are provided on a confidential basis solely for the information of those persons granted access to this data room by EIIV Group LLC ("EM. The Materials, including the information contained therein, may not be copied, reproduced, republished, posted, transmitted, distributed, disseminated or disclosed, in whole or in part, to any other person in any way without the prior written consent of EIIV (individually or together with their affiliates as the context requires, "EIIV Group", "we" or "our") or as required by applicable law. By accessing the Materials, you agree that you will comply with these confidentiality restrictions and acknowledge that your compliance is a material inducement to our providing the Materials to you. The Materials are provided for informational and reference purposes only with respect to the transaction described herein (the 'Transaction") and is not intended to be, and must not be, taken as the basis for an investment decision. By acceptance of the Materials, you acknowledge and agree that: (i) by participating in the Transaction, you will not be an investor in the fund entity referred to as "EIIV Fund" and/or any affiliates and/or subsidiaries related thereto; (ii) offers and sales of interests in EIIV Fund will be made only pursuant to a confidential offering memorandum of EIIV Fund and in accordance with applicable securities laws and the Materials are not intended to be, and is not, an offer for a sale of interests in EIIV Fund and/or any affiliate and/or subsidiary related thereto; (iii) the information contained herein does not purport to be a complete description of the Transaction and the risks associated with an investment therein; (iv) the Morgan Stanley & Co. LLC ("Morgan Stanley") and its affiliates (and all entities directly or indirectly controlled by Morgan Stanley, and their respective officers, directors, employees, affiliates and agents, collectively (the "Morgan Stanley Group') makes no representation or warranty as to the accuracy or completeness of the Materials and the information contained herein and has no obligation to update such information; and (v) the Materials and any oral information provided in connection with the Materials must be held in strict confidence and must not be communicated, reproduced, distributed or disclosed to any other person, or referred to publicly, in whole or in part at any time except with our prior written consent. The contents hereof should not be construed as investment, legal, tax or other advice. Investors should consult their own advisers as to legal, business, tax and other related matters concerning the Transaction. The Transaction referenced herein may not be suitable for all investors. Investors must conduct their own independent investigations, review and analysis of the Transaction as considered necessary or appropriate, and must not rely on any statements or other information provided herein. Certain assumptions have been made regarding the historical performance information included herein, and such performance information is presented by way of example only. Statements in this material are stated as of the dates specified herein. No representation or warranty (express or implied) is made or can be given with respect to the accuracy or completeness of the information in this material. No representation is made that the performance presented will be achieved. Any changes to assumptions could have a material impact on the investment returns that are presented by way of example. Returns for any period may be attributable to certain market conditions and timing of transaction, which may not be repeated. Past performance is no guarantee of future results. Actual results may vary. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements. The market analysis, estimates and similar information, including all statements of opinion and/or belief, contained herein are subject to inherent uncertainties and qualifications and are based on a number of assumptions. All statements in the Materials (and any oral statements made by Morgan Stanley personnel regarding the Materials) other than historical facts are forward-looking statements, which rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors outside of the Morgan Stanley's control which could cause actual results to differ materially from such statements. 2 EFTA00807592 EIIV Group Disclaimer PERFORMANCE DISCLOSURES The performance information contained herein is provided for informational purposes only. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS, AND NEITHER MORGAN STANLEY NOR ANY OF ITS AFFIUATES MAKE ANY REPRESENTATION IN THIS REGARD. Moreover, wherever there is the potential for profit there is also the possibility of loss. There can be no assurance that any EIIV Group will be able to earn the rates of return indicated in the Materials or otherwise be successful. Any targeted rates of return included in these Materials are hypothetical returns, and are for illustrative purposes only. Accordingly, no assumptions or comparisons should be made based upon these returns. Hypothetical returns are subject to inherent limitations, including, but not limited to. that hypothetical returns do not take into account the impact that market and economic risks, such as defaults. prepayments, and reinvestment rates. may have on actual performance. While EIIV Group believes that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course. It is impossible for EIIV Group to anticipate all factors that could affect our actual results. Future events may differ from such assumptions and hypothetical returns are subject to inherent limitations. In no circumstances should the targeted rates of returns included in these Materials be regarded as a representation, warranty or prediction by EIIV or Morgan Stanley of any particular performance that its managed funds would achieve or are likely to achieve, nor as a representation, warranty or prediction that any investors in such funds would be able to avoid losses, including total losses of their investment. EXIT PROJECTIONS Any exit projections included in these Materials are hypothetical, and are for illustrative purposes only. Accordingly, no assumptions or comparisons should be made based upon these exit projections. Hypothetical exit projections are subject to inherent limitations, including, but not limited to. that hypothetical projections do not take into account the impact that market and economic risks may have on actual performance. While EIIV believes that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course. It is impossible for EIIV to anticipate all factors that could affect our actual results. Future events may differ and hypothetical exit projections are subject to inherent limitations. In no circumstances should the exit projections included in these Materials be regarded as a representation, warranty or prediction by EIIV or Morgan Stanley of any particular performance that its managed funds would achieve or are likely to achieve. Morgan Stanley has not considered the actual or desired investment objectives. goals, strategies. guidelines, or factual circumstances of any potential investor in any fund(s). Before making any investment, each investor should carefully consider the risks associated with the investment, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Investors should understand these risks and have the financial ability and willingness to accept them for an extended period of time before making an investment. Conditions of Access I am being granted access to the information contained on this site solely in order to review certain information of EIIV Group, LLC and certain of its affiliates (collectively, the 'EIIV Parties") related to a possible acquisition of certain assets on behalf of the EIIV Parties' (the "Proposed Transaction"). I understand that my access to this site is expressly subject to the following conditions: 1. All of the information contained on this site is strictly confidential. and my access to it is conditioned upon my acknowledgment of, and my agreement to maintain, that confidentiality. I will maintain the information in confidence and will not disclose any of the information to others except as required to complete the Proposed Transaction. 2. I will not attempt to download, scan. copy, print or otherwise capture any of the information contained on the site, except that I may view, print or download information for which the view. print or download capability has been enabled as indicated by the site index. I will not attempt to circumvent any of the security features of the site, and will not enable or allow others to access the site using my authorization to the site. 3. The information on this site has been assembled by the EIIV Parties in response to document requests by participants in the Proposed Transaction and their representatives. I understand that I should not assume that such information is accurate as of any date other than the date when it was posted or that there has been no changes since that date. None of the EIIV Parties or any of their affiliates or representatives is making any representation or warranty of any kind, express or implied, with respect to such information. 4. I acknowledge that the information and materials provided herein supersede any previous information or material, whether written or oral, I may have received from EIIV or. otherwise. By clicking on the "I Accept" button below. I acknowledge that I have read, undentand, and agree to be bound by. the above conditions. 3 EFTA00807593