ABS Financing Solutions for Energy Retrofitsof Private Commercial & Multifamily Properties

Through First Sustainable, LLC’s Survivable Energy Services Agreement (“SESA”) &“Securitized ESCO Program ”

First Sustainable www.firstsustainablellc.comScott Sidell, Ph.D., Chief Executive Officer 203-682-3134 scottsidell@firstsustainablellc.com Steven Turner, Chief Legal Officer 631-464-2709 steventurner@firstsustainablellc.com STRICTLY CONFIDENTIAL

SESA

FIRST SUSTAINABLE

Nature of Market and Scope of Opportunity

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Buildings:A HugeImpact

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Less is

More

[“Unlocking the Power of Energy Efficiency in Buildings” – NRDC Bulletin, 2008]

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First Sustainable has developed an innovative, truly scalable, non-recourse ABS solution to address the building retrofit challenge, by providing the financial structure capable of unlocking this enormous underserved market. More than $300 Billion of private commercial real estate (“CRE”) related energy retrofits are viable in the US. Few such retrofits have been done in the CRE/Multifamily sector, due to a number of challenging barriers to capital. Retrofitting existing commercial buildings for energy efficiency is one of the greatest opportunities facing the building industry.

If our existing buildings in the U.S. were a nation, its energy consumption would rank third after China and the U.S. More than a trillion dollars is currently flowing out of our buildings in the form of wasted energy.

First Sustainable’s ABS “Securitized ESCO” Program-- Opportunities for all Stakeholders -- Private sector Commercial and Multifamily property owners can save upwards of 40% of their annual utility costs -

◦ Non-recourse financing; Off-balance sheet treatment ◦ No capital investment necessary◦ No additional lien or security interest on the underlying property◦ Increased operating income enhanced property values & debt service coverage (thereby benefitting mortgage lenders as well )

Energy Service Companies (ESCOs) will have the financing tool capable of servicing this massive opportunity -◦ Enabling new ESCO entrants – currently, ten (10) major ESCOs provide 75% of the energy retrofit projects in the US)◦ Smaller manufacturing, construction and engineering firms can participate

Banks/Financial Institutions can participate in compelling fee related income -◦ Warehouse Revolving Credit Facility Fees - Interim financing for bundling pools of energy performance contracts (“SESAs”)◦ ABS Securitization - Underwriting & placement fees; secondary market trading services.

Investors can benefit from potentially generous preferred and total ROI’s-◦ Working Capital◦ Project Equity◦ Tax Equity

First Sustainable: Up for the Challenge

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MUSH69%

federal15%

commercial and indus-trial7%

public housing3%

Energy Retrofits by Source

MUSHfederalcommercial and industrialresidential programspublic housing

Municipal, University,School & Hospital

residential 3%

3%

Energy Retrofits in Private CRE Properties:An Underserved Sector Non-residential buildings currently consume about $200 billion of energy

annually – nearly 20% of total energy in the U.S. – with $145 billion of this, or 72% , being consumed by private owners.

Total value of all energy retrofit projects – energy efficiency and distributed generation (on-site power) projects – recently equaled about $4.1 billion.

Recent data show only 7% of all non-residential buildings retrofitted were privately held; nearly all such properties owned by large investment-grade property owners.

No scalable market currently exists to serve property owners who lack an investment grade rating.

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30% of energy used in commercial buildings is used inefficiently.

$43.5 billion of energy is being used inefficiently by private commercial buildings.

Assuming a simple payback of 5-6 years, this translates into a potential value of energy efficiency measures of $300 billion.

This value is even understated, given that on-site generated renewable power or co-gen in many locations can often be cheaper than grid-supplied power.

Potential Value of Private CRE Energy Retrofit Market

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The commercial real estate market for energy retrofits is huge:

There are 4.8 million commercial / industrial buildings in the U.S. – 8,000 of these are over 500,000 sq ft and 26,000 are over 200,000 sq ft.

Many buildings are antiquated. In New York City, for example, where 43% of all office buildings were constructed before 1945, the average office building is over 70 years old. Nearly 700 buildings are over 30 floors.

Most private commercial buildings are beneficially owned by parties who lack an investment grade rating, making access to a traditional methods for financing energy retrofits, not feasible or accessible on commercially viable terms.

Attributes of Private CRE Energy Retrofit Market

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Barriers and Solutions to Financing Private CRE Energy Retrofits:Summary of DLA Piper’s Analysis and Validation of First Sustainable’s ABS Approach

Part II

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Private CRE/Multifamily owners have historically lacked the capital or resolve needed for retrofits, for the following reasons: Mortgage loans typically prohibit additional CRE secured debt or encumbrances. Most private CRE owners are organized as Special Purpose Vehicles (“SPE’s”), are

thinly capitalized, and consequently, are perceived by creditors as un-creditworthy. Retrofit paybacks may often exceed owner holding period horizons. Consequently, such constraints generally: Discourage CRE owners from allocating unsecured credit or retained equity to

non-core investments. Result in reliance on unattractive, equipment finance-type recourse credit,

requiring personal or parent company guarantees. Preclude non-recourse or off-balance sheet financing choices.

Historical Barriers to Financing CRE/Multifamily Energy Retrofits

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The First Sustainable Securitized ESCO Program has been vetted by external legal counsel, DLA Piper, who has concluded that the program satisfies all conditions necessary to overcome historical CRE retrofit financing barriers, by developing a scalable and securitizable financing program and warehouse credit facility, designed expressly to support a non-recourse, off-balance sheet, fully-scalable financing solution, enabling energy retrofits for the CRE sector.

Such conditions include:

Insulation from CRE property owner bankruptcy risk. Adequate project performance and completion guarantees. Reliability of SESA related receivables (energy performance contracts -- EPCs). Qualification for off-balance sheet treatment. Freely assignable SESA related receivables. No need for a lien in underlying property. Survivability with respect to property transfers and foreclosures. Reliance on customary practices of owners and mortgagees.

Addressing Barriers to Energy Retrofit Capital

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The Traditional ESCO ModelVersion 1: Client Pays

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Version 2:Energy Performance Contract (“EPC”)

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Financing Structure

InvestorsWarehouseLender

FinanceCo

SecuritizationTrust

ServiceCo#1

ServiceCo#2

ServiceCo#3

ServiceCo#4

ServiceCo#5 et seq.

ProjectCo

AssignSESARevenues(true sale)

AssignSESARevenues(true sale)

AssignSESARevenues(true sale)

AssignSESARevenues(true sale)

AssignSESARevenues(true sale)

100%

100%

100%

100%100%

100%

Issue TermSecuritization

Notes

Securitization Proceeds Applied to ReduceWarehouse Debt

Note Proceeds

PledgeSESAReceivables(after releasedfrom WarehouseFacility lien)

ReleaseCollateral (uponreceipt of securitizationproceeds)

PeriodicAdvances

Periodically IssueShort-Term Notesand Pledge SESAReceivables

Legend:

= Warehouse Facility documents and cash flow= Securitization Transaction documents and cash flow

#48540349

The First Sustainable Securitized ESCO Program

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First Sustainable establishes a wholly-owned operating subsidiary:

First Sustainable Energy Services Company, LLC (“FESCO”), which operates as project developer, providing planning, logistical, analytical, transactional, monitoring, origination and/or financing related services with respect to proposed CRE energy retrofit projects.

FESCO forms a JV with a special purpose entity (SPE) “ProjectCo”, which capitalizes retrofit projects, whereby FESCO provides such development services.

ProjectCo sets up separate wholly owned SPE’s, (each, a “ServiceCo”) for each energy retrofit project, for each building to be retrofitted (each, a “BuildingCo”).

Each BuildingCo retrofit project is insulated from other BuildingCos’ operational and financial risks.

First Sustainable Structure & Deal Flow

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Each ServiceCo assigns its rights to all rights and revenues under each separate SESA (“SESA Receivables”), to a single, bankruptcy remote SPE (“FinanceCo”), consolidating all rights in an aggregated pool of SESA Receivables, to effectuate a more efficient warehouse financing and securitization on optimally favorable financing terms.

ProjectCo provides the required equity capital for retrofit projects.

FinanceCo “draws down” a Revolving Warehouse Facility to finance the SESA Program, bundling a sufficient critical mass of SESA Receivables, to support a term securitization.

Financial Institution underwrites distribution/placement of SESA Receivables ABS term securitization to Investors

Distribution proceeds repay warehouse facility advances, thus freeing up new capacity in the warehouse facility, to be used to finance new SESA related transactions, and thus create new SESA Receivables.

This process will be repeated periodically through the life of this “Securitized ESCO” securitization program.

Corporate Structure & Deal Flow (CONTINUED)

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ESCO function is unbundled, retaining the technical/construction, planning “energy audit”, energy savings measurement & valuation (M&V) elements, from the Key Financial Elements

◦ Financing the Retrofit Project is done through the capital markets

◦ Energy Performance Guaranty is provided by highly insurance carrier

This “unbundled” ESCO-function no longer requires “Fortune 500” balance sheet in order to provide the building owner (or the bank financing the project) an investment-grade energy saving performance contract.

Enables broader base of ESCOs to participate in energy retrofits through the SESA-ABS “Securitized ESCO”Program:

First Sustainable -- “Securitizing the ESCO”

First Sustainable: ”Securitizing” the ESCO Function:

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The First Sustainable SESA-ABS Program: Benefits of Warehousing and Securitizing CRE Energy Retrofit Projects

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Short-term revolving “blind” warehouse credit and long-term securitization refinancing provided through First Sustainable’s SESA solution are particularly suitable to energy retrofit projects, due to their inherent attributes:

Homogeneity among projects: CRE retrofits share similar retrofit measures and economics among different projects.

Long-term, reliable cash flows: CRE retrofits generate reliable cash flows, given applicable credit enhancements.

Replicability: CRE retrofits lend themselves to uniform, pre-determined legal and underwriting criteria, given their homogeneity.

Favorable economics: CRE retrofits provide compelling paybacks, producing favorable economics and ample debt coverage.

Predictable operating costs: CRE retrofit operating costs are very predictable and can be subject to investment grade guarantees.

Insulated from energy market price volatility: CRE retrofits will not be adversely impacted by utility prices changes, given the nature of applicable guarantees.

Investment grade completion and performance guarantees: CRE retrofits can benefit from investment grade construction and product warranties.

SESA Enhanced CRE Energy Retrofit Projects Lend Themselves to ABS Financing

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The following virtues of the SESA-ABS program, will create enormous business opportunities for project originators:

Requires no contractor or building owner capital or balance sheet.

Provides the confidence that any qualifying project satisfying underwriting criteria, will be funded.

Obviates need for scarce, long-term bank credit Materially reduces transaction costs, given reliance on

global agreements and templates Provides more favorable interest rate and tenor terms Creates access to massive source of institutional investor

liquidity Benefits from accelerated decline in risk premium as

investor comfort grows Lower financing and transaction costs enable inclusion of

longer payback technologies, and consequently, larger project sizes

Enables development of projects that would otherwise go un-built.

Benefits of the SESA-ABS Program to CRE Energy Retrofit Originators

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Energy Service Companies (ESCOs)• Siemens, Honeywell, Johnson Controls, United

Technology, Lockheed Martin, Chevron, Constellation, AECOM, SAIC, Schneider Electric, ConEd, Trane, FPL and others.

Property Managers• Jones Lang Lasalle, CBRE, Cushman Wakefield

and others Engineering Firms Contractors Vendors Consultants

Contractors of Energy Retrofit Projects Who Can Benefit from SESA-ABS “Securitized ESCO” Program

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Appendix

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Limitations of Existing Retrofit Financing Structures

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First Sustainable (FS) comprises a team of accomplished structured finance professionals seeking to develop innovative financing solutions to facilitate the development of compelling cash flowing projects, through the deployment of proven sustainable technology.

The FS team draws on over 100 years of total experience in a number of structured finance related disciplines, including underwriting, origination, product development, asset management, proprietary and dealer trading, law, modeling and ratings.

FS pioneered the application of warehouse credit and ABS securitization to the commercial solar PV project space. In 2010, it negotiated a term sheet with a leading global bank for a revolving warehouse credit line to fund European utility scale Solar PV projects.

Having now innovated an ABS solution to finance private commercial energy retrofits, FS will continue to develop new ABS products to address the most compelling and challenging emerging green asset classes.

About First Sustainable

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As founder and chief executive of First Sustainable, Dr. Sidell focuses largely on conceiving and implementing the strategy to impose the proven ABS specialty finance approach within the sustainable project space. He is working with numerous financial institutions with which he has developed relationships over the years, to secure the credit and underwriting commitments necessary to successfully pursue this framework. He simultaneously concentrates on putting all of the other necessary pieces together to successfully exploit this model within these emerging green asset classes.

Prior to founding First Sustainable, Dr. Sidell spent 20 years as a quantitative institutional debt arbitrage trader and the last seven as Chief Executive of a specialty finance company that he started at Millennium Partners, one of the world’s only investment grade rated hedge funds . Dr. Sidell was instrumental in arranging the sale of the company at the end of 2006. He has been involved in the sale of three companies, including the sale in 1997 to a publicly traded company of a non-toxic clothes cleaner he organized and financed. Dr. Sidell has worked in fixed income arbitrage for institutions including Chase Manhattan Bank, Chemical Bank, Societe Generale, Greenwich Capital Markets (now RBS) and Millennium Partners.

Dr. Sidell received his Ph.D. and M.A. from Cornell University, and BA from Boston College. He attended Harvard University as an Exchange Scholar in the Department of Economics. He is the author of several books and academic articles related to global finance.

Scott Sidell, Ph.D., Chief Executive Officer

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At First Sustainable, Mr. Turner provides legal and transaction advice and support in connection with company renewable energy asset securitizations and related asset acquisition and project financings, as well as legal services in connection with all corporate financings, contracts and internal organizational matters.

Mr. Turner has over 20 years of experience as a capital markets transactions lawyer, with extensive asset securitization transaction expertise over a broad array of underlying asset classes, including mortgage loans, consumer/auto loans, credit card and trade receivables, government leases and government-supported export loans. Mr. Turner complements his ABS experience with extensive legal practice in securities offerings & corporate finance, derivatives & energy products/carbon emissions trading markets, and commercial bank loan origination and secondary trading. Mr. Turner previously worked as senior internal counsel and as legal consultant to major U.S. and European financial institutions, including Deutsche Bank, UBS and Lehman Brothers, prior to which Mr. Turner was an associate with Cadwalader, Wickersham & Taft, where he advised on several of the earliest multi-class mortgage and auto securitization deals.

Mr. Turner received his J.D. in 1982 from Harvard Law School and his B.S. from City College of New York.

Steven Turner, Chief Legal Officer

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Mr. Douglass has over 20 years of experience in virtually all aspects of ABS securitization. Having run Bear Stern’s ABS trading desk through1995, he was also Gen Re Securities Global Head of Asset Backed Securities through 2002. As a senior ratings analyst, Mr. Douglass spent four years at both Fitch and Moodys, and in 2004, was instrumental in the start-up of the Monoline Insurer, Security Guaranty Holdings. In 2006, he managed a $400MM portfolio of structured product related debt on behalf of New Star Financial, a specialty finance company. Mr. Douglass directs First Sustainable’s efforts to identify, structure and securitize new green asset classes, by liaising with his multitude of strategic and propriety contacts in the banking and rating sectors. Mr. Douglass received his MBA in Finance from the University of Chicago and B.S. in engineering from Washington University in St. Louis. He served as a captain for the U.S. Air Force in the Engineering Group of the U.S. Space Command from 1983-1987.

Mark Douglas, Chief Financial Engineer

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