SOF III - 1081 Southern Financial LLC It is the General Partner's policy to treat Limited Partners fairly. Consistent with this policy and applicable rules and regulations, the terms negotiated with individual Limited Partners may vary for a number of reasons, including a Limited Partner's regulatory and/or tax status or other requirements or policies applicable to it, the amount of a Limited Partner's commitment to the Partnership, a Limited Partner's overall commercial relationship with the General Partner, the Investment Manager and/or any of their affiliates, and the nature of a particular investment. Borrowing. The Onshore Feeder Fund may borrow money in an aggregate amount of up to 20% of the total capital commitments to the Onshore Feeder Fund (the "Capital Commitments"), including pursuant to a credit facility or other loans from a third party. Such borrowing provides the advantages of leverage, but exposes the Onshore Feeder Fund to capital risk and higher current expenses. The Onshore Feeder Fund may provide collateral to the banks from which it borrows by pledging some or all of the assets of the Onshore Feeder Fund (the "Onshore Feeder Fund Assets") and/or the Capital Commitments to the Onshore Feeder Fund. In such event, the Onshore Feeder Fund may also be required to delegate the rights to issue drawdown notices and to receive capital contributions to a third party. This procedure exposes the Onshore Feeder Fund to the risk that for whatever reason, including, without limitation, the default, insolvency, negligence, misconduct or fraud of such banks, the Onshore Feeder Fund will not reacquire the ownership of such Onshore Feeder Fund Assets upon the repayment by the Onshore Feeder Fund of such loans. Also, the Onshore Feeder Fund will be unable to reacquire such Onshore Feeder Fund Assets if the Onshore Feeder Fund defaults on such loans. The Onshore Feeder Fund's failure or inability to reacquire such Onshore Feeder Fund Assets