Quadrangle Capital Partners 375 Park Avenue Telephone 212 418 1700

New York, NY 10152 Facsimile 212 418 1701

February 19, 2010

Dear Limited Partner:

We would like to take a moment to reflect on the events of 2009 and our objectives
for 2010 and the future. To state the obvious, last year presented the firm with
many challenges. We responded by sharpening the focus of the firm, making
significant changes to our people and processes, and greatly increasing our
communication with you – all while maintaining our focus on the performance of
our business. We are enormously grateful for the attention, support and guidance
you provided during this period, and believe strongly that your input and our
decisions as a partnership position us well to continue to create value for you, our
investors.

Simply put, since the change in leadership at Quadrangle, we have strengthened

our partnership and rededicated ourselves to our core mission of private equity
investing.

QCP’s Mission

Our mission has always been to create value for our investors through our private
equity investments. That mission remains unchanged, and its implementation
through prudent investing in the middle-market with a focus on media,
communications and information-based businesses remains the same. We believe
our sector expertise, investment processes and business practices have only
improved with time.

Nevertheless, the events of 2009 highlighted that increased communication and

transparency with each other and our investors needed to become a more integral
part of our DNA. The reputation and integrity of our firm are of the utmost
importance to us, and we have further implemented policies and practices to
institutionalize our values of integrity and personal accountability.

Portfolio Activity

In 2009, we were extremely active as we continued to invest, add value to our

portfolio companies and position investments for successful exits.

New Investments
In 2009, we reviewed approximately 300 opportunities, had dozens of meetings
with management teams, submitted over a dozen term sheets to make new
investments and committed more than $200 million. Despite the difficult market
environment, we continued to see interesting opportunities in our sectors and
sought creative solutions that enabled us to continue to invest in what we believe
are opportunities with attractive risk-reward profiles. Importantly, we were
 Page 2

cognizant of the severe liquidity crisis and accordingly prioritized our capital to
focus on portfolio support and investments that we believe offered truly outsized
risk adjusted returns:
• Mobilicity (formerly DAVE Wireless): Invested $37.2 million in a
convertible debt instrument to drive the launch of service in the Toronto
market. When coupled with the C$200 million of new third party debt that
Mobilicity raised in the second half of 2009, we believe that Mobilicity is
fully funded to launch wireless service in Toronto, Vancouver, Calgary,
Edmonton and Ottawa.
• NNB Master Holdings: Invested $40.4 million in NNB Master Holdings, a
holding company for distressed debt investments. While the combination
of the Key Man Event and the debt market recovery prevented us from
investing as much capital as we would have liked, we were pleased to
return 1.7x invested capital later in 2009.
• Tower Vision: Committed $125 million to invest in Tower Vision, an
Indian tower company, and subsequently closed on this investment on
January 29, 2010. We believe Tower Vision is a great opportunity to
obtain exposure to one of the fastest growing wireless markets in the world
and is well positioned capitalize on the growth potential of India’s
telecommunications sector. In addition, we believe our structured
preferred security provides an attractive risk-reward profile.

While our investment pace slowed slightly in 2009, we believe these investments
are consistent with our investment philosophy of maintaining steady progress and
implementing conservative investment structures with the objective of providing
significant capital protection while generating private equity returns.

Portfolio Management
Against the backdrop of the well documented market dislocation of 2009, we
executed a number of significant actions to strengthen the balance sheets of our
portfolio companies and position them for long-term value creation.
• Managed the increase in value of our investments by $42.7 million or 9%
in QCP I and $226.9 million or 19% in QCP II.
• Secured and refinanced $3.2 billion of portfolio company debt across both
funds, thereby extending maturities, increasing available capital and
gaining additional covenant flexibility.
• Maintained solid growth across our portfolios with weighted average
revenue remaining steady across both funds in a difficult environment and
EBITDA growing approximately 7.1% and 4.4% for QCP I and QCP II,
respectively.
• With the exception of MGM, which we had already written down by 90%,
none of our portfolio companies had a financing crisis or default in 2009,
 Page 3

despite the challenging economic landscape. As a result of this balance

sheet strength and overall continued operating success, we had no realized
losses in QCP I or II during 2009.

On balance, we were gratified that our portfolio demonstrated strength and

resilience through the worst market downturn of our generation.

Realizations
We took steps in 2009 both to prudently realize investments and to create greater
flexibility for many of our companies to consider strategic alternatives.
• QCP II realized $253.6 million, principally from the realizations of Intelsat
and NNB Master Holdings. These two investments generated a combined
gross multiple of money of 2.25x and an IRR of 174%.
• QCP II has returned 26% of capital called.
• QCP I realized a total of $92.3 million, principally from the $68.6 million
sale of Cinemark shares, which generated a gross multiple of money of
2.0x and an IRR of 17.6%.
• QCP I has returned 107% of capital called.
• Furthermore, in early February 2010, the sale of NuVox Communications
Inc. closed, resulting in a QCP I realization of approximately $23 million
and generating a gross multiple of money of 2.6x and an IRR of 17.0%.
We expect to distribute proceeds in early March.

We would note that while we are mindful of our investors’ desire for liquidity, we
have not engaged in any forced selling. Rather, we continue to apply a strict
discipline of examining expected future returns when considering an appropriate
time to exit.

Organizational Changes

As we have discussed with you at length, leading up to 2009 Quadrangle’s prior

leadership had positioned the firm to be a multi-product firm that included a multi-
billion dollar private equity business. When we assumed leadership of the firm,
we reassessed those ambitions and concluded that we had inherited an
unsustainable cost structure that did not align our resources with our highest
priorities or greatest opportunities. The challenges created by this cost structure
were exacerbated by the triggering of the Key Man Clause in QCP II’s LP
Agreement, caused by Steven Rattner’s departure, and the investigation of “pay-to-
play” activities of former employees under the firm’s prior leadership.

Faced with these challenges, we took a number of actions to change our firm,
including its culture, structure and business practices. In addition, we more closely
 Page 4

aligned the incentives of Quadrangle with those of our limited partners.

Specifically, we took the following actions in 2009:
• Simplified the firm’s operating structure and strategic focus;
• Increased our headcount and resources in Hong Kong, while reducing
headcount elsewhere, principally in our London office, to focus our
resources where we have the greatest sources of differentiated information
and deal flow;
• Dedicated partner resources to our portfolio, with a particular focus on
achieving realizations of our mature investments;
• Overhauled our firm’s compliance programs;
• Transitioned to new inside and outside legal counsel; and
• Instituted quarterly QCP II LPAC calls, reduced fees, strengthened the
language of the continuing Key Man clause, and improved our LP
reporting packages.

Consistent with this increased focus on our core mission of private equity investing
and Mayor Bloomberg’s desire to have the Quadrangle Asset Management
(“QAM”) team focus on his assets, we are also transferring QAM’s team and its
investments to an independent entity that will serve the needs of Mayor Bloomberg
and his foundation. As you are aware, at the beginning of 2008, Mayor Bloomberg
and his foundation retained Quadrangle to build a separate, dedicated investment
team to provide customized asset management services. Having successfully built
out the investment team and operating functions necessary to provide these
services, Mayor Bloomberg believes creating this independent entity will allow his
investment team to operate with the flexibility and privacy that he seeks. We
thank Mayor Bloomberg for his support and confidence, and we wish our
colleagues well in the transition to their new home. The separation of this team
will have no impact on our private equity team or investment capabilities.

Regulatory Update

We remain constrained in what we can communicate about the New York Attorney
General’s (“NY AG”) investigation relating to the actions of certain former
employees, and deeply regret that the regulatory situation continues to be
outstanding. While we would prefer to be in a position to tell you when we expect
to reach a resolution, the decision is out of our control. That said, we are doing all
that we can to resolve it.

We do wish to reiterate, however, the following salient facts:

• Quadrangle is fully cooperating with the NY AG’s office.
• The NY AG’s office understands that no one currently working at the firm
was involved in the matters under investigation.
 Page 5

• The NY AG’s office is not waiting for any additional information from
Quadrangle.
• We have indicated to the NY AG’s office that we are willing to adopt the
NY AG’s Code of Conduct as a part of any resolution to this situation.

Importantly, as the substance of this letter demonstrates, our focus continues to be

on creating value for you.

2010 and Forward

In conversations with our investors, we have also received certain questions with
sufficient frequency that we would like to address them here:

• What liquidity can we expect in 2010? Given the successful value

creation at several companies, we believe the time has come to examine
their strategic alternatives. We ended 2009 with $197.3 million of
marketable securities in QCP II and another $179.4 million in QCP I,
situations that we believe could present opportunities for further
realizations in the coming year. Specifically, while there is no certainty
that it will lead to any transaction, Protection One, in QCP I’s portfolio,
announced it has hired JP Morgan to explore its strategic alternatives.
Similarly, we believe that other portfolio companies, with proven and
sustainable operating growth that may benefit from stronger financing
markets, would be well positioned to examine strategic alternatives in the
current year.

• Where are you seeing interesting investment opportunities? Pro forma

for our investment in Tower Vision, and after reserving for follow-on
investments, we have sufficient capital for new investments prior to the
end of the Commitment Period in December 2010. We would highlight
three areas of focus:
(i) As evidenced by our investment in Tower Vision, we continue
to see the benefit of investing globally across specialized
areas. Specifically, we are looking at two additional tower
opportunities: one in Japan, another in the United States, and
we expect to replicate our global approach to towers in other
areas.
(ii) Our long history of successful investments in competitive
telecommunications providers has drawn our attention to
companies with specialized strategies that can take advantage
of the massive increase in data usage.
(iii) We continue to believe that the migration of consumer time
and viewership to the Internet along with the attendant
 Page 6

benefits of greater targeting and measurability associated with

Internet advertising will provide compelling investment
opportunities. Our experience and relationships in this area
combined with our experience in growth investing will
continue to serve us well, particularly in an environment
where new leveraged transactions remain muted relative to
long-term historic levels.

• What are your plans for QCP III? We are enthusiastic about the quality
of our team, the nature and attractiveness of our deal flow, and the
investment proposition that we offer to investors. We are in the early
stages of developing a view on the timing and size of QCP III, and the first
step in that process will be discussions with our existing investors, which
we plan to begin in the spring.

We conclude with our sincerest thanks for your support and advice. As always, we
hope you will contact us with any comments or questions.

Peter Ezersky Andrew Frey Michael Huber Edward Sippel Joshua Steiner
Managing Managing Co-President & Managing Co-President &
Principal Principal Managing Principal Managing
Principal Principal