Exhibit 10.3

 

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SECOND AMENDED AND RESTATED

LOAN FUNDING AND SERVICING AGREEMENT

 

by and among

 

ACS FUNDING TRUST I,

as the Borrower

 

AMERICAN CAPITAL STRATEGIES, LTD.,

as the Servicer

 

EACH OF THE CONDUIT LENDERS AND INSTITUTIONAL LENDERS

FROM TIME TO TIME PARTY HERETO,

as Lenders

 

EACH OF THE LENDER AGENTS

FROM TIME TO TIME PARTY HERETO,

as Lender Agents

 

WACHOVIA CAPITAL MARKETS, LLC,

as the Deal Agent

 

JPMORGAN CHASE BANK,

as the Swingline Lender

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Backup Servicer and as the Collateral Custodian

 

Dated as of August 10, 2004

 

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ARTICLE I DEFINITIONS

   2

Section 1.1.

   Certain Defined Terms    2

Section 1.2.

   Other Terms    39

Section 1.3.

   Computation of Time Periods    39

Section 1.4.

   Interpretation    39

Section 1.5.

   Section References    40

Section 1.6.

   Calculations    40

ARTICLE II PURCHASE OF THE STRUCTURED NOTES

   40

Section 2.1.

   The Structured Notes    40

Section 2.2.

   Procedures for Swingline Advances    42

Section 2.3.

   Procedures for Advances by the Conduit Lenders and Institutional Lenders   
44

Section 2.4.

   Optional Changes in Facility Amount; Prepayments    45

Section 2.5.

   Reimbursement of Swingline Advances    46

Section 2.6.

   Notations on the Structured Notes    46

Section 2.7.

   Principal Repayments    47

Section 2.8.

   Interest Payments    48

Section 2.9.

   Settlement Procedures    48

Section 2.10.

   Collections and Allocations    52

Section 2.11.

   Payments, Computations, Etc.    53

Section 2.12.

   [Reserved]    53

Section 2.13.

   Fees    53

Section 2.14.

   Increased Costs; Capital Adequacy; Illegality    54

Section 2.15.

   Taxes    55

Section 2.16.

   Assignment of the Purchase Agreement    57

Section 2.17.

   Lien Release Dividend    57

Section 2.18.

   Appointment of Registrar and Duties    59

Section 2.19.

   Substitution of Loans; Repurchase or Substitutions of Ineligible Loans    60

ARTICLE III CLOSING; CONDITIONS OF CLOSING AND ADVANCES

   63

Section 3.1.

   Conditions to Closing and Initial Advances    63

 

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Section 3.2.

   Conditions Precedent to All Advances and Swingline Advances    64

ARTICLE IV REPRESENTATIONS AND WARRANTIES

   65

Section 4.1.

   Representations and Warranties of the Borrower    65

Section 4.2.

   Representations and Warranties of the Borrower Relating to the Agreement and
the Loans    74

ARTICLE V GENERAL COVENANTS OF THE BORROWER

   75

Section 5.1.

   Covenants of the Borrower    75

Section 5.2.

   Hedging Agreement    79

Section 5.3.

   Delivery of Loan Files    80

ARTICLE VI PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

   81

Section 6.1.

   Custody of Transferred Loans    81

Section 6.2.

   Filing    81

Section 6.3.

   Changes in Name, Corporate Structure or Location    81

Section 6.4.

   Chief Executive Office    82

Section 6.5.

   Costs and Expenses    82

Section 6.6.

   Sale Treatment    82

Section 6.7.

   Separateness from the Borrower    82

ARTICLE VII ADMINISTRATION AND SERVICING OF LOANS

   83

Section 7.1.

   Appointment of the Servicer    83

Section 7.2.

   Duties and Responsibilities of the Servicer    83

Section 7.3.

   Authorization of the Servicer    84

Section 7.4.

   Collection of Payments    85

Section 7.5.

   Servicer Advances    87

Section 7.6.

   Realization Upon Defaulted Loans or Charged-Off Loans    88

Section 7.7.

   Maintenance of Insurance Policies    88

Section 7.8.

   Representations and Warranties of the Servicer    88

Section 7.9.

   Covenants of the Servicer    90

Section 7.10.

   The Collateral Custodian    92

Section 7.11.

   Representations and Warranties of the Collateral Custodian    96

Section 7.12.

   Covenants of the Collateral Custodian    97

Section 7.13.

   The Backup Servicer    97

 

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Section 7.14.

   Representations and Warranties of the Backup Servicer    100

Section 7.15.

   Covenants of the Backup Servicer    101

Section 7.16.

   Payment of Certain Expenses by the Servicer and the Borrower    102

Section 7.17.

   Reports    102

Section 7.18.

   Annual Statement as to Compliance    103

Section 7.19.

   Annual Independent Public Accountant’s Servicing Reports    103

Section 7.20.

   Limitation on Liability of the Servicer and Others    103

Section 7.21.

   The Servicer, the Backup Servicer and the Collateral Custodian Not to Resign
   104

Section 7.22.

   Access to Certain Documentation and Information Regarding the Loans    104

Section 7.23.

   [Reserved]    104

Section 7.24.

   Identification of Records    105

Section 7.25.

   Servicer Termination Events    105

Section 7.26.

   Appointment of Successor Servicer    106

Section 7.27.

   Market Servicing Fee    108

ARTICLE VIII SECURITY INTEREST

   108

Section 8.1.

   Grant of Security Interest    108

Section 8.2.

   Release of Lien on Loans    109

Section 8.3.

   [Reserved]    109

Section 8.4.

   Further Assurances    109

Section 8.5.

   Remedies    109

Section 8.6.

   Waiver of Certain Laws    109

Section 8.7.

   Power of Attorney    110

ARTICLE IX TERMINATION EVENTS

   110

Section 9.1.

   Termination Events    110

ARTICLE X INDEMNIFICATION

   113

Section 10.1.

   Indemnities by the Borrower    113

Section 10.2.

   Indemnities by the Servicer    115

ARTICLE XI THE DEAL AGENT AND LENDER AGENTS

   116

Section 11.1.

   The Deal Agent    116

Section 11.2.

   The Lender Agents    118

 

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ARTICLE XII MISCELLANEOUS

   120

Section 12.1.

   Amendments and Waivers    120

Section 12.2.

   Notices, Etc.    121

Section 12.3.

   Liabilities to Obligors    121

Section 12.4.

   No Waiver, Rights and Remedies    122

Section 12.5.

   Binding Effect    122

Section 12.6.

   Term of this Agreement    122

Section 12.7.

   GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE    122

Section 12.8.

   WAIVER OF JURY TRIAL.    122

Section 12.9.

   Costs, Expenses and Taxes    123

Section 12.10.

   No Proceedings    123

Section 12.11.

   Recourse Against Certain Parties    124

Section 12.12.

   Protection of Security Interest; Appointment of Deal Agent as
Attorney-in-Fact    124

Section 12.13.

   Confidentiality    125

Section 12.14.

   Third Party Beneficiaries    126

Section 12.15.

   Execution in Counterparts; Severability; Integration    126

Section 12.16.

   Waiver of Setoff    127

Section 12.17.

   Assignments by the Lenders;    127

Section 12.18.

   Heading and Exhibits    128

Section 12.19.

   Sharing of Payments on Transferred Loans Subject to the Retained Interest
Provisions    128

Section 12.20.

   Non-Confidentiality of Tax Treatment    129

 

- v -

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ANNEXES

Annex A

   Notice Information EXHIBITS

EXHIBIT A-1

   Borrower Notice (Funding Request)

EXHIBIT A-2

   Borrower Notice (Swingline Funding Request)

EXHIBIT A-3

   Borrower Notice (Reduction of Advances Outstanding and Reduction of Facility
Amount)

EXHIBIT B-1

   Form of Structured Note

EXHIBIT B-2

   Form of Swingline Note

EXHIBIT C

   Form of Trust Agreement

EXHIBIT D

   Form of Assignment and Acceptance

EXHIBIT E

   Form of Monthly Report

EXHIBIT F

   Form of Servicer’s Certificate

EXHIBIT G

   Credit and Collection Policy

EXHIBIT H-1

   Form of Hedging Agreement (Wachovia) (including Schedule and Confirmation)

EXHIBIT H-2

   Form of Hedging Agreement (JPMorgan Chase Bank) (including Schedule and
Confirmation)

EXHIBIT I

   Form of Certificate of Borrower’s Counsel

EXHIBIT J

   Form of Trust Receipt and Initial Certification

EXHIBIT K

   Form of Trust Receipt and Final Certification

EXHIBIT L

   Form of Request for Release of Loan Documents and Receipt

EXHIBIT M-1

   Form of Assignment of Mortgage

EXHIBIT M-2

   Assignment of Second Mortgage and Security Agreement

EXHIBIT N

   Form of Reinvestment Certification

EXHIBIT O-1

   Officer’s Certificate as to Solvency from Originator

EXHIBIT O-2

   Officer’s Certificate as to Solvency from Borrower

EXHIBIT P-1

   Officer’s Closing Certificate from Originator

EXHIBIT P-2

   Officer’s Closing Certificate from Borrower

EXHIBIT Q-1

   Power of Attorney from Servicer

EXHIBIT Q-2

   Power of Attorney from Borrower

EXHIBIT R

   [Reserved]

EXHIBIT S

   [Reserved]

EXHIBIT T

   Form of Agent and Intercreditor Provisions for Agented Notes

EXHIBIT U

   Form of Intercreditor and Subordination Agreement

EXHIBIT V

   Form of Transferee Letter

EXHIBIT W

   Form of Joinder Supplement SCHEDULES

SCHEDULE I

   Schedule of Documents

SCHEDULE II

   [Reserved]

SCHEDULE III

   [Reserved]

SCHEDULE IV

   Loan List

SCHEDULE V

   Location of Loan Files

 

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[EXECUTION COPY]

 

P R E A M B L E

 

THIS SECOND AMENDED AND RESTATED LOAN FUNDING AND SERVICING AGREEMENT (such
agreement as amended, modified, waived, supplemented or restated from time to
time, the “Agreement”) is made as of this 10th day of August, 2004, by and
among:

 

(1) ACS FUNDING TRUST I, a Delaware statutory trust, as the borrower (together
with its successors and assigns in such capacity, the “Borrower”);

 

(2) AMERICAN CAPITAL STRATEGIES, LTD., a Delaware corporation (“American
Capital”), as the servicer (together with its successors and assigns in such
capacity, the “Servicer”);

 

(3) EACH OF THE CONDUIT LENDERS FROM TIME TO TIME PARTY HERETO, as a Conduit
Lender;

 

(4) EACH OF THE INSTITUTIONAL LENDERS FROM TIME TO TIME PARTY HERETO, as an
Institutional Lender;

 

(5) EACH OF THE LENDER AGENTS FROM TIME TO TIME PARTY HERETO, as a Lender Agent;

 

(6) WACHOVIA CAPITAL MARKETS, LLC, a Delaware limited liability company (“WCM”),
as the deal agent (together with its successors and assigns in such capacity,
the “Deal Agent”);

 

(7) JPMORGAN CHASE BANK, a New York banking corporation (together with its
successors and assigns, “JPMorgan Chase Bank”), as the swingline lender
(together with its successors and assigns in such capacity, the “Swingline
Lender”, and together with the Conduit Lenders and the Institutional Lenders,
the “Lenders”); and

 

(8) WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
(“Wells Fargo”), not in its individual capacity, but solely as the backup
servicer (together with its successors and assigns in such capacity, the “Backup
Servicer”) and as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”).

 

R E C I T A L S

 

WHEREAS, the Borrower, the Servicer, Variable Funding Capital Corporation
(“VFCC”), as the original conduit lender (in such capacity, the “Original
Conduit Lender”), and Wachovia Bank, National Association, (together with its
successors and assigns, “Wachovia”), as the original swingline lender (the
“Original Swingline Lender”) and together with the Original Conduit Lender, the
“Original Lenders”), WCM (f/k/a Wachovia Securities, LLC as the original deal
agent (together with its successors and assigns in such capacity, the “Original
Deal Agent”), the Backup Servicer, and the Collateral Custodian have heretofore
executed and delivered an

 

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Amended and Restated Loan Funding and Servicing Agreement, dated as of June 13,
2003, as amended by Amendment No. 1, dated as of October 7, 2003, Amendment No.
2, dated as of January 2, 2004, Amendment No. 3, dated as of April 22, 2004 and
Amendment No. 4, dated as of June 29, 2004 (as amended, modified, waived or
supplemented, the “Original Loan Funding and Servicing Agreement”), providing
for the purchase from time to time by the Original Lenders of Structured Notes
representing an undivided ownership interest in the Collateral purchased by the
Original Lenders;

 

WHEREAS, Section 11.1 of the Original Loan Funding and Servicing Agreement
provides that no amendment shall be effective without the written agreement of
the Borrower, the Original Deal Agent, the Required Lenders (as defined in the
Original Loan Funding and Servicing Agreement), the Backup Servicer, the
Collateral Custodian and the Hedge Counterparty;

 

WHEREAS, the Borrower, the Original Deal Agent, each of the Original Lenders,
the Backup Servicer, the Collateral Custodian and the Hedge Counterparty hereby
desire to amend and restate the Original Loan Funding and Servicing Agreement to
make such changes as are necessary or in the interests of the parties;

 

WHEREAS, each of the Borrower, the Original Deal Agent, the Original Lenders,
the Backup Servicer, the Collateral Custodian and the Hedge Counterparty
consents to the amendments to the Original Loan Funding and Servicing Agreement
effected by this Agreement;

 

(a) WHEREAS, the parties to the Original Loan Funding and Servicing Agreement
wish to add JPMorgan Chase Bank as an Institutional Lender party hereto and the
Original Swingline Lender and JPMorgan Chase Bank have agreed that JPMorgan
Chase Bank will become the new Swingline Lender hereunder; and

 

WHEREAS, all other conditions precedent to the execution of this Agreement have
been complied with;

 

NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises and
agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1. Certain Defined Terms.

 

(a) Certain capitalized terms used throughout this Agreement are defined above
or in this Section 1.1.

 

(b) As used in this Agreement and its schedules, exhibits and other attachments,
unless the context requires a different meaning, the following terms shall have
the following meanings:

 

“1940 Act”: The Investment Company Act of 1940, as amended.

 

2

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“2000-1 Class C Securities”: Collectively, (i) the ACAS Business Loan Trust
2000-1 Class C Loan Backed Note, dated December 20, 2000 and (ii) the ACAS
Business Loan Trust 2000-1, Trust Certificate, dated December 20, 2000.

 

“2002-1 Class C Securities”: Collectively, (i) the ACAS Business Loan Trust
2002-1 Class C Loan Backed Note, dated March 15, 2002 and (ii) the ACAS Business
Loan Trust 2002-1, Trust Certificate, dated March 15, 2002.

 

“2002-2 Class C Securities”: Collectively, (i) the ACAS Business Loan Trust
2002-2 Class C Loan Backed Note, dated August 8, 2002 and (ii) the ACAS Business
Loan Trust 2002-2, Trust Certificate, dated August 8, 2002.

 

“2003-1 Class D Securities”: Collectively, (i) the ACAS Business Loan Trust
2003-1, Class D Principal Only Asset Backed Note, dated May 21, 2003, and (ii)
the ACAS Business Loan Trust 2003- 1, Trust Certificate, dated May 21, 2003.

 

“Accreted Interest”: The accrued interest on a PIK Loan that is added to the
principal amount of such PIK Loan instead of being paid as it accrues.

 

“Accrual Period”: With respect to each Advance and Swingline Advance (or portion
thereof) (a) with respect to the first Payment Date, the period from and
including the Closing Date to and including the last day of the calendar month
in which the Closing Date occurs and (b) with respect to any subsequent Payment
Date, the calendar month immediately preceding the month in which the Payment
Date occurs.

 

“Add-On Loan”: Any additional loan or extension of credit made subsequent to any
Loan made by the Originator or one of its Subsidiaries to the Obligor of such
Loan in accordance with the Credit and Collection Policy.

 

“Adjusted Eurodollar Rate”: For any Accrual Period, an interest rate per annum
equal to a fraction, expressed as a percentage and rounded upwards (if
necessary), to the nearest 1/100 of 1%, (i) the numerator of which is equal to
the LIBOR Rate for such Accrual Period and (ii) the denominator of which is
equal to 100% minus the Eurodollar Reserve Percentage for such Accrual Period.

 

“Advance”: Defined in Section 2.1(b).

 

“Advances Outstanding”: On any day, the aggregate principal amount of Advances
outstanding and Swingline Advances outstanding on such day, after giving effect
to all repayments of Advances and Swingline Advances and makings of new Advances
and Swingline Advances on such day; provided, that, the “Advances Outstanding”
under and as defined in the Original Loan Funding and Servicing Agreement on and
as of the Closing Date shall be deemed to be Advances Outstanding under and for
all purposes of this Agreement.

 

“Affected Party”: The Deal Agent, each Lender Agent, each Conduit Lender, each
Institutional Lender, the Swingline Lender, each Liquidity Bank, all assignees
and participants of

 

3

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the Lenders, each Liquidity Bank, any successor to WCM as Deal Agent and any
sub-agent of the Deal Agent.

 

“Affiliate”: With respect to a Person, means any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” or “controlled” have meanings correlative
to the foregoing; provided, that in the case of the Servicer or any Subsidiary,
“Affiliate” shall not include any Person that is a Portfolio Investment.

 

“Agent’s Account”: The Deal Agent’s Account, each Lender Agent’s Account or the
Swingline Lender’s Account, as applicable.

 

“Agented Notes”: One or more promissory notes issued by an Eligible Obligor
wherein (a) the note(s) are originated in accordance with the Credit and
Collection Policy as a part of a syndicated loan transaction, (b) upon an
assignment of the note to the Borrower under the Purchase Agreement and the
grant of a security interest in such note under this Agreement, the original
note will be endorsed either in blank or to the Deal Agent on behalf of the
Secured Parties, and held by the Collateral Custodian on behalf of the Secured
Parties, (c) the Borrower, as assignee of the note, will have all of the rights
(but none of the obligations) of the Originator with respect to such note and
the Related Property, including the right to receive and collect payments
directly in its own name or through the agent described in item (e) and to
enforce its rights against the Obligor thereof, (d) the note is secured by an
undivided interest in the Related Property that also secures and is shared by,
on a pro rata basis, all other holders of such Obligor’s notes of equal priority
and (e) the Originator (or American Capital Financial Services, Inc., a
wholly-owned Subsidiary of the Originator) is the agent for all noteholders of
such Obligor; provided, that Agented Notes shall not include (1) the
obligations, if any, of any agents under the Loan Documents evidencing such
Agented Notes, and (2) the interests, rights and obligations under the Loan
Documents evidencing such Agented Notes that are retained by the Originator or
are owned or owed by other noteholders.

 

“Aggregate Net Mark to Market Amount”: As of each Determination Date, the sum of
all Net Mark to Market Amounts for such date for all Hedge Counterparties,
provided, however, that if such sum shall be a negative number, the Aggregate
Net Mark to Market Amount shall be deemed to be zero.

 

“Aggregate Outstanding Loan Balance”: As of any date of determination, the sum
of the Outstanding Loan Balances of all Eligible Loans included as part of the
Collateral on such date minus the Outstanding Loan Balance of all Charged-Off
Loans included as part of the Collateral on such date.

 

“Agreement”: Defined in the Preamble.

 

“Allocation Adjustment Event”: With respect to each Transferred Loan subject to
the Retained Interest provisions of this Agreement, the occurrence of any one or
more of the

 

4

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following under and as defined in any Permitted Securitization Transaction rated
by the Rating Agencies, as applicable: (i) a “Servicer Termination Event” or
(ii) a “Termination Event”.

 

“Alternative Rate”: An interest rate per annum equal to the Adjusted Eurodollar
Rate; provided, however, that the Alternative Rate shall be the Base Rate if a
Eurodollar Disruption Event occurs; provided, further, that the Alternative Rate
for the first two Business Days following any Advance made by a Liquidity Bank
shall be the Base Rate unless such Liquidity Bank has received at least two
Business Days prior notice of such Advance.

 

“American Capital”: Defined in the Preamble.

 

“Amortization Period”: The period beginning on the Termination Date and ending
on the Collection Date.

 

“Applicable Law”: For any Person or property of such Person, all existing and
future applicable laws, rules, regulations (including proposed, temporary and
final income tax regulations), statutes, treaties, codes ordinances, permits,
certificates, orders and licenses of and interpretations by any Governmental
Authority (including, without limitation, usury laws, predatory lending laws,
the Federal Truth in Lending Act, and Regulation Z and Regulation B of the
Federal Reserve Board), and applicable judgments, decrees, injunctions, writs,
orders, or line action of any court, arbitrator or other administrative,
judicial, or quasi-judicial tribunal or agency of competent jurisdiction.

 

“Assignment”: The Assignment entered into between the Originator and the
Borrower in substantially the form of Exhibit A to the Purchase Agreement.

 

“Assignment of Mortgage”: As to each Loan secured by an interest in real
property, one or more assignments, notices of transfer or equivalent
instruments, each in recordable form and sufficient under the laws of the
relevant jurisdiction to reflect the transfer of the related mortgage, deed of
trust, security deed or similar security instrument and all other documents
related to such Loan and to the Borrower and to grant a perfected lien thereon
by the Borrower in favor of the Deal Agent, on behalf of the Secured Parties,
each such Assignment of Mortgage to be substantially in the form of Exhibit M
hereto; provided, however, with respect to Agented Notes, Assignment of Mortgage
shall mean such documents, including assignments, notices of transfer or
equivalent instruments, each in recordable form as necessary, as are sufficient
under the laws of the relevant jurisdiction to reflect the transfer to the
Originator (or American Capital Financial Services, Inc., a wholly owned
Subsidiary of the Originator), as collateral agent for all noteholders of the
Obligor, of the related mortgage, deed of trust, security deed or other similar
instrument securing such notes and all other documents relating to such notes
and to grant a perfected lien thereon by the Obligor in favor of the Originator
(or American Capital Financial Services, Inc., a wholly owned Subsidiary of the
Originator), as collateral agent for all such noteholders.

 

“Availability”: At any time, an amount equal to the excess, if any, of (i) the
lesser of (a) the Facility Amount and (b) the Maximum Availability over (ii) the
sum of (a) the Advances Outstanding on such day plus (b) the Aggregate Net Mark
to Market Amount; provided, however, that, (x) prior to April 22, 2005, subject
to the other terms and conditions contained

 

5

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herein, with respect to Swingline Advances and Advances against (I) the 2000-1
Class C Securities owned by the Borrower, the Availability (subject to Fair
Market Value adjustments) in respect thereof shall be an amount up to
$28,850,000, (II) the 2002-1 Class C Securities owned by the Borrower, the
Availability (subject to Fair Market Value adjustments) in respect thereof shall
be an amount up to $36,850,000, (III) the 2002-2 Class C Securities owned by the
Borrower, the Availability (subject to Fair Market Value adjustments) in respect
thereof shall be an amount up to $36,840,000 and (IV) the 2003-1 Class D
Securities owned by the Borrower, the Availability (subject to Fair Market Value
adjustments) in respect thereof shall be an amount up to $41,590,000, (y) on and
after April 22, 2005, the Availability with respect to Swingline Advances and
Advances against the Class C Securities shall be $0 and (z) for all purposes of
this Agreement, during the Amortization Period, the Availability shall be $0.

 

“Available Funds”: With respect to any Payment Date, all amounts received in the
Collection Account (including, without limitation, any Collections on any of the
Collateral) as of the later of (i) the immediately preceding Determination Date
or (ii) the date of the calculations set forth in the most recent Borrower
Notice.

 

“Average Obligor Amount”: As of any date of determination, the Aggregate
Outstanding Loan Balance minus all amounts in excess of Concentration Limits (a)
through (j) divided by the number of Obligors as of such date.

 

“Backup Servicer”: Defined in the Preamble.

 

“Backup Servicer Expenses”: The reasonable out-of-pocket expenses to be paid to
the Backup Servicer under and in accordance with the Backup Servicer and
Collateral Custodian Fee Letter.

 

“Backup Servicer Fee”: The fee to be paid to the Backup Servicer under the terms
of the Backup Servicer and Collateral Custodian Fee Letter.

 

“Backup Servicer and Collateral Custodian Fee Letter”: The Amended and Restated
Backup Servicer and Collateral Custodian Fee Letter, dated as of the date
hereof, among the Servicer, the Borrower, the Backup Servicer, the Collateral
Custodian and the Deal Agent.

 

“Bankruptcy Code”: The United States Bankruptcy Reform Act of 1978 (11 U.S.C. §§
101, et seq.), as amended from time to time.

 

“Base Rate”: On any date, a fluctuating rate of interest per annum equal to the
higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1.0%.

 

“Benefit Plan”: Any employee benefit plan as defined in Section 3.1(3) of ERISA
in respect of which the Borrower or any ERISA Affiliate of the Borrower is, or
at any time during the immediately preceding six years was, an “employer” as
defined in Section 3.1(5) of ERISA.

 

“Borrower”: Defined in the Preamble.

 

“Borrowing Base”: On any date of determination, an amount equal to (i) the
Aggregate Outstanding Loan Balance on such date plus (ii) the Outstanding Loan
Balance of all Eligible

 

6

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Loans to become included as part of the Collateral on such date minus (iii) the
amount (calculated without duplication) by which the Eligible Loans in clauses
(i) and (ii) together exceed any applicable Concentration Limits minus (iv) the
Outstanding Loan Balance of any Defaulted Loans.

 

“Borrowing Base Certificate”: A certificate of a Responsible Officer of the
Servicer setting forth the current Borrowing Base as of the date set forth in
such certificate and the manner of calculation thereof, to be delivered to the
parties and at the times specified herein.

 

“Borrower Notice”: A written notice, in the form of Exhibit A-1, A-2 or A-3, as
applicable, to be used for each Advance or Swingline Advance, repayment of each
Advance or Swingline Advance or termination or reduction of the Facility Amount
or Prepayments of Advances or Swingline Advances.

 

“Breakage Costs”: Any amount or amounts as shall compensate a Lender for any
loss, cost or expense incurred by such Lender (as reasonably determined by the
applicable Lender Agent on behalf of such Lender) as a result of (i) a
prepayment by the Borrower of Advances Outstanding or Interest or (ii) solely in
the case of a Conduit Lender, the excess, if any, of the CP Rate over the
Adjusted Eurodollar Rate. All Breakage Costs shall be due and payable upon
demand. The determination by the applicable Lender Agent of the amount of any
such loss or expense shall be set forth in a written notice to the Borrower and
shall be conclusive absent manifest error.

 

“Business Day”: Any day of the year other than a Saturday or a Sunday on which
(a) banks are not required or authorized to be closed in New York City, New
York, Minneapolis, Minnesota, Charlotte, North Carolina and Baltimore, Maryland,
and (b) if the term “Business Day” is used in connection with the Adjusted
Eurodollar Rate, means the foregoing only if such day is also a day of year on
which dealings in United States dollar deposits are carried on in the London
interbank market.

 

“Capital Lease Obligations”: With respect to any Obligor, for any period, the
obligations of such Person to pay rent and other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP.

 

“Change-in-Control”: The date on which (a) any Person or “group” acquires any
“beneficial ownership” (as such terms are defined under Rule 13d-3 of, and
Regulation 13D under the Exchange Act), either directly or indirectly, of stock
or other equity interests or any interest convertible into any such interest in
the Originator or Servicer having more than fifty percent (50%) of the voting
power for the election of directors of the Originator, or Servicer, if any,
under ordinary circumstances, or (b) (except in connection with any Permitted
Securitization Transaction) the Originator or Servicer sells, transfers,
conveys, assigns or otherwise disposes of all or substantially all of the assets
of the Originator or Servicer.

 

“Charged-Off Loan”: Any Transferred Loan: (i) that is 180 days or more past due
(without giving effect to any Servicer Advance thereon) with respect to any
interest or principal

 

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payment, (ii) for which an Insolvency Event has occurred with respect to the
related Obligor, (iii) for which the related Obligor has suffered any Material
Adverse Change, (iv) that is or should be written off as uncollectible by the
Servicer in accordance with the Credit and Collection Policy, (v) that has been
placed on non-accrual status by the Servicer in accordance with the Credit and
Collection Policy, (vi) all or any portion of which has been converted into or
exchanged for an Equity Security or (vii) has been sold for less than its
Outstanding Loan Balance upon foreclosure or upon exercise of remedies,
provided, that, only the portion of the Transferred Loan not recouped in such
sale shall be deemed to be “charged-off’ for purposes of clause (vii).

 

“Charged-Off Portfolio Loan”: Any Portfolio Loan: (i) that is 180 days or more
past due (without giving effect to any Servicer Advance thereon) with respect to
any interest or principal payment, (ii) for which an Insolvency Event has
occurred with respect to the related Obligor, (iii) for which the related
Obligor has suffered any Material Adverse Change, (iv) that is or should be
written off as uncollectible by the Servicer in accordance with the Credit and
Collection Policy, (v) that has been placed on non-accrual status by the
Servicer in accordance with the Credit and Collection Policy, (vi) all or any
portion of which has been converted into or exchanged for an Equity Security or
(vii) has been sold for less than its Portfolio Outstanding Loan Balance upon
foreclosure or upon exercise of remedies, provided, that, only the portion of
the Portfolio Loan not recouped in such sale shall be deemed to be “charged-off”
for purposes of clause (vii).

 

“Charged-Off Ratio”: With respect to any Collection Period, the percentage
equivalent of a fraction, calculated as of the Determination Date for such
Collection Period, (a) the numerator of which is equal to the aggregate
Outstanding Loan Balance of all Transferred Loans that became Charged-Off Loans
during such Collection Period and (b) the denominator of which is equal to the
decimal equivalent of a fraction (x) the numerator of which is equal to the sum
of (A) the Aggregate Outstanding Loan Balance as of the first day of such
Collection Period plus (B) the Aggregate Outstanding Loan Balance as of the last
day of such Collection Period and (y) the denominator of which is 2.

 

“Class C Securities”: Collectively, (i) the 2000-1 Class C Securities, (ii) the
2002-1 Class C Securities, (iii) the 2002-2 Class C Securities and (iv) the
2003-1 Class D Securities.

 

“Closing Date”: August 10, 2004.

 

“Code”: The Internal Revenue Code of 1986, as amended.

 

“Collateral”: All right, title and interest, whether now owned or hereafter
acquired or arising, and wherever located, of the Borrower in and to the
property described in clauses (i) through (xii) below and all accounts, cash and
currency, chattel paper, tangible chattel paper, electronic chattel paper,
copyrights, copyright licenses, equipment, fixtures, contract rights, general
intangibles, instruments, certificates of deposit, certificated securities,
uncertificated securities, financial assets, securities entitlements, commercial
tort claims, deposit accounts, inventory, investment property, letter-of-credit
rights, software, supporting obligations, accessions, and other property
consisting of, arising out of, or related to any of the following (in each case
excluding the Retained Interest and the Excluded Amounts):

 

(i) the Transferred Loans, and all monies due or to become due in payment of
such Transferred Loans on and after the related Cut-Off Date, including but not
limited to all Collections and all obligations owed to the Originator in
connection with such Loans;

 

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(ii) any Related Property securing or purporting to secure the Transferred Loans
(to the extent the Originator, other than solely in its capacity as collateral
agent under any loan agreement with an Obligor, has been granted a Lien thereon)
including the related security interest granted by the Obligor under such
Transferred Loans, all proceeds from any sale or other disposition of such
Related Property;

 

(iii) all security interests, liens, guaranties, warranties, letters of credit,
accounts, bank accounts, mortgages or other encumbrances and property subject
thereto from time to time purporting to secure payment of any Transferred Loan,
together with all UCC financing statements or similar filings relating thereto;

 

(iv) all claims (including “claims” as defined in Bankruptcy Code § 101(5)),
suits, causes of action, and any other right of the Originator, whether known or
unknown, against the related Borrower, the related Obligors, if any, or any of
their respective Affiliates, agents, representatives, contractors, advisors, or
any other Person that in any way is based upon, arises out of or is related to
any of the foregoing, including, to the extent permitted to be assigned under
applicable law, all claims (including contract claims, tort claims, malpractice
claims, and claims under any law governing the purchase and sale of, or
indentures for, securities), suits, causes of action, and any other right of the
Originator against any attorney, accountant, financial advisor, or other Person
arising under or in connection with the related Loan Documents;

 

(v) all cash, securities, or other property, and all setoffs and recoupments,
received or effected by or for the account of the Originator under such
Transferred Loans (whether for principal, interest, fees, reimbursement
obligations, or otherwise) after the related Cut-Off Date, including all
distributions obtained by or through redemption, consummation of a plan of
reorganization, restructuring, liquidation, or otherwise of any related Obligor
or the related Loan Documents, and all cash, securities, interest, dividends,
and other property that may be exchanged for, or distributed or collected with
respect to, any of the foregoing;

 

(vi) all Insurance Policies;

 

(vii) the Loan Documents with respect to such Transferred Loans;

 

(viii) the Collection Account, each Lock-Box and all Lock-Box Accounts, together
with all funds held in or credited to such accounts, and all certificates and
instruments, if any, from time to time representing or evidencing each of the
foregoing or such funds;

 

(ix) any Hedging Agreement and any payment from time to time due thereunder;

 

9

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(x) the Purchase Agreement and the assignment to the Deal Agent of all UCC
financing statements filed by the Borrower against the Originator under or in
connection with the Purchase Agreement;

 

(xi) the “Collateral” under, and as defined in, the Original Loan Funding and
Servicing Agreement, excluding, however, all right, title, and interest in,
under and to the “Pledge Agreement” and the related “Supplemental Interests”, in
each case under, and as defined in, the Original Loan Funding and Servicing
Agreement; and

 

(xii) the proceeds of each of the foregoing.

 

“Collateral Custodian”: Defined in the Preamble.

 

“Collateral Custodian Expenses”: The reasonable out-of-pocket expenses to be
paid to the Collateral Custodian under and in accordance with the Backup
Servicer and Collateral Custodian Fee Letter.

 

“Collateral Custodian Fee”: The fee to be paid to the Collateral Custodian under
the terms of the Backup Servicer and Collateral Custodian Fee Letter, including
the “Collateral Custodian Fee” and “Administration Fee,” each as defined in the
Backup Servicer and Collateral Custodian Fee Letter.

 

“Collection Account”: Defined in Section 7.4(e).

 

“Collection Date”: The date following the Termination Date on which the
Obligations have been reduced to zero and indefeasibly paid in full other than
contingent indemnification obligations.

 

“Collection Period”: Each calendar month, except in the case of the first
Collection Period, the period beginning on the Closing Date to and including the
last day of the calendar month in which the Closing Date occurs.

 

“Collections”: (a) All cash collections or other cash proceeds received by the
Borrower or by the Servicer or Originator on behalf of the Borrower from any
source in payment of any amounts owed in respect of a Transferred Loan,
including, without limitation, Interest Collections, Principal Collections,
Deemed Collections, Insurance Proceeds, interest earnings in the Collection
Account, and all Recoveries, (b) all amounts received by the Borrower in
connection with the repurchase of an Ineligible Loan pursuant to Section 2.19(b)
any other funds received by or on behalf of the Borrower with respect to any
Transferred Loan or Related Property, and (d) all payments received pursuant to
any Hedging Agreement or Hedge Transaction, but excluding, in the case of (a),
(b) or (c), as applicable, amounts in respect of any Retained Interest and
Excluded Amounts.

 

“Commercial Paper Notes”: On any day, any short-term promissory notes issued by
any Conduit Lender in the commercial paper market.

 

“Commitment”: With respect to each Conduit Lender and each Institutional Lender,
the commitment of such Lender to make Advances and, with respect to the
Swingline Lender, the

 

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commitment of such Lender to make Swingline Advances, in accordance herewith in
an amount not to exceed (a) prior to the Termination Date, the amount set forth
opposite such Lender’s name on the signature pages of this Agreement, under the
heading “Commitment,” and (b) on and after the Termination Date, except to the
extent set forth in Section 2.5, the outstanding Advances of such Lender.

 

“Commitment Termination Date”: August 7, 2007, or such later date as the Deal
Agent and each Lender Agent shall notify the Borrower of in writing in
accordance with Section 2.1(d).

 

“Computer Records”: The computer records generated by the Servicer or any
subservicer that provide information relating to the Loans and that were used by
the Originator in selecting the Loans in the Collateral.

 

“Concentration Limits”: On any day, each of the following (calculated on the
basis of a percentage of the Aggregate Outstanding Loan Balance):

 

(a) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral to Obligors whose chief executive office is in any one state shall
not exceed 35%;

 

(b) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral to Obligors which are in the same Industry shall not exceed 10%;

 

(c) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral to any one Obligor shall not exceed the Large Loan Limit;

 

(d) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral the Obligors of which are Grade 2 Obligors shall not exceed 7.5%;

 

(e) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral that have interest due and payable monthly shall not be less than
50%;

 

(f) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral that are secured by a security interest in all assets of the related
Obligor shall not be less than 75%;

 

(g) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral that have at least a portion of the monthly or quarterly interest
that is due under such Loans payable on a current basis by the Obligors thereof
in cash (or such Obligors shall have other Loans included as part of the
Collateral that pay current monthly or quarterly interest on a current basis in
cash) shall not be less than 100%;

 

(h) the sum of the Outstanding Loan Balances of each Eligible Loan included in
the Collateral which is a PIK Loan and which is either (a) a Fixed Rate Loan
having a Loan Rate of less than 11% per annum or (b) a Floating Rate Loan having
a Loan Rate of less than 8% per annum shall not exceed 0%;

 

(i) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral principally secured by real property shall not exceed 40%;

 

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(j) the sum of the Outstanding Loan Balances of all Eligible Loans included in
the Collateral which have been included as part of the Collateral for 12 months
or more shall not exceed $50,000,000 (provided, that, if a Loan or portion
thereof has been transferred, sold, contributed or otherwise conveyed to the
Originator or any Affiliate thereof as part of a Permitted Securitization
Transaction that is a private placement collateralized loan or collateralized
debt obligation transaction, such sum shall be calculated by treating any Loans
to the related Obligor remaining in the Collateral as if such Loans were first
included in the Collateral as of the date of such Permitted Securitization
Transaction); and

 

(k) the Average Obligor Amount shall not exceed the greater of $12,000,000 and
4%.

 

“Consents”: Defined in Section 7.11(e).

 

“Conduit Lender”: VFCC and each other commercial paper conduit as may from time
to time become a Lender hereunder by executing and delivering a Joinder
Supplement to the Deal Agent and the Borrower as contemplated by Section 2.1(e).

 

“Consolidated Subsidiary”: With respect to any Obligor, as of any date of
determination, any Subsidiary or other Person the accounts of which would be
consolidated with those of the Obligor in its consolidated financial statements
if such statements were prepared as of such date.

 

“Contractual Obligation”: With respect to any Person, means any provision of any
securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its property is bound or is subject.

 

“CP Rate”: For any Accrual Period, the per annum rate equivalent to the weighted
average of the per annum rates paid or payable by a Conduit Lender from time to
time as interest on or otherwise (by means of interest rate hedges or otherwise
taking into consideration any incremental carrying costs associated with
short-term promissory notes issued by such Conduit Lender maturing on dates
other than those certain dates on which such Conduit Lender is to receive funds)
in respect of the Commercial Paper Notes issued by such Conduit Lender that are
allocated, in whole or in part, by the applicable Lender Agent (on behalf of
such Conduit Lender) to fund or maintain the Advances Outstanding during such
period, as determined by the applicable Lender Agent (on behalf of such Conduit
Lender) and reported to the Borrower and the Servicer, which rates shall reflect
and give effect to (i) the commissions of placement agents and dealers in
respect of such promissory notes, to the extent such commissions are allocated,
in whole or in part, to such promissory notes by the applicable Lender Agent (on
behalf of such Conduit Lender) and (ii) other borrowings by such Conduit Lender,
including, without limitation, borrowings to fund small or odd dollar amounts
that are not easily accommodated in the commercial paper market; provided,
however, that if any component of such rate is a discount rate, in calculating
the CP Rate, the applicable Lender Agent shall for such component use the rate
resulting from converting such discount rate to an interest bearing equivalent
rate per annum.

 

“Credit and Collection Policy”: Those credit, collection, customer relation and
service policies: (a) determined by the Borrower, the Originator and the initial
Servicer as of the date

 

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hereof relating to the Loans and related Loan Documents, described in Exhibit G,
as the same may be amended or modified from time to time in accordance with
Section 7.9(g); and (b) with respect to any Successor Servicer, the collection
procedures and policies of such person (as approved by the Required Lenders) at
the time such Person becomes Successor Servicer.

 

“Cut-Off Date”: With respect to each Transferred Loan, the Purchase Date of such
Transferred Loan, on and after which Collections on such Transferred Loan become
included as part of the Collateral.

 

“Deal Agent”: Defined in the Preamble.

 

“Deal Agent’s Account”: A special account (account number xxxxxxxxxxxx) in the
name of the Deal Agent at Wachovia.

 

“Deemed Collection”: Defined in Section 2.4(c).

 

“Defaulted Loan”: Any Transferred Loan (that is not a Charged-Off Loan) (a) that
is 60 days or more past due with respect to any interest or principal payments
or (b) that is or otherwise should be considered a Defaulted Loan by the
Servicer in accordance with the Credit and Collection Policy.

 

“Defaulted Portfolio Loan”: Any Portfolio Loan (that is not a Charged-Off
Portfolio Loan) (a) that is 60 days or more past due with respect to any
interest or principal payments (b) that is or otherwise should be considered a
Defaulted Portfolio Loan by the Servicer in accordance with the Credit and
Collection Policy.

 

“Default Ratio”: With respect to any Collection Period, the percentage
equivalent of a fraction, calculated as of the Determination Date for such
Collection Period, (a) the numerator of which is equal to the aggregate
Outstanding Loan Balance of all Defaulted Loans (excluding Charged-Off Loans)
and (b) the denominator of which is equal to the decimal equivalent of a
fraction the numerator of which is equal to the sum of (i) the Aggregate
Outstanding Loan Balance as of the first day of such Collection Period and (ii)
the Aggregate Outstanding Loan Balance as of the last day of such Collection
Period and the denominator of which is 2.

 

“Delinquent”: On any day with respect to any Loan, and any specified time
period, (i) any payment, or portion thereof, due with respect thereto, has not
been made by the Obligor of such Loan for the specified time period from the due
date of such payment or (ii) other than with respect to any PIK Loans, the
related Obligor is not paying any of the accrued and unpaid interest thereon on
a current basis.

 

“Derivatives”: Any exchange-traded or over-the-counter (a) forward, future,
option, swap, cap, collar, floor, foreign exchange contract, any combination
thereof, whether for physical delivery or cash settlement, relating to any
interest rate, interest rate index, currency, currency exchange rate, currency
exchange rate index, debt instrument, debt price, debt index, depository
instrument, depository price, depository index, equity instrument, equity price,
equity index, commodity, commodity price or commodity index, (b) any similar
transaction, contract, instrument, undertaking or security, or (c) any
transaction, contract, instrument, undertaking or security containing any of the
foregoing.

 

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“Determination Date”: The last day of each Collection Period.

 

“Dollars”: Means, and the conventional “$” signifies, the lawful currency of the
United States.

 

“Eligible Loan”: (i) Any Class C Security and (ii) on any date of determination,
any Loan that satisfies each of the following requirements:

 

(i) the Loan is evidenced by a promissory note that has been duly authorized and
that, together with the related Loan Documents, is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor of such Loan
to pay the stated amount of the Loan and interest thereon, and the related Loan
Documents are enforceable against such Obligor in accordance with their
respective terms;

 

(ii) the Loan was originated in accordance with the terms of the Credit and
Collection Policy and arose in the ordinary course of the Originator’s business
from the loaning of money to the Obligor thereof;

 

(iii) as of the date such Loan is first included in the Collateral, the Loan is
not a Defaulted Loan or a Charged-Off Loan, and, for purposes of the initial
Advance or Swingline Advance made with respect to such Loan, no payment or
portion thereof is more than ten days Delinquent;

 

(iv) the Obligor of such Loan has executed all appropriate documentation
required by the Originator, as required by, and in accordance with, the Credit
and Collection Policy;

 

(v) the Loan, together with the Loan Documents related thereto, is a “general
intangible”, an “instrument”, a “payment intangible”, an “account”, or “chattel
paper” within the meaning of the UCC of all jurisdictions that govern the
perfection of the security interest granted therein;

 

(vi) all material consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority required to be
obtained, effected or given in connection with the making of such Loan have been
duly obtained, effected or given and are in full force and effect;

 

(vii) any applicable taxes in connection with the transfer of such Loan have
been paid and the Obligor has been given any assurances (including with respect
to the payment of transfer taxes and compliance with securities laws) required
by the Loan Documents in connection with the transfer of the Loan;

 

(viii) the Loan is denominated and payable only in Dollars in the United States;

 

(ix) the Loan bears some current interest, which is due and payable monthly or
quarterly;

 

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(x) the Loan, together with the Loan Documents related thereto, was originated
in accordance with, and does not contravene in any material respect any
Applicable Laws (including, without limitation, laws, rules and regulations
relating to usury, predatory lending, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy) and with respect to which no party to the Loan Documents related
thereto is in material violation of any such Applicable Laws;

 

(xi) the Loan, together with the related Loan Documents, is fully assignable,
(and, if such Loan is secured by an interest in real property, an Assignment of
Mortgage has been delivered to the Collateral Custodian);

 

(xii) the Loan was documented and closed in accordance with the Credit and
Collection Policy, and there is only one current original promissory note, which
has been delivered to the Collateral Custodian, duly endorsed as collateral;

 

(xiii) the Loan and the Borrower’s interest in all related Collateral and
Related Property are free of any Liens, except for Permitted Liens and all
filings and other actions required to perfect the security interest of (a) the
Deal Agent, as agent for the Secured Parties, in the Collateral have been made
or taken and (b) in the case of Agented Notes, the collateral agent, as agent
for all noteholders of the related Obligor, in the Related Property, have been
made or taken;

 

(xiv) the Loan has an original term to maturity of no more than 120 months, and
is either fully amortizing in installments (which installments need not be in
identical amounts) over such term or the principal amount thereof is due in a
single installment at the end of such term;

 

(xv) no right of rescission, set off, counterclaim, defense or other material
dispute has been asserted with respect to such Loan;

 

(xvi) any Related Property with respect to such Loan is insured in accordance
with the Credit and Collection Policy;

 

(xvii) the Loan Documents with respect to such Loan are complete in accordance
with the Credit and Collection Policy;

 

(xviii) the Obligor with respect to such Loan is an Eligible Obligor;

 

(xix) such Loan does not represent payment obligations relating to “put” rights;

 

(xx) the Loan does not by its terms permit the payment obligation of the Obligor
thereunder to be converted into or exchanged for equity capital of such Obligor;

 

(xxi) [Reserved];

 

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(xxii) if such Loan is originated on or after December 1, 2000, the Obligor of
such Loan has waived all rights of set-off and/or counterclaim against the
Originator of the Loan and all assignees thereof;

 

(xxiii) with respect to Agented Notes, the related Loan Documents (a) shall
include a note purchase agreement containing provisions relating to the
appointment and duties of a payment agent and a collateral agent and
intercreditor and (if applicable) subordination provisions substantially similar
to the forms provided to and approved by the Required Lenders and attached
hereto as Exhibit T, and (b) are duly authorized, fully and properly executed
and are the valid, binding and unconditional payment obligation of the Obligor
thereof;

 

(xxiv) with respect to Agented Notes, the Originator (or American Capital
Financial Services, Inc., a wholly owned Subsidiary of the Originator) has been
appointed the collateral agent of the security and the payment agent for all
such notes prior to such Agented Note becoming a part of the Collateral;

 

(xxv) with respect to Agented Notes, if the entity serving as the collateral
agent of the security for all syndicated notes of the Obligor has or will change
from the time of the origination of the notes, all appropriate assignments of
the collateral agent’s rights in and to the collateral on behalf of the
noteholders have been executed and filed or recorded as appropriate prior to
such Agented Note becoming a part of the Collateral;

 

(xxvi) with respect to Agented Notes, all required notifications, if any, have
been given to the collateral agent, the payment agent and any other parties
required by the Loan Documents, and all required consents, if any, have been
obtained with respect to, the Originator’s assignment of the Agented Notes and
the Originator’s right, title and interest in the Related Property to the
Borrower and the Deal Agent’s security interest therein on behalf of the Secured
Parties;

 

(xxvii) with respect to Agented Notes, the right to control the actions of and
to replace the collateral agent and/or the paying agent of the syndicated notes
is by the Note Majority; and

 

(xxviii) with respect to Agented Notes, all syndicated notes of the Obligor of
the same priority are cross-defaulted, the Related Property securing such notes
is held by the collateral agent for the benefit of all holds of the syndicated
notes and all holders of such notes (a) have an undivided interest in the
collateral securing such notes, (b) share in the proceeds of the sale or other
disposition of such collateral on a pro rata basis and (c) may transfer or
assign their right, title and interest in the Related Property.

 

(xxix) all information on the Loan List delivered to the Deal Agent with respect
to such Loan is true and correct.

 

“Eligible Obligor”: On any day, any Obligor that satisfies each of the following
requirements at all times:

 

(i) such Obligor is not in the gaming, nuclear waste, bio-tech, oil and gas or
real estate industries;

 

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(ii) such Obligor is not a natural person and is a legal operating entity, duly
organized and validly existing under the laws of its jurisdiction of
organization;

 

(iii) the business being financed by such Obligor has an Operating History of at
least 60 months from the date of its incorporation or formation;

 

(iv) such Obligor is not the subject of any Insolvency Event (and, as of the
Funding Date on which such Loan became part of the Collateral, such Obligor has
not experienced a Material Adverse Change);

 

(v) such Obligor is not an Affiliate of any other Obligor hereto (other than as
a result of being an Affiliate of the Originator);

 

(vi) no other Loan of such Obligor is Delinquent for more than 30 days;

 

(vii) such Obligor is not a Governmental Authority;

 

(viii) such Obligor is in compliance with all material terms and conditions of
its Loan Documents;

 

(ix) such Obligor’s principal office and any Related Property are located in the
United States or any other country or territory of the United States (approved
by the Deal Agent upon receipt and review of satisfactory legal due diligence,
Rating Agency discussions and credit approval);

 

(x) such Obligor has an Eligible Risk Rating.

 

“Eligible Risk Rating”: As of any date of determination, with respect to a
designated Obligor, a risk rating of “Grade 2,” “Grade 3,” or “Grade 4.”

 

“Equity Security”: Any equity security or other obligation or security that does
not entitle the holder thereof to receive periodic payments of interest and one
or more installments of principal.

 

“ERISA”: The U.S. Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

 

“ERISA Affiliate”: (a) Any corporation that is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as the
Borrower; (b) a trade or business (whether or not incorporated) under common
control (within the meaning of Section 414(c) of the Code) with the Borrower or
(c) a member of the same affiliated service group (within the meaning of Section
414(m) of the Code) as the Borrower, any corporation described in clause (a)
above or any trade or business described in clause (b) above.

 

17

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“Eurocurrency Liabilities”: Defined in Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

 

“Eurodollar Disruption Event”: The occurrence of any of the following: (a) the
Swingline Lender, any Institutional Lender or any Liquidity Bank, as applicable,
shall have notified the Deal Agent of a determination by such Swingline Lender,
Institutional Lender or Liquidity Bank or any of their respective assignees or
participants, as applicable, that it would be contrary to law or to the
directive of any central bank or other Governmental Authority (whether or not
having the force of law) to obtain Dollars in the London interbank market to
fund any Advance or Swingline Advance, (b) the Swingline Lender, Institutional
Lender or Liquidity Bank, as applicable, shall have notified the Deal Agent of
the inability, for any reason, of such Swingline Lender, Institutional Lender,
Liquidity Bank or any of their respective assignees or participants, as
applicable, to determine the Adjusted Eurodollar Rate, (c) any Swingline Lender,
Institutional Lender or Liquidity Bank, as applicable, shall have notified the
Deal Agent of a determination by such Swingline Lender, Institutional Lender,
Liquidity Bank or any of their respective assignees or participants, as
applicable, that the rate at which deposits of Dollars are being offered to such
Swingline Lender, Institutional Lender or Liquidity Bank or any of their
respective assignees or participants, as applicable, in the London interbank
market does not accurately reflect the cost to such Swingline Lender,
Institutional Lender or Liquidity Bank, such assignee or such participant, as
applicable, of making, funding or maintaining any Advance or Swingline Advance
or (d) any Swingline Lender, any Institutional Lender or any Liquidity Bank, as
applicable, shall have notified the Deal Agent of the inability of such
Swingline Lender, Institutional Lender, Liquidity Bank or any of their
respective assignees or participants, as applicable, to obtain Dollars in the
London interbank market to make, fund or maintain any Advance or Swingline
Advance.

 

“Eurodollar Reserve Percentage”: For any period, means the reserve percentage
(expressed as a decimal, rounded upward to the next 1/100th of one percent
(0.01%)), if any, applicable during such period (or, if more than one such
percentage shall be so applicable, the daily average of such percentages for
those days in such period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any basic, emergency,
supplemental, marginal or other reserve requirements) with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term of one month.

 

“Exchange Act”: The Securities Exchange Act of 1934, as amended.

 

“Excluded Amounts”: Any Collections received with respect to Repurchased Loans,
Replaced Loans or Loans which are the subject of a Lien Release Dividend to the
extent such Collections are attributable to a time after the effective date of
such repurchase, substitution or Lien Release Dividend.

 

“Facility Amount”: The aggregate Commitments of the Conduit Lenders and the
Institutional Lenders then in effect (excluding, for the avoidance of doubt any
Commitment of the Swingline Lender); provided, that, such amount may not at any
time exceed $850,000,000 without the written agreement of the parties hereto;
provided, further, that, on or after the Termination Date, the Facility Amount
shall be $0.

 

18

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“Facility Fee”: (a) With respect to each Conduit Lender, the Facility Fee (as
defined in such Conduit Lender’s Fee Letter), (b) with respect to each
Institutional Lender, the Facility Fee (as defined in such Institutional
Lender’s Fee Letter) and (c) with respect to the Swingline Lender, the Swingline
Facility Fee (as defined in the Swingline Lender’s Fee Letter).

 

“Fair Market Value”: With respect to (i) each Eligible Loan included in the
Collateral (other than the Class C Securities), if such Eligible Loan has been
reduced in value on such date of determination below the original principal
amount (other than as a result of the allocation of a portion of the original
principal amount to warrants) the fair market value of such Eligible Loan as
required by, and in accordance with, the 1940 Act and any orders of the
Securities and Exchange Commission issued to the Originator, to be determined by
the Board of Directors of the Originator and reviewed by its auditors, and (ii)
the Class C Securities (if any), the fair market value of such Class C
Securities as determined by the Required Lenders, from time to time (including,
without limitation, on the date of any Funding Request and any Monthly Report),
provided, that, from and after the occurrence of an “event of default” under the
indenture pursuant which any Class C Security has been issued, the fair market
value of such Class C Security shall equal $0.

 

“FATF”: Defined in Section 4.1(hh).

 

“Federal Funds Rate”: With respect to any Lender, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the federal funds rates as quoted by the applicable Lender Agent (in
the case of any Conduit Lender or Institutional Lender) or the Swingline Lender
(in the case of the Swingline Lender) and confirmed in Federal Reserve Board
Statistical Release H.15 (519) or any successor or substitute publication
selected by each Lender Agent or the Swingline Lender, as applicable (or, if
such day is not a Business Day, for the preceding Business Day), or, if, for any
reason, such rate is not available on any day, the rate determined, in the sole
opinion of each Lender Agent or the Swingline Lender, as applicable, to be the
rate at which federal funds are being offered for sale in the national federal
funds market at 9:00 a.m. Charlotte, North Carolina time.

 

“Fee Letter”: With respect to each Lender and the applicable Lender Agent, the
“Fee Letter”, dated as of the effective date thereof, among the Borrower, the
Servicer and the applicable Lender Agent, as such letter may be amended,
supplemented, modified, waived or restated from time to time.

 

“Federal Reserve Board”: The Board of Governors of the Federal Reserve System.

 

“Fitch”: Means Fitch, Inc. or any successor thereto.

 

“Fixed Rate Loan”: A Transferred Loan that is other than a Floating Rate Loan.

 

“Fixed Rate Loan Percentage”: As of any date of determination, the percentage
equivalent of a fraction (i) the numerator of which is equal to the sum of the
Outstanding Loan Balances of all Fixed Rate Loans as of such date and (ii) the
denominator of which is equal to the Aggregate Outstanding Loan Balance as of
such date.

 

19

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“Floating Rate Loan”: A Transferred Loan where the interest rate payable by the
Obligor thereof is based on the prime interest rate (daily rate) or the London
interbank offered rate (one-month, two-month, three-month, six-month or
twelve-month rate), plus some specified interest percentage in addition thereto,
and such Transferred Loan provides that such interest rate will reset
immediately upon any change in the related prime interest rate or London
interbank offered rate.

 

“Funding Date”: Any Business Day on which an Advance or Swingline Advance is
made.

 

“Funding Request”: A Borrower Notice requesting an Advance and including the
items required by Sections 2.2 and 2.3.

 

“GAAP”: Generally accepted accounting principles in the United States of
America. All ratios and computations based on GAAP contained in this Agreement
shall be computed in conformity with GAAP as in effect on the date hereof.

 

“Governmental Authority”: Any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, any court
or arbitrator and any accounting board or authority (whether or not a part of
the government) which is responsible for the establishment or interpretation of
national or international accounting principles.

 

“Grade 1 Obligor”: As of any date of determination, an Obligor of any Loan that
the Servicer determines to be or, in accordance with the Credit and Collection
Policy, should have determined to be, classified as “Grade 1.”

 

“Grade 2 Obligor”: As of any date of determination, an Obligor of any Loan that
the Servicer determines to be or, in accordance with the Credit and Collection
Policy and Section 7.9(l), should have determined to be, classified as “Grade
2.”

 

“Grade 3 Obligor”: As of any date of determination, any Obligor of any Loan that
the Servicer determines to be or, in accordance with the Credit and Collection
Policy, should have determined to be, classified as “Grade 3.”

 

“Grade 4 Obligor”: As of any date of determination, an Obligor of any Loan that
the Servicer determines to be or, in accordance with the Credit and Collection
Policy, should have determined to be, classified as “Grade 4.”

 

“Grant”: To grant, bargain, sell, warrant, alienate, remise, demise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against, deposit, set over and confirm. A Grant of any
instrument, shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including without limitation, the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect thereof, and all other monies
payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
any suit in equity, action at law or other

 

20

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judicial or administrative proceeding in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party may
be entitled to do or receive thereunder or with respect thereto.

 

“H.15”: Federal Reserve Statistical Release H.15.

 

“Hedge Amount”: On any day, an amount equal to the product of (a) the product of
(i) the Borrowing Base and (ii) the Fixed Rate Loan Percentage and (b) the
Advances Outstanding divided by the Aggregate Outstanding Loan Balance.

 

“Hedge Breakage Costs”: With respect to each Hedge Counterparty upon the early
termination of any Hedge Transaction with such Hedge Counterparty, the net
amount, if any, payable by the Borrower to such Hedge Counterparty for the early
termination of that Hedge Transaction or any portion thereof.

 

“Hedge Collateral”: Defined in Section 5.2(b).

 

“Hedge Counterparty”: Means (a) Wachovia and JPMorgan Chase Bank and (b) any
other entity that (i) on the date of entering into any Hedge Transaction (x) is
an interest rate swap dealer that has been approved in writing by (I) at any
time when there are two or fewer Lenders party hereto (excluding the Swingline
Lender), each Lender Agent, and (II) at any time when there are more than two
Lenders party hereto (excluding the Swingline Lender), the Deal Agent (which
approval shall not, in the case of either clause (I) or clause (II), be
unreasonably withheld), and (y) has a long-term unsecured debt rating of not
less than “A” by S&P, not less than “A-2” by Moody’s and not less than “A” by
Fitch (if such entity is rated by Fitch) (the “Long-term Rating Requirement”)
and a short-term unsecured debt rating of not less than “A-1” by S&P, not less
than “P-1” by Moody’s and not less than F-1 by Fitch (if such entity is rated by
Fitch) (the “Short-term Rating Requirement”), and (ii) in a Hedging Agreement
(x) consents to the assignment of the Borrower’s rights under the Hedging
Agreement to the Deal Agent on behalf of the Secured Parties pursuant to Section
5.2(b) and (y) agrees that in the event that Moody’s, S&P or Fitch reduces its
long-term unsecured debt rating below the Long-term Rating Requirement or
reduces it short-term debt rating below the Short-Term Rating Requirement, it
shall either collateralize its obligations in a manner satisfactory to (I) at
any time when there are two or fewer Lenders party hereto (excluding the
Swingline Lender), each Lender Agent, and (II) at any time when there are more
than two Lenders party hereto (excluding the Swingline Lender), the Deal Agent,
or transfer its rights and obligations under each Hedging Agreement (excluding,
however, any right to net payments or Hedge Breakage Costs under any Hedge
Transaction, to the extent accrued to such date or to accrue thereafter and
owing to the transferring Hedge Counterparty as of the date of such transfer) to
another entity that meets the requirements of clauses (b)(i) and (b)(ii) hereof
and has entered into a Hedging Agreement with the Borrower on or prior to the
date of such transfer.

 

“Hedge Notional Amount”: For any Advance, the aggregate notional amount in
effect on any day under all Hedge Transactions entered into pursuant to Section
5.2(a) for that Advance.

 

“Hedge Percentage”: (a) On any day that the Aggregate Outstanding Loan Balance
exceeds $150,000,000, (i) an amount equal to 100% if the sum of the Outstanding
Loan Balances

 

21

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of all Fixed Rate Loans on such date exceeds $50,000,000, or (ii) an amount
equal to 0% if the sum of the Outstanding Loan Balances of all Fixed Rate Loans
is less than or equal to $50,000,000, or (b) on any day that the Aggregate
Outstanding Loan Balance is less than or equal to $150,000,000, (i) an amount
equal to 100% if the sum of the Outstanding Loan Balances of all Fixed Rate
Loans on such date exceeds $20,000,000, or (ii) an amount equal to 0% if the sum
of the Outstanding Loan Balances of all Fixed Rate Loans on such date is less
than or equal to $20,000,000.

 

“Hedge Transaction”: Each interest rate swap, index rate swap or interest rate
cap transaction or comparable derivative arrangements as the Required Lenders
may approve in their discretion between the Borrower and a Hedge Counterparty
that is entered into pursuant to Section 5.2(a) and is governed by a Hedging
Agreement.

 

“Hedging Agreement”: The agreement between the Borrower and a Hedge Counterparty
that governs one or more Hedge Transactions entered into by the Borrower and
such Hedge Counterparty pursuant to Section 5.2(a), which agreement shall
consist of a “Master Agreement” in a form published by the International Swaps
and Derivatives Association, Inc., together with a “Schedule” thereto
substantially in the form of Exhibit H-1 hereto or Exhibit H-2 hereto or such
other form as the Required Lenders shall approve in writing; provided, that the
“Schedule” to the Hedging Agreement with respect to JPMorgan Chase Bank, as
Hedge Counterparty, shall be reasonably acceptable to the Deal Agent, and each
“Confirmation” thereunder confirming the specific terms of each such Hedge
Transaction.

 

“Increased Costs”: Any amounts required to be paid by the Borrower to an
Affected Party pursuant to Section 2.14.

 

“Indebtedness”: With respect to any Person as of any date, whether or not
reflected on the balance sheet or comparable statement of financial position of
such Person, (a) all indebtedness of such Person as well as any special purpose
entity Subsidiaries of such Person for borrowed money or for the deferred
purchase price of property or services (other than current liabilities incurred
in the ordinary course of business and payable in accordance with customary
trade practices) or that is evidenced by a note, bond, debenture or similar
instrument, (including, without limitation, any note, bond, debenture or similar
instrument issued in connection with a securitization transaction), (b) all
obligations of such Person under capital leases, (b) all obligations of such
Person under capital leases, (c) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (d) all
liabilities secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof,
and (e) all indebtedness, obligations or liabilities of that Person in respect
of Derivatives, determined as of such date on a net mark-to-market basis in
accordance with customary market practice and (f) obligations under direct or
indirect guaranties in respect of obligation (contingent or otherwise) to
purchase or otherwise acquire, or to otherwise assure a creditor against loss in
respect of, clauses (a) through (e) above.

 

“Indemnified Amounts”: Defined in Section 10.1.

 

“Indemnified Parties”: Defined in Section 10.1.

 

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“Independent Trustee”: Defined in Section 4.1(t)(xxvii).

 

“Industry”: The industry of an Obligor as determined by reference to the four
digit standard industry classification (SIC) codes.

 

“Ineligible Loan”: Defined in Section 2.19(b)(i).

 

“Initial Advance”: The first Advance made under the Second Amended and Restated
Loan Funding and Servicing Agreement.

 

“Insolvency Event”: With respect to a specified Person, (a) the filing of a
decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary
case under any applicable Insolvency Law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person’s affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable Insolvency Law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case under any such
law, or the consent by such Person to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.

 

“Insolvency Laws”: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or similar debtor relief
laws from time to time in effect affecting the rights of creditors generally.

 

“Insolvency Proceeding”: Any case, action or proceeding before any court or
Governmental Authority relating to an Insolvency Event.

 

“Institutional Lender”: JPMorgan Chase Bank and each financial institution other
than a commercial paper conduit which may from time to time become a Lender
hereunder by executing and delivering a Joinder Supplement to the Deal Agent and
the Borrower as contemplated by Section 2.1(e).

 

“Insurance Policy”: With respect to any Transferred Loan included in the
Collateral, an insurance policy covering physical damage to or loss to any
assets or Related Property of the Obligor securing such Transferred Loan.

 

“Insurance Proceeds”: Any amounts payable or any payments made to the Borrower
or to the Servicer on its behalf under any Insurance Policy.

 

“Intercreditor Agreement”: The Fourth Amended and Restated Intercreditor and
Lockbox Administration Agreement, dated as of August 10, 2004, among Wells Fargo
Bank, National Association, as the indenture trustee, Wachovia Capital Markets,
LLC, as the conduit

 

23

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agent, Branch Banking and Trust Company, as the administrative agent, Harris
Nesbitt Corp., as the Fairway Agent thereunder each Securitization Agent that
from time to time executes a joinder thereto, and American Capital, as such
agreement may be amended, modified, waived, supplemented or restated from time
to time.

 

“Interest”: For each Accrual Period and each Advance and each Swingline Advance
outstanding during such Accrual Period, the sum of the products (for each day
during such Accrual Period) of:

 

     IR   

x P x 1

               D            where                     IR    =   

the Interest Rate applicable on such day;

     P    =   

the principal amount of such Advance or Swingline Advance on such day; and

     D    =   

360 or, to the extent the Interest Rate is based on the Base Rate, 365 or 366
days, as applicable.

 

provided, however, that (i) no provision of this Agreement shall require or
permit the collection of Interest in excess of the maximum permitted by
Applicable Law and (ii) Interest shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.

 

“Interest Collections”: Any and all amounts received on a Transferred Loan from
or on behalf of any Obligors that are deposited into the Collection Account, or
received by the Borrower or by the Servicer or Originator on behalf of the
Borrower in respect of Transferred Loans, not constituting Principal Collections
and, solely for purposes of calculating the Portfolio Yield, any and all amounts
accrued in respect of any fees (but only to the extent such fees are not part of
the Retained Interest or were not received during such Collection Period) owed
by any Obligor in respect of any Eligible Loan (net of any payment owed by the
Borrower to, and including any receipts from, any Hedge Counterparties).

 

“Interest Expense”: With respect to any Obligor, as of any date of
determination, the total interest expense for all obligations of such Obligor
(including, without limitation Capital Lease Obligations and hedging agreements)
determined on a consolidated basis, without duplication, for such Obligor and
its Consolidated Subsidiaries in accordance with GAAP (calculated on a rolling
12 month basis).

 

“Interest Rate”: For each Accrual Period and for each Advance and each Swingline
Advance outstanding by a Lender for each day during such Accrual Period:

 

(i) to the extent the applicable Lender has funded the Advance through the
issuance of Commercial Paper Notes, a rate equal to the applicable CP Rate; or

 

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(ii) to the extent the applicable Lender did not fund its Advance or Swingline
Advance through the issuance of Commercial Paper Notes, a rate equal to the
Alternative Rate; provided, that,

 

(a) with respect to any Advance by a Conduit Lender, the Interest Rate shall be
the Base Rate for any Accrual Period for any Advance as to which the related
Conduit Lender has funded the making or maintenance thereof by a sale of an
interest therein to any Liquidity Bank under the Liquidity Agreement on any day
other than the first day of such Accrual Period and without giving such
Liquidity Bank at least two Business Days’ prior notice of such assignment; and

 

(b) the Interest Rate shall be the Base Rate for any Accrual Period for any
Advance if the relevant Lender or Liquidity Bank shall have notified the Deal
Agent that a Eurodollar Disruption Event has occurred.

 

“Investment”: With respect to any Person, any direct or indirect loan, advance
or investment by such Person in any other Person, whether by means of share
purchase, capital contribution, loan or otherwise, excluding the acquisition of
assets pursuant to the Purchase Agreement and excluding commission, travel and
similar advances to officers, employees and directors made in the ordinary
course of business.

 

“ISDA Definitions”: The 2000 ISDA Definitions, as published by the International
Swaps and Derivatives Association, Inc.

 

“Joinder Supplement” An agreement among the Borrower, a Lender, a Lender Agent
and the Deal Agent in the form of Exhibit W to this Agreement (appropriately
completed) delivered in connection with a Person becoming a Lender hereunder, as
contemplated by Section 2.01(e).

 

“JPMorgan Chase Bank”: Defined in the Preamble.

 

“Large Loan Limit”: An amount determined in accordance with the table below.

 

Aggregate Outstanding Loan Balance

--------------------------------------------------------------------------------

   Large Loan Limit

--------------------------------------------------------------------------------

Less than or equal to $250,000,000

   $ 20,000,000

Greater than $250,000,000 but less than or equal to $400,000,000

   $ 25,000,000

Greater than $400,000,000 but less than or equal to $500,000,000

   $ 30,000,000

Greater than $500,000,000 but less than or equal to $600,000,000

   $ 35,000,000

Greater than $600,000,000

   $ 40,000,000

 

25

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“Lender”: Defined in the Preamble.

 

“Lender Agent”: With respect to (i) VFCC, the Deal Agent, (ii) each Conduit
Lender which may from time to time become party hereto, the Person designated as
the “Lender Agent” with respect to such Lender in the applicable Joinder
Supplement and (iii) JPMorgan Chase Bank and each other Institutional Lender
which may from time to time become a party hereto, each shall be deemed to be
its own Lender Agent.

 

“Lender Agent’s Account”: (i) With respect to JPMorgan Chase Bank, a special
account (ABA number xxxxxxxx; Account number xxxxxxxx; Ref: ACS Funding Trust I)
at JPMorgan Chase Bank and (ii) with respect to each Lender which may become a
party hereto after the Closing Date, a special account having the account number
and located at the financial institution specified in the applicable Lender
Agent’s agreement evidencing its Commitment delivered in accordance with Section
2.1(e).

 

“LIBOR Rate”: For any Accrual Period and any Advance or Swingline Advance, an
interest rate per annum equal to:

 

(a) the posted rate for one-month deposits in Dollars appearing on Telerate page
3750 as of 11:00 a.m. (London time) on the Business Day that is the second
Business Day immediately preceding the applicable Funding Date (with respect to
the initial Accrual Period for such Advance or Swingline Advance) and as of the
second Business Day immediately preceding the first (1st) day of the applicable
Accrual Period (with respect to all subsequent Accrual Periods for such Advance
or Swingline Advance); or

 

(b) if no rate appears on Telerate page 3750 at such time and day, then the
LIBOR Rate shall be determined by the applicable Lender Agent at its principal
office in the United States as its rate (each such determination, absent
manifest error, to be conclusive and binding on all parties hereto and their
assignees) at which one-month deposits in Dollars are being, have been, or would
be offered or quoted by such Lender Agent to major banks in the applicable
interbank market for Eurodollar deposits at or about 11:00 a.m. (New York, New
York time) on such day.

 

“Lien”: With respect to any Collateral, (a) any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such Collateral, or
(b) the interest of a vendor or lessor under any conditional sale agreement,
financing Loan or other title retention agreement relating to such Collateral.

 

“Lien Release Dividend”: Defined in Section 2.17(a).

 

“Lien Release Dividend Date”: The date specified by the Borrower, which date may
be any Business Day, provided written notice is given in accordance with Section
2.17(a).

 

“Liquidation Expenses”: With respect to any Defaulted Loan or Charged-Off Loan,
the aggregate amount of all out-of-pocket expenses reasonably incurred by the
Borrower or on behalf of the Borrower by the Servicer (including amounts paid to
any subservicer) in connection with the repossession, refurbishing and
disposition of any related assets securing such

 

26

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Transferred Loan including the attempted collection of any amount owing pursuant
to such Transferred Loan.

 

“Liquidity Bank”: The Person or Persons who provide liquidity support to each
Conduit Lender, respectively, pursuant to a Liquidity Purchase Agreement in
connection with the issuance by such Conduit Lender of Commercial Paper Notes.

 

“Liquidity Purchase Agreement”: Means any agreement entered into in connection
with this Agreement pursuant to which a Liquidity Bank agrees to make purchases
or advances to, or purchase assets from, any Conduit Lender in order to provide
liquidity for such Conduit Lender’s Advances hereunder.

 

“Loan”: (i) Any senior or subordinate loan arising from the extension of credit
to an Obligor in the ordinary course of the Originator’s business including,
without limitation, all Add-On Loans, Revolving Loans, PIK Loans and Agented
Notes and (ii) the Class C Securities (if any), in each case including monies
due and owing and all Interest Collections, Principal Collections and other
amounts received from time to time with respect to such loan or note receivable
and all Proceeds thereof.

 

“Loan Documents”: With respect to (i) any Loan (other than the Class C
Securities), the related promissory note and any related loan agreement,
security agreement, mortgage, assignment of Loans, all guarantees, note purchase
agreement, intercreditor and/or subordination agreement, and UCC financing
statements and continuation statements (including amendments or modifications
thereof) executed by the Obligor thereof or by another Person on the Obligor’s
behalf in respect of such Loan and related promissory note, including, without
limitation, general or limited guaranties and, for each Loan secured by real
property an Assignment of Mortgage, and for all Loans with a promissory note, an
assignment (which may be by allonge), in blank, signed by an officer of the
Originator, and (ii) with respect to the Class C Securities (if any), duly
executed originals of each of the Class C Securities registered in the name of
“Wachovia Capital Markets, LLC, as the Deal Agent”.

 

“Loan File”: With respect to any Loan, each of the Loan Documents related
thereto.

 

“Loan List”: The Loan List provided by the Borrower to the Deal Agent and the
Collateral Custodian in connection with each Advance or Swingline Advance or as
new Eligible Loans are added to the Collateral, initially as set forth in
Schedule IV hereto (which shall set forth a description of each Transferred
Loan, including, without limitation, the name of the Obligor of each such
Transferred Loan and the maturity date and type of each such Transferred Loan),
as the same may be amended, modified or supplemented from time to time in
accordance with the provisions hereof.

 

“Loan Rate”: For each Loan in a Collection Period, the current cash pay interest
rate for such Loan in such period, as specified in the related Loan Documents.

 

“Lock-Box”: A post office box to which Collections are remitted for retrieval by
the Lock-Box Bank and deposited by such Lock-Box Bank into the Lock-Box Account.

 

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“Lock-Box Account”: Account number xxxxxxxxx maintained in the name of the
Borrower for the purpose of receiving Collections at the Lock-Box Bank.

 

“Lock-Box Agreement”: The Five Party Lockbox Agreement, dated as of August 8,
2002, by and among Wells Fargo Bank, National Association, Regulus West LLC,
Wachovia Capital Markets, LLC (f/k/a/ Wachovia Securities, LLC), American
Capital Strategies, Ltd. and ACS Funding Trust I, as such agreement may be
amended, modified, waived, supplemented or restated from time to time.

 

“Lock-Box Bank”: Wells Fargo Bank, National Association.

 

“Margin Stock”: Means “Margin Stock” as defined in Regulation U issued by the
Board of Governors of the Federal Reserve System.

 

“Market Servicing Fee”: Defined in Section 7.27.

 

“Market Servicing Fee Differential”: On any date of determination, an amount
equal to the excess, if any, of the Market Servicing Fee over the Servicing Fee.

 

“Material Adverse Change”: With respect to any Person, any material adverse
change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of such Person.

 

“Material Adverse Effect”: With respect to any event or circumstance, means a
material adverse effect on, as applicable, (a) the business, condition
(financial or otherwise), operations, performance, properties or prospects of
the Servicer, the Borrower, the Backup Servicer or the Collateral Custodian, (b)
the validity, enforceability or collectibility of this Agreement or any other
Transaction Document or the validity, enforceability or collectibility of the
Loans, (c) the rights and remedies of the Deal Agent or any other Secured Party
under this Agreement or any Transaction Document or (d) the ability of the
Servicer, the Borrower, the Backup Servicer or the Collateral Custodian to
perform its obligations under this Agreement or any other Transaction Document,
or (e) the status, existence, perfection, priority, or enforceability of the
Deal Agent’s or Secured Parties’ interest in the Collateral.

 

“Maximum Availability”: At any time, an amount equal to the sum of (a) the
lesser of (i) the Borrowing Base minus the Required Equity Contribution and (ii)
the product of the Borrowing Base and 70% plus (b) the amount of Principal
Collections on deposit in the Collection Account received in reduction of the
Outstanding Loan Balance of any Loan; provided, however, that during the
Amortization Period, the Maximum Availability shall be equal to the Advances
Outstanding.

 

“Maximum Lawful Rate”: Defined in Section 2.8(c).

 

“Minimum Portfolio Yield”: 6.0%

 

“Monthly Report”: Defined in Section 7.17(a).

 

“Moody’s”: Moody’s Investors Service, Inc., or any successor thereto.

 

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“Multiemployer Plan”: A “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA that is or was at any time during the current year or the immediately
preceding five years contributed to by the Borrower or any ERISA Affiliate on
behalf of its employees.

 

“Net Mark to Market Amount”: With respect to each Hedge Counterparty, as set
forth on each Monthly Report for each Determination Date, the net amount that
would be payable by the Borrower to such Hedge Counterparty if all Hedge
Transactions of the Borrower with such Hedge Counterparty were being terminated
as of such date, which amount (i) shall have been provided to the Servicer by
such Hedge Counterparty for inclusion in each Monthly Report and (ii) shall have
been determined by such Hedge Counterparty in good faith and in accordance with
its usual business practices; provided, however, that such valuation will be
based on a mid-market valuation of each such Hedge Transaction and as such is an
indicative valuation calculation, it being understood that the net amount that
would be payable in the event of any termination of any Hedge Transaction would
be determined in accordance with the provisions of the applicable Hedging
Agreement governing a termination due to an event of default or termination
event and would be subject to market conditions at the time the applicable Hedge
Transaction is terminated.

 

“Net Worth”: The total of stockholder’s equity (determined in accordance with
GAAP) plus Subordinated Debt, less (i) the total amount of loans to officers,
directors, or employees and (ii) the total amount of any intangible assets,
including without limitation, deferred charges and goodwill.

 

“Note Majority”: With respect to Agented Notes, the holders of the Notes
evidencing not less than 66 2/3% of the outstanding amount of all such notes
issued by the Obligor.

 

“Notes”: Defined in Section 2.1(a).

 

“Obligations”: All loans, advances, debts, liabilities and obligations, for
monetary amounts owing by the Borrower to the Secured Parties, the Backup
Servicer and the Collateral Custodian or any of their assigns, as the case may
be, whether due or to become due, matured or unmatured, liquidated or
unliquidated, contingent or non-contingent, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, arising under
or in respect of any of this Agreement, any fee letter (including, without
limitation, the Fee Letter and the Backup Servicer and Collateral Custodian Fee
Letter) delivered in connection with the transactions contemplated by this
Agreement, any Transaction Document, or any Hedging Agreement, as amended or
supplemented from time to time, whether or not evidenced by any separate note,
agreement or other instrument. This term Obligations includes, without
limitation, all Advances Outstanding, Interest (including interest that accrues
after the commencement against the Borrower of any action under the Bankruptcy
Code), Breakage Costs, Hedge Breakage Costs, fees, including, without
limitation, any and all arrangement fees, loan fees, facility fees, and any and
all other fees, expenses, costs or other sums (including attorney costs)
chargeable to the Borrower under any of the Transaction Documents or under any
Hedging Agreement.

 

“Obligor”: With respect to any Loan, the Person or Persons obligated to make
payments pursuant to such Loan, including any guarantor thereof. For purposes of
calculating any of the

 

29

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Concentration Limits, all Loans included in the Collateral or to become part of
the Collateral the Obligor of which is an Affiliate of another Obligor shall be
aggregated with all Loans of such other Obligor, for example, if Corporation A
is an Affiliate of Corporation B; and the aggregate Outstanding Loan Balance of
all of Corporation A’s Loans in the Collateral constitutes 10% of the Aggregate
Outstanding Loan Balance and the aggregate Outstanding Loan Balance of all
Corporation B’s Loans in the Collateral constitute 10% of the Aggregate
Outstanding Loan Balance, the Obligor concentration for Corporation A would be
20% and the Obligor concentration for Corporation B would be 20%.

 

“Officer’s Certificate”: A certificate signed by any officer of the Borrower or
the Servicer, as the case may be, and delivered to the Backup Servicer and the
Deal Agent.

 

“Operating History”: With respect to any specified Person, the time since the
date of such Person’s incorporation or formation that it has continuously
operated its business; provided, however, the Operating History of any Person,
newly formed as a result of a merger of two or more Persons or as a result of
the acquisition of one or more Persons by a newly formed Person (“Merged
Parties”) shall be based on the weighted average (by relative sales) of the
Operating Histories of the Merged Parties (excluding for such purposes, entities
that are created only for the purpose of being acquisition entities), for
example, if Corporation A with sales of $10 million has an Operating History of
four years and Corporation B with sales of $20 million has an Operating History
of eight years, merge to form NEWCO, the Operating History of NEWCO will be 6.67
years.

 

“Opinion of Counsel”: A written opinion of external counsel, who may be external
counsel for the Borrower or the Servicer, as the case may be, and who shall be
reasonably acceptable to the Deal Agent.

 

“Original Conduit Lender”: Defined in the Recitals.

 

“Original Deal Agent”: Defined in the Recitals.

 

“Original Lenders”: Defined in the Recitals.

 

“Original Loan Funding and Servicing Agreement”: Defined in the Recitals.

 

“Original Swingline Lender”: Defined in the Recitals.

 

“Originator”: American Capital Strategies, Ltd.

 

“Other Costs”: Defined in Section 12.9(c).

 

“Outstanding Loan Balance”: With respect to any Loan, as of any date of
determination, the lesser of (i) the Fair Market Value of such Loan and (ii) the
total remaining amounts of principal payable by the Obligor thereof exclusive of
(a) interest payments and (b) Accreted Interest (it being understood that any
principal previously covered by a Servicer Advance will be excluded from the
principal amounts payable for purposes of this definition).

 

“Parent”: Defined in Section 4.1(t)(xxvii).

 

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“Paying Agent”: American Capital in its capacity as Servicer and any Successor
Servicer.

 

“Payment Date”: The tenth (10th) day of each calendar month or, if such day is
not a Business Day, the next succeeding Business Day, commencing August 10,
2004.

 

“Permitted Investments”: Means negotiable instruments or securities or other
investments that, as of any date of determination, mature by their terms on or
prior to the Business Day immediately preceding the next Payment Date
immediately following such date of determination and which may include one or
more of the following types of investments:

 

(a) marketable obligations of the United States, the full and timely payment of
which are backed by the full faith and credit of the United States;

 

(b) marketable obligations, the full and timely payment of which are directly
and fully guaranteed by the full faith and credit of the United States;

 

(c) bankers’ acceptances and certificates of deposit and other interest-bearing
obligations denominated and payable in Dollars and issued by any bank with
capital, surplus and undivided profits aggregating at least $100,000,000, the
short-term obligations of which are rated “A-1” by S&P and “P-1” by Moody’s;

 

(d) repurchase obligations for underlying securities of the types described in
clauses (a), (b) and (c) above entered into with any bank of the type described
in clause (c) above;

 

(e) commercial paper rated at least “A-1” by S&P and “P-1” by Moody’s;

 

(f) investments in money market funds rated in the highest investment category
or otherwise approved in writing by S&P or Moody’s; and

 

(g) demand deposits, time deposits or certificates of deposit (having original
maturities of no more than 365 days of depository institutions or trust
companies incorporated under the laws of the United States or any state thereof
(or domestic branches of any foreign bank) and subject to supervision and
examination by federal or state banking or depository institution authorities;
provided, however, that at the time such investment, or the commitment to make
such investment, is entered into, the short-term debt rating of such depository
institution or trust company shall be at least “A-1” by S&P and “P-1” by
Moody’s.

 

Each of the Permitted Investments may be purchased by or through the Backup
Servicer or Collateral Custodian or an Affiliate of the Backup Servicer or
Collateral Custodian.

 

“Permitted Liens”: (a) With respect to the Loans, Liens in favor of the Deal
Agent, as agent for the Secured Parties, created pursuant to this Agreement, and
(b) with respect to the Borrower’s interest in the related Collateral, any of
the following as to which no enforcement, collection, execution, levy or
foreclosure proceedings shall have been commenced: (i) materialmen’s,
warehousemen’s, mechanics’ and other liens arising by operation of law in the
ordinary course of business for sums not due or sums that are being contested in
good faith, (ii) Liens for state, municipal and other local taxes if such taxes
are not at the time due and

 

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payable or if the Obligor shall currently be contesting the validity thereof in
good faith by appropriate proceedings, (iii) Liens held by senior lenders with
respect to subordinated Loans, (iv) Liens created pursuant to this Agreement in
favor of the Deal Agent, on behalf of the Secured Parties, (v) the rights of a
Hedge Counterparty under its Hedging Agreement, and (vi) with respect to Agented
Notes, Liens in favor of the collateral agent on behalf of all noteholders of
the related Obligor.

 

“Permitted Securitization Transaction”: Any financing transaction undertaken by
the Borrower or an Affiliate of the Borrower or the Originator that is secured,
directly or indirectly, by the Collateral or any portion thereof or interest
therein, including any sale, lease, whole loan sale, asset securitization,
secured loan or other transfer.

 

“Person”: An individual, partnership, corporation (including a business or
statutory trust), limited liability company, joint stock company, trust,
unincorporated association, sole proprietorship, joint venture, government (or
any agency or political subdivision thereof) or other entity.

 

“PIK Loan”: A Loan to an Obligor, which provides for a portion of the interest
that accrues thereon to be added to the principal amount of such Loan for some
period of the time prior to such Loan requiring the current cash payment of
interest on a monthly or quarterly basis, which cash payment shall be treated as
Interest Collections at the time it is received.

 

“Portfolio Aggregate Outstanding Loan Balance”: With respect to all Portfolio
Loans, as of any date of determination, the sum of the Portfolio Outstanding
Loan Balances of such Portfolio Loans on such date minus the Portfolio
Outstanding Loan Balances of any Defaulted Portfolio Loans and Charged-Off
Portfolio Loans on such date.

 

“Portfolio Investments”: Investments made by the Originator in the ordinary
course of business and consistent with practices existing on December 31, 2003
in a Person that is accounted for under GAAP as a portfolio investment of the
Originator.

 

“Portfolio Loan”: Any Loan serviced by the Servicer, but excluding any Loan
which the Servicer services for an unaffiliated third party.

 

“Portfolio Outstanding Loan Balance”: With respect to any Portfolio Loan, as of
any date of determination, the total remaining amounts of principal payable by
the Obligor thereof (excluding interest payments and Accreted Interest); it
being understood that any principal payment previously the subject of a Servicer
Advance (of the type described in Section 7.5) will be excluded from the
principal amounts payable for purposes of this definition.

 

“Portfolio Yield”: As of each Determination Date, the annualized percentage
equivalent of a fraction (a) the numerator of which is equal to all Interest
Collections deposited in the Collection Account during the related Collection
Period minus the sum of (i) the Interest, (ii) the Servicing Fee, (iii) the
Program Fee, (iv) the Facility Fee, (v) any Backup Servicer Fees and (vi) any
Collateral Custodian Fees and (b) denominator of which is equal to the Aggregate
Outstanding Loan Balance as of the first day of the related Collection Period.

 

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“Prepaid Loan”: Any Loan (other than a Charged-Off Loan) that was terminated or
has been prepaid in full or in part prior to its scheduled maturity date.

 

“Pre-Positioned Loan”: Any Loan which will be funded at the closing of such Loan
with the proceeds of an Advance or Swingline Advance and which is designated by
the Borrower (or the Servicer on the Borrower’s behalf) in writing to the Deal
Agent as a “Pre-Positioned Loan” shall constitute a “Pre-Positioned Loan” for
purposes of the conditions, obligations, certifications and delivery
requirements (as applicable) provided for in Sections 2.2(b), 2.3(b), 2.3(c),
3.2(f), 4.1(u)(x), 5.3(a) and 7.10(a), and shall constitute a Transferred Loan
for all other purposes under this Agreement, subject to the limitations set
forth in Section 2.2(b)(iii) and Section 2.3(b)(ii).

 

“Prime Rate”: The rate announced by Wachovia from time to time as its prime rate
in the United States, such rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of interest
charged by Wachovia in connection with extensions of credit to debtors.

 

“Principal Collections”: Any and all amounts received in respect of any
principal due and payable under any Loan from or on behalf of Obligors that are
deposited into the Collection Account, or received by the Borrower or the
Servicer or Originator on behalf of the Borrower in respect of Loans, in the
form of cash, checks, wire transfers, electronic transfers or any other form of
cash payment and applied to reduce the Outstanding Loan Balance of a Loan in
accordance with the Credit and Collection Policy.

 

“Proceeds”: With respect to any Collateral, whatever is receivable or received
when such Collateral is sold, collected, liquidated, foreclosed, exchanged, or
otherwise disposed of, whether such disposition is voluntary or involuntary, and
includes all rights to payment with respect to any Insurance Policy relating to
such Collateral.

 

“Program Fee”: (a) With respect to each Conduit Lender, the Program Fee (as
defined in such Conduit Lender’s Fee Letter), (b) with respect to each
Institutional Lender, the Program Fee (as defined in such Institutional Lender’s
Fee Letter) and (c) with respect to the Swingline Lender, the Swingline Program
Fee (as defined in the Swingline Lender’s Fee Letter).

 

“Pro Rata Share” The percentage obtained for each Conduit Lender and each
Institutional Lender by dividing each such Lender’s Commitment (as determined
under clause (a) of the definition of “Commitment”) by the aggregate Commitment
of all Conduit Lenders and all Institutional Lenders (as determined under clause
(a) of the definition of “Commitment”).

 

“Purchase Agreement”: The Second Amended and Restated Purchase and Sale
Agreement, dated as of the date hereof, by and between the Originator and the
Borrower, as such agreement may be amended, modified, waived, supplemented or
restated from time to time.

 

“Purchase Date”: Defined in the Purchase Agreement.

 

“Qualified Institution”: Defined in Section 7.4(e).

 

“Rating Agency”: Each of S&P, Moody’s and any other rating agency that has
issued a rating with respect to the Commercial Paper Notes issued by a Conduit
Lender.

 

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“Records”: With respect to any Loans, all documents, books, records and other
information (including without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights)
maintained with respect to any item of Collateral and the related Obligors,
other than the Loan Documents.

 

“Recoveries”: With respect to any Defaulted Loan or Charged-Off Loan, proceeds
of the sale of any Related Property, proceeds of any related Insurance Policy,
and any other recoveries with respect to such Loan and Related Property, and
amounts representing late fees and penalties, net of Liquidation Expenses and
amounts, if any, received that are required to be refunded to the Obligor on
such Loan.

 

“Reference Bank”: Any bank that furnishes information for purposes of
determining the Adjusted Eurodollar Rate.

 

Registrar: Wachovia, not in its individual capacity but solely as Registrar, its
successor or successors in interest and any Person which at any time may be
selected by the Borrower upon the resignation of Wachovia to act as Registrar.

 

“Related Property”: With respect to any Loan, any property or other assets of
the Obligor thereunder pledged or purported to be pledged as collateral to
secure the repayment of such Loan.

 

“Replaced Loan”: Defined in Section 2.19(a).

 

“Released Amounts”: With respect to any payment or Collection received with
respect to any Transferred Loan on any Business Day (whether such payment or
Collection is received by the Servicer, the Originator or the Borrower), an
amount equal to that portion of such payment or collection constituting Excluded
Amounts or Retained Interest.

 

“Reporting Date”: The date that is two Business Days prior to each Payment Date.

 

“Repurchased Loan”: Defined in Section 2.4(c).

 

“Required Advance Reduction Amount”: On any Payment Date, the amount of Advances
Outstanding required to be repaid in order to cause the Availability to exceed
$0.

 

“Required Equity Contribution”: As of any date of determination prior to the
Termination Date, an amount equal to $115,000,000.

 

“Required Lenders”: The Conduit Lenders and/or Institutional Lenders
representing an aggregate of more than 66.67% of the aggregate Commitments of
the Conduit Lenders and the Institutional Lenders then in effect (excluding, for
the avoidance of doubt, any Commitment of the Swingline Lender); provided,
however, that for the purposes of determining the Required Lenders, in the event
that an Institutional Lender or a Conduit Lender (or its related Liquidity Bank
on its behalf) fails to provide funding for an Advance hereunder for which all
conditions precedent have been satisfied, such Institutional Lender or Conduit
Lender, as applicable, shall not constitute a Required Lender hereunder (and the
Commitment of such Institutional Lender or

 

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Conduit Lender, as applicable, shall be disregarded for purposes of determining
whether the consent of the Required Lenders has been obtained).

 

“Required Reports”: Collectively, the Monthly Report, the Servicer’s Certificate
and the quarterly financial statement of the Servicer required to be delivered
to the Borrower, the Deal Agent, each Lender Agent, and the Backup Servicer
pursuant to Section 7.17 hereof.

 

“Responsible Officer”: As to any Person, any officer of such Person with direct
responsibility for the administration of this Agreement and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer’s knowledge of and familiarity with the particular
subject.

 

“Restricted Payments”: Defined in Section 5.1(z).

 

“Retained Interest”: With respect to each Loan, the following interests, rights
and obligations in such Loan and under the associated Loan Documents, which are
being retained by the Originator: (a) all of the obligations, if any, to provide
additional funding with respect to such Loan, (b) all of the rights and
obligations, if any, of the agent(s) under the documentation evidencing such
Loan, (c) the applicable portion of the interests, rights and obligations under
the documentation evidencing such Loan that relate to such portion(s) of the
indebtedness that is owned by another lender or is being retained by the
Originator, (d) any unused, commitment or similar fees associated with the
additional funding obligations that are not being transferred in accordance with
clause (a) of this definition, (e) any agency or similar fees associated with
the rights and obligations of the agent that are not being transferred in
accordance with clause (b) of this definition and (f) any advisory, consulting
or similar fees due from the Obligor associated with services provided by the
agent that are not being transferred in accordance with clause (b) of this
definition.

 

“Retransfer Price”: Defined in Section 2.19(b).

 

“Revolving Loan”: Any Loan that is a line of credit or other similar extension
of credit by the Originator where the Originator’s commitment under such Loan is
not fully funded and/or the proceeds of such Loan may be repaid and reborrowed.

 

“Revolving Period”: The period commencing on the Closing Date and ending on the
day immediately preceding the Termination Date.

 

“Rolling Three-Month Charged-Off Ratio”: As of any date, the percentage
equivalent of a fraction (a) the numerator of which equals the sum of the
Charged-Off Ratios for the three Collection Periods immediately preceding such
date, and (b) the denominator of which equals three.

 

“Rolling Three-Month Default Ratio”: As of any date, the percentage equivalent
of a fraction (a) the numerator of which equals the sum of the Default Ratios
for the three Collection Periods immediately preceding such date, and (b) the
denominator of which equals three.

 

“Rolling Three-Month Portfolio Yield”: As of any date, the percentage equivalent
of a fraction (a) the numerator of which equals the sum of the Portfolio Yields
for the three

 

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Collection Periods immediately preceding such date, and (b) the denominator of
which equals three.

 

“Rolling Twelve-Month Portfolio Charged-Off Ratio”: As of any Determination
Date, the percentage equivalent of a fraction (i) the numerator of which is
equal to the sum of the Portfolio Outstanding Loan Balance of all Portfolio
Loans that became Charged-Off Portfolio Loans during the Collection Period
related to such Determination Date and each of 11 preceding Determination Dates,
and (ii) the denominator of which is equal to a fraction, the numerator of which
is equal to the sum of the Portfolio Aggregate Outstanding Loan Balance as of
the first day of the Collection Period related to such Determination Date and
each of the 11 preceding Determination Dates and the denominator of which is
equal to 12.

 

“S&P”: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor thereto.

 

“Scheduled Payment”: On any Determination Date, with respect to any Loan, each
monthly or quarterly payment (whether principal, interest or principal and
interest) scheduled to be made by the Obligor thereof after such Determination
Date under the terms of such Loan.

 

“Secured Party”: (a) Each Lender; (b) the Deal Agent; and (c) each Hedge
Counterparty that, at the time of execution of the relevant Hedge Agreement, is
a Lender, an Affiliate of such Lender or an Affiliate of the Deal Agent, that
executes a counterpart of this Agreement or a Joinder Supplement hereto, as
applicable, agreeing to be bound by the terms of this Agreement applicable to a
Secured Party.

 

“Servicer”: Defined in the Preamble.

 

“Servicer Advance”: Defined in Section 7.5.

 

“Servicer Termination Event”: Defined in Section 7.25.

 

“Servicer Termination Notice”: Defined in Section 7.25.

 

“Servicer’s Certificate”: Defined in Section 7.17(b).

 

“Servicing Duties”: Defined in Section 7.2.

 

“Servicing Fee”: For each Payment Date, an amount equal to the sum of the
products, for each day during the related Collection Period, of (a) a fraction,
the numerator of which is the sum of (i) the Aggregate Outstanding Loan Balance
as of the first day of such Collection Period plus (ii) the Aggregate
Outstanding Loan Balance as of the last day of such Collection Period, and the
denominator of which is two, (b) the Servicing Fee Rate, and (c) a fraction, the
numerator of which is 1 and the denominator of which is 360.

 

“Servicing Fee Rate”: A rate equal to 1.0% per annum.

 

“Servicing Records”: All documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, data processing
software and related

 

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property rights) prepared and maintained by the Servicer with respect to the
Loans and the related Obligors.

 

“Solvent”: As to any Person at any time, having a state of affairs such that all
of the following conditions are met: (a) the fair value of the property owned by
such Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy
Code; (b) the present fair salable value of the property owned by such Person in
an orderly liquidation of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person’s property would constitute unreasonably small capital.

 

“Structured Note”: Defined in Section 2.1(a).

 

“Subordinated Debt”: Any debt that is subordinated in right of payment to the
obligations of the Borrower under this Agreement.

 

“Subsidiary”: With respect to any Person, means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having ordinary
voting power to elect a majority of the Board of Directors of such entity
(irrespective of whether at the time capital stock of any other class or classes
of such entity shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, or such Person and one or more of its other Subsidiaries or by
one or more of such Person’s other Subsidiaries; provided that, with respect to
the Originator and the Servicer, “Subsidiary” shall not include any Person that
is a Portfolio Investment.

 

“Substitute Loan”: Defined in Section 2.19.

 

“Successor Servicer”: Defined in Section 7.26(a).

 

“Swingline Advance”: Defined in Section 2.1(c).

 

“Swingline Funding Request”: Defined in Section 2.1(c).

 

“Swingline Lender”: Defined in the Preamble.

 

“Swingline Lender’s Account”: A special account (ABA number xxxxxxxx; Account
number xxxxxxx; Ref: ACS Funding Trust I) at JPMorgan Chase Bank.

 

“Swingline Note”: Defined in Section 2.1(a).

 

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“Tape”: Defined in Section 7.13(b)(ii).

 

“Taxes”: Any present or future taxes, levies, imposts, duties, charges,
assessments or fees of any nature (including interest, penalties, and additions
thereto) that are imposed by any Government Authority.

 

“Termination Date”: The earliest to occur of (a) the Business Day designated by
the Borrower to the Deal Agent upon at least two Business Days’ prior written
notice, (b) the date of the occurrence of a Termination Event pursuant to
Section 9.1, (c) August 9, 2005, as the same may be extended as provided in
Section 2.1(d), (d) the date any Liquidity Purchase Agreement shall cease to be
in full force and effect, and (e) the second Business Day prior to the
Commitment Termination Date.

 

“Termination Event”: Defined in Section 9.1.

 

“Transaction Documents”: This Agreement, the Purchase Agreement, the
Assignments, the Liquidity Purchase Agreement, all Hedging Agreements, the
Intercreditor Agreement, the Lock-Box Agreement, the Notes, each Fee Letter, the
Backup Servicer and Collateral Custodian Fee Letter, any UCC financing
statements filed pursuant to the terms of this Agreement, and any additional
document, letter, fee letter, certificate, opinion, agreement or writing the
execution of which is necessary or incidental to carrying out the terms of the
foregoing documents.

 

“Transferred Loans”: Each Class C Security, each Loan that is acquired by the
Borrower under the Purchase Agreement and all Loans received by the Borrower as
a contribution to the capital of the Borrower; provided, that, the term
Transferred Loan shall not include any Retained Interests, provided, further,
that, for avoidance of doubt, the term Transferred Loan shall include each
Transferred Loan acquired or received by the Borrower under the Original
Purchase Agreement and owned by the Borrower on the Closing Date.

 

“Transition Costs”: The reasonable costs and expenses incurred by the Backup
Servicer in transitioning to Servicer; provided, however, in no event shall such
Transition Costs exceed $50,000.00 in the aggregate.

 

“UCC”: The Uniform Commercial Code as from time to time in effect in the
specified jurisdiction.

 

“Underlying Note”: The promissory note of an Obligor evidencing a Loan.

 

“United States”: The United States of America.

 

“Unmatured Termination Event”: An event that, with the giving of notice or lapse
of time, or both, would become a Termination Event.

 

“Unreimbursed Servicer Advances”: At any time, the amount of all previous
Servicer Advances (or portions thereof) as to which the Servicer has not been
reimbursed as of such time pursuant to Section 2.9(a)(1)(ii) and (b)(ii) and
that the Servicer has determined in its sole discretion will not be recoverable
from Collections with respect to the related Transferred Loan.

 

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“VFCC”: Defined in the Recitals.

 

“Wachovia”: Defined in the Recitals.

 

“Warranty Event”: Occurs as to any Loan included as part of the Collateral, if
any representation or warranty herein relating to such Loan was not true and
correct in any material respect when made and such breach is not cured within
the relevant cure period.

 

“Weighted Average Life”: At any date of determination, with respect to any Loan,
is determined by: (a) multiplying the number of months from and including the
month in which such date of determination falls to but excluding the month when
each Scheduled Payment is to be received under such Loan, (b) summing said
products, (c) dividing the sum total by the total amount of all Scheduled
Payments to be received under the Loan, and (d) dividing the total by 12.

 

“Wells Fargo”: Defined in the Preamble.

 

“WCM”: Defined in the Preamble.

 

Section 1.2. Other Terms.

 

All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York, and not specifically defined herein, are used herein as defined in such
Article 9.

 

Section 1.3. Computation of Time Periods.

 

Unless otherwise stated in this Agreement, in the computation of a period of
time from a specified date to a later specified date, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding.”

 

Section 1.4. Interpretation.

 

In each Transaction Document, unless a contrary intention appears:

 

(i) the singular number includes the plural number and vice versa;

 

(ii) reference to any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are permitted by the
Transaction Documents;

 

(iii) reference to any gender includes each other gender;

 

(iv) reference to day or days without further qualification means calendar days;

 

(v) unless otherwise stated, reference to any time means Charlotte, North
Carolina time;

 

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(vi) references to “writing” include printing, typing, lithography, electronic
or other means of reproducing words in a visible form;

 

(vii) reference to any agreement (including any Transaction Document), document
or instrument means such agreement, document or instrument as amended, modified,
waived, supplemented or restated and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms of the other Transaction
Documents and reference to any promissory note includes any promissory note that
is an extension or renewal thereof or a substitute or replacement therefor; and

 

(viii) reference to any Applicable Law means such Applicable Law as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder and
reference to any section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision.

 

Section 1.5. Section References.

 

All Section references (including to the Recitals and the Preamble), unless
otherwise indicated, shall be to Sections (and the Recitals and the Preamble) in
this Agreement.

 

Section 1.6. Calculations.

 

Except as otherwise provided herein, all interest rate and basis point
calculations hereunder will be made on the basis of a 360-day year and the
actual days elapsed in the relevant period and will be carried out to at least
three decimal places.

 

ARTICLE II

 

PURCHASE OF THE STRUCTURED NOTES

 

Section 2.1. The Structured Notes.

 

(a) On the terms and conditions hereinafter set forth, on the Closing Date, the
Borrower shall deliver to each Lender Agent and the Swingline Lender, as
applicable, at the applicable address set forth on Annex A to this Agreement, a
duly executed structured note in substantially the form of Exhibit B-1 (each a
“Structured Note”) and Exhibit B-2 (the “Swingline Note”, and together with the
Structured Notes, the “Notes”), as applicable, dated as of the date of this
Agreement, each in a face amount equal to the applicable Lender’s Commitment as
of the Closing Date and otherwise duly completed. Each Note evidences, and at
all times on and after the date hereof shall continue to evidence each Lender’s
ratable share of the security interest in the Collateral granted pursuant to
Section 8.1 (and the Borrower hereby expressly affirms its prior grant of a
security interest in the “Collateral” under the Original Loan Funding and
Servicing Agreement). Interest shall accrue, and each Note shall be payable, as
described herein.

 

(b) During the Revolving Period, the Borrower may, at its option, request the
Conduit Lenders and the Institutional Lenders to make advances of funds (each,
an “Advance”) under the

 

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Structured Notes, each such Funding request to be substantially in the form of
Exhibit A-1 hereto, in an aggregate amount up to the Availability as of the date
of the proposed Advance. Following the receipt of a Funding Request, subject to
the terms and conditions hereinafter set forth, during the Revolving Period, the
Conduit Lenders and the Institutional Lenders shall fund such Advance.
Notwithstanding anything to the contrary contained herein, no Lender shall be
obligated to provide the Deal Agent or the Borrower with aggregate funds in
connection with an Advance that would exceed (i) such Lender’s unused Commitment
then in effect, (ii) the aggregate unused Commitments then in effect or (iii)
the Availability on the date such Advance is to be made. Each Advance made by a
Lender hereunder is subordinated to the interests of the Hedge Counterparties
under Sections 2.9(a)(1)(i) and (b)(i) of this Agreement.

 

(c) During the Revolving Period, the Borrower may, at its option, request the
Swingline Lender to make advances of funds on an expedited basis under the
Swingline Note (each such request, a “Swingline Funding Request”), each such
Swingline Funding Request to be substantially in the form of Exhibit A-2 hereto.
Subject to the terms and conditions hereinafter set forth, during the Revolving
Period, the Swingline Lender shall advance to the Borrower the amount requested
under a Swingline Funding Request (each, a “Swingline Advance”). Notwithstanding
anything to the contrary contained herein, the Swingline Lender shall not be
obligated to provide the Borrower with aggregate funds in connection with a
Swingline Advance that would exceed the least of (i) the Swingline Lender’s
unused Commitment then in effect, (ii) the aggregate unused Commitments then in
effect or (iii) the Availability on the date such Swingline Advance is to be
made. Each Swingline Advance made by the Swingline Lender hereunder is
subordinated to the interests of the Hedge Counterparties under Sections
2.9(a)(1)(i) and (b)(i) of this Agreement.

 

(d) The Borrower may, within 60 days but not less than 45 days prior to the (x)
the date on which each Liquidity Purchase Agreement is to expire in accordance
with its terms, in the case of an extension of each Liquidity Purchase
Agreement, (y) the Termination Date then in effect pursuant to clause (c) of the
definition thereof, in the case of an extension of the Termination Date or (z)
the Commitment Termination Date then in effect, in the case of an extension of
this Agreement, request by written notice to (i) each Lender Agent with respect
to a Conduit Lender for the applicable Liquidity Bank to extend the term of
their Liquidity Purchase Agreement for an additional period of 364 days, (ii)
each Lender Agent for each Lender and the Swingline Lender, as applicable, to
extend the date set forth in clause (c) of the definition of Termination Date
for an additional period of 364 days and (iii) each Lender Agent for each Lender
and the Swingline Lender, as applicable, to extend the Commitment Termination
Date for an additional period of 364 days. Each Lender Agent and the Swingline
Lender, as applicable, will give prompt notice to the related Liquidity Bank or
Lender, as applicable, of its receipt of such request, and each Liquidity Bank
and each Lender shall make a determination, each in its respective sole
discretion, not less than 15 days prior to the expiration of the related
Liquidity Purchase Agreement or the Commitment Termination Date, as applicable,
as to whether or not it will agree to the extension requested. The failure of a
Lender or a Liquidity Bank to provide timely notice of its decision to the
Borrower shall be deemed to constitute a refusal by the applicable Lender or
Liquidity Bank to extend the Commitment Termination Date or the term of such
Liquidity Bank’s Liquidity Purchase Agreement, as applicable. The Borrower
confirms that each Liquidity Bank and each Lender, in their sole and absolute
discretion, without regard to the value or performance of the Collateral or any
other factor, may

 

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elect not to extend the term of such Liquidity Purchase Agreement, the date set
forth in clause (c) of the definition of Termination Date or the Commitment
Termination Date, as applicable.

 

(e) The Borrower may, with the written consent of the Deal Agent, request that
an existing Lender increase its Commitment in connection with a corresponding
increase in the Facility Amount or, with the written consent of the Deal Agent
and JPMorgan Chase Bank, add additional Persons as Lenders; provided, that: (i)
if the addition of any Lender or the increase of any Lender’s Commitment would
cause the aggregate Commitments of the Conduit Lenders and the Institutional
Lenders to exceed $850,000,000, such addition or increase may be effected only
with the consent of the Deal Agent and each Lender Agent; (ii) if a proposed
increase of VFCC’s Commitment would cause VFCC’s Commitment to constitute 66.67%
or more of the aggregate Commitments of the Conduit Lenders and the
Institutional Lenders then in effect, such increase may only be effected with
the prior written consent of JPMorgan Chase Bank, which consent shall not be
unreasonably withheld; and (iv) the Commitment of any Lender may only be
increased with the prior written consent of such Lender. Each new Lender and
Lender Agent shall become a party hereto by executing and delivering to the Deal
Agent and the Borrower a Joinder Supplement.

 

(f) Notwithstanding anything to the contrary herein, each of the parties hereto
hereby understands and agrees that:

 

(i) any outstanding “Advances” (under and as defined in the Original Loan
Funding and Servicing Agreement) of any Lender that exist as of the Closing Date
hereof shall, subject to the remainder of this Section 2.1(f), be deemed to be
Advances outstanding for all purposes of this Agreement and the other
Transaction Documents;

 

(ii) any outstanding “Hedge Transactions” (under and as defined in the Original
Loan Funding and Servicing Agreement) of any Hedge Counterparty that exist as of
the Closing Date hereof shall be deemed to be Hedge Transactions outstanding for
all purposes of this Agreement and the other Transaction Documents; and

 

(iii) on the Closing Date and on each subsequent date on which a Lender shall
become a party to this Agreement, the Borrower shall request Advances, on a
non-pro rata basis, from each Lender becoming a party to this Agreement as of
the Closing Date or such later date, as applicable, and shall use the proceeds
of such Advances to reduce outstanding Advances of each other Lender until the
respective outstanding Advances of each Lender equal such Lender’s Pro Rata
Share of all Advances Outstanding.

 

Section 2.2. Procedures for Swingline Advances.

 

(a) Subject to the limitations set forth in Section 2.1, the Borrower may
request a Swingline Advance from the Swingline Lender by delivering to the Deal
Agent, the Swingline Lender and the Collateral Custodian, as applicable, the
information and documents at the times set forth in this Section 2.2.

 

(b) No later than 2:00 p.m. (New York City time) on the proposed Funding Date,
the Borrower (or the Servicer on its behalf) shall deliver:

 

(i) to the Deal Agent, the Collateral Custodian and the Swingline Lender, a
Swingline Funding Request substantially in the form of Exhibit A-2 hereto;

 

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(ii) to the Deal Agent, the Swingline Lender and the Collateral Custodian a duly
completed Borrowing Base Certificate and Tape updated to such date;

 

(iii) subject to the Borrower’s receipt of a written request from the Deal
Agent, to the Deal Agent a transaction summary for each Pre-Positioned Loan to
be funded with the proceeds of the proposed Swingline Advance, which shall
include a description of the Obligor and the proposed Loan transaction;
provided, that no more than six Loans may be funded (in respect of all Advances
Outstanding, including the proposed Swingline Advance) as Pre-Positioned Loans
at any one time; and

 

(iv) to the Deal Agent a certification substantially in the form of Exhibit I
from outside counsel to the Borrower concerning the Collateral Custodian’s
receipt of certain documentation relating to any Pre-Positioned Loan which is
being funded with the proceeds of such Swingline Advance.

 

Each such Swingline Funding Request shall (i) specify the aggregate amount of
the requested Swingline Advance, which shall be in an amount equal to at least
$1,000,000 but less than $50,000,000, (ii) specify the proposed Funding Date of
such requested Swingline Advance, (iii) specify the amount of Advances
Outstanding (prior to giving effect to each requested Swingline Advance), (iv)
include a representation that all conditions precedent for a funding have been
met, (v) include a calculation of the Borrowing Base as of the date the
Swingline Advance is requested and after giving effect to the Swingline Advance
requested therein and the use of proceeds thereof, (vi) include a wire
disbursement and authorization form and (vii) include an updated Loan List
including each Pre-Positioned Loan that is subject to the requested Swingline
Advance. Any Swingline Funding Request shall be irrevocable. If any Swingline
Funding Request is received by the Deal Agent and the Swingline Lender after
2:00 p.m. (New York City time) on the Business Day for which such Swingline
Advance is requested or on a day that is not a Business Day, such Swingline
Funding Request shall be deemed to be received by the Deal Agent and the
Swingline Lender at 9:00 a.m. on the following Business Day.

 

(c) On the Funding Date, the Swingline Lender shall, subject to the limitations
set forth in Section 2.1, and upon satisfaction of the applicable conditions set
forth in Article III, make available to the Borrower in same day funds, at such
bank or other location reasonably designated by the Borrower in the Swingline
Funding Request given pursuant to this Section 2.2, an amount equal to the least
of (i) the amount requested by the Borrower for such Swingline Advance (ii) the
Swingline Lender’s unused Commitment then in effect, (iii) the aggregate unused
Commitments then in effect or (iv) the Availability on such Funding Date.

 

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Section 2.3. Procedures for Advances by the Conduit Lenders and Institutional
Lenders.

 

(a) Subject to the limitations set forth in Section 2.1, the Borrower may
request an Advance from the Conduit Lenders and the Institutional Lenders by
delivering to the Lender Agents at certain times the information and documents
set forth in this Section 2.3.

 

(b) No later than 2:00 p.m. (Charlotte, North Carolina time) one Business Day
prior to the proposed Funding Date, the Borrower shall deliver:

 

(i) to each Lender Agent and the Collateral Custodian, a duly completed Funding
Request substantially in the form of Exhibit A-1 hereto; and

 

(ii) subject to its receipt of a written request from the Deal Agent, to the
Deal Agent a transaction summary for each Pre-Positioned Loan to be funded with
the proceeds of the proposed Advance, which shall include a description of the
Obligor and the proposed Loan transaction; provided, that no more than six Loans
may be funded (in respect of all Advances Outstanding, including the proposed
Advance) as Pre-Positioned Loans at any one time;

 

provided, that, in the event that a Funding Request is delivered to JPMorgan
Chase later than 11:00 a.m. (Charlotte, North Carolina time) three Business Days
prior to the proposed Funding Date, the Interest Rate for the related Advances
funded by JPMorgan Chase with respect to such Funding Request shall be the Base
Rate.

 

Each Funding Request shall (i) specify the aggregate amount of the requested
Advance, which shall be in an amount equal to at least $1,000,000, (ii) specify
the proposed Funding Date of the requested Advance, (iii) specify the amount of
Advances Outstanding, (iv) include a representation that all conditions
precedent for a funding have been met, (v) include a calculation of the
Borrowing Base as of the date the Advance is requested, and after giving effect
to the Advance requested therein and the use of proceeds thereof, (vi) include a
wire disbursement and authorization form and (vii) include an updated Loan List
including each Pre-Positioned Loan to be funded with the proceeds of the
requested Advance. Any Funding Request shall be irrevocable. If any Funding
Request is received by the Deal Agent and each Lender Agent after 2:00 p.m. (New
York City time) on the Business Day that is one Business Day’s prior to the
Business Day for which such Advance is requested or on a day that is not a
Business Day, such Funding Request shall be deemed to be received by the Deal
Agent and each Lender Agent at 9:00 a.m. on the next Business Day.

 

(c) No later than 2:00 p.m. (Charlotte, North Carolina time) on the proposed
Funding Date, the Borrower (or the Servicer on its behalf) shall deliver to the
Deal Agent and the Collateral Custodian a certification substantially in the
form of Exhibit I from outside counsel to the Borrower concerning the Collateral
Custodian’s receipt of certain documentation relating to each Pre-Positioned
Loan to be funded with the proceeds of such Advance.

 

(d) On the Funding Date, each Conduit Lender and each Institutional Lender
shall, subject to the limitations set forth in Section 2.1, and upon
satisfaction of the applicable

 

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conditions set forth in Article III, make available to the Borrower in same day
funds, at such bank or other location reasonably designated by the Borrower in
the Funding Request given pursuant to this Section 2.3, an amount equal to such
Lender’s Pro Rata Share of the lesser of (x) the amount requested by the
Borrower for such Advance and (y) an amount equal to the Availability on such
Funding Date.

 

(e) On each Funding Date, the obligation of each Lender to remit its Pro Rata
Share of any such Advance shall be several from that of each other Lender and
the failure of a Lender to so make such amount available to the Borrower shall
not relieve any other Lender of its obligation hereunder.

 

Section 2.4. Optional Changes in Facility Amount; Prepayments.

 

(a) The Borrower shall be entitled at its option, at any time prior to the
occurrence of a Termination Event, to terminate in whole or reduce in part the
portion of the Facility Amount that exceeds the sum of the Advances Outstanding,
accrued Interest, Breakage Costs and Hedge Breakage Costs; provided, that, the
Borrower shall give prior written notice in the form of Exhibit A-3 of such
reduction to the Deal Agent as provided in Section 2.4(b) and that any partial
reduction of the Facility Amount shall be in an amount equal to $5,000,000 or
integral multiples thereof to a minimum of $500,000. Any request for a reduction
or termination pursuant to this Section 2.4(a) shall be irrevocable. The
Commitment of each Conduit Lender and each Institutional Lender shall be reduced
by an amount equal to its Pro Rata Share (prior to giving effect to any
reduction of Commitments hereunder) of the aggregate amount of any reduction
under this Section 2.4(a).

 

(b) Prior to the occurrence of a Termination Event, the Borrower may, upon one
Business Day’s prior written notice (such notice to be received by the Deal
Agent and each applicable Hedge Counterparty no later than 5:00 p.m. (Charlotte,
North Carolina time) on such day) to the Deal Agent and each applicable Hedge
Counterparty, reduce the Advances Outstanding by remitting, to the Deal Agent,
for payment to the respective Lenders (i) cash and (ii) instructions to reduce
such Advances Outstanding, accrued Interest, Breakage Costs and Hedge Breakage
Costs; provided, that, no such reduction shall be given effect unless the
Borrower has complied with the terms of any Hedging Agreement requiring that one
or more Hedge Transactions be terminated in whole or in part as the result of
any such reduction of the Advances Outstanding, and the Borrower has paid in
full all Hedge Breakage Costs owing to the relevant Hedge Counterparty for any
such termination. Any reduction of the Advances Outstanding (other than with
respect to prepayments of Advances Outstanding to be made by the Borrower to
reduce Advances Outstanding such that the Availability is greater than or equal
to $0) shall be in a minimum amount of $1,000,000 with integral multiples of
$100,000. Any such reduction will occur only if sufficient funds have been
remitted to pay all such amounts in the succeeding sentence in full. Upon
receipt of such amounts, the Deal Agent shall apply such amounts to the payment
of any Hedge Breakage Costs, to the pro rata reduction of the Advances
Outstanding to the respective Lenders, to the payment of accrued Interest on the
amount of the Advances Outstanding to be repaid by paying such amounts to the
respective Lenders and to the payment of any Breakage Costs. Any Advance so
prepaid may, subject to the terms and conditions hereof, be reborrowed during
the Revolving Period. Any Borrower Notice relating to any prepayment pursuant to
this Section 2.4(b) shall be irrevocable.

 

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(c) If on any day the Deal Agent, as agent for the Secured Parties, does not own
or have a valid and perfected first priority security interest in any Loan and
Related Property (subject to Permitted Liens) upon the earlier of the Borrower’s
receipt of notice from the Deal Agent or the Borrower becoming aware thereof and
the Borrower’s failure to cure such breach within 30 days (if cure is reasonably
possible and otherwise immediately upon receipt of such notice or upon the
Borrower becoming aware), the Borrower shall be deemed to have received on such
day a collection (a “Deemed Collection”) of such Loan in full and shall on such
day pay to the Deal Agent, on behalf of the Secured Parties, an amount equal to
(x) the Outstanding Loan Balance of such Loan, plus accrued and unpaid interest
thereon, to be applied to the pro rata reduction of the principal of the
Structured Notes and the Swingline Notes, plus (y) any Breakage Costs and Hedge
Breakage Costs and any other payments owing to the applicable Hedge Counterparty
in respect of the termination of any Hedge Transaction required as a result of
the Deemed Collection, plus (z) any other costs and expenses related to the
retransfer of such Loan and any Related Property contemplated by this Section
2.4(c). In connection with any such Deemed Collection, the Deal Agent, as agent
for the Secured Parties, shall automatically and without further action (unless
otherwise necessary or requested by the Borrower or Servicer), be deemed to
release the Lien on such Loan and any Related Property created by this Agreement
in favor of the Deal Agent and transfer to the Borrower, free and clear of any
Lien created by the Deal Agent, all of the right, title and interest of the Deal
Agent, as agent for the Secured Parties, in, to, and under the Loan and any
Related Property with respect to which the Deal Agent has received such Deemed
Collection (such Loan a “Repurchased Loan”), but without any recourse,
representation and warranty of any kind, express or implied.

 

Section 2.5. Reimbursement of Swingline Advances.

 

Notwithstanding Sections 2.3, 3.1 and 3.2, each Conduit Lender and each
Institutional Lender hereby agrees that if the Swingline Lender funds any
Swingline Advance, (i) each Conduit Lender and each Institutional Lender shall
reimburse the Swingline Lender for such Swingline Advance not later than one
Business Day after the Swingline Lender funds such Swingline Advance in the
proportions described in the following sentence. Such reimbursement shall be
accomplished by each Conduit Lender and each Institutional Lender remitting to
the Swingline Lender at the Swingline Lender’s Account or such other account as
designated in writing by the Swingline Lender such Conduit Lender’s and such
Institutional Lender’s Pro Rata Share of the Swingline Advance; provided,
however, that clause (a) of the definition of Commitment shall be used to
calculate the Commitment of each Conduit Lender and Institutional Lender for the
purposes of any such reimbursement occurring after the Termination Date. The
Borrower and the Servicer hereby authorize and instruct each Conduit Lender and
each Institutional Lender to reimburse the Swingline Lender in the manner
described in this Section 2.5.

 

Section 2.6. Notations on the Structured Notes.

 

(a) Each Lender Agent is hereby authorized to enter on a schedule attached to
each Conduit Lender’s and each Institutional Lender’s Structured Note a notation
(which may be computer generated) or to otherwise record in its internal books
and records or computer system with respect to each Advance under such
Structured Note made by the applicable Lender of: (i) the date and principal
amount thereof and (ii) each payment and repayment of principal

 

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thereof. Any such recordation shall, absent manifest error, constitute prima
facie evidence of the accuracy of the information so recorded. The failure of
any Lender Agent to make any such notation on the schedule attached to the
applicable Structured Note shall not limit or otherwise affect the obligation of
the Borrower to repay the Advances under such Structured Note in accordance with
the terms set forth herein.

 

(b) The Swingline Lender is hereby authorized to enter on a schedule attached to
the Swingline Note a notation (which may be computer generated) or to otherwise
record in its internal books and records or computer system with respect to each
Swingline Advance under the Swingline Note made by the Swingline Lender of: (i)
the date and principal amount thereof and (ii) each payment and repayment of
principal thereof. Any such recordation shall, absent manifest error, constitute
prima facie evidence of the accuracy of the information so recorded. The failure
of the Swingline Lender to make any such notation on the schedule attached to
the Swingline Note shall not limit or otherwise affect the obligation of the
Borrower to repay the Swingline Advances under the Swingline Note in accordance
with the terms set forth herein.

 

Section 2.7. Principal Repayments.

 

(a) Unless sooner prepaid pursuant to Section 2.4(b) or Section 9.1, the
Advances Outstanding shall be repaid in full on the date that occurs twenty-four
(24) months following the Termination Date. In addition, Advances Outstanding
shall be repaid as and when necessary to cause the Availability to equal or
exceed $0, and any amount so repaid may, subject to the terms and conditions
hereof, be reborrowed hereunder during the Revolving Period.

 

(b) Unless sooner reimbursed by the Conduit Lenders and the Institutional
Lenders pursuant to Section 2.5, Swingline Advances shall be repaid in full by
the Borrower to the Swingline Lender at the Swingline Lender’s Account or such
other account designated in writing by the Swingline Lender one Business Day
following the date such Swingline Advance was funded. Swingline Advances shall
be with full recourse to the Borrower, and if a Swingline Advance is not paid,
the Swingline Lender will have the rights and remedies provided under the UCC of
each applicable jurisdiction and other Applicable Law, which rights shall be
cumulative.

 

(c) All repayments of any Advance, Swingline Advance or any portion thereof
shall be made together with payment of (i) all Interest accrued and unpaid on
the amount repaid to (but excluding) the date of such repayment, (ii) any and
all Breakage Costs, and (iii) all Hedge Breakage Costs and any other amounts
payable by the Borrower under or with respect to any Hedging Agreement.

 

(d) With respect to any Swingline Advances, (i) all Interest accrued and unpaid
on the amount repaid to (but excluding) the date of such repayment, and (ii) any
and all Hedge Breakage Costs and any other amounts payable by the Borrower under
or with respect to any Hedging Agreement, shall be paid to the Swingline Lender
and any applicable Hedge Counterparty from the Collection Account on each
Payment Date, monthly in arrears, in accordance with Sections 2.9(a)(1)(vi) and
(vii) and Sections 2.9(b)(vi) and (vii).

 

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Section 2.8. Interest Payments.

 

(a) Interest shall accrue on each Advance or Swingline Advance, as applicable,
during each Accrual Period at the applicable Interest Rate. The Borrower shall
pay Interest on the unpaid principal amount of each Advance or Swingline
Advance, as applicable, for the period commencing on and including the Funding
Date of such Advance or Swingline Advance, as applicable, through but excluding
the date that such Advance or Swingline Advance, as applicable, shall be paid in
full. Interest shall accrue during each Accrual Period and be payable on each
Advance and each Swingline Advance on each Payment Date, unless earlier paid
pursuant to (i) a prepayment in accordance with Section 2.4 or (ii) a
reimbursement or repayment in accordance with Section 2.5 or Section 2.7, as
applicable.

 

(b) Each Lender Agent shall determine the Interest Rate and Interest (including
unpaid Interest, if any, due and payable on a prior Payment Date) to be paid by
the Borrower with respect to each Advance and each Swingline Advance on each
Payment Date for the Accrual Period and shall advise the Servicer on behalf of
the Borrower thereof three Business Days prior to each Payment Date.

 

(c) Anything in this Agreement or the other Transaction Documents to the
contrary notwithstanding, if at any time the rate of interest payable by any
Person under this Agreement and the Transaction Documents exceeds the highest
rate of interest permissible under Applicable Law (the “Maximum Lawful Rate”),
then, so long as the Maximum Lawful Rate would be exceeded, the rate of interest
under this Agreement and the Transaction Documents shall be equal to the Maximum
Lawful Rate. If at any time thereafter the rate of interest payable under this
Agreement and the Transaction Documents is less than the Maximum Lawful Rate,
such Person shall continue to pay interest under this Agreement and the
Transaction Documents at the Maximum Lawful Rate until such time as the total
interest received from such Person is equal to the total interest that would
have been received had Applicable Law not limited the interest rate payable
under this Agreement and the Transaction Documents. In no event shall the total
interest received by a Lender under this Agreement and the Transaction Documents
exceed the amount that such Lender could lawfully have received, had the
interest due under this Agreement and the Transaction Documents been calculated
since the Closing Date at the Maximum Lawful Rate.

 

Section 2.9. Settlement Procedures.

 

(a) (1) During the Revolving Period. On each Payment Date during the Revolving
Period, the Servicer on behalf of the Borrower shall pay to the following
Persons pursuant to the Monthly Report, from the Collection Account, to the
extent of Available Funds, the following amounts in the following order of
priority:

 

(i) First, pro rata to each Hedge Counterparty, any amounts, including any Hedge
Breakage Costs and any payments due in respect of the termination of any Hedge
Transactions, owing to that Hedge Counterparty under its respective Hedging
Agreement in respect of any Hedge Transaction(s), for the payment thereof;

 

(ii) Second, to the Servicer, to the extent of Collections received with respect
to the specific Loans and Obligors for which such Servicer Advances were made,
in an

 

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amount equal to any Unreimbursed Servicer Advances on such Loans, for the
payment thereof;

 

(iii) Third, to the Servicer, in an amount equal to its accrued and unpaid
Servicing Fees to the end of the preceding Collection Period, for the payment
thereof;

 

(iv) Fourth, to the extent not paid by the Servicer, to the Backup Servicer, in
amount equal to any accrued and unpaid currently due Backup Servicer Fee, for
the payment thereof;

 

(v) Fifth, to the extent not paid by the Servicer, to the Collateral Custodian
in an amount equal to any accrued and unpaid currently due Collateral Custodian
Fee, for the payment thereof;

 

(vi) Sixth, to each Lender Agent and the Swingline Lender, pro rata in
accordance with the amount of Advances Outstanding and Swingline Advances
outstanding hereunder, in an amount equal to any accrued and unpaid Interest and
Breakage Costs, for the payment thereof;

 

(vii) Seventh, to each Lender Agent and the Swingline Lender, pro rata in
accordance with the amount of Advances Outstanding and Swingline Advances
outstanding hereunder, in an amount equal to any accrued and unpaid Program Fee
and Facility Fee, for the payment thereof;

 

(viii) Eighth, to the Deal Agent, for the account of the applicable Affected
Party, to be paid pro rata to such Affected Parties in accordance with the
amount owed to such Person under this clause Eighth, in an amount equal to any
unpaid Increased Costs, Taxes and any Other Costs, for the payment thereof;

 

(ix) Ninth, to each Lender Agent and the Swingline Lender, if the Required
Advance Reduction Amount is greater than zero, an amount necessary to reduce the
Required Advance Reduction Amount to zero, pro rata in accordance with the
amount of Advances Outstanding hereunder, for the payment thereof;

 

(x) Tenth, to the Deal Agent, the Swingline Lender, each Conduit Lender and each
Institutional Lender, the Affected Parties and the Indemnified Parties, pro rata
in accordance with the amount owed to such Person under this clause Tenth, all
other amounts (other than Advances Outstanding) then due under this Agreement,
for the payment thereof;

 

(xi) Eleventh, to the extent not paid by the Servicer, to the Backup Servicer,
to the Collateral Custodian, and to any Successor Servicer, as applicable, pro
rata in accordance with the amount owed to such Person under this clause
Eleventh, in an amount equal to any accrued and unpaid Transition Costs, Backup
Servicer Expenses, Collateral Custodian Expenses and Market Servicing Fee
Differential, for the payment thereof;

 

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(xii) Twelfth, to the Servicer, in an amount equal to any Unreimbursed Servicer
Advances, to the extent not reimbursed pursuant to clause Second above, for the
payment thereof;

 

(xiii) Thirteenth, at the option of the Borrower, to be invested in additional
Eligible Loans that become part of the Collateral within two Business Days of
such date or distributed to the Borrower;

 

(2) On the terms and conditions hereinafter set forth, from time to time during
the Revolving Period, the Servicer may, to the extent of any Principal
Collections on deposit in the Collection Account:

 

(i) withdraw such funds for the purpose of reinvesting in additional Eligible
Loans, provided the following conditions are satisfied:

 

a. all conditions precedent set forth in Section 3.2(a) have been satisfied;

 

b. the Servicer provides same day written notice to the Agent and Collateral
Custodian by facsimile (to be received no later than 2:00 p.m. (Charlotte, North
Carolina time) on such day) of the request to withdraw Principal Collections and
the amount thereof;

 

c. the notice required in clause (b) above shall be accompanied by a Borrower
Notice in the form of Exhibit A-3 and a Borrowing Base Certificate and the same
are executed by the Borrower and at least one Responsible Officer of the
Servicer;

 

d. the Collateral Custodian provides to the Agent by facsimile or email (to be
received no later than 2:00 p.m. (Charlotte, North Carolina time) on that same
date) a statement reflecting the total amount of Principal Collections on
deposit on such day in the Collection Account; and

 

e. upon the satisfaction of the conditions set forth in clauses (a) through (d)
above, and the Collateral Custodian’s confirmation of available funds, the
Collateral Custodian shall release funds from the Collection Account to the
Servicer in an amount not to exceed the lesser of (A) the amount requested by
the Servicer and (B) the amount of Principal Collections on deposit in the
Collection Account on such day; or

 

(ii) withdraw such funds for the purpose of making payments in respect of the
Advances Outstanding at such time in accordance with and subject to the terms of
Section 2.4(b).

 

(b) During the Amortization Period. On each Payment Date during the Amortization
Period, the Servicer on behalf of the Borrower shall pay to the following
Persons pursuant to the Monthly Report, from the Collection Account, to the
extent of Available Funds, the following amounts in the following order of
priority:

 

(i) First, pro rata to each Hedge Counterparty, any amounts, including any Hedge
Breakage Costs and any payments due in respect of the termination of any Hedge
Transactions owing to that Hedge Counterparty under its respective Hedging
Agreement in respect of any Hedge Transaction(s), for the payment thereof;

 

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(ii) Second, to the Servicer, to the extent of Collections received with respect
to the specific Loans and Obligors for which such Servicer Advances were made,
in an amount equal to any Unreimbursed Servicer Advances on such Loans, for the
payment thereof;

 

(iii) Third, to the Servicer, in an amount equal to its accrued and unpaid
Servicing Fees to the end of the preceding Collection Period, for the payment
thereof;

 

(iv) Fourth, to the extent not paid by the Servicer, to the Backup Servicer, in
amount equal to any accrued and unpaid currently due Backup Servicer Fee, for
the payment thereof;

 

(v) Fifth, to the extent not paid by the Servicer, to the Collateral Custodian
in an amount equal to any accrued and unpaid currently due Collateral Custodian
Fee, for the payment thereof;

 

(vi) Sixth, to each Lender Agent and the Swingline Lender, pro rata in
accordance with the amount of Advances Outstanding and Swingline Advances
outstanding hereunder, in an amount equal to any accrued and unpaid Interest and
Breakage Costs, for the payment thereof;

 

(vii) Seventh, to each Lender Agent and the Swingline Lender, pro rata in
accordance with the amount of Advances Outstanding and Swingline Advances
outstanding hereunder, in an amount equal to any accrued and unpaid Program Fee
and Facility Fee, for the payment thereof;

 

(viii) Eighth, to the Deal Agent and each Lender Agent, for the account of the
applicable Affected Party, to be paid pro rata to such Affected Parties in
accordance with the amount owed to such Person under this clause Eighth, in an
amount equal to any unpaid Increased Costs, Taxes and any Other Costs, for the
payment thereof;

 

(ix) Ninth, to each Lender Agent and the Swingline Lender, pro rata in
accordance with the amount of Advances Outstanding and Swingline Advances
outstanding hereunder, for the account of the applicable Lender, in an amount
necessary to reduce the Advances Outstanding and Obligations to zero, for the
payment thereof;

 

(x) Tenth, to each Lender Agent, the Swingline Lender, the Lenders, the Affected
Parties and the Indemnified Parties, pro rata in accordance with the amount owed
to such Person under this clause Tenth, all other amounts (other than Advances
Outstanding) then due under this Agreement, for the payment thereof;

 

(xi) Eleventh, to the extent not paid by the Servicer, to the Backup Servicer,
to the Collateral Custodian, and to any Successor Servicer, as applicable, pro
rata in

 

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accordance with the amount owed to such Person under this clause Eleventh, in an
amount equal to any accrued and unpaid Transition Costs, Backup Servicer
Expenses, Collateral Custodian Expenses and Market Servicing Fee Differential,
for the payment thereof;

 

(xii) Twelfth, to each Person entitled thereto, pro rata, an amount equal to all
outstanding Obligations owed to such Person;

 

(xiii) Thirteenth, any remaining amounts shall be distributed to the Borrower.

 

Section 2.10. Collections and Allocations.

 

(a) The Borrower or the Servicer on behalf of the Borrower shall promptly (but
in no event later than two Business Days after the receipt thereof) identify any
Collections received by it as being Interest Collections or Principal
Collections and deposit all such Interest Collections or Principal Collections
received directly by it into the Collection Account. The Servicer on behalf of
the Borrower shall make such deposits or payments on the date indicated by wire
transfer, in immediately available funds.

 

(b) Until the occurrence of a Termination Event, to the extent there are
uninvested amounts deposited in the Collection Account, all amounts shall be
invested in Permitted Investments selected by the Servicer on behalf of the
Borrower; from and after the occurrence of a Termination Event, to the extent
there are uninvested amounts deposited in the Collection Account, all amounts
may be invested in Permitted Investments selected by the Deal Agent that mature
no later than the next Business Day. Any earnings (and losses) thereon shall be
for the account of the Lenders.

 

(c) Notwithstanding anything to the contrary contained herein or in any other
Transaction Document, all payments required to be made by the Borrower hereunder
shall be made by the Borrower through the Servicer acting as its Paying Agent.

 

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Section 2.11. Payments, Computations, Etc.

 

(a) Unless otherwise expressly provided herein, all amounts to be paid or
deposited by the Borrower, the Servicer on behalf of the Borrower or the Conduit
Lenders and the Institutional Lenders to the Swingline Lender hereunder shall be
paid or deposited in accordance with the terms hereof no later than 10:00 a.m.
(Charlotte, North Carolina time) on the day when due in lawful money of the
United States in immediately available funds to the applicable Agent’s Account.
The Borrower shall, to the extent permitted by law, pay to the Secured Parties
interest on all amounts not paid or deposited when due hereunder at 2% per annum
above the Base Rate, and in the case of any amounts not paid or deposited under
any Hedging Agreement, interest at the “rate” specified in the applicable
Hedging Agreement, in each case, payable on demand; provided, however, that such
interest rate shall not at any time exceed the Maximum Lawful Rate. All
computations of interest and all computations of the Interest Rate and other
fees hereunder shall be made on the basis of a year of 360 (other than
calculations with respect to the Base Rate which shall be based on a year
consisting of 365 or 366 days, as applicable) days for the actual number of days
(including the first but excluding the last day) elapsed.

 

(b) Whenever any payment hereunder shall be stated to be due on a day other than
a Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of Interest, other interest or any fee payable hereunder, as the case
may be.

 

(c) All payments hereunder shall be made without set-off or counterclaim and in
such amounts as may be necessary in order that all such payments shall not be
less than the amounts otherwise specified to be paid under this Agreement (after
withholding for or on account of any Taxes). Promptly following the Collection
Date, the Deal Agent, each Conduit Lender, each Institutional Lender and the
Swingline Lender shall mark the Notes “Paid” and return them to the Borrower.

 

Section 2.12. [Reserved].

 

Section 2.13. Fees.

 

(a) The Borrower shall pay to each Lender Agent and the Swingline Lender, to the
extent of Available Funds, from the Collection Account on each Payment Date,
monthly in arrears, in accordance with Section 2.9(1)(a)(vii) and Section
2.9(b)(vii), the Program Fee and Facility Fee.

 

(b) The Borrower shall pay to the Servicer, to the extent of Available Funds,
from the Collection Account on each Payment Date, monthly in arrears, in
accordance with Section 2.9(a)(1)(iii) and Section 2.9(b)(iii), the Servicing
Fee, and, as applicable to any Successor Servicer, the Market Servicing Fee
Differential.

 

(c) The Backup Servicer shall be entitled to receive, to the extent of Available
Funds, from the Collection Account on each Payment Date, monthly in arrears, in
accordance with Section 2.9(a)(1)(iv) and Section 2.9(b)(iv), the Backup
Servicer Fee.

 

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(d) The Collateral Custodian shall be entitled to receive, to the extent of
Available Funds, from the Collection Account on each Payment Date, monthly in
arrears, in accordance with Section 2.9(a)(1)(v) and Section 2.9(b)(v), the
Collateral Custodian Fee.

 

(e) The Borrower shall pay to Dechert LLP, as counsel to the Deal Agent, in
accordance with Section 12.9, (i) the estimated legal fees and itemized
out-of-pocket expenses of such counsel as of such date, and (ii) all additional
reasonable fees and out-of-pocket expenses of such counsel within 30 days
Business Days after receiving an invoice for such amounts; provided, however,
all such fees shall be broken down by time and hourly rates and not value
billed.

 

Section 2.14. Increased Costs; Capital Adequacy; Illegality.

 

(a) If either (i) the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
in or in the interpretation of any Applicable Law or regulation or (ii) the
compliance by an Affected Party with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
(A) shall subject an Affected Party to any Tax (except for Taxes on the overall
net income of such Affected Party), duty or other charge with respect to an
Advance or Swingline Advance hereunder, or on any payment made hereunder or (B)
shall impose, modify or deem applicable any reserve requirement (including,
without limitation, any reserve requirement imposed by the Federal Reserve
Board, but excluding any reserve requirement, if any, included in the
determination of Interest), special deposit or similar requirement against
assets of, deposits with or for the amount of, or credit extended by, any
Affected Party or (C) shall impose any other condition affecting an Advance or
Swingline Advance or a Lender’s rights hereunder (or of maintaining a Lender’s
obligation to make any such Advance), the result of which is to increase the
cost to any Affected Party or to reduce the amount of any sum received or
receivable by an Affected Party under this Agreement, then within ten days after
demand by such Affected Party (which demand shall be accompanied by a statement
setting forth the basis for such demand), the Borrower shall pay directly to
such Affected Party such additional amount or amounts as will compensate such
Affected Party for such additional or increased cost incurred or such reduction
suffered.

 

(b) If either (i) the introduction of or any change in or in the interpretation
of any Applicable Law, guideline, rule, regulation, directive or request or (ii)
compliance by any Affected Party with any Applicable Law, guideline, rule,
regulation, directive or request from any central bank or other Governmental
Authority (whether or not having the force of law), including, without
limitation, compliance by an Affected Party with any request or directive
regarding capital adequacy, has or would have the effect of reducing the rate of
return on the capital of any Affected Party or any Lender’s holding company as a
consequence of its obligations hereunder or arising in connection herewith to a
level below that which any such Affected Party or such Lender’s holding company
could have achieved but for such introduction, change or compliance (taking into
consideration the policies of such Affected Party or such Lender’s holding
company with respect to capital adequacy) by an amount deemed by such Affected
Party or such Lender’s holding company to be material, then from time to time,
within ten days after demand by such Affected Party (which demand shall be
accompanied by a statement setting forth the basis for such demand), the
Borrower shall pay directly to such

 

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Affected Party or the Lender with respect to such holding company such
additional amount or amounts as will compensate such Affected Party for such
reduction. For avoidance of doubt, any interpretation of Accounting Research
Bulletin No. 51 by the Financial Accounting Standards Board shall constitute an
adoption, change, request or directive subject to this Section 2.14(b).

 

(c) If as a result of any event or circumstance similar to those described in
Sections 2.14(a) and (b), any Affected Party is required to compensate a bank or
other financial institution providing liquidity support, credit enhancement or
other similar support to such Affected Party in connection with this Agreement
or the funding or maintenance of Advances or Swingline Advances hereunder, then
within ten days after demand by such Affected Party, the Borrower shall pay to
such Affected Party such additional amount or amounts as may be necessary to
reimburse such Affected Party for any such amounts paid by it.

 

(d) In determining any amount provided for in this Section 2.14, the Affected
Party may use any reasonable averaging and attribution methods. Any Affected
Party making a claim under this section shall submit to the Borrower a
certificate as to such additional or increased cost or reduction, which
certificate shall calculate in reasonable detail any such charges and shall be
conclusive absent demonstrable error.

 

(e) If a Lender shall notify the Deal Agent that a Eurodollar Disruption Event
as described in clause (a) of the definition of “Eurodollar Disruption Event”
has occurred, the Deal Agent shall in turn so notify the Borrower, whereupon all
Advances and Swingline Advances in respect of which Interest accrues at the
LIBOR Rate shall immediately be converted into Advances and Swingline Advances
in respect of which Interest accrues at the Base Rate.

 

(f) Failure or delay on the part of any Affected Party to demand compensation
pursuant to this Section 2.14 shall not constitute a waiver of such Affected
Party’s right to demand such compensation.

 

Section 2.15. Taxes.

 

(a) All payments made by the Borrower in respect of any Advance or Swingline
Advance and all payments made by the Borrower or the Servicer on behalf of the
Borrower under this Agreement will be made free and clear of and without
deduction or withholding for or on account of any Taxes, unless such withholding
or deduction is required by law. In such event, the Borrower shall pay to the
appropriate taxing authority any such Taxes required to be deducted or withheld
and the amount payable to the Deal Agent and each other Secured Party (as the
case may be) will be increased (such increase, the “Additional Amount”) such
that every net payment made under this Agreement after deduction or withholding
for or on account of any Taxes (including, without limitation, any Taxes on such
increase) is not less than the amount that would have been paid had no such
deduction or withholding been deducted or withheld. The foregoing obligation to
pay Additional Amounts, however, will not apply with respect to, and the term
“Additional Amount” shall be deemed not to include, net income or franchise
taxes imposed on the Deal Agent or another Secured Party, respectively, with
respect to payments required to be made by the Borrower or Servicer on behalf of
the Borrower under this Agreement, by a taxing jurisdiction in which such
Secured Party or the Deal Agent is organized, conducts business or is paying
taxes as of the Closing Date (as the case may be). If the Deal

 

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Agent or another Secured Party pays any Taxes in respect of which the Borrower
is obligated to pay Additional Amounts under this Section 2.15(a), the Borrower
shall promptly reimburse such Secured Party or the Deal Agent, as applicable, in
full.

 

(b) The Borrower will indemnify the Deal Agent and each other Secured Party for
the full amount of Taxes in respect of which the Borrower is required to pay
Additional Amounts (including, without limitation, any Taxes imposed by any
jurisdiction on such Additional Amounts) paid by the Deal Agent or such other
Secured Party (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto; provided,
however, that the Deal Agent or such other Secured Party, as appropriate, making
a demand for indemnity payment, shall provide the Borrower, at its address set
forth on Annex A hereto, with a certificate from the relevant taxing authority
or from a Responsible Officer of the Deal Agent or such other Secured Party
stating or otherwise evidencing that the Deal Agent or such other Secured Party
has made payment of such Taxes and will provide a copy of or extract from
documentation, if available, furnished by such taxing authority evidencing
assertion or payment of such Taxes. This indemnification shall be made within
ten days from the date the Deal Agent or such other Secured Party (as the case
may be) makes written demand therefor.

 

(c) Within 30 days after the date of any payment by the Borrower of any Taxes,
the Borrower will furnish to the Deal Agent, at its address set forth on Annex A
hereto, appropriate evidence of payment thereof.

 

(d) If a Lender is not created or organized under the laws of the United States
or a political subdivision thereof, such Lender shall, to the extent that it may
then do so under Applicable Laws, deliver to the Borrower with a copy to the
Deal Agent (i) within 15 days after the date hereof, or, if later, the date on
which such Lender becomes a Lender hereunder two (or such other number as may
from time to time be prescribed by Applicable Laws) duly completed copies of IRS
Form W-8ECI or Form W-8BEN (or any successor forms or other certificates or
statements that may be required from time to time by the relevant United States
taxing authorities or Applicable Laws), as appropriate, to permit the Borrower
to make payments hereunder for the account of such Lender, as the case may be,
without deduction or withholding of United States federal income or similar
Taxes and (ii) upon the obsolescence of or after the occurrence of any event
requiring a change in, any form or certificate previously delivered pursuant to
this Section 2.15(d), two copies (or such other number as may from time to time
be prescribed by Applicable Laws) of such additional, amended or successor
forms, certificates or statements as may be required under Applicable Laws to
permit the Borrower to make payments hereunder for the account of such Lender,
without deduction or withholding of United States federal income or similar
Taxes.

 

(e) For any period with respect to which a Lender or the Deal Agent has failed
to provide the Borrower with the appropriate form, certificate or statement
described in Section 2.15(d) (other than if such failure is due to a change in
law occurring after the date of this Agreement), the Deal Agent or such Lender,
as the case may be, shall not be entitled to indemnification under clauses (a)
or (b) of this Section 2.15 with respect to any Taxes.

 

(f) Within 30 days of the written request of the Borrower therefor, the Deal
Agent and the Lenders, as appropriate, shall execute and deliver to the Borrower
such certificates,

 

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forms or other documents that can be furnished consistent with the facts and
that are reasonably necessary to assist the Borrower in applying for refunds of
Taxes remitted hereunder; provided, however, that the Deal Agent and the Lenders
shall not be required to deliver such certificates forms or other documents if
in their respective sole discretion it is determined that the delivery of such
certificate, form or other document would have a material adverse effect on the
Deal Agent or Lenders; provided further, however, that the Borrower shall
reimburse the Deal Agent or the Lenders for any reasonable expenses incurred in
the delivery of such certificate, form or other document.

 

(g) If, in connection with an agreement or other document providing liquidity
support, credit enhancement or other similar support to the Lenders in
connection with this Agreement or the funding or maintenance of Advances or
Swingline Advances hereunder, the Lenders are required to compensate a bank or
other financial institution in respect of Taxes under circumstances similar to
those described in this Section 2.15, then within ten days after demand by the
Lenders, the Borrower shall pay to the Lenders such additional amount or amounts
as may be necessary to reimburse the Lenders for any amounts paid by them.

 

Section 2.16. Assignment of the Purchase Agreement.

 

The Borrower hereby assigns to the Deal Agent, for the ratable benefit of the
Secured Parties hereunder, all of the Borrower’s right, and title and interest
in and to (but none of its obligations under) the Purchase Agreement. In
furtherance and not in limitation of the foregoing, the Borrower hereby assigns
to the Deal Agent for the benefit of the Secured Parties, its right to
Indemnification under Section 10.18(c) of the Purchase Agreement. The Borrower
confirms that following a Termination Event the Deal Agent shall have the sole
right to enforce the Borrower’s rights and remedies under the Purchase Agreement
for the benefit of the Secured Parties, but without any obligation on the part
of the Deal Agent, the Secured Parties or any of their respective Affiliates, to
perform any of the obligations of the Borrower under the Purchase Agreement. The
Borrower further confirms and agrees that such assignment to the Deal Agent
shall terminate upon the Collection Date; provided, however, that the rights of
the Deal Agent and the Secured Parties pursuant to such assignment with respect
to rights and remedies in connection with any indemnities and any breach of any
representation, warranty or covenants made by the Originator pursuant to the
Purchase Agreement, which rights and remedies survive the termination of the
Purchase Agreement, shall be continuing and shall survive any termination of
such assignment.

 

Section 2.17. Lien Release Dividend.

 

(a) Notwithstanding any provision contained in this Agreement to the contrary,
provided there is not then existing an Unmatured Termination Event, a
Termination Event or a Servicer Termination Event, on a Lien Release Dividend
Date, the Borrower may dividend to the Originator a portion of the Transferred
Loans or portions thereof (each, a “Lien Release Dividend”), subject to the
following terms and conditions:

 

(i) The Borrower and the Originator shall have given the Deal Agent at least two
Business Days’ prior written notice of their intent to effectuate a Lien Release
Dividend, unless such notice is waived by the Deal Agent;

 

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(ii) Any Lien Release Dividend shall only be in connection with a Permitted
Securitization Transaction;

 

(iii) After giving effect to the Lien Release Dividend and the transfer to the
Originator of the Transferred Loans or portions thereof on the Lien Release
Dividend Date, (A) the Availability is greater than or equal to $0, (B) the
representations and warranties contained in Sections 3.2(i), 3.2(k), 3.2(l), and
3.2(n), and Section 4.1 and 4.2 hereof shall continue to be correct in all
material respects, except to the extent relating to an earlier date, (C) the
eligibility of any Transferred Loan remaining as part of the Collateral after
the Lien Release Dividend will be redetermined as of the Lien Release Dividend
Date, (D) the Concentration Limits will be redetermined as of the Lien Release
Dividend Date, and (E) neither an Unmatured Termination Event, a Termination
Event nor a Servicer Termination Event shall have resulted;

 

(iv) Such Lien Release Dividend must be in compliance with Applicable Law and
may not (A) be made with the intent to hinder, delay or defraud any creditor of
the Borrower or (B) leave the Borrower, immediately after giving effect to the
Lien Release Dividend, (i) insolvent, (ii) with insufficient funds to pay its
obligations as and when they become due or (iii) with inadequate capital for its
present and anticipated business and transactions;

 

(v) On or prior to the Lien Release Dividend Date, the Borrower shall have (A)
delivered to the Deal Agent a list specifying all Transferred Loans or portions
thereof to be transferred pursuant to such Lien Release Dividend and the Deal
Agent shall have approved same in its sole discretion and (B) obtained all
authorizations, consents and approvals required to effectuate the Lien Release
Dividend;

 

(vi) A portion of a Transferred Loan may be transferred pursuant to a Lien
Release Dividend provided that (A) such transfer does not have an adverse effect
on the portion of the Loan remaining as a part of the Collateral, any other
Collateral, the Lenders, the Deal Agent or the other Secured Parties, (B) the
Loan Documents for such portion of the Transferred Loan remaining as a part of
the Collateral have been amended to contain pro rata sharing, intercreditor and,
if applicable, subordination provisions substantially the same as those
contained in the form of the intercreditor and subordination agreement attached
hereto as Exhibit U and (C) a new promissory note for the portion of the
Transferred Loan remaining as a part of the Collateral has been executed by the
Obligor, and the original thereof has been endorsed to the Deal Agent and
delivered to the Collateral Custodian; and

 

(vii) The Borrower shall deliver a Borrowing Base Certificate (including a
calculation of the Borrowing Base after giving effect to such Lien Release
Dividend) to the Deal Agent; and

 

(viii) The Borrower shall have paid in full an aggregate amount equal to the sum
of all amounts due and owing to the Deal Agent, the Lenders and any Hedge
Counterparty, as applicable, under this Agreement and the other Transaction
Documents, to the extent accrued to such date (including, without limitation,
Breakage Costs and

 

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Hedge Breakage Costs) with respect to the Transferred Loans to be transferred
pursuant to a Lien Release Dividend and incurred in connection with the transfer
of such Transferred Loans pursuant to such Lien Release Dividend and the
termination of any Hedge Transactions, in whole or in part, on connection
therewith.

 

(b) In connection with the Lien Release Dividend, there shall be sold and
assigned to the Borrower, without recourse, representation or warranty, all of
the right, title and interest of the Deal Agent, on behalf of the Secured
Parties, in, to and under the Transferred Loans or portions thereof so
transferred (together with, in the case of the transfer of the Loans but not
portions thereof, any related Collateral) and such Transferred Loans or portions
thereof so transferred (together with, in the case of the transfer of the
Transferred Loans but not portions thereof, any related Collateral) shall be
released from the Lien of this Agreement (subject to the requirements of Section
2.17(a)(iii) above).

 

(c) The Borrower hereby agrees to pay the reasonable legal fees and expenses of
the Deal Agent and the other Secured Parties in connection with any Lien Release
Dividend (including, but not limited to, expenses incurred in connection with
the release of the Lien of the Deal Agent, on behalf of the Secured Parties, and
any other party having an interest in the Transferred Loans in connection with
such Lien Release Dividend).

 

(d) In connection with any Lien Release Dividend, on the related Lien Release
Dividend Date, the Deal Agent, on behalf of the Secured Parties, shall, at the
expense of the Borrower (1) execute such instruments of release with respect to
the Transferred Loans or portions thereof to be transferred to the Borrower
(together with, in the case of the transfer of the Transferred Loans but not
portions thereof, any related Collateral), in recordable form if necessary, in
favor of the Borrower as the Borrower may reasonably request, (2) deliver any
portion of the Transferred Loans or portions thereof to be transferred to the
Borrower (together with, in the case of the transfer of the Transferred Loans
but not portions thereof, any related Collateral) in its possession to the
Borrower and (3) otherwise take such actions, and cause or permit the Collateral
Custodian to take such actions, as are necessary and appropriate to release the
Lien of the Deal Agent on behalf of the Secured Parties on the Transferred Loans
or portions thereof to be transferred to the Borrower (together with, in the
case of the transfer of the Transferred Loans but not portions thereof, any
related Collateral) and release and deliver to the Borrower such Transferred
Loans or portions thereof to be transferred to the Borrower (together with, in
the case of the transfer of the Transferred Loans but not portions thereof, any
related Collateral).

 

Section 2.18. Appointment of Registrar and Duties.

 

(a) Wachovia is hereby appointed to act as Registrar under this Agreement and
hereby accepts such appointment and agrees to perform the duties and obligations
with respect thereto set forth in the Agreement.

 

(b) As long as any Advances or Swingline Advances remain outstanding under the
Notes, the Borrower shall maintain a Registrar therefor.

 

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(c) The Borrower shall cause to be kept a register (the “Note Register”) that
contains an accurate and complete list of those Persons who from time to time
shall be holders of the Structured Notes. The Note Register shall be maintained
by the Registrar, and so long as Wachovia is the Registrar, the Registrar may
not be removed by the Borrower. Upon the resignation of any Registrar, the
Borrower shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Registrar. So long as Wachovia is the
Registrar, the Note Register shall be kept at One Wachovia Center, Mail Code:
NC0600, Charlotte, North Carolina 28288.

 

(d) Upon the resignation of Wachovia as Registrar, the Borrower will give the
Deal Agent prompt written notice of the appointment of a successor Registrar and
of the location, and any change in the location, of the Note Register, and the
Deal Agent shall have the right to inspect the Note Register at all reasonable
times and to obtain copies thereof, and the Deal Agent shall have the right to
rely upon a certificate executed on behalf of the Registrar by a Responsible
Officer thereof as to the names and addresses of the holder(s) of the Notes and
the principal amounts and the amounts and number of such Notes.

 

Section 2.19. Substitution of Loans; Repurchase or Substitutions of Ineligible
Loans.

 

(a) Substitution of Loans. On any day prior to the occurrence of a Termination
Event (and after the Termination Date at the discretion of the Required
Lenders), the Borrower may, subject to the conditions set forth in this Section
2.19 and subject to the other restrictions contained herein, replace any
Transferred Loan with one or more Eligible Loans (each, a “Substitute Loan”),
provided that no such replacement shall occur unless each of the following
conditions is satisfied as of the date of such replacement and substitution:

 

(i) the Borrower has recommended to the Deal Agent (with a copy to the
Collateral Custodian) in writing that the Transferred Loan to be replaced should
be replaced (each a “Replaced Loan”);

 

(ii) each Substitute Loan is an Eligible Loan on the date of substitution;

 

(iii) the aggregate Outstanding Loan Balance of such Substitute Loans shall be
equal to or greater than the aggregate Outstanding Loan Balance of the Replaced
Loans;

 

(iv) all representations and warranties of the Borrower contained in Sections
4.1 and 4.2 shall be true and correct as of the date of substitution of any such
Substitute Loan;

 

(v) the substitution of any Substitute Loan does not cause a Termination Event
or Unmatured Termination Event to occur;

 

(vi) as of any date of determination, the sum of the Outstanding Loan Balances
of all Substitute Loans does not exceed 20% of the highest Aggregate Outstanding
Loan Balance of any month during the 12 month period immediately preceding such
date of determination;

 

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(vii) as of any date of determination, the sum of the Outstanding Loan Balances
of all Substitute Loans substituted for Defaulted Loans, Charged-Off Loans and
Loans subject to a Warranty Event shall not exceed 10% of the highest Aggregate
Outstanding Loan Balance of any month during the 12 month period immediately
preceding such date of determination;

 

(viii) the remaining maturity of the Substitute Loan is less than or equal to
the remaining maturity of the Replaced Loan;

 

(ix) the Weighted Average Life of such Substitute Loan is less than or equal to
that of the Replaced Loan;

 

(x) no adverse selection procedures shall have been employed in the selection of
such Substitute Loan from the Originator’s portfolio;

 

(xi) all actions or additional actions (if any) necessary to perfect the
security interest and assignment of such Substitute Loan and related Collateral
to the Borrower and the Deal Agent shall have been taken as of or prior to the
Substitution Date;

 

(xii) the Eligible Risk Rating of the Obligor relating to the Substitute Loan is
equal to or better than that of the Obligor relating to the Replaced Loan;

 

(xiii) the Loan Rate on the Substitute Loan is not less than the Loan Rate on
the Loan to be replaced and reconveyed to the Originator in exchange for such
Substitute Loan;

 

(xiv) the total interest rate (inclusive of any deferred interest component) of
the Substitute Loan is greater than or equal to the total interest rate on the
Loan to be replaced and reconveyed to the Originator in exchange for such
Substitute Loan; and

 

(xv) the Borrower shall deliver to the Deal Agent on the date of such
substitution (i) a certificate of a Responsible Officer certifying that each of
the foregoing is true and correct as of such date and (ii) a Borrowing Base
Certificate (including a calculation of Borrowing Base after giving effect to
such substitution).

 

In addition, the Borrower shall in connection with such substitution deliver to
the Collateral Custodian the related Loan Documents and shall pay to each
Conduit Lender, each Institutional Lender and each Hedge Counterparty, as
applicable, all Breakage Costs or Hedge Breakage Costs, if any, incurred in
connection with the substitution of such Loan pursuant to this Section 2.19 and
the termination of any Hedge Transactions, in whole or in part, in connection
therewith. In connection with any such substitution, the Deal Agent, as agent
for the Secured Parties, shall, automatically and without further action (unless
otherwise necessary or requested by the Borrower or the Servicer), be deemed to
transfer to the Borrower, free and clear of any Lien created by the Deal Agent,
all of the right, title and interest of the Deal Agent, as agent for the Secured
Parties, in, to and under such Replaced Loan, but without any representation and
warranty of any kind, express or implied.

 

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(b) Repurchase or Substitution of Ineligible Loans.

 

(i) In the event of a breach of any representation or warranty set forth in
Section 4.2 with respect to a Transferred Loan, Related Property and other
related Collateral (each such Loan, Related Property and other related
Collateral, an “Ineligible Loan”), no later than 30 days after the earlier of
(x) knowledge of such breach on the part of the Borrower and (y) receipt by the
Borrower of written notice thereof given by the Deal Agent, the Borrower shall
either (1) repay Advances Outstanding in an amount equal to the aggregate
Retransfer Price of such Ineligible Loan(s) to which such breach relates on the
terms and conditions set forth below, or (2) substitute for such Ineligible Loan
a Substitute Loan; provided, however, that no such repayment shall be required
to be made with respect to such Ineligible Loan (and such Loan shall cease to be
an Ineligible Loan) if, on or before the expiration of such 30 day period, the
representations and warranties in Section 4.2 with respect to such Ineligible
Loan shall be made true and correct in all material respects with respect to
such Ineligible Loan as if such Ineligible Loan had become part of the
Collateral on such day. Notwithstanding anything contained in this Section
2.19(b) to the contrary, in the event of a breach of any representation and
warranty set forth in Section 4.2 with respect to each Transferred Loan, Related
Property and other related Collateral having been (A) granted to the Deal Agent,
on behalf of the Secured Parties, free and clear of any Lien of any Person
claiming through or under the Borrower and its Affiliates and (B) in compliance,
in all material respects, with all requirements of laws applicable to the
Borrower, immediately upon the earlier to occur of the discovery of such breach
by the Borrower or receipt by the Borrower of written notice of such breach
given by the Deal Agent, the Borrower shall repay Advances Outstanding in an
amount equal to the sum of (I) the aggregate Outstanding Loan Balance of such
Ineligible Loan(s), (II) any accrued and unpaid interest thereon, (III) any
outstanding Servicer Advances thereon, (iv) all Hedge Breakage Costs owed to any
relevant Hedge Counterparty for any termination of one or more Hedge
Transactions, in whole or in part, as required by the terms of any Hedge
Agreement and (v) any Breakage Costs incurred in connection with the retransfer
of such Loan pursuant to this Section 2.19(b) and the termination of any Hedge
Transactions in whole or in part in connection therewith, (collectively, the
“Retransfer Price”), and the Deal Agent on behalf of the Secured Parties shall
release to Borrower any such Ineligible Loan(s) and relinquish any Lien created
pursuant to this Agreement or otherwise, and the Secured Parties shall, in
connection with such conveyance and without further action, be deemed to
represent and warrant that they have the corporate authority and has taken all
necessary corporate action to accomplish such release, but without any other
representation or warranty, express or implied. In the foregoing instances, the
Borrower shall make such repayment and on and after the date of such repayment,
each Ineligible Loan so repaid shall not be included in the Collateral. In
consideration of any such release by the Secured Parties, the Borrower shall, on
the date of such repayment, remit to the Deal Agent, on behalf of the Secured
Parties, in immediately available funds an amount equal to the Retransfer Price
therefor. Upon each such repayment, the Deal Agent, on behalf of the Secured
Parties, shall automatically and without further action be deemed to release to
the Borrower all the right, title and interest of the Secured Parties in, to and
under such Ineligible Loan(s) and all monies due or to become due with respect
thereto, all proceeds thereof and all rights to security for any such Ineligible
Loan, and all proceeds and products of the foregoing.

 

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The Deal Agent shall, at the sole expense of the Borrower, execute such
documents and instruments of transfer as may be prepared by the Borrower and
take such other actions as shall reasonably be requested by the Borrower to
effect the transfer of such Ineligible Loan pursuant to this Section 2.19(b).

 

(ii) The Borrower hereby agrees that (x) if any real property collateral
securing any Transferred Loan becomes the subject of any claims, proceedings,
Liens or encumbrances with respect to any material violation or claimed material
violation of any federal or state environmental laws or regulations or (y) in
the event of a breach of the representation and warranty in Section 4.1(ee),
such Transferred Loan shall for all purposes hereunder be, at and following the
time of discovery by the Servicer of such fact, the Borrower, the Deal Agent or
any other Secured Party, deemed an Ineligible Loan and the Borrower shall either
repay Advances Outstanding in an amount equal to the aggregate Retransfer Price
of such Ineligible Loan or substitute for such Ineligible Loan a Substitute
Loan. Such Ineligible Loan shall otherwise be treated in accordance with Section
2.19(b) and shall be subject to the same remedial and recourse provisions
hereunder as other Transferred Loans determined to be Ineligible Loans
hereunder.

 

ARTICLE III

 

CLOSING; CONDITIONS OF CLOSING AND ADVANCES

 

Section 3.1. Conditions to Closing and Initial Advances.

 

No Lender shall be obligated to make any Advance or any Swingline Advance
hereunder on the occasion of the Initial Advance, nor shall any Lender, the Deal
Agent, the Backup Servicer or the Collateral Custodian be obligated to take,
fulfill or perform any other action hereunder, until the following conditions
have been satisfied, in the sole discretion of, or waived in writing by, the
Deal Agent:

 

(a) This Agreement and all other Transaction Documents or counterparts hereof or
thereof shall have been duly executed by, and delivered to, the parties hereto
and thereto and the Deal Agent shall have received such other documents,
instruments, agreements and legal opinions as the Deal Agent shall request in
connection with the transactions contemplated by this Agreement, including all
those listed in the Schedule of Documents, attached hereto as Schedule I, as due
on the Closing Date, each in form and substance satisfactory to the Deal Agent
and each Lender Agent.

 

(b) The Deal Agent shall have received (i) satisfactory evidence that the
Originator, the Borrower and the Servicer have obtained all required consents
and approvals of all Persons, including all requisite Governmental Authorities,
and have all authority necessary to the execution, delivery and performance of
this Agreement and other Transaction Documents to which each is a party and the
consummation of the transactions contemplated hereby or thereby or (ii) an
Officer’s Certificate from each of the Borrower and the Servicer in form and
substance satisfactory to the Deal Agent and each Lender Agent affirming that no
such consents or approvals are required.

 

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(c) The Borrower and the Servicer shall each be in compliance in all material
respects with all Applicable Laws.

 

(d) The Borrower shall have paid all fees required to be paid by it on the
Closing Date, including all fees required hereunder and under the Fee Letter to
be paid as of such date, and shall have reimbursed each Lender, the Deal Agent
for all fees, costs and expenses of closing the transactions contemplated
hereunder and under the other Transaction Documents, including the legal and
other document preparation costs incurred by any Lender, the Deal Agent.

 

Section 3.2. Conditions Precedent to All Advances and Swingline Advances.

 

Each Advance (including the Initial Advance), each Swingline Advance and each
reinvestment of Available Funds made pursuant to Section 2.9(a)(1)(xiii) or
Section 2.9(a)(2) shall be subject to the further conditions precedent that:

 

(a) On the related Funding Date or date of reinvestment, the Borrower and the
Servicer shall have certified in the related Borrower Notice that all conditions
precedent to the requested Advance or Swingline Advance have been satisfied and
the shall thereby be deemed to have certified that:

 

(i) the representations and warranties set forth in Sections 4.1, 4.2 and 7.8
are true and correct on and as of such date, before and after giving effect to
such borrowing and to the application of the proceeds therefrom, as though made
on and as of such date;

 

(ii) no event has occurred, or would result from such Advance, such Swingline
Advance or from the application of the proceeds therefrom, that constitutes a
Termination Event or Unmatured Termination Event;

 

(iii) such Person is in material compliance with each of its covenants set forth
herein; and

 

(iv) no event has occurred that constitutes a Servicer Termination Event;

 

(b) (i) with respect to the initial Funding Date, the Deal Agent and each Lender
Agent shall have received all Transaction Documents listed on the Schedule of
Documents, attached hereto as Schedule I, as due on the initial Funding Date, or
counterparts thereof, each of which has been duly executed by, and delivered to,
the parties hereto and each shall be in form and substance satisfactory to the
Deal Agent and each Lender Agent and (ii) on any date on which Available Funds
are reinvested pursuant to Section 2.9(a)(1)(xiii) or Section 2.9(a)(2), the
Deal Agent shall have received a certification in the form of Exhibit N;

 

(c) the Termination Date shall not have occurred;

 

(d) (i) in the case of each Advance, on and as of the applicable Funding Date,
before and after giving effect to such Advance and to the application of
proceeds therefrom, the Availability is greater than $0;

 

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(ii) in the case of each Swingline Advance, on and as of the applicable Funding
Date, before and after giving effect to such Swingline Advance and to the
application of proceeds therefrom, such Swingline Advance does not exceed the
least of (i) the Swingline Lender’s unused Commitment then in effect, (ii) the
unused Commitment of JPMorgan Chase Bank then in effect or (iii) the
Availability on such Funding Date;

 

(e) in the case of each Advance and Swingline Advance, each Loan submitted by
the Borrower for funding on the related Funding Date or date of reinvestment of
Available Funds pursuant to Section 2.9(a)(1)(xiii) or Section 2.9(a)(2) is an
Eligible Loan;

 

(f) with respect to each Pre-Positioned Loan that is funded with the proceeds of
such Advance or Swingline Advance, the Deal Agent, each Lender Agent and, as
applicable, the Swingline Lender, and the Collateral Custodian shall have
received a faxed copy of the executed Underlying Note, and the Certificate of
Borrower in the form of Exhibit I, and, if requested in writing by the Deal
Agent, the Deal Agent shall have received a copy of the credit report and
transaction summary for each such Pre-Positioned Loan.

 

(g) no claim has been asserted or proceeding commenced challenging
enforceability or validity of any of the Loan Documents, excluding any
instruments, certificates or other documents relating to Loans that were funded
with the proceeds of prior Advances and Swingline Advances;

 

(h) there shall have been no Material Adverse Change as to the Servicer or as to
the Borrower since the preceding Advance or Swingline Advance, as applicable;

 

(i) the Servicer and Borrower shall have taken such other action, including
delivery of approvals, consents, opinions, documents, and instruments to the
Secured Parties and the Deal Agent as each may reasonably request;

 

(j) after giving effect to the applicable Advance or Swingline Advance or
reinvestment of Available Funds, the Weighted Average Life of the Transferred
Loans included in the Collateral (weighted based on Outstanding Loan Balances)
will not exceed eight years;

 

(k) in the case of each Swingline Advance, the Swingline Lender shall have
consented to such Swingline Advance.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1. Representations and Warranties of the Borrower.

 

The Borrower represents and warrants as follows:

 

(a) Organization and Good Standing; Power and Authority. The Borrower is a
Delaware statutory trust duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its formation, and has full trust power,
authority and legal right to own or lease

 

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its properties and conduct its business as such business is presently conducted
and to enter into and perform its obligations under this Agreement each other
Transaction Document to which it is a party.

 

(b) Due Qualification. The Borrower is duly qualified to do business and is in
good standing as a statutory trust, and has obtained or will obtain all
necessary licenses and approvals, in each jurisdiction in which the nature of
its business requires it to be so qualified.

 

(c) Due Authorization. The execution and delivery of this Agreement and each
Transaction Document to which the Borrower is a party and the consummation of
the transactions provided for herein and therein have been duly authorized by
the Borrower by all necessary trust action on the part of the Borrower.

 

(d) No Conflict. The execution and delivery of this Agreement and each
Transaction Document to which the Borrower is a party, the performance by the
Borrower of the transactions contemplated hereby and thereby and the fulfillment
of the terms hereof and thereof will not conflict with or result in any breach
of any of the material terms and provisions of, and will not constitute (with or
without notice or lapse of time or both) a default under, the Borrower’s trust
agreement or any Contractual Obligation of the Borrower.

 

(e) No Violation. The execution and delivery of this Agreement and each
Transaction Document to which the Borrower is a party, the performance of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof will not conflict with or violate, in any material respect,
any Applicable Law.

 

(f) No Proceedings. Except as previously disclosed to the Deal Agent and each
Lender Agent in writing, there are no proceedings or investigations (formal or
informal) pending or, to the best knowledge of the Borrower, threatened against
the Borrower, before any Governmental Authority (i) asserting the invalidity of
this Agreement or any Transaction Document to which the Borrower is a party,
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any Transaction Document to which the Borrower is a party
or (iii) seeking any determination or ruling that could reasonably be expected
to have a Material Adverse Effect.

 

(g) All Consents Required. All approvals, authorizations, consents, orders or
other actions of any Person or of any Governmental Authority (if any) required
in connection with the due execution, delivery and performance by the Borrower
of this Agreement and any Transaction Document to which the Borrower is a party,
have been obtained.

 

(h) Bulk Sales. The execution, delivery and performance of this Agreement do not
require compliance with any “bulk sales” law by Borrower.

 

(i) Solvency. The transactions contemplated under this Agreement and each
Transaction Document to which the Borrower is a party do not and will not render
the Borrower not Solvent.

 

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(j) Selection Procedures. No procedures believed by the Borrower to be
materially adverse to the interests of the Secured Parties were utilized by the
Borrower in identifying and/or selecting the Loans that are part of the
Collateral.

 

(k) Taxes. The Borrower has filed or caused to be filed all Tax returns required
to be filed by it. The Borrower has paid all Taxes and all assessments made
against it or any of its property (other than any amount of Tax the validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in accordance with GAAP have been provided on the
books of the Borrower), and no Tax lien has been filed and, to the Borrower’s
knowledge, no claim is being asserted, with respect to any such Tax, fee or
other charge.

 

(l) Agreements Enforceable. This Agreement and each Transaction Document to
which the Borrower is a party constitute the legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with their
respective terms, except as such enforceability may be limited by Insolvency
Laws and except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).

 

(m) [Reserved].

 

(n) Reports Accurate. All Monthly Reports (if prepared by the Borrower, or to
the extent that information contained therein is supplied by the Borrower),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by the Borrower to the Deal Agent or any Lender in
connection with this Agreement are true, complete and accurate.

 

(o) Location of Offices. The Borrower’s name is “ACS Funding Trust I” and its
location (within the meaning of Article 9 of the UCC) is the State of Delaware.
The Borrower has not changed its name, identity, structure, existence or state
of formation, whether by amendment of its certificate of trust, by
reorganization or otherwise, and has not changed its location (within the
meaning of Article 9 of the UCC) within the four months preceding the Closing
Date.

 

(p) Tradenames. The Borrower has no trade names, fictitious names, assumed names
or “doing business as” names or other names under which it has done or is doing
business.

 

(q) Purchase Agreement. The Purchase Agreement is the only agreement pursuant to
which the Borrower acquires Collateral (other than the Hedge Collateral).

 

(r) Value Given. The Borrower gave reasonably equivalent value to the Originator
in consideration for the transfer to the Borrower of the Loans under the
Purchase Agreement, no such transfer was made for or on account of an antecedent
debt owed by the Originator to the Borrower, and no such transfer is voidable or
subject to avoidance under any Insolvency Law.

 

(s) Special Purpose Entity. The trust agreement of the Borrower is in the form
attached as Exhibit C hereto.

 

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(t) Separate Entity. The Borrower has not and shall not:

 

(i) engaged in any business or activity other than the purchase and receipt of
Loans and related Collateral from the Originator under the Purchase Agreement,
the sale of Loans and related Collateral under the Transaction Documents, and
such other activities as are incidental or related thereto;

 

(ii) acquired or owned any material assets other than (a) the Loans and related
Collateral from the Originator under the Purchase Agreement and (b) incidental
property as may be necessary for the operation of the Borrower;

 

(iii) merged into or consolidated with any Person or dissolved, terminated or
liquidated in whole or in part, transferred or otherwise disposed of all or
substantially all of its assets or changed its legal structure, without in each
case first obtaining the consent of the Deal Agent and each Lender Agent;

 

(iv) failed to preserve its existence as an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization or formation, or without the prior written consent of the Deal
Agent or each Lender Agent, amended, modified, terminated or failed to comply
with the provisions of its trust agreement, or failed to observe statutory trust
formalities;

 

(v) owned any Subsidiary or made any investment (other than the purchase of
Loans pursuant to the Transaction Documents) in any Person without the consent
of the Deal Agent and each Lender Agent;

 

(vi) except as permitted by this Agreement, the Lock–Box Agreement and the other
Transaction Documents, commingled its assets with the assets of any of its
Affiliates, or of any other Person;

 

(vii) incurred any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than (A) indebtedness to the Secured Parties
hereunder or in conjunction with a repayment of all Advances and Swingline
Advances owed to any of the Lenders, (B) obligations in respect of Hedging
Agreements, (C) trade payables in the ordinary course of its business and (D)
other operating expenses; provided, that, such debt is not evidenced by a note
and is paid when due;

 

(viii) become insolvent or failed to pay its debts and liabilities from its
assets as the same shall have become due;

 

(ix) failed to maintain its records, books of account and bank accounts separate
and apart from those of any other Person;

 

(x) entered into any contract or agreement with any Person other than as
contemplated by the Transaction Documents, except upon terms and conditions that
are commercially reasonable and intrinsically fair and substantially similar to
those that would be available on an arms–length basis with third parties other
than such Person;

 

(xi) sought its dissolution or winding up in whole or in part;

 

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(xii) failed to correct any known misunderstandings regarding the separate
identity of Borrower and the Originator or any principal or Affiliate thereof or
any other Person;

 

(xiii) guaranteed, become obligated for, or held itself out to be responsible
for the debt of another Person;

 

(xiv) made any loan or advances to any third party, including any principal or
Affiliate, or held evidence of indebtedness issued by any other Person (other
than cash and investment–grade securities);

 

(xv) failed either to hold itself out to the public as a legal entity separate
and distinct from any other Person or to conduct its business solely in its own
name in order not (a) to mislead others as to the identity with which such other
party is transacting business, or (b) to suggest that it is responsible for the
debts of any third party (including any of its principals or Affiliates);

 

(xvi) failed to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations;

 

(xvii) filed or consented to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or made an assignment for the benefit of
creditors;

 

(xviii) except as may be required by the Code and regulations, shared any common
logo with or held itself out as or been considered as a department or division
of (a) any of its principals or Affiliates, (b) any Affiliate of a principal or
(c) any other Person;

 

(xix) permitted any transfer (whether in any one or more transactions) of any
direct or indirect ownership interest in the Borrower to the extent it has the
ability to control the same, unless the Borrower shall have delivered to the
Deal Agent and each Lender Agent an acceptable non–consolidation opinion and the
Deal Agent and each Lender Agent shall have consented to such transfer;

 

(xx) failed to maintain separate financial statements, showing its assets and
liabilities separate and apart from those of any other Person;

 

(xxi) failed to pay its own liabilities and expenses only out of its own funds;

 

(xxii) failed to pay the salaries of its own employees in light of its
contemplated business operations;

 

(xxiii) acquired the obligations or securities of its Affiliates or
stockholders;

 

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(xxiv) failed to allocate fairly and reasonably any overhead expenses that are
shared with an Affiliate, including paying for office space and services
performed by any employee of an Affiliate;

 

(xxv) failed to use separate invoices and checks bearing its own name;

 

(xxvi) pledged its assets for the benefit of any other Person, other than with
respect to payment of the indebtedness to the Secured Parties hereunder;

 

(xxvii) failed at any time to have at least two independent trustees (each, an
“Independent Trustee”), each of which is not and, for the immediately preceding
two year period, was not (a) a trustee (other than an Independent Trustee),
officer of employee of the Trust; (b) a director, officer or employee of
American Capital Strategies, Ltd. (the “Parent”) or any of its affiliates; (c) a
supplier, independent contractor or any other person who derives more than 15%
of its gross revenues from its activities with the Trust, the Parent and/or any
affiliate of the foregoing; (d) a holder (directly or indirectly) of more than
5% of any voting securities of the Trust, the Parent or any affiliate of the
foregoing; (e) a person controlling any such director, officer, employee,
supplier, independent contractor, holder or any other person meeting the
criteria set forth in clauses (a), (b), (c) or (d) of this Section
4.1(t)(xxviii) or (f) a member of the immediate family of any person meeting the
criteria set fourth in clauses (a), (b), (c), (d) or (e) of this Section
4.1(t)(xxviii); provided, however, that such independent trustees may be an
independent director or trustee of another special purpose entity affiliated
with the Originator;

 

(xxviii) failed to provide that the unanimous consent of all trustees (including
the consent of the Independent Trustees) is required for the Borrower to (a)
dissolve or liquidate, in whole or part, or institute proceedings to be
adjudicated bankrupt or insolvent, (b) institute or consent to the institution
of bankruptcy or insolvency proceedings against it, (c) file a petition seeking
or consent to reorganization or relief under any applicable federal or state law
relating to bankruptcy or insolvency, (d) seek or consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator, custodian or any
similar official for the Borrower, (e) make any assignment for the benefit of
the Borrower’s creditors, (f) admit in writing its inability to pay its debts
generally as they become due, or (g) take any action in furtherance of any of
the foregoing; or

 

(xxix) taken or refrained from taking, as applicable, each of the activities
specified in the non–consolidation opinion of Winston & Strawn LLP, dated as of
the Closing Date, upon which the conclusions expressed therein are based.

 

(u) Security Interest.

 

(i) This Agreement creates a valid, continuing and enforceable security interest
(as defined in the applicable UCC) in the Collateral in favor of the Deal Agent,
on behalf of the Secured Parties, which security interest is prior to all other
Liens (except for Permitted Liens), and is enforceable as such against creditors
of and purchasers from the Borrower;

 

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(ii) the Loans, along with the related Loan Files, constitute either a “general
intangible,” an “instrument,” an “account,” “investment property,” or “chattel
paper,” within the meaning of the applicable UCC;

 

(iii) the Borrower is the lawful owner of and has good and marketable title to
the Transferred Loans and all related Collateral free and clear of any Lien
(other than Permitted Liens);

 

(iv) the Borrower has received all consents and approvals required by the terms
of the Collateral to the grant of a security interest in the Collateral
hereunder to the Deal Agent, on behalf of the Second Parties;

 

(v) the Borrower has caused the filing of all appropriate financing statements
in the proper filing office in the appropriate jurisdictions under Applicable
Law in order to perfect the security interest in such Collateral granted to the
Deal Agent, on behalf of the Secured Parties under this Agreement;

 

(vi) other than the security interest granted to the Deal Agent, on behalf of
the Secured Parties pursuant to this Agreement, the Borrower has not pledged,
assigned, sold, granted a security interest in or otherwise conveyed any of such
Collateral;

 

(vii) the Borrower has not authorized the filing of and is not aware of any
financing statements against the Borrower that include a description of
collateral covering such Collateral other than any financing statement (A)
relating to the security interest granted to the Deal Agent, on behalf of the
Secured Parties under this Agreement, or (B) that has been terminated;

 

(viii)the Borrower is not aware of the filing of any judgment or tax Lien
filings against the Borrower;

 

(ix) other than in the case of Pre-Positioned Loans (and subject to Sections
3.2(f), 4.1(u)(x), 5.3(a) and 7.10(a) in the case of Pre-Positioned Loans), all
original executed Underlying Notes that constitute or evidence any Transferred
Loans have been delivered to the Collateral Custodian;

 

(x) the Borrower has received a written acknowledgment from the Collateral
Custodian that the Collateral Custodian or its bailee is holding the Underlying
Notes that constitute or evidence the Transferred Loans solely on behalf of and
for the benefit of the Secured Parties; provided, however, notwithstanding the
foregoing, with respect to any Pre-Positioned Loan to be funded with the
proceeds of an Advance or Swingline Advance, the Borrower shall have received a
written acknowledgment from the Collateral Custodian (A) that the Collateral
Custodian has received a faxed copy of the Underlying Note and (B) within two
Business Days after such Funding Date, that the Collateral Custodian or its
bailee is holding the Underlying Note that constitute or evidence the Loans
included in the Collateral solely on behalf of the Deal Agent, as agent for the
Secured Parties; and

 

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(xi) none of the Underlying Notes that constitute or evidence the Transferred
Loans has any marks or notations indicating that it has been pledged, assigned
or otherwise conveyed to any Person other than the Borrower and the Deal Agent.

 

(v) [Reserved].

 

(w) Investments. The Borrower does not own or hold directly or indirectly, any
capital stock or equity security of, or any equity interest in, any Person.

 

(x) Business. Since its formation, the Borrower has conducted no business other
than the purchase and receipt of Loans and Related Property from the Originator
under the Purchase Agreement, the borrowing of funds under this Agreement and
such other activities as are incidental to the foregoing.

 

(y) ERISA. The Borrower is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments arising in
the ordinary course of business) payable to the Pension Benefit Guaranty
Corporation under ERISA.

 

(z) No Broker. No broker or finder acting on behalf of the Borrower was employed
or utilized in connection with this Agreement or the other Transaction Documents
or the transactions contemplated hereby or thereby and the Borrower has no
obligation to any Person in respect of any finder’s or brokerage fees in
connection therewith.

 

(aa) Investment Company Act.

 

(i) The Borrower is not an “investment company” within the meaning of the 1940
Act.

 

(ii) The Borrower represents and warrants that, if the Borrower operates in such
a manner as to be an “investment company” within the meaning of the 1940 Act,
the Borrower will register as an “investment company” under the 1940 Act
immediately upon being required to do so under the 1940 Act and will conduct its
business and other activities in compliance with the provisions of the 1940 Act
and any rules, regulations or orders issued by the SEC thereunder.

 

(iii) The business and other activities of the Borrower, including but not
limited to, the making of the Advances and Swingline Advances by the Lenders,
the application of the proceeds and repayment thereof by the Borrower and the
consummation of the transactions contemplated by the Transaction Documents to
which the Borrower is a party do not now and will not at any time result in any
violations, with respect to the Borrower, of the provisions of the 1940 Act or
any rules, regulations or orders issued by the SEC thereunder.

 

(bb) Accuracy of Representations and Warranties. Each representation or warranty
by the Borrower contained herein or in any certificate or other document
furnished by the Borrower pursuant hereto or in connection herewith is true and
correct.

 

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(cc) Government Regulations. The Borrower is not engaged in the business of
extending credit for the purpose of “purchasing” or “carrying” any Margin Stock.
The Borrower owns no Margin Stock, and no portion of the proceeds of any Advance
or Swingline Advance hereunder will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing
or retiring any Indebtedness that was originally incurred to purchase or carry
any Margin Stock or for any other purpose that might cause any portion of such
proceeds to be considered a “purpose credit” within the meaning of Regulation T,
U or X of the Federal Reserve Board. The Borrower will not take or permit to be
taken any action that might cause any Related Document to violate any regulation
of the Federal Reserve Board.

 

(dd) [Reserved].

 

(ee) Environmental. At the time of origination of any Loan and on the Cut-Off
Date where real property that is material to the operations of the related
business constitutes Related Property securing such Loan, the related mortgaged
property was free of contamination from toxic substances or hazardous wastes
requiring action under Applicable Law or is subject to ongoing environmental
rehabilitation approved by the Servicer, and, as of the related Cut-Off Date of
such Loan, the Borrower has no knowledge of any such contamination from toxic
substances or hazardous waste material on any such real property unless such
items are below action levels.

 

(ff) Material Adverse Change. Since the Closing Date, there has been no Material
Adverse Change with respect to the Borrower.

 

(gg) Credit and Collection Policy. Since the Closing Date, there have been no
material changes in any Credit and Collection Policy other than in accordance
with this Agreement. Since such date, no Material Adverse Change has occurred in
the overall rate collection of the Loans, and Borrower has at all times complied
with the Credit and Collection Policy with respect to each Loan.

 

(hh) Coverage Requirement. The Availability is greater than or equal to $0.

 

(ii) No Termination Event. No event has occurred and is continuing and no
condition exists, or would result from any Advance or Swingline Advance or from
the application of the proceeds therefrom, which constitutes or may be
reasonably expected to constitute a Termination Event.

 

(jj) USA PATRIOT Act. Neither the Borrower nor any Affiliate of the Borrower is
(i)a country, territory, organization, person or entity named on an OFAC list,
(ii)a Person that resides or has a place of business in a country or territory
named on such lists or which is designated as a Non-Cooperative Jurisdiction by
the Financial Action Task Force on Money Laundering (“FATF”), or whose
subscription funds are transferred from or through such a jurisdiction; (iii)a
“Foreign Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a foreign
bank that does not have a physical presence in any country and that is not
affiliated with a bank that has a physical presence and an acceptable level of
regulation and supervision; or (iv)a person or entity that resides in or is
organized under the laws of a jurisdiction designated by the

 

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United States Secretary of the Treasury under Section 311 or 312 of the USA
PATRIOT Act as warranting special measures due to money laundering concerns.

 

The representations and warranties in Section 4.1 shall survive the termination
of this Agreement.

 

Section 4.2. Representations and Warranties of the Borrower Relating to the
Agreement and the Loans.

 

The Borrower hereby represents and warrants to the Deal Agent and each other
Secured Party, as of the Closing Date and as of each Funding Date, that:

 

(a) Security Interest. This Agreement constitutes a Grant of a security interest
by the Borrower in all Collateral to the Deal Agent, as agent for the Secured
Parties. The Deal Agent, as agent for the Secured Parties, has a first priority
perfected security interest in the Collateral. Neither the Borrower nor any
Person claiming through or under the Borrower shall have any claim to or
interest in the Collection Account, except for the interest of the Borrower in
such property as a debtor for purposes of the UCC.

 

(b) Eligibility of Loans. As of the Closing Date, (i) the Loan List and the
information contained in the Borrower Notice delivered pursuant to Sections 2.2
and 2.3 is an accurate and complete listing in all material respects of all the
Loans that are part of the Collateral as of the Closing Date, and the
information contained therein with respect to the identity of such Transferred
Loans and the amounts owing thereunder is true and correct in all material
respects as of such date, (ii) each such Transferred Loan is an Eligible Loan,
(iii) each such Transferred Loan and the Related Property is free and clear of
any Lien (other than Permitted Liens) and in compliance with all Applicable Laws
and (iv) with respect to each such Loan, all consents, licenses, approvals or
authorizations of or registrations or declarations with any Governmental
Authority or other Person required to be obtained, effected or given by the
Borrower in connection with the transfer of an interest in such Loan and the
Related Property to the Deal Agent, as agent for the Secured Parties, have been
duly obtained, effected or given and are in full force and effect. On each
Funding Date, the Borrower shall be deemed to represent and warrant that (i) any
additional Transferred Loan referenced on the related Borrower Notice delivered
pursuant to Sections 2.2 and 2.3 is an Eligible Loan, (ii) each such Transferred
Loan and the related Property is free and clear of any Lien (other than
Permitted Liens) and in compliance with all Applicable Laws, (iii) with respect
to each such Transferred Loan, all consents, licenses, approvals,
authorizations, registrations or declarations with any Governmental Authority or
other Person required to be obtained, effected or given by the Borrower in
connection with the addition of such Transferred Loan and the Related Property
to the Collateral have been duly obtained, effected or given and are in full
force and effect and (iv) the representations and warranties set forth in
Section 4.2(a) are true and correct with respect to each Loan transferred on
such day as if made on such day.

 

(c) No Fraud. Each Loan was originated without any fraud or material
misrepresentation by the Originator or, to the best of the Borrower’s knowledge,
on the part of the Obligor.

 

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ARTICLE V

 

GENERAL COVENANTS OF THE BORROWER

 

Section 5.1. Covenants of the Borrower.

 

The Borrower hereby covenants that:

 

(a) Compliance with Laws. The Borrower will comply in all material respects with
all Applicable Laws, including those with respect to the Loans in the Collateral
and any Related Property.

 

(b) Preservation of Corporate Existence. The Borrower will preserve and maintain
its existence, rights, franchises and privileges in the jurisdiction of its
formation, and qualify and remain qualified in good standing in each
jurisdiction where the failure to maintain such existence, rights, franchises,
privileges and qualification could reasonably be expected to have a Material
Adverse Effect.

 

(c) Loans Not to Be Evidenced by Promissory Notes. The Borrower will not take
any action to cause any Transferred Loan not originally evidenced by an
Underlying Note to be evidenced by an instrument (as defined in the UCC), except
in connection with the enforcement or collection of such Loan.

 

(d) Security Interests. Except as contemplated in this Agreement and except in
the case of any Permitted Lien, the Borrower will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any part of the Collateral, whether now existing or hereafter
transferred hereunder, or any interest therein. The Borrower will promptly
notify the Deal Agent of the existence of any Lien on any part of the Collateral
and the Borrower shall defend the right, title and interest of the Deal Agent as
agent for the Secured Parties in, to and under any part of the Collateral,
against all claims of third parties; provided, however, that nothing in this
Section 5.1(d) shall prevent or be deemed to prohibit the Borrower from
suffering to exist Permitted Liens upon any part of the Collateral.

 

(e) Delivery of Collections. The Borrower shall deposit in the Collection
Account promptly (but in no event later than two Business Days after receipt)
all Collections (including any Deemed Collections) received (or deemed received)
by Borrower in respect of the Loans that are part of the Collateral.

 

(f) Activities of Borrower. The Borrower shall not engage in any business or
activity of any kind, or enter into any transaction or indenture, mortgage,
instrument, agreement, contract, Loan or other undertaking, which is not
incidental to the transactions contemplated and authorized by this Agreement or
the Purchase Agreement.

 

(g) Indebtedness. The Borrower shall not create, incur, assume or suffer to
exist any Indebtedness or other liability whatsoever, except (i) obligations
incurred under this Agreement, under any Hedging Agreement required by Section
5.2(a), or the Purchase Agreement, or (ii) liabilities incident to the
maintenance of its existence in good standing.

 

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(h) Guarantees. The Borrower shall not become or remain liable, directly or
indirectly, in connection with any Indebtedness or other liability of any other
Person, whether by guarantee, endorsement (other than endorsements of negotiable
instruments for deposit or collection in the ordinary course of business),
agreement to purchase or repurchase, agreement to supply or advance funds, or
otherwise.

 

(i) Investments. The Borrower shall not make or suffer to exist any loans or
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or securities
or evidences of indebtedness, acquisition of the business or assets, or
otherwise) in, any Person except for purchases of Loans pursuant to the Purchase
Agreement, or for investments in Permitted Investments in accordance with the
terms of this Agreement.

 

(j) Merger; Sales. The Borrower shall not enter into any transaction of merger
or consolidation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution), or acquire or be acquired by any Person, or convey, sell, loan or
otherwise dispose of all or substantially all of its property or business,
except as provided for in this Agreement.

 

(k) Distributions. The Borrower may not declare or pay or make, directly or
indirectly, any distribution (whether in cash or other property) with respect to
the assets of the Borrower or any Person’s interest therein (collectively, a
“Distribution”); provided, however, if no Termination Event has occurred or will
occur as a result thereof, the Borrower may make Distributions.

 

(l) Agreements. The Borrower shall not become a party to, or permit any of its
properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, loan or other undertaking, except the Transaction Documents or amend
or modify the provisions of its trust agreement, without the consent of the Deal
Agent and each Lender Agent, or issue any power of attorney except to the Deal
Agent or the Servicer.

 

(m) Separate Existence. The Borrower shall not take any action or permit or
acquiesce in any action to be taken which would have the effect, directly or
indirectly, of causing (i) its representations and warranties made pursuant to
Section 4.1(t)(i)-(xxix) to be inaccurate in any respect, or (ii) any breach of
the covenants of the Borrower set forth in Section 4.01(a)-(gg) of the
Borrower’s trust agreement.

 

(n) ERISA Matters. The Borrower will not (a) engage or permit any ERISA
Affiliate to engage in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the United States Department
of Labor; (b) permit to exist any accumulated funding deficiency, as defined in
Section 302(a) of ERISA and Section 412(a) of the Code, or funding deficiency
with respect to any Benefit Plan other than a Multiemployer Plan; (c) fail to
make any payments to a Multiemployer Plan that the Borrower or any ERISA
Affiliate may be required to make under the agreement relating to such
Multiemployer Plan or any law pertaining thereto; (d) terminate any Benefit Plan
so as to result in any liability; or (e) permit to exist any occurrence of any
reportable event described in Title IV of ERISA.

 

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(o) Collateral Acquired from the Originator. With respect to each item of
Collateral acquired from the Originator, the Borrower will (i) acquire such
Collateral pursuant to and in accordance with the terms of the Purchase
Agreement, (ii) take all action necessary to perfect, protect and more fully
evidence the Borrower’s ownership of such Collateral, including, without
limitation, (A) filing and maintaining, effective financing statements (Form
UCC-1) naming the Originator as seller/debtor and the Borrower as
purchaser/creditor in all necessary or appropriate filing offices, and filing
continuation statements, amendments or assignments with respect thereto in such
filing offices and (B) executing or causing to be executed such other
instruments or notices as may be necessary or appropriate, including, without
limitation, Assignments of Mortgage, and (iii) take all additional action that
the Deal Agent may reasonably request to perfect, protect and more fully
evidence the respective interests of the parties to this Agreement in the
Collateral.

 

(p) Transactions with Affiliates. The Borrower will not enter into, or be a
party to, any transaction with any of its Affiliates, except (i) the
transactions permitted or contemplated by this Agreement, the Purchase Agreement
and any Hedging Agreements and (ii) other transactions (including, without
limitation, transactions related to the use of office space or computer
equipment or software by the Borrower to or from an Affiliate) (A) in the
ordinary course of business, (B) pursuant to the reasonable requirements of the
Borrower’s business, (C) upon fair and reasonable terms that are no less
favorable to the Borrower than could be obtained in a comparable arm’s-length
transaction with a Person not an Affiliate of the Borrower, and (D) not
inconsistent with the factual assumptions set forth in the “substantive
non-consolidation” legal opinion letter issued by Winston & Strawn LLP and
delivered to the Deal Agent and each Lender Agent as a condition to the Initial
Advance, as such assumptions may be modified in any subsequent opinion letters
delivered to the Deal Agent and each Lender Agent pursuant to Section 3.2 or
otherwise. It is understood that any compensation arrangement for any trustee
shall be permitted under clause (ii)(A) through (C) above if such arrangement
has been expressly approved by the trustees of the Borrower in accordance with
the Borrower’s trust agreement.

 

(q) Change in the Transaction Documents. The Borrower shall provide notice of
any proposed amendment, modification, waiver or termination of any terms or
conditions of the Transaction Documents other than this Agreement to the Deal
Agent and each Lender Agent. The Borrower will not amend, modify, waive or
terminate any terms or conditions of any of the Transaction Documents other than
this Agreement to which it is a party, without the prior written consent of the
Deal Agent; provided, that, no such amendment shall be effective without the
prior written consent of each Lender Agent, unless the opinions of counsel
delivered pursuant to Section 3.1(a) with respect to (x) the creation,
perfection and priority of the security interest of the Secured Parties in the
Collateral, (y) the sale of the Transferred Loans and Related Property from
American Capital to the Borrower constituting a true sale, and (z) the assets of
the Borrower not constituting property of the estate of American Capital
following an Insolvency Event with respect to American Capital can be confirmed,
if so requested by any Lender Agent, after giving effect to the proposed
amendment, modification, waiver or termination. For the avoidance of doubt, the
amendment, modification or waiver of this Agreement is governed by Section 12.1.

 

(r) Credit and Collection Policy. The Borrower will (i) comply in all material
respects with the Credit and Collection Policy in regard to each Loan and the
Related Property

 

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included in the Collateral, and (ii) furnish to the Deal Agent and each Lender
Agent, prior to its effective date, prompt notice of any changes in the Credit
and Collection Policy. The Borrower will not agree to or otherwise (x) permit
any change in the Credit and Collection Policy which would materially and
adversely affect or impair the collectibility of any Loan, or (y) any material
change in the Credit and Collection Policy, without the prior written consent of
the Deal Agent and each Lender Agent.

 

(s) Termination Events. The Borrower will furnish to the Deal Agent and each
Lender Agent, as soon as possible and in any event within three Business Days
after the occurrence of each Termination Event and each Unmatured Termination
Event, a written statement setting forth the details of such event and the
action that the Borrower proposes to take with respect thereto.

 

(t) Extension or Amendment of Loans. The Borrower will not, except as otherwise
permitted in Section 7.4(a), extend, amend or otherwise modify, or permit the
Servicer on its behalf to extend, amend or otherwise modify, the terms of any
Loan.

 

(u) Other. The Borrower will furnish to the Deal Agent or any Lender Agent such
other information, documents, records or reports respecting the Loans or the
condition or operations, financial or otherwise, of the Borrower or Originator
as the Deal Agent or any Lender Agent may from time to time reasonably request
in order to protect the interests of the Deal Agent or the other Secured Parties
under or as contemplated by this Agreement.

 

(v) Notices Under the Purchase Agreement. The Borrower will promptly, but in no
event later than two Business Days after its receipt furnish to the Deal Agent
copies of any and all notices, certificates, documents, or reports delivered to
it by the Originator under the Purchase Agreement.

 

(w) Inspection of Records. The Borrower will, at any time and from time to time
during regular business hours, as requested by the Deal Agent and any Lender
Agent, permit the Deal Agent and any Lender Agent, or its agents or
representatives, (i) to examine and make copies of and take abstracts from all
books, records and documents (including computer tapes and disks) relating to
the Transferred Loans and the related Loan Documents and (ii) to visit the
offices and properties of the Borrower, the Originator or the Servicer, as
applicable, for the purpose of examining such materials described in clause (i),
and to discuss matters relating to the Transferred Loans or the Borrower’s, the
Originator’s or the Servicer’s performance hereunder, under the Loan Documents
and under the other Transaction Documents to which such Person is a party with
any of the officers, directors, employees or independent public accountants of
the Borrower, the Originator or the Servicer, as applicable, having knowledge of
such matters.

 

(x) Keeping of Records. The Borrower will maintain and implement administrative
and operating procedures (including an ability to recreate records evidencing
Transferred Loans and the related Loan Documents in the event of the destruction
of the originals thereof), and keep and maintain, all documents, books, computer
tapes, disks, records and other information reasonably necessary or advisable
for the collection of all Loans (including records adequate to permit the daily
identification of each new Transferred Loan and all Collections of and
adjustments to each existing Loan). The Borrower shall give the Deal Agent
prompt notice of

 

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any material change in its administrative and operating procedures referred to
in the previous sentence.

 

(y) Compliance with Loans. The Borrower will (i) at its own expense, timely and
fully perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Transferred Loans and the
related Loan Documents; and (ii) timely and fully comply in all material
respects with the Credit and Collection Policy with respect to each Loan and the
related Transferred Loan Document.

 

(z) Restricted Payments. The Borrower shall not (i) purchase or redeem any
shares of its capital stock, (ii) prepay, purchase or redeem any Indebtedness,
(iii) lend or advance any funds or (iv) repay any loans or advances to, for or
from any of its Affiliates (the amounts described in clauses (i) through (iv)
being referred to as “Restricted Payments”), except that the Borrower may (a)
make Restricted Payments out of funds received pursuant to Article II and (b)
make other Restricted Payments (including the payment of dividends and Lien
Release Dividends) if, after giving effect thereto, no Termination Event shall
have occurred and be continuing.

 

(aa) Notice of Litigation. The Borrower will promptly, but in no event later
than two Business Days after any officer of the Borrower becoming aware thereof,
deliver written notice to the Deal Agent regarding any claim, action,
investigation or proceeding pending or threatened against the Borrower and shall
provide copies of any and all notices, certificates or documents delivered to it
in connection therewith.

 

Section 5.2. Hedging Agreement.

 

(a) On or prior to each Funding Date, the Borrower shall enter into one or more
Hedge Transactions, provided that each such Hedge Transaction shall:

 

(i) be entered into with a Hedge Counterparty and governed by a Hedging
Agreement;

 

(ii) have a schedule of periodic monthly (or quarterly, as applicable) or
quarterly calculation periods the first of which commences on the Funding Date
of the applicable Advance and the last of which ends on the date of the last
Scheduled Payment due to occur under the Loans to which that Advance relates;

 

(iii) have an amortizing notional amount such that the Hedge Notional Amount in
effect on each day during the term of such Hedge Transactions shall be at least
equal to the portion of the product of the Hedge Percentage and the Hedge Amount
represented by such Advance; and

 

(iv) provide, in the case of any interest rate swap, for two series of monthly
(or quarterly, as applicable) payments to be netted against each other, one such
series being payments to be made by the Borrower to a Hedge Counterparty by
reference to a fixed rate for that Hedge Transaction, and the other such series
being payments to be made by the applicable Hedge Counterparty at a floating
rate equal to “USD-LIBOR-BBA” (as defined in the ISDA Definitions), the net
amount of which shall be paid into the

 

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Collection Account (if payable by such Hedge Counterparty) or, to the extent of
Available Funds and from the Collection Account under Sections 2.9(a)(1)(i) and
2.9(b)(i) of this Agreement (if payable by the Borrower).

 

(b) Subject to, and without limiting the provisions of, Article VIII of this
Agreement, Borrower hereby assigns to the Deal Agent, as agent for the Secured
Parties, all right, title and interest of Borrower in each Hedging Agreement,
each Hedge Transaction, and all present and future amounts payable by a Hedge
Counterparty to Borrower under or in connection with the respective Hedging
Agreement and Hedge Transaction(s) with that Hedge Counterparty (the “Hedge
Collateral”), and grants a security interest to the Deal Agent, as agent for the
Secured Parties, in the Hedge Collateral. The Borrower acknowledges that, as a
result of that assignment, Borrower may not, without the prior written consent
of the Deal Agent, exercise any rights under any Hedging Agreement or Hedge
Transaction, except for Borrower’s right under any Hedging Agreement to enter
into Hedge Transactions in order to meet the Borrower’s obligations under
Section 5.2(a) hereof. Nothing herein shall have the effect of releasing the
Borrower from any of its obligations under any Hedging Agreement or any Hedge
Transaction, nor be construed as requiring the consent of the Deal Agent or any
Secured Party for the performance by Borrower of any such obligations.

 

(c) The Borrower shall, promptly upon execution thereof, provide to the Deal
Agent and each Lender Agent, a copy of each Hedging Agreement entered into in
connection with this Agreement.

 

Section 5.3. Delivery of Loan Files.

 

(a) The Borrower, or the Servicer on its behalf, shall deliver possession of all
“instruments” (within the meaning of Article 9 of the UCC) not constituting part
of “chattel paper” (within the meaning of Article 9 of the UCC) that evidence
any Transferred Loan set forth on a Loan List, including all Underlying Notes,
and all portions of the Loan Files to the Collateral Custodian on behalf of the
Deal Agent, as agent for the Secured Parties, prior to the applicable Funding
Dates in each case endorsed in blank without recourse; provided, however, that
notwithstanding the foregoing, with respect to any Pre-Positioned Loan, the
Borrower shall (i) have a copy of the executed Underlying Note faxed to the
Collateral Custodian on the applicable Funding Date with the original to be
received by the Collateral Custodian within two Business Days after such Funding
Date and (ii) within ten Business Days of the Funding Date deliver all other
portions of the Loan File in each case endorsed in blank without recourse.
Pursuant to Section 7.10, the Borrower is required to deliver such instruments
and Loan Files to the Collateral Custodian for the benefit of the Deal Agent, as
agent for the Secured Parties. Accordingly, the Borrower hereby authorizes and
directs the Servicer to deliver possession of all such instruments and Loan
Files to the Collateral Custodian on behalf of the Deal Agent, as agent for the
Secured Parties, and agrees that such delivery shall satisfy the condition set
forth in the first sentence of this Section 5.3(a). The Servicer shall also
identify on the Loan List (including any amendment thereof), whether by attached
schedule or marking or other effective identifying designation, all Transferred
Loans that are not evidenced by such instruments.

 

(b) Prior to the occurrence of a Termination Event or Servicer Termination
Event, the Collateral Custodian shall not record the Assignments of Mortgage
delivered pursuant to Section 5.3(a)

 

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and the definition of Loan Documents. Upon the occurrence of a Termination Event
or a Servicer Termination Event, the Collateral Custodian shall cause to be
recorded in the appropriate offices each Assignment of Mortgage delivered to it
with respect to all Transferred Loans except those Transferred Loans covered by
the proviso to the definition of Assignment of Mortgage. Each such recording
shall be at the expense of the Servicer; provided, however, to the extent the
Servicer does not pay such expenses, the Collateral Custodian shall be
reimbursed pursuant to the provisions of Section 2.9.

 

ARTICLE VI

 

PERFECTION OF TRANSFER AND

PROTECTION OF SECURITY INTERESTS

 

Section 6.1. Custody of Transferred Loans.

 

The contents of each Loan File relating to a Transferred Loan shall be held in
the custody of the Collateral Custodian under the terms of the Purchase
Agreement and this Agreement for the benefit of the Deal Agent, as agent for the
Secured Parties.

 

Section 6.2. Filing.

 

On or prior to the Closing Date, the Borrower and Servicer shall cause the UCC
financing statement(s) referred to in Section 4.1(u)(v) hereof to be filed, and
from time to time the Servicer shall take and cause to be taken such actions and
execute such documents as are necessary or desirable or as the Deal Agent may
reasonably request to perfect and protect the first priority perfected security
interest of the Deal Agent, as agent for the Secured Parties, in the Collateral
against all other Persons, including, without limitation, the filing of
financing statements, amendments thereto and continuation statements, the
execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title. Notwithstanding the obligations
of the Borrower and the Servicer set forth in the preceding sentence, the
Borrower and the Servicer hereby authorize the Deal Agent to prepare and file,
at the expense of the Servicer, UCC financing statements (including but not
limited to renewal, continuation or in lieu statements) and amendments or
supplements thereto or other instruments as the Deal Agent may from time to time
deem necessary or appropriate in order to perfect and maintain the security
interest granted hereunder in accordance with the UCC.

 

Section 6.3. Changes in Name, Corporate Structure or Location.

 

(a) During the term of this Agreement, neither the Servicer nor the Borrower
shall change its name, identity, structure, existence or location (as defined in
Article 9 of the UCC) without first giving at least 30 days’ prior written
notice to the Deal Agent and each other Secured Party.

 

(b) If any change in either the Servicer’s or the Borrower’s name, identity,
structure, existence, location (as defined in Article 9 of the UCC) or other
action would make any financing or continuation statement or notice of ownership
interest or Lien relating to any Collateral seriously misleading within the
meaning of applicable provisions of the UCC, the Servicer, no later than five
Business Days after the effective date of such change, shall file such

 

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amendments as may be required or reasonably advisable to preserve and protect
the security interest of the Deal Agent, as agent for the Secured Parties, in
the Collateral and the proceeds thereof. Promptly after taking any of the
foregoing actions, the Servicer shall deliver to the Deal Agent and each other
Secured Party an Opinion of Counsel reasonably acceptable to the Deal Agent
stating that, in the opinion of such counsel, all financing statements or
amendments necessary to preserve and protect the security interest of the Deal
Agent, as agent for the Secured Parties, in the Collateral have been filed, and
reciting the details of such filing.

 

Section 6.4. Chief Executive Office.

 

During the term of this Agreement, and subject to the other terms and provisions
herein relating to changes in location, the Originator will maintain its chief
executive office in one of the States of the United States.

 

Section 6.5. Costs and Expenses.

 

The Servicer agrees to pay all reasonable costs and disbursements in connection
with the perfection and the maintenance of perfection, as against all third
parties, of the Borrower’s and the Deal Agent’s, as agent for the Secured
Parties, right, title and interest in and to the Collateral (including, without
limitation, the security interest in the Collateral related thereto and the
security interests provided for herein).

 

Section 6.6. Sale Treatment.

 

The Borrower shall treat the transfer of Collateral made hereunder for all
purposes (other than for financial accounting purposes) as a sale and purchase
on all of its relevant books, records, financial statements and other applicable
documents. Notwithstanding the preceding sentence, for federal income tax
purposes, the grant of a security interest in the Collateral by the Borrower
hereunder shall not be treated as a sale and purchase for federal income tax
purposes.

 

Section 6.7. Separateness from the Borrower.

 

The Borrower agrees to take or refrain from taking or engaging in with respect
to the Originator each of the actions or activities specified in the
“substantive consolidation” opinion of Winston & Strawn LLP (including any
certificates of the Originator attached thereto), delivered on the Closing Date,
upon which the conclusions therein are based.

 

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ARTICLE VII

 

ADMINISTRATION AND SERVICING OF LOANS

 

Section 7.1. Appointment of the Servicer.

 

The Borrower hereby appoints American Capital as the Servicer hereunder to
service the Transferred Loans and enforce its respective rights and interests in
and under each Transferred Loan in accordance with the terms and conditions of
this Article VII and to serve in such capacity until the termination of its
responsibilities pursuant to Section 7.25. American Capital hereby accepts such
appointment and agrees to perform the duties and obligations with respect
thereto set forth herein. The Servicer and the Borrower hereby acknowledge that
the Deal Agent and the other Secured Parties are third party beneficiaries of
the obligations undertaken by the Servicer hereunder.

 

Section 7.2. Duties and Responsibilities of the Servicer.

 

(a) The Servicer shall conduct the servicing, administration and collection of
the Transferred Loans and shall take, or cause to be taken, all such actions as
may be necessary or advisable to service, administer and collect Transferred
Loans from time to time on behalf of the Borrower and as the Borrower’s agent.
The Servicer will service, administer and make collections on the Transferred
Loans with reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to all comparable loans that it services for
itself or others.

 

(b) The duties of the Servicer (the “Servicing Duties”), as the Borrower’s
agent, shall include, without limitation:

 

(i) preparing and submitting of claims to, and post-billing liaison with,
Obligors on Transferred Loans;

 

(ii) maintaining all necessary Servicing Records with respect to the Transferred
Loans and providing such reports to the Borrower and the Deal Agent and each
Lender Agent in respect of the servicing of the Transferred Loans (including
information relating to its performance under this Agreement) as may be required
hereunder or as the Borrower or the Deal Agent may reasonably request;

 

(iii) maintaining and implementing administrative and operating procedures
(including, without limitation, an ability to re-create Servicing Records
evidencing the Transferred Loans in the event of the destruction of the
originals thereof) and keeping and maintaining all documents, books, records and
other information reasonably necessary or advisable for the collection of the
Transferred Loans (including, without limitation, records adequate to permit the
identification of each new Transferred Loan and all Collections of and
adjustments to each existing Transferred Loan); provided, however, that any
Successor Servicer shall only be required to re-create the Servicing Records of
each prior Servicer to the extent such records have been delivered to it in a
format reasonably acceptable to such Successor Servicer;

 

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(iv) promptly delivering to the Borrower, the Deal Agent and each Lender Agent
and the Collateral Custodian, from time to time, such information and Servicing
Records (including information relating to its performance under this Agreement)
as the Borrower, the Deal Agent and the Collateral Custodian may from time to
time reasonably request;

 

(v) identifying each Transferred Loan clearly and unambiguously in its Servicing
Records to reflect that such Transferred Loan is owned by the Borrower and
pledged to the Deal Agent, as agent for the Secured Parties;

 

(vi) complying in all material respects with the Credit and Collection Policy in
regard to each Transferred Loan;

 

(vii) complying in all material respects with all Applicable Laws with respect
to it, its business and properties and all Transferred Loans and Collections
with respect thereto;

 

(viii) preserving and maintaining its existence, rights, licenses, franchises
and privileges as a corporation in the jurisdiction of its organization, and
qualifying and remaining qualified in good standing as a foreign corporation and
qualifying to and remaining authorized and licensed to perform obligations as
Servicer (including enforcement of collection of Transferred Loans on behalf of
the Borrower, the Deal Agent and the Secured Parties) in each jurisdiction where
the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would materially adversely affect (A) the rights or
interests of the Borrower, the Deal Agent and the other Secured Parties in the
Transferred Loans, (B) the collectibility of any Transferred Loan, or (C) the
ability of the Servicer to perform its obligations hereunder;

 

(ix) notifying the Borrower and the Deal Agent of any material action, suit,
proceeding, dispute, offset deduction, defense or counterclaim that (1) is or is
threatened to be asserted by an Obligor with respect to any Transferred Loan; or
(2) would reasonably be expected to have a Material Adverse Effect; and

 

(c) The Borrower and Servicer hereby acknowledge that none of the Deal Agent,
any other Secured Party nor the Collateral Custodian shall have any obligation
or liability with respect to any Transferred Loans, nor shall any of them be
obligated to perform any of the obligations of the Servicer hereunder.

 

Section 7.3. Authorization of the Servicer.

 

(a) Each of the Borrower and the Deal Agent, on behalf of the Secured Parties,
hereby authorizes the Servicer (including any successor thereto) to take any and
all reasonable steps in its name and on its behalf necessary or desirable and
not inconsistent with the pledge of the Transferred Loans to the Secured
Parties, in the determination of the Servicer, to collect all amounts due under
any and all Transferred Loans, including, without limitation, endorsing any of
their names on checks and other instruments representing Collections, executing
and delivering any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Transferred Loans and, after

 

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the delinquency of any Transferred Loan and to the extent permitted under and in
compliance with Applicable Law, to commence proceedings with respect to
enforcing payment thereof, to the same extent as the Originator could have done
if it had continued to own such Loan. The Borrower shall furnish the Servicer
(and any successors thereto) with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder, and shall cooperate with the Servicer to the
fullest extent in order to ensure the collectibility of the Transferred Loans.
In no event shall the Servicer be entitled to make the Borrower, the Collateral
Custodian, the Deal Agent or any other Secured Party a party to any litigation
without such party’s express prior written consent, or to make the Borrower a
party to any litigation (other than any routine foreclosure or similar
collection procedure) without the Deal Agent’s consent.

 

(b) After a Termination Event has occurred and is continuing, at the Deal
Agent’s direction, the Servicer shall take such action as the Deal Agent may
deem necessary or advisable to enforce collection of the Transferred Loans;
provided, however, that the Deal Agent may, at any time after a Termination
Event has occurred and is continuing, notify any Obligor with respect to any
Transferred Loans of the assignment of such Transferred Loans to the Deal Agent
and direct that payments of all amounts due or to become due to the Borrower
thereunder be made directly to the Deal Agent or any servicer, collection agent
or lock-box or other account designated by the Deal Agent and, upon such
notification and at the expense of the Borrower, the Deal Agent may enforce
collection of any such Transferred Loans and adjust, settle or compromise the
amount or payment thereof. The Deal Agent shall give written notice to any
Successor Servicer of the Deal Agent’s actions or directions pursuant to this
Section 7.3(b), and no Successor Servicer shall take any actions pursuant to
this Section 7.3(b) that are outside of its Credit and Collection Policy.

 

Section 7.4. Collection of Payments.

 

(a) Collection Efforts, Modification of Loans. The Servicer will make reasonable
efforts to collect all payments called for under the terms and provisions of the
Transferred Loans as and when the same become due, and will follow those
collection procedures which it follows with respect to all comparable Loans that
it services for itself or others. The Servicer may not waive, modify or
otherwise vary any provision of a Transferred Loan, except as may be in
accordance with the provisions of the Credit and Collection Policy, which
permits, among other things, the waiver of any late payment charge or any other
fees that may be collected in the ordinary course of servicing any Loan included
in the Collateral. Notwithstanding anything to the contrary contained herein, if
after giving effect to any sale (1) the amount described in clause (ii) of the
definition of Availability shall exceed the amount described in clause (i) of
the definition of Availability or (2) an Unmatured Termination Event, a
Termination Event or a Servicer Termination Event would occur then the Servicer
prior to any such sale which would result in a loss to the Secured Parties based
on the Outstanding Loan Balance plus accrued interest and other fees due and
payable shall obtain the prior written consent of the Deal Agent.

 

(b) [Reserved].

 

(c) Taxes and other Amounts. To the extent provided for in any Transferred Loan,
the Servicer will use its best efforts to collect all payments with respect to
amounts due for taxes,

 

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assessments and insurance premiums relating to such Transferred Loans or the
Related Property and remit such amounts to the appropriate Governmental
Authority or insurer on or prior to the date such payments are due.

 

(d) Payments to Lock-Box Account. On or before the Cut-Off Date with respect to
each Transferred Loan, the Servicer shall have instructed all Obligors to make
all payments in respect of all Transferred Loans included in the Collateral to a
Lock-Box or directly to the Lock-Box Account. All proceeds in the Lock-Box
Account shall be distributed into the Collection Account within two Business
Days as provided in the Lock-Box Agreement and the Intercreditor Agreement.

 

(e) Establishment of the Collection Account. The Borrower or the Servicer on its
behalf has previously caused a segregated deposit account to be established with
Wells Fargo, Account No. xxxxxxx, and shall cause such account to be maintained,
in the name of the Borrower but under the control of the Deal Agent, as agent
for the Secured Parties, with an office or branch of a depository institution or
trust company organized under the laws of the United States or any one of the
States thereof or the District of Columbia (or any domestic branch of a foreign
bank) (the “Collection Account”) for the purpose of receiving Collections from
the Collateral; provided, however, that at all times such depository institution
or trust company shall be a depository institution organized under the laws of
the United States or any one of the States thereof or the District of Columbia
(or any domestic branch of a foreign bank), (i) (A) that has either (1) a
long-term unsecured debt rating of “A-” or better by S&P and “A-3” or better by
Moody’s or (2) a short-term unsecured debt rating or certificate of deposit
rating of “A-1” or better by S&P or “P-1” or better by Moody’s, (B) the parent
corporation of which such depository institution is a Subsidiary has either (1)
a long-term unsecured debt rating of “A-” or better by S&P and “A-3” or better
by Moody’s or (2) a short-term unsecured debt rating or certificate of deposit
rating of “A-1” or better by S&P and “P-1” or better by Moody’s or (C) is
otherwise acceptable to the Deal Agent and (ii) whose deposits are insured by
the Federal Deposit Insurance Corporation (any such depository institution or
trust company, a “Qualified Institution”) which Qualified Institution has agreed
with the Borrower, the Servicer and the Deal Agent to comply with any and all
orders, notices, requests and other instructions originated by the Deal Agent
directing disposition of the funds in the Collection Account without any further
consent from the Borrower or the Servicer.

 

(f) In order to provide the Deal Agent with control over the Collection Account
within the meaning of Section 9-104(a) of the UCC and any other applicable law,
the Borrower and the Servicer hereby agree that the Deal Agent may at any time
provide Wells Fargo or any successor Person that maintains the Collection
Account with instructions as to the disposition of funds in the Collection
Account or as to any other matters relating to the Collection Account without
any further consent from the Borrower or the Servicer. Wells Fargo agrees with
the Borrower, the Servicer and the Deal Agent to comply with any and all orders,
notices, requests and other instructions originated by the Deal Agent directing
disposition of the funds in the Collection Account without any further consent
from the Borrower or the Servicer.

 

(g) Adjustments. If (i) the Servicer makes a deposit into the Collection Account
in respect of a Collection of a Loan in the Collateral and such Collection was
received by the Servicer in the form of a check that is not honored for any
reason or (ii) the Servicer makes a

 

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mistake with respect to the amount of any Collection and deposits an amount that
is less than or more than the actual amount of such Collection, the Servicer
shall appropriately adjust the amount subsequently deposited into the Collection
Account to reflect such dishonored check or mistake. Any Scheduled Payment in
respect of which a dishonored check is received shall be deemed not to have been
paid.

 

(h) Released Amounts. The Deal Agent and the other Secured Parties hereby agree
to release to the Borrower from the Collateral, and the Borrower hereby agrees
to release to the Originator, an amount equal to the Released Amounts
immediately upon identification thereof and upon receipt of an Officer’s
Certificate of the Servicer, which release shall be automatic and shall require
no further act by the Deal Agent or the other Secured Parties; provided, that,
the Deal Agent and the other Secured Parties shall execute and deliver such
instruments of release and assignment, or otherwise confirm the foregoing
release, as may reasonably be requested by the Originator in writing. Upon such
release, such Released Amounts shall not constitute and shall not be included in
the Collateral. Immediately upon the release to the Borrower by the Deal Agent
and the other Secured Parties of the Released Amounts, the Borrower hereby
irrevocably agrees to release to the Originator such Released Amounts, which
release shall be automatic and shall require no further act by the Borrower;
provided, that, the Borrower shall execute and deliver such instruments of
release and assignment, or otherwise confirming the foregoing release of any
Released Amounts, as may be reasonably requested by the Originator.

 

Section 7.5. Servicer Advances.

 

(a) For each Collection Period, if the Servicer determines that any Scheduled
Payment (or portion thereof) that was due and payable pursuant to a Loan
included in the Collateral during such Collection Period was not received prior
to the end of such Collection Period, the Servicer may, but shall not be
obligated to, make an advance in an amount up to the amount of such delinquent
Scheduled Payment (or portion thereof) if the Servicer reasonably believes that
the advance will be reimbursed by the related Obligor; in addition, if on any
day there are not sufficient funds on deposit in the Collection Account to pay
accrued Interest and Program Fees on any Advance or Swingline Advance the
Collection Period of which ends on such day, the Servicer may make an advance in
the amount necessary to pay such Interest and Program Fees if the Servicer
reasonably believes that the advance will be reimbursed by the related Obligor
(in either case, any such advance, a “Servicer Advance”). Notwithstanding the
preceding sentence, any successor Servicer will not be obligated to make any
Servicer Advances.

 

(b) The Servicer will deposit any Servicer Advances into the Collection Account
on or prior to 11:00 a.m. (Charlotte, North Carolina time) on the related
Payment Date, in immediately available funds. A Servicer Advance for a
delinquent payment on a Loan will not constitute a reclassification of the
delinquency status of such Loan for reporting purposes and the Delinquent
payment with respect to such Loan will continue to age as if no payment has been
made.

 

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Section 7.6. Realization Upon Defaulted Loans or Charged-Off Loans.

 

The Servicer will use its reasonable efforts to repossess or otherwise
comparably convert the ownership of any Related Property with respect to a
Defaulted Loan or Charged-Off Loan and will act as sales and processing agent
for Related Property that it repossesses. The Servicer will follow the practices
and procedures set forth in the Credit and Collection Policy in order to realize
upon such Related Property. Without limiting the foregoing, the Servicer may
sell any such Related Property with respect any Defaulted Loan or Charged-Off
Loan to the Servicer or its Affiliates for a purchase price equal to the then
fair market value thereof; any such sale to be evidenced by a certificate of a
Responsible Officer of the Servicer delivered to the Deal Agent identifying the
Defaulted Loan or Charged-Off Loan and the Related Property, setting forth the
sale price of the Related Property and certifying that such sale price is the
fair market value of such Related Property; provided, however, that if after
giving effect to such sale (a) the Availability is greater than $0 or (b) an
Unmatured Termination Event, a Termination Event or a Servicer Termination Event
would occur, then the Servicer prior to selling any Related Property with
respect a Defaulted Loan or Charged-Off Loan shall obtain the prior written
consent of the Deal Agent. In any case in which any such Related Property has
suffered damage, the Servicer will not expend funds in connection with any
repair or toward the repossession of such Related Property unless it reasonably
determines that such repair and/or repossession will increase the Recoveries by
an amount greater than the amount of such expenses. The Servicer will remit to
the Collection Account the Recoveries received in connection with the sale or
disposition of Related Property with respect to a Defaulted Loan or Charged-Off
Loan.

 

Section 7.7. Maintenance of Insurance Policies.

 

The Servicer will require that each Obligor with respect to a Transferred Loan
maintain an Insurance Policy with respect to each Transferred Loan and the
Related Property in accordance with the Credit and Collection Policy. In
connection with its activities as Servicer, the Servicer agrees to present, on
behalf of the Borrower and the Deal Agent, as agent for the Secured Parties,
with respect to the respective interests, claims to the insurer under each
Insurance Policy and any such liability policy, and to settle, adjust and
compromise such claims, in each case, consistent with the terms of each related
Loan.

 

Section 7.8. Representations and Warranties of the Servicer.

 

The Servicer hereby represents and warrants as follows:

 

(a) Organization and Good Standing; Power and Authority The Servicer is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation with all requisite corporate power and
authority to own its properties and to conduct its business as presently
conducted and to enter into and perform its obligations pursuant to this
Agreement and each other Transaction Document to which it is a party.

 

(b) Due Qualification. The Servicer is qualified to do business as a
corporation, is in good standing, and has obtained all licenses and approvals as
required under the laws of all jurisdictions in which the ownership or lease of
its property and or the conduct of its business

 

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(other than the performance of its obligations hereunder) requires such
qualification, standing, license or approval, except to the extent that the
failure to so qualify, maintain such standing or be so licensed or approved
would not have an adverse effect on the interests of the Borrower or of the
Lenders. The Servicer is qualified to do business as a corporation, is in good
standing, and has obtained all licenses and approvals as required under the laws
of all states in which the performance of its obligations pursuant to this
Agreement requires such qualification, standing, license or approval, except
where the failure to qualify or obtain such license or approval would not
reasonably be expected to have a Material Adverse Effect on its ability to
perform hereunder.

 

(c) Due Authorization. The Servicer has duly authorized the execution, delivery
and performance of this Agreement by all requisite corporate action.

 

(d) No Violation. The consummation of the transactions contemplated by, and the
fulfillment of the terms of, this Agreement by the Servicer (with or without
notice or lapse of time) will not (i) conflict with, result in any breach of any
of the terms or provisions of, or constitute a default under, the articles of
incorporation or by-laws of the Servicer, or any Contractual Obligation to which
the Servicer is a party or by which it or any of its property is bound, (ii)
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such Contractual Obligation (other than this
Agreement or the Purchase Agreement), or (iii) violate any Applicable Law.

 

(e) No Consent. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any Governmental Authority
having jurisdiction over the Servicer or any of its properties is required to be
obtained by or with respect to the Servicer in order for the Servicer to enter
into this Agreement or perform its obligations hereunder.

 

(f) Binding Obligation. This Agreement constitutes a legal, valid and binding
obligation of the Servicer, enforceable against the Servicer in accordance with
its terms, except as such enforceability may be limited by (i) applicable
Insolvency Laws and (ii) general principles of equity (whether considered in a
suit at law or in equity).

 

(g) No Proceedings. Except as previously disclosed to the Deal Agent in writing,
there are no proceedings or investigations (formal or informal) pending or
threatened against the Servicer, before any Governmental Authority (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that would (in the reasonable judgment of the Servicer)
be expected to have a Material Adverse Effect.

 

(h) Reports Accurate. All Servicer Certificates, information, exhibits,
financial statements, documents, books, Servicer Records or reports furnished or
to be furnished by the Servicer to the Deal Agent or any other Secured Party in
connection with this Agreement are and will be accurate, true and correct.

 

(i) No Servicer Default. No event has occurred and is continuing and no
condition exists, or would result from a purchase in respect of any Investment
or from the application of the proceeds therefrom, which constitutes or may
reasonably be expected to constitute a Servicer Default.

 

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(j) Material Adverse Change. Since March 31, 2004, there has been no Material
Adverse Change with respect to the initial Servicer.

 

(k) Credit and Collection Policy. Since March 31, 2004, there has been no
material change in any Credit and Collection Policy of the initial Servicer
other than in accordance with this Agreement. Since such date, no Material
Adverse Change has occurred in the overall rate collection of the Loans. It has
at all times complied with the Credit and Collection Policy with respect to each
Loan.

 

Section 7.9. Covenants of the Servicer.

 

The Servicer hereby covenants that:

 

(a) Compliance with Law. The Servicer will comply in all material respects with
all Applicable Laws, including those with respect to the Transferred Loans, the
Related Property and Loan Documents or any part thereof.

 

(b) Preservation of Corporate Existence. The Servicer will preserve and maintain
its corporate existence, rights, franchises and privileges in the jurisdiction
of its formation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to maintain such existence,
rights, franchises, privileges and qualification could reasonably be expected to
have, a Material Adverse Effect.

 

(c) Obligations with Respect to Loans. The Servicer will duly fulfill and comply
with all obligations on the part of the Borrower to be fulfilled or complied
with under or in connection with each Loan and will do nothing to impair the
rights of the Borrower or the Deal Agent, as agent for the Secured Parties, or
of the Secured Parties in, to and under the Collateral.

 

(d) Preservation of Security Interest. The Borrower or the Servicer on behalf of
the Borrower will execute and file (or cause the execution and filing of) such
financing and continuation statements and any other documents and take such
other actions that may be required by any law or regulation of any Governmental
Authority to preserve and protect fully the interest of the Deal Agent, as agent
for the Secured Parties, in, to and under the Collateral.

 

(e) [Reserved].

 

(f) Change of Name or Location; Records. The Servicer (i) shall not change its
name, move the location of its principal executive office or change its
jurisdiction of incorporation, without 30 days’ prior written notice to the
Borrower, the Deal Agent, and (ii) shall not move, or consent to the Collateral
Custodian moving the Loan Documents without 30 days’ prior written notice to the
Borrower, the Deal Agent and (iii) will promptly take all actions required of
each relevant jurisdiction in order to continue the first priority perfected
security interest of the Deal Agent, as agent for the Secured Parties, in all
Collateral including delivery of an Opinion of Counsel.

 

(g) Credit and Collection Policy. The initial Servicer will (i) comply in all
material respects with the Credit and Collection Policy in regard to each Loan
and the Related Property included in the Collateral, including, without
limitation, performing the Loan grading and asset

 

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valuation functions specified in Sections IV(D) and V of the Credit and
Collection Policy on a quarterly basis, and (ii) furnish to the Deal Agent,
prior to its effective date, prompt notice of any change in the Credit and
Collection Policy. The initial Servicer will not agree or otherwise permit (x)
any change in the Credit and Collection Policy which would materially and
adversely affect or impair the collectibility of any Loan, or (y) to occur any
material change in the Credit and Collection Policy, without the prior written
consent of the Deal Agent and each Lender Agent.

 

(h) Termination Events. The Servicer will furnish to the Deal Agent, as soon as
possible and in any event within three Business Days after the occurrence of
each Termination Event or Unmatured Termination Event, a written statement
setting forth the details of such event and the action that the Servicer
proposes to take with respect thereto.

 

(i) Extension or Amendment of Loans. The Servicer will not, except as otherwise
permitted in Section 7.4(a), extend, amend or otherwise modify the terms of any
Loan.

 

(j) Other. The Servicer will furnish to the Borrower, the Deal Agent and any
Lender Agent such other information, documents records or reports respecting the
Loans or the condition or operations, financial or otherwise of the Servicer as
the Borrower, the Deal Agent and any Lender Agent may from time to time
reasonably request in order to protect the respective interests of the Borrower,
the Deal Agent or the other Secured Parties under or as contemplated by this
Agreement.

 

(k) Agented Notes. Except as provided in Section 7.4(a), the Servicer and the
Originator covenant that they shall not without the prior written consent of the
Deal Agent (i) make or consent to any amendment or alteration of the terms of
any Agented Note or related Loan Documents, including without limitation the
payments due thereunder, (ii) undertake to release or authorize or consent to
the release of any collateral or security for the Agented Notes, (iii)
accelerate or extend the maturity of any Agented Note or (iv) waive any claim
against the Obligor or any applicable guarantor thereof, where the effect of any
of the foregoing would have a material adverse effect on the Collateral, the
Deal Agent or any other Secured Party.

 

(l) Grade 2 Obligor. In the event that the Originator or an Affiliate thereof
provides to any Obligor an Add-On Loan, the proceeds of which are intended to be
used for the purpose of providing funds for the Obligor to make an interest
and/or principal payment on an Eligible Loan issued to such Obligor, the
Servicer shall designate such Obligor as a Grade 2 Obligor or a Grade 1 Obligor
through the date that is one year after the date that such Add-On Loan is made;
provided, that, this Section 7.9(l) shall not apply in connection with Add-On
Loans that are part of a single plan of financing (regardless of when such plan
of financing is actually funded) involving Add-On Loans to the Obligor by, in
addition to the Originator, a Person who is neither the Originator nor an
Affiliate thereof; provided, further, that, the restriction set forth in this
Section 7.9(l) shall not apply after the date on which a subsequent Add-On Loan
is made to the Obligor and neither the Originator nor an Affiliate thereof is a
party to such subsequent Add-On Loan.

 

(m) Inspection of Records. The Servicer will, at any time and from time to time
during regular business hours, as requested by the Deal Agent or any Lender
Agent, permit the

 

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Deal Agent or any Lender Agent, or its agents or representatives, (i) to examine
and make copies of and take abstracts from all books, records and documents
(including computer tapes and disks) relating to the Loans and the related Loan
Documents and (ii) to visit the offices and properties of the Borrower, the
Originator or the Servicer, as applicable, for the purpose of examining such
materials described in clause (i), and to discuss matters relating to the Loans
or the Borrower’s, the Originator ‘s or the Servicer’s performance hereunder,
under the Loan Documents and under the other Transaction Documents to which such
Person is a party with such officers, directors, employees or independent public
accountants of the Borrower, the Originator or the Servicer, as applicable, as
might reasonably be determined to have knowledge of such matters.

 

(n) Keeping of Records. The Servicer will maintain and implement administrative
and operating procedures (including an ability to recreate records evidencing
Loans and the related Loan Documents in the event of the destruction of the
originals thereof), and keep and maintain, all documents, books, computer tapes,
disks, records and other information reasonably necessary or advisable for the
collection of all Loans (including records adequate to permit the daily
identification of each new Loan and all Collections of and adjustments to each
existing Loan). The Borrower shall give the Deal Agent prompt notice of any
material change in its administrative and operating procedures referred to in
the previous sentence.

 

(o) Compliance with Loans. The Servicer will (i) at its own expense, timely and
fully perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Loans and the related Loan
Documents; and (ii) timely and fully comply in all material respects with the
Credit and Collection Policy with respect to each Loan and the related Loan
Document.

 

(p) Consolidation or Merger of the Servicer. The initial Servicer shall not
consolidate or merge with or into, or sell, lease or transfer all or
substantially all of its assets to, any other Person, unless, in the case of any
such action (i) no Termination Event or Material Adverse Effect would occur or
be reasonably likely to occur as a result of such transaction, (ii) the Deal
Agent and each Lender Agent provides its prior written consent to such
transaction and (iii) such Person executes and delivers to the Deal Agent an
agreement by which such Person assumes the obligations of the Servicer hereunder
and under the other Transaction Documents to which it is a party, or confirms
that such obligations remain enforceable against it, together with such
certificates and opinions of counsel as the Deal Agent may reasonably request.

 

(q) Compliance with Trust Agreement Accounting/Recordkeeping Requirements. The
initial Servicer shall comply with, and not take any action, or permit or
acquiesce in any action being taken which would have the effect, directly, or
indirectly, of causing any breach of, the covenants of the initial Servicer set
forth in Section 4.01(cc)-(gg) of the Borrower’s trust agreement.

 

Section 7.10. The Collateral Custodian.

 

(a) Appointment; Custodial Duties. The Borrower and the Deal Agent each hereby
appoints Wells Fargo to act as Collateral Custodian hereunder, for the benefit
of the Borrower, the Deal Agent and the other Secured Parties, as provided
herein. Wells Fargo hereby accepts

 

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such appointment and agrees to perform the duties and responsibilities with
respect thereto set forth herein.

 

The Collateral Custodian shall take and retain custody of the Loan Files
delivered by the Borrower or on its behalf pursuant to Section 5.3 hereof in
accordance with the terms and conditions of this Agreement, all for the benefit
of the Secured Parties and subject to the Lien thereon in favor of the Deal
Agent, as agent for the Secured Parties. Immediately upon receipt of any such
Loan File, the Collateral Custodian shall deliver to the Deal Agent a custodial
receipt in form of Exhibit J hereto. Within five Business Days of its receipt of
any Loan File, the Collateral Custodian shall review the related Loan Documents
to verify that each Loan Document listed on the index of the related Loan File
has been received, is executed and has no missing or mutilated pages and that
each Underlying Note with respect to each Loan is in original form (except that
with respect to any Pre-Positioned Loan, the Collateral Custodian shall have
received a faxed copy of each Underlying Note and within two Business Days after
the related Funding Date, the Collateral Custodian shall have received an
original of each Underlying Note), and to confirm (in reliance on the related
Loan number and Obligor name) that such Loan is referenced on the related Loan
List and shall, at the expiration of such period, deliver to the Deal Agent a
certification in the form of Exhibit K hereto. Except as described in the
preceding sentence with respect to Underlying Notes, the Collateral Custodian
may fulfill its obligations hereunder by accepting and reviewing copies of all
Loan Documents in a Loan File. In order to facilitate the foregoing review by
the Collateral Custodian, in connection with each delivery of Loan Files
hereunder to the Collateral Custodian, the Servicer shall provide to the
Collateral Custodian an electronic file in a mutually acceptable electronic
format that contains the related Loan List or that otherwise contains the Loan
number and the name of the Obligor with respect to each related Loan. If, at the
conclusion of such review, the Collateral Custodian shall determine that any
such Loan Document is not executed or in proper form on its face, that any
Underlying Note is not in original form as required, or that any such Loan
Document is not referenced on the index of the related Loan File, the Collateral
Custodian shall promptly notify the Borrower and the Deal Agent of such
determination by providing an exception report to such Persons setting forth,
with particularity, the lack of execution of such Loan Document(s), that such
Loan Document(s) has missing or mutilated pages, that an original Underlying
Note has not been delivered or the fact that such Loan was not referenced on the
related Loan List or such Loan Document(s) was not referenced on the index of
the related Loan File. In addition, unless instructed otherwise in writing by
the Borrower and the Deal Agent within ten days of the Collateral Custodian’s
delivery of such report, the Collateral Custodian shall return any Loan File not
referenced on such Loan List to the Borrower. Other than the foregoing, the
Collateral Custodian shall not have any responsibility for reviewing any Loan
File.

 

In taking and retaining custody of the Loan Files, the Collateral Custodian
shall be acting as the agent of the Deal Agent and the other Secured Parties;
provided, that, the Collateral Custodian makes no representations as to the
existence, perfection or priority of any Lien on the Loan Files or the
instruments therein; provided, further, that, the Collateral Custodian’s duties
as agent shall be limited to those expressly contemplated herein. All Loan Files
shall be kept in fire-resistant vaults or cabinets at the locations specified on
Schedule V attached hereto, or at such other office as shall be specified to the
Deal Agent and the Borrower by the Collateral Custodian in a written notice
delivered at least 45 days prior to such change. All Loan Files shall be
segregated with an appropriate identifying label and maintained in such a manner
so as to

 

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permit retrieval and access. All Loan Files shall be clearly segregated from any
other documents or instruments maintained by the Collateral Custodian. The
Collateral Custodian shall clearly indicate that such Loan Files are the sole
property of Borrower, subject to the security interest of the Deal Agent, on
behalf of the Secured Parties. In performing its duties, the Collateral
Custodian shall use the same degree of care and attention as it employs with
respect to similar loan files that it holds as collateral custodian for others.

 

(b) Concerning the Collateral Custodian.

 

(i) Except for its willful misconduct, gross negligence or bad faith, the
Collateral Custodian may conclusively rely on and shall be fully protected in
acting upon any certificate, instrument, opinion, notice, letter, telegram or
other document delivered to it and that in good faith it reasonably believes to
be genuine and that has been signed by the proper party or parties. Except for
its willful misconduct, gross negligence or bad faith, the Collateral Custodian
may rely conclusively on and shall be fully protected in acting upon the written
instructions of any designated officer of the Deal Agent.

 

(ii) The Collateral Custodian may consult counsel satisfactory to it and the
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.

 

(iii) The Collateral Custodian shall not be liable for any error of judgment, or
for any act done or step taken or omitted by it, in good faith, or for any
mistakes of fact or law, or for anything that it may do or refrain from doing in
connection herewith except in the case of its willful misconduct, gross
negligence or bad faith.

 

(iv) The Collateral Custodian makes no warranty or representation and shall have
no responsibility (except as expressly set forth in this Agreement) as to the
content, enforceability, completeness, validity, sufficiency, value,
genuineness, ownership or transferability of the Loans or the Loan Documents,
and will not be required to and will not make any representations as to the
validity or value of any of the Loans. The Collateral Custodian shall not be
obligated to take any legal action hereunder that might in its judgment involve
any expense or liability unless it has been furnished with an indemnity
reasonably satisfactory to it.

 

(v) The Collateral Custodian shall have no duties or responsibilities except
such duties and responsibilities as are specifically set forth in this Agreement
and no covenants or obligations shall be implied in this Agreement against the
Collateral Custodian.

 

(vi) The Collateral Custodian shall not be required to expend or risk its own
funds in the performance of its duties hereunder.

 

(vii) It is expressly agreed and acknowledged that the Collateral Custodian is
not guaranteeing performance of or assuming any liability for the obligations of
the other parties hereto or any parties to the Loans.

 

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(c) Release for Servicing. From time to time and as appropriate for the
enforcement or servicing of any of the Transferred Loans, the Collateral
Custodian is hereby authorized, upon receipt from the Servicer on behalf of the
Borrower, of a written request for release of documents and receipt in the form
annexed hereto as Exhibit L and upon receipt from the Deal Agent of its written
consent to such request and receipt, to release to the Servicer the related Loan
File or the documents set forth in such request and receipt to the Servicer;
provided, however, notwithstanding the foregoing or any other provision of this
Agreement, upon its receipt of written instructions from the Deal Agent, the
Collateral Custodian shall cease releasing documents to the Servicer. All
documents so released to the Servicer on behalf of the Borrower shall be held by
the Servicer in trust for the benefit of the Borrower, the Deal Agent and the
other Secured Parties, with respect to their respective interests, in accordance
with the terms of this Agreement. The Servicer, on behalf of the Borrower, shall
return to the Collateral Custodian the Loan File or other such documents when
the Servicer’s need therefor in connection with such foreclosure or servicing no
longer exists, unless the Loan shall be liquidated, in which case, upon receipt
of an additional request for release of documents and receipt certifying such
liquidation from the Servicer to the Collateral Custodian in the form annexed
hereto as Exhibit L, the Servicer’s request and receipt submitted pursuant to
the first sentence of this Section 7.10(c) shall be released by the Collateral
Custodian to the Servicer. Notwithstanding anything in this Section 7.10(c) to
the contrary, in no event shall the Collateral Custodian release any Loan File
or part thereof to the Servicer for any reason without the Deal Agent’s prior
written consent.

 

(d) Release for Payment. Upon receipt by the Collateral Custodian of the
Servicer’s request for release of documents and receipt in the form annexed
hereto as Exhibit L (which certification shall include a statement to the effect
that all amounts received in connection with such payment or repurchase have
been credited to the Collection Account as provided in this Agreement), the
Collateral Custodian shall promptly release the related Loan File to the
Servicer, on behalf of the Borrower.

 

(e) Collateral Custodian Compensation. As compensation for its activities
hereunder, the Collateral Custodian shall be entitled to a Collateral Custodian
Fee from the Servicer. To the extent that such Collateral Custodian Fee is not
paid by the Servicer, the Collateral Custodian shall be entitled to receive the
unpaid balance of such Collateral Custodian Fee to the extent of funds available
therefor pursuant to the provision of Sections 2.9(a)(1)(v) and 2.9(b)(v). The
Collateral Custodian’s entitlement to receive the Collateral Custodian Fee
(other than due and unpaid Collateral Custodian Fees owed through such date)
shall cease on the earlier to occur of: (i) its removal as Collateral Custodian
or (ii) the termination of this Agreement.

 

(f) Replacement of the Collateral Custodian. The Collateral Custodian may be
replaced by the Borrower with the prior consent of the Deal Agent and each
Lender Agent; provided, however, no such replacement shall be effective until a
replacement Collateral Custodian has been appointed, has agreed to act as
Collateral Custodian hereunder and has received all Loan Files held by the
previous Collateral Custodian.

 

(g) Release of Loan Documents Following a Lien Release Dividend. To the extent
that portions of Transferred Loans are transferred pursuant to a Lien Release
Dividend under Section 2.17 and such portions of transferred Loans are part of a
Permitted Securitization Transaction, the Collateral Custodian may, but only
with the Deal Agent’s prior written consent,

 

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and upon terms and conditions satisfactory to the Deal Agent, including without
limitation the execution by the servicer of the sold Loans of all such documents
as the Deal Agent may require, release original Loan Documents (excluding the
related original Underlying Note(s)) evidencing the portion of the Transferred
Loan remaining as part of the Collateral) to the servicer of such sold
Transferred Loans for the purposes of enforcing or servicing such Loans in
connection with a Permitted Securitization Transaction.

 

Section 7.11. Representations and Warranties of the Collateral Custodian.

 

The Collateral Custodian represents and warrants as follows:

 

(a) Organization and Good Standing. It is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States with all requisite power and authority to own its properties and to
conduct its business as presently conducted and to enter into and perform its
obligations pursuant to this Agreement.

 

(b) Due Qualification. It is duly qualified to do business as a national banking
association and is in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its property
or the conduct of its business requires such qualification, licenses or approval
except where the failure to so qualify or have such licenses or approvals has
not had, and would not be reasonably expected to have, a Material Adverse
Effect.

 

(c) Power and Authority. It has the power and authority to execute and deliver
this Agreement and each other Transaction Document to which it is a party and to
carry out their respective terms. It has duly authorized the execution, delivery
and performance of this Agreement and each other Transaction Document to which
it is a party by all requisite action.

 

(d) No Violation. The consummation of the transactions contemplated by, and the
fulfillment of the terms of, this Agreement and each other Transaction Document
to which it is a party by it will not (i) conflict with, result in any breach of
any of the terms or provisions of, or constitute a default under, its articles
of association, or any Contractual Obligation to which it is a party or by which
it or any of its property is bound, (ii) result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any Contractual
Obligation, or (iii) violate any Applicable Law.

 

(e) No Consents. No consent, approval, authorization, order, registration,
filing, qualification, license or permit (collectively, the “Consents”) of or
with any Governmental Authority having jurisdiction over it or any of its
respective properties is required to be obtained in order for it to enter into
this Agreement or perform its obligations hereunder.

 

(f) Binding Obligation. This Agreement constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable Insolvency Laws and (ii) general
principles of equity (whether considered in a suit at law or in equity).

 

(g) No Proceedings. There are no proceedings or investigations pending or, to
the best of its knowledge, threatened, against it before any Governmental
Authority (i) asserting the

 

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invalidity of this Agreement, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might (in its reasonable judgment) have a Material
Adverse Effect.

 

Section 7.12. Covenants of the Collateral Custodian.

 

The Collateral Custodian hereby covenants that:

 

(a) Compliance with Law. The Collateral Custodian will comply in all material
respects with all Applicable Laws.

 

(b) Preservation of Existence. The Collateral Custodian will preserve and
maintain its existence, rights, franchises and privileges as a national banking
association in good standing under the laws of the United States.

 

(c) No Bankruptcy Petition. With respect to any Conduit Lender, prior to the
date that is one year and one day (or such longer preference period as shall
then be in effect) after the payment in full of all amounts owing in respect of
all outstanding Commercial Paper Notes issued by such Conduit Lender and, with
respect to the Borrower, prior to the date that is one year and one day (or such
longer preference period as shall then be in effect) after the Collection Date,
it will not institute against the Borrower or any Conduit Lender, or join any
other Person in instituting against the Borrower or any Conduit Lender, any
Insolvency Proceedings or other similar proceedings under the laws of the United
States or any state of the United States. This Section 7.12(c) will survive the
termination of this Agreement.

 

(d) Loan Files. The Collateral Custodian will not dispose of any documents
constituting the Loan Files in any manner that is inconsistent with the
performance of its obligations as the Collateral Custodian pursuant to this
Agreement and will not dispose of any Loan except as contemplated by this
Agreement.

 

(e) Location of Loan Files. The Loan Files shall remain at all times in the
possession of the Collateral Custodian at the address set forth on Annex A
hereto unless notice of a different address is given in accordance with the
terms hereof.

 

(f) No Changes in Collateral Custodian Fee. The Collateral Custodian will not
make any changes to the Collateral Custodian Fee set forth in the Backup
Servicer and Collateral Custodian Fee Letter without the prior written approval
of the Deal Agent.

 

Section 7.13. The Backup Servicer.

 

(a) Appointment. The Borrower and the Deal Agent hereby appoint Wells Fargo to
act as Backup Servicer for the benefit of the Borrower, the Deal Agent and the
other Secured Parties in accordance with the terms of this Agreement. Wells
Fargo hereby accepts such appointment and agrees to perform the duties and
responsibilities with respect thereto set forth herein.

 

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(b) Duties. On or before the initial Funding Date, and until the receipt by the
Servicer of a Servicer Termination Notice, the Backup Servicer shall perform, on
behalf of the Borrower and the Deal Agent and the other Secured Parties, the
following duties and obligations:

 

(i) On or before the Closing Date, the Backup Servicer shall accept from the
Servicer delivery of the information required to be set forth in the Monthly
Reports in hard copy and in an agreed upon electronic format.

 

(ii) Not later than 12:00 noon (Charlotte, North Carolina time) on each
Reporting Date, the Servicer shall provide to the Backup Servicer and the Backup
Servicer shall accept delivery of tape in an agreed upon electronic format (the
“Tape”) from the Servicer, which shall include but not be limited to the
following information: (x) for each Transferred Loan, the name and number of the
related Obligor, the collection status, the Loan status, the date of each
Scheduled Payment and the Outstanding Loan Balance and (y) the Aggregate
Outstanding Loan Balance.

 

(iii) Prior to the related Payment Date, the Backup Servicer shall review the
Monthly Report to ensure that it is complete on its face and that the following
items in such Monthly Report have been accurately calculated, if applicable, and
reported: (A) the Availability, (B) the Aggregate Outstanding Loan Balance, (C)
the Backup Servicer Fee, (D) the Loans that are 30 or more days Delinquent
(other than Defaulted Loans and Charged-Off Loans), (E) the Defaulted Loans
(other than Charged-Off Loans), (F) the Charged-Off Loans, (G) the Portfolio
Yield, (H) the Rolling Three-Month Portfolio Yield, (I) the Rolling Three-Month
Default Ratio, (J) the Rolling Three-Month Charged-Off Ratio and (K) the Rolling
Twelve-Month Portfolio Charged-Off Ratio. The Backup Servicer shall notify the
Deal Agent, the Borrower and the Servicer of any disagreements with the Monthly
Report based on such review not later than the Business Day preceding such
Payment Date to such Persons.

 

(iv) If the Borrower or the Servicer disagrees with the report provided under
Section 7.13(b)(iii) by the Backup Servicer or if the Borrower or the Servicer
or any subservicer has not reconciled such discrepancy, the Backup Servicer
agrees to confer with the Borrower or the Servicer to resolve such disagreement
on or prior to the next succeeding Determination Date and shall settle such
discrepancy with the Borrower or the Servicer if possible, and notify the Deal
Agent of the resolution thereof. The Borrower or the Servicer hereby agree to
cooperate at their own expense, with the Backup Servicer in reconciling any
discrepancies herein. If within twenty (20) days after the delivery of the
report provided under Section 7.13(b)(iii) by the Backup Servicer, such
discrepancy is not resolved, the Backup Servicer shall promptly notify the
Borrower and the Deal Agent of the continued existence of such discrepancy.
Following receipt of such notice by the Deal Agent, the Servicer shall deliver
to the Borrower, the Deal Agent, the Secured Parties and the Backup Servicer no
later than the related Payment Date a certificate describing the nature and
amount of such discrepancies and the actions the Servicer proposes to take with
respect thereto.

 

With respect to the duties described in this Section 7.13(b), in the absence of
bad faith or gross negligence, the Backup Servicer, in the performance of its
duties and obligations

 

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hereunder, is entitled to rely conclusively, and shall be fully protected in so
relying, on the contents of each Tape, including, but not limited to, the
completeness and accuracy thereof, provided by the Servicer.

 

(c) Transition to Servicer Role. After the receipt by the Servicer of an
effective Servicer Termination Notice, all authority, power, rights and
responsibilities of the Servicer, under this Agreement, whether with respect to
the Loans or otherwise, shall pass to and be vested in the Backup Servicer,
subject to and in accordance with the provisions of Section 7.26, as long as the
Backup Servicer is not prohibited by Applicable Law from fulfilling the same, as
evidenced by an Opinion of Counsel.

 

(d) Merger or Consolidation. Any Person (i) into which the Backup Servicer may
be merged or consolidated, (ii) that may result from any merger or consolidation
to which the Backup Servicer shall be a party, or (iii) that may succeed to the
properties and assets of the Backup Servicer substantially as a whole, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Backup Servicer hereunder, shall be the
successor to the Backup Servicer under this Agreement without further act on the
part of any of the parties to this Agreement.

 

(e) Backup Servicing Compensation. As compensation for its backup servicing
activities hereunder, the Backup Servicer shall be entitled to receive the
Backup Servicer Fee from the Servicer. To the extent such Backup Servicer Fee is
not paid by the Servicer, the Backup Servicer shall be entitled to receive the
unpaid balance of its Backup Servicer Fee to the extent of funds available
therefor pursuant to the provision of Sections 2.9(a)(1)(iv) and 2.9(b)(iv). The
Backup Servicer’s entitlement to receive the Backup Servicer Fee (other than due
and unpaid Backup Servicer Fees owed through such date) shall cease on the
earliest to occur of: (i) it becoming the Successor Servicer, (ii) its removal
as Backup Servicer, or (iii) the Termination of this Agreement.

 

(f) Backup Servicer Removal. The Backup Servicer may be removed with or without
cause by the Deal Agent, or by the Borrower with the prior written approval of
the Deal Agent by notice given in writing to the Backup Servicer. In the event
of any such removal, a replacement Backup Servicer may be appointed by (i) the
Borrower, acting with the written consent of the Deal Agent or (ii) if no such
replacement is appointed within 30 days following such removal, by the Deal
Agent.

 

(g) Scope of Backup Servicing Duties. The Backup Servicer undertakes to perform
only such duties and obligations as are specifically set forth in this
Agreement, it being expressly understood by all parties hereto that there are no
implied duties or obligations of the Backup Servicer hereunder. Without limiting
the generality of the foregoing, the Backup Servicer, except as expressly set
forth herein, shall have no obligation to supervise, verify, monitor or
administer the performance of the Servicer. The Backup Servicer may act through
its agents, attorneys and custodians in performing any of its duties and
obligations under this Agreement, it being understood by the parties hereto that
the Backup Servicer will be responsible for any misconduct or negligence on the
part of such agents, attorneys or custodians acting on the routine and ordinary
day-to-day operations for and on behalf of the Backup Servicer. Neither the
Backup Servicer nor any of its officers, directors, employees or agents shall be
liable, directly or

 

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indirectly, for any damages or expenses arising out of the services performed
under this Agreement other than damages or expenses that result from the gross
negligence or bad faith of it or them or the failure to perform materially in
accordance with this Agreement.

 

(h) Limitation on Liability. Except for its willful misconduct, gross negligence
or bad faith, the Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement or for any errors of the Servicer contained
in any computer tape, certificate or other data or document delivered to the
Backup Servicer hereunder or on which the Backup Servicer must rely in order to
perform its obligations hereunder, and the Borrower, the Deal Agent, the
Collateral Custodian, the Backup Servicer and the other Secured Parties each
agree to look only to the Servicer to perform such obligations. Except for its
willful misconduct, gross negligence or bad faith, the Backup Servicer shall
have no responsibility and shall not be in default hereunder or incur any
liability for any failure, error, malfunction or any delay in carrying out any
of their respective duties under this Agreement if such failure or delay results
from the Backup Servicer acting in accordance with information prepared or
supplied by a Person other than the Backup Servicer or the failure of any such
other Person to prepare or provide such information. Except for its gross
negligence or bad faith, the Backup Servicer shall have no responsibility, shall
not be in default and shall incur no liability for (i) any act or failure to act
of any third party, including the Servicer (ii) any inaccuracy or omission in a
notice or communication received by the Backup Servicer from any third party,
(iii) the invalidity or unenforceability of any Loan or Loan Document under
Applicable Law, (iv) the breach or inaccuracy of any representation or warranty
made with respect to any Loan, or (v) the acts or omissions of any successor
Backup Servicer.

 

Section 7.14. Representations and Warranties of the Backup Servicer.

 

The Backup Servicer hereby represents and warrants as follows:

 

(a) Organization and Good Standing. It is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States with all requisite power and authority to own its properties and to
conduct its business as presently conducted and to enter into and perform its
obligations pursuant to this Agreement.

 

(b) Due Qualification. The Backup Servicer is duly qualified to do business as a
national banking association and is in good standing, and have obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of its property and the conduct of its business requires such
qualification, licenses or approvals except where the failure to so qualify or
have such licenses or approvals has not had, and would not be reasonably
expected to have, a Material Adverse Effect.

 

(c) Power and Authority. It has the power and authority to execute and deliver
this Agreement and to carry out its terms. It has duly authorized the execution,
delivery and performance of this Agreement by all requisite action.

 

(d) No Violation. The consummation of the transactions contemplated by, and the
fulfillment of the terms of, this Agreement by it will not (i) conflict with,
result in any breach of any of the terms or provisions of, or constitute a
default under, its articles of association or any

 

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Contractual Obligation by which it or any of its property is bound, (ii) result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any Contractual Obligation (other than the Agreement), or (iii)
violate any Applicable Law.

 

(e) No Consents. No Consents of or with any Governmental Authority having
jurisdiction over it or any of its respective properties is required to be
obtained in order for it to enter into this Agreement or perform its obligations
hereunder.

 

(f) Binding Obligation. This Agreement constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable Insolvency Laws and (ii) general
principles of equity (whether considered in a suit at law or in equity).

 

(g) No Proceedings. There are no proceedings or investigations pending or, to
the best of its knowledge, threatened, against it before any Governmental
Authority (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or ruling that might (in its
reasonable judgment) have a Material Adverse Effect.

 

Section 7.15. Covenants of the Backup Servicer.

 

The Backup Servicer hereby covenants that:

 

(a) Compliance with Law. The Backup Servicer will comply in all material
respects with all Applicable Laws.

 

(b) Preservation of Existence. The Backup Servicer will preserve and maintain
its existence, rights, franchises and privileges as a national banking
association in good standing under the laws of the United States.

 

(c) No Bankruptcy Petition. With respect to any Conduit Lender, prior to the
date that is one year and one day (or such longer preference period as shall
then be in effect) after the payment in full of all amounts owing in respect of
all outstanding Commercial Paper Notes issued by such Conduit Lender and with
respect to the Borrower, prior to the date that is one year and one day (or such
longer preference period as shall then be in effect) after the Collection Date,
the Backup Servicer will not institute against the Borrower or any Conduit
Lender, or join any other Person in instituting against the Borrower or any
Conduit Lender, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 7.15(c) will
survive the termination of this Agreement.

 

(d) No Changes in Backup Servicer Fee. The Backup Servicer will not make any
changes to Backup Servicer Fee set forth in the Backup Servicer and Collateral
Custodian Fee Letter without the prior written approval of the Deal Agent.

 

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Section 7.16. Payment of Certain Expenses by the Servicer and the Borrower.

 

(a) The Servicer will be required to pay all fees and expenses incurred by it in
connection with the transactions and activities contemplated by this Agreement,
including fees and disbursements of legal counsel and independent accountants,
Taxes imposed on the Servicer, expenses incurred in connection with payments and
reports pursuant to this Agreement, and all other fees and expenses not
expressly stated under this Agreement for the account of the Borrower. In
consideration for the payment by the Borrower of the Servicing Fee, the Servicer
will be required to pay all reasonable fees and expenses owing to any bank or
trust company in connection with the maintenance of the Collection Accounts and
the Backup Servicer Fee and Collateral Custodian Fee pursuant to the Backup
Servicer and Collateral Custodian Fee Letter. The Servicer shall be required to
pay such expenses for its own account and shall not be entitled to any payment
therefor other than the Servicing Fee.

 

(b) The Borrower will be required to pay all fees and expenses incurred by the
Deal Agent, each Lender Agent, and the Lenders in connection with the
transactions and activities contemplated by this Agreement, including reasonable
fees and disbursements of legal counsel and independent accountants.

 

Section 7.17. Reports.

 

(a) Monthly Report. With respect to each Determination Date and the related
Collection Period, the Servicer will provide to the Borrower, the Backup
Servicer, the Deal Agent and each Lender Agent, on the related Reporting Date, a
monthly statement (a “Monthly Report”), signed by a Responsible Officer of the
Servicer and substantially in the form of Exhibit E. Except as otherwise set
forth herein, the Backup Servicer shall have no obligation to review any
information in the Monthly Report.

 

(b) Servicer’s Certificate. Together with each Monthly Report, the Servicer
shall submit to the Borrower, the Backup Servicer, the Deal Agent and each
Lender Agent a certificate substantially in the form of Exhibit F (a “Servicer’s
Certificate”), signed by a Responsible Officer of the Servicer, which shall
include a certification by such Responsible Officer that no Termination Event or
Unmatured Termination Event has occurred and is continuing. Except as otherwise
set forth herein, the Backup Servicer shall have no duty to review any
information set forth in the Servicer’s Certificate.

 

(c) Financial Statements. The Servicer will submit to the Borrower, the Backup
Servicer, the Deal Agent and each Lender Agent, within 45 days following the end
of each of the Servicer’s fiscal quarters (other than the final fiscal quarter),
commencing for the fiscal quarter ending on June 30, 2004, unaudited financial
statements of the Servicer (including an analysis of delinquencies and losses
for each fiscal quarter) as of the end of each such fiscal quarter. The Servicer
shall submit to the Borrower, the Deal Agent and each Lender Agent, within 90
days following the end of the Servicer’s fiscal year, commencing with the fiscal
year ending on December 31, 2004, annual audited financial statements as of the
end of such fiscal year. Except as otherwise set forth herein, the Backup
Servicer shall have no duty to review any of the financial information set forth
in such financial statements.

 

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Section 7.18. Annual Statement as to Compliance.

 

The Servicer will provide to the Borrower, the Backup Servicer, the Deal Agent
and each Lender Agent, within 90 days following the end of each fiscal year of
the Servicer, commencing with the fiscal year ending on December 31, 2004, an
annual report signed by a Responsible Officer of the Servicer certifying that
(a) a review of the activities of the Servicer, and the Servicer’s performance
pursuant to this Agreement, for the period ending on the last day of such fiscal
year has been made under such Responsible Officer’s supervision and (b) the
Servicer has performed or has caused to be performed in all material respects
all of its obligations under this Agreement throughout such year and no Servicer
Termination Event has occurred and is continuing (or if a Servicer Termination
Event has so occurred and is continuing, specifying each such event, the nature
and status thereof and the steps necessary to remedy such event, and, if a
Servicer Termination Event occurred during such year and no notice thereof has
been given to the Deal Agent, specifying such Servicer Termination Event and the
steps taken to remedy such event).

 

Section 7.19. Annual Independent Public Accountant’s Servicing Reports.

 

The Servicer will cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer) to furnish to
the Borrower, the Deal Agent and each Lender Agent (with a copy to the Backup
Servicer), within 90 days following the end of each fiscal year of the Servicer,
commencing with the fiscal year ending on December 31, 2004, (i) a report
relating to such fiscal year to the effect that (A) such firm has reviewed
certain documents and records relating to the servicing of the Loans, and (B)
based on such examination, such firm is of the opinion that the Monthly Reports
for such year were prepared in compliance with this Agreement, except for such
exceptions as it believes to be immaterial and such other exceptions as will be
set forth in such firm’s report and (ii) a report covering such fiscal year to
the effect that such accountants have applied certain agreed-upon procedures
(which procedures shall not be amended from those procedures in effect as of the
Closing Date without the prior approval of the Borrower and the Deal Agent) to
certain documents and records relating to the servicing of Loans under this
Agreement, compared the information contained in the Monthly Reports and the
Servicer’s Certificates delivered during the period covered by such report with
such documents and records and that no matters came to the attention of such
accountants that caused them to believe that such servicing was not conducted in
compliance with this Article VI of this Agreement, except for such exceptions as
such accountants shall believe to be immaterial and such other exceptions as
shall be set forth in such statement.

 

Section 7.20. Limitation on Liability of the Servicer and Others.

 

Except as provided herein, neither the Servicer nor any of the directors or
officers or employees or agents of the Servicer shall be under any liability to
the Borrower, the Deal Agent, the other Secured Parties or any other Person for
any action taken or for refraining from the taking of any action expressly
provided for in this Agreement; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability that would
otherwise be imposed by reason of its willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of its failure to perform
materially in accordance with this Agreement.

 

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The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties to service the Loans in
accordance with this Agreement that in its reasonable opinion may involve it in
any expense or liability. The Servicer may, in its sole discretion, undertake
any legal action relating to the servicing, collection or administration of
Loans and the Related Property that it may reasonably deem necessary or
appropriate for the benefit of the Borrower and the Secured Parties with respect
to this Agreement and the rights and duties of the parties hereto and the
respective interests of the Borrower and the Secured Parties hereunder.

 

Section 7.21. The Servicer, the Backup Servicer and the Collateral Custodian Not
to Resign.

 

None of the Servicer, the Backup Servicer or the Collateral Custodian shall
resign from the obligations and duties hereby imposed on such Person except upon
such Person’s determination that (i) the performance of its duties hereunder is
or becomes impermissible under Applicable Law and (ii) there is no reasonable
action that such Person could take to make the performance of its duties
hereunder permissible under Applicable Law. Any such determination permitting
the resignation of the Servicer, the Backup Servicer, the Collateral Custodian
shall be evidenced as to clause (i) above by an Opinion of Counsel to such
effect delivered to the Borrower and the Deal Agent. No such resignation shall
become effective until a successor shall have assumed the responsibilities and
obligations of such Person in according with the terms of this Agreement.

 

Section 7.22. Access to Certain Documentation and Information Regarding the
Loans.

 

The Borrower, the Servicer or the Collateral Custodian, as applicable, shall
provide to the Deal Agent and each Lender Agent access to the Loan Documents and
all other documentation regarding the Loans included as part of the Collateral
and the Related Property in such cases where the Deal Agent and each Lender
Agent is required in connection with the enforcement of the rights or interests
of the Lenders, or by applicable statutes or regulations, to review such
documentation, such access being afforded without charge but only (i) upon two
Business Days’ prior written request, (ii) during normal business hours and
(iii) subject to the Servicer’s and the Collateral Custodian’s normal security
and confidentiality procedures. From and after the Closing Date and periodically
thereafter at the discretion of the Deal Agent and each Lender Agent, the Deal
Agent and each Lender Agent or their respective agents may review the Borrower’s
and the Servicer’s collection and administration of the Transferred Loans in
order to assess compliance by the Servicer with the Servicer’s written policies
and procedures, as well as with this Agreement and may conduct an audit of the
Loans, Loan Documents and Records in conjunction with such a review. Such review
shall be reasonable in scope and shall be completed in a reasonable period of
time. The Borrower shall bear the cost of such audits; provided, however, that
prior to the date on which a Termination Event shall have occurred and be
continuing, the Borrower shall not be required to bear the cost of more than two
audits in any 12-month period; and provided, further, that each Lender Agent
agrees to cooperate with the Deal Agent in coordinating the timing and scope of
such audits.

 

Section 7.23. [Reserved].

 

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Section 7.24. Identification of Records.

 

The Servicer shall clearly and unambiguously identify each Loan that is part of
the Collateral and the Related Property in its computer or other records to
reflect that the interest in such Loans and Related Property have been
transferred to and are owned by the Borrower and that the Deal Agent, as agent
for the Secured Parties, has the interest therein Granted by Borrower pursuant
to this Agreement.

 

Section 7.25. Servicer Termination Events.

 

If any one of the following events (a “Servicer Termination Event”) shall occur
and be continuing on any date:

 

(a) any failure by the Servicer to make any payment, transfer or deposit or to
give instructions or notice to the Borrower, the Deal Agent or any Lender Agent
as required by this Agreement, or to deliver any Required Reports hereunder on
or before the date occurring two Business Days after the date such payment,
transfer, deposit, instruction of notice or report is required to be made or
given, as the case may be, under the terms of this Agreement;

 

(b) any failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement or any other Transaction Document to which it is a party as
Servicer that continues unremedied for a period of 30 days after the first to
occur of (i) the date on which written notice of such failure requiring the same
to be remedied shall have been given to the Servicer by the Deal Agent or the
Borrower and (ii) the date on which an officer of the Servicer becomes aware
thereof;

 

(c) any representation, warranty or certification made by the Servicer in this
Agreement or in any certificate delivered pursuant to this Agreement shall prove
to have been incorrect when made, and that continues to be unremedied for a
period of 30 days after the first to occur of (i) the date on which written
notice of such incorrectness requiring the same to be remedied shall have been
given to the Servicer by the Deal Agent or the Borrower and (ii) the date on
which the Servicer becomes aware thereof;

 

(d) the Servicer shall fail in any material respect to service the Transferred
Loans in accordance with the Credit and Collection Policy;

 

(e) an Insolvency Event shall occur with respect to the Servicer or any of its
Affiliates;

 

(f) the Servicer agrees to or otherwise permits (x) any change in the Credit and
Collection Policy which would materially and adversely affect or impair the
collectibility of any Transferred Loan, or (y) any material change in the Credit
and Collection Policy without the prior written consent of the Deal Agent and
each Lender Agent;

 

(g) any financial or asset information reasonably requested by the Deal Agent or
the other Secured Parties as provided herein is not provided as requested within
five Business Days of the receipt by the Servicer of such request;

 

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(h) the rendering against the Servicer of a final judgment, decree or order for
the payment of money in excess of U.S. $5,000,000 (individually or in the
aggregate) and the continuance of such judgment, decree or order unsatisfied and
in effect for any period of 61or more consecutive days without a stay of
execution;

 

(i) the failure of the Servicer to make any payment due with respect to
aggregate recourse debt or other obligations with an aggregate principal amount
exceeding U.S. $2,500,000 or the occurrence of any event or condition that would
permit acceleration of such recourse debt or other obligations if such event or
condition has not been waived;

 

(j) the Servicer fails to maintain a minimum Net Worth of at least
$1,000,000,000 plus seventy-five (75%) percent of any new equity and
Subordinated Debt issued after March 31, 2004; or

 

(k) any Change-in-Control of the Servicer is made without the prior written
consent of the Borrower and the Deal Agent; or

 

(l) the Servicer shall fail to maintain its status as a business development
company or as a registered investment company under the 1940 Act;

 

then notwithstanding anything herein to the contrary, so long as any such
Servicer Termination Events shall not have been remedied at the expiration of
any applicable cure period, the Deal Agent, by written notice to the Servicer
and the Backup Servicer (a “Servicer Termination Notice”), may, subject to the
provisions of Section 7.26, terminate all of the rights and obligations of the
Servicer as Servicer under this Agreement. The Borrower shall pay all reasonable
set-up and conversion costs associated with the transfer of servicing rights to
the Successor Servicer.

 

Section 7.26. Appointment of Successor Servicer.

 

(a) On and after the receipt by the Servicer of a Servicer Termination Notice
pursuant to Section 7.25, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Servicer
Termination Notice or otherwise specified by the Deal Agent to the Servicer and
the Backup Servicer in writing. The Deal Agent may at the time described in the
immediately preceding sentence, in its sole discretion, appoint the Backup
Servicer as the Servicer hereunder, and the Backup Servicer shall on such date
assume all obligations of the Servicer hereunder, and all authority and power of
the Servicer under this Agreement shall pass to and be vested in the Backup
Servicer; provided, however, that any successor Servicer shall not (i) be
responsible or liable for any past actions or omissions of the outgoing Servicer
or (ii) be obligated to make Servicer Advances or (iii) have any liability or
obligation with respect to any Servicer indemnification obligations of any prior
servicer including the initial Servicer. In the event that the Deal Agent does
not so appoint the Backup Servicer, there is no Backup Servicer or the Backup
Servicer is unwilling or unable to assume such obligations on such date, the
Required Lenders shall as promptly as possible appoint a successor servicer (in
such capacity, the “Successor Servicer”), and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the Deal
Agent. In

 

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the event that a Successor Servicer has not been appointed and has not accepted
its appointment at the time when the Servicer ceases to act as Servicer, the
Deal Agent shall petition a court of competent jurisdiction to appoint any
established financial institution having a net worth of not less than U.S.
$100,000,000 and whose regular business includes the servicing of Loans as the
Successor Servicer hereunder.

 

(b) Upon its appointment as successor to the Servicer, the Backup Servicer
(subject to Section 7.26(a)) or the Successor Servicer, as applicable, shall be
the successor in all respects to the Servicer (except as otherwise expressly
provided for herein) with respect to servicing functions under this Agreement,
shall assume all Servicing Duties hereunder and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, and all references in this Agreement to the
Servicer shall be deemed to refer to the Backup Servicer or the Successor
Servicer, as applicable. Any Successor Servicer shall be entitled, with the
prior consent of the Deal Agent, to appoint agents to provide some or all of its
duties hereunder, provided that no such appointment shall relieve such Successor
Servicer of the duties and obligations of the Successor Servicer pursuant to the
terms hereof and that any such subcontract may be terminated upon the occurrence
of a Servicer Termination Event.

 

(c) All authority and power granted to the Servicer under this Agreement shall
automatically cease and terminate upon termination of the Servicer under this
Agreement and shall pass to and be vested in the Successor Servicer, and,
without limitation, the Successor Servicer is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Servicer agrees to cooperate with the
Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing on the Collateral.

 

(d) Upon the Backup Servicer receiving notice that it is required to serve as
the Servicer hereunder pursuant to the foregoing provisions of this Section
7.26, the Backup Servicer will promptly begin the transition to its role as
Servicer.

 

(e) The Backup Servicer shall be entitled to receive its reasonable costs
incurred in transitioning to Servicer.

 

(f) Notwithstanding anything contained in this Agreement to the contrary, any
successor Servicer is authorized to accept and rely on all of the accounting,
records (including computer records) and work of the prior Servicer relating to
the Loans (collectively, the “Predecessor Servicer Work Product”) without any
audit or other examination thereof, except, in all cases, where audit,
examination or other inquiry would be required in the exercise of reasonable
care or the degree of skill and attention the successor Servicer exercises with
respect to all comparable loans that it services for itself and others, and the
successor Servicer shall have no liability for the acts and omissions of the
prior Servicer; provided, however, if any successor Servicer discovers any
error, inaccuracy, omission or incorrect or non-standard practice or procedure
(collectively, “Errors”) in any Predecessor Servicer Work Product, then such
successor Servicer shall use its best commercially reasonable efforts to correct
such Errors. Wells Fargo agrees to use its best efforts to prevent further
errors, inaccuracies or omissions relating to Errors (collectively, “Continued
Errors”) previously discovered by the successor Servicer and shall, with the
prior consent of the Deal Agent, use its best commercially reasonable efforts to
reconstruct and reconcile such data to correct such Errors and Continued Errors
and to prevent future Continued Errors. The successor Servicer shall be entitled
to recover its costs incurred pursuant to this Section 7.26(f).

 

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Section 7.27. Market Servicing Fee.

 

Notwithstanding anything to the contrary herein, in the event that a Successor
Servicer is appointed, the Servicing Fee shall equal the market rate for
comparable servicing duties to be fixed upon the date of such appointment by
such Successor Servicer with the consent of the Deal Agent; in the event that
the Backup Servicer becomes the Successor Servicer, the Backup Servicer shall
solicit three bids, with a copy to the Borrower and the Deal Agent, from not
less than three entities experienced in the servicing of loans similar to the
Loans and that are not Affiliates of the Backup Servicer, the Servicer or the
Borrower, and the Servicing Fee shall be equal to the average of the fees
proposed as determined by the Backup Servicer with the consent of the Deal Agent
(the “Market Servicing Fee”).

 

ARTICLE VIII

 

SECURITY INTEREST

 

Section 8.1. Grant of Security Interest.

 

(a) The parties hereto intend that this Agreement constitute a security
agreement and the transactions effected hereby constitute secured loans by the
Secured Parties to the Borrower under Applicable Law. For such purpose, the
Borrower hereby Grants as of the Closing Date to the Deal Agent, as agent for
the Secured Parties, a lien and continuing security interest in all of the
Borrower’s right, title and interest in, to and under (but none of the
obligations under) all Collateral (including any Hedging Agreements), whether
now existing or hereafter arising or acquired by the Borrower, and wherever the
same may be located, to secure the prompt, complete and indefeasible payment and
performance in full when due, whether by lapse of time, acceleration or
otherwise, of the Obligations of the Borrower arising in connection with this
Agreement and each other Transaction Document, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent.
The Grant of a security interest under this Section 8.1 does not constitute and
is not intended to result in a creation or an assumption by the Deal Agent or
any of the other Secured Parties of any obligation of the Borrower or any other
Person in connection with any or all of the Collateral or under any agreement or
instrument relating thereto. Anything herein to the contrary notwithstanding,
(i) the Originator and the Borrower shall remain liable under the Transferred
Loans and related Collateral to the extent set forth therein to perform all of
their respective duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (ii) the exercise by the Deal Agent, as agent
for the Secured Parties, of any of its rights in the Collateral shall not
release the Originator and the Borrower from any of its duties or obligations
under the Transferred Loans and other Collateral, and (iii) none of the Deal
Agent nor any other Secured Party shall have any obligations or liability under
the Loans and other Collateral by reason of this Agreement, nor shall the Deal
Agent or any other Secured Party be obligated to perform any of the obligations
or duties of the Borrower thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.

 

(b) The Borrower and the Deal Agent, on behalf of the Secured Parties, hereby
acknowledge and agree that the security interest Granted hereby in the
Collateral constitutes

 

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continuing collateral security for all of the Obligations, whether now existing
or hereafter arising.

 

Section 8.2. Release of Lien on Loans.

 

If no Termination Event or Unmatured Termination Event has occurred and is
continuing, at the same time as (i) any Transferred Loan in the Collateral
expires by its terms and all amounts in respect thereof have been paid in full
by the related Obligor and deposited in the Collection Account, (ii) any
Transferred Loan becomes a Prepaid Loan and all amounts in respect thereof have
been paid in full by the related Obligor and deposited in the Collection
Account, (iii) such Transferred Loan is replaced in accordance with Section
2.19(a), (iv) such Transferred Loan is repurchased in accordance with Section
2.19(b), (v) such Transferred Loan is subject to a Lien Release Dividend in
accordance with Section 2.17, or (vi) this Agreement terminates in accordance
with Section 12.6, the Deal Agent, as agent for the Secured Parties, will be
deemed to automatically release its interest in such Loan without representation
or warranty express or implied. In connection with any such prepayment, release
or substitution, the Deal Agent, as agent for the Secured Parties, will after
the deposit by the Servicer of the Proceeds of such event into the Collection
Account, at the sole expense of the Servicer, execute and deliver to the
Servicer any assignments, bills of sale, termination statements and any other
releases and instruments as the Servicer may reasonably request in order to
effect the release and transfer the Related Property if such Related Property is
not also serving as Collateral to secure the repayment of another Transferred
Loan; provided, that, the Deal Agent, as agent for the Secured Parties, will
make no representation or warranty, express or implied, with respect to any such
Related Property in connection with such prepayment, release or substitution.
Nothing in this Section 8.2 shall diminish the Servicer’s obligations pursuant
to Section 6.6 with respect to the Proceeds of any such sale.

 

Section 8.3. [Reserved].

 

Section 8.4. Further Assurances.

 

The provisions of Section 12.12 shall apply to the security interest granted
under Section 8.1 as well as to the Advances and Swingline Advances hereunder.

 

Section 8.5. Remedies.

 

Upon the occurrence of a Termination Event, the Deal Agent and other Secured
Parties shall have, with respect to the Collateral granted pursuant to Section
8.1, and in addition to all other rights and remedies available to the Deal
Agent and the other Secured Parties under this Agreement or other Applicable
Law, all rights and remedies of a secured party upon default under the UCC.

 

Section 8.6. Waiver of Certain Laws.

 

Each of the Borrower and the Servicer agrees, to the full extent that it may
lawfully so agree, that neither it nor anyone claiming through or under it will
set up, claim or seek to take advantage of any appraisement, valuation, stay,
extension or redemption law now or hereafter in force in any locality where any
Collateral may be situated in order to prevent, hinder or delay the

 

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enforcement or foreclosure of this Agreement, or the absolute sale of any of the
Collateral or any part thereof, or the final and absolute putting into
possession thereof, immediately after such sale, of the Secured Parties thereof,
and each of the Borrower and the Servicer, for itself and all who may at any
time claim through or under it, hereby waives, to the full extent that it may be
lawful so to do, the benefit of all such laws, and any and all right to have any
of the properties or assets constituting the Collateral marshaled upon any such
sale, and agrees that the Deal Agent or any court having jurisdiction to
foreclose the security interests granted in this Agreement may sell the
Collateral as an entirety or in such parcels as the Deal Agent or such court may
determine.

 

Section 8.7. Power of Attorney.

 

Each of the Borrower and the Servicer, upon the occurrence and during the
continuance of a Termination Event, hereby irrevocably appoints the Deal Agent
its true and lawful attorney (with full power of substitution) in its name,
place and stead and at its expense, in connection with the enforcement of the
rights and remedies provided for in this Agreement, including without limitation
the following powers: (a) to give any necessary receipts or acquittance for
amounts collected or received hereunder, (b) to make all necessary transfers of
the Collateral in connection with any such sale or other disposition made
pursuant hereto, (c) to execute and deliver for value all necessary or
appropriate bills of sale, assignments and other instruments in connection with
any such sale or other disposition, the Borrower and the Servicer hereby
ratifying and confirming all that such attorney (or any substitute) shall
lawfully do hereunder and pursuant hereto, and (d) to sign any agreements,
orders or other documents in connection with or pursuant to any Transaction
Document or Hedging Agreement. Nevertheless, if so requested by the Deal Agent,
the Borrower shall ratify and confirm any such sale or other disposition by
executing and delivering to the Deal Agent all proper bills of sale,
assignments, releases and other instruments as may be designated in any such
request. The appointment by each of the Servicer and the Borrower of the Deal
Agent as its attorney-in-fact shall be evidenced by its execution and delivery
of a Power of Attorney substantially in the form of Exhibit Q-1 and Q-2,
respectively.

 

ARTICLE IX

 

TERMINATION EVENTS

 

Section 9.1. Termination Events.

 

If any of the following events (each, a “Termination Event”) shall occur and be
continuing:

 

(a) the Borrower shall default in the payment of any amount required to be made
under the terms of this Agreement and such failure continues unremedied for a
period of three Business Days after the due date set forth herein for such
payment, or if no due date is specified, such failure continues for a period of
twenty (20) days after written request for such payment has been made; or

 

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(b) the amount described in clause (ii) of the definition of Availability shall
exceed the amount described in clause (i) of the definition of Availability, for
more than three Business Days; or

 

(c) (i) the Borrower shall fail to perform or observe in any material respect
any other covenant or other agreement of the Borrower set forth in this
Agreement and any other Transaction Document to which it is a party, or (ii) the
Originator shall fail to perform or observe in any material respect any term,
covenant or agreement of such Originator set forth in any other Transaction
Document to which it is a party, in each case when such failure continues
unremedied for more than twenty (20) days after written notice thereof shall
have been given by the Deal Agent or any other Secured Party to such Person; or

 

(d) any representation or warranty made or deemed made hereunder shall prove to
be incorrect in any material respect as of the time when the same shall have
been made, and such incorrect representation or warranty shall not have been
eliminated or otherwise cured within a period of twenty (20) days after written
notice thereof shall have been given by the Deal Agent or any other Secured
Party to the Borrower; or

 

(e) an Insolvency Event shall occur with respect to the Borrower; or

 

(f) a Servicer Termination Event occurs; or

 

(g) any Change-in-Control of the Borrower or Originator occurs; or

 

(h) the Borrower or the Originator defaults in making any payment required to be
made under any material agreement for borrowed money to which either is a party
and such default is not cured within the relevant cure period; or

 

(i) the Deal Agent, as agent for the Secured Parties, shall fail for any reason
to have a valid and perfected first priority security interest in any of the
Collateral; or

 

(j) (i) a final judgment for the payment of money in excess of $5,000,000 shall
have been rendered against the Originator or $100,000 against the Borrower by a
court of competent jurisdiction and, if such judgment relates to the Originator,
the Originator shall have either: (1) discharged or provided for the discharge
of such judgment in accordance with its terms, or (2) perfected a timely appeal
of such judgment and caused the execution thereof to be stayed (by supersedes or
otherwise during the pendency of such appeal or (ii) the Originator or the
Borrower, as the case may be, shall have made payments of amounts in excess of
$1,000,000 or $100,000, respectively, in settlement of any litigation; or

 

(k) the Borrower or the Servicer agrees or consents to, or otherwise permits to
occur, any amendment, modification, change, supplement or recession of or to the
Credit and Collection Policy in whole or in part that could have a material
adverse effect upon the Loans or interest of any Lender, without the prior
written consent of the Deal Agent; or

 

(l) on any day, either (i) the aggregate Hedge Notional Amount is less than the
product of the Hedge Percentage on such day and the Hedge Amount on that day, or
(ii) any

 

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Hedge Transaction fails to meet the requirements set forth in Section 5.2(a) and
such failure continues unremedied for a period of ten consecutive days; or

 

(m) the Aggregate Net Mark to Market Amount exceeds $10,000,000 for two
consecutive Determination Dates; or

 

(n) on any Determination Date, the Rolling Three-Month Portfolio Yield does not
equal or exceed Minimum Portfolio Yield and such failure continues for a period
of 15 consecutive days; or

 

(o) the Rolling Three-Month Default Ratio shall exceed 5.0%; or

 

(p) the Rolling Three-Month Charged-Off Ratio shall exceed 2.5%; or

 

(q) any two of (i) Malon Wilkus, (ii) Ira Wagner, and (iii) John Erickson shall
cease to be employed by the Borrower or Originator in the capacity as executive
officers thereof; or

 

(r) the Borrower shall become required to register as an “investment company”
under the 1940 Act or the arrangements contemplated by the Transaction Documents
shall require registration as an “investment company” within the meaning of the
1940 Act or any rules, regulations or orders issued by the SEC thereunder; or

 

(s) the business and other activities of the Borrower or the Originator,
including but not limited to, the acceptance of the Advances and the Swingline
Advances by the Borrower made by the Lenders, the application and use of the
proceeds thereof by the Borrower and the consummation and conduct of the
transactions contemplated by the Transaction Documents to which the Borrower or
the Originator is a party result in a violation by the Originator, the Borrower,
or any other person or entity of the 1940 Act or the rules and regulations
promulgated thereunder; or

 

(t) a Material Adverse Change in the operations of the Originator, the Servicer
or the Borrower shall occur; or

 

(u) a change in any binding law or any rule or regulation having the force of
law shall occur, which would cause the legal conclusions made in the true sale,
non-consolidation and perfection opinions delivered in connection with the
Transaction Documents to be incorrect; or

 

(v) the Rolling Twelve-Month Portfolio Charged-Off Ratio shall exceed 12.0%; or

 

(w) the Servicer shall fail to deliver an amended and restated Credit and
Collection Policy to the Deal Agent and each Lender Agent by June 30, 2005;

 

then, and in any such event, the Deal Agent may, with the consent of the
Required Lenders, and shall, at the direction of the Required Lenders, by notice
to the Borrower, declare the Termination Date to have occurred, without demand,
protest or future notice of any kind, all of which are hereby expressly waived
by the Borrower, and all Obligations owing by the Borrower under this Agreement
shall be accelerated and become immediately due and payable; provided, that, in
the event that the Termination Event described in Section 9.1(e) herein has
occurred, the

 

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Termination Date shall automatically occur, without demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower.
Upon any such declaration or automatic occurrence of the Termination Date, no
Advances or Swingline Advances will be made, and the Deal Agent and the other
Secured Parties shall have, in addition to all other rights and remedies under
this Agreement or otherwise, all rights and remedies provided under the UCC of
each applicable jurisdiction and other Applicable Laws, including the right to
sell the Collateral, which rights and remedies shall be cumulative. The
aforementioned rights and remedies shall be without limitation, and shall be in
addition to all other rights and remedies of the Deal Agent and the Secured
Parties otherwise available under any provision of this Agreement by operation
of law, at equity or otherwise, each of which are expressly preserved.

 

ARTICLE X

 

INDEMNIFICATION

 

Section 10.1. Indemnities by the Borrower.

 

(a) Without limiting any other rights that any such Person may have hereunder or
under Applicable Law, the Borrower hereby agrees to indemnify the Deal Agent,
the Backup Servicer, the Collateral Custodian, any other Secured Party or its
assignee and each of their respective Affiliates and officers, directors,
employees and agents thereof (collectively, the “Indemnified Parties”),
forthwith on demand, from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys’ fees
and disbursements (all of the foregoing being collectively referred to as
“Indemnified Amounts”) awarded against or incurred by, any such Indemnified
Party or other non-monetary damages of any such Indemnified Party any of them
arising out of or as a result of this Agreement, excluding, however, Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of any Indemnified Party. Without limiting the foregoing, the Borrower
shall indemnify the Indemnified Parties for Indemnified Amounts relating to or
resulting from:

 

(i) any Transferred Loan treated as or represented by the Borrower to be an
Eligible Loan that is not at the applicable time an Eligible Loan;

 

(ii) reliance on any representation or warranty made or deemed made by the
Borrower, the Servicer or any of their respective officers under or in
connection with this Agreement, which shall have been false or incorrect in any
material respect when made or deemed made or delivered;

 

(iii) the failure by the Borrower or the Servicer to comply with any term,
provision or covenant contained in this Agreement or any agreement executed in
connection with this Agreement, or with any Applicable Law with respect to any
Transferred Loan comprising a portion of the Collateral, or the nonconformity of
any Transferred Loan, the Related Property with any such Applicable Law or any
failure by the Originator, the Borrower or any Affiliate thereof to perform its
respective duties under the Transferred Loans included as a part of the
Collateral;

 

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(iv) the failure to vest and maintain vested in the Deal Agent, as agent for the
Secured Parties, a first priority perfected security interest in the Collateral;

 

(v) the failure to file, or any delay in filing, financing statements or other
similar instruments or documents under the UCC of any applicable jurisdiction or
other Applicable Laws with respect to any Collateral whether at the time of any
Advance or Swingline Advance or at any subsequent time and as required by the
Transaction Documents;

 

(vi) any dispute, claim, offset or defense (other than the discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Transferred Loan
included as part of the Collateral that is, or is purported to be, an Eligible
Loan (including, without limitation, a defense based on the Transferred Loan not
being a legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms);

 

(vii) any failure of the Borrower or the Servicer (if the Originator or one of
its Affiliates) to perform its duties or obligations in accordance with the
provisions of this Agreement or any failure by the Originator, the Borrower or
any Affiliate thereof to perform its respective duties under the Transferred
Loans;

 

(viii) any products liability claim or environmental liability claim or personal
injury or property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with the Related Property,
merchandise or services that are the subject of any Transferred Loan included as
part of the Collateral or the Related Property included as part of the
Collateral;

 

(ix) the failure by Borrower to pay when due any Taxes for which the Borrower is
liable, including without limitation, sales, excise or personal property taxes
payable in connection with the Collateral;

 

(x) any repayment by the Deal Agent or another Secured Party of any amount
previously distributed in reduction of Advances Outstanding, the Swingline
Advances outstanding or payment of Interest or any other amount due hereunder or
under any Hedging Agreement, in each case which amount the Deal Agent or another
Secured Party believes in good faith is required to be repaid;

 

(xi) any investigation, litigation or proceeding related to this Agreement or
the use of proceeds of Advances, Swingline Advances or in respect of any
Transferred Loan included as part of the Collateral or the Related Property
included as part of the Collateral;

 

(xii) any failure by the Borrower to give reasonably equivalent value to the
Originator in consideration for the transfer by the Originator to the Borrower
of any Transferred Loan or the Related Property or any attempt by any Person to
void or otherwise avoid any such transfer under any statutory provision or
common law or equitable action, including, without limitation, any provision of
the Bankruptcy Code;

 

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(xiii) the failure of the Borrower, the Originator or any of their respective
agents or representatives to remit to the Servicer or the Deal Agent,
Collections on the Collateral remitted to the Borrower or any such agent or
representative in accordance with the terms hereof or the commingling by the
Borrower or any Affiliate of any collections; or

 

(xiv) the failure by the Borrower to comply with any of the covenants relating
to the Hedging Agreement in accordance with the Transaction Documents.

 

(b) Any amounts subject to the indemnification provisions of this Section 10.1
shall be paid by the Borrower to the applicable Indemnified Party within two
Business Days following such Person’s demand therefor.

 

(c) If for any reason the indemnification provided above in this Section 10.1 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then the Borrower, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and the Borrower, on
the other hand but also the relative fault of such Indemnified Party as well as
any other relevant equitable considerations.

 

(d) The obligations of the Borrower under this Section 10.1 shall survive the
removal of the Deal Agent, the Backup Servicer or the Collateral Custodian and
the termination of this Agreement.

 

(e) The parties hereto agree that the provisions of this Section 10.1 shall not
be interpreted to provide recourse to the Borrower against loss by reason of the
bankruptcy, insolvency or lack of creditworthiness of an Obligor on any
Transferred Loan.

 

Section 10.2. Indemnities by the Servicer.

 

(a) Without limiting any other rights that any such Person may have hereunder or
under Applicable Law, the Servicer hereby agrees to indemnify each Indemnified
Party, forthwith on demand, from and against any and all Indemnified Amounts
awarded against or incurred by any such Indemnified Party by reason of any acts,
omissions or alleged acts or omissions of the Servicer, including, but not
limited to (i) any representation or warranty made by the Servicer under or in
connection with any Transaction Documents to which it is a party, any Monthly
Report, Servicer’s Certificate or any other information or report delivered by
or on behalf of the Servicer pursuant hereto, which shall have been false,
incorrect or misleading in any material respect when made or deemed made, (ii)
the failure by the Servicer to comply with any Applicable Law, (iii) the failure
of the Servicer to comply with its duties or obligations in accordance with the
Agreement, (iv) the failure by the Servicer to comply with any of the covenants
relating to the Hedging Agreement in accordance with the Transaction Documents
or (v) any litigation, proceedings or investigation against the Servicer,
excluding, however, (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party, and (b)
under any Federal, state or local income or franchise taxes or any other Tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by
such

 

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Indemnified Party in connection herewith to any taxing authority. The provisions
of this indemnity shall run directly to and be enforceable by the applicable
Indemnified Party subject to the limitations hereof. If the Servicer has made
any indemnity payment pursuant to this Section 10.2 and such payment fully
indemnified the recipient thereof and the recipient thereafter collects any
payments from others in respect of such Indemnified Amounts, the recipient shall
repay to the Servicer an amount equal to the amount it has collected from others
in respect of such indemnified amounts.

 

(b) Any amounts subject to the indemnification provisions of this Section 10.2
shall be paid by the Servicer within two Business Days following such Person’s
demand therefor.

 

(c) If for any reason the indemnification provided above in this Section 10.2 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then Servicer shall contribute to the amount paid or payable to
such Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party on the one hand and Servicer on the other
hand but also the relative fault of such Indemnified Party as well as any other
relevant equitable considerations.

 

(d) The obligations of the Servicer under this Section 10.2 shall survive the
resignation or removal of the Deal Agent, the Backup Servicer or the Collateral
Custodian and the termination of this Agreement.

 

(e) The parties hereto agree that the provisions of this Section 10.2 shall not
be interpreted to provide recourse to the Servicer against loss by reason of the
bankruptcy or insolvency (or other credit condition) of, or default by, related
Obligor on, any Loan.

 

(f) Any indemnification pursuant to this Section 10.2 shall not be payable from
the Collateral.

 

ARTICLE XI

 

THE DEAL AGENT AND LENDER AGENTS

 

Section 11.1. The Deal Agent.

 

(a) Authorization and Action. The Lenders hereby designate and appoint WCM as
the Deal Agent hereunder, and authorize the Deal Agent to take such actions as
agent on their behalf and to exercise such powers as are delegated to the Deal
Agent by the terms of this Agreement together with such powers as are reasonably
incidental thereto. The Deal Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with the Lenders, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Deal
Agent shall be read into this Agreement or otherwise exist for the Deal Agent.
In performing its functions and duties hereunder, the Deal Agent shall act
solely as agent for the Lenders and does not assume nor shall be deemed to have
assumed any obligation or relationship of trust or agency with or for the
Borrower or any of its successors or assigns. The Deal Agent shall not be
required to take any action that exposes the Deal Agent to personal liability or
that is contrary to this Agreement, any other Transaction

 

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Document or Applicable Law. The appointment and authority of the Deal Agent
hereunder shall terminate at the indefeasible payment in full of the
Obligations.

 

(b) Delegation of Duties. The Deal Agent may execute any of its duties under
this Agreement by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Deal
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

 

(c) Exculpatory Provisions. Neither the Deal Agent nor any of its directors,
officers, agents or employees shall be (i) liable for any action lawfully taken
or omitted to be taken by it or them under or in connection with this Agreement
(except for its, their or such Person’s own gross negligence or willful
misconduct or, in the case of the Deal Agent, the breach of its obligations
expressly set forth in this Agreement), or (ii) responsible in any manner to the
Lenders or the other Secured Parties for any recitals, statements,
representations or warranties made by the Borrower contained in Article IV of
this Agreement, any other Transaction Document or in any certificate, report,
statement or other document referred to or provided for in, or received under or
in connection with, this Agreement, or any other Transaction Document, for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other document furnished in connection herewith, for any
failure of the Borrower to perform its obligations hereunder, or for the
satisfaction of any condition specified in Article III. The Deal Agent shall not
be under any obligation to the Lenders or the other Secured Parties to ascertain
or to inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, this Agreement or any other
Transaction Document, or to inspect the properties, books or records of the
Borrower. The Deal Agent shall not be deemed to have knowledge of any Unmatured
Termination Event, Termination Event or Servicer Termination Event unless the
Deal Agent has received notice from the Borrower or a Secured Party.

 

(d) Reliance. The Deal Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, upon any document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Deal Agent. The Deal Agent shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other document furnished in connection herewith unless it shall first receive
such advice or concurrence of the Lenders, as it deems appropriate, or it shall
first be indemnified to its satisfaction by the Lenders, provided that unless
and until the Deal Agent shall have received such advice, the Deal Agent may
take or refrain from taking any action as the Deal Agent shall deem advisable
and in the best interests of the Lenders. The Deal Agent shall in all cases be
fully protected in acting, or in refraining from acting, in accordance with a
request of the Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Lenders.

 

(e) Non-Reliance on Deal Agent. The Lenders expressly acknowledge that neither
the Deal Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Deal Agent hereafter taken, including, without
limitation, any review of the affairs of the Borrower, shall be deemed

 

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to constitute any representation or warranty by the Deal Agent. Each Lender
represents and warrants to the Deal Agent that it has and will, independently
and without reliance upon the Deal Agent, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of the Borrower and made its own decision
to enter into this Agreement or Hedging Agreement, as the case may be.

 

(f) The Deal Agent in its Individual Capacity. The Deal Agent and any of its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower or any Affiliate of the Borrower as though
the Deal Agent were not the Deal Agent hereunder. With respect to the Advances
made pursuant to this Agreement, the Deal Agent and each of its Affiliates shall
have the same rights and powers under this Agreement as the Purchasers and may
exercise the same as though it were not the Deal Agent and in such context the
terms “Lender” and “Lenders” shall include the Deal Agent in its individual
capacity.

 

(g) Successor Deal Agent. The Deal Agent may, upon five days’ notice to the
Borrower and each Lender, and the Deal Agent will, upon the direction of all
Lenders, resign as Deal Agent. If the Deal Agent shall resign, then the Lenders,
during such five day period, shall appoint a successor agent. If for any reason
no successor Deal Agent is appointed by the Lenders during such five day period,
then effective upon the expiration of such five day period, the Borrower or the
Deal Agent, as applicable, shall make all payments it otherwise would have made
to the Deal Agent in respect of the Obligations or under any fee letter
delivered in connection herewith directly to the Lenders and for all purposes
shall deal directly with the Lenders. After any retiring Deal Agent’s
resignation hereunder as Deal Agent, the provisions of Article X and this
Article XI shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Deal Agent under this Agreement. Notwithstanding
the resignation or removal of WCM as the Deal Agent, Wachovia, as a Hedge
Counterparty, shall continue to be a Secured Party hereunder.

 

Section 11.2. The Lender Agents.

 

(a) Authorization and Action. Each Lender, respectively, hereby designates and
appoints its applicable Lender Agent to act as its agent hereunder and under
each other Transaction Document, and authorizes such Lender Agent to take such
actions as agent on its behalf and to exercise such powers as are delegated to
such Lender Agent by the terms of this Agreement and the other Transaction
Documents together with such powers as are reasonably incidental thereto. Such
Lender Agent shall not have any duties or responsibilities, except those
expressly set forth herein or in any other Transaction Document, or any
fiduciary relationship with its related Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities on the part of
such Lender Agent shall be read into this Agreement or any other Transaction
Document or otherwise exist for such Lender Agent. In performing its functions
and duties hereunder and under the other Transaction Documents, such Lender
Agent shall act solely as agent for its related Lender and does not assume nor
shall be deemed to have assumed any obligation or relationship of trust or
agency with or for the Borrower or the Servicer or any of the Borrower’s or the
Servicer’s successors or assigns. Such Lender Agent shall not be required to
take any action that exposes such Lender Agent to personal liability or that is
contrary to this Agreement, any other Transaction Document or Applicable Law.
The appointment and authority

 

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of such Lender Agent hereunder shall terminate upon the indefeasible payment in
full of all Obligations. Each Lender, respectively, hereby authorizes the Deal
Agent to execute each of the UCC financing statements on behalf of such Lender
(the terms of which shall be binding on such Lender).

 

(b) Delegation of Duties. Each applicable Lender Agent, respectively, may
execute any of its duties under this Agreement and each other Transaction
Document by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. Such Lender
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

 

(c) Exculpatory Provisions. Neither any applicable Lender Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person’s own gross negligence or willful misconduct), or (ii) responsible in any
manner to its related Lender for any recitals, statements, representations or
warranties made by the Borrower or the Servicer contained in Article IV, any
other Transaction Document or any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement or any other Transaction Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any other Transaction Document or any other document furnished in
connection herewith or therewith, or for any failure of the Borrower or the
Servicer to perform its obligations hereunder or thereunder, or for the
satisfaction of any condition specified in this Agreement, or for the
perfection, priority, condition, value or sufficiency of any collateral pledged
in connection herewith. Such Lender Agent shall not be under any obligation to
its related Lender to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the
properties, books or records of the Borrower or the Servicer. Such Lender Agent
shall not be deemed to have knowledge of any Termination Event or Unmatured
Termination Event unless such Lender Agent has received notice from the Borrower
or its related Lender.

 

(d) Reliance by Lender Agents. Each applicable Lender Agent, respectively, shall
in all cases be entitled to rely, and shall be fully protected in relying, upon
any document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by such Lender
Agent. Such Lender Agent shall in all cases be fully justified in failing or
refusing to take any action under this Agreement or any other Transaction
Document unless it shall first receive such advice or concurrence of its related
Lender as it deems appropriate and it shall first be indemnified to its
satisfaction by its Lender; provided, that, unless and until such Lender Agent
shall have received such advice, such Lender Agent may take or refrain from
taking any action, as such Lender Agent shall deem advisable and in the best
interests of its related Lender. Each applicable Lender Agent, respectively,
shall in all cases be fully protected in acting, or in refraining from acting,
in accordance with a request of its related Lender, and such request and any
action taken or failure to act pursuant thereto shall be binding upon its
related Lender.

 

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(e) Non-Reliance on Lender Agent. Each applicable Lender, respectively,
expressly acknowledges that neither its related Lender Agent, nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by such Lender Agent
hereafter taken, including, without limitation, any review of the affairs of the
Borrower or the Servicer, shall be deemed to constitute any representation or
warranty by such Lender Agent. Each applicable Lender, respectively, represents
and warrants to its related Lender Agent that it has and will, independently and
without reliance upon such Lender Agent, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of the Borrower and made its own decision
to enter into this Agreement, the other Transaction Documents and all other
documents related hereto or thereto.

 

(f) Lender Agents in their Respective Individual Capacities. Each applicable
Lender Agent, respectively and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower or any
Affiliate of the Borrower as though such Lender Agent were not a Lender Agent
hereunder. With respect to Advances pursuant to this Agreement, such Lender
Agent shall have the same rights and powers under this Agreement in its
individual capacity as any Lender and may exercise the same as though it were
not a Lender Agent, and in such context the terms “Lender,” and “Lenders,” shall
include such Lender Agent in its individual capacity.

 

(g) Successor Lender Agents. Each applicable Lender Agent, respectively, may,
upon five days’ notice to the Borrower and its related Lender, and such Lender
Agent will, upon the direction of its related Lender (other than such Lender
Agent, in its individual capacity) resign as the Lender Agent for such Lender.
If such Lender Agent shall resign, then its related Lender during such five day
period shall appoint a successor agent. If for any reason no successor agent is
appointed by such Lender during such five day period, then effective upon the
termination of such five day period, the Borrower shall make all payments in
respect of the Obligations directly to such Lender, and for all purposes shall
deal directly with such Lender. After any retiring Lender Agent’s resignation
hereunder as a Lender Agent, the provisions of Articles XI and XII shall inure
to its benefit with respect to any actions taken or omitted to be taken by it
while it was a Lender Agent under this Agreement.

 

ARTICLE XII

 

MISCELLANEOUS

 

Section 12.1. Amendments and Waivers.

 

(a) Except as provided in this Section 12.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective without the
written agreement of the Borrower, the Deal Agent, and the Required Lenders;
provided, that, any amendment of this Agreement that is solely for the purpose
of adding a Lender may be effected with the written consent of (x) the Deal
Agent at any time when the aggregate Commitments of the Conduit Lenders and
Institutional Lenders shall be less than or equal to $850,000,000 (after giving
effect to the proposed Commitment of the Lender to be added), and (y) each
Lender Agent at any time

 

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when the aggregate Commitments of the Conduit Lenders and Institutional Lenders
shall be greater than $850,000,000 (after giving effect to the proposed
Commitment of the Lender to be added); and provided, further, that any amendment
to this Agreement which would (i) reduce or impair Collections or the payment of
Interest or fees to the Lenders, (ii) modify any provisions of this Agreement
relating to the timing of payments required to be made by the Borrower or the
application of the proceeds of such payments, including, without limitation, any
provisions of Section 2.9, (iii) release any Collateral from the Lien of this
Agreement (other than as provided herein), (iv) increase the Facility Amount,
any Lender’s Commitment or extend the Commitment Termination Date or (v) make
any modification to the definitions of “Availability”, “Concentration Limits”,
“Eligible Loan”, or “Eligible Obligor” (each of the amendments described in
clauses (i) through (v) of this proviso, a “Material Amendment”), shall not be
effective without the written agreement of the Borrower, the Deal Agent and each
of the Lenders and, provided, further, that, no such amendment, waiver or
modification adversely affecting the rights or obligations of any Hedge
Counterparty shall be effective without the written agreement of such Person.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

 

(b) No amendment, waiver or other modification (i) affecting the rights or
obligations of any Hedge Counterparty or (ii) having a material affect on the
rights or obligations of the Collateral Custodian or the Backup Servicer
(including any duties of the Servicer that the Backup Servicer would have to
assume as Successor Servicer) shall be effective against such Person without the
written agreement of such Person. The Borrower or the Servicer on its behalf
will deliver a copy of all waivers and amendments to the Collateral Custodian
and the Backup Servicer.

 

Section 12.2. Notices, Etc.

 

All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or hand
delivered, as to each party hereto, at its address set forth on Annex A hereto
or specified in such party’s Assignment and Acceptance or at such other address
as shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, upon receipt, or
in the case of (a) notice by mail, five days after being deposited in the United
States mail, first class postage prepaid, (b) notice by telex, when telexed
against receipt of answer back, or (c) notice by facsimile copy, when verbal
communication of receipt is obtained, except that notices and communications
pursuant to Article XII shall not be effective until received with respect to
any notice sent by mail or telex.

 

Section 12.3. Liabilities to Obligors.

 

No obligation or liability to any Obligor under any of the Transferred Loans is
intended to be assumed by the Deal Agent and the other Secured Parties under or
as a result of this Agreement and the transactions contemplated hereby.

 

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Section 12.4. No Waiver, Rights and Remedies.

 

No failure on the part of the Deal Agent or any other Secured Party or any
assignee of any Secured Party to exercise, and no delay in exercising, any right
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right. The rights and remedies
herein provided are cumulative and not exclusive of any rights and remedies
provided by law.

 

Section 12.5. Binding Effect.

 

This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Deal Agent, the other Secured Parties and their respective successors and
permitted assigns and, in addition, the provisions of Section 2.9(a)(1)(i) and
Section 2.9(b)(i) shall inure to the benefit of each Hedge Counterparty, whether
or not that Hedge Counterparty is a Secured Party.

 

Section 12.6. Term of this Agreement.

 

This Agreement, including, without limitation, the Borrower’s obligation to
observe its covenants set forth in Article V and VI, and the Servicer’s
obligation to observe its covenants set forth in Article VII, shall remain in
full force and effect until the Collection Date; provided, however, that the
rights and remedies with respect to any breach of any representation and
warranty made or deemed made by the Borrower pursuant to Article IV and the
indemnification and payment provisions of Article X and the provisions of
Section 12.10 and Section 12.11 shall be continuing and shall survive any
termination of this Agreement.

 

Section 12.7. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO
VENUE.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH HEDGE COUNTERPARTY
HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED
WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH HEDGE
COUNTERPARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

 

Section 12.8. WAIVER OF JURY TRIAL.

 

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO AND EACH
HEDGE COUNTERPARTY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES
HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

 

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Section 12.9. Costs, Expenses and Taxes.

 

(a) In addition to the rights of indemnification granted to the Deal Agent, the
other Secured Parties, the Backup Servicer and the Collateral Custodian and its
or their Affiliates and officers, directors, employees and agents thereof under
Article X hereof, the Borrower agrees to pay on demand all reasonable costs and
expenses of the Deal Agent and the other Secured Parties incurred in connection
with the preparation, execution, delivery, administration (including periodic
auditing), amendment or modification of, or any waiver or consent issued in
connection with, this Agreement and the other documents to be delivered
hereunder or in connection herewith, (including any Hedging Agreement)
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Deal Agent and the other Secured Parties with respect thereto
and with respect to advising the Deal Agent and the other Secured Parties as to
their respective rights and remedies under this Agreement and the other
documents to be delivered hereunder or in connection herewith (including any
Hedging Agreement) and all costs and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Deal Agent or the other Secured
Parties in connection with the enforcement of this Agreement and the other
documents to be delivered hereunder or in connection herewith (including any
Hedging Agreement).

 

(b) The Borrower shall pay on demand any and all stamp, sales, excise and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the other documents
to be delivered hereunder or, with respect to any Conduit Lender, any agreement
or other document providing liquidity support, credit enhancement or other
similar support in connection with this Agreement or the funding or maintenance
of Advances hereunder.

 

(c) The Borrower shall pay on demand all other costs, expenses and taxes
(excluding income taxes) (“Other Costs”), including, without limitation, all
reasonable costs and expenses incurred by the Deal Agent and each Lender Agent
in connection with periodic audits of the Borrower’s or the Servicer’s books and
records (subject to the limitations set forth in Section 7.22), the cost of
rating each Conduit Lender’s commercial paper by independent financial rating
agencies as may be agreed by the Borrower and such Conduit Lender, which are
incurred as a result of the execution of this Agreement, and the amount of any
taxes and insurance due and unpaid by an Obligor with respect to any Transferred
Loan or Related Property.

 

Section 12.10. No Proceedings.

 

(a) Each of the parties hereto (other than each Conduit Lender) and each Hedge
Counterparty hereby agrees that it will not institute against, or join any other
Person in instituting against, any Conduit Lender any Insolvency Proceeding so
long as any Commercial Paper Notes issued by such Conduit Lender shall be
outstanding and there shall not have elapsed one year and one day (or such
longer preference period as shall then be in effect) since the last day on which
any such Commercial Paper Notes shall have been outstanding.

 

(b) Each of the parties hereto (other than the Deal Agent and the other Secured
Parties) hereby agrees that it will not institute against, or join any other
Person in instituting against the Borrower any Insolvency Proceeding so long as
there shall not have elapsed one year

 

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and one day (or such longer preference period as shall then be in effect) since
the Collection Date.

 

Section 12.11. Recourse Against Certain Parties.

 

(a) No recourse under or with respect to any obligation, covenant or agreement
(including, without limitation, the payment of any fees or any other
obligations) of the Borrower, the Servicer, the Deal Agent or any other Secured
Party as contained in this Agreement or any other agreement, instrument or
document entered into by it pursuant hereto or in connection herewith shall be
had against any Person or any manager or administrator of such Person or any
incorporator, affiliate, stockholder, officer, employee or director of such
Person or of the Borrower or of any such manager or administrator, as such, by
the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise.

 

(b) Notwithstanding anything in this Agreement or any other Transaction Document
to the contrary, no Conduit Lender shall have any obligation to pay any amount
required to be paid by it hereunder or thereunder in excess of any amount
available to such Conduit Lender after paying or making provision for the
payment of its Commercial Paper Notes. All payment obligations of each Conduit
Lender hereunder are contingent upon the availability of funds in excess of the
amounts necessary to pay Commercial Paper Notes; and each of the Borrower, the
Servicer, the Backup Servicer, the Collateral Custodian, the Deal Agent and the
other Secured Parties agrees that they shall not have a claim under Section
101(5) of the Bankruptcy Code if and to the extent that any such payment
obligation exceeds the amount available to any Conduit Lender to pay such
amounts after paying or making provision for the payment of its Commercial Paper
Notes.

 

(c) The provisions of this Section 12.11 shall survive the termination of this
Agreement.

 

Section 12.12. Protection of Security Interest; Appointment of Deal Agent as
Attorney-in-Fact.

 

(a) The Borrower shall, or shall cause the Servicer to, cause this Agreement,
all amendments hereto and/or all financing statements and continuation
statements and any other necessary documents covering the right, title and
interest of the Deal Agent, as agent for the Secured Parties, and of the Secured
Parties to the Collateral to be promptly recorded, registered and filed, and at
all time to be kept recorded, registered and filed, all in such manner and in
such places as may be required by law fully to preserve and protect the right,
title and interest of the Deal Agent, as agent for the Secured Parties,
hereunder to all property comprising the Collateral. The Borrower shall deliver
or, shall cause the Servicer to deliver, to the Deal Agent file-stamped copies
of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recording, registration or
filing. The Borrower and the Servicer shall cooperate fully in connection with
the obligations set forth above and will execute any and all documents
reasonably required to fulfill the intent of this Section 12.12.

 

(b) The Borrower agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents, and take all actions, that
may reasonably be

 

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necessary or desirable, or that the Deal Agent may reasonably request, to
perfect, protect or more fully evidence the security interest Granted to the
Deal Agent, as agent for the Secured Parties, in the Collateral, or to enable
the Deal Agent or the other Secured Parties to exercise and enforce their rights
and remedies hereunder.

 

(c) If the Borrower or the Servicer fails to perform any of its obligations
hereunder after five Business Days’ notice from the Deal Agent or any other
Secured Party may (but shall not be required to) perform, or cause performance
of, such obligation; and the Deal Agent’s or Secured Party’s reasonable costs
and expenses incurred in connection therewith shall be payable by the Borrower
(if the Servicer that fails to so perform is the Borrower or an Affiliate
thereof) as provided in Article X, as applicable. The Borrower irrevocably
authorizes the Deal Agent and appoints the Deal Agent as its attorney-in-fact to
act on behalf of the Borrower, (i) to execute on behalf of the Borrower as
debtor and to file financing statements necessary or desirable in the Deal
Agent’s sole discretion to perfect and to maintain the perfection and priority
of the interest of the Secured Parties in the Collateral and (ii) to file a
carbon, photographic or other reproduction of this Agreement or any financing
statement with respect to the Collateral as a financing statement in such
offices as the Deal Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the interests of the
Lenders in the Collateral. This appointment is coupled with an interest and is
irrevocable.

 

(d) Without limiting the generality of the foregoing, Borrower will, on or prior
to August 15 of each year unless the Collection Date shall have occurred,
deliver or cause to be delivered to the Deal Agent an Opinion of the Counsel for
Borrower, in form and substance reasonably satisfactory to the Deal Agent,
confirming and updating the opinion delivered pursuant to Section 3.1 with
respect to perfection and otherwise to the effect that the Collateral hereunder
continues to be subject to a perfected security interest in favor of the Deal
Agent, as agent for the Secured Parties, subject to no other Liens of record
except as provided herein or otherwise permitted hereunder, which opinion may
contain usual and customary assumptions, limitations and exceptions.

 

Section 12.13. Confidentiality.

 

(a) Each of the Deal Agent, each other Secured Party and the Borrower shall
maintain and shall cause each of its employees and officers to maintain the
confidentiality of this Agreement and the other confidential proprietary
information with respect to the other parties hereto and their respective
businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except that
each such party and its officers and employees may (i) disclose such information
to its external accountants, investigators, auditors, attorneys, investors,
potential investors or other agents engaged by such party in connection with any
due diligence or comparable activities with respect to the transactions and
Collateral contemplated herein and the agents of such Persons, as required to be
publicly filed with the Securities and Exchange Commission, or as required by
Applicable Law, (ii) disclose the existence of this Agreement, but not the
financial terms thereof and (iii) disclose the Agreement and such information in
any suit, action, proceeding or investigation (whether in law or in equity or
pursuant to arbitration) involving any of the Transaction Documents or any
Hedging Agreement for the purpose of defending itself, reducing itself, reducing
its liability, or

 

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protecting or exercising any of its claims, rights, remedies, or interests under
or in connection with any of the Transaction Documents or any Hedging Agreement.

 

(b) Anything herein to the contrary notwithstanding, the Borrower hereby
consents to the disclosure of any nonpublic information with respect to it for
use in connection with the transactions contemplated herein and in the
Transaction Documents (i) to the Deal Agent or the other Secured Parties by each
other, (ii) by the Deal Agent or the other Secured Parties to any prospective or
actual Eligible Assignee or participant of any of them or (iii) by the Deal
Agent or the Lenders to any Rating Agency, commercial paper dealer or provider
of a surety, guaranty or credit or liquidity enhancement to a Lender and to any
officers, directors, employees, outside accountants and attorneys of any of the
foregoing, provided each such Person is informed of the confidential nature of
such information and agree to be bound hereby. In addition, the Lenders, the
Deal Agent and each Hedge Counterparty may disclose any such nonpublic
information pursuant to any law, rule, regulation, direction, request or order
of any judicial, administrative or regulatory authority or proceedings.

 

(c) The Borrower and the Servicer each agrees that it shall not (and shall not
permit any of its Affiliates to) issue any news release or make any public
announcement pertaining to the transactions contemplated by this Agreement and
the Transaction Documents without the prior written consent of the Deal Agent
(which consent shall not be unreasonably withheld) unless such news release or
public announcement is required by law, in which case the Borrower or the
Servicer shall consult with the Deal Agent prior to the issuance of such news
release or public announcement. The Borrower and the Servicer each may, however,
disclose the general terms of the transactions contemplated by this Agreement
and the Transaction Documents to trade creditors, suppliers and other similarly
situated Persons so long as such disclosure is not in the form of a news release
or public announcement.

 

Section 12.14. Third Party Beneficiaries.

 

Except as otherwise specifically provided herein, the parties hereto hereby
manifest their intent that no third party, other than the Hedge Counterparties,
shall be deemed a third party beneficiary of this Agreement, and specifically
that the Obligors are not third party beneficiaries of this Agreement.

 

Section 12.15. Execution in Counterparts; Severability; Integration.

 

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby. This Agreement contains the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings other than any fee letter
delivered to the Deal Agent and the Lenders.

 

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Section 12.16. Waiver of Setoff.

 

Each of the parties hereto (other than each Conduit Lender) hereby waives any
right of setoff it may have or which it may be entitled under this Agreement
from time to time against such Conduit Lender or its assets.

 

Section 12.17. Assignments by the Lenders;

 

(a) With the prior written consent of the Borrower (which consent shall not be
unreasonably withheld), each Lender may at any time assign, or grant a security
interest or sell a participation interest in, any Advance (or portion thereof)
to any Person; provided, that, (i) no such consent of the Borrower shall be
required following the occurrence of a Termination Event, (ii) in the case of an
assignment of the Structured Note with respect to such Lender, the assignee
(other than any assignee described in the following provision) executes and
delivers to the Servicer and the Deal Agent a fully-executed Assignment and
Acceptance substantially in the form of Exhibit D hereto and a Transferee Letter
substantially in the form of Exhibit V hereto, (iii) any Institutional Lender
shall not need prior consent to at any time assign, or grant a security interest
or sell a participation interest in, any Advance (or portion thereof) to an
Affiliate of its related Lender Agent and (iv) any Conduit Lender shall not need
prior consent to at any time assign, or grant a security interest or sell a
participation interest in, any Advance (or portion thereof) to a Liquidity Bank
or an Affiliate of its related Lender Agent. The Swingline Lender may at any
time assign, or grant a security interest or sell a participation in, any
Swingline Advance (or any portion thereof) to any Person; provided, that, in the
case of an assignment of the Swingline Note, the assignee executes and delivers
to the Servicer and the Deal Agent a fully-executed Assignment and Acceptance
substantially in the form of Exhibit D hereto and a Transferee Letter
substantially in the form of Exhibit V hereto. The parties to any such
assignment, grant or sale of a participation interest by a Lender shall execute
and deliver to the Deal Agent, for its acceptance and recording in its books and
records, such agreement or document as may be satisfactory to such parties and
the Deal Agent. The Borrower shall not assign or delegate, or grant any interest
in, or permit any Lien to exist upon, any of the Borrower’s rights, obligations
or duties under this Agreement without the prior written consent of the Deal
Agent and each Hedge Counterparty.

 

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Section 12.18. Heading and Exhibits.

 

The headings of the various Articles and Sections herein are for purposes of
references only and shall not otherwise affect the meaning or interpretation of
any provision hereof. The schedules and exhibits attached hereto and referred to
herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.

 

Section 12.19. Sharing of Payments on Transferred Loans Subject to the Retained
Interest Provisions.

 

(a) With respect to any Transferred Loan (including, without limitation, any
Revolving Loan) subject to the Retained Interest provisions of this Agreement,
the Borrower will own only the principal portion of such Transferred Loans
outstanding as of the applicable Cut-off Date. Principal Collections received by
the Servicer on any such Transferred Loan will be allocated first to the portion
of such Transferred Loan owned by the Borrower, until the principal amount of
such portion is reduced to zero, and then to the portion not owned by the
Borrower; provided, however, (i) if a payment with respect to such Transferred
Loan is Delinquent beyond any applicable grace period or (ii) an Allocation
Adjustment Event occurs, then Principal Collections received on (x) the
applicable Transferred Loan (in the case of clause (i) above) or (y) all the
Transferred Loans subject to the Retained Interest provisions of this Agreement
(in the case of clause (ii) above) will be allocated between the portion owned
by the Borrower and the portion not owned by the Borrower, pro rata based upon
the outstanding principal amount of each such portion.

 

(b) With respect to any Transferred Loan (including, without limitation, any
Revolving Loan) subject to the Retained Interest provisions of this Agreement,
Interest Collections received by the Servicer on those Transferred Loans will be
allocated between the portion not owned by the Borrower and the portion owned by
the Borrower on a pro rata basis according to the outstanding principal amount
of each such portion.

 

(c) Notwithstanding the foregoing or anything to the contrary contained herein
or any Transaction Document, any payments made by any Hedge Counterparty
pursuant to the terms of the Hedge Agreements shall be solely for the benefit of
the Borrower, subject to the lien of the Deal Agent and the other Secured
Parties, and shall not be subject to the pro rata sharing provisions of Section
12.19(a). In furtherance of the foregoing clause of this paragraph, the
Originator hereby releases any right, title, or interest it may have in or to
any payment made or to be made at any time by any Hedge Counterparty pursuant to
the terms of any Hedge Agreement.

 

128

--------------------------------------------------------------------------------

Section 12.20. Non-Confidentiality of Tax Treatment.

 

All parties hereto agree that each of them and each of their employees,
representatives, and other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transaction
and all materials of any kind (including, without limitation, opinions or other
tax analyses) that are provided to any of them relating to such tax treatment
and tax structure. “Tax treatment” and “tax structure” shall have the same
meaning as such terms have for purposes of Treasury Regulation Section 1.6011-4;
provided, however, that with respect to any document or similar item that in
either case contains information concerning the tax treatment or tax structure
of the transaction as well as other information, the provisions of this Section
12.20 shall only apply to such portions of the document or similar item that
relate to the tax treatment or tax structure of the transactions contemplated
hereby.

 

[The remainder of this page is intentionally left blank.]

 

129

--------------------------------------------------------------------------------

[EXECUTION COPY]

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto, duly authorized, as of the date first above
written.

 

ACS FUNDING TRUST I, as the Borrower

By:

 

/s/ Malon Wilkus

   

Name: Malon Wilkus

Title: Beneficiary Trustee

AMERICAN CAPITAL STRATEGIES, LTD.,

as the Servicer

By:

 

/s/ John Erickson

   

Name: John Erickson

Title: Executive Vice President, Chief Financial
     Officer and Secretary

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

--------------------------------------------------------------------------------

Commitment: $350,000,000; provided, however, that the sum of the Advances
outstanding under the Structured Notes and Swingline Advances outstanding under
the Swingline Note shall not, in the aggregate, exceed the Facility Amount.    
 

VARIABLE FUNDING CAPITAL CORPORATION, as a Conduit Lender

     

 

By:

 

 

Wachovia Capital Markets, LLC (f/k/a Wachovia Securities, Inc.) as attorney-in-
fact

        By:  

/s/ Bryan P. McGrath

           

Name: Bryan P. McGrath

Title: Vice President

       

WACHOVIA CAPITAL MARKETS, LLC,

as the Deal Agent

       

By:

 

/s/ Paul A. Burkhart

           

Name: Paul A. Burkhart

Title: Vice President

 

2nd Amended and Restated Loan Funding and

Servicing Agreement

 

--------------------------------------------------------------------------------

Commitment: $250,000,000; provided, however, that the sum of the Advances
outstanding under the Structured Notes and Swingline Advances outstanding under
the Swingline Note shall not, in the aggregate, exceed the Facility Amount.    
 

JPMORGAN CHASE BANK, as an Institutional Lender

     

 

By:

 

 

/s/ Christine Herrick

         

Name: Christine Herrick

Title: Vice President

Commitment: $50,000,000; provided, however, the sum of the Advances outstanding
under the Structured Notes and Swingline Advances outstanding shall not exceed
the Facility Amount.      

JPMORGAN CHASE BANK, as the Swingline Lender

     

 

By:

 

 

/s/ Christine Herrick

         

Name: Christine Herrick

Title: Vice President

 

2nd Amended and Restated Loan Funding and

Servicing Agreement

 

--------------------------------------------------------------------------------

WELLS FARGO BANK, NATIONAL

ASSOCIATION, as the Backup Servicer and

as the Collateral Custodian

By:

 

/s/ Edna Barber

   

Name:

 

Edna Barber

   

Title:

 

Assistant Vice President

 

2nd Amended and Restated Loan Funding and

Servicing Agreement

 

--------------------------------------------------------------------------------

Annex A

 

ACS FUNDING TRUST I

 

c/o American Capital Strategies, Ltd.

2 Bethesda Metro Center, 14th Floor

Bethesda, Maryland 20814

Attention: Compliance Officer

Facsimile No.: (301) 654-6714

Confirmation No.: (301) 951-6122

 

AMERICAN CAPITAL STRATEGIES, LTD.

 

2 Bethesda Metro Center, 14th Floor

Bethesda, Maryland 20814

Attention: Compliance Officer

Facsimile No.: (301) 654-6714

Confirmation No.: (301) 951-6122

 

JPMORGAN CHASE BANK

 

JPMorgan Chase Bank

Corporate Banking

270 Park Avenue 4th floor

New York, NY 10017

Attention: Christine Herrick

Facsimile No.: 212-270-1511

Confirmation No.: 212-270-9747

 

JPMorgan Chase Bank

IB ABL Portfolio Management Group

270 Park Avenue 20th floor

Attention: Jason Chang

Facsimile No.: 212-270-7449

Confirmation No.: 212-270-1657

 

JPMorgan Chase Bank

Loan and Agency Services

1111 Fannin, 10th floor

Houston, TX 77002

Attention: Claudine Garcia

Facsimile No.: 713-750-2223

Confirmation No.: 713-750-2531

 

VARIABLE FUNDING CAPITAL CORPORATION

 

c/o Wachovia Capital Markets, LLC

One Wachovia Center, Mail Code: NC0600

Charlotte, North Carolina 28288

 

--------------------------------------------------------------------------------

Attention: Raj Shah

Facsimile No.: (704) 383-7979

Confirmation No.: (704) 374-6230

 

WACHOVIA CAPITAL MARKETS, LLC

 

One Wachovia Center, Mail Code: NC0600

Charlotte, North Carolina 28288

Attention: Raj Shah

Facsimile No.:(704) 383-7979

Confirmation No.:(704) 374-6230

 

WACHOVIA BANK, NATIONAL ASSOCIATION

 

One Wachovia Center, DC-8

Charlotte, North Carolina 28202-0600

Attention: Bruce M. Young

Facsimile No.: (704) 383-0575

Confirmation No.: (704) 383-8778

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

Wells Fargo Bank, National Association

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, Minnesota 55479

Attention: Corporate Trust Services Asset-Backed Administration

Facsimile No.:(612) 667-3539

Confirmation No.:(612) 667-8058

 

- 2 -

--------------------------------------------------------------------------------

EXHIBITS AND SCHEDULES TO SECOND AMENDED AND

RESTATED LOAN FUNDING AND SERVICING AGREEMENT

 

Dated as of August 10, 2004

 

EXHIBIT A-1

   Borrower Notice (Funding Request)

EXHIBIT A-2

   Borrower Notice (Swingline Funding Request)

EXHIBIT A-3

   Borrower Notice (Reduction of Advances Outstanding and Reduction of Facility
Amount)

EXHIBIT B-1

   Form of Structured Note

EXHIBIT B-2

   Form of Swingline Note

EXHIBIT C

   Form of Trust Agreement

EXHIBIT D

   Form of Assignment and Acceptance

EXHIBIT E

   Form of Monthly Report

EXHIBIT F

   Form of Servicer’s Certificate

EXHIBIT G

   Credit and Collection Policy

EXHIBIT H-1

   Form of Hedging Agreement (Wachovia) (including Schedule and Confirmation)

EXHIBIT H-2

   Form of Hedging Agreement (JPMorgan Chase Bank) (including Schedule and
Confirmation)

EXHIBIT I

   Form of Certificate of Borrower’s Counsel

EXHIBIT J

   Form of Trust Receipt and Initial Certification

EXHIBIT K

   Form of Trust Receipt and Final Certification

EXHIBIT L

   Form of Request for Release of Loan Documents and Receipt

EXHIBIT M-1

   Form of Assignment of Mortgage

EXHIBIT M-2

   Assignment of Second Mortgage and Security Agreement

EXHIBIT N

   Form of Reinvestment Certification

EXHIBIT O-1

   Officer’s Certificate as to Solvency from Originator

EXHIBIT O-2

   Officer’s Certificate as to Solvency from Borrower

EXHIBIT P-1

   Officer’s Closing Certificate from Originator

EXHIBIT P-2

   Officer’s Closing Certificate from Borrower

EXHIBIT Q-1

   Power of Attorney from Servicer

EXHIBIT Q-2

   Power of Attorney from Borrower

EXHIBIT R

   [Reserved]

EXHIBIT S

   [Reserved]

EXHIBIT T

   Form of Agent and Intercreditor Provisions for Agented Notes

EXHIBIT U

   Form of Intercreditor and Subordination Agreement

EXHIBIT V

   Form of Transferee Letter

EXHIBIT W

   Form of Joinder Supplement

SCHEDULE I

   Schedule of Documents

SCHEDULE II

   [Reserved]

SCHEDULE III

   [Reserved]

SCHEDULE IV

   Loan List

SCHEDULE V

   Location of Loan Files

 

--------------------------------------------------------------------------------

EXHIBIT A-1

 

FORM OF BORROWER NOTICE

(Funding Request)

 

[                    ] [        ], [            ]

 

ACS FUNDING TRUST I

 

Wachovia Capital Markets, LLC,

as the Deal Agent

One Wachovia Center, Mail Code NC0600

Charlotte, North Carolina 28288

  

JPMorgan Chase Bank

Loan and Agency Services

1111 Fannin, 10th floor

Houston, TX 77002

Facsimile No.:  

(704) 383-6036

(704) 715-0067

  

Attention: Claudine Garcia

Facsimile No.: 713-750-2223

via e-mail:

 

cp.conduits@wachovia.com scp.mmloans@wachovia.com

  

Confirmation No.: 713-750-2531

JPMorgan Chase Bank

Corporate Banking

270 Park Avenue 4th floor

New York, NY 10017

Attention: Christine Herrick

Facsimile No.: 212-270-1511

Confirmation No.: 212-270-9747

  

JPMorgan Chase Bank

Collateral Agent Services

270 Park Avenue 20th floor

Attention: Jason Chang

Facsimile No.: 212-270-7449

Confirmation No.: 212-270-1657

Wells Fargo Bank, National Association

as the Backup Servicer

MAC N9311-161

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

    

 

  Re: Second Amended and Restated Loan Funding and Servicing Agreement dated as
of August 10, 2004

 

Ladies and Gentlemen:

 

This Borrower Notice is delivered to you under Section 2.3 of that certain
Second Amended and Restated Loan Funding and Servicing Agreement, dated as of
August 10, 2004 (as amended, modified, waived, supplemented or restated from
time to time, the “Agreement”), by and among ACS Funding Trust I, as the
borrower (the “Borrower”), American Capital Strategies, Ltd., as the servicer
(the “Servicer”), the Conduit Lenders and Institutional Lenders from time to
time party thereto, the Lender Agents from time to time party thereto, Wachovia
Capital Markets, LLC, as the deal agent, JPMorgan Chase Bank, as the swingline
lender, and Wells Fargo Bank,

 

A-1-1

--------------------------------------------------------------------------------

National Association, as the backup servicer and as the collateral custodian.
All capitalized undefined terms used herein have the meaning assigned thereto in
the Agreement.

 

Each of the undersigned, each being a duly elected officer of the Borrower and
the Servicer, respectively, holding the office set forth below such officer’s
name, hereby certifies as follows:

 

1. The Borrower hereby requests an Advance in the principal amount of
$                    .

 

2. Check one below:

 

¨ The proceeds of such Advance should be delivered to the Swingline Lender.

 

¨ The proceeds of such Advance should be delivered to the Servicer

 

3. The Borrower hereby requests that such Advance be made on the following date:
                    .

 

4. The amount of Advances Outstanding as of the date specified in Item 3 above
will be $                    , after giving effect to the Advance request
hereby.

 

5. Attached to this Borrower Notice is a true, correct and complete calculation
of the Borrowing Base and all components thereof as of the date specified in
Item 3 above and after giving effect to the Advance requested hereby.

 

6. Attached to this Borrower Notice is a true, correct and complete Loan List,
reflecting all Loans which will become part of the Collateral on the date
hereof, each Loan reflected thereon being an Eligible Loan.

 

7. All of the conditions precedent applicable to the Advance requested herein as
set forth in the Agreement have been satisfied as of the date hereof and will
remain satisfied to the date of such Advance, including those set forth in
Section 3.2 of the Agreement.

 

[The Remainder Of This Page Is Intentionally Left Blank]

 

A-1-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed the Borrower Notice this
[            ] day of [                    ], [            ].

 

ACS FUNDING TRUST I
as the Borrower

By: American Capital Strategies, Ltd., as Servicer

By:

   

Name:

   

Title:

   

 

AMERICAN CAPITAL STRATEGIES, LTD.,
as the Servicer

By:

   

Name:

   

Title:

   

 

[attach Borrowing Base Certificate]

 

A-1-3

--------------------------------------------------------------------------------

EXHIBIT A-2

 

FORM OF BORROWER NOTICE

(Swingline Funding Request)

 

[                    ] [        ], [            ]

 

ACS FUNDING TRUST I

 

Wachovia Capital Markets, LLC,

as the Deal Agent

One Wachovia Center, Mail Code NC0600

Charlotte, North Carolina 28288

  

JPMorgan Chase Bank

Loan and Agency Services

1111 Fannin, 10th floor

Houston, TX 77002

Facsimile No.:  

(704) 715-0067

(704) 383-6036

  

Attention: Claudine Garcia

Facsimile No.: 713-750-2223

via e-mail:   cp.conduits@wachovia.com scp.mmloans@wachovia.com    Confirmation
No.: 713-750-2531

JPMorgan Chase Bank

Corporate Banking

270 Park Avenue 4th floor

New York, NY 10017

Attention: Christine Herrick

Facsimile No.: 212-270-1511

Confirmation No.: 212-270-9747

  

JPMorgan Chase Bank

Collateral Agent Services

270 Park Avenue 20th floor

Attention: Jason Chang

Facsimile No.: 212-270-7449

Confirmation No.: 212-270-1657

Wells Fargo Bank, National Association

as the Backup Servicer

MAC N9311-161

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

    

 

  Re: Second Amended and Restated Loan Funding and Servicing Agreement dated as
of August 10, 2004

 

Ladies and Gentlemen:

 

This Swingline Funding Request is delivered to you under Section 2.2 of that
certain Second Amended and Restated Loan Funding and Servicing Agreement, dated
as of August 10, 2004 (as amended, modified, waived, supplemented or restated
from time to time, the “Agreement”), by and among ACS Funding Trust I, as the
borrower (the “Borrower”), American Capital Strategies, Ltd., as the servicer
(the “Servicer”), the Conduit Lenders and Institutional Lenders from time to

 

A-2-1

--------------------------------------------------------------------------------

time party thereto, the Lender Agents from time to time party thereto, Wachovia
Capital Markets, LLC, as the deal agent, JPMorgan Chase Bank, as the swingline
lender, and Wells Fargo Bank, National Association, as the backup servicer and
as the collateral custodian. All capitalized undefined terms used herein have
the meaning assigned thereto in the Agreement.

 

Each of the undersigned, each being a duly elected officer of the Borrower and
the Servicer, respectively, holding the office set forth below such officer’s
name, hereby certifies as follows:

 

1. The Borrower hereby requests a Swingline Advance in the principal amount of
$                    .

 

2. The Borrower hereby requests that such Swingline Advance be made on the
following date:                     .

 

3. Attached to this Swingline Funding Request is a true, correct and complete
calculation of the Borrowing Base and all components thereof as of the date
specified in Item 2 above and after giving effect to the Advance requested
hereby.

 

4. Attached to this Swingline Funding Request is a true, correct and complete
Loan List, reflecting all Loans which will become part of the Collateral on the
date hereof, each Loan reflected thereon being an Eligible Loan.

 

5. All of the conditions applicable to the Swingline Advance requested herein as
set forth in the Agreement have been satisfied as of the date hereof and will
remain satisfied to the date of such Swingline Advance, including those set
forth in Section 3.2 of the Agreement.

 

[The Remainder Of This Page Is Intentionally Left Blank]

 

A-2-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed the Borrower Notice this
[            ] day of [                    ], [            ].

 

ACS FUNDING TRUST I
as the Borrower

By: American Capital Strategies, Ltd., as Servicer

By:

   

Name:

   

Title:

   

 

 

AMERICAN CAPITAL STRATEGIES, LTD.,
as the Servicer

By:

   

Name:

   

Title:

   

 

Acknowledged and accepted

this          day of                     ,             

JPMORGAN CHASE BANK,

as the Swingline Lender

By:

   

Name:

   

Title:

   

 

[attach Borrowing Base Certificate]

 

A-2-3

--------------------------------------------------------------------------------

EXHIBIT A-3

 

FORM OF BORROWER NOTICE

(Reduction of Advances Outstanding and Reduction of Facility Amount)

 

[                    ] [        ], 20[        ]

 

ACS FUNDING TRUST I

 

Wachovia Capital Markets, LLC,

as the Deal Agent

One Wachovia Center, Mail Code NC0600

Charlotte, North Carolina 28288

Facsimile No.:  

(704) 715-0067

(704) 383-6036

via e-mail:  

cp.conduits@wachovia.com

scp.mmloans@wachovia.com

 

Wells Fargo Bank, National Association,

as the Backup Servicer

MAC N9311-161

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

  Re: Second Amended and Restated Loan Funding and Servicing Agreement dated as
of August 10, 2004

 

Ladies and Gentlemen:

 

This Borrower Notice is delivered to you under Section 2.4 of that certain
Second Amended and Restated Loan Funding and Servicing Agreement, dated as of
August 10, 2004 (as amended, modified, waived, supplemented or restated from
time to time, the “Agreement”), by and among ACS Funding Trust I, as the
borrower (the “Borrower”), American Capital Strategies, Ltd., as the servicer
(the “Servicer”), the Conduit Lenders and Institutional Lenders from time to
time party thereto, the Lender Agents from time to time party thereto, Wachovia
Capital Markets, LLC, as the deal agent, JPMorgan Chase Bank, as the swingline
lender, and Wells Fargo Bank, National Association, as the backup servicer and
as the collateral custodian. All capitalized undefined terms used herein have
the meaning assigned thereto in the Agreement.

 

Each of the undersigned, each being a duly elected officer of the Borrower and
the Servicer, respectively, holding the office set forth below such officer’s
name, hereby certifies as follows:

 

1. Pursuant to Section 2.4 of the Agreement, the Servicer on behalf of the
Borrower desires to reduce the Advances Outstanding (an “Advance Reduction”) by
the amount of $                    .

 

A-3-1

--------------------------------------------------------------------------------

(A) VFCC’s portion (reduction is pro rata based on Advances Outstanding) of such
Advance Reduction is $                    .

 

(B) JPMorgan Chase Bank’s portion (reduction is pro rata based on Advances
Outstanding) of such Advance Reduction is $                    .

 

2. Pursuant to Section 2.4 of the Agreement, the Servicer on behalf of the
Borrower desires to reduce the Facility Amount (a “Facility Reduction”) by the
amount of $                    .

 

3. The Servicer on behalf of the Borrower hereby requests that such Advance
Reduction or Facility Reduction, as applicable, be made on the following date:
                    .

 

4. The Advances Outstanding as of the date specified in Item 3 above will be
$                    , after giving effect to the reduction requested hereby.

 

5. Attached to this Borrower Notice is a true, correct and complete calculation
of the Borrowing Base and all components thereof as of the date specified in
Item 3 above and after giving effect to the reduction requested hereby.

 

6. All of the conditions precedent applicable to the Advance Reduction or
Facility Reduction requested herein as set forth in the Agreement have been
satisfied as of the date hereof and will remain satisfied to the date of such
Advance, including those set forth in Section 2.4 of the Agreement.

 

[The Remainder Of This Page Is Intentionally Left Blank]

 

A-3-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed the Borrower Notice this
[        ] day of [                    ], [        ].

 

ACS FUNDING TRUST I
as the Borrower

By: American Capital Strategies, Ltd., as the Servicer

By:

   

Name:

   

Title:

   

 

AMERICAN CAPITAL STRATEGIES, LTD.,
as the Servicer

By:

   

Name:

   

Title:

   

 

[attach Borrowing Base Certificate]

 

A-3-3

--------------------------------------------------------------------------------

EXHIBIT B-1

 

FORM OF STRUCTURED NOTE

 

$[            ],000,000

  [                    ] [        ], [            ]

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE
SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT
THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (2) IN CERTIFICATED FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN
THE MEANING OF RULE 501 (a)(1)–(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING
FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN
EACH CASE, SUBJECT TO THE RECEIPT BY THE SERVICER AND THE DEAL AGENT OF A
TRANSFERREE LETTER AND SUCH OTHER EVIDENCE ACCEPTABLE TO THE SERVICER AND THE
DEAL AGENT THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH
ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION,
(3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION
AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS, OR (5) PURSUANT TO A VALID REGISTRATION STATEMENT. THE PURCHASE
OF THIS NOTE WILL BE DEEMED A REPRESENTATION BY THE ACQUIRER THAT EITHER: (I) IT
IS NOT, AND IS NOT PURCHASING THIS NOTE FOR, ON BEHALF OF OR WITH THE ASSETS OF,
AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO
TITLE I OF ERISA AND/OR SECTION 4975 OF THE CODE, OR A GOVERNMENTAL PLAN (AS
DEFINED IN SECTION 3(32) OF ERISA) OR A CHURCH PLAN (AS DEFINED IN SECTION 3(33)
OF ERISA FOR WHICH NO ELECTION HAS BEEN MADE UNDER SECTION 410(d) OF THE CODE)
THAT IS SUBJECT TO ANY FEDERAL, STATE, OR LOCAL LAW THAT IS SUBSTANTIALLY
SIMILAR TO THE PROVISIONS OF

 

B-1-1

--------------------------------------------------------------------------------

SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR (II) PTCE 95–60, PTCE 96–23,
PTCE 91–38, PTCE 90–1, PTCE 84–14 OR SOME OTHER PROHIBITED TRANSACTION EXEMPTION
IS APPLICABLE TO THE PURCHASE, HOLDING AND DISPOSITION OF THIS NOTE BY THE
ACQUIRER.

 

THIS NOTE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE
PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE SECOND AMENDED
AND RESTATED LOAN FUNDING AND SERVICING AGREEMENT REFERRED TO HEREIN.

 

THE PRINCIPAL AMOUNT OF THIS NOTE WILL VARY AS ADVANCES ARE MADE AND PAID DOWN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE MAXIMUM AMOUNT SHOWN ON THE FACE THEREOF.

 

FOR VALUE RECEIVED, ACS FUNDING TRUST I, a Delaware statutory trust (the
“Borrower”), promises to pay to [LENDER AGENT] [INSTITUTIONAL LENDER] (“[LENDER
AGENT]” “[INSTITUTIONAL LENDER]”), [as the agent for [Conduit Lender] (“[Conduit
Lender]”)] or its [or Conduit Lender’s] successors or assigns, the principal sum
of [CLOSING DATE COMMITMENT AMOUNT] DOLLARS ($[            ],000,000) or, if
less, the unpaid principal amount of the aggregate loans (“Advances”) made by
[Conduit Lender] [Institutional Lender] to the Borrower pursuant to the Second
Amended and Restated Loan Funding and Servicing Agreement (as defined below), as
set forth on the attached Schedule, on the dates specified in the Second Amended
and Restated Loan Funding and Servicing Agreement, and to pay interest on the
unpaid principal amount of each Advance on each day that such unpaid principal
amount is outstanding at the applicable Interest Rate related to such Advance as
provided in the Second Amended and Restated Loan Funding and Servicing Agreement
on each Payment Date and each other dates specified in the Second Amended and
Restated Loan Funding and Servicing Agreement.

 

This Note is issued pursuant to the Second Amended and Restated Loan Funding and
Servicing Agreement, dated as of August 10, 2004 (as amended, modified, waived,
supplemented or restated from time to time, the “Second Amended and Restated
Loan Funding and Servicing Agreement”), by and among the Borrower, American
Capital Strategies, Ltd., as the servicer (the “Servicer”), the Conduit Lenders
and Institutional Lenders from time to time party thereto, the Lender Agents
from time to time party thereto, Wachovia Capital Markets, LLC, as the deal
agent, JPMorgan Chase Bank, as the swingline lender, and Wells Fargo Bank,
National Association, as the backup servicer and as the collateral custodian.
Capitalized terms used but not defined in this Note are used with the meanings
ascribed to them in the Second Amended and Restated Loan Funding and Servicing
Agreement.

 

Notwithstanding any other provisions contained in this Note, if at any time the
rate of interest payable by the Borrower under this Note, when combined with any
and all other charges provided for in this Note, in the Second Amended and
Restated Loan Funding and Servicing Agreement or in any other document (to the
extent such other charges would constitute interest for the purpose of any
applicable law limiting interest that may be charged on this Note), exceeds the
highest rate of interest permissible under applicable law (the “Maximum Lawful
Rate”), then

 

B-1-2

--------------------------------------------------------------------------------

so long as the Maximum Lawful Rate would be exceeded the rate of interest under
this Note shall be equal to the Maximum Lawful Rate. If at any time thereafter
the rate of interest payable under this Note is less than the Maximum Lawful
Rate, the Borrower shall continue to pay interest under this Note at the Maximum
Lawful Rate until such time as the total interest paid by the Borrower is equal
to the total interest that would have been paid had applicable law not limited
the interest rate payable under this Note. In no event shall the total interest
received by [Conduit Lender] [Institutional Lender] under this Note exceed the
amount which [Conduit Lender] [Institutional Lender] could lawfully have
received had the interest due under this Note been calculated since the date of
this Note at the Maximum Lawful Rate.

 

Payments of the principal of, and interest on, Advances represented by this Note
shall be made by the Borrower to the holder hereof by wire transfer of
immediately available funds in the manner and at the address specified for such
purpose as provided in Article 2 of the Second Amended and Restated Loan Funding
and Servicing Agreement, or in such manner or at such other address as the
holder of this Note shall have specified in writing to the Borrower for such
purpose, without the presentation or surrender of this Note or the making of any
notation on this Note.

 

If any payment under this Note falls due on a day that is not a Business Day,
then such due date shall be extended to the next succeeding Business Day and
interest shall be payable on any principal so extended at the applicable
Interest Rate.

 

If all or a portion of (i) the principal amount hereof or (ii) any interest
payable thereon or (iii) any other amounts payable hereunder shall not be paid
when due (whether at maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum that is equal to the Base Rate
plus 1.0%, in each case from the date of such non-payment to (but excluding) the
date such amount is paid in full.

 

Portions or all of the principal amount of the Note shall become due and payable
at the time or times set forth in the Second Amended and Restated Loan Funding
and Servicing Agreement. Any portion or all of the principal amount of this Note
may be prepaid, together with interest thereon (and as set forth in the Second
Amended and Restated Loan Funding and Servicing Agreement, certain costs and
expenses of [Conduit Lender] [Institutional Lender]) at the time and in the
manner set forth in, but subject to the provisions of, the Second Amended and
Restated Loan Funding and Servicing Agreement.

 

Except as provided in the Second Amended and Restated Loan Funding and Servicing
Agreement, the Borrower expressly waives presentment, demand, diligence, protest
and all notices of any kind whatsoever with respect to this Note.

 

All amounts evidenced by this Note, [Conduit Lender]’s [Institutional Lender]’s
making such Advance and all payments and prepayments of the principal hereof and
the respective dates and maturity dates thereof shall be endorsed by the [Lender
Agent] [Institutional Lender] on the schedule attached hereto and made a part
hereof or on a continuation thereof which shall be attached hereto and made a
part hereof, or otherwise recorded by the [Lender Agent] [Institutional Lender]
in its internal records; provided, however, that the failure of the [Lender
Agent] [Institutional Lender] to make such a notation shall not in any way limit
or otherwise

 

B-1-3

--------------------------------------------------------------------------------

affect the obligations of the Borrower under this Note as provided in the Second
Amended and Restated Loan Funding and Servicing Agreement.

 

The holder hereof may sell, assign, transfer, negotiate, grant participations in
or otherwise dispose of all or any portion of any Advances made by [Conduit
Lender] [Institutional Lender] and represented by this Note and the indebtedness
evidenced by this Note.

 

This Note is secured by the security interests granted pursuant to Section 8.1
of the Second Amended and Restated Loan Funding and Servicing Agreement. The
holder of this Note[, as agent for [Conduit Lender],] is entitled to the
benefits of the Second Amended and Restated Loan Funding and Servicing Agreement
and may enforce the agreements of the Borrower contained in the Second Amended
and Restated Loan Funding and Servicing Agreement and exercise the remedies
provided for by, or otherwise available in respect of, the Second Amended and
Restated Loan Funding and Servicing Agreement, all in accordance with, and
subject to the restrictions contained in, the terms of the Second Amended and
Restated Loan Funding and Servicing Agreement. If a Termination Event shall
occur and be continuing, the unpaid balance of the principal of all Advances,
together with accrued interest thereon, shall be declared, and become due and
payable in the manner and with the effect provided in the Second Amended and
Restated Loan Funding and Servicing Agreement.

 

This Note is one of the “Structured Notes” referred to in the Second Amended and
Restated Loan Funding and Servicing Agreement. This Note shall be construed in
accordance with and governed by the laws of the State of New York.

 

[Remainder of Page Intentionally Left Blank]

 

B-1-4

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this Note as on the date first
written above.

 

ACS FUNDING TRUST I,

as the Borrower

By:

   

Name:

   

Title:

   

 

B-1-5

--------------------------------------------------------------------------------

SCHEDULE TO NOTE

 

Date of

Advance or

Repayment

--------------------------------------------------------------------------------

 

Principal

Amount of

Advance

--------------------------------------------------------------------------------

 

Principal

Amount of

Repayment

--------------------------------------------------------------------------------

 

Outstanding

Principal

Amount

--------------------------------------------------------------------------------

                           

 

B-1-6

--------------------------------------------------------------------------------

EXHIBIT B-2

 

FORM OF SWINGLINE NOTE

 

$50,000,000   August 10, 2004

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE
SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT
THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A “QIB“), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (2) IN CERTIFICATED FORM TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN
THE MEANING OF RULE 501 (a)(1)–(3) OR (7) UNDER THE SECURITIES ACT) PURCHASING
FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IN
EACH CASE, SUBJECT TO THE RECEIPT BY THE SERVICER AND THE DEAL AGENT OF SUCH
OTHER EVIDENCE ACCEPTABLE TO THE SERVICER AND THE DEAL AGENT THAT SUCH REOFFER,
RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF ANY STATE OF THE
UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (4) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES
ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (5) PURSUANT
TO A VALID REGISTRATION STATEMENT. THE PURCHASE OF THIS NOTE WILL BE DEEMED A
REPRESENTATION BY THE ACQUIRER THAT EITHER: (I) IT IS NOT, AND IS NOT PURCHASING
THIS NOTE FOR, ON BEHALF OF OR WITH THE ASSETS OF, AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF ERISA AND/OR SECTION
4975 OF THE CODE, OR A GOVERNMENTAL PLAN (AS DEFINED IN SECTION 3(32) OF ERISA)
OR A CHURCH PLAN (AS DEFINED IN SECTION 3(33) OF ERISA FOR WHICH NO ELECTION HAS
BEEN MADE UNDER SECTION 410(d) OF THE CODE) THAT IS SUBJECT TO ANY FEDERAL,
STATE, OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE OR (II) PTCE 95–60, PTCE 96–23, PTCE
91–38, PTCE 90–1, PTCE 84–14 OR SOME OTHER PROHIBITED TRANSACTION EXEMPTION IS
APPLICABLE TO THE PURCHASE, HOLDING AND DISPOSITION OF THIS NOTE BY THE
ACQUIRER.

 

B-2-1

--------------------------------------------------------------------------------

THIS NOTE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE
PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE SECOND AMENDED
AND RESTATED LOAN FUNDING AND SERVICING AGREEMENT REFERRED TO HEREIN.

 

THE PRINCIPAL AMOUNT OF THIS NOTE WILL VARY AS ADVANCES ARE MADE AND PAID DOWN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE MAXIMUM AMOUNT SHOWN ON THE FACE THEREOF.

 

FOR VALUE RECEIVED, ACS FUNDING TRUST I, a Delaware statutory trust (the
“Borrower”), promises to pay to JPMORGAN CHASE BANK, a New York banking
corporation, as the swingline lender (the “Swingline Lender”), or its successors
and assigns, the principal sum of FIFTY MILLION DOLLARS ($50,000,000) or, if
less, the unpaid principal amount of the aggregate swingline loans (“Swingline
Advances”) made by the Swingline Lender to the Borrower pursuant to the Second
Amended and Restated Loan Funding and Servicing Agreement (as defined below), as
set forth on the attached Schedule, on the dates specified in Section 2.7 of the
Second Amended and Restated Loan Funding and Servicing Agreement, and to pay
interest on the unpaid principal amount of each Swingline Advance on each day
that such unpaid principal amount is outstanding at the applicable Interest Rate
related to such Swingline Advance as provided in the Second Amended and Restated
Loan Funding and Servicing Agreement on each Payment Date and each other dates
specified in the Second Amended and Restated Loan Funding and Servicing
Agreement.

 

This Note is issued pursuant to the Second Amended and Restated Loan Funding and
Servicing Agreement, dated as of August 10, 2004 (as amended, modified, waived,
supplemented or restated from time to time, the “Second Amended and Restated
Loan Funding and Servicing Agreement”), by and among the Borrower, American
Capital Strategies, Ltd., as the servicer (the “Servicer”), the Conduit Lenders
and Institutional Lenders from time to time party thereto, the Lender Agents
from time to time party thereto, Wachovia Capital Markets, LLC, as the deal
agent, JPMorgan Chase Bank, as the swingline lender, and Wells Fargo Bank,
National Association, as the backup servicer and as the collateral custodian.
Capitalized terms used but not defined in this Note are used with the meanings
ascribed to them in the Second Amended and Restated Loan Funding and Servicing
Agreement.

 

Notwithstanding any other provisions contained in this Note, if at any time the
rate of interest payable by the Borrower under this Note, when combined with any
and all other charges provided for in this Note, in the Second Amended and
Restated Loan Funding and Servicing Agreement or in any other document (to the
extent such other charges would constitute interest for the purpose of any
applicable law limiting interest that may be charged on this Note), exceeds the
highest rate of interest permissible under applicable law (the “Maximum Lawful
Rate”), then so long as the Maximum Lawful Rate would be exceeded the rate of
interest under this Note shall be equal to the Maximum Lawful Rate. If at any
time thereafter the rate of interest payable under this Note is less than the
Maximum Lawful Rate, the Borrower shall continue to pay interest under this Note
at the Maximum Lawful Rate until such time as the total interest paid by the
Borrower is equal to the total interest that would have been paid had applicable
law not limited the interest rate payable under this Note. In no event shall the
total interest received by

 

B-2-2

--------------------------------------------------------------------------------

the Swingline Lender under this Note exceed the amount which the Swingline
Lender could lawfully have received had the interest due under this Note been
calculated since the date of this Note at the Maximum Lawful Rate.

 

Payments of the principal of, and interest on, Advances represented by this Note
shall be made by the Borrower to the holder hereof by wire transfer of
immediately available funds in the manner and at the address specified for such
purpose as provided in Article 2 of the Second Amended and Restated Loan Funding
and Servicing Agreement, or in such manner or at such other address as the
holder of this Note shall have specified in writing to the Borrower for such
purpose, without the presentation or surrender of this Note or the making of any
notation on this Note.

 

If any payment under this Note falls due on a day that is not a Business Day,
then such due date shall be extended to the next succeeding Business Day and
interest shall be payable on any principal so extended at the applicable
Interest Rate.

 

If all or a portion of (i) the principal amount hereof or (ii) any interest
payable thereon or (iii) any other amounts payable hereunder shall not be paid
when due (whether at maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum that is equal to the Base Rate
plus 1.0%, in each case from the date of such non-payment to (but excluding) the
date such amount is paid in full.

 

Portions or all of the principal amount of the Note shall become due and payable
at the time or times set forth in the Second Amended and Restated Loan Funding
and Servicing Agreement. Any portion or all of the principal amount of this Note
may be prepaid, together with interest thereon (and as set forth in the Second
Amended and Restated Loan Funding and Servicing Agreement, certain costs and
expenses of the Swingline Lender) at the time and in the manner set forth in,
but subject to the provisions of, the Second Amended and Restated Loan Funding
and Servicing Agreement.

 

Except as provided in the Second Amended and Restated Loan Funding and Servicing
Agreement, the Borrower expressly waives presentment, demand, diligence, protest
and all notices of any kind whatsoever with respect to this Note.

 

All amounts evidenced by this Note, the Swingline Lender’s making such Advance
and all payments and prepayments of the principal hereof and the respective
dates and maturity dates thereof shall be endorsed by the Swingline Lender on
the schedule attached hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof, or otherwise recorded by
the Swingline Lender in its internal records; provided, however, that the
failure of the Swingline Lender to make such a notation shall not in any way
limit or otherwise affect the obligations of the Borrower under this Note as
provided in the Second Amended and Restated Loan Funding and Servicing
Agreement.

 

The holder hereof may sell, assign, transfer, negotiate, grant participations in
or otherwise dispose of all or any portion of any Advances made by the Swingline
Lender and represented by this Note and the indebtedness evidenced by this Note.

 

B-2-3

--------------------------------------------------------------------------------

This Note is secured by the security interests granted pursuant to Section 8.1
of the Second Amended and Restated Loan Funding and Servicing Agreement. The
holder of this Note is entitled to the benefits of the Second Amended and
Restated Loan Funding and Servicing Agreement and may enforce the agreements of
the Borrower contained in the Second Amended and Restated Loan Funding and
Servicing Agreement and exercise the remedies provided for by, or otherwise
available in respect of, the Second Amended and Restated Loan Funding and
Servicing Agreement, all in accordance with, and subject to the restrictions
contained in, the terms of the Second Amended and Restated Loan Funding and
Servicing Agreement. If a Termination Event shall occur and be continuing, the
unpaid balance of the principal of all Advances, together with accrued interest
thereon, shall be declared, and become due and payable in the manner and with
the effect provided in the Second Amended and Restated Loan Funding and
Servicing Agreement.

 

This Note is the “Swingline Note” referred to in the Second Amended and Restated
Loan Funding and Servicing Agreement. This Note shall be construed in accordance
with and governed by the laws of the State of New York.

 

[Remainder of Page Intentionally Left Blank]

 

B-2-4

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this Note as on the date first
written above.

 

ACS FUNDING TRUST I

By:

   

Name:

   

Title:

   

 

B-2-5

--------------------------------------------------------------------------------

SCHEDULE TO NOTE

 

Date of

Advance or

Repayment

--------------------------------------------------------------------------------

 

Principal

Amount of

Advance

--------------------------------------------------------------------------------

 

Principal

Amount of

Repayment

--------------------------------------------------------------------------------

 

Outstanding

Principal

Amount

--------------------------------------------------------------------------------

                           

 

B-2-6

--------------------------------------------------------------------------------

EXHIBIT C

 

FORM OF TRUST AGREEMENT

 

[ATTACH FORM OF TRUST AGREEMENT]

 

[intentionally omitted]

 

C-1

--------------------------------------------------------------------------------

EXHIBIT D

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

Dated: [                    ] [        ], 2004

 

Reference is made to the Second Amended and Restated Loan Funding and Servicing
Agreement, dated as of August 10, 2004 (as amended, modified, waived,
supplemented or restated from time to time, the “Agreement”) among ACS Funding
Trust I, as the borrower, American Capital Strategies, Ltd., as the servicer
(the “Servicer”), the Conduit Lenders and Institutional Lenders from time to
time party thereto, the Lender Agents from time to time party thereto, Wachovia
Capital Markets, LLC, as the deal agent, JPMorgan Chase Bank, as the swingline
lender, and Wells Fargo Bank, National Association, as collateral custodian and
as backup servicer. Terms defined in the Agreement are used herein with the same
meaning. This Assignment and Acceptance is delivered pursuant to Section 12.17
of the Agreement.

 

                             (the “Assignor”) and                             
(the “Assignee”) agree as follows:

 

1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, that interest in and to all of
the Assignor’s rights and obligations under the Agreement as of the date hereof
which represents the percentage interest specified in Section 1 of Schedule 1 of
all outstanding rights and obligations of the Assignor under the Agreement,
including, without limitation, such interest in the Assignor’s Commitment and
the Advances made by the Assignor. After giving effect to such sale and
assignment, the Assignee’s Commitment and the amount of Advances made by the
Assignee will be as set forth in Section 2 of Schedule 1.

 

2. The Assignor (i) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; and (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Agreement or any other instrument or document furnished pursuant thereto.

 

3. The Assignee (i) confirms that it has received a copy of the Agreement,
together with copies of such financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Deal Agent or the Assignor, the
Swingline Lender or the Conduit Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Agreement; (iii)
appoints and authorizes the Deal Agent each to take such action as agent on its
behalf and to exercise such powers under the Agreement as are delegated to the
Deal Agent, respectively, by the terms thereof, together with such powers as are
reasonably incidental thereto; and (iv) agrees that it will perform in

 

D-1

--------------------------------------------------------------------------------

accordance with their terms all of the obligations which by the terms of the
Agreement are required to be performed by it as a Lender.

 

4. Following the execution of this Assignment and Acceptance by the Assignor and
the Assignee, it will be delivered to the Deal Agent for acceptance and
recording. The effective date of this Assignment and Acceptance (the “Transfer
Date”) shall be the date of acceptance thereof by the Deal Agent, unless a later
date is specified in Section 3 of Schedule 1.

 

5. Upon such acceptance and recording by the Deal Agent, as of the Transfer
Date, (i) the Assignee shall be a party to the Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Agreement.

 

6. Upon such acceptance and recording by the Deal Agent, from and after the
Transfer Date, the Deal Agent shall make, or cause to be made, all payments
under the Agreement in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and Facility Fee with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Agreement for periods prior to the
Transfer Date directly between themselves.

 

7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of North Carolina.

 

[Remainder of Page Intentionally Left Blank]

 

D-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.

 

[ASSIGNOR] By:        

Name:

       

Title:

   

Address for notices
[Address]

[ASSIGNEE] By:        

Name:

       

Title:

   

Address for notices
[Address]

 

[Consented to:] 1

By:

 

ACS Funding Trust I

   

Name:

   

Title:

--------------------------------------------------------------------------------

1 To be added if consent of the Borrower is required by Section 12.17 of the
Agreement.

 

D-3

--------------------------------------------------------------------------------

Schedule 1

to

Assignment and Acceptance

Dated                     , 20    

 

Section 1.

 

Percentage Interest:

 

                    %

   

 

Section 2.

Assignee’s Commitment:

 

$                    

   

Aggregate Outstanding

Advances Owing to

the Assignee:

 

$                    

   

 

Section 3.

 

Transfer Date:                      , 20        

 

D-4

--------------------------------------------------------------------------------

EXHIBIT E

 

FORM OF MONTHLY REPORT

 

[TO BE PROVIDED BY WCM/AMERICAN CAPITAL]

 

E-1

--------------------------------------------------------------------------------

EXHIBIT F

 

FORM OF SERVICER’S CERTIFICATE

 

This Servicer’s Certificate is delivered pursuant to the provisions of
subsection 7.17(b) of the Second Amended and Restated Loan Funding and Servicing
Agreement, dated as of August 10, 2004, by and among ACS Funding Trust I, as the
borrower, American Capital Strategies, Ltd., as the servicer (the “Servicer”),
the Conduit Lenders and Institutional Lenders from time to time party thereto,
the Lender Agents from time to time party thereto, Wachovia Capital Markets,
LLC, as the deal agent, JPMorgan Chase Bank, as the swingline lender, and Wells
Fargo Bank, National Association, as collateral custodian and as backup servicer
(hereinafter as such agreement may have been, or may from time to time be
amended, supplemented or otherwise modified, the “Agreement”). This Servicer’s
Certificate relates to the Collection Period and related Payment Date, to which
the Monthly Report attached hereto as Schedule A relates.

 

  A. Capitalized terms used and not otherwise defined herein have the meanings
assigned them in the Agreement. References herein and in the attached Schedule A
to certain subsections are to the applicable subsections of the Agreement.

 

  B. The Servicer is the Servicer under the Agreement.

 

  C. The undersigned hereby certifies to the Borrower, the Backup Servicer, the
Deal Agent and each Lender Agent that:

 

1. all of the foregoing information and all of the information set forth on
attached Schedule A is true and accurate in all material respects of the date
hereof; and

 

2. as of the date hereof, no Termination Event or Unmatured Termination Event
has occurred and is continuing.

 

IN WITNESS WHEREOF, the undersigned has caused this Servicer’s Certificate to be
duly executed this [            ] day of [                    ], [            ].

 

AMERICAN CAPITAL STRATEGIES, LTD.,

as the Servicer

By:

   

Name:

   

Title:

   

 

F-1

--------------------------------------------------------------------------------

EXHIBIT G

 

CREDIT AND COLLECTION POLICY

 

[See attached]

 

[intentionally omitted]

 

G-1

--------------------------------------------------------------------------------

EXHIBIT H-1

 

FORM OF HEDGING AGREEMENT

 

(WACHOVIA)

 

[See Attached]

 

[intentionally omitted]

 

H-1-1

--------------------------------------------------------------------------------

EXHIBIT H-2

 

FORM OF HEDGING AGREEMENT

 

(JPMORGAN CHASE BANK)

 

[See Attached]

 

[intentionally omitted]

 

H-2-1

--------------------------------------------------------------------------------

EXHIBIT I

 

FORM OF CERTIFICATE OF BORROWER’S COUNSEL

 

[                    ] [    ], [            ]

 

Wachovia Capital Markets, LLC,

as the Deal Agent

One Wachovia Center, Mail Code NC0600

Charlotte, North Carolina 28288

Attn: Conduit Administration

 

Wells Fargo Bank, National Association,

as the Collateral Custodian

MAC N9311-161

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

  Re: Loans in the aggregate principal amount of $_________, from American
Capital Strategies, Ltd. (the “Originator”) to ACS Funding Trust I (the
“Borrower”) in connection with [Obligor] (the “Obligor”) (collectively, the
“Loan”)

 

To whom it may concern:

 

In connection with the Loan, the undersigned (i) acknowledges that the
Originator has granted a security interest to Wachovia Capital Markets, LLC, as
the deal agent for the Secured Parties (the “Deal Agent”) in each of the items
indicated on the closing checklist attached hereto (the “Checklist”), and (ii)
certifies to you that as of the day of funding the Loan:

 

  A. It has received, reviewed and approved the Checklist items, in the form and
subject to those exceptions or matters indicated on the Checklist;

 

  B. A copy of the executed promissory note has been faxed to the Collateral
Custodian. The original promissory note(s) and related indorsements are in our
possession and will be forwarded to Wells Fargo Bank, National Association, as
the Collateral Custodian (the “Collateral Custodian”) or as otherwise directed
in writing to                      (hereinafter referred to as “Borrower’s
Counsel”) by the Deal Agent, for receipt within two (2) business days after the
funding date of the transaction;

 

I-1

--------------------------------------------------------------------------------

  C. Within ten (10) business days after the closing, all remaining Security
Documents which are in our possession and indicated on Schedule 1 attached
hereto, will be forwarded to the Collateral Custodian; and

 

  D. Notwithstanding any contrary instruction from the Originator, in the event
the Loan is funded, it will follow the written direction of the Deal Agent with
regard to the original promissory note(s) in its possession, provided that in
the event it reasonably believes that a dispute exists as to custody of any
Security Documents, it may deposit them with a court of competent jurisdiction
and be relieved of its obligations hereunder with respect to any and all
documents so deposited.

 

The Collateral Custodian, the Deal Agent, the Originator and Borrower’s Counsel
acknowledge and agree that:

 

  1. The security interest and the rights in the Security Documents granted to
the Deal Agent, as agent for the Secured Parties, are paramount and superior to
the rights of the Originator.

 

  2. Borrower’s Counsel shall not be required to perform any duties other than
the duties expressly set forth in this letter. No implied obligations or duties
shall be inferred by any other agreement, written or verbal, or any
representation made by any party.

 

  3. Borrower’s Counsel is authorized to comply with and obey laws, orders,
judgments, decrees and regulations of any governmental authority, court,
tribunal, or arbitrator. If Borrower’s Counsel complies with any such law,
order, judgment, decree, or regulation Borrower’s Counsel shall not be liable to
the Collateral Custodian, the Deal Agent or the Originator or to any other
person even if such law, order, judgment, decree or regulation is subsequently
reversed, modified, annulled, set aside, vacated, found to have been entered
without jurisdiction, or found to be in violation or beyond the scope of the
law.

 

  4. Borrower’s Counsel shall be responsible hereunder solely to hold the
original promissory note(s) for the Deal Agent’s account and other documents for
Collateral Custodian’s and the Originator’s account and to deliver the same in
accordance with the terms of this letter.

 

  5. Borrower’s Counsel may act relative hereto upon the advice of counsel in
reference to any matter in connection herewith and shall not be liable for any
mistakes of fact or errors of judgment, or for any acts or omissions of any kind
unless caused by its own willful misconduct or gross negligence.

 

  6. Borrower’s Counsel shall be entitled to rely or act upon any notice,
direction, instrument or document believed by Borrower’s Counsel to be genuine
and to be executed and delivered by the proper person and shall have no
obligation to verify any statements contained in any notice, instrument or
document or the accuracy or due authorization of the execution of any notice,
instrument or document.

 

I-2

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  7. Borrower’s Counsel shall not be responsible or liable in any manner
whatsoever for (a) the sufficiency, correctness, genuineness or validity of any
document, agreement or instrument delivered to it, (b) the form of execution of
any such document, agreement or instrument, (c) the identity, authority or
rights of any person executing or delivering any such document, agreement or
instrument, or (d) the terms and conditions of any instrument pursuant to which
the parties may act.

 

  8. Borrower’s Counsel may serve and shall continue to serve as counsel to the
Originator in connection with the transactions contemplated by the Loan and
other matters, and notwithstanding anything herein to the contrary, may
represent the Originator (or any affiliate) as its counsel in any action, suit
or other proceeding in which Collateral Custodian, Deal Agent or Originator (or
any affiliate) may be involved.

 

  9. Borrower’s Counsel shall be deemed to have satisfied any delivery
requirement set forth herein if it shall have deposited the relevant documents
for uninsured overnight delivery (properly addressed) with Federal Express, UPS
or other overnight courier of national standing.

 

Very truly yours,

  By:    

Name:

   

Title:

   

 

(Acceptance on following page)

 

I-3

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ACCEPTED AND AGREED: AMERICAN CAPITAL STRATEGIES, LTD.,

as the Originator

By:    

Name:

   

Title:

    WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Collateral Custodian

By:    

Name:

   

Title:

    WACHOVIA CAPITAL MARKETS, LLC,

as the Deal Agent

By:    

Name:

   

Title:

   

 

I-4

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SCHEDULE 1

SECURITY DOCUMENTS

 

Security Documents are defined as the following documents:

 

(i) all Loans:

 

(a) original of promissory note executed in favor of Originator or Borrower and
any reformation thereof or endorsed or assigned to Originator or Borrower (if
purchased by such Person) and endorsed by Borrower without recourse in blank
(along with any reformation thereof);

 

(ii) in the case of Loans secured by real property:

 

(a) original mortgages or deeds of trust or other security instrument (including
a leasehold mortgage, if applicable) securing the above note; provided, that, in
lieu of a recorded document, the Collateral Custodian may accept a copy
certified by the records office or escrow or title company or Originator or
Borrower, if applicable;

 

(b) original assignment in blank of the mortgage or deed of trust or other
security instrument (including a leasehold mortgage, if applicable) by Borrower
to the Collateral Custodian in recordable form and the original or a copy,
certified by the records office or escrow or title company or Originator or
Borrower (in the case of a copy), of a properly recorded assignment or
assignments of the related mortgage or deed of trust or other instrument from
the original holder, through any subsequent transferees, to Borrower or
Originator;

 

(c) if any of the above items were executed pursuant to a power of attorney, a
copy of such; and

 

(iii) in the case of Loans secured in part by personal property, the following,
as and to the extent applicable in accordance with the terms of the Loan:

 

(a) copy of any guaranties, if any, and as identified on the closing checklist
and certification;

 

(b) copy of executed security agreements relating to furnishings, fixtures and
equipment securing each Loan;

 

(c) copies of all UCC filings with respect to furnishings, fixtures and
equipment securing each Loan; and

 

(d) if any of the above items were executed pursuant to a power of attorney, a
copy of such.

 

I-5

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EXHIBIT J

 

FORM OF TRUST RECEIPT AND INITIAL CERTIFICATION

 

[Delivery Date]

 

Wachovia Capital Markets, LLC,

as the Deal Agent

One Wachovia Center, Mail Code NC0600

Charlotte, North Carolina 28288

Facsimile No.:

  

(704) 715-0067

(704) 383-6036

via e-mail:

  

cp.conduits@wachovia.com

scp.mmloans@wachovia.com

 

Re: Second Amended and Restated Loan Funding and Servicing Agreement, dated as
of August 10, 2004 (as amended, modified, waived, supplemented or restated from
time to time, the “Agreement”), by and among ACS Funding Trust I, as the
borrower, American Capital Strategies, Ltd., as the servicer, the Conduit
Lenders and Institutional Lenders from time to time party thereto, the Lender
Agents from time to time party thereto, Wachovia Capital Markets, LLC, as the
deal agent, JPMorgan Chase Bank, as the swingline lender, and Wells Fargo Bank,
National Association, as collateral custodian and as backup servicer.

 

Ladies and Gentlemen:

 

In accordance with the provisions of subsection 7.10(a) of the above-referenced
Agreement, the undersigned, as the Collateral Custodian, hereby certifies that
it has received each Loan identified on the Loan List attached hereto as Exhibit
I. The Collateral Custodian makes no representations as to (i) the validity,
legality, enforceability, sufficiency, due authorization or genuineness of any
of the documents contained in each Loan File or of any of the Loans or (ii) the
collectability, insurability, effectiveness or suitability of any such Loan.

 

The Collateral Custodian hereby confirms that it is holding each such Loan
Document as agent and bailee of, and custodian for the exclusive use and
benefit, and subject to the sole direction, of the Deal Agent pursuant to the
terms and conditions of the Agreement.

 

J-1

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Capitalized terms used but not defined herein shall have the meaning ascribed to
them in the Agreement.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Collateral Custodian

By    

Name:

   

Title:

   

 

J-2

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EXHIBIT K

 

FORM OF TRUST RECEIPT AND FINAL CERTIFICATION

 

Trust Receipt #                

 

[Delivery Date]

 

Wachovia Capital Markets, LLC,

as the Deal Agent

One Wachovia Center, Mail Code NC0600

Charlotte, North Carolina 28288

Facsimile No.:

  

(704) 715-0067

(704) 383-6036

via e-mail:

  

cp.conduits@wachovia.com

scp.mmloans@wachovia.com

 

Re: Second Amended and Restated Loan Funding and Servicing Agreement, dated as
of August 10, 2004 (as amended, modified, waived, supplemented or restated from
time to time, the “Agreement”), by and among ACS Funding Trust I, as the
borrower, American Capital Strategies, Ltd., as the servicer, the Conduit
Lenders and Institutional Lenders from time to time party thereto, the Lender
Agents from time to time party thereto, Wachovia Capital Markets, LLC, as the
deal agent, JPMorgan Chase Bank, as the swingline lender, and Wells Fargo Bank,
National Association, as collateral custodian and as backup servicer.

 

Ladies and Gentlemen:

 

In accordance with the provisions of subsection 7.10(a) of the above-referenced
Agreement, the undersigned, as the Collateral Custodian, hereby certifies that
as to each Loan listed on the Loan List it has reviewed the Loan Files and has
determined (other than any Loan paid in full or any Loan listed on the
attachment hereto) that (i) all Loan Documents listed on the index of the
related Loan File are in its possession; (ii) such documents have been reviewed
by it and appear regular on their face and related to such Loan; and each
Underlying Note with respect to each Loan has been received in original form;
(iii) as to each Loan that is secured by an interest in real property, all
assignments of mortgage (or deed of trust or other security instrument) or
intervening assignments of mortgage (or deed of trust or other security
instrument), as applicable, have been submitted for recording in the
jurisdictions in which recording is necessary; and (iv) as to each Loan that is
secured by an interest in real property, each mortgage note has been endorsed in
blank. The Collateral Custodian makes no representations as to (i) the validity,
legality, enforceability, sufficiency, due authorization or genuineness of any
of the documents contained in each Loan File or of any of the Loans or (ii) the
collectability, insurability, effectiveness or suitability of any such Loan.

 

The Collateral Custodian hereby confirms that it is holding each such Loan File
as agent and bailee of, and custodian for the exclusive use and benefit, and
subject to the sole direction, of the Deal Agent pursuant to the terms and
conditions of the Agreement.

 

K-1

--------------------------------------------------------------------------------

Capitalized terms used but not defined herein shall have the meaning ascribed to
them in the Agreement.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Collateral Custodian

By    

Name:

   

Title:

   

 

K-2

--------------------------------------------------------------------------------

EXHIBIT L

 

FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT

 

[Delivery Date]

 

BY FACSIMILE: (612) 667-3539

 

Wells Fargo Bank, National Association,

MAC N9328-011

Suite ABS

751 Kasota Avenue

Minneapolis, MN 55414

  Attn:  Corporate Trust Services

       Asset-Backed Administration

 

  Re: Second Amended and Restated Loan Funding and Servicing Agreement, dated as
of August 10, 2004 (as amended, modified, waived, supplemented or restated from
time to time, the “Agreement”), by and among ACS Funding Trust I, as the
borrower, American Capital Strategies, Ltd., as the servicer, the Conduit
Lenders and Institutional Lenders from time to time party thereto, the Lender
Agents from time to time party thereto, Wachovia Capital Markets, LLC, as the
deal agent, JPMorgan Chase Bank, as the swingline lender, and Wells Fargo Bank,
National Association, as collateral custodian and as backup servicer.

 

Ladies and Gentlemen:

 

In connection with the administration of the Loans held by you as the Collateral
Custodian on behalf of the Deal Agent under the Agreement, we request the
release, and acknowledge receipt, of the Loan File for the Loan described below,
for the reason indicated.

 

Obligor’s Name, Address & Zip Code:

 

Loan Number:

 

Reason for Requesting Documents (check one)

 

¨ 1. Loan Paid in Full. (The Servicer hereby certifies that all amounts received
in connection therewith have been credited to the account of the Deal Agent.)

 

¨ 2. Loan Liquidated By                                  (The Servicer hereby
certifies that all proceeds of foreclosure, insurance, condemnation or other
liquidation have been finally received and credited to the account of the Deal
Agent.)

 

¨ 3. Loan in Foreclosure.

 

¨ 4. Other (explain).

 

L-1

--------------------------------------------------------------------------------

If box 1 or 2 above is checked, and if all or part of the Loan File was
previously released to us, please release to us our previous request and receipt
on file with you, as well as any additional documents in your possession
relating to the specified Loan.

 

If box 3 or 4 above is checked, upon our return of all of the above documents to
you as the Collateral Custodian, please acknowledge your receipt by signing in
the space indicated below, and returning this form.

 

Capitalized terms used but not defined herein have the meanings provided in the
Agreement.

 

[SIGNATURES FOLLOW ON NEXT PAGE]

 

L-2

--------------------------------------------------------------------------------

AMERICAN CAPITAL STRATEGIES, LTD.,

as the Servicer

By    

Name:

   

Title:

   

Date:

   

 

Acknowledgment of Documents returned to the Collateral Custodian:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Collateral Custodian

By    

Name:

   

Title:

   

 

The Deal Agent hereby consents to the Collateral Custodian’s releasing the Loan
File or a part thereof to the Servicer designated above:

 

WACHOVIA CAPITAL MARKETS, LLC,

as the Deal Agent

By    

Name:

   

Title:

   

 

L-3

--------------------------------------------------------------------------------

EXHIBIT M-1

 

FORM OF ASSIGNMENT OF MORTGAGE

 

[See Attached]

 

[intentionally omitted]

 

M-1

--------------------------------------------------------------------------------

EXHIBIT N

 

FORM OF REINVESTMENT CERTIFICATION

 

ACS FUNDING TRUST I

 

Wachovia Capital Markets, LLC,

as the Deal Agent

One Wachovia Center, Mail Code NC0600

Charlotte, North Carolina 28288

Attn: Conduit Administration

 

Ladies and Gentlemen:

 

This certification is delivered to you under Section 3.2 of that certain Second
Amended and Restated Loan Funding and Servicing Agreement, dated as of August
10, 2004 (as amended, modified, waived, supplemented or restated from time to
time, the “Agreement”), by and among ACS Funding Trust I, as the borrower,
American Capital Strategies, Ltd., as the servicer, the Conduit Lenders and
Institutional Lenders from time to time party thereto, the Lender Agents from
time to time party thereto, Wachovia Capital Markets, LLC, as the deal agent,
JPMorgan Chase Bank, as the swingline lender, and Wells Fargo Bank, National
Association, as collateral custodian and as backup servicer.

 

Each of the undersigned, each being a duly elected officer of the Borrower and
the Servicer, respectively, holding the office set forth below such officer’s
name, hereby certifies as follows:

 

1. The Borrower hereby notifies you that on the date first written above it will
use Principal Collections in amount of $                     to acquire
additional Loans.

 

2. Attached to this certification is a true, correct and complete calculation of
the Borrowing Base and all components thereof.

 

3. Attached to this Reinvestment Certification is a true, correct and complete
Loan List, reflecting all Loans which will become part of the Collateral on the
date hereof, each Loan reflected thereon being an Eligible Loan.

 

4. All of the conditions applicable to the reinvestment of Principal Collections
requested herein as set forth in the Agreement have been satisfied as of the
date hereof and will remain satisfied to the date of such reinvestment,
including those set forth in Section 3.2.

 

N-1

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed the Reinvestment Certification
this [            ] day of [                    ], [            ].

 

ACS FUNDING TRUST I,

as the Borrower

By: American Capital Strategies, Ltd., as the Servicer

By

   

Name:

   

Title:

   

AMERICAN CAPITAL STRATEGIES, LTD.,

as the Servicer

By

   

Name:

   

Title:

   

 

N-2

--------------------------------------------------------------------------------

EXHIBIT O-1

 

OFFICER’S CERTIFICATE AS TO SOLVENCY

 

AMERICAN CAPITAL STRATEGIES, LTD.

 

The undersigned, a duly elected Vice President of American Capital Strategies,
Ltd. (the “Corporation”), hereby certifies in connection with (i) that certain
Second Amended and Restated Purchase and Sale Agreement (the “Purchase
Agreement”), dated as of August 10, 2004, by and between the Corporation and ACS
Funding Trust I, and (ii) that certain Second Amended and Restated Loan Funding
and Servicing Agreement (the “Agreement”), dated as of August 10, 2004, by and
among ACS Funding Trust I, as the borrower, the Corporation, as the servicer,
the Conduit Lenders and Institutional Lenders from time to time party thereto,
the Lender Agents from time to time party thereto, Wachovia Capital Markets,
LLC, as the deal agent, JPMorgan Chase Bank, as the swingline lender, and Wells
Fargo Bank, National Association, as collateral custodian and as backup
servicer, for the benefit of the Seller, the Deal Agent and the Secured Parties
and their respective successors and assigns, as follows:

 

1. Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Purchase Agreement and the
Agreement.

 

2. Both before and after giving effect to (a) the transactions contemplated by
the Purchase Agreement and the other Transaction Documents and (b) the payment
and accrual of all transaction costs in connection with the foregoing, the
Corporation is and will be Solvent.

 

IN WITNESS WHEREOF, I have signed and delivered this Officer’s Certificate this
10th day of August, 2004.

 

By

   

Name:

   

Title:

   

 

O-1-1

--------------------------------------------------------------------------------

EXHIBIT O-2

 

OFFICER’S CERTIFICATE AS TO SOLVENCY

 

ACS FUNDING TRUST I

 

The undersigned, a duly appointed Beneficiary Trustee of ACS Funding Trust I
(the “Trust”), hereby certifies in connection with (i) that certain Second
Amended and Restated Purchase and Sale Agreement (the “Purchase Agreement”),
dated as of August 10, 2004, by and between the Trust and American Capital
Strategies, Ltd., and (ii) that certain Second Amended and Restated Loan Funding
and Servicing Agreement (the “Agreement”), dated as of August 10, 2004, by and
among the Trust, as the borrower, American Capital Strategies, Ltd., as the
servicer, the Conduit Lenders and Institutional Lenders from time to time party
thereto, the Lender Agents from time to time party thereto, Wachovia Capital
Markets, LLC, as the deal agent, JPMorgan Chase Bank, as the swingline lender,
and Wells Fargo Bank, National Association, as collateral custodian and as
backup servicer, for the benefit of the Seller, the Deal Agent and the Secured
Parties and their respective successors and assigns, as follows:

 

1. Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Purchase Agreement and the
Agreement.

 

2. Both before and after giving effect to (a) the transactions contemplated by
the Purchase Agreement and the other Transaction Documents and (b) the payment
and accrual of all transaction costs in connection with the foregoing, the Trust
is and will be Solvent.

 

IN WITNESS WHEREOF, I have signed and delivered this Officer’s Certificate this
10th day of August, 2004.

 

By

   

Name:

   

Title:

   

 

O-2-1

--------------------------------------------------------------------------------

EXHIBIT P-1

 

OFFICER’S CLOSING CERTIFICATE

 

AMERICAN CAPITAL STRATEGIES, LTD.

 

The undersigned, a duly elected Vice President of American Capital Strategies,
Ltd. (the “Corporation”), hereby certifies in connection with (i) that certain
Second Amended and Restated Purchase and Sale Agreement, dated as of August 10,
2004 (the “Purchase Agreement”), by and between the Corporation, as seller and
ACS Funding Trust I, as buyer (the “Buyer”), (ii) that certain Second Amended
and Restated Loan Funding and Servicing Agreement, dated as of August 10, 2004
(the “Agreement”), by and among the Buyer, as the borrower, the Corporation, as
the servicer, the Conduit Lenders and Institutional Lenders from time to time
party thereto, the Lender Agents from time to time party thereto, Wachovia
Capital Markets, LLC, as the deal agent, JPMorgan Chase Bank, as the swingline
lender, and Wells Fargo Bank, National Association, as collateral custodian and
as backup servicer, and (iii) the other Transaction Documents, for the benefit
of the Deal Agent and the Secured Parties, as follows:

 

1. Capitalized terms herein and not otherwise defined shall have the respective
meanings ascribed to them in the Purchase Agreement and the Agreement.

 

2. Each of the representations and warranties of the Corporation contained in
any of the Transaction Documents are true and correct on and as of the Closing
Date as though made on and as of such date (except to the extent any such
representation and warranty relates solely to an earlier date), and no event has
occurred and is continuing, or would result from the transactions effected
pursuant thereto as of the Closing Date, that constitutes or would constitute a
Termination Event or default by the Servicer.

 

3. The Corporation is in material compliance with all federal, state, and local
laws and regulations, including those relating to labor and environmental
matters and ERISA.

 

4. Except as otherwise indicated on a schedule to a Transaction Document, or as
otherwise consented to by the Deal Agent, the Corporation has delivered to the
Deal Agent true and correct copies of all documents required to be delivered by
it to the Deal Agent pursuant to the Transaction Documents, all such documents
are complete and correct in all material respects on and as of the Closing Date,
and each and every other condition precedent to the closing of the transactions
contemplated by the Transaction Documents has been satisfied.

 

5. The Corporation has conveyed the Purchased Assets to the Buyer free and clear
of all Liens.

 

P-1-1

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have signed and delivered this Officer’s Certificate this
10th day of August, 2004.

 

AMERICAN CAPITAL STRATEGIES, LTD.

By

   

Name:

   

Title:

   

 

P-1-2

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EXHIBIT P-2

 

OFFICER’S CLOSING CERTIFICATE

 

ACS FUNDING TRUST I

 

The undersigned, a duly appointed trustee of ACS Funding Trust I (the “Trust”),
hereby certifies in connection with that certain Second Amended and Restated
Loan Funding and Servicing Agreement, dated as of August 10, 2004 (the
“Agreement”), by and among the Trust, as the borrower, American Capital
Strategies, Ltd., as the servicer, the Conduit Lenders and Institutional Lenders
from time to time party thereto, the Lender Agents from time to time party
thereto, Wachovia Capital Markets, LLC, as the deal agent, JPMorgan Chase Bank,
as the swingline lender, and Wells Fargo Bank, National Association, as
collateral custodian and as backup servicer, and the other Transaction
Documents, for the benefit of the Deal Agent and the Secured Parties, as
follows:

 

1. Capitalized terms herein and not otherwise defined shall have the respective
meanings ascribed to them in the Agreement.

 

2. Each of the representations and warranties of the Trust contained in any of
the Transaction Documents are true and correct on and as of the Closing Date as
though made on and as of such date (except to the extent any such representation
and warranty relates solely to an earlier date), and no event has occurred and
is continuing, or would result from the transactions effected pursuant thereto
as of the Closing Date, that constitutes or would constitute a Termination
Event.

 

3. The Trust is in material compliance with all federal, state, and local laws
and regulations, including those relating to labor and environmental matters and
ERISA.

 

4. Except as otherwise indicated on a schedule to a Transaction Document or as
otherwise consented to by the Deal Agent, the Trust has delivered to the Deal
Agent true and correct copies of all documents required to be delivered to the
Deal Agent pursuant to the Transaction Documents, all such documents are
complete and correct in all material respects on and as of the Closing Date, and
each and every other condition precedent to the closing of the transactions
contemplated by the Transaction Documents has been satisfied.

 

5. No Liens have arisen or been granted with respect to the Collateral other
than Permitted Liens.

 

P-2-1

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have signed and delivered this Officer’s Certificate this
10th day of August, 2004.

 

ACS FUNDING TRUST I

By

   

Name:

   

Title:

   

 

P-2-2

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EXHIBIT Q-1

 

POWER OF ATTORNEY

 

This Power of Attorney is executed and delivered by American Capital Strategies,
Ltd., as the Servicer (the “Servicer”) pursuant to Section 8.7 of the Agreement
(each as defined below), to Wachovia Capital Markets, LLC, as the Deal Agent
under the Agreement (hereinafter referred to as “Attorney”), pursuant to that
certain Second Amended and Restated Loan Funding and Servicing Agreement, dated
as of August 10, 2004 (the “Agreement”), by and among ACS Funding Trust I, as
the borrower, the Servicer, the Conduit Lenders and Institutional Lenders from
time to time party thereto, the Lender Agents from time to time party thereto,
Wachovia Capital Markets, LLC, as the deal agent, JPMorgan Chase Bank, as the
swingline lender, and Wells Fargo Bank, National Association, as collateral
custodian and as backup servicer, and the other Transaction Documents.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Agreement. No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall inquire into or seek confirmation from Servicer as to the
authority of Attorney to take any action described below, or as to the existence
of or fulfillment of any condition to this Power of Attorney, which is intended
to grant to Attorney unconditionally the authority to take and perform the
actions contemplated herein, and Servicer irrevocably waives any right to
commence any suit or action, in law or equity, against any person or entity that
acts in reliance upon or acknowledges the authority granted under this Power of
Attorney. The power of attorney granted hereby is coupled with an interest and
may not be revoked or canceled by Servicer until all Obligations of the Servicer
under the Transaction Documents have been indefeasibly paid in full and Attorney
has provided its written consent thereto.

 

Servicer hereby irrevocably constitutes and appoints Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in its place and stead and in its name or in Attorney’s own name, from time to
time in Attorney’s discretion, to take any and all appropriate action and to
execute and deliver any and all documents and instruments that may be necessary
or desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, hereby grants to Attorney the power and right,
on its behalf, without notice to or assent by it, upon the occurrence and during
the continuance of any Termination Event, to do the following: (a) open mail for
Servicer, and ask, demand, collect, give acquittances and receipts for, take
possession of, or endorse and receive payment of, any checks, drafts, notes,
acceptances, or other instruments for the payment of moneys due, and sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, and
notices in connection with any of Servicer’s property; (b) effect any repairs to
any of Servicer’s assets, or continue or obtain any insurance and pay all or any
part of the premiums therefor and costs thereof, and make, settle and adjust all
claims under such policies of insurance, and make all determinations and
decisions with respect to such policies; (c) pay or discharge any taxes, Liens,
or other encumbrances levied or placed on or threatened against Servicer or
Servicer’s property; (d) defend any suit, action or proceeding brought against
Servicer if Servicer does not defend such suit, action or proceeding or if
Attorney believes that it is not pursuing such defense in a manner that will
maximize the recovery to Attorney, and settle, compromise or adjust any suit,
action, or proceeding described

 

Q-1-1

--------------------------------------------------------------------------------

above and, in connection therewith, give such discharges or releases as Attorney
may deem appropriate; (e) file or prosecute any claim, litigation, suit or
proceeding in any court of competent jurisdiction or before any arbitrator, or
take any other action otherwise deemed appropriate by Attorney for the purpose
of collecting any and all such moneys due to Servicer whenever payable and to
enforce any other right in respect of Servicer’s property; (f) sell, transfer,
pledge, make any agreement with respect to, or otherwise deal with, any of
Servicer’s property, and execute, in connection with such sale or action, any
endorsements, assignments or other instruments of conveyance or transfer in
connection therewith; and (g) cause the certified public accountants then
engaged by Servicer to prepare and deliver to Attorney at any time and from time
to time, promptly upon Attorney’s request, any reports required to be prepared
by or on behalf of Servicer under the Agreement or any other Transaction
Document, all as though Attorney were the absolute owner of its property for all
purposes, and to do, at Attorney’s option and Servicer’s expense, at any time or
from time to time, all acts and other things that Attorney reasonably deems
necessary to perfect, preserve, or realize upon its property or assets and the
Liens of the Deal Agent as agent for the Secured Parties thereon, all as fully
and effectively as it might do. Servicer hereby ratifies, to the extent
permitted by law, all that said attorneys shall lawfully do or cause to be done
by virtue hereof.

 

[Remainder of Page Left Intentionally Blank]

 

Q-1-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Power of Attorney is executed by Servicer, and Servicer
has caused its seal to be affixed pursuant to the authority of its board of
directors as of this 10th day of August, 2004.

 

       

Very truly yours,

 

AMERICAN CAPITAL STRATEGIES, LTD.

   

(CORPORATE SEAL)

     

 

 

By

               

Name:

               

Title:

   

 

Sworn to and subscribed before

me this              day of August, 2004:

 

   Notary Public

 

Q-1-3

--------------------------------------------------------------------------------

 

EXHIBIT Q-2

 

POWER OF ATTORNEY

 

This Power of Attorney is executed and delivered by ACS Funding Trust I, as the
Borrower (the “Borrower”) pursuant to Section 8.7 of the Agreement (each as
defined below), to Wachovia Capital Markets, LLC, as the Deal Agent under the
Agreement (hereinafter referred to as “Attorney”), pursuant to that certain
Second Amended and Restated Loan Funding and Servicing Agreement, dated as of
August 10, 2004 (the “Agreement”), by and among ACS Funding Trust I, as the
borrower, American Capital Strategies, Ltd., as the servicer, the Conduit
Lenders and Institutional Lenders from time to time party thereto, the Lender
Agents from time to time party thereto, Wachovia Capital Markets, LLC, as the
deal agent, JPMorgan Chase Bank, as the swingline lender, and Wells Fargo Bank,
National Association, as collateral custodian and as backup servicer, and the
other Transaction Documents. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Agreement. No person to
whom this Power of Attorney is presented, as authority for Attorney to take any
action or actions contemplated hereby, shall inquire into or seek confirmation
from Borrower as to the authority of Attorney to take any action described
below, or as to the existence of or fulfillment of any condition to this Power
of Attorney, which is intended to grant to Attorney unconditionally the
authority to take and perform the actions contemplated herein, and Borrower
irrevocably waives any right to commence any suit or action, in law or equity,
against any person or entity that acts in reliance upon or acknowledges the
authority granted under this Power of Attorney. The power of attorney granted
hereby is coupled with an interest and may not be revoked or canceled by
Borrower until all Obligations of the Borrower under the Transaction Documents
have been indefeasibly paid in full and Attorney has provided its written
consent thereto.

 

Borrower hereby irrevocably constitutes and appoints Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in its place and stead and in its name or in Attorney’s own name, from time to
time in Attorney’s discretion, to take any and all appropriate action and to
execute and deliver any and all documents and instruments that may be necessary
or desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, hereby grants to Attorney the power and right,
on its behalf, without notice to or assent by it, upon the occurrence and during
the continuance of any Termination Event, to do the following: (a) open mail for
Borrower, and ask, demand, collect, give acquittances and receipts for, take
possession of, or endorse and receive payment of, any checks, drafts, notes,
acceptances, or other instruments for the payment of moneys due, and sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, and
notices in connection with any of Borrower’s property; (b) effect any repairs to
any of Borrower’s assets, or continue or obtain any insurance and pay all or any
part of the premiums therefor and costs thereof, and make, settle and adjust all
claims under such policies of insurance, and make all determinations and
decisions with respect to such policies; (c) pay or discharge any taxes, Liens,
or other encumbrances levied or placed on or threatened against Borrower or
Borrower’s property; (d) defend any suit, action or proceeding brought against
Borrower if Borrower does not defend such suit, action or proceeding or if
Attorney believes that it is not pursuing such defense in a manner that will
maximize the recovery to Attorney, and settle, compromise or adjust any suit,
action, or

 

Q-2-1

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proceeding described above and, in connection therewith, give such discharges or
releases as Attorney may deem appropriate; (e) file or prosecute any claim,
litigation, suit or proceeding in any court of competent jurisdiction or before
any arbitrator, or take any other action otherwise deemed appropriate by
Attorney for the purpose of collecting any and all such moneys due to Borrower
whenever payable and to enforce any other right in respect of Borrower’s
property; (f) sell, transfer, pledge, make any agreement with respect to, or
otherwise deal with, any of Borrower’s property, and execute, in connection with
such sale or action, any endorsements, assignments or other instruments of
conveyance or transfer in connection therewith; and (g) cause the certified
public accountants then engaged by Borrower to prepare and deliver to Attorney
at any time and from time to time, promptly upon Attorney’s request, any reports
required to be prepared by or on behalf of Borrower under the Agreement or any
other Transaction Document, all as though Attorney were the absolute owner of
its property for all purposes, and to do, at Attorney’s option and Borrower’s
expense, at any time or from time to time, all acts and other things that
Attorney reasonably deems necessary to perfect, preserve, or realize upon its
property or assets and the Liens of the Deal Agent as agent for the Secured
Parties thereon, all as fully and effectively as it might do. Borrower hereby
ratifies, to the extent permitted by law, all that said attorneys shall lawfully
do or cause to be done by virtue hereof.

 

[Remainder of Page Left Intentionally Blank]

 

Q-2-2

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IN WITNESS WHEREOF, this Power of Attorney is executed by Borrower, and Borrower
has caused its seal to be affixed pursuant to the authority of its board of
directors as of this 10th day of August, 2004.

 

       

Very truly yours,

 

ACS FUNDING TRUST I

   

(CORPORATE SEAL)

     

 

 

By

               

Name:

               

Title:

   

 

Sworn to and subscribed before

me this              day of August, 2004:

 

   Notary Public

 

Q-2-3

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EXHIBIT R

 

[RESERVED]

 

R-1

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EXHIBIT S

 

[RESERVED]

 

S-1

--------------------------------------------------------------------------------

 

EXHIBIT T

 

FORM OF AGENT AND INTERCREDITOR

PROVISIONS FOR AGENTED NOTES

 

[See attached]

 

[intentionally omitted]

 

T-1

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EXHIBIT U

 

FORM OF INTERCREDITOR

AND SUBORDINATION AGREEMENT

 

[See attached]

 

[intentionally omitted]

 

U-1

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EXHIBIT V

 

FORM OF TRANSFEREE LETTER

 

[                    ] [        ], 20[        ]

 

American Capital Strategies, Ltd.,

    as the Originator and the Servicer

2 Bethesda Metro Center, 14th Floor

Bethesda, Maryland 20814

Attention:   Compliance Officer

 

Wachovia Capital Markets, LLC,

    as the Deal Agent

One Wachovia Center, Mail Code NC0600

Charlotte, North Carolina 28288

Attention: Conduit Administrator

 

  Re: ACS Funding Trust I Structured Note

 

Ladies and Gentlemen:

 

In connection with our acquisition of the above–captioned Note, we certify that
(a) we understand that the Notes are not being registered under the Securities
Act of 1933, as amended (the “Act”), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we are an institutional
“Accredited Investor” as defined in Rule 501(a)(1)-(3) under the Act, and have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Notes, (c) we
have had the opportunity to ask questions of and receive answers from the
Originator and the Servicer concerning the purchase of the Notes and all matters
relating thereto or any additional information deemed necessary to our decision
to purchase the Notes, (d) we are acquiring the Notes for investment for our own
account and not with a view to any distribution of such Notes (but without
prejudice to our right at all times to sell or otherwise dispose of the Notes in
accordance with clause (f) below), (e) we have not offered or sold any Notes to,
or solicited offers to buy any Notes from, any person, or otherwise approached
or negotiated with any person with respect thereto, or taken any other action
which would result in a violation of Section 5 of the Act, (f) we will not sell,
transfer or otherwise dispose of any Notes unless (1) such sale, transfer or
other disposition is made pursuant to an effective registration statement under
the Act or is exempt from such registration requirements, and if requested, we
will at our expense provide an opinion of counsel satisfactory to the addressees
of this certificate that such sale, transfer or other disposition may be made
pursuant to an exemption from the Act, (2) the purchaser or transferee of such
Note has executed and delivered to you a certificate to substantially the same
effect as this certificate if required by the Second Amended and Restated Loan
Funding and Servicing Agreement, dated as of August 10, 2004 (as amended,
modified, waived, supplemented or restated from time to time, the “Loan Funding
and Servicing Agreement”), and (3) the purchaser or transferee has otherwise
complied with any conditions for transfer set forth in the Loan Funding and
Servicing Agreement, dated as

 

V-1

--------------------------------------------------------------------------------

of August 10, 2004, (g) the purchaser is not acquiring a Note, directly or
indirectly, for or on behalf of an employee benefit plan or other retirement
arrangement subject to the Employee Retirement Income Security Act of 1974, as
amended, and/or Section 4975 of the Internal Revenue Code of 1986, as amended,
or any entity, the assets of which would be deemed plan assets under the
Department of Labor regulations set forth at 29 C.F.R. §2510.3–101; unless
Prohibited Transaction Class Exemption (“PTCE”) 84–14, PTCE 90–1, PTCE 91–38,
PTCE 95–60 or PTCE 92–23 or some other applicable prohibited transaction
exemption is applicable to the acquisition and holdings of such Note, (h) the
purchaser is a U.S. Person, as such term is defined in Section 7701(a)(30) of
the Internal Revenue Code of 1986, as amended.

 

Very truly yours,   Print Name of Transferee

 

By:         Responsible Officer

 

V-2

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EXHIBIT W

 

JOINDER SUPPLEMENT

 

JOINDER SUPPLEMENT, dated as of the date set forth in Item 1 of Schedule I
hereto, among the financial institution identified in Item 2 of Schedule I
hereto, ACS Funding Trust I, as the borrower (the “Borrower”), the Lender Agent
named in Item 5 of Schedule I hereto (the “Lender Agent”), and Wachovia Capital
Markets, LLC, as Deal Agent (the “Deal Agent”).

 

W I T N E S S E T H:

 

WHEREAS, this Joinder Supplement is being executed and delivered under Section
2.1(e) of the Second Amended and Restated Loan Funding and Servicing Agreement,
dated as of August 10, 2004 (as amended, modified, waived, supplemented or
restated from time to time, the “Agreement”), by and among the Borrower,
American Capital Strategies, Ltd., as the servicer (the “Servicer”), the Conduit
Lenders and Institutional Lenders from time to time party thereto, the Lender
Agents from time to time party thereto, the Deal Agent, JPMorgan Chase Bank, as
the swingline lender, and Wells Fargo Bank, National Association, as the backup
servicer and as the collateral custodian (all capitalized terms used but not
defined herein have the meaning assigned thereto in the Agreement); and

 

WHEREAS, the party set forth in Item 2 of Schedule I hereto (the “Proposed
Lender”) wishes to become a Lender designated as a[n] [Conduit
Lender][Institutional Lender] party to the Agreement;

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

(a) Upon receipt by the Deal Agent of an executed counterpart of this Joinder
Supplement, to which is attached a fully completed Schedule I and Schedule II,
each of which has been executed by the Proposed Lender, the Borrower, the Lender
Agent and the Deal Agent, the Deal Agent will transmit to the Proposed Lender,
the Borrower and the Lender Agent, a Joinder Effective Notice, substantially in
the form of Schedule III to this Joinder Supplement (a “Joinder Effective
Notice”). Such Joinder Effective Notice shall be executed by the Deal Agent and
shall set forth, inter alia, the date on which the joinder effected by this
Joinder Supplement shall become effective (the “Joinder Effective Date”). From
and after the Joinder Effective Date, the Proposed Lender shall be a Lender
designated as a[n] [Conduit Lender][Institutional Lender] party to the Agreement
for all purposes thereof.

 

(b) Each of the parties to this Joinder Supplement agrees and acknowledges that
at any time and from time to time upon the written request of any other party,
it will execute and deliver such further documents and do such further acts and
things as such other party may reasonably request in order to effect the
purposes of this Joinder Supplement.

 

(c) By executing and delivering this Joinder Supplement, the Proposed Lender
confirms to and agrees with the Deal Agent, the Lender Agents and the other
Lenders as follows: (i) none of the Deal Agent, the Lender Agents and the other
Lenders makes any representation or warranty or assumes any responsibility with
respect to any statements, warranties or representations made in or in
connection with the Agreement or the execution, legality, validity,

 

W-1

--------------------------------------------------------------------------------

enforceability, genuineness, sufficiency or value of the Agreement or any other
instrument or document furnished pursuant thereto, or with respect to any
Structured Notes issued under the Agreement, or the Collateral (as defined under
the Agreement) or the financial condition of the Originator, the Servicer or the
Borrower, or the performance or observance by the Originator, the Servicer or
the Borrower of any of their respective obligations under the Agreement, any
other Transaction Document or any other instrument or document furnished
pursuant thereto; (ii) the Proposed Lender confirms that it has received a copy
of such documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Joinder Supplement; (iii) the
Proposed Lender will, independently and without reliance upon the Deal Agent,
the Lender Agents or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Agreement; (iv) the
Proposed Lender appoints and authorizes the Lender Agent to take such action as
agent on its behalf and to exercise such powers under the Agreement as are
delegated to the Lender Agent by the terms thereof, together with such powers as
are reasonably incidental thereto, all in accordance with Article XI of the
Agreement; (v) the Proposed Lender appoints and authorizes the Deal Agent to
take such action as agent on its behalf and to exercise such powers under the
Agreement as are delegated to the Deal Agent by the terms thereof, together with
such powers as are reasonably incidental thereto, all in accordance with the
Agreement; and (vi) the Proposed Lender agrees (for the benefit of the parties
hereto and the other Lenders) that it will perform in accordance with their
terms all of the obligations which by the terms of the Agreement are required to
be performed by it as a Lender designated as a[n] [Conduit Lender][Institutional
Lender].

 

(d) Schedule II hereto sets forth administrative information with respect to the
Proposed Lender.

 

(e) This Joinder Supplement shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

IN WITNESS WHEREOF, the parties hereto have caused this Joinder Supplement to be
executed by their respective duly authorized officers on Schedule I hereto as of
the date set forth in Item 1 of Schedule I hereto.

 

W-2

--------------------------------------------------------------------------------

SCHEDULE I TO

JOINDER SUPPLEMENT

 

COMPLETION OF INFORMATION AND

SIGNATURES FOR JOINDER SUPPLEMENT

 

  Re: Second Amended and Restated Loan Funding and Servicing Agreement, dated as
of [_________] [__], [____], among ACS Funding Trust I, as Borrower, the other
parties thereto and Wachovia Capital Markets, LLC, as Deal Agent.

 

Item 1:        Date of Joinder Supplement:

   __________________

Item 2:        Proposed Lender:

   ___________________________________

Item 3:        Type of Lender:

  

______Conduit Lender

______Institutional Lender

Item 4:        

  

Commitment - $____________

Commitment Termination Date:________________

Item 5:        Name of Lender Agent (if a Conduit Lender): ________________

    

Item 6:        Signatures of Parties to Agreement:

         

_________________________________, as

Proposed Lender

    

By:_______________________________________

      Name:

      Title:

    

[_________________________________, as

Proposed Lender

    

By:_______________________________________

      Name:

      Title:]

 

W-3

--------------------------------------------------------------------------------

ACS FUNDING TRUST I, as Borrower,

By: American Capital Strategies, Ltd.,

as Servicer

By:

       

Name:

       

Title:

   

WACHOVIA CAPITAL MARKETS, LLC,

as Deal Agent

By:

       

Name:

       

Title:

   

[NAME OF LENDER AGENT] [NAME

OF INSTITUTIONAL LENDER], as

[Lender Agent] [Institutional Lender]

By:

           

Name:

       

Title:

   

[NAME OF CONDUIT LENDER, as

Conduit Lender]

By:

           

Name:

       

Title:]

   

 

W-4

--------------------------------------------------------------------------------

SCHEDULE II TO

JOINDER SUPPLEMENT

 

ADDRESS FOR NOTICES

AND

WIRE INSTRUCTIONS

 

Address for Notices:

   _____________________________________          
_____________________________________          
_____________________________________          
_____________________________________          

Telephone:____________________________

          Facsimile:_____________________________          
email:________________________________           With a copy to:          
_____________________________________          
_____________________________________          
_____________________________________          
_____________________________________          

Telephone:____________________________

          Facsimile:_____________________________          

Telephone:____________________________

    

Wire Instructions:

   Facsimile:_____________________________          
email:________________________________          
ABA No.______________________________          
Reference:_____________________________     

 

W-5

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SCHEDULE III TO

JOINDER SUPPLEMENT

 

FORM OF

JOINDER EFFECTIVE NOTICE

 

To: [Name and address of the Borrower, Lender Agent and Proposed Lender]

 

The undersigned, as Deal Agent under the Second Amended and Restated Loan
Funding and Servicing Agreement, dated as of August 10, 2004, by and among the
Borrower, American Capital Strategies, Ltd., as the servicer, the Conduit
Lenders and Institutional Lenders from time to time party thereto, the Lender
Agents from time to time party thereto, the Deal Agent, JPMorgan Chase Bank, as
the swingline lender, and Wells Fargo Bank, National Association, as the backup
servicer and as the collateral custodian, acknowledges receipt of an executed
counterpart of a completed Joinder Supplement. [Note: attach copies of Schedules
I and II from such Agreement.] Terms defined in such Joinder Supplement are used
herein as therein defined.

 

Pursuant to such Joinder Supplement, you are advised that the Joinder Effective
Date for [Name of Proposed Lender] will be                          and such
Proposed Lender will be a Lender designated as a[n] [Conduit
Lender][Institutional Lender] with a Commitment of $                    .

 

Very truly yours,

WACHOVIA CAPITAL MARKETS, LLC,

as Deal Agent

By:

       

Name:

       

Title:

   

 

W-6

--------------------------------------------------------------------------------

 

SCHEDULE I

 

Schedule of Documents

 

In addition to, and not in limitation of, the conditions specified in Section
3.1 of the Agreement described below, the following documents must be received
by the Deal Agent in form and substance satisfactory to the Deal Agent on or
prior to the Closing Date:

 

Borrower    –      ACS Funding Trust I Originator    –      American Capital
Strategies, Ltd. VFCC    –      Variable Funding Capital Corporation Dechert   
–      Dechert LLP, counsel to VFCC and Wachovia WCM    –      Wachovia Capital
Markets, LLC WBNA    –      Wachovia Bank, National Association Dechert    –
     Dechert LLP, counsel to VFCC and Wachovia A&P    –      Arnold & Porter,
counsel to the Originator and Borrower W&S    –      Winston & Strawn LLP,
special counsel to the Originator Backup Servicer and Collateral Custodian    –
     Wells Fargo Bank, National Association

 

I. CLOSING DATE DELIVERIES

 

TRANSACTION DOCUMENTS

 

Second Amended and Restated Loan Funding and Servicing Agreement

 

Exhibit A-1 (Borrower Notice – Funding Request)

Exhibit A-2 (Borrower Notice – Swingline Advance Request)

Exhibit A-3 (Borrower Notice – Reduction of Advances Outstanding and Reduction
of Facility Amount)

Exhibit B-1 (Form of Structured Note)

Exhibit B-2 (Form of Swingline Note)

Exhibit C (Trust Agreement)

Exhibit D (Form of Assignment and Acceptance)

Exhibit E (Form of Monthly Report)

Exhibit F (Form of Servicer’s Certificate)

Exhibit G (Credit and Collection Policy)

Exhibit H (Form of Hedging Agreement (including Schedule and Confirmation))

Exhibit I (Form of Certificate of Borrower’s Counsel)

Exhibit J (Form of Trust Receipt and Initial Certification of Custodian)

Exhibit K (Form of Trust Receipt and Final Certification of Custodian)

Exhibit L (Form of Request for Release of Loan Documents and Receipt)

Exhibit M-1 (Form of Assignment of Mortgage)

Exhibit M-2 (Assignment of Second Mortgage and Security Agreement)

Exhibit N (Form of Reinvestment Certification)

Exhibit O-1 (Officer’s Certificate as to Solvency from Originator)

 

SI-1

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Exhibit O-2 (Officer’s Certificate as to Solvency from Borrower)

Exhibit P-1 (Officer’s Closing Certificate from Originator)

Exhibit P-2 (Officer’s Closing Certificate from Borrower)

Exhibit Q-1 (Power of Attorney from Servicer)

Exhibit Q-2 (Power of Attorney from Borrower)

Exhibit R (Reserved)

Exhibit S (Reserved)

Exhibit T (Form of Agent and Intercreditor Provisions for Agented Notes)

Exhibit U (Form of Intercreditor and Subordination Agreement)

Exhibit V (Form of Transferee Letter)

Exhibit W (Form of Joinder Supplement)

Schedule I (Schedule of Documents)

Schedule II (Reserved)

Schedule III (Reserved)

Schedule IV (Loan List)

Schedule V (Location of Loan Files)

 

Second Amended and Restated Purchase and Sale Agreement

Originator to Borrower

Exhibit A (Form of Assignment)

Exhibit B (Notice of Sale)

Schedule I (Loan List)

 

Second Amended and Restated Liquidity Purchase Agreement

Between VFCC, WCM, WBNA and Investors

Exhibit A (Form of Assignment and Acceptance)

Exhibit B (Form of Purchase Confirmation)

Schedule 1 (Pro-Rata Shares of each Investor)

Schedule 4.1 (Conditions Precedent)

 

Hedge Agreement

  (a) Schedule to Master Agreement

  (i) Exhibit A (Swap Transaction Confirmation)

  (ii) Exhibit B (Legal Opinion of counsel to Borrower)

 

CORPORATE DOCUMENTS

 

Authority documents relating to Borrower

  (a) Certified Copy of Certificate of Formation

  (b) Trust Agreement

  (c) Good Standing Certificates

 

Secretary’s Certificate of Trustee of Borrower

(Certificate of Formation, Trust Agreement, Resolutions and Incumbency)

 

Authority documents relating to Originator

  (a) Certified Copy of Organizational Documents

 

SI-2

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  (b) Bylaws

  (c) Good Standing Certificates

 

Secretary’s Certificate of Originator

(Certificate of Incorporation, Bylaws, Resolutions, and Incumbency)

 

Officer’s Certificate of Borrower

(Bringdown of Representations and Warranties in Purchase and Sale Agreement and
Loan Funding and Servicing Agreement)

 

Officer’s Certificate of Originator

(Bringdown of Representations and Warranties in Purchase and Sale Agreement and
Loan Funding and Servicing Agreement)

 

Officer’s Certificate of Borrower

(Solvency)

 

Officer’s Certificate of Originator

(Solvency)

 

Power of Attorney of Borrower to WCM

 

Power of Attorney of Originator to WCM

 

UCC FINANCING STATEMENTS

 

Originator to Borrower

  (a) Delaware

 

Borrower to WCM, as the Deal Agent

  (a) Delaware

 

Pre-Closing UCC, tax lien and judgment search reports

  (a) as to Borrower

  (i) Delaware, Maryland, Minnesota

  (b) as to Originator

  (i) Delaware, Maryland, Minnesota

 

Post-Closing UCC, tax lien and judgment search reports

  (a) as to Borrower

  (i) Delaware, Maryland, Minnesota

  (b) as to Originator

  (i) Delaware, Maryland, Minnesota

 

LEGAL OPINIONS

 

Opinion of A&P, (Incorporation, Authorization, Execution, and Enforceability as
to Borrower)

 

SI-3

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Opinion of A&P, (Incorporation, Authorization, Execution, and Enforceability as
to Originator)

 

Opinion of W&S, as Counsel to Borrower and Originator (perfection and priority)

 

Opinion of W&S, as Counsel to Borrower and Originator (true sale and
non-consolidation)

 

Opinion of A&P, as Counsel to Borrower (Hedge Agreement)

 

Opinion of RLF, as Counsel to Originator (Formation of the Trust)

 

Opinion of Wells Fargo in-house Counsel (Incorporation, Authorization,
Execution, and Enforceability)

 

Opinion of RLF, as Counsel to the Borrower and Originator (UCC matters)

 

MISCELLANEOUS

 

Fee Letter

 

Backup Servicer and Collateral Custodian Fee Letter

 

Payment of Legal Fees

 

Such other consents, opinions, documents or instruments as the Deal Agent may
request.

 

II. INITIAL FUNDING DATE DELIVERIES

 

Notice of Sale

 

Assignment from Originator to Borrower

 

Loan List

 

[Borrower Notice for Initial Advance]

 

Trust Receipt and Initial Certification

 

Officer’s Certificate of Borrower

(Bringdown of Representations and Warranties in Purchase and Sale Agreement and
Loan Funding and Servicing Agreement)

 

Officer’s Certificate of Originator

(Bringdown of Representations and Warranties in Purchase and Sale Agreement and
Loan Funding and Servicing Agreement)

 

Officer’s Certificate of Borrower

(Solvency)

 

SI-4

--------------------------------------------------------------------------------

Officer’s Certificate of Originator

(Solvency)

 

Servicer’s Certificate

 

Such other consents, opinions, documents or instruments as the Deal Agent may
request.

 

SI-5

--------------------------------------------------------------------------------

SCHEDULE II

 

[RESERVED]

 

SII-1

--------------------------------------------------------------------------------

SCHEDULE III

 

[RESERVED]

 

SIII-1

--------------------------------------------------------------------------------

SCHEDULE IV

 

Loan List

 

[to be provided by the Originator]

 

SIV-1

--------------------------------------------------------------------------------

SCHEDULE V

 

Locations of Loan Files

 

    Wells Fargo Bank, National Association         Corporate Trust/Asset-Backed
Securities         ABS Custody Vault         MAC # N9328-011         751 Kasota
Avenue         Suite ABS         Minneapolis, MN 55414    

 

SV-1