Exhibit 10.1

EXECUTION COPY

 

 

 

U.S. $125,000,000

FOURTH AMENDED AND RESTATED LOAN AND SERVICING AGREEMENT

by and among

NEWSTAR CP FUNDING LLC,

as the Borrower,

NEWSTAR FINANCIAL, INC.,

as the Originator and as the Servicer,

EACH OF THE CONDUIT LENDERS AND INSTITUTIONAL LENDERS FROM TIME

TO TIME PARTY HERETO,

as the Lenders,

EACH OF THE LENDER AGENTS FROM TIME TO TIME PARTY HERETO,

as the Lender Agents,

WELLS FARGO SECURITIES, LLC

as the Administrative Agent,

and

U.S. BANK NATIONAL ASSOCIATION,

as the Trustee

Amended and Restated as of July 12, 2011

 

 

 

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TABLE OF CONTENTS

 

          Page  

ARTICLE I.    DEFINITIONS

  

Section 1.1.

   Certain Defined Terms      2   

Section 1.2.

   Other Terms      43   

Section 1.3.

   Computation of Time Periods      43   

Section 1.4.

   Interpretation      43   

ARTICLE II.    PURCHASE OF THE VARIABLE FUNDING NOTES

  

Section 2.1.

   The Variable Funding Notes      44   

Section 2.2.

   [Reserved]      44   

Section 2.3.

   Procedures for Advances by Lenders      45   

Section 2.4.

   Delivery of Loans      46   

Section 2.5.

   Reduction of the Facility Amount; Mandatory and Optional Repayments      46
  

Section 2.6.

   Determination of Interest      47   

Section 2.7.

   Principal Repayments on the Termination Date      47   

Section 2.8.

   Instructions to the Trustee      48   

Section 2.9.

   Notations on Variable Funding Notes      48   

Section 2.10.

   Settlement Procedures Prior to Termination Period      48   

Section 2.11.

   Settlement Procedures During the Termination Period      52   

Section 2.12.

   Collections and Allocations      54   

Section 2.13.

   Payments, Computations, Etc.      55   

Section 2.14.

   [Reserved]      56   

Section 2.15.

   Fees      56   

Section 2.16.

   Increased Costs; Capital Adequacy; Illegality      56   

Section 2.17.

   Taxes      58   

Section 2.18.

   Assignment of the Sale Agreement      59   

Section 2.19.

   Substitution and Transfer of Loans; Repurchase of Defaulted Loans      59   

Section 2.20.

   Optional Sales      62   

Section 2.21.

   Discretionary Sales      63   

Section 2.22.

   Limitations on Certain Substitutions and Sales      65   

Section 2.23.

   Release of Lien and Required Loan Documents      65   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

Section 2.24.

   Loan Acquisition and Disposition Criteria      66    ARTICLE
III.    CONDITIONS TO ADVANCES   

Section 3.1.

   Conditions to Closing      66   

Section 3.2.

   Conditions Precedent to All Advances      67   

Section 3.3.

   Conditions to Pledges of Loans      69   

Section 3.4.

   Custodianship; Transfer of Loans and Permitted Investments      69   

ARTICLE IV.    REPRESENTATIONS AND WARRANTIES

  

Section 4.1.

   Representations and Warranties of the Borrower      71   

Section 4.2.

   Representations and Warranties of the Borrower Relating to the Agreement and
the Collateral      80   

Section 4.3.

   Representations and Warranties of the Servicer      81   

Section 4.4.

   Representations and Warranties of the Trustee      84   

ARTICLE V.    GENERAL COVENANTS

  

Section 5.1.

   Affirmative Covenants of the Borrower      85   

Section 5.2.

   Negative Covenants of the Borrower      89   

Section 5.3.

   Covenants of the Borrower Relating to the Hedging of Loans      91   

Section 5.4.

   Affirmative Covenants of the Servicer      92   

Section 5.5.

   Negative Covenants of the Servicer      94   

Section 5.6.

   Affirmative Covenants of the Trustee      95   

Section 5.7.

   Negative Covenants of the Trustee      95   

ARTICLE VI.    ADMINISTRATION AND SERVICING OF LOANS

  

Section 6.1.

   Designation of the Servicer      96   

Section 6.2.

   Duties of the Servicer      97   

Section 6.3.

   Authorization of the Servicer      98   

Section 6.4.

   Collection of Payments      99   

Section 6.5.

   [Reserved]      102   

Section 6.6.

   Realization upon Loans Subject to an Assigned Value Adjustment Event      102
  

Section 6.7.

   Maintenance of Insurance Policies      102   

Section 6.8.

   [Reserved.]      102   

Section 6.9.

   [Reserved.]      102   

 

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TABLE OF CONTENTS

(continued)

 

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Section 6.10.

   [Reserved.]      102   

Section 6.11.

   Servicing Compensation      102   

Section 6.12.

   Payment of Certain Expenses by Servicer      103   

Section 6.13.

   Reports      103   

Section 6.14.

   Annual Statement as to Compliance      104   

Section 6.15.

   Annual Independent Public Accountant’s Servicing Reports      105   

Section 6.16.

   Limitation on Liability of the Servicer and Others      105   

Section 6.17.

   The Servicer Not to Resign      105   

Section 6.18.

   Servicer Defaults      106   

Section 6.19.

   Appointment of Successor Servicer      109   

ARTICLE VII.      [RESERVED]

  

ARTICLE VIII.    THE TRUSTEE

  

Section 8.1.

   Designation of Trustee      111   

Section 8.2.

   Duties of Trustee      111   

Section 8.3.

   Merger or Consolidation      115   

Section 8.4.

   Trustee Compensation      115   

Section 8.5.

   Trustee Removal      115   

Section 8.6.

   Limitation on Liability      115   

Section 8.7.

   Resignation      118   

Section 8.8.

   Release of Documents      118   

Section 8.9.

   Return of Required Loan Documents      119   

Section 8.10.

   Access to Certain Documentation and Information Regarding the Collateral;
Audits      119   

ARTICLE IX.      SECURITY INTEREST

  

Section 9.1.

   Grant of Security Interest      120   

Section 9.2.

   Release of Lien on Collateral      121   

Section 9.3.

   Further Assurances      121   

Section 9.4.

   Remedies      122   

Section 9.5.

   Waiver of Certain Laws      122   

Section 9.6.

   Power of Attorney      122   

 

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TABLE OF CONTENTS

(continued)

 

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ARTICLE X.      TERMINATION EVENTS

  

Section 10.1.

   Termination Events      123   

Section 10.2.

   Remedies      125   

ARTICLE XI.    INDEMNIFICATION

  

Section 11.1.

   Indemnities by the Borrower      127   

Section 11.2.

   Indemnities by the Servicer      130   

Section 11.3.

   After-Tax Basis      131   

ARTICLE XII.    THE ADMINISTRATIVE AGENT AND LENDER AGENTS

  

Section 12.1.

   The Administrative Agent      131   

Section 12.2.

   Lender Agents      135   

ARTICLE XIII.    MISCELLANEOUS

  

Section 13.1.

   Amendments and Waivers      137   

Section 13.2.

   Notices, Etc.      137   

Section 13.3.

   Ratable Payments      137   

Section 13.4.

   No Waiver; Remedies      138   

Section 13.5.

   Binding Effect; Benefit of Agreement      138   

Section 13.6.

   Term of this Agreement      138   

Section 13.7.

   Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue, Service
of Process      138   

Section 13.8.

   Waiver of Jury Trial      139   

Section 13.9.

   Costs, Expenses and Taxes      139   

Section 13.10.

   No Proceedings      140   

Section 13.11.

   Recourse Against Certain Parties      140   

Section 13.12.

   Protection of Right, Title and Interest in the Collateral; Further Action
Evidencing Advances      141   

Section 13.13.

   Confidentiality      142   

Section 13.14.

   Execution in Counterparts; Severability; Integration      143   

Section 13.15.

   Waiver of Setoff      144   

Section 13.16.

   Assignments      144   

Section 13.17.

   Heading and Exhibits      145   

Section 13.18.

   Non-Confidentiality of Tax Treatment      145   

Section 13.19.

   Cooperation with Trustee and the Servicer      145   

 

 

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EXHIBITS

 

EXHIBIT A-1    Form of Borrowing Notice (Advance Request) EXHIBIT A-2    Form of
Repayment Notice (Reduction of Advances Outstanding/Facility Amount) EXHIBIT A-3
   Form of Borrowing Notice (Reinvestment of Principal Collections) EXHIBIT A-4
   Form of Borrowing Notice (Unfunded Exposure Account Disbursement) EXHIBIT A-5
   Form of Borrowing Base Certificate EXHIBIT A-6    Form of Approval Notice
EXHIBIT B    Form of Variable Funding Note (VFN) EXHIBIT C    Form of Servicing
Report EXHIBIT D    [Reserved] EXHIBIT E-1    Form of Officer’s Certificate to
Solvency (NewStar CP Funding LLC) EXHIBIT E-2    Form of Officer’s Certificate
to Solvency (NewStar Financial, Inc.) EXHIBIT F-1    Form of Officer’s Closing
Certificate (NewStar CP Funding LLC) EXHIBIT F-2    Form of Officer’s Closing
Certificate (NewStar Financial, Inc.) EXHIBIT G-1    Form of Power of Attorney
(NewStar CP Funding LLC) EXHIBIT G-2    Form of Power of Attorney (NewStar
Financial, Inc.) EXHIBIT H    Form of Release of Required Loan Documents EXHIBIT
I    Form of Servicer’s Certificate EXHIBIT J    Form of Transferee Letter

SCHEDULES

 

SCHEDULE I    Condition Precedent Documents SCHEDULE II    Concentration Account
Bank and Concentration Account SCHEDULE III    Location of Required Loan
Documents SCHEDULE IV    Credit and Collection Policy SCHEDULE V    Agreed-Upon
Procedures For Independent Public Accountants

ANNEXES

 

ANNEX A    Addresses

 

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FOURTH AMENDED AND RESTATED SALE AND SERVICING AGREEMENT

THIS FOURTH AMENDED AND RESTATED SALE AND SERVICING AGREEMENT (as amended,
modified, waived, supplemented, restated or replaced from time to time, the
“Agreement”) is made as of this July 12, 2011, by and among:

(1) NEWSTAR CP FUNDING LLC, a Delaware limited liability company, as the seller
(together with its successors and assigns in such capacity, the “Borrower”);

(2) NEWSTAR FINANCIAL, INC., a Delaware corporation (the “Company”), as the
originator (together with its successors and assigns in such capacity, the
“Originator”), and as the servicer (together with its successors and assigns in
such capacity, the “Servicer”);

(3) WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
(together with its successors and assigns, “Wells Fargo”), as a Lender;

(4) EACH OF THE CONDUIT LENDERS FROM TIME TO TIME PARTY HERETO (each, together
with its successors and assigns in such capacity, a “Conduit Lender” and a
“Lender”);

(5) EACH OF THE INSTITUTIONAL LENDERS FROM TIME TO TIME PARTY HERETO (each,
together with its successors and assigns in such capacity, an “Institutional
Lender” and a “Lender” and collectively with the Conduit Lenders, the
“Lenders”);

(6) EACH OF THE LENDER AGENTS FROM TIME TO TIME PARTY HERETO (each, together
with its successors and assigns, a “Lender Agent”);

(7) WELLS FARGO SECURITIES, LLC a Delaware limited liability company (together
with its successors and assigns, “WFS”), as the administrative agent (together
with its successors and assigns in such capacity, the “Administrative Agent”)
and as the Lender Agent with respect to Wells Fargo as an Institutional Lender
(together with its successors and assigns in such capacity, the “Wells Fargo
Agent”); and

(8) U.S. BANK NATIONAL ASSOCIATION, a national banking association (together
with its successors and assigns, “US Bank”), not in its individual capacity but
as the trustee (together with its successors and assigns in such capacity, the
“Trustee”).

R E C I T A L S

WHEREAS, the parties hereto, previously entered into the Third Amended and
Restated Loan and Servicing Agreement dated as of July 15, 2009 (such agreement,
as amended, modified or waived prior to the date hereof, the “Existing
Agreement”);

WHEREAS, the parties hereto now wish to amend and restate the Existing Agreement
in its entirety in order to make certain additional changes agreed to by the
parties hereto; and

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

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NOW, THEREFORE, based upon the foregoing Recitals, the mutual promises 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.

Certain capitalized terms used throughout this Agreement are defined above or in
this Section 1.1. 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, and the rules and
regulations promulgated thereunder.

“Account”: Any of the Collection Account, the Principal Collections Account, the
Interest Collections Account, the Custodial Account, the Unfunded Exposure
Account and any sub-accounts thereof deemed appropriate or necessary by the
Administrative Agent for convenience in administering such accounts.

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

“Accrual Period”: With respect to each Advance (or portion thereof), (i) with
respect to the first Payment Date, the period from and including the Initial
Closing Date to and including the last day of the calendar month preceding the
first Payment Date, and (ii) with respect to any subsequent Payment Date, the
period ending on the last day of the calendar month immediately preceding the
month in which the Payment Date occurs and commencing on the first day of the
calendar month in which the preceding Payment Date occurred; provided, that the
final Accrual Period hereunder shall end on and include the day prior to the
payment in full of the Advances hereunder.

“Additional Amount”: Defined in Section 2.17(a).

“Adjusted Borrowing Value”: For any Loan as of any date of determination, an
amount equal to the least of (i) the OLB of such Loan, (ii) the Purchase Price
of such Loan multiplied by the OLB thereof at such time, and (iii) the Assigned
Value of such Loan multiplied by the OLB thereof at such time; provided that the
“Adjusted Borrowing Value” of any Loan that (x) is no longer an Eligible Loan or
(y) constitutes an Equity Security shall be zero.

“Administrative Agent”: WFS, in its capacity as administrative agent for the
Lender Agents, together with its successors and assigns, including any successor
appointed pursuant to Article XII.

“Advance”: Defined in Section 2.1(b).

 

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“Advance Rate”: With respect to any Loan on any Measurement Date, the
corresponding percentage for the type of Loan (such type to be determined as of
the Cut-Off Date of each Loan) set forth below:

 

Type of Loan

   Advance Rate  

Traditional Middle Market Loan

     65.0 % 

Large Middle Market Loan

     67.5 % 

Broadly Syndicated Loan

     70.0 % 

“Advances Outstanding”: On any day, the aggregate principal amount of all
Advances outstanding on such day, after giving effect to all repayments of
Advances and the making of new Advances on such day.

“Affected Party”: The Administrative Agent, each Lender Agent, each Hedge
Counterparty, each Lender, each Liquidity Bank, all assignees and participants
of each Lender and each Liquidity Bank, and any sub-agent of the Administrative
Agent.

“Affiliate”: With respect to a Person, means any other Person that, directly or
indirectly, controls, is controlled by or under common control with such Person,
or is a director or officer of such Person; provided that for purposes of
determining whether any Loan is an Eligible Loan or any Obligor is an Eligible
Obligor, the term Affiliate shall not include any Affiliate relationship which
may exist solely as a result of direct or indirect ownership of, or control by,
a common Financial Sponsor. For purposes of this definition, “control”
(including the terms “controlling,” “controlled by” and “under common control
with”) when used with respect to any specified Person means the possession,
direct or indirect, of the power to vote 20% or more of the voting securities of
such Person or to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.

“Agent’s Account”: Means, with respect to any applicable Lender, the special
account established in the name of such Lender with such Lender’s Lender Agent,
or any other agent on such Lender’s behalf and identified as such to the
Borrower and Servicer in writing (or any other account from time to time
notified to the Borrower and the Servicer in writing by such Lender or its
Lender Agent).

“Agented Loan”: Any Loan which is agented by a Person as part of a syndicated
loan transaction or is agented by the Company.

“Aggregate Exposure Amount”: As of any date of determination, the sum of the
Exposure Amounts of all Delayed Draw Term Loans and Revolving Loans included in
the Collateral on such date.

“Aggregate Unfunded Exposure Equity Amount”: As of any date of determination, an
amount equal to the sum of the Unfunded Exposure Equity Amounts with respect to
the Delayed Draw Term Loans and Revolving Loans in the Collateral on such date.

 

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“Aggregate Unpaids”: At any time, an amount equal to the sum of all unpaid
Advances Outstanding, Interest, Breakage Costs, Hedge Breakage Costs and all
other amounts owed by the Borrower to the Lenders, the Lender Agents, the
Administrative Agent, any applicable Hedge Counterparty and the Trustee
hereunder (including, without limitation, all Indemnified Amounts, other amounts
payable under Article XI and amounts required under Section 2.10, Section 2.11,
Section 2.16 and Section 2.17 to the Affected Parties or Indemnified Parties) or
under any Hedging Agreement (including, without limitation, payments in respect
of the termination of any such Hedging Agreement) or by the Borrower or any
other Person under any fee letter (including, without limitation, each
applicable Lender Fee Letter and the Trustee Fee Letter) delivered in connection
with the transactions contemplated by this Agreement, in each case whether due
or accrued.

“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 which are applicable to such Person or property (including, without
limitation, and to the extent applicable, usury laws, the Federal Truth in
Lending Act, and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System), and applicable judgments, decrees, injunctions, writs,
awards or orders of any court, arbitrator or other administrative, judicial, or
quasi-judicial tribunal or agency of competent jurisdiction.

“Applicable Spread”: As set forth in each Lender’s Fee Letter.

“Approval Notice”: With respect to any Eligible Loan, the written notice,
substantially in the form attached hereto as Exhibit A-6, evidencing the
approval by the Administrative Agent, in its sole discretion, of the acquisition
of such Eligible Loan by the Borrower.

“Approved Valuation Firm”: Each of (i) Houlihan Lokey Howard & Zukin,
(ii) Lincoln International LLC (f/k/a Lincoln Partners LLC), (iii) Duff & Phelps
Corp., (iv) Valuation Research Corporation, (v) FTI Consulting, Inc.,
(vi) American Appraisal Associates, Inc., (vii) Deloitte LLP, (viii) Ernst &
Young LLP, (ix) KPMG LLP, (x) Capstone Advisory Group, LLC and (xi) any other
nationally recognized accounting firm or valuation firm, in each case as
approved by the Administrative Agent in its sole discretion.

“Assigned Value”: With respect to each Loan included in the Collateral, as of
any date of determination, the value (expressed as a percentage of such Loan’s
par value) assigned to such Loan by the Administrative Agent in its sole
discretion as of the Closing Date or the applicable Cut-Off Date (in the case of
a Loan added to the Collateral after the Closing Date), in each case subject to
the following terms:

(a) If an Assigned Value Adjustment Event of the type described in clauses (i),
(iii), (iv) or (viii) (solely with respect to a Material Modification described
in clause (a) therein) of the definition thereof with respect to such Loan
occurs, the Assigned Value of such Loan will, automatically and without further
action by the Administrative Agent, be zero;

 

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(b) If an Assigned Value Adjustment Event not described in clause (a) hereof
with respect to such Loan occurs, the Assigned Value of such Loan may be amended
by the Administrative Agent, in its sole discretion. In the event the Borrower
disagrees with the Administrative Agent’s determination of the Assigned Value of
a Loan, the Borrower may (at its expense) retain any single Approved Valuation
Firm to value such Loan and if the value (expressed as a percentage of par)
determined by such firm is greater than the Administrative Agent’s determination
of the Assigned Value, such firm’s valuation shall be the Assigned Value;
provided that (a) the Assigned Value of such Loan shall be the value (expressed
as a percentage of par) assigned by the Administrative Agent until such
valuation firm has determined its value and (b) the Assigned Value shall not be
based upon the practices set forth in FASB No. 157 or any pronouncement,
statement, rule or amendment with respect to GAAP mandated mark to market
requirements, but rather shall be based on the amortized cost adjusted for any
credit impairment of such Loan;

(c) The Assigned Value of any Priced Loan shall not be less than the price
quoted therefor (if any) by a nationally-recognized pricing service as selected
by the Administrative Agent;

(d) The Assigned Value of any Loan will be re-evaluated at the sole discretion
of the Administrative Agent for any Loan whose Assigned Value was decreased
following the occurrence of an Assigned Value Adjustment Event upon the
improvement in the Senior Net Leverage Ratio or the Interest Coverage Ratio that
gave rise to the decrease in the Assigned Value; and

(e) The Administrative Agent shall promptly notify the Servicer of any change
effected by the Administrative Agent in the Assigned Value of any Loan.

“Assigned Value Adjustment Event”: With respect to any Loan, the occurrence of
any one or more of the following events after the related Cut-Off Date:

(i) a default in the payment of principal or interest under such Loan (after
giving effect to any applicable grace or cure periods, but in any case not to
exceed five (5) Business Days, in accordance with the Underlying Instruments);

(ii) a default as to all or any portion of one or more payments of principal or
interest has occurred in relation to any other pari passu obligation for
borrowed money of the related Obligor (giving effect to any grace period
applicable thereto but in no event exceeding five (5) Business Days past the
applicable due date);

(iii) an Insolvency Event with respect to the related Obligor;

(iv) the Servicer has determined in accordance with the Collateral Management
Standard that such Loan is on non-accrual status or not collectible;

(v) the failure to deliver any financial reporting package monthly (to the
extent required by the Underlying Instruments), quarterly or annually with
respect to such Loan pursuant to Section 6.13(f) no later than 45 days after the
end of each month, 60 days after the end of each quarter and 120 days after the
end of each fiscal year (or such greater number of

 

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days as allowed by the Underlying Instruments (including any grace periods
thereunder), but which shall in no case exceed 150 days after the end of each
fiscal year), unless otherwise agreed to by the Administrative Agent in its sole
discretion;

(vi) the Interest Coverage Ratio (calculated solely with respect to interest
payable in cash) for any Relevant Test Period with respect to such Loan is
(A) less than 85% of the Interest Coverage Ratio with respect to such Loan as of
the Cut-Off Date for such Loan and (B) less than 1.50 to 1.00;

(vii) the Senior Net Leverage Ratio for any Relevant Test Period of the related
Obligor with respect to such Loan is (A) more than 0.50x higher than such Senior
Net Leverage Ratio with respect to such Loan as of the Cut-Off Date for such
Loan and (B) greater than 3.50 to 1.00; or

(viii) the occurrence of a Material Modification with respect to such Loan.

“Availability”: At any time, an amount equal to the positive excess, if any, of
(i) the Maximum Availability over (ii) the Advances Outstanding on such day;
provided that at all times on and after the Termination Date, the Availability
shall be zero.

“Available Funds”: With respect to any Payment Date, all amounts received in the
Collection Account (including, without limitation, any Collections on Loans
included in the Collateral and earnings from Permitted Investments in the
Collection Account) during the Collection Period that ended on the Determination
Date immediately preceding the calendar month in which such Payment Date occurs.

“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 per annum interest rate equal to the
higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1.5%.

“Benefit Plan”: Any employee benefit plan as defined in Section 3(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(5) of ERISA.

“Borrower”: Defined in the Preamble of this Agreement.

“Borrower ISDA Guaranty”: That certain limited guaranty, in the form agreed by
the Borrower, NewStar and Wells Fargo, made by the Borrower in favor of Wells
Fargo, guaranteeing the obligations of NewStar under the ISDA Master Agreement
between the Administrative Agent and the Originator dated as of November 12,
2004, as the same may be amended from time to time in accordance with its terms.

“Borrowing Base”: As of any Measurement Date, an amount equal to the aggregate
Adjusted Borrowing Value of all Eligible Loans in the Collateral after giving
effect to all Eligible Loans added to and removed from the Collateral on such
date.

 

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“Borrowing Base Certificate”: Each certificate, in the form of Exhibit A-5,
required to be delivered by the Borrower along with each Borrowing Notice and on
each Measurement Date.

“Borrowing Base Deficiency”: As of any Measurement Date, an amount equal to the
positive difference, if any, of (a) the Advances Outstanding on such day over
(b) the Maximum Availability on such day.

“Borrowing Notice”: Each notice required to be delivered by the Borrower in
respect of (a) each Advance, in the form of Exhibit A-1 or (b) any reinvestment
of Principal Collections under Section 2.10(c), in the form of Exhibit A-3 or
under Section 2.10(d), in the form of Exhibit A-4.

“Breakage Costs”: Means, with respect to any applicable Lender, any amount or
amounts as shall compensate such Lender for any loss, cost or expense incurred
by such Lender (as determined by the applicable Lender Agent on behalf of such
Lender, in such Lender Agent’s sole discretion) as a result of a prepayment by
the Borrower of Advances Outstanding or Interest. All Breakage Costs shall be
due and payable hereunder on each Payment Date in accordance with Section 2.10
and Section 2.11 or as otherwise specified herein. The determination by the
applicable Lender of the amount of any such loss, cost or expense shall be
conclusive absent manifest error.

“Broadly Syndicated Loan”: Any commercial loan that is (i) a broadly syndicated
commercial loan, (ii) has first priority right of payments and is not (and
cannot by its terms become) subordinate in right of payment to any obligation of
the Obligor in any bankruptcy, reorganization, insolvency, moratorium or
liquidation proceedings, (iii) is secured by a pledge of collateral, which
security interest is validly perfected and first priority under Applicable Law
(subject to liens permitted under the applicable credit agreement), (iv) the
Servicer has determined in good faith that the value of the collateral securing
the loan (or the enterprise value of the underlying business) on or about the
time of origination equals or exceeds the outstanding principal balance of the
loan plus the aggregate outstanding balances of all other loans of equal or
higher seniority secured by the same collateral, (v) has a tranche size of
$250,000,000 or greater, and (vi) is rated by both S&P and Moody’s (or the
Obligor is rated by S&P and Moody’s) at the time of acquisition by the Borrower
and such ratings are not lower than B3 by Moody’s and B- by S&P. For avoidance
of doubt, the reference to “tranche size” in clause (v) hereof is to the tranche
currently held or contemplated for purchase by the Borrower. To the extent,
there are multiple pari passu tranches issued by the Obligor, such other
tranches shall be included in the calculation of tranche size if they carry the
same material terms and are each widely distributed. Additionally, the
calculation of tranche size shall also include any last out component, but not
any second lien component.

“Business Day”: Any day (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, Boston,
Massachusetts, Minneapolis, Minnesota, Charlotte, North Carolina or Florence,
South Carolina and (b) if the term “Business Day” is used in connection with the
determination of the LIBOR Rate, dealings in United States dollar deposits are
carried on in the London interbank market.

 

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“Capital Lease Obligations”: With respect to any entity, the obligations of such
entity to pay rent or 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 entity under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

“Cash”: Such currency or coin of the United States as at the time shall be legal
tender for payment of all public and private debts.

“Certificated Security”: The meaning specified in Section 8-102(a)(4) of the
UCC.

“Change-in-Control”: Any of the following:

(a) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act, but excluding (i) Permitted Holders, and (ii) any employee
benefit plan of such person or its subsidiaries, and any person or entity acting
in its capacity as trustee, agent or other fiduciary or administrator of such
plan) becomes the “beneficial owner” (as defined under Rule 13d-3 and 13d-5
under the Exchange Act, except that a person or group shall be deemed to have
“beneficial ownership” of all securities that such person or group has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of stock or other equity interests or
any interest convertible into any such interest in the Originator or the initial
Servicer having more than fifty percent (50%) of the voting power for the
election of directors of the Originator or the initial Servicer, if any, under
ordinary circumstances;

(b) the creation or imposition of any Lien on any limited liability company
membership interest in the Borrower; other than a pledge of the membership
interests in the Borrower to secure the Fortress Notes pursuant to the pledge
agreement which has already been approved by the Administrative Agent; or

(c) the failure by Originator to own all of the limited liability company
membership interests in the Borrower.

“Clearing Agency”: An organization registered as a “clearing agency” pursuant to
Section 17A of the Exchange Act.

“Clearing Corporation”: The meaning specified in Section 8-102(a)(5) of the UCC.

“Closing Date”: July 12, 2011.

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

“Collateral”: All right, title, and interest (whether now owned or hereafter
acquired or arising, and wherever located) of the Borrower in all accounts, cash
and currency, chattel paper, tangible chattel paper, electronic chattel paper,
copyrights, copyright licenses, equipment, fixtures, general intangibles,
instruments, commercial tort claims, deposit accounts, inventory,

 

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investment property, letter-of-credit rights, software, supporting obligations,
accessions, and other property of the Borrower, including, without limitation,
all right, title and interest of the Borrower in the following (in each case
excluding the Retained Interest and any fee permitted to be retained by the
Originator in connection with the origination of any Loan under clause (b)(iii)
of the definition of Excluded Amounts):

(i) the Existing Loans and all other Loans in which the Borrower has an
interest, and all monies due or to become due in payment under such Loans on and
after the related Cut-Off Date, including, but not limited to, all Collections;

(ii) all Related Security with respect to the Loans referred to in clause (i);

(iii) for the avoidance of doubt, all “Collateral” under and as defined in the
Existing Agreement; and

(iv) all income and Proceeds of the foregoing.

For the avoidance of doubt, the term “Collateral” shall, for all purposes of
this Agreement, be deemed to include any Loan acquired directly by the Borrower
from a third party in a transaction arranged and underwritten by the Originator
or any transaction in which the Borrower is the designee of the Originator under
the instruments of conveyance relating to the applicable Loan.

“Collection Account”: Defined in Section 6.4(h).

“Collection Date”: The date following the Termination Date on which the
Aggregate Unpaids have been reduced to zero and indefeasibly paid in full.

“Collection Period”: With respect to the first Payment Date, the period from and
including the Initial Closing Date to and including the Determination Date
preceding the first Payment Date; and thereafter, the period from but excluding
the Determination Date preceding the previous Payment Date to and including the
Determination Date preceding the current Payment Date.

“Collections”: (a) All Cash collections and other Cash proceeds of any Loan,
including, without limitation, any Interest Collections, Principal Collections,
Prepayments, Insurance Proceeds, interest earnings in the Collection Account,
and all other amounts received in respect of any Loan but excluding any Excluded
Amounts and amounts attributable to any Retained Interests, (b) any Cash
proceeds or other funds received by the Borrower or the Servicer with respect to
any Related Security, including from any guarantors and (c) all payments
received pursuant to any Hedging Agreement or Hedge Transaction.

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

“Commitment”: With respect to each Lender, the commitment of such Lender to make
Advances in accordance herewith in an amount not to exceed (i) prior to the end
of the Revolving Period, the dollar amount set forth opposite such Lender’s
signature on the signature

 

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pages hereto under the heading “Commitment” (as adjusted for assignments
thereof) and (ii) on or after the Revolving Period, with respect to each Lender,
such Lender’s Pro-Rata Share of the Advance Outstanding.

“Commitment Fee”: With respect to any applicable Lender and each Accrual Period,
the “commitment fee” set forth in such Lender’s Lender Fee Letter.

“Company”: Defined in the Preamble of this Agreement.

“Company LIBOR Rate”: The posted rate for one-month, two-month or three-month,
as applicable, deposits in Dollars appearing on the applicable Telerate Page
(3750 for Dollars, which is known as Telerate Successor Page 37507) or the
applicable Reuters Screen Page, or, if such Telerate Page is not available, in
such other manner, as and when determined in accordance with the applicable
Underlying Instruments.

“Company Prime Rate”: The rate designated by the Company (or the Person serving
as agent on a Loan if other than the Company) from time to time and/or pursuant
to the related Underlying Instruments as its prime rate in the United States,
such rate to change as and when the designated rate changes; provided that the
Company Prime Rate is not intended to be the lowest rate of interest charged by
the Company (or such agent) in connection with extensions of credit to debtors.

“Concentration Account”: The account maintained at the Concentration Account
Bank for the purpose of receiving Collections, the details of which are
contained in Schedule II, as such schedule may be amended from time to time.

“Concentration Account Bank”: Either (i) US Bank or (ii) Wells Fargo, as
applicable.

“Conduit Lender”: Each commercial paper conduit from time to time party hereto
as a Lender.

“Continued Errors”: Defined in Section 6.19(e).

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

“Credit and Collection Policy”: The written credit policies and procedures
manual of the Originator and the initial Servicer set forth on Schedule IV, as
may be as amended or supplemented from time to time in accordance with
Section 5.1(h) and Section 5.4(f).

“Custodial Account”: The securities account designated as the Custodial Account
and established in the name of the Trustee pursuant to Section 6.4(i).

“Cut-Off Date”: With respect to each Loan, the date such Loan is acquired by the
Borrower.

 

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“Defaulted Loan”: Any Loan which has been accelerated after an “Event of
Default” as defined in the Required Loan Documents, which acceleration has not
been waived, and any Loan classified as a Defaulted Loan by the Servicer in
accordance with the Credit and Collection Policy and the Servicing Standard.

“Delayed Draw Term Loan”: A Loan that is fully committed on the initial funding
date of such Loan and is required to be fully funded in one or more installments
on draw dates to occur within one year of the initial funding of such Loan but
which, once all such installments have been made has the characteristics of a
Term Loan.

“Derivatives”: Any exchange-traded or over-the-counter (i) forward, future,
option, swap, cap, collar, floor or foreign exchange contract or 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, (ii) any similar
transaction, contract, instrument, undertaking or security, or (iii) any
transaction, contract, instrument, undertaking or security containing any of the
foregoing.

“Determination Date”: The last day of each calendar month.

“Discretionary Sale”: Defined in Section 2.21(a).

“Discretionary Sale Date”: The Business Day identified by the Borrower to the
Administrative Agent in a Discretionary Sale Notice as the proposed date of a
Discretionary Sale.

“Discretionary Sale Notice”: Defined in Section 2.21(a)(i).

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

“EBITDA”: With respect to any period and any Loan, the meaning of “EBITDA,”
“Adjusted EBITDA” or any comparable definition in the Underlying Instruments for
each such Loan, and in any case that “EBITDA,” “Adjusted EBITDA” or such
comparable definition is not defined in such Underlying Instruments, an amount,
for the principal obligor on such Loan and any of its parents or Subsidiaries
that are obligated pursuant to the Underlying Instruments for such Loan
(determined on a consolidated basis without duplication in accordance with GAAP)
equal to earnings from continuing operations for such period plus interest
expense, income taxes and unallocated depreciation and amortization for such
period (to the extent deducted in determining earnings from continuing
operations for such period), and any other item the Borrower and the
Administrative Agent mutually deem to be appropriate.

“Eligible Asset”: A financial asset, either fixed or revolving, that by its
terms converts into cash within a finite time period plus any rights or other
assets designed to assure the servicing or timely distribution of proceeds to
securityholders.

 

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“Eligible Bid”: A bid made in good faith (and acceptable as a valid bid in the
Administrative Agent’s commercially reasonable discretion) by a bidder for all
or any portion of the Collateral in connection with a sale of Collateral in
whole or in part pursuant to Section 10.2.

“Eligible Loan”: On any Measurement Date thereof, each Loan that satisfies each
of the following eligibility requirements (unless any such eligibility
requirement with respect to such Loan is expressly waived by the Administrative
Agent in its sole discretion at the written request of the Servicer (for the
avoidance of doubt, the normal-course approval of a Loan pursuant to clause
(a) below shall not be deemed to be a waiver of any other eligibility
requirements listed below):

(a) such Loan has been approved by the Administrative Agent in its sole
discretion as evidenced by an Approval Notice delivered by the Administrative
Agent with respect to such Loan;

(b) such Loan is a first lien loan and a Traditional Middle Market Loan, Large
Middle Market Loan or Broadly Syndicated Loan;

(c) such Loan is an “eligible asset” as defined in Rule 3a-7 under the 1940 Act;

(d) such Loan is Registered;

(e) such Loan, together with the Related Security, has been purchased directly
by or sold or assigned to the Borrower, in each case, pursuant to (and in
accordance with) the Sale Agreement and the Borrower has good and marketable
title, free and clear of all Liens (other than Permitted Liens), on such Loan
and Related Security;

(f) the Loan (together with the Collections and Related Security related
thereto) has been the subject of a Grant by the Borrower in favor of the
Trustee, for the benefit of the Secured Parties, of a valid and perfected first
priority security interest;

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

(h) such Loan is denominated and payable only in Dollars in the United States
and does not permit the currency in which or country in which such Loan is
payable to be changed;

(i) such Loan complies with each of the representations and warranties made by
the Borrower and Servicer hereunder with respect thereto and all information
provided by the Borrower or the Servicer with respect to the Loan is true and
correct in all material respects;

(j) such Loan and any Related Security with respect thereto does not contravene
any Applicable Laws (including, without limitation, laws, rules and regulations,
if applicable, relating to usury, truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices,
licensing and privacy);

 

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(k) all consents, licenses, approvals or authorizations of, or registrations or
declarations with, any Governmental Authority or any other Person required to be
obtained, effected or given in connection with the acquisition, transfer or
performance (and, if originated by the Originator, the origination) by the
Borrower or the Originator of such Loan have been duly obtained, effected or
given and are in full force and effect;

(l) such Loan is eligible under its Underlying Instruments (giving effect to the
provisions of Sections 9-406 and 9-408 of the UCC) to be sold to the Borrower
and to have a security interest therein granted to the Trustee for the benefit
of the Secured Parties;

(m) as of the applicable Cut-Off Date, such Loan is not the subject of an offer
of exchange or tender by its issuer, for Cash, securities or any other type of
consideration, and has not been called for redemption or tender into any other
security or property that is not, on the date of such investment, a Loan;

(n) as of the applicable Cut-Off Date, such Loan (A) is not an Equity Security
and (B) does not provide for the conversion or exchange into an Equity Security
at any time on or after the date it is included as part of the Collateral;

(o) other than Permitted PIK Loans, such Loan is not a Loan with respect to
which interest required by the Underlying Instrument to be paid in cash has
previously been deferred or capitalized as principal and not subsequently paid
in full;

(p) no selection procedure adverse to the interests of the Secured Parties was
utilized by the Borrower or Originator in the selection of such Loan for
inclusion in the Collateral;

(q) the repayment of such Loan is not subject to material non-credit related
risk (for example, a Loan the payment of which is expressly contingent upon the
nonoccurrence of a catastrophe), as reasonably determined by the Servicer in
accordance with the Credit and Collection Policy and the Servicing Standard;

(r) the acquisition of such Loan will not cause the Borrower or the pool of
Collateral to be required to register as an investment company under the 1940
Act;

(s) such Loan is not principally secured by Margin Stock;

(t) such Loan provides for a fixed amount of principal payable in Cash no later
than its stated maturity;

(u) such Loan provides for periodic payments of interest in Cash no less
frequently than quarterly;

(v) such Loan is not subject to withholding tax unless the Obligor thereon is
required under the terms of the related Underlying Instrument to make “gross-up”
payments that cover the full amount of such withholding tax on an after-tax
basis;

 

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(w) the inclusion of such Loan in the Collateral does not result in the
aggregate commitments of the Borrower under all Revolving Loans and the
aggregate unfunded commitments of the Borrower under all Delayed Draw Term Loans
included in the Collateral exceeding $25,000,000;

(x) the inclusion of such Loan in the Collateral does not result in the
aggregate OLB of all Fixed Rate Loans included in the Collateral exceeding
$15,000,000;

(y) as of the applicable Cut-Off Date, such Loan is not principally secured by
real estate;

(z) such Loan is evidenced by a promissory note (other than in the case of a
Noteless Loan), a credit agreement containing an express promise to pay, a
security agreement or instrument and related loan documents that have been duly
authorized and executed, are in full force and effect and constitute the legal,
valid, binding and absolute and unconditional payment obligation of the related
Obligor, enforceable against such Obligor in accordance with their terms
(subject, as to enforcement only, to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
to general principles of equity, whether considered in a suit at law or in
equity), and there are no conditions precedent to the enforceability or validity
of the Loan that have not been satisfied or validly waived;

(aa) as of the applicable Cut-Off Date, all parties that have had any interest
in the Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein any Related Property is located, and (ii)(A) organized under the
laws of such state, (B) qualified to do business in such state, (C) federal
savings and loan associations or national banks having principal offices in such
state or (D) not doing business in such state;

(bb) such Loan (i) was originated and underwritten, or purchased and
re-underwritten, by the Originator including, without limitation, the completion
of a due diligence audit and collateral assessment, (ii) is fully documented,
and (iii) is being serviced by the Servicer, in each case in accordance with the
Credit and Collection Policy and the Servicing Standard;

(cc) if such Loan was acquired by the Borrower after the Closing Date, such Loan
has an original term to maturity that does not exceed 84 months;

(dd) all of the original or certified Required Loan Documents with respect to
such Loan have been, or will be, delivered to the Trustee as provided in
Section 3.2(c) or Section 3.3(b), as applicable, and all Servicing Files are
being or shall be maintained at the principal place of business of the Servicer
in accordance with the Credit and Collection Policy;

(ee) as of the date such Loan is first included as part of the Collateral, such
Loan is not in payment default;

 

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(ff) as of the applicable Cut-Off Date, there is no default, breach, violation
or event or condition which would give rise to a right of acceleration existing
under the Underlying Instruments and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event or condition which would give rise to a
right of acceleration;

(gg) as of the applicable Cut-Off Date, such Loan is not a Materially Modified
Loan and such Loan is not a loan (including, without limitation, a new loan that
replaced a prior loan by the Originator or any of its Affiliates to the Obligor
that was delinquent or defaulted) or extension of credit by the Originator to
the Obligor for the purpose of making any past due principal, interest or other
payments due on such Loan;

(hh) other than for Permitted PIK Loans, such Loan does not permit interest to
be capitalized;

(ii) such Loan is not subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, by the related Obligor (including
any account debtor or Person obligated to make payments on such Loan to such
Obligor), nor will the operation of any of the terms of the Underlying
Instruments, or the exercise of any right thereunder, render the Underlying
Instruments unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury, no
such right of rescission, set-off, counterclaim or defense has been asserted
with respect thereto, and the Underlying Instruments with respect to the Loan
provide for an affirmative waiver by the related Obligor of all rights of
rescission, set-off and counterclaim against the Originator and its assignees;

(jj) such Loan does not contain a confidentiality provision that restricts or
purports to restrict the ability of the Administrative Agent or any Secured
Party to exercise their rights under this Agreement, including, without
limitation, their rights to review the Loan File;

(kk) as of the applicable Cut-Off Date, if the Loan is one of a number of loans
made to the same Obligor at the same seniority in such Obligor’s capital
structure, such Loan and any other loans to the same Obligor contain standard
cross-collateralization and cross-default provisions;

(ll) the rights to service, administer and enforce all rights and remedies under
the applicable Underlying Instruments inure to the benefit of the holder of such
Loan or its designee (including the administrative agent for such Loan) and
neither the sale, transfer or assignment of such Loan to the Borrower, nor the
granting of a security interest hereunder to the Trustee, on behalf of the
Secured Parties, violates, conflicts with or contravenes any Applicable Law or
any contractual or other restriction, limitation or encumbrance;

(mm) the master computer records of the Originator and the Servicer relating to
such Loan have been clearly and unambiguously marked to show that such Loan has
been sold to and is owned by the Borrower;

 

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(nn) such Loan has not been sold, transferred, assigned or pledged by the
Borrower to any person other than the Trustee, on behalf of the Secured Parties;

(oo) such Loan is not a financing to a debtor-in-possession in any insolvency
proceeding; and

(pp) such Loan is not a participation interest.

“Eligible Obligor”: On any Measurement Date, any Obligor that:

(i) is a business organization (and not a natural person) duly organized and
validly existing under the laws of its jurisdiction of organization,

(ii) is a legal operating entity or holding company,

(iii) has not entered into the Loan primarily for personal, family or household
purposes,

(iv) is not a Governmental Authority,

(v) is not an Affiliate of the Borrower, the Originator or the Servicer (so long
as the Servicer is an Affiliate of the Borrower),

(vi) such Obligor is organized under the federal or provincial laws of, or its
principal office is located in, and the Related Property with respect to which
the Loan is principally underwritten is located in, the United States or Canada,

(vii) is not (and has not been for at least three years) the subject of an
Insolvency Event, and, as of the date on which such Loan became part of the
Collateral, such Obligor is not in financial distress and has not experienced a
material adverse change in its condition, financial or otherwise, as determined
by the Servicer, unless approved in writing by the Administrative Agent in its
sole discretion, and

(viii) as of any applicable Cut-Off Date, the sum of the OLB of all Loans
included in the Collateral made to such Obligor (including any Affiliate
thereof) shall not, collectively, exceed $10,000,000; provided that up to three
(3) Obligors (including any Affiliate thereof) may, collectively, have an
aggregate OLB in an amount up to $15,000,000 each for the first 75 days after
acquisition by the Borrower.

“Eligible Repurchase Obligations”: Repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the United
States or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States, in either case entered
into with a depository institution or trust company (acting as principal)
described in clauses (iii)(c) and (iii)(d) of the definition of Permitted
Investments.

“Entitlement Holder”: The meaning specified in Section 8-102(a)(7) of the UCC.

 

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“Environmental Laws”: Any and all foreign, federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. § 331 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control
Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.),
the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Safe Drinking
Water Act (42 U.S.C. § 300, et seq.), the Environmental Protection Agency’s
regulations relating to underground storage tanks (40 C.F.R. Parts 280 and 281),
and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the
rules and regulations thereunder, each as amended or supplemented from time to
time.

“Equity Security”: (i) Any equity security or any other security that is not
eligible for purchase by the Borrower as a Loan, (ii) any security purchased as
part of a “unit” with a Loan and that itself is not eligible for purchase by the
Borrower as a Loan, and (iii) any obligation that, at the time of commitment to
acquire such obligation, qualified as a Loan (because of its characterization as
indebtedness) but that, as of any subsequent date of determination, no longer
satisfies the requirements of a Loan, for so long as such obligation fails to
satisfy such requirements.

“ERISA”: The United States 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.

“Errors”: Defined in Section 6.19(e).

“Eurodollar Disruption Event”: The occurrence of any of the following: (a) any
Institutional Lender or Liquidity Bank shall have notified the Administrative
Agent of a determination by such Institutional Lender or Liquidity Bank or any
of its assignees or participants 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, (b) any Institutional Lender or Liquidity Bank shall have
notified the Administrative Agent of a determination by such Institutional
Lender or Liquidity Bank or any of its assignees or participants that the rate
at which deposits of Dollars are being offered to such Institutional Lender or
Liquidity Bank or any of its assignees or participants in the London interbank
market does not accurately reflect the cost to such Institutional Lender or
Liquidity Bank, such assignee or such participant of making, funding or
maintaining any

 

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Advance or (c) any Institutional Lender or Liquidity Bank shall have notified
the Administrative Agent of the inability of such Institutional Lender or
Liquidity Bank or any of its assignees or participants to obtain Dollars in the
London interbank market to make, fund or maintain any Advance.

“Excepted Persons”: Defined in Section 13.13(a).

“Exchange Act”: The United States Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

“Excluded Amounts”: (a) Any amount received in the Concentration Account with
respect to any Loan included as part of the Collateral, which amount is
attributable to the payment of any tax, fee or other charge imposed by any
Governmental Authority on such Loan or on any Related Property, and (b) any
amount received into the Collection Account or other Account representing
(i) any amount representing a reimbursement of insurance premiums, (ii) any
escrows relating to taxes, insurance and other amounts in connection with Loans
which are held in an escrow account for the benefit of the Obligor and the
secured party pursuant to escrow arrangements under the Underlying Instruments,
(iii) any fee retained by the Originator in connection with the origination of
any Loan, (iv) any fees or similar charges which are permitted to be retained by
the Servicer under this Agreement, and (v) any amount with respect to any Loan
retransferred or substituted for upon the occurrence of a Warranty Event or that
is otherwise replaced by a Substitute Loan, or that is otherwise sold by the
Borrower pursuant to Section 2.19, Section 2.20 or Section 2.21, to the extent
such amount is attributable to a time after the effective date of such
replacement or sale.

“Existing Loans”: Each Loan purchased by the Borrower under the Sale Agreement
and owned by the Borrower on the Closing Date, as set forth on the Loan Tape
delivered pursuant to Section 3.2(a)(i) on the Closing Date.

“Exposure Amount”: As of any date of determination, with respect to any Delayed
Draw Term Loan or Revolving Loan included in the Collateral, the excess, if any,
of (i) the maximum commitment of the Borrower under the terms of the Underlying
Instruments to make loans (and, for the avoidance of doubt, the Borrower’s
commitment in respect of a Loan as to which the commitment to make additional
loans has been terminated shall be zero) over (ii) the outstanding principal
balance (exclusive of any interest and Accreted Interest) of such Delayed Draw
Term Loan or Revolving Loan, as the case may be, on such date of determination.

“Facility Amount”: $125,000,000; provided that on or after the Termination Date,
the Facility Amount shall mean the Advances Outstanding.

“Facility Termination Date”: Means January 12, 2015.

“Fair Market Value” With respect to any Loan, if such Loan and Related Property
is to be sold to the Originator or any other Affiliate of the Borrower, (i) the
offered price quoted by Markit or Loan Pricing Corporation or (ii) if such price
quotation is not available, the price that would be paid by a willing buyer to a
willing seller of such Loan and Related Property in an expedited sale on an
arm’s-length basis determined by the Servicer (x) by obtaining bids for such
Loan and Related Property from three unaffiliated market participants (or, if
the Servicer is

 

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unable to obtain bids from three such participants, then such lesser number of
unaffiliated loan market participants from which the Servicer can obtain bids
using efforts consistent with the Servicing Standard), or (y) if the Servicer is
unable to obtain any bids for such Loan and Related Property from an
unaffiliated loan market participant, the price determined by an analysis
performed by a recognized valuation firm with experience valuing assets of the
applicable type to establish a fair market value of such Loan and Related
Property which reflects the price that would be paid by a willing buyer to a
willing seller of such Loan and Related Property in an expedited sale on an
arm’s-length basis.

“FDIC”: The Federal Deposit Insurance Corporation, and any successor thereto.

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

“Finance Charges”: With respect to any Loan, any interest or finance charges
owing by an Obligor pursuant to or with respect to such Loan.

“Financial Asset”: The meaning specified in Section 8-102(a)(9) of the UCC.

“Financial Sponsor”: Any Person, including any Subsidiary of such Person, whose
principal business activity is acquiring, holding, and selling investments
(including controlling interests) in otherwise unrelated companies that each are
distinct legal entities with separate management, books and records and bank
accounts, whose operations are not integrated with one another and whose
financial condition and creditworthiness are independent of the other companies
so owned by such Person.

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

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

“Floating Rate Loan”: A Loan that is an Eligible Loan where the interest rate
payable by the Obligor thereof is based on the Company Prime Rate or the Company
LIBOR Rate, plus some specified interest percentage in addition thereto, and the
Loan provides that such interest rate will reset immediately upon any change in
the related Company Prime Rate or Company LIBOR Rate.

“Fortress Notes”: Any promissory note made by the Company in favor of Fortress
Credit Corp. or any Affiliate thereof, in a principal amount not to exceed
$100,000,000.

“Funding Date”: With respect to any Advance, the date on which such Advance is
made by the Lenders hereunder.

 

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“GAAP”: Generally accepted accounting principles as in effect from time to time
in the United States.

“Governmental Authority”: With respect to any Person, any nation or government,
any state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any body or entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
such Person.

“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 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.

“Hazardous Materials”: All materials subject to regulation under any
Environmental Law, including, without limitation, materials listed in 49 C.F.R.
§172.101, materials defined as hazardous pursuant to § 101(14) of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, flammable, explosive or radioactive materials, hazardous or toxic
wastes or substances, lead-based materials, petroleum or petroleum distillates
or asbestos or material containing asbestos, polychlorinated biphenyls, radon
gas, urea formaldehyde and any substances classified as being “in inventory”,
“usable work in process” or similar classification that would, if classified as
unusable, be included in the foregoing definition.

“Hedge Breakage Costs”: For any Hedge Transaction, any amount payable by the
Borrower for the early termination of that Hedge Transaction or any portion
thereof.

“Hedge Collateral”: Defined in Section 5.3(b).

“Hedge Counterparty”: Wells Fargo Bank, National Association or any other entity
approved in writing by the Administrative Agent (in its commercially reasonable
discretion), which has entered into a Hedging Agreement in connection with this
Agreement. For the avoidance of doubt, unless a Hedge Counterparty has an
outstanding Hedge Transaction with the Borrower, no consent or approval of such
Hedge Counterparty shall be required in connection herewith.

“Hedge Transaction”: Each interest rate swap, cap or collar transaction or other
comparable derivative arrangements as the Administrative Agent may approve in
writing in its commercially reasonable discretion between the Borrower and a
Hedge Counterparty that is entered into pursuant to Section 5.3(a) and is
governed by a Hedging Agreement.

 

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“Hedging Agreement”: Each agreement between the Borrower and a Hedge
Counterparty that governs one or more Hedge Transactions entered into pursuant
to Section 5.3(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 and each “Confirmation” thereunder confirming
the specific terms of each such Hedge Transaction; provided that the “Schedule”
and the form of each “Confirmation” to any Hedging Agreement shall be subject to
the written approval of the Administrative Agent, in its commercially reasonable
discretion.

“Highest Required Investment Category”: (i) With respect to ratings assigned by
Moody’s, “Aa2” or “P-1” for one month instruments, “Aa2” or “P-1” for
three-month instruments, “Aa3” and “P-1” for six-month instruments and “Aa2” and
“P-1” for instruments with a term in excess of six months, (ii) with respect to
rating assigned by S&P, “A-1” for short-term instruments and “A” for long-term
instruments, and (iii) with respect to rating assigned by Fitch (if such
investment is rated by Fitch), “F-1+” for short-term instruments and “AAA” for
long-term instruments.

“Increased Costs”: Any amounts required to be paid by the Borrower to an
Affected Party pursuant to Section 2.16.

“Indebtedness”: (i) With respect to any Obligor under any Loan, the meaning of
“Indebtedness” or any comparable definition in the Underlying Instruments for
each such Loan, and in any case that “Indebtedness” or such comparable
definition is not defined in such Underlying Instruments, without duplication,
(a) all obligations of such entity for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such entity evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
entity under conditional sale or other title retention agreements relating to
property acquired by such entity, (d) all obligations of such entity in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (e) all
indebtedness of others secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such entity, whether or not the indebtedness
secured thereby has been assumed, (f) all guarantees by such entity of
indebtedness of others, (g) all Capital Lease Obligations of such entity,
(h) all obligations, contingent or otherwise, of such entity as an account party
in respect of letters of credit and letters of guaranty and (i) all obligations,
contingent or otherwise, of such entity in respect of bankers’ acceptances; and

(ii) for all other purposes, with respect to any Person at any date, (a) all
indebtedness 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
or other evidence of indebtedness customary for indebtedness of that type,
(b) all obligations of such Person under leases that have been or should be, in
accordance with GAAP, recorded as 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, (e) all indebtedness, obligations or liabilities of that
Person in respect of derivatives, and

 

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(f) all obligations under direct or indirect guaranties in respect of
obligations (contingent or otherwise) to purchase or otherwise acquire, or to
otherwise assure a creditor against loss in respect of, indebtedness or
obligations of others of the kind referred to in clauses (a) through (e) of this
clause (ii).

“Indemnified Amounts”: Defined in Section 11.1.

“Indemnified Parties”: Defined in Section 11.1.

“Independent Manager”: Means a natural person who, (A) for the five-year period
prior to his or her appointment as Independent Manager, has not been, and during
the continuation of his or her service as Independent Manager is not: (i) an
employee, director, stockholder, member, manager, partner or officer of the
Borrower or any of its respective Affiliates (other than his or her service as
an Independent Manager of the Borrower or other Affiliates that are structured
to be “bankruptcy remote”); (ii) a customer or supplier (other than as a
supplier of registered agent or registered office services) of the Borrower or
any of its Affiliates (other than his or her service as an Independent Manager
of the Borrower); or (iii) any member of the immediate family of a person
described in clauses (i) or (ii) above, and (B) has, (i) prior experience as an
Independent Manager for a corporation or limited liability company whose charter
documents required the unanimous consent of all Independent Managers thereof
before such corporation or limited liability company could consent to the
institution of bankruptcy or insolvency proceedings against it or could file a
petition seeking relief under any applicable federal or state law relating to
bankruptcy and (ii) at least three years of employment experience with one or
more entities that provide, in the ordinary course of their respective
businesses, advisory, management or placement services to issuers of
securitization or structured finance instruments, agreements or securities.

“Indorsement”: The meaning specified in Section 8-102(a)(11) of the UCC; and
“Indorsed” has a corresponding meaning.

“Initial Closing Date”: August 11, 2004.

“Insolvency Event”: With respect to a specified Person, (a) the filing of a
decree or order for relief by a court having jurisdiction 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.

 

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“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
other Governmental Authority relating to any Insolvency Event.

“Institutional Lender”: Each financial institution which may from time to time
become a Lender hereunder as an “Institutional Lender”.

“Instrument”: The meaning specified in Section 9-102(a)(47) of the UCC.

“Insurance Policy”: With respect to any Loan, an insurance policy covering
liability and physical damage to or loss of the Related Property.

“Insurance Proceeds”: Any amounts received on or with respect to a Loan under
any Insurance Policy or with respect to any condemnation proceeding or award in
lieu of condemnation which is neither required to be used to restore, improve or
repair the related real estate nor required to be paid to the Obligor.

“Intercreditor Agreement”: The Intercreditor and Concentration Account
Administration Agreement (Wachovia Deposit Account), dated as of February 15,
2007 (as further amended, modified, waived, supplemented, restated or replaced
from time to time), by and among U.S. Bank National Association, as account
custodian and as secured party, Wachovia Capital Markets, LLC, as administrative
agent of a credit facility, NewStar Financial, Inc., as originator, as original
servicer, as collateral manager and as concentration account servicer, NewStar
CP Funding LLC, as seller under a credit facility, U.S. Bank National
Association, as trustee for various facilities, NewStar Trust 2005-1, as an
issuer, NewStar Short-Term Funding LLC, as a borrower, NewStar Credit
Opportunities Funding I Ltd., as seller under a credit facility, Natixis
Financial Products Inc., as administrative agent of a credit facility and as an
investor agent, NewStar Warehouse Funding 2005 LLC, as an issuer, NewStar
Structured Finance Opportunities II, LLC, as an issuer, NewStar Commercial Loan
Trust 2006-1, as an issuer, NewStar Concentration LLC, as account titleholder,
NewStar Commercial Loan Trust 2007-1, as an issuer, NewStar DB Term Funding,
LLC, as a financing SPE, NewStar Credit Opportunities Funding II Ltd., as an
issuer, NewStar Commercial Loan Trust 2009-1, as an issuer, NewStar Loan Funding
LLC, as a financing SPE, NewStar CRE Finance I LLC, as a financing SPE, each
party that from time to time hereafter executes and delivers a joinder thereto
and Wachovia Bank, National Association, as concentration account bank, as
applicable.

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

 

IR x P x    1      D  

where:

 

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IR

     =       the Interest Rate applicable on such day;

P

     =       the principal amount of such 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 that (i) no provision of this Agreement shall require the payment 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 of Collections received in respect
of interest (including, without limitation, the interest portion of any
Scheduled Payment or of any repurchase amount paid by the Originator to
repurchase a Loan pursuant to Section 6.1 of the Sale Agreement), fees
(including, without limitation, collateral management fees, commitment fees,
unused line fees and termination fees) or other similar charges (including any
Finance Charges) on or with respect to a Loan and in each case from or on behalf
of any Obligor that are deposited into the Collection Account, or received by or
on behalf of the Borrower by the Servicer or Originator in respect of a Loan, in
the form of Cash, checks, wire transfers, electronic transfers or any other form
of Cash payment (net of any payment owed by the Borrower to, and including any
receipts from, any Hedge Counterparties) plus any interest received on Permitted
Investments.

“Interest Collections Account”: Defined in Section 6.4(h).

“Interest Coverage Ratio”: With respect to any Loan for any Relevant Test
Period, the meaning of “Interest Coverage Ratio” or any comparable definition in
the Underlying Instruments for such Loan, and in any case that “Interest
Coverage Ratio” or such comparable definition is not defined in such Underlying
Instruments, the ratio of (a) EBITDA to (b) Interest Obligations as calculated
by the Borrower and the Servicer in good faith using information from and
calculations consistent with the relevant compliance statements and financial
reporting packages provided by the relevant Obligor as per the requirements of
the Underlying Instruments.

“Interest Obligations”: With respect to any period and any Loan, for the Obligor
thereon and, to the extent included in the corresponding calculation of EBITDA,
any of its parents or Subsidiaries that are obligated pursuant to the Underlying
Instruments for such Loan (determined on a consolidated basis without
duplication in accordance with GAAP), the meaning of “Interest Obligations” or
any comparable definition in the Underlying Instruments for each such Loan, and
in any case that “Interest Obligations” or such comparable definition is not
defined in such Underlying Instruments, all cash interest in respect of
Indebtedness (including the interest component of any payments in respect of
Capital Lease Obligations) accrued during such period (whether or not actually
paid during such period).

“Interest Rate”: The applicable LIBOR Rate, plus the Applicable Spread; provided
that, upon and during the occurrence of an Eurodollar Disruption Event,
“Interest Rate” shall mean the Base Rate, plus the Applicable Spread.

 

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“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
Loans pursuant to the Sale Agreement and the Transfer Documents 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.

“Large Middle Market Loan”: Any commercial loan that is a syndicated commercial
loan (but not a “club” syndication) that (i) meets the definition of “Broadly
Syndicated Loan” other than with respect to clauses (i), (v) and (vi) of the
definition thereof, and (ii) has a tranche size of $150,000,000 or greater and
has an EBITDA for the prior twelve calendar months of $50,000,000 or greater.

“Lender”: Each Person from time to time party hereto as a Conduit Lender or an
Institutional Lender, and “Lenders” means all such Persons collectively.

“Lender Agent”: With respect to any Lender, the person listed as the “Lender
Agent” for such Lender on the signature pages to this Agreement or any
Transferee Letter pursuant to which a Lender may, following the date of this
Agreement, become a party hereto.

“Lender Fee Letter”: With respect to any Lender, the fee letter among such
Lender, the Borrower and any other parties thereto relating to the upfront fees,
commitment fees and prepayment fees payable to such Lender in connection with
the transactions contemplated hereby.

“LIBOR Rate”: For any day during an Accrual Period, with respect to any Advance
(or portion thereof), an interest rate per annum equal to:

(a) the posted rate for thirty (30) day deposits in United States dollars
appearing on Reuters Screen LIBOR01 Page (or any successor page) as of 11:00
a.m. (London Time) on the Business Day which is the second (2nd) Business Day
immediately preceding such day; or

(b) if no such rate appears on Reuters Screen LIBOR01 Page (or any successor
page), at such time and day, then the LIBOR Rate appearing on the Bloomberg
Screen BBAM as of 11:00 a.m. (London time) on the Business Day which is the
second (2nd) Business Day immediately preceding such day; or

(c) if no such rate appears on either screen referenced in clause (a) or (b),
then the LIBOR Rate shall be determined by Wells Fargo Bank, National
Association at its principal office in Charlotte, North Carolina as its rate
(each such determination, absent manifest error, to be conclusive and binding on
all parties hereto and their assignees) at which thirty (30) day deposits in
United States dollars are being, have been, or would be offered or quoted by
Wells Fargo Bank, National Association to major banks in the applicable
interbank market for Eurodollar deposits at or about 11:00 a.m. on such day.

 

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“Lien”: Any mortgage, lien, pledge, charge, right, claim, security interest or
encumbrance of any kind of or on any Person’s assets or properties in favor of
any other Person (including any UCC financing statement or any similar
instrument filed against such Person’s assets or properties).

“Liquidation Expenses”: With respect to any Loan, the aggregate amount of all
out-of-pocket expenses reasonably incurred by the Servicer (including amounts
paid to any subservicer) in accordance with the Servicer’s customary procedures
in connection with the repossession, refurbishing and disposition of any related
assets securing such Loan upon or after the expiration or earlier termination of
such Loan and other out-of-pocket costs related to the liquidation of any such
assets, including the attempted collection of any amount owing pursuant to such
Loan if it is a Defaulted Loan and, if requested by the Administrative Agent,
the Servicer must provide to the Administrative Agent a breakdown of the
Liquidation Expenses for such Loan, along with any supporting documentation
therefor.

“Liquidity”: As of any date of determination, the sum of (a) the Originator’s
Unrestricted Cash Balance, (b) amounts available for advance to the Originator
in accordance with Indebtedness available to the Originator, (c) cash available
for distribution to the Originator from any consolidated subsidiary thereof and
(d) amounts available for advance to any consolidated subsidiary of the
Originator in accordance with Indebtedness available to any such consolidated
subsidiary.

“Liquidity Agreement”: Means any agreement pursuant to which a Liquidity Bank
agrees to make purchases from or advances to or purchase assets from or cause
third parties to purchase assets from any Conduit Lender in order to provide
liquidity for such Conduit Lender’s Advances hereunder.

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

“Loan”: Any commercial loan or note originated or acquired by the Originator and
sold to the Borrower or acquired by the Borrower in the ordinary course of its
respective business, which loan includes, without limitation, (i) the Required
Loan Documents and Loan File, and (ii) all right, title and interest of the
Borrower in and to the loan and any Related Property excluding, however, the
Retained Interest and Excluded Amounts set forth in clause (b)(iii) of the
definition thereof.

“Loan Checklist”: With respect to a Loan, an electronic or hard copy, as
applicable, list delivered by or on behalf of the Borrower to the Trustee that
identifies each of the items which constitute the Required Loan Documents,
specifies whether such document is an original or a copy and includes the
identification number and name of the Obligor with respect to such Loan.

“Loan Files”: With respect to any Loan and Related Security, copies of each of
the Required Loan Documents and duly executed originals (to the extent required
by the Credit and

 

26

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Collection Policy and the Servicing Standard) and copies of any other Records
relating to such Loan and Related Security.

“Loan Pricing Corporation”: Loan Pricing Corporation, or any successor thereto.

“Loan Tape”: With respect to each Measurement Date, the loan tape with respect
to the Loans included in the Collateral, which tape shall include (but not be
limited to) the aggregate OLB of all Loans and, with respect to each Loan, the
following information:

(a) name and number of the related Obligor;

(b) calculation of the Senior Net Leverage Ratio as of the applicable Cut-Off
Date for such Loan and for the most recent Relevant Test Period;

(c) calculation of the Total Net Leverage Ratio as of the applicable Cut-Off
Date for such Loan and for the most recent Relevant Test Period;

(d) calculation of the Interest Coverage Ratio as of the applicable Cut-Off Date
for such Loan and for the most recent Relevant Test Period;

(e) trailing twelve month EBITDA;

(f) collection status;

(g) loan status;

(h) scheduled maturity date;

(i) loan rate of interest (and reference rate);

(j) LIBOR floor (if applicable);

(k) OLB;

(l) any Exposure Amount (if applicable);

(m) par amount;

(n) Purchase Price;

(o) Cut-Off Date

(p) Assigned Value;

(q) Adjusted Borrowing Value;

(r) Moody’s asset and Obligor rating (if applicable);

(s) S&P asset and Obligor rating (if applicable);

 

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(t) Loan type (Broadly Syndicated Loan, Large Middle Market Loan, or Traditional
Middle Market Loan);

(u) NewStar risk rating;

(v) Obligor jurisdiction;

(w) Loan tranche size;

(x) Loan lien position;

(y) industry classification;

(z) whether such Loan has been subject to an Assigned Value Adjustment Event
(and of what type); and

(aa) whether such Loan has been subject to a Material Modification.

“Margin Stock”: “Margin Stock” as defined under Regulation U.

“Markit”: LoanX Markit Partners, or any successor thereto.

“Material Adverse Effect”: With respect to any event or circumstance, means a
material adverse effect on (a) the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Originator, the Servicer
or the Borrower, (b) the validity, enforceability or collectibility of this
Agreement or any other Transaction Document or the validity, enforceability or
collectibility of the Collateral generally or any material portion of the
Collateral, (c) the rights and remedies of the Administrative Agent, the
Trustee, the Lenders, the Lender Agents and the Secured Parties with respect to
matters arising under this Agreement or any other Transaction Document, (d) the
ability of the Borrower, the Servicer or the Trustee to perform its obligations
under this Agreement or any Transaction Document, or (e) the status, existence,
perfection, priority or enforceability of the Trustee’s interest on behalf of
the Secured Parties in the Collateral.

“Material Modification”: Any amendment or waiver of, or modification or
supplement to, an Underlying Instrument governing a Loan executed or affected on
or after the Cut-Off Date for such Loan that:

(a) reduces or forgives any or all of the principal amount due under such Loan;

(b) extends or delays the maturity date of such Loan;

(c) waives one or more interest payments, permits any interest due in cash to be
deferred or capitalized and added to the principal amount of such Loan (other
than any deferral or capitalization permitted under the terms of the applicable
Underlying Instruments) or reduces the amount of interest (including, without
limitation, any spread or coupon) due when the Interest Coverage Ratio of the
related Obligor for the most recent Relevant Test Period

 

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(calculated solely with respect to interest payable in cash) is less than 1.50
to 1.00 (prior to giving effect to such reduction in interest expense);

(d) contractually or structurally subordinates such Loan by operation of a
priority of payments, turnover provisions, the transfer of assets in order to
limit recourse to the related Obligor or the granting of Liens (other than
Permitted Liens) on any of the Related Property securing such Loan;

(e) substitutes, alters or releases the Related Property securing such Loan, and
any such substitution, alteration or release, as determined in the sole
discretion of the Administrative Agent, materially and adversely affects the
value of such Loan; provided, that the foregoing shall not apply to any release
in conjunction with a relatively contemporaneous disposition by the Obligor
accompanied by a mandatory reinvestment of net proceeds or mandatory repayment
of the loan facility with the net proceeds; or

(f) amends, waives, forbears, supplements or otherwise modifies (i) the meaning
of “Senior Net Leverage Ratio,” “Interest Coverage Ratio” or any respective
comparable definitions in the Underlying Instruments for such Loan or (ii) any
term or provision of such Underlying Instruments referenced in or utilized in
the calculation of the “Senior Net Leverage Ratio,” “Interest Coverage Ratio” or
any respective comparable definitions for such Loan, in either case in a manner
that, in the commercially reasonable judgment of the Administrative Agent, is
materially adverse to the Secured Parties.

“Materially Modified Loan”: Any Loan subject to a Material Modification, unless
otherwise deemed not to constitute a Materially Modified Loan by the
Administrative Agent in its sole discretion.

“Maximum Availability”: At any time, an amount equal to the least of:

(x) (i) the product of the Borrowing Base and the Weighted Average Advance Rate,
plus (ii) the amounts on deposit in the Principal Collections Account, plus
(iii) the amount on deposit in the Unfunded Exposure Account, minus (iv) the
Aggregate Unfunded Exposure Equity Amount,

(y) the Borrowing Base, minus the Minimum Equity Amount, plus the amounts in the
Principal Collections Account, plus the amount on deposit in the Unfunded
Exposure Account minus the Aggregate Unfunded Exposure Equity Amount, and

(z) the Facility Amount.

“Measurement Date”: Each of the following: (i) the Closing Date; (ii) each
Determination Date; (iii) the date of any Borrowing Notice or Repayment Notice;
(iv) any date on which a substitution or repurchase of a Loan occurs pursuant to
Section 2.19; (v) any Optional Sale Date; (vi) the day as of which any Servicing
Report, as provided for herein, is calculated; (vii) the date of any requested
release of Principal Collections pursuant to Section 2.10(c); (viii) any
Discretionary Sale Date; (ix) the date of any requested release of amounts on
deposit in the Unfunded Exposure Account pursuant to Section 2.10(d) or
Section 2.11(b); (x)

 

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the date on which an Assigned Value for any Eligible Loan is changed; and
(xi) the date on which any Assigned Value Adjustment Event occurs.

“Minimum Equity Amount”: As of any Measurement Date, an amount equal to the
greater of (i) $30,000,000 and (ii) the sum of the OLB of all Eligible Loans to
the three largest Obligors included in the Collateral.

“Money”: The meaning specified in Section 1-201(24) of the UCC.

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

“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.

“Noteless Loan”: A Loan with respect to which the related Required Loan
Documents (i) do not require the Obligor to execute and deliver a promissory
note to evidence the indebtedness created under such Loan and/or (ii) require
any holder of the indebtedness created under such Loan to affirmatively request
a promissory note from the related Obligor, so long as the Borrower has not
requested and obtained a promissory note from such Obligor.

“Notice of Intended Sale”: Defined in Section 10.2(d).

“Obligor”: With respect to any Loan, any Person or Persons obligated to make
payments pursuant to or with respect to such Loan, including any guarantor
thereof. For purposes of determining whether a Loan is made to an Eligible
Obligor, all Loans included as part of the Collateral or to be transferred to
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 sum of the OLB of all of Corporation
A’s Loans included as part of the Collateral equals $25,000,000, and the sum of
the OLB of all of Corporation B’s Loans included as part of the Collateral
equals $10,000,000, the OLB for Corporation A and Corporation B would be
$35,000,000.

“Officer’s Certificate”: A certificate signed by a Responsible Officer of the
Borrower or the Servicer, as the case may be, and delivered to the Trustee.

“OLB”: As of any Measurement Date, with respect to any Loan, the principal
balance of such Loan outstanding (exclusive of any accrued interest and Accreted
Interest).

“Opinion of Counsel”: A written opinion of counsel, which opinion and counsel
are acceptable to the Administrative Agent in its sole discretion.

“Option Price”: Defined in Section 2.19(c).

“Optional Sale”: Defined in Section 2.20(a).

 

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“Optional Sale Date”: The Business Day identified by the Borrower to the
Administrative Agent, in such written notice as required by Section 2.20(a), as
the proposed date of an Optional Sale.

“Originator”: Defined in the Preamble of this Agreement.

“Originator’s Unrestricted Cash Balance”: The Originator’s unencumbered cash
balance and any encumbered cash balance that is available to be withdrawn and
used for general corporate purposes or for the purpose of making a capital
contribution to the Borrower or otherwise.

“Other Costs”: Defined in Section 13.9(c).

“Payment Duties”: Defined in Section 8.2(c)(iv).

“Payment Date”: Quarterly on the 15th day of each February, May, August and
November and, if such day is not a Business Day, the next succeeding Business
Day.

“Permitted Holders”: (a) Any of Corsair Capital, LLC and Capital Z Partners,
Ltd., or (b) any Person or group of Persons that controls, is controlled by, or
is under common control with, any of the foregoing, including without
limitation, any fund that is an Affiliate of Corsair Capital, LLC or Capital Z
Partners, Ltd. and/or managed by Corsair Capital, LLC or Capital Z Partners,
Ltd. or any of their Affiliates.

“Permitted Investments”: Any 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 of America
and that have a maturity of not more than 270 days from the date of acquisition;

(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 and that
have a maturity of not more than 270 days from the date of acquisition;

(c) bankers’ acceptances and certificates of deposit and other interest-bearing
obligations (in each case having a maturity of not more than 270 days from the
date of acquisition) denominated 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 of least A-1 by S&P and P-1 by Moody’s;

(d) repurchase obligations with a term of not more than ten (10) days 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) demand deposits, time deposits or certificates of deposit (having original
maturities of no more than 365 days) of depository institutions or trust
companies incorporated

 

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under the laws of the United States of America 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;
and

(g) investments in money market funds (including funds for which the Trustee or
an Affiliate thereof is the investment manager or advisor) rated AAAm/AAAm-G or
higher by S&P or Aaa by Moody’s. Each of the Permitted Investments may be
purchased by the Trustee or through an Affiliate of the Trustee.

“Permitted Liens”: Means

(i) with respect to the interest of the Originator and/or of the Borrower in the
Loans and the Accounts: (a) Liens in favor of the Borrower created pursuant to
the Sale Agreement and transferred to the Trustee for the benefit of the Secured
Parties pursuant to this Agreement and (b) Liens in favor of the Trustee for the
benefit of the Secured Parties pursuant to this Agreement; and

(ii) with respect to the interest of the Originator and/or of the Borrower in
the other Collateral (including any Related Property): (a) 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 by
an appropriate Person in good faith by appropriate proceedings, (b) purchase
money security interests in specific items of equipment, (c) Liens for state,
municipal and other local taxes if such taxes shall not at the time be due and
payable or the validity or amount thereof is currently being contested by an
appropriate Person in good faith by appropriate proceedings, (d) Liens in favor
of the Borrower and transferred by the Borrower to the Trustee for the benefit
of the Secured Parties pursuant to this Agreement, (e) Liens in favor of the
Trustee for the benefit of the Secured Parties created pursuant to this
Agreement, (f) Liens which have priority over first priority perfected security
interests in such other Collateral or any portion thereof under the UCC or any
other Applicable Law, and (g) with respect to Agented Loans, Liens in favor of
the lead agent, the collateral agent or the paying agent for the benefit of all
holders of indebtedness of such Obligor under the related facility.

“Permitted PIK Loan”: A Loan which provides for both (i) 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 such previously capitalized interest, which cash payment shall be
treated as an Interest Collection at the time it is received and (ii) a portion
of the interest that accrues thereon to be paid in cash, which cash portion
shall not be less than (x) LIBOR plus 2.50% per annum, in the case of a Floating
Rate Loan and (y) 8% per annum, in the case of a Fixed Rate Loan.

“Person”: An individual, partnership, corporation (including a business 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.

“Predecessor Servicer Work Product”: Defined in Section 6.19(e).

 

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

“Prepayment Amount”: Defined in Section 6.4(b).

“Prepayment Premium”: An amount payable to the Lenders upon any termination or
permanent reduction (in whole or in part) of the Facility Amount on or prior to
the first anniversary of the Closing Date equal to the amount set forth in such
Lender’s Fee Letter. For the avoidance of doubt, (i) no Prepayment Premium shall
be payable in connection with a prepayment of Advances Outstanding that does not
result in a permanent reduction in the Facility Amount pursuant to
Section 2.05(a) and (ii) no Prepayment Premium shall be payable if such
reduction in the Facility Amount is made in conjunction with a Term
Securitization where Wells Fargo is the lead or joint lead book runner.

“Prepayments”: Any and all (i) partial or full prepayments on or with respect to
a Loan (including, with respect to any Loan and any Collection Period, any
Scheduled Payment, Finance Charge or portion thereof that is due in a subsequent
Collection Period that the Servicer has received, and pursuant to the terms of
Section 6.4(b) expressly permitted the related Obligor to make, in advance of
its scheduled due date, and that will be applied to such Scheduled Payment on
such due date), (ii) Recoveries, and (iii) Insurance Proceeds.

“Priced Loan”: Means any Loan that has an observable quote from Markit, Loan
Pricing Corporation or another pricing service consented to in writing by the
Administrative Agent.

“Prime Rate”: The rate publicly announced by the Administrative Agent 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 the Administrative Agent or any other specified
financial institution in connection with extensions of credit to debtors.

“Principal Collections”: Any and all amounts of Collections received in respect
of any principal due and payable under the Loans, from or on behalf of Obligors
that are deposited into the Collection Account (including, without limitation,
the principal portion of any Scheduled Payment or of any repurchase amount paid
by the Originator to repurchase a Loan pursuant to Section 6.1 of the Sale
Agreement) or received by or on behalf of the Borrower by the Servicer or
Originator in respect of Loans and all Recoveries, in the form of Cash, checks,
wire transfers, electronic transfers or any other form of Cash payment.

“Principal Collections Account”: Defined in Section 6.4(h).

“Proceeds”: With respect to any Collateral, whatever is receivable or received
when such Collateral is sold, 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 relating to such Collateral.

“Pro-Rata Share”: With respect to a Lender, the percentage obtained by dividing
the Commitment of such Lender (or, following the termination thereof, the
outstanding principal

 

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amount of all Advances of such Lender) by the aggregate Commitments of all the
Lenders (or, following the termination thereof, the aggregate Advances
Outstanding).

“Purchase Date”: Defined in the Sale Agreement.

“Purchase Option”: Defined in Section 2.19(c).

“Purchase Price”: With respect to any Loan, an amount (expressed as a
percentage) equal to (i) the purchase price paid by the Borrower for such Loan
(exclusive of any accrued interest, Accreted Interest, original issue discount
and upfront fees) divided by (ii) the principal balance of such Loan outstanding
as of the date of such purchase (exclusive of any accrued interest, Accreted
Interest, original issue discount and upfront fees). Any purchase of a Loan in
the primary syndication thereof at a price equal to or greater than 95% of par
(including any purchase at a premium) shall be treated as a par loan.

“Qualified Institution”: A depository institution or trust company organized
under the laws of the United States of America 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 “A2” 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 has either (1) a long-term
unsecured debt rating of “A” or better by S&P and “A2” 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) that is otherwise
acceptable to the Administrative Agent and (ii) whose deposits are insured by
the Federal Deposit Insurance Corporation.

“Rating Agency”: Each of S&P and Moody’s.

“Records”: All documents relating to the Loans, including books, records and
other information (including without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
executed in connection with the origination or acquisition of the Collateral or
maintained with respect to the Collateral and the related Obligors that the
Borrower, the Originator or the Servicer have generated, in which the Borrower
or the Servicer have acquired an interest pursuant to the Sale Agreement or in
which the Borrower, the Originator or the Servicer have otherwise obtained an
interest.

“Recoveries”: As of the time any Related Property with respect to any Loan is
sold, discarded or abandoned (after a determination by the Servicer that such
Related Property has little or no remaining value) or otherwise determined to be
fully liquidated by the Servicer in accordance with the Credit and Collection
Policy and the Servicing Standard with respect to any Defaulted Loan, the
proceeds from the sale of the Related Property or any other related property,
the proceeds of any related Insurance Policy, any other recoveries with respect
to such Defaulted Loan and the Related Property and amounts representing late
fees and penalties, net of Liquidation Expenses and amounts, if any, received
that are required under such Loan, to be refunded to the related Obligor.

 

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“Registered”: With respect to any registration-required obligation within the
meaning of Section 163(f)(2) of the Code, a debt obligation that was issued
after July 18, 1984 and that is in registered form within the meaning of
Section 5f.103-1(c) of the Treasury Regulations.

“Regulation U”: Regulation U of the Board of Governors of the Federal Reserve
System, 12 C.F.R. §221, or any successor regulation.

“Related Property”: With respect to any Loan, any property or other assets
designated and pledged or mortgaged as collateral to secure repayment of such
Loan (including, without limitation, a pledge of the stock, membership or other
ownership interests in the Obligor), including all Proceeds from any sale or
other disposition of such property or other assets.

“Related Security”: As used in the Sale Agreement, all of the Originator’s
right, title and interest in and to the items set forth in clauses (a) through
(d) and clause (i) hereof and, as used herein, all of the Borrower’s right,
title and interest in and to:

(a) any Related Property securing a Loan and all Recoveries related thereto;

(b) all Required Loan Documents and Loan Files related to any Loan, any Records,
and the documents, agreements, and instruments included in the Loan File or
Records including, without limitation, rights of recovery of the Borrower
against the Originator;

(c) all Insurance Policies with respect to any Loan;

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

(e) the Accounts and the Concentration Account as it relates to the Collateral,
together with all Cash and investments in each of the foregoing other than
amounts earned on investments therein;

(f) any Hedging Agreement;

(g) any payment from time to time due from a Hedge Counterparty under a Hedging
Agreement;

(h) the Sale Agreement and the assignment to the Trustee for the benefit of the
Secured Parties of all UCC financing statements filed by the Borrower against
the Originator under or in connection with the Sale Agreement; and

(i) the proceeds of each of the foregoing.

“Relevant Test Period”: With respect to any Loan, the relevant test period for
the calculation of Senior Net Leverage Ratio, Total Net Leverage Ratio or
Interest Coverage Ratio, as applicable, for such Loan in the applicable
Underlying Instruments or, if no such period is provided for therein, for
Obligors delivering monthly financing statements, each period of the

 

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last twelve consecutive reported calendar months, and for Obligors delivering
quarterly financing statements, each period of the last four consecutive
reported fiscal quarters of the principal Obligor on such Loan; provided that,
with respect to any Loan for which the relevant test period is not provided for
in the applicable Underlying Instruments, if an Obligor is a newly-formed entity
as to which twelve consecutive calendar months have not yet elapsed, “Relevant
Test Period” shall initially include the period from the date of formation of
such Obligor to the end of the twelfth calendar month or fourth fiscal quarter
(as the case may be) from the date of formation, and shall subsequently include
each period of the last twelve consecutive reported calendar months or four
consecutive reported fiscal quarters (as the case may be) of such Obligor.

“Repayment Notice”: Each written notice required to be delivered by the Borrower
in respect of (a) any reduction of the Advances Outstanding pursuant to
Section 2.5(b), in the form of Exhibit A-2 or (b) any termination in whole or
reduction in part of the Facility Amount pursuant to Section 2.5(a), in the form
of Exhibit A-2.

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

“Reporting Date”: The date that is two Business Days prior to the 15th of each
calendar month.

“Required Loan Documents”: For each Loan, originals (except as otherwise
indicated) of the following documents or instruments:

(a) (i) other than in the case of a Noteless Loan, the original or, if
accompanied by a “lost note” affidavit and indemnity, a copy of, the underlying
promissory note, endorsed by the Borrower or the prior holder of record either
in blank or to the Trustee for the benefit of the Secured Parties (and
evidencing an unbroken chain of endorsements from the prior holder thereof
evidenced in the chain of endorsements to the Trustee for the benefit of the
Secured Parties), with any such endorsement to the Trustee to be in the
following form: “U.S. Bank National Association, as Trustee”, and (ii) in the
case of a Noteless Loan, (x) a copy of each Transfer Document, and (y) a copy of
the related credit agreement, note purchase agreement or sale and servicing
agreement (or equivalent agreement as identified on the Loan Checklist), as
applicable, together with, to the extent in the possession of the Originator or
reasonably available to the Originator, copies of all other documents and
instruments described in clauses (b) and (c) hereof with respect to such
Noteless Loan;

(b) originals or copies of each of the following, to the extent applicable to
the related Loan: any related loan agreement, credit agreement, note purchase
agreement, security agreement, mortgage, sale and servicing agreement,
acquisition agreement, subordination agreement, intercreditor agreement or
similar instruments, guarantee, Insurance Policy, assumption or substitution
agreement or similar material operative document, in each case together with any
amendment or modification thereto, as set forth on the Loan Checklist;

(c) with respect to any Loan originated by the Originator, either (i) copies of
the UCC-1 Financing Statements, if any, and any related continuation statements,
each showing the Obligor as debtor and the Trustee as total assignee or showing
the Obligor, as debtor and the

 

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Originator as secured party and each with evidence of filing thereon, together
with (except for Agented Loans) a copy of each intervening UCC-2 or UCC-3
financing statement showing a complete chain of assignment from the secured
party named in such UCC-1 Financing Statement to the Trustee with evidence of
filing thereon disclosing the assignment to the Trustee or the Originator of the
security interest in the personal property securing the Loan or (ii) copies of
any such financing statements certified by the Servicer to be true and complete
copies thereof in instances where the original financing statements have been
sent to the appropriate public filing office for filing.

“Required Reports”: Collectively, the Servicing Report, the Servicer’s
Certificate required pursuant to Section 6.13(c), the financial statements of
the Servicer required pursuant to Section 6.13(d), the annual statements as to
compliance required pursuant to Section 6.14, and the annual independent public
accountant’s report required pursuant to Section 6.15.

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

“Restricted Junior Payment”: (i) Any dividend or other distribution, direct or
indirect, on account of any class of membership interests of the Borrower now or
hereafter outstanding, except a dividend paid solely in interests of that class
of membership interests or in any junior class of membership interests of the
Borrower; (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any class of the
Borrower now or hereafter outstanding, (iii) any payment made to redeem,
purchase, repurchase or retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire membership interests of Borrower
now or hereafter outstanding, and (iv) any payment of management fees by the
Borrower (except for reasonable management fees to the Originator or its
Affiliates in reimbursement of actual management services performed). For the
avoidance of doubt, (i) payments and reimbursements due to the Servicer in
accordance with this Agreement or any other Transaction Document do not
constitute Restricted Junior Payments, (ii) distributions by the Borrower to its
members of amounts received by the Borrower pursuant to clause TWELFTH of
Section 2.10(a), clause FIFTH of Section 2.10(b) or clause TENTH of
Section 2.11(a) do not constitute Restricted Junior Payments, and
(iii) distributions by the Borrower to its members of Loans or of cash or other
proceeds relating thereto which have been repurchased or substituted by the
Borrower in accordance with this Agreement do not constitute Restricted Junior
Payments.

“Retained Interest”: With respect to any Loan arising as part of an agented or
syndicated transaction that is transferred to the Borrower, (i) all of the
rights and obligations, if any, of the agent(s) under the documentation
evidencing such Loan arising under the related Underlying Instruments and
(ii) the applicable portion of the interests, rights and obligations under the
documentation evidencing any agented or syndicated transaction including such
Loan that relate to such portion(s) of the indebtedness that is owned by another
lender (which may be the Originator or an Affiliate thereof).

 

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

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

“Review Criteria”: Defined in Section 8.2(b)(i).

“Revolving Loan”: A Loan that is a line of credit or contains an unfunded
commitment arising from an extension of credit to an Obligor, pursuant to the
terms of which amounts borrowed may be repaid and subsequently reborrowed.

“Revolving Period”: The period commencing on the Closing Date and ending on the
earlier to occur of (i) January 12, 2013 and (ii) the day immediately preceding
the Termination Date.

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

“Sale Agreement”: The Second Amended and Restated Sale and Contribution
Agreement, dated as of July 12, 2011, between the Originator and the Borrower,
as amended, modified, waived, supplemented, restated or replaced from time to
time.

“Scheduled Payment”: Each scheduled payment of principal and/or interest
required to be made by an Obligor on the related Loan, as adjusted pursuant to
the terms of the related Required Loan Documents.

“Secured Party”: (i) Each Lender, (ii) the Administrative Agent and each Lender
Agent, and (iii) each Hedge Counterparty that at the time of entering into a
Hedging Agreement with the Borrower is either a Lender or an Affiliate of the
Administrative Agent if that Affiliate is a Hedge Counterparty that executes a
counterpart of this Agreement agreeing to be bound by the terms of this
Agreement applicable to a Secured Party.

“Securities Account”: The meaning specified in Section 8-501 of the UCC.

“Securities Account Control Agreement”: The Second Amended and Restated
Securities Account Control Agreement, dated as of July 12, 2011 (as further
amended, modified, waived, supplemented, restated or replaced from time to
time), among NewStar CP Funding LLC, as the debtor, the Servicer and US Bank, as
Trustee and as the Securities Intermediary, as the same may be amended,
modified, waived, supplemented or restated from time to time.

“Securities Act”: The U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Securities Intermediary”: Means (i) a Clearing Corporation; or (ii) a Person,
including a bank or broker, that in the ordinary course of its business
maintains Securities Accounts for others and is acting in that capacity.

“Security”: The meaning specified in Section 9-102(a)(15) of the UCC.

 

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“Security Certificate”: The meaning specified in Section 8-102(a)(16) of the
UCC.

“Security Entitlement”: The meaning specified in Section 8-102(a)(17) of the
UCC.

“Senior Net Leverage Ratio”: With respect to any Loan for any Relevant Test
Period, the meaning of “Senior Net Leverage Ratio” or any comparable definition
relating to first lien senior secured (or such applicable lien or applicable
level within the capital structure) indebtedness in the Underlying Instruments
for such Loan, and in any case that “Senior Net Leverage Ratio” or such
comparable definition is not defined in such Underlying Instruments, the ratio
of (a) first lien senior secured (or such applicable lien or applicable level
within the capital structure) Indebtedness minus Unrestricted Cash to (b) EBITDA
as calculated by the Borrower and the Servicer in good faith using information
from and calculations consistent with the relevant compliance statements and
financial reporting packages provided by the relevant Obligor as per the
requirements of the Underlying Instruments.

“Servicer”: NewStar Financial, Inc., and each successor (in the same capacity)
appointed as Successor Servicer pursuant to Section 6.19(a).

“Servicer Default”: Defined in Section 6.18.

“Servicer Termination Notice”: Defined in Section 6.18.

“Servicer’s Certificate”: Defined in Section 6.13(c).

“Servicing Fee”: Defined in Section 2.15(a).

“Servicing Fee Rate”: 0.625% per annum.

“Servicing File”: For each Loan, the following documents or instruments:

(a) copies of each of the Required Loan Documents; and

(b) any other portion of the Loan File which is not part of the Required Loan
Documents.

“Servicing Report”: Defined in Section 6.13(b).

“Servicing Standard”: With respect to any Loans included in the Collateral, to
service and administer such Loans in accordance with the Underlying Instruments
and all customary and usual servicing practices (A) which are consistent with
the higher of: (x) the customary and usual servicing practices that a prudent
loan investor or lender would use in servicing loans like the Loans for its own
account, and (y) the same care, skill, prudence and diligence with which the
Servicer services and administers loans for its own account or for the account
of others; (B) with a view to maximize the value of the Loans; and (C) without
regard to: (1) any relationship that the Servicer or any Affiliate of the
Servicer may have with any Obligor or any Affiliate of any Obligor, (2) the
Servicer’s obligations to incur servicing and administrative expenses with
respect to a Loan, (3) the Servicer’s right to receive compensation for its
services hereunder or with respect to any particular transaction, (4) the
ownership by the Servicer or any Affiliate of

 

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any Retained Interest or any Loans, (5) the ownership, servicing or management
for others by the Servicer of any other Loans or property by the Servicer or
(6) any relationship that the Servicer or any Affiliate of the Servicer may have
with any holder of other loans of the Obligor with respect to such Loans;
provided that with respect to any Successor Servicer, the “Servicing Standard”
shall be the same care, skill and diligence with which such Successor Servicer
services and administers loans for its own account and for the account of
others.

“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 of 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 saleable value of the property of 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 and other
liabilities 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 a
business or a transaction, and does not propose to engage in a business or a
transaction, for which such Person’s assets would constitute unreasonably small
capital.

“Subsidiary”: As to any Person, a corporation, limited liability company,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency)
sufficient to elect a majority of the board of directors or other managers of
such corporation, limited liability company, partnership or other entity are at
the time owned, or the management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such Person.

“Substitute Loan”: On any day, an Eligible Loan that meets each of the
conditions for substitution set forth in Section 2.19.

“Successor Servicer”: Defined in Section 6.19(a).

“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 Governmental Authority.

“Term Loan”: A Loan that is a term loan that has been fully funded and does not
contain any unfunded commitment arising from an extension of credit to an
Obligor.

“Term Securitization”: Any private or public term securitization transaction
(a) undertaken by the Company, the Borrower or an Affiliate of the Company or
the Borrower that is secured, directly or indirectly, by any Loan currently or
formerly included in the Collateral or any portion thereof or any interest
therein, including, without limitation, any collateralized loan or
collateralized debt offering or other asset securitization and (b) in which the
Company or an Affiliate has agreed to purchase 100% of the equity in such term
securitization transaction. For

 

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the avoidance of doubt, notwithstanding any agreement by the Company or an
Affiliate to purchase 100% of the equity in such term securitization
transaction, any such party agreeing to so purchase may designate other Persons
as purchasers of such equity provided such party or parties remain primarily
liable therefor if such designees fail to purchase in connection with the
closing date of such term securitization and/or, after the closing of such term
securitization, may transfer equity it purchases at the closing thereof.

“Termination Date”: The earliest of (a) the date of the termination in whole of
the Facility Amount pursuant to Section 2.5(a), (b) the date of the declaration
of the Termination Date pursuant to Section 10.2(a) or the date of the automatic
occurrence of the Termination Date pursuant to Section 10.2(b) and (c) the
Facility Termination Date.

“Termination Event”: Defined in Section 10.1.

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

“Total Net Leverage Ratio”: With respect to any Loan for any Relevant Test
Period, the meaning of “Total Net Leverage Ratio” or any comparable definition
relating to total indebtedness in the Underlying Instruments for such Loan, and
in any case that “Total Net Leverage Ratio” or such comparable definition is not
defined in such Underlying Instruments, the ratio of (a) total Indebtedness
minus Unrestricted Cash to (b) EBITDA as calculated by the Borrower and the
Servicer in good faith using information from and calculations consistent with
the relevant compliance statements and financial reporting packages provided by
the relevant Obligor as per the requirements of the Underlying Instruments.

“Trade Ticket”: A confirmation of the purchase and sale of a Loan as provided by
the Servicer to the Trustee in connection with such purchase.

“Traditional Middle Market Loan”: Any commercial loan that (i) meets the
definition of “Broadly Syndicated Loan” other than with respect to clauses (i),
(v), and (vi) of the definition thereof and (ii) does not meet the definition of
“Large Middle Market Loan”.

“Transaction”: Defined in Section 3.2.

“Transaction Documents”: This Agreement, the Sale Agreement, each Hedging
Agreement, the Borrower ISDA Guaranty, the Intercreditor Agreement, the
Securities Account Control Agreement, each Variable Funding Note, any Lender Fee
Letter, the Trustee Fee Letter, any UCC financing statements filed pursuant to
the terms of this Agreement, and any additional document the execution of which
is necessary or incidental to carrying out the terms of the foregoing documents.

“Transfer Document”: With respect to any Loan, each transfer document or
instrument relating to such Loan evidencing the assignment of such Loan either
(1) to the Originator and from the Originator to the Borrower, or (2) from the
prior third party owner thereof directly to the Borrower (at the direction of
the Originator).

“Transferee Letter”: Defined in Section 13.16.

 

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“Trustee”: US Bank, not in its individual capacity, but solely as Trustee, its
successor in interest pursuant to Section 8.3 or such Person as shall have been
appointed successor Trustee pursuant to Section 8.5 or Section 8.7.

“Trustee Fee”: Defined in Section 8.4.

“Trustee Fee Letter”: The Trustee Fee Letter, dated as of the Closing Date, by
and among the Originator, the Administrative Agent and the Trustee, as such
letter may be amended, modified, supplemented, restated or replaced from time to
time.

“Trustee Termination Notice”: Defined in Section 8.5.

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

“Uncertificated Security”: The meaning specified in Section 8-102(a)(l8) of the
UCC.

“Underlying Instruments”: The indenture, loan agreement, credit agreement or
other agreement pursuant to which a Loan has been issued or created and each
other agreement that governs the terms of or secures the obligations represented
by such Loan or of which the holders of such Loan are the beneficiaries.

“Unfunded Exposure Account”: Defined in Section 6.4(k).

“Unfunded Exposure Equity Amount”: As of any date of determination, with respect
to any Revolving Loan or Delayed Draw Term Loan, an amount equal to the sum of
(a) the product of (i) the Exposure Amount of such Loan times (ii) 100% minus
the Advance Rate of such Loan, plus (b) the product of (i) (x) 100%, minus the
Assigned Value of such Loan, times (y) the Exposure Amount of such Loan, times
(ii) the Advance Rate of such Loan.

“United States”: The United States of America.

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

“Unrestricted Cash”: The meaning of “Unrestricted Cash” or any comparable
definition in the Underlying Instruments for each Loan, and in any case that
“Unrestricted Cash” or such comparable definition is not defined in such
Underlying Instruments, all cash available for use for general corporate
purposes and not held in any reserve account or legally or contractually
restricted for any particular purposes or subject to any lien (other than
blanket liens permitted under or granted in accordance with such Underlying
Instruments).

“USA PATRIOT Act”: The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

“US Bank”: Defined in the Preamble.

 

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“U.S. Treasury Obligations”: Direct registered obligations of the United States
which are expressly backed by the full faith and credit of the United States,
but excluding (x) any such obligations that are Zero-Coupon Bonds and (y) such
obligations that are interest only securities.

“Variable Funding Note” or “VFN”: Defined in Section 2.1.

“Warranty Event”: As to any Loan, (i) the earlier of knowledge by the Originator
or the Borrower, as applicable, or receipt of written notice thereof from any of
the Servicer, the Administrative Agent or the Trustee that as of the related
Cut-Off Date there existed a breach of any representation or warranty relating
to such Loan (other than any representation or warranty that the Loan satisfies
the criteria of the definition of Eligible Loan) and the failure of the
Originator or of the Borrower to cure such breach, or cause the same to be
cured, within 30 days after the earlier to occur of either of the Borrower or
the Originator becoming aware thereof or the receipt by the Borrower or the
Originator of such notice thereof or (ii) the Originator or Borrower fails to
satisfy Section 3.2(c), with respect to such Loan within two Business Days after
the date the applicable document was due to be delivered pursuant to such
section.

“Warranty Loan”: Any Loan that fails to satisfy any criteria of the definition
of Eligible Loan as of the applicable Cut-Off Date of such Loan or any Loan with
respect to which a Warranty Event has occurred.

“Weighted Average Advance Rate”: For any Advances Outstanding on any day, the
weighted average of the Advance Rates applicable to the Eligible Loans backing
such Advances on such day, weighted according to the proportion of the Adjusted
Borrowing Value that each Loan forming a part of the Collateral represents.

“Wells Fargo”: Defined in the Preamble.

Section 1.2. Other Terms.

All accounting terms used but 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 used but 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:

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

(b) 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;

 

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

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

(e) reference to any time means Charlotte, North Carolina time;

(f) reference to the words “include”, “includes” and “including” shall be deemed
to be followed by the phrase “without limitation”;

(g) reference to any agreement (including any Transaction Document), document or
instrument means such agreement, document or instrument as amended, modified,
waived, supplemented, restated or replaced 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

(h) 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.

ARTICLE II.

PURCHASE OF THE VARIABLE FUNDING NOTES

Section 2.1. The Variable Funding Notes.

(a) On the terms and conditions hereinafter set forth, Borrower shall deliver a
duly executed variable funding note (each such note, a “Variable Funding Note”
or “VFN”), in substantially the form of Exhibit B to each Lender Agent for the
benefit of its related Lenders. Interest shall accrue, and each VFN shall be
payable, as described herein. The VFN purchased by Wells Fargo shall be in the
name of “Wells Fargo Bank, National Association” and shall be in the face amount
equal to up to $125,000,000 and otherwise duly completed. The aggregate amount
outstanding under all VFNs at any one time shall not exceed the Facility Amount.

(b) On the terms and conditions hereinafter set forth, during the Revolving
Period, the Borrower may, at its option, request the Lenders to make advances of
funds under the VFNs (each, an “Advance”) and each such Lender shall make such
Advance in an amount equal to their Pro-Rata Share of such requested Advance;
provided that in no event shall the Lenders make any Advance if, after giving
effect to such Advance the aggregate Advances Outstanding hereunder would exceed
the Maximum Availability. Notwithstanding anything contained in this Section 2.1
or elsewhere in this Agreement to the contrary, no Lender shall be obligated to
provide its Lender Agent or the Borrower with aggregate funds in connection with
an Advance that would exceed such Lender’s unused Commitment then in effect.

Section 2.2. [Reserved].

 

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Section 2.3. Procedures for Advances by Lenders.

(a) Each Advance from a Lender hereunder shall be effected by the Borrower (or
the Servicer on its behalf) delivering to the Administrative Agent and each
Lender Agent (with a copy to the Trustee) a duly completed Borrowing Notice
(along with a Borrowing Base Certificate, current Loan Tape and any applicable
Approval Notices) no later than 2:00 p.m. on the Business Day of the proposed
Funding Date. Each Borrowing Notice shall (i) specify the desired amount of such
Advance, which amount must be at least $250,000, to be allocated to each Lender
in accordance with its Pro-Rata Share, (ii) specify the proposed Funding Date
for such Advance, (iii) specify the Loans which are to be financed on such
Funding Date in the then-current Loan Tape, (iv) specify the amount of cash
required to be deposited into the Unfunded Exposure Account in connection with
any Revolving Loan or Delayed Draw Term Loan funded by such Advance, if
applicable, and (v) include a representation that all conditions precedent for
an Advance described in Article III hereof have been met. Each Borrowing Notice
shall be irrevocable. If any Borrowing Notice is received by the Administrative
Agent after 2:00 p.m. on the Business Day for which such Advance is requested or
on a day that is not a Business Day, such Borrowing Notice shall be deemed to be
received by the Administrative Agent at 9:00 a.m. on the next following Business
Day.

(b) 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 any Lender to so make such amount available to the Borrower shall
not relieve any other Lender of its obligation hereunder.

(c) Upon satisfaction of the applicable conditions set forth in Article III, on
the relating Funding Date of an Advance, each Lender shall, subject to the
limitations set forth in Section 2.1, make available to the Borrower in same day
funds, at such bank or other location reasonably designated by the Borrower in
the Borrowing Notice given pursuant to Section 2.1, an amount equal to its
Pro-Rata Share of the lesser of (i) the amount requested by the Borrower for
such Advance and (ii) the excess of the Maximum Availability at such time over
the aggregate Advances Outstanding.

(d) Subject to the terms, conditions, provisions and limitations set forth
herein, the Borrower may (i) borrow, repay or prepay and reborrow Advances
without any penalty, fee or premium on and after the Closing Date and prior to
the end of the Revolving Period; (ii) repay or prepay Advances at any time after
the Revolving Period; and (iii) at any time, withdraw funds in the Unfunded
Exposure Account in order to satisfy its funding obligations under its Delayed
Draw Term Loans and Revolving Loans and deposit Principal Collections received
from its Revolving Loans into the Unfunded Exposure Account (up to the Aggregate
Exposure Amount) in accordance with Section 6.4(k).

(e) Notwithstanding anything to the contrary herein (including, without
limitation, the occurrence of a Termination Event (other than the occurrence of
an Insolvency Event with respect to the Borrower) or the existence of an
Unmatured Termination Event), if, upon the earlier to occur of the end of the
Revolving Period or the Termination Date, the amount on deposit in the Unfunded
Exposure Account is less than the Aggregate Exposure Amount, the Borrower
covenants and agrees to (i) request an Advance hereunder in the amount of such

 

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shortfall for deposit into the Unfunded Exposure Account and/or (ii) deposit
other funds of the Borrower in the amount of such shortfall into the Unfunded
Exposure Account. For purposes of any Advance required to be requested by the
Borrower to fulfill such funding obligation, the conditions precedent set forth
in Section 3.2 shall be deemed to have been satisfied (other than the
non-occurrence of a Termination Event related to an Insolvency Event with
respect to the Borrower). Following the disbursement of such Advance to the
Borrower by deposit into the Unfunded Exposure Account on the Funding Date
(which shall be no later than two Business Days following the occurrence of such
Termination Date), no further Advances will be made.

(f) For the avoidance of doubt, the Borrower may acquire Cash or Eligible Loans
(pursuant to Section 3.3) for any purpose not in violation of the Transaction
Documents from equity contributions from its equityholders; provided that any
asset to be contributed to the Borrower that is not Cash or an Eligible Loan
(added pursuant to Section 3.3) must be approved by the Administrative Agent in
its sole and absolute discretion.

Section 2.4. Delivery of Loans.

(a) Upon the acquisition of any Collateral by the Borrower, the ownership of
each transferred Underlying Instrument and the contents of each Loan File will
be vested in the Borrower. Each Loan and Related Security transferred to the
Borrower shall immediately and without further action automatically become part
of the Collateral.

(b) Pursuant to and in accordance with the terms of Section 3.2(c), the Borrower
will deliver, or cause to be delivered, to the Trustee the Required Loan
Documents accompanied by the related Loan Checklist relating to each Loan being
transferred on such Funding Date.

Section 2.5. Reduction of the Facility Amount; Mandatory and Optional
Repayments.

(a) The Borrower shall be entitled at its option and upon three (3) Business
Days’ prior written notice in the form of Exhibit A-2 to the Administrative
Agent (with a copy to the Trustee) to either (i) terminate the Facility Amount
in whole upon payment in full of all Advances Outstanding, all accrued and
unpaid Interest, any Breakage Costs and Hedge Breakage Costs, any applicable
Prepayment Premium and all other Aggregate Unpaids, or (ii) reduce in part the
portion of the Facility Amount that exceeds the sum of the Advances Outstanding,
upon payment of any applicable Prepayment Premium. Any request for a reduction
or termination pursuant to this Section 2.5(a) shall be irrevocable. The
Commitment of each 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 2.5(a).

(b) The Borrower shall be entitled at its option, at any time, to reduce the
Advances Outstanding; provided that (i) the Borrower shall give written notice
of such reduction in the form of Exhibit A-2 to the Administrative Agent (with a
copy to the Trustee) on or prior to 12:00 noon on the proposed date of
reduction, and (ii) any reduction of Advances Outstanding (other than with
respect to repayments of Advances Outstanding made by the Borrower to reduce
Advances Outstanding such that the Availability is greater than or equal to $0)
shall be in an

 

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amount in integral multiples of $100,000 which is greater than or equal to
$500,000. In connection with any reduction of Advances Outstanding (x) in part,
the Borrower shall deliver to the Administrative Agent by 2:00 p.m. immediately
available funds in an amount sufficient to repay such Advances Outstanding,
together with any Breakage Costs and Hedge Breakage Costs related to such
repayment and (y) in whole, the Borrower shall deliver to the Administrative
Agent funds sufficient to repay the Advances Outstanding, together with all
accrued and unpaid Interest, any Breakage Costs and Hedge Breakage Costs, and
all accrued and unpaid costs and expenses of the Administrative Agent and
Lenders related to such repayment; provided that any such reduction will occur
only if sufficient funds have been remitted to pay all such amounts in full, as
determined by the Administrative Agent in its commercially reasonable
discretion. The Administrative Agent shall apply amounts received from the
Borrower pursuant to this Section 2.5(b) to the pro rata reduction of the
Advances Outstanding, to the payment of all accrued and unpaid Interest on the
amount of the Advances Outstanding to be repaid, to the payment of any Breakage
Costs and Hedge Breakage Costs and to the payment of related costs and expenses
as applicable pursuant to clause (x) or (y) above. Any Advance so repaid may,
subject to the terms and conditions hereof, be reborrowed during the Revolving
Period. Any Repayment Notice relating to any repayment pursuant to this
Section 2.5(b) shall be irrevocable.

(c) If, on any day, the Advances Outstanding exceed the Maximum Availability,
then the Borrower shall pay, without further demand by the Administrative Agent,
an amount equal to such excess within three (3) Business Days by (i) depositing
such amount into the Collection Account, (ii) repaying Advances in such amount
in accordance with the procedures set forth in Section 2.5(b) above, or
(iii) pledging to the Trustee, for the benefit of the Secured Parties,
additional Eligible Loans (subject to approval by the Administrative Agent
pursuant to the terms and conditions hereof) with an Adjusted Borrowing Value at
least equal to such excess.

(d) Notwithstanding anything to the contrary in Section 2.5(a), no Prepayment
Premium shall be payable by the Borrower in the event that as of any date of
termination or reduction occurring in the first year after the Closing Date,
pursuant to Section 2.5(a), the Administrative Agent has not approved at least 5
of the first 10 Eligible Loans presented for approval to the Administrative
Agent on or after the Closing Date; provided that only Eligible Loans with
respect to which the Borrower has provided the Administrative Agent with all of
the information reasonably requested by the Administrative Agent to make such
approval determination for such Eligible Loan shall be included in such
calculation.

Section 2.6. Determination of Interest.

Each applicable Lender Agent shall determine the applicable Interest Rate for
its related Lender (including unpaid Interest related thereto, if any, due and
payable from a prior Payment Date) to be paid by the Borrower with respect to
each Advance on each Payment Date for the related Accrual Period and shall
advise the Servicer thereof on the third Business Day prior to such Payment
Date.

Section 2.7. Principal Repayments on the Termination Date.

The Advances Outstanding shall be payable in full on the Termination Date.

 

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Section 2.8. Instructions to the Trustee.

All instructions and directions given to the Trustee by the Servicer, the
Borrower or the Administrative Agent pursuant to Sections 2.10 and 2.11 shall be
in writing (including instructions and directions transmitted to the Trustee by
facsimile or e-mail), and such written instructions and directions shall be
delivered with a written certification that such instructions and directions are
in compliance with the provisions of Sections 2.10 and 2.11. If either the
Administrative Agent or Trustee disagrees with the computation of any amounts to
be paid or deposited by the Borrower or the Servicer under Sections 2.10 and
2.11 or otherwise pursuant to this Agreement or the Servicer has not delivered a
Servicing Report as required by the terms hereof, the Administrative Agent shall
so notify the Borrower, the Servicer and the Trustee in writing and in
reasonable detail to identify the specific disagreement. If such disagreement
cannot be resolved within two (2) Business Days or at any time Trustee receives
instructions from the Servicer or the Borrower which conflict with any
instructions received from the Administrative Agent, the Trustee shall rely on
and follow the instructions given by the Administrative Agent.

Section 2.9. Notations on Variable Funding Notes.

Each Lender Agent is hereby authorized to enter on a schedule attached to the
VFN a notation (which may be computer generated) with respect to each Advance
under the VFN made by the related Lender of: (a) the date and principal amount
thereof, and (b) each repayment of principal thereof, and any such recordation
shall 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 VFN shall not limit or otherwise affect the obligation
of the Borrower to repay the Advances in accordance with their respective terms
as set forth herein.

Section 2.10. Settlement Procedures Prior to Termination Period.

(a) On each Payment Date prior to the Termination Period, the Servicer shall
direct the Trustee to pay pursuant to the Servicing Report (and, subject to
Section 2.8, the Trustee shall make payment, in reliance on the information set
forth in such Servicing Report) to the following Persons, from the Interest
Collections Account, to the extent of Available Funds received with respect to
the Collection Period that ended on the last day of the calendar quarter
immediately preceding the calendar month in which such Payment Date occurs, the
following amounts in the following order of priority:

(i) FIRST, pro rata to each Hedge Counterparty, any amounts, (other than any
Hedge Breakage Costs, 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 extent not paid for by the Servicer, to the Trustee, (a) in
an amount equal to any accrued and unpaid Trustee Fees and (b) incurred but
unreimbursed reasonable third-party, out-of-pocket expenses relating to its
duties as Trustee hereunder, in respect of which the Trustee has provided prior
written notice to the Servicer and the Administrative Agent, for the payment
thereof; provided that amounts payable pursuant to clause (b) hereof shall not
exceed $12,500 for any Payment Date;

 

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

(iv) FOURTH, to each Lender Agent (or, at the direction of any Lender Agent, to
such Lender Agent’s Lender), pro rata in accordance with the amount of Advances
Outstanding hereunder for the account of the applicable Lender, in an amount
equal to any accrued and unpaid Interest, Commitment Fee and Breakage Costs, for
the payment thereof;

(v) FIFTH, to each Lender Agent (or, at the direction of any Lender Agent, to
such Lender Agent’s Lender), pro rata in accordance with amounts due for the
account of the applicable Lender, in an amount equal to any accrued and unpaid
fees and expenses incurred in connection with this Agreement and the other
Transaction Documents, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Lender Agents, as set forth in
Section 13.9(a);

(vi) SIXTH, (a) prior to the end of the Revolving Period, at the Servicer’s
discretion, to the Unfunded Exposure Account, up to an amount that would cause
the funds in the Unfunded Exposure Account to equal the Aggregate Exposure
Amount and (b) after the Revolving Period, to the Unfunded Exposure Account, up
to an amount that would cause the funds in the Unfunded Exposure Account to
equal the Aggregate Exposure Amount:

(vii) SEVENTH, if the Maximum Availability as of the most recent Determination
Date is less than the Advances Outstanding as of such Determination Date, to
each Lender Agent (or, at the direction of any Lender Agent, to such Lender
Agent’s Lender), pro rata in accordance with the amount of Advances Outstanding
hereunder for the account of the applicable Lender, in reduction of the Advances
Outstanding in an amount up to such overage;

(viii) EIGHTH, to each Lender Agent, pro rata in accordance with amount due, in
an amount equal to any Prepayment Premium then due and payable;

(ix) NINTH, to Wells Fargo, solely to the extent of any remaining available
funds, up to the amount due under the Borrower ISDA Guaranty until an aggregate
amount equal to $1,000,000 shall have been distributed to Wells Fargo pursuant
to this subsection (ix) and Section 2.10(v);

(x) TENTH, to the Administrative Agent, each Lender Agent (or, at the direction
of any Lender Agent, to such Lender Agent’s Lender), the applicable Lender, the
Trustee, the Affected Parties, the Indemnified Parties or the Secured Parties,
pro rata in accordance with the amounts owed to such Persons under this clause
TENTH, and without duplication, all other amounts, including Increased Costs but
other than Advances Outstanding, then due under this Agreement, reasonable
third-party out-of-pocket expenses relating to its duties as the Trustee
hereunder, to the extent not paid pursuant to clause SECOND above in respect of
which the Trustee has provided prior

 

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written notice to the Servicer and the Administrative Agent, and any Hedge
Breakage Costs owing to each Hedge Counterparty under its respective Hedging
Agreement, for the payment thereof; and

(xi) ELEVENTH, any remaining amount shall be distributed to the Borrower.

(b) On each Payment Date prior to the Termination Period, the Servicer shall
direct the Trustee to pay pursuant to the Servicing Report (and, subject to
Section 2.8, the Trustee shall make payment, in reliance on the information set
forth in such Servicing Report) to the following Persons, from the Principal
Collections Account, to the extent of Available Funds, the following amounts in
the following order of priority:

(i) FIRST, to the parties to which amounts are expressed to be due pursuant to
Sections 2.10(a)(i) – (vi), in the priority set forth therein, such amounts to
the extent not paid in full pursuant to Sections 2.10(a)(i) – (vi);

(ii) SECOND, (a) prior to the end of the Revolving Period, at the Servicer’s
discretion, to the Unfunded Exposure Account, up to an amount that would cause
the funds in the Unfunded Exposure Account to equal the aggregate of the
Unfunded Exposure Equity Amounts and (b) after the Revolving Period, to the
Unfunded Exposure Account, up to an amount that would cause the funds in the
Unfunded Exposure Account to equal the Aggregate Exposure Amount;

(iii) THIRD, (a) prior to the end of the Revolving Period, if the Maximum
Availability as of the most recent Determination Date is less than the Advances
Outstanding as of such Determination Date, to each Lender Agent (or, at the
direction of any Lender Agent, to such Lender Agent’s Lender), pro rata in
accordance with the amount of Advances Outstanding hereunder for the account of
the applicable Lender, in reduction of the Advances Outstanding in an amount up
to such overage; and (b) after the Revolving Period, to each Lender Agent for
the account of the applicable Lender, an amount necessary to reduce the Advances
Outstanding and Aggregate Unpaids to zero and to pay all applicable Prepayment
Premiums;

(iv) FOURTH, to the Administrative Agent, each Lender Agent (or, at the
direction of any Lender Agent, to such Lender Agent’s Lender), the applicable
Lender, the Trustee, the Affected Parties, the Indemnified Parties or the
Secured Parties, pro rata in accordance with the amounts owed to such Persons
under this clause FOURTH, and without duplication, all other amounts, including
Increased Costs then due under this Agreement, and reasonable third-party
out-of-pocket expenses relating to its duties as the Trustee hereunder, to the
extent not paid pursuant to Section 2.10(a), in respect of which the Trustee has
provided prior written notice to the Servicer and the Administrative Agent, and
any Hedge Breakage Costs owing to each Hedge Counterparty under its respective
Hedging Agreement, for the payment thereof; and

(v) FIFTH, any remaining amount shall be distributed to the Borrower; provided
that the Borrower shall first reimburse the Servicer for any unreimbursed

 

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amounts paid by the Servicer pursuant to Section 2.16, Section 2.17 or
Section 13.9 or any amounts paid by the Servicer on the Borrower’s behalf
relating to its servicing activities hereunder, together with interest thereon
at a per annum rate of interest equal to LIBOR plus 2.00% from and including the
date such payment was made to but not including the date of such reimbursement.

(c) 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 Principal Collections Account:

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

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

(2) the Servicer provides same day written notice to the Administrative Agent
and the Trustee by facsimile (to be received no later than 1:00 p.m. on such
day) of the request to withdraw Principal Collections and the amount of such
request;

(3) the notice required in clause (2) above shall be accompanied by a Borrowing
Notice in the form of Exhibit A-3, and a Borrowing Base Certificate, each
executed by the Borrower and a Responsible Officer of the Servicer and a current
Loan Tape and Approval Notice (for each Loan added to the Collateral on the date
of such reinvestment of Principal Collections);

(4) the Trustee provides to the Administrative Agent by facsimile (to be
received no later than 1:30 p.m. on that same day) a statement reflecting the
total amount on deposit on such day in the Principal Collections Account; and

(5) upon the satisfaction of the conditions set forth in clauses (1) through
(4) of this Section 2.10(c) (as certified by the Borrower to the Trustee and the
Administrative Agent), the Trustee will release funds from the Principal
Collections Account to the Servicer in an amount not to exceed the lesser of
(A) the amount requested by the Servicer and (B) the amount on deposit in the
Principal Collections 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 2.5.

(d) Prior to the Termination Period, the Servicer may withdraw amounts on
deposit in the Unfunded Exposure Account for the purpose of funding the
Borrower’s unfunded commitments with respect to Delayed Draw Term Loans and
Revolving Loans in the Collateral, provided the following conditions are
satisfied (unless otherwise waived in writing by the Administrative Agent):

 

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(i) the Servicer provides same day written notice (in the form of a Borrowing
Notice appended hereto as Exhibit A-4) to the Administrative Agent and the
Trustee by facsimile (to be received no later than 1:00 p.m. on such day) of the
request to withdraw funds from the Unfunded Exposure Account and the amount of
such request;

(ii) the notice required in clause (i) above shall be accompanied by a Borrowing
Base Certificate, executed by the Borrower and at least one Responsible Officer
of the Servicer and a current Loan Tape; and

(iii) the Trustee provides to the Administrative Agent by facsimile (to be
received no later than 1:00 p.m. on that same date) a statement reflecting the
total amount on deposit on such day in the Unfunded Exposure Account.

Upon the satisfaction or waiver of the conditions set forth in clauses
(i) through (iii) above as certified by the Borrower or the Servicer on its
behalf to the Trustee, the Trustee will release funds from the Unfunded Exposure
Account to the Servicer in an amount not to exceed the lesser of (A) the
aggregate amount requested by the Borrower, which amount shall not exceed the
aggregate amount of the applicable funding commitment requests made by, and
payable to, the Obligors under such Delayed Draw Term Loans and Revolving Loans
and (B) the amount on deposit in the Unfunded Exposure Account on such day.

Section 2.11. Settlement Procedures During the Termination Period.

(a) On each Payment Date during the Termination Period, the Servicer shall
direct the Trustee to pay pursuant to the Servicing Report (and, subject to
Section 2.8, the Trustee shall make payment, in reliance on the information set
forth in such Servicing Report) to the following Persons, 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 (other than any
Hedge Breakage Costs), 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 extent not paid for by the Servicer, pro rata to the
Trustee, (2) in an amount equal to any accrued and unpaid Trustee Fees, and
(b) incurred but unreimbursed reasonable third-party, out-of-pocket expenses
relating to its duties as Trustee hereunder, in respect of which the Trustee has
provided prior written notice to the Servicer and the Administrative Agent, for
the payment thereof; provided that amounts payable pursuant to clause (b) hereof
shall not exceed $12,500 for any Payment Date;

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

(iv) FOURTH, to each Lender Agent (or, at the direction of any Lender Agent, to
such Lender Agent’s Lender), pro rata in accordance with the amount of Advances
Outstanding hereunder for the account of the applicable Lender, in an amount

 

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equal to any accrued and unpaid Interest, Commitment Fee and Breakage Costs, for
the payment thereof;

(v) FIFTH, to each Lender Agent (or, at the direction of any Lender Agent, to
such Lender Agent’s Lender), pro rata in accordance with amounts due for the
account of the applicable Lender, in an amount equal to any accrued and unpaid
fees and expenses incurred in connection with this Agreement and the other
Transaction Documents, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Lender Agents, as set forth in
Section 13.9(a);

(vi) SIXTH, to the Unfunded Exposure Account, up to an amount that would cause
the funds in the Unfunded Exposure Account to equal the Aggregate Exposure
Amount;

(vii) SEVENTH, to each Lender Agent (or, at the direction of any Lender Agent,
to such Lender Agent’s Lender), pro rata in accordance with the amount of
Advances Outstanding hereunder for the account of the applicable Lender, in an
amount necessary to reduce the Advances Outstanding to zero;

(viii) EIGHTH, to the Administrative Agent, each Lender Agent (or, at the
direction of any Lender Agent, to such Lender Agent’s Lender), the applicable
Lender, the Trustee, the Affected Parties, the Indemnified Parties or the
Secured Parties, pro rata in accordance with the amounts owed to such Persons
under this clause EIGHTH, and without duplication, all other amounts, including
Increased Costs, then due under this Agreement, and reasonable third-party
out-of-pocket expenses relating to its duties as Trustee hereunder to the extent
not paid pursuant to clause SECOND above in respect of which the Trustee has
provided prior written notice to the Servicer and the Administrative Agent, the
Prepayment Premium and any Hedge Breakage Costs owing to each Hedge Counterparty
under its respective Hedging Agreement for the payment thereof; and

(ix) NINTH, any remaining amount shall be distributed to the Borrower, provided
that the Borrower shall first reimburse the Servicer for any unreimbursed
amounts paid by the Servicer pursuant to Section 2.16, Section 2.17 or
Section 13.9 or any amounts paid by the Servicer on the Borrower’s behalf
relating to its servicing activities hereunder, together with interest thereon
at a per annum rate of interest equal to LIBOR plus 2.00% from and including the
date such payment was made to but not including the date of such reimbursement.

(b) From time to time during the Termination Period, the Servicer may withdraw
amounts on deposit in the Unfunded Exposure Account for the purpose of funding
the Borrower’s unfunded commitments with respect to Delayed Draw Term Loans and
Revolving Loans in the Collateral, provided the conditions set forth in clauses
(i) through (iii) of Section 2.10(d) are satisfied (unless otherwise waived in
writing by the Administrative Agent). Upon the satisfaction or waiver of such
conditions (as certified to the Trustee by the Borrower or the Servicer), the
Trustee will release funds from the Unfunded Exposure Account to the Servicer in
an amount not to exceed the least of (A) the amount requested by the Servicer in
the related

 

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Borrowing Notice (which amount will not exceed the aggregate amount of the
applicable funding commitment requests made by, and payable to, the Obligors
under such Delayed Draw Term Loans and Revolving Loans) and (B) the amount on
deposit in the Unfunded Exposure Account on such day.

Section 2.12. Collections and Allocations.

(a) Collections. The Servicer shall promptly identify (with the assistance of
the Trustee, if necessary) any collections as being on account of Interest
Collections, Principal Collections or other Collections, whether received by it
in its capacity as Concentration Account Servicer under the Intercreditor
Agreement or on deposit in the Custodial Account or otherwise, and shall
transfer or cause to be transferred to the Collection Account all such
Collections which are in the form of available funds by the close of business on
the second Business Day after such Collections are so received. Upon the
transfer of Collections to the Collection Account, and on the basis of
information received from the Servicer, the Trustee shall segregate Principal
Collections and Interest Collections and transfer the same to the corresponding
Principal Collections Account and Interest Collections Account, as applicable.
The Trustee shall make such deposits or payments on the date indicated therein
by wire transfer, in immediately available funds. The Trustee shall further
provide a statement to the Servicer as to the amount of Principal Collections
and Interest Collections on deposit in the Collection Account as of the related
Determination Date on each Reporting Date for inclusion in the Servicing Report
delivered pursuant to Section 6.13(b). In addition, at the time the Trustee
receives Collections or funds from the Concentration Account into the Collection
Account, the Servicer will classify all funds so transferred as one of the
following types of Collections (which list may have reasonable additional items
added to it from time to time by written notice from the Servicer to the Trustee
and the Administrative Agent): (i) Scheduled Payments, (ii) Prepayments,
(iii) Recoveries, (iv) Insurance Proceeds, (v) fees, (vi) hedge payments,
(vii) Excluded Amounts and (viii) additional amounts.

(b) Deposits. On each Cut-Off Date, the Servicer will deposit (in immediately
available funds) into the Collection Account all Collections received after the
applicable Cut-Off Date and through and including the Cut-Off Date in respect of
Eligible Loans being transferred to and included as part of the Collateral on
such date.

(c) Excluded Amounts. With the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld (a copy of which will be
provided by the Servicer to the Trustee), the Servicer may withdraw from the
Collection Account any deposits thereto constituting Excluded Amounts if the
Servicer has, prior to such withdrawal and consent, delivered to the
Administrative Agent (with a copy to the Trustee) a report setting forth the
calculation of such Excluded Amounts in a form and substance satisfactory to the
Administrative Agent and the Trustee in their sole discretion.

(d) Investment of Funds. Until the occurrence of a Termination Event, to the
extent there are uninvested available amounts deposited in the Collection
Account, on or before 3:00 p.m. all such amounts shall be invested in Permitted
Investments selected by the Servicer in written instructions delivered to the
Trustee (which may be in the form of standing instructions) that mature no later
than the Business Day immediately preceding the next Payment Date; to the

 

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extent that there are uninvested available funds deposited after 3:00 p.m., such
funds shall be swept into the overnight funds investment which shall be a
Permitted Investment selected by the Servicer in written instructions delivered
to the Trustee (which may be in the form of standing instructions). From and
after the occurrence of a Termination Event, to the extent there are uninvested
amounts in the Collection Account (net of losses and investment expenses), all
amounts may be invested in Permitted Investments selected by the Administrative
Agent in written instructions delivered to the Trustee (which may be in the form
of standing instructions) that mature no later than the Business Day immediately
preceding the next Payment Date. Until the occurrence of a Termination Event, to
the extent there are uninvested available amounts deposited in the Custodial
Account after 3:00 p.m., such funds shall be swept into the overnight funds
investment which shall be a Permitted Investment selected by the Servicer in
written instructions delivered to the Trustee (which may be in the form of
standing instructions). From and after the occurrence of a Termination Event, to
the extent there are uninvested amounts in the Custodial Account (net of losses
and investment expenses) after 3:00 p.m., all such amounts may be swept into the
overnight funds investment which shall be a Permitted Investment selected by the
Administrative Agent in written instructions delivered to the Trustee (which may
be in the form of standing instructions). All earnings (net of losses and
investment expenses) thereon shall be retained or deposited into the Collection
Account and shall be applied pursuant to the provisions of Section 2.10 and
Section 2.11. All investments shall be subject to availability. Absent receipt
of instructions as contemplated herein, the Trustee shall have no obligation to
invest any funds.

Section 2.13. Payments, Computations, Etc.

(a) Unless otherwise expressly provided herein, all amounts to be paid or
deposited by the Borrower or the Servicer hereunder shall be paid or deposited
in accordance with the terms hereof no later than 11:00 a.m. on the day when due
in lawful money of the United States in immediately available funds to the
applicable Lender Agent’s Account and if not received before such time shall be
deemed received on the next Business Day. 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, payable on
demand; provided that such interest rate shall not at any time exceed the
maximum rate permitted by Applicable Law. Such interest shall be for the account
of, and distributed to, each applicable Lender. All computations of Interest and
other fees hereunder shall be made on the basis of a year consisting of 360 days
(other than calculations with respect to the Base Rate which shall be based on a
year consisting of 365 or 366 days, as applicable) 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
the payment of Interest or any fee payable hereunder, as the case may be. For
avoidance of doubt, to the extent that Available Funds are insufficient on any
Payment Date to satisfy the full amount of any Increased Costs pursuant to the
provisions of Section 2.10 or Section 2.11, as applicable, such unpaid amounts
shall remain due and owing and shall accrue Interest until repaid in full.

 

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(c) If any Advance requested by the Borrower and approved by the applicable
Lender and the Lender Agents pursuant to Section 2.3 is not, for any reason,
made or effectuated, as the case may be, on the date specified therefor, the
Borrower shall indemnify the applicable Lender against any reasonable loss, cost
or expense incurred by the applicable Lender including, without limitation, any
loss (including loss of anticipated profits, net of anticipated profits in the
reemployment of such funds in the manner determined by each Lender), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the applicable Lender to fund or maintain such Advance.

Section 2.14. [Reserved].

Section 2.15. Fees.

(a) The Servicer shall be entitled to receive a servicing fee (the “Servicing
Fee”), in arrears in respect of each Collection Period in accordance with
Section 2.10 and/or Section 2.11, as applicable, which fee shall be equal to the
product of (i) the applicable Servicing Fee Rate, (ii) average daily Borrowing
Base during the immediately preceding Collection Period and (iii) the actual
number of days in such Collection Period divided by 360. The Servicing Fee is
payable to the Servicer to compensate the Servicer for performing its
obligations as Servicer hereunder and, so long as the Servicer is also the
Originator, for the Originator’s performance of its obligations hereunder and
under the Sale Agreement as such obligations relate to Collateral purchased
directly by the Borrower from third parties which was reunderwritten by the
Originator on behalf of the Borrower in connection with the Borrower’s purchase
thereof.

(b) The Trustee shall be entitled to receive the Trustee Fee and shall be
entitled to receive reimbursement for certain expenses as described in, and in
accordance with, Section 2.10 and Section 2.11, as applicable.

(c) The Borrower shall pay to Mayer Brown LLP, as counsel to the Administrative
Agent, and to Nixon Peabody LLP, as counsel to the Trustee, all reasonable fees
and out-of-pocket expenses thereof within 30 Business Days after receiving an
invoice for such amounts.

Section 2.16. 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 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) shall
(x) 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 its
Advances, any interest in the Collateral, or any obligation to make Advances
hereunder, or on any payment made hereunder, (y) impose, modify or deem
applicable any reserve requirement (including, without limitation, any reserve
requirement imposed by the Board of Governors of the Federal Reserve System, 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
(z) impose any other condition affecting the

 

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interest in the Collateral Granted to the Trustee for the benefit of the Secured
Parties hereunder or the Lenders’ rights hereunder, 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
(and to the extent the Borrower does not make such payment the Servicer 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 law, guideline, rule, regulation, directive or request or (ii) compliance
by any Affected Party with any law, guideline, rule, regulation, directive or
request from any central bank or other governmental authority or agency (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 as a consequence of its obligations hereunder or arising in
connection herewith to a level below that which any such Affected Party could
have achieved but for such introduction, change or compliance (taking into
consideration the policies of such Affected Party with respect to capital
adequacy) by an amount deemed by such Affected Party 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 (and to the extent the Borrower does not make such
payment the Servicer shall pay) directly to such Affected Party such additional
amount or amounts as will compensate such Affected Party for such reduction. For
the avoidance of doubt, if the issuance of Interpretation No. 46 by the
Financial Accounting Standards Board or any other change in accounting standards
or the issuance of any other pronouncement, release or interpretation, causes or
requires the consolidation of all or a portion of the assets and liabilities of
the Originator or Borrower with the assets and liabilities of the Administrative
Agent, any Lender Agent or any Lender such event shall constitute a circumstance
on which such Affected Party may base a claim for reimbursement under this
Section 2.16.

(c) If as a result of any event or circumstance similar to those described in
clauses (a) or (b) of this Section 2.16, 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 hereunder, then
within ten days after demand by such Affected Party, the Borrower shall pay (or
to the extent the Borrower does not make such payment the Servicer shall pay) to
such Affected Party such additional amount or amounts as may be necessary to
reimburse such Affected Party for any amounts payable or paid by it.

(d) In determining any amount provided for in this Section 2.16, the Affected
Party may use any reasonable averaging and attribution methods. Any Affected
Party making a claim under this Section 2.16 shall submit to the Borrower and
the Servicer a written description as to such additional or increased cost or
reduction and the calculation thereof, which written description shall be
conclusive absent demonstrable error.

 

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

(f) Notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all rules and regulations promulgated
thereunder or issued in connection therewith shall be deemed to have been
introduced after the Closing Date, thereby constituting a change for which a
claim for increased costs or additional amounts may be made hereunder with
respect to the Affected Parties, regardless of the date enacted, adopted or
issued.

Section 2.17. Taxes.

(a) All payments made by an Obligor in respect of a Loan and all payments made
by the Borrower or made by 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. If any Taxes are required to be withheld from
any amounts payable to the Administrative Agent, the Lender Agents, any Affected
Party or any Secured Party, then the amount payable to such Person will be
increased (such increase, the “Additional Amount”) such that every net payment
made under this Agreement after 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 net income or franchise taxes imposed on
the Lenders, any Affected Party, the Administrative Agent or the Lender Agents,
respectively, with respect to payments required to be made by the Borrower or
Servicer under this Agreement, by a taxing jurisdiction in which the Lenders,
any Affected Party, the Administrative Agent or the Lender Agents, are
organized, conducts business or is paying taxes (as the case may be).

(b) The Borrower will indemnify (and to the extent the indemnification provided
by the Borrower is insufficient the Servicer will indemnify) each Affected Party
for the full amount of Taxes payable by such Person in respect of Additional
Amounts and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. All payments in respect of this
indemnification shall be made within ten days from the date a written invoice
therefor is delivered to the Borrower and the Servicer.

(c) Within 30 days after the date of any payment by the Borrower or by the
Servicer on behalf of the Borrower of any Taxes, the Borrower or the Servicer,
as applicable, will furnish to the Administrative Agent and each of the Lender
Agents at the applicable address set forth on Annex A to this Agreement,
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 deliver to the Borrower,
with a copy to the Administrative Agent, (i) within 15 days after the date
hereof, two (or such other number as may

 

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from time to time be prescribed by Applicable Laws) duly completed copies of IRS
Form W-8BEN or Form W-8ECI (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 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 2.17(d),
copies (in such numbers as may from time to time be prescribed by Applicable
Laws or regulations) of such additional, amended or successor forms,
certificates or statements as may be required under Applicable Laws or
regulations to permit the Borrower or the Servicer to make payments hereunder
for the account of such Lender without deduction or withholding of United States
federal income or similar Taxes.

(e) 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
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 2.17, then, within ten days after demand by the Lenders, the
Borrower shall pay (or to the extent the Borrower does not make such payment the
Servicer shall pay) to the Lenders such additional amount or amounts as may be
necessary to reimburse the Lenders for any amounts paid by them.

(f) Without prejudice to the survival of any other agreement of the Borrower and
the Servicer hereunder, the agreements and obligations of the Borrower and the
Servicer contained in this Section 2.17 shall survive the termination of this
Agreement.

Section 2.18. Assignment of the Sale Agreement.

The Borrower hereby collaterally assigns to the Trustee, for the ratable benefit
of the Secured Parties hereunder, all of the Borrower’s right, title and
interest in and to, but none of its obligations under, the Sale Agreement and
any UCC financing statements filed under or in connection therewith. In
furtherance and not in limitation of the foregoing, the Borrower hereby
collaterally assigns to the Trustee for the benefit of the Secured Parties its
right to indemnification under Article IX of the Sale Agreement. The Borrower
confirms that following the occurrence of a Termination Event or Unmatured
Termination Event the Trustee on behalf of the Secured Parties shall have the
sole right to enforce the Borrower’s rights and remedies under the Sale
Agreement and any UCC financing statements filed under or in connection
therewith for the benefit of the Secured Parties.

Section 2.19. Substitution and Transfer of Loans; Repurchase of Defaulted Loans.

(a) Substitution of Loans. On any day so long as a Termination Event has not
occurred (or, if a Termination Event has occurred, the Administrative Agent has
consented in its sole discretion), the Borrower may, subject to the conditions
set forth in this Section 2.19 and subject to the other restrictions contained
herein, replace any 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:

 

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(i) the Borrower has recommended to the Administrative Agent (with a copy to the
Trustee) in writing that the Loan to be replaced should be replaced (each a
“Replaced Loan”) and the Administrative Agent has consented in writing to such
replacement in its sole and absolute discretion;

(ii) each Substitute Loan is an Eligible Loan (including having been approved by
the Administrative Agent in accordance with clause (a) of the definition
thereof) on the date of substitution;

(iii) the sum of the OLB of such Substitute Loans shall be equal to or greater
than the sum of the OLB of the Replaced Loans;

(iv) after giving effect to any such substitution, the Availability is greater
than or equal to $0;

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

(vi) the inclusion of any such Substitute Loan does not cause a Termination
Event or Unmatured Termination Event to occur;

(vii) except in the case of a substitution pursuant to Section 2.19(b), such
substitution shall be subject to the provisions of Section 2.22;

(viii) each such substitution shall be subject to the applicable provisions of
Section 2.24; and

(ix) the Borrower shall deliver to the Administrative Agent and the Trustee on
the date of such substitution a certificate of a Responsible Officer certifying
that each of the foregoing is true and correct as of such date.

In addition, the Borrower shall, in connection with such substitution, deliver
the related Required Loan Documents to the Trustee in accordance with
Section 3.2(c) and deliver the related Servicing File to the Servicer.

(b) Transfer or Substitution of Warranty Loans. If on any day a Loan is (or
becomes) a Warranty Loan, no later than 30 days following the earlier of
knowledge by the Borrower or the Originator of such Loan becoming a Warranty
Loan or receipt by the Originator or by the Borrower, as applicable, from the
Administrative Agent, the Servicer or the Trustee of written notice thereof, the
Originator, pursuant to Section 6.1(b) of the Sale Agreement, or the Borrower
shall either:

(i) make a deposit to the Collection Account (for allocation pursuant to
Section 2.10 or Section 2.11, as applicable) in immediately available funds in
an amount equal to the sum of (a) the OLB of such Loan, (b) any accrued and
unpaid interest thereon, and (c) any Hedge Breakage Costs arising as a result
thereof (collectively, the “Retransfer Price”); or

 

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(ii) subject to the satisfaction of the conditions in Section 2.19(a),
substitute for such Warranty Loan a Substitute Loan.

In either of the foregoing instances, (i) if the Originator made such deposit or
substitution pursuant to Section 6.1(b) of the Sale Agreement, the Borrower
shall retransfer each such Warranty Loan and any Related Property to the
Originator in accordance with the Sale Agreement and (ii) the Borrowing Base
shall be reduced by the Adjusted Borrowing Value of such Warranty Loan and, if
applicable, increased by the Adjusted Borrowing Value of each Substitute Loan.
Upon confirmation of the deposit of such Retransfer Price into the Collection
Account or the delivery by the Originator or by the Borrower of a Substitute
Loan for each Warranty Loan (the “Retransfer Date”), such Warranty Loan shall
not be included in the Borrowing Base and, as applicable, the Substitute Loan
shall be included in the Collateral.

(c) Repurchase of Defaulted Loans. In the event a Loan becomes a Defaulted Loan,
the Servicer is hereby granted an option (a “Purchase Option”) to purchase such
Defaulted Loan at a price (the “Option Price”) equal to the Fair Market Value
thereof. Upon a Loan becoming a Defaulted Loan, the Servicer may exercise the
Purchase Option by providing the Borrower, the Trustee, the Administrative Agent
and the Lender Agents at least five days prior written notice thereof (the
“Purchase Option Notice”), which notice shall specify a cash exercise price at
least equal to the Option Price. The exercise of any Purchase Option shall be
irrevocable. Unless and until the Purchase Option with respect to a Defaulted
Loan is exercised, the Servicer shall pursue such other resolution strategies
available hereunder with respect to such Defaulted Loan, including, without
limitation, workout and foreclosure, as the Servicer may deem appropriate and
consistent with the Servicing Standard and the Credit and Collection Policy, in
each case with a view towards the maximization of the recovery on such Loan to
the Borrower on a present value basis. The exercise of the Purchase Option shall
be subject to the following conditions precedent:

(i) any sale of the applicable Loans by the Borrower in connection with the
exercise of the Purchase Option shall be made by the Borrower in a transaction
in which the Borrower makes no representations, warranties or covenants and
provides no indemnification for the benefit of any other party;

(ii) after giving effect to the exercise of the Purchase Option (x) the
representations and warranties contained in Sections 4.1 and 4.2 hereof shall
continue to be correct in all material respects, except to the extent relating
to an earlier date, (y) neither an Unmatured Termination Event nor a Termination
Event shall have occurred and (z) no Borrowing Base Deficiency exists;

(iii) the Servicer shall have deposited the Option Price into the Collection
Account; and

(iv) satisfaction of the applicable provisions in Section 2.22 and Section 2.24.

 

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Section 2.20. Optional Sales.

(a) Prior to the occurrence of an Unmatured Termination Event or a Termination
Event, on any Optional Sale Date, the Borrower shall have the right to prepay
all or a portion of the Advances Outstanding in connection with a sale of all or
a portion of the Collateral (each, an “Optional Sale”), subject to the following
terms and conditions:

(i) The Borrower shall have given the Administrative Agent (with a copy to the
Trustee) at least 45 Business Days’ prior written notice of its intent to effect
an Optional Sale, and (other than an Optional Sale which results in the
termination in full of this Agreement pursuant to Section 2.5(a)) the
Administrative Agent has consented in writing to such Optional Sale in its sole
discretion unless such notice and consent are waived or such notice period is
reduced by the Administrative Agent;

(ii) Any Optional Sale shall be in connection with either (A) a Term
Securitization or (B) the repayment of all Aggregate Unpaids and termination in
whole of the Facility Amount pursuant to Section 2.5(a);

(iii) Unless an Optional Sale is to be effected on a Payment Date (in which case
the relevant calculations with respect to such Optional Sale shall be reflected
on the applicable Servicing Report), the Servicer shall deliver to the
Administrative Agent a certificate and evidence to the reasonable satisfaction
of the Administrative Agent (with a copy to the Trustee) (which evidence may
consist solely of a certificate from the Servicer) that the Borrower shall have
sufficient funds on the related Optional Sale Date to effect the contemplated
Optional Sale in accordance with this Agreement. In effecting an Optional Sale,
the Borrower may use the Proceeds of sales of the Collateral to repay all or a
portion of the Aggregate Unpaids;

(iv) After giving effect to any Optional Sale (other than an Optional Sale that
results in a termination in full of this Agreement pursuant to Section 2.5(a)),
(a) the Availability shall be greater than or equal to $0 (unless otherwise
agreed in writing by the Administrative Agent), (b) the representations and
warranties contained in Sections 4.1 and 4.2 hereof shall continue to be correct
in all material respects, except to the extent relating to an earlier date and
(c) neither an Unmatured Termination Event nor a Termination Event shall have
resulted. On the related Optional Sale Date, the Administrative Agent, each
Lender Agent on behalf of the applicable Lender, the Hedge Counterparties and
the Trustee, as applicable, shall have received, as applicable, in immediately
available funds, an amount equal to the sum of (a) the portion of the Advances
Outstanding to be prepaid that are attributable to the Collateral to be sold by
the Borrower in connection with such Optional Sale plus (b) an amount equal to
all unpaid Interest to the extent reasonably determined by the Administrative
Agent and the Lender Agents to be attributable to that portion of the Advances
Outstanding to be paid in connection with the Optional Sale plus (c) an
aggregate amount equal to the sum of all other amounts due and owing to the
Administrative Agent, the Trustee, the Lender Agents, the Lenders, the Affected
Parties and the Hedge Counterparties, as applicable, under this Agreement and
the other Transaction Documents, to the extent accrued to such date (and, in the
case of a partial sale of the Collateral, to accrue thereafter to the next

 

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Payment Date) (including, without limitation, Breakage Costs, Hedge Breakage
Costs and any other payments owing to the Hedge Counterparties in respect of the
termination of any Hedge Transaction) in each case to the extent attributable to
the Collateral to be sold by the Borrower in connection with such Optional Sale
(or, in the case of a repayment in full and termination of the Facility Amount,
all Aggregate Unpaids at such time); provided that the Administrative Agent and
each Lender Agent shall have the right to determine whether the amount paid (or
proposed to be paid) by the Borrower on the Optional Sale Date is sufficient to
satisfy the requirements of clauses (iii) and (iv) and is sufficient to reduce
the Advances Outstanding to the extent requested by the Borrower in connection
with the Optional Sale;

(v) On or prior to each Optional Sale Date, the Borrower shall have delivered to
the Administrative Agent a list specifying all Loans to be sold and assigned
pursuant to such Optional Sale.

(b) In connection with any Optional Sale, the Borrower shall pay to the
Administrative Agent, for the account of each Lender, any Prepayment Premium
payable in connection therewith.

Section 2.21. Discretionary Sales.

Prior to the occurrence of an Unmatured Termination Event (other than in
connection with a Discretionary Sale (as defined below) to cure a Borrowing Base
Deficiency) or a Termination Event, the Borrower shall have the right to sell
Loans and prepay all or a portion of the Advances Outstanding (each, a
“Discretionary Sale”), subject to the following terms and conditions:

(i) At least one Business Day prior to each Discretionary Sale Date, the
Borrower shall have given the Administrative Agent (with a copy to the Trustee)
written notice of its intent to effect a Discretionary Sale (each such notice, a
“Discretionary Sale Notice”), specifying the Discretionary Sale Date and
including a list of all Loans to be sold and assigned pursuant to such
Discretionary Sale, and the Administrative Agent shall have consented in writing
to such Discretionary Sale in its sole and absolute discretion; provided that no
consent of the Administrative Agent shall be required (1) if the sum of the OLB
of all Loans subject to a Discretionary Sale during any twelve month period does
not exceed an amount equal to 15% of the highest OLB during the immediately
preceding twelve month period; (2) if (x) such Discretionary Sale is of a Loan
which has been included in the Collateral for less than 90 days and (y) at least
$5,000,000 in OLB of such Loan remains in the Collateral following such sale; or
(3) if such sale by the Borrower is being completed to cure a Borrowing Base
Deficiency, so long as immediately after giving effect to such sale and any
other substitution or transfer substantially contemporaneously therewith, the
Borrowing Base Deficiency shall be cured; provided however that, notwithstanding
the foregoing, any Discretionary Sale to an Affiliate of the Borrower other than
pursuant to clause (2) above shall require the prior written consent of the
Administrative Agent in its sole and absolute discretion;

 

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(ii) Any Discretionary Sale shall be made by the Borrower in a transaction
(i) reflecting arm’s-length market terms and (ii) in which the Borrower makes no
representations, warranties or covenants and provides no indemnification for the
benefit of any other party to the Discretionary Sale;

(iii) The Servicer shall deliver to the Administrative Agent (with a copy to the
Trustee) a certificate and evidence to the reasonable satisfaction of the
Administrative Agent (which evidence may consist solely of a certificate from
the Servicer) that the Borrower shall have sufficient funds on the related
Discretionary Sale Date to effect the contemplated Discretionary Sale in
accordance with this Agreement (unless a Discretionary Sale is to be effected on
a Payment Date (in which case the relevant calculations with respect to such
Discretionary Sale shall be reflected on the applicable Servicing Report)). In
effecting an Discretionary Sale, the Borrower may use the Proceeds of sales of
the Collateral to satisfy its remittance obligations hereunder;

(iv) After giving effect to the Discretionary Sale and the assignment to the
Borrower of the applicable Loans on any Discretionary Sale Date, (a) the
Availability is greater than or equal to $0 (unless otherwise agreed in writing
by the Administrative Agent), (b) the representations and warranties contained
in Section 4.1 hereof shall continue to be correct in all material respects,
except to the extent relating to an earlier date, (c) neither an Unmatured
Termination Event nor a Termination Event shall have resulted;

(v) On the related Discretionary Sale Date, the Trustee shall have received for
distribution to the applicable recipients referred to below, in immediately
available funds, an amount equal to the sum of (a) the portion of the Advances
Outstanding to be prepaid that are attributable to the Collateral to be sold by
the Borrower pursuant to this Section 2.21 plus (b) an amount equal to all
unpaid Interest to the extent reasonably determined by the Administrative Agent
and the Lender Agents to be attributable to that portion of the Advances
Outstanding to be paid in connection with the Discretionary Sale plus (c) an
aggregate amount equal to the sum of all other amounts due and owing to the
Administrative Agent, the Trustee, the Lender Agents, the Lenders, the Affected
Parties and the Hedge Counterparties, as applicable, under this Agreement and
the other Transaction Documents, to the extent accrued to such date and to
accrue to the next Payment Date (including, without limitation, Breakage Costs,
Hedge Breakage Costs and any other payments owing to the Hedge Counterparties in
respect of the termination of any Hedge Transaction) in each case, to the extent
attributable to the Loans to be sold by the Borrower pursuant to this
Section 2.21; provided that the Administrative Agent and each Lender Agent shall
have the right to determine whether the amount paid (or proposed to be paid) by
the Borrower on the Discretionary Sale Date is sufficient to satisfy the
requirements of clauses (iii) and (iv) above and is sufficient to reduce the
Advances Outstanding to the extent requested by the Borrower in connection with
the Discretionary Sale;

(vi) All Discretionary Sales of Loans to any Affiliate of the Borrower pursuant
to this Section 2.21 shall be subject to the limitations contained in
Section 2.22; and

 

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(vii) On the related Discretionary Sale Date, the proceeds from such
Discretionary Sale have been sent directly into the Collection Account.

Section 2.22. Limitations on Certain Substitutions and Sales.

(a) The sum, without duplication, of (A) the OLB of all Loans that were
substituted pursuant to Section 6.1(a) of the Sale Agreement and Section 2.19(a)
during the twelve month period preceding the proposed date of substitution (or
such lesser number of months as shall have elapsed since the Closing Date as of
such date) plus (B) the aggregate OLB of all Loans purchased by an Affiliate of
the Borrower pursuant to Section 2.19 or Section 2.21 during such period shall
not exceed an amount equal to 15% of the highest OLB during the immediately
preceding twelve month period; provided, however, that this Section 2.22(a)
shall not apply to (i) any Loan sold at the option of the Borrower to an
Affiliate of the Borrower (other than the Originator) at Fair Market Value where
such Loan was included in the Collateral for less than 90 days and at least
$5,000,000 OLB of such Loan remains in the Collateral following such sale or
(ii) any Warranty Loan sold or substituted pursuant to Section 6.1(b) of the
Sale Agreement or Section 2.19(b).

(b) The sum, without duplication, of the OLB of all Defaulted Loans and of all
Loans subject to clause (i), (iii) or (iv) of the definition of “Assigned Value
Adjustment Event” or clause (a) or (b) (and, with respect to clause (b), only if
the extension or delay of the maturity date of a Loan relates to credit
impairment of such Loan or the related Obligor) of the definition of “Material
Modification” that were substituted pursuant to Section 6.1(a) of the Sale
Agreement during the twelve month period preceding the proposed date of
substitution (or such lesser number of months as shall have elapsed since the
Closing Date as of such date) or purchased by the Originator pursuant to
Section 2.19(c) or Section 2.21 during such period shall not exceed an amount
equal to 10% of the highest OLB during the immediately preceding twelve month
period; provided, however, for the avoidance of doubt this Section 2.22(b) shall
not apply to any Warranty Loan sold or substituted pursuant to Section 6.1(b) of
the Sale Agreement or Section 2.19(b).

(c) Any Loan (other than any Warranty Loan) sold by the Borrower to the
Originator or to any Affiliate thereof shall be sold on an arm’s-length basis at
Fair Market Value.

Section 2.23. Release of Lien and Required Loan Documents.

(a) In connection with any Replaced Loan, Warranty Loan, Defaulted Loan or Loan
subject to the exercise of a Purchase Option, Optional Sale or Discretionary
Sale that is replaced, retransferred, purchased or sold pursuant to Sections
2.19, 2.20 or 2.21, on the applicable date of substitution or deposit into the
Collection Account of all required amounts specified by the applicable Section,
the Trustee, on behalf of the Secured Parties, shall, automatically and without
further action be deemed to, and hereby does, transfer, assign and set-over to
the Borrower, without recourse, representation or warranty, all the right, title
and interest of the Trustee, for the benefit of the Secured Parties in, to and
under such Loan and all future monies due or to become due with respect thereto,
the Related Property, all Proceeds of such Loan, and Recoveries relating
thereto, all rights to security for any such Loan, and all Proceeds and products
of the foregoing. In addition, the Trustee, at the expense of the Borrower, will
(i)

 

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execute such instruments of release with respect to the portion of the
Collateral to be so replaced, retransferred, repurchased or sold, in recordable
form if necessary, in favor of the Borrower or its designee as the Borrower or
the Servicer may reasonably request, (ii) deliver to the Borrower or its
designee any portion of the Collateral (including the related Required Loan
Documents) to be so replaced, retransferred, repurchased or sold in its
possession as identified to it by the Servicer and (iii) otherwise take such
actions as requested by the Borrower or the Servicer as are necessary and
appropriate to release the Lien of the Trustee for the benefit of the Secured
Parties on the portion of the Collateral to be so replaced, retransferred,
repurchased or sold.

(b) The Borrower hereby agrees to pay the reasonable legal fees and expenses of
the Administrative Agent, the Trustee, each Lender Agent and the Secured Parties
in connection with any such substitution, retransfer, repurchase or sale
(including, but not limited to, expenses incurred in connection with the release
of the Lien of the Trustee, for the benefit of the Secured Parties. and any
other party having an interest in the Collateral.

Section 2.24. Loan Acquisition and Disposition Criteria.

The Borrower shall not, nor shall the Servicer on behalf of the Borrower,
acquire (whether by purchase or substitution) or dispose of any Loan unless each
of the following conditions is met: (a) if such Loan is being acquired by the
Borrower, it is an Eligible Asset, (b) such Loan is being acquired or disposed
of in accordance with the terms of this Agreement, and (c) such Loan is not
being acquired or disposed of for the primary purpose of recognizing gains or
decreasing losses resulting from market value changes.

ARTICLE III.

CONDITIONS TO ADVANCES

Section 3.1. Conditions to Closing.

The effectiveness of this Agreement on the Closing Date shall be subject to the
satisfaction of the following conditions:

(a) Each Transaction Document shall have been duly executed by, and delivered
to, the parties thereto, and the Administrative Agent and each Lender Agent
shall have received such other documents, instruments, agreements and legal
opinions as the Administrative Agent and each Lender Agent shall reasonably
request in connection with the transactions contemplated by this Agreement,
including, without limitation, all those specified in the Schedule of Documents
attached hereto as Schedule I, each in form and substance satisfactory to the
Administrative Agent and each Lender Agent;

(b) The Borrower, the Servicer and the Originator shall each be in compliance in
all material respects with all Applicable Laws and shall have delivered to the
Administrative Agent and each Lender Agent as to this and other closing matters
a certification in the form of Exhibits F-1 or F-2, as applicable;

 

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(c) The Borrower and the Servicer shall have delivered to the Administrative
Agent and each Lender Agent duly executed Powers of Attorney in the form of
Exhibits G-1 and G-2;

(d) The Borrower and the Servicer shall each have delivered to the
Administrative Agent and each Lender Agent a certificate as to Solvency in the
form of Exhibits E-1 and E-2; and

(e) The Servicer shall have delivered to the Administrative Agent and each
Lender Agent a Loan Tape as of the Closing Date.

Section 3.2. Conditions Precedent to All Advances.

Each Advance to the Borrower by the applicable Lender, each reduction in
Advances Outstanding pursuant to Section 2.5(b) and each reinvestment of
Principal Collections pursuant to Section 2.10(c) (each, a “Transaction”) shall
be subject to the further conditions precedent that:

(a) (i) With respect to any Advance, the Servicer shall have delivered to the
Administrative Agent and each Lender Agent (with a copy to the Trustee), no
later than 2:00 p.m., on the related Funding Date, in a form and substance
satisfactory to the Administrative Agent and each Lender Agent, a Borrowing
Notice (Exhibit A-1), Borrowing Base Certificate (Exhibit A-5), Loan Tape,
Servicing Report (if applicable), Approval Notice (for any such Loan added to
the Collateral on the related Funding Date) and containing such additional
information as may be reasonably requested by the Administrative Agent and each
Lender Agent, (ii) with respect to any reduction in Advances Outstanding
pursuant to Section 2.5(b), the Servicer shall have delivered to the
Administrative Agent and each Lender Agent (with a copy to the Trustee) no later
than 5:00 p.m. on the Business Day prior to any such reduction a Repayment
Notice (Exhibit A-2) and a Borrowing Base Certificate (Exhibit A-5) executed by
the Servicer and the Borrower, and (iii) with respect to any reinvestment of
Principal Collections permitted by Section 2.10(c), the Servicer shall have
delivered to the Administrative Agent (with a copy to the Trustee), no later
than 1:00 p.m. on the Business Day prior to any such reinvestment, a Borrowing
Notice (Exhibit A-3), any applicable Approval Notice and a Borrowing Base
Certificate, executed by the Servicer;

(b) On the date of such Transaction the following statements (other than in the
case of a reduction of the Advances Outstanding) shall be true and the Borrower
shall be deemed to have certified that:

(i) The representations and warranties contained in Section 4.1, Section 4.2 and
Section 4.3 are true and correct on and as of such day as though made on and as
of such day and shall be deemed to have been made on such day;

(ii) No event has occurred and is continuing, or would result from such
Transaction, that constitutes a Termination Event or Unmatured Termination
Event;

 

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(iii) On and as of such day, the Borrower and the Servicer each has performed
all of the covenants and agreements contained in this Agreement to be performed
by such person at or prior to such day;

(iv) After giving effect to such Transaction, the Availability is greater than
$0; and

(v) The Revolving Period has not ended.

(c) In the case of any Advance, reinvestment of Principal Collections or any
substitution of a Loan, the Borrower shall cause any assignment or Transfer
Document for any Loan to be in the possession of the Trustee within two Business
Days after any related Funding Date and all other Required Loan Documents
(including any UCCs included in the Required Loan Documents) to be in the
possession of the Trustee within seven Business Days after any related Funding
Date;

(d) The Termination Date shall not have occurred;

(e) In the case of any Advance or reinvestment of Principal Collections, the
Administrative Agent and each Lender Agent shall have received such other
approvals, opinions or documents as the Administrative Agent and each Lender
Agent may reasonably require;

(f) The Borrower and Servicer shall have delivered (or caused to be delivered)
to the Trustee, the Administrative Agent and each Lender Agent, as applicable,
all reports required to be delivered as of the date of such Transaction
including, without limitation, all deliveries required by Section 2.3;

(g) With respect to any Eligible Loan to be acquired by the Borrower in
connection with such Advance or reinvestment of Principal Collections, the
Administrative Agent shall have approved in its sole and absolute discretion
each such Eligible Loan identified on an updated Loan Tape for inclusion in the
Collateral on the applicable Cut-Off Date;

(h) The Borrower shall have paid all fees required to be paid, including all
fees required hereunder and under any Lender Fee Letter and shall have
reimbursed the Lenders, the Administrative Agent and each Lender Agent for all
reasonable fees, costs and expenses of closing the transactions contemplated
hereunder and under the other Transaction Documents, including the reasonable
attorney fees and any other legal and document preparation costs incurred by the
Lenders, the Administrative Agent and each Lender Agent;

(i) No Applicable Law shall prohibit, and no order, judgment or decree of any
federal, state or local court or governmental body, agency or instrumentality
shall prohibit or enjoin, the making of such Advance by the Lenders in
accordance with the provisions hereof or any other transaction contemplated
herein; and

(j) The Borrower shall have delivered to the Administrative Agent and each
Lender Agent an Officer’s Certificate (which may be part of the Borrowing
Notice) in form and substance reasonably satisfactory to the Administrative
Agent and each Lender Agent certifying

 

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that each of the foregoing conditions precedent has been satisfied or, with
respect to Section 3.2(c), will be satisfied as required thereby.

The failure of the Borrower to satisfy any of the foregoing conditions precedent
in respect of any Advance shall give rise to a right of the Administrative Agent
and the applicable Lender Agent, which right may be exercised at any time on the
demand of the applicable Lender Agent, to rescind the related Advance and direct
the Borrower to pay to the Administrative Agent for the benefit of the
applicable Lender an amount equal to the Advances made during any such time that
any of the foregoing conditions precedent were not satisfied.

Section 3.3. Conditions to Pledges of Loans.

Each pledge of an additional Eligible Loan, a Substitute Loan or any other
pledge of a Loan hereunder shall be subject to the further conditions precedent
that (as certified to the Trustee by the Borrower):

(a) the Servicer (on behalf of the Borrower) shall have delivered to the
Administrative Agent and each Lender Agent (with a copy to the Trustee) no later
than 2:00 p.m. on the date of such pledge: (A) a Borrowing Base Certificate,
(B) an updated Loan Tape, (C) Approval Notice (for each Loan added to the
Collateral on the related Cut-Off Date) and (D) such additional information as
may be reasonably requested by the Administrative Agent;

(b) the Borrower shall cause any assignment or Transfer Document for any Loan
pledged to be in the possession of the Trustee within two Business Days after
the related date of pledge and all other Required Loan Documents (including any
UCCs included in the Required Loan Documents) to be in the possession of the
Trustee within seven Business Days after the related date of pledge;

(c) the Administrative Agent shall have approved in its sole and absolute
discretion each of the Eligible Loans identified on the Loan Tape for inclusion
in the Collateral on the applicable Cut-Off Date; and

(d) the representations and warranties contained in Sections 4.1, 4.2 and 4.3
are true and correct in all respects, before and after giving effect to the
pledge to take place on such Cut-Off Date, on and as of such day as though made
on and as of such date (other than any representation and warranty that is made
as of a specific date).

Section 3.4. Custodianship; Transfer of Loans and Permitted Investments.

(a) The Trustee on behalf of the Secured Parties shall hold all Certificated
Securities (whether Loans, Equity Interests or Permitted Investments) and
Instruments in physical form at the office of the Trustee in Boston,
Massachusetts or the document custody office of the Trustee in Florence, South
Carolina at the addresses specified in Schedule III hereto. Any successor
Trustee shall be a state or national bank or trust company which is not an
Affiliate of the Borrower and which is a Qualified Institution.

(b) Each time that the Borrower shall direct or cause the acquisition of any
Permitted Investment, the Borrower shall, if such Permitted Investment has not
already been

 

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transferred in accordance with its Underlying Instruments (including obtaining
any necessary consents) to the Custodial Account or Collection Account (with
respect to Permitted Investments), cause the transfer of such Permitted
Investment) to the Trustee to be held in the Custodial Account or Collection
Account, as applicable, for the benefit of the Secured Parties in accordance
with the terms of this Agreement. The security interest of the Trustee, for the
benefit of the Secured Parties, in the funds or other property utilized in
connection with such acquisition shall, immediately and without further action
on the part of the Trustee, be released. The security interest of the Trustee,
for the benefit of the Secured Parties, shall nevertheless come into existence
and continue in the Permitted Investment so acquired, including all rights of
the Borrower in and to any contracts related to and proceeds of such Permitted
Investment.

The Borrower shall cause all Permitted Investments to be credited to the
appropriate Account, and shall cause all Loans and Equity Interests acquired by
the Borrower to be delivered to the Trustee, for the benefit of the Secured
Parties, by one of the following means (and shall take any and all other actions
necessary to create in favor of the Trustee, for the benefit of the Secured
Parties, a valid, perfected, first priority security interest in each Loan and
Permitted Investment Granted to the Trustee, for the benefit of the Secured
Parties, under laws and regulations (including without limitation Articles 8 and
9 of the UCC, as applicable) in effect at the time of such Grant):

(i) in the case of an Instrument or a Certificated Security represented by a
Security Certificate in registered form by having it specially Indorsed to the
Trustee or in blank by an effective Indorsement or registered in the name of the
Trustee and by (A) delivering such Instrument or Security Certificate to the
Trustee in the Commonwealth of Massachusetts or the State of South Carolina and
(B) causing the Trustee to maintain continuous possession of such Investment or
Security Certificate in the Commonwealth of Massachusetts or the State of South
Carolina;

(ii) in the case of an Uncertificated Security, by (A) causing the Trustee to
become the registered owner of such Uncertificated Security and (B) causing such
registration to remain effective;

(iii) in the case of any Security Entitlement, by causing the Trustee to become
the Entitlement Holder of such Security Entitlement; and

(iv) in the case of general intangibles (including any loan not evidenced by an
Instrument and any Participation in which neither the Participation nor the
underlying debt are evidenced by any Instrument) by (A) if required by the
Required Loan Documents, notifying the Obligor (and, in the case of a
Participation, both the institution which has sold the Participation and the
Obligor of the debt underlying the Participation) thereunder of the transfer and
(B) filing, maintaining and continuing the effectiveness of, a financing
statement naming the Borrower as debtor and the Trustee as secured party and
describing the Loan or Permitted Investment (as the case may be) as the
collateral at the filing office of the Secretary of State for the State of
Delaware.

 

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ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

Section 4.1. Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows as of the Closing Date, each
Cut-Off Date, each Funding Date and as of each other date provided under this
Agreement or the other Transaction Documents on which such representations and
warranties are required to be (or deemed to be) made:

(a) Organization and Good Standing. The Borrower has been duly organized, and is
validly existing as a limited liability company in good standing, under the laws
of the State of Delaware, with all requisite limited liability company power and
authority to own or lease its properties and conduct its business as such
business is presently conducted, and had at all relevant times, and now has, all
necessary power, authority and legal right to acquire, own and sell the
Collateral.

(b) Due Qualification. The Borrower is duly qualified to do business and is in
good standing as a limited liability company, and has obtained all necessary
qualifications, licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires such
qualification, licenses or approvals.

(c) Power and Authority; Due Authorization; Execution and Delivery. The Borrower
(i) has all necessary limited liability company power, authority and legal right
to (a) execute and deliver this Agreement and the other Transaction Documents to
which it is a party, (b) carry out the terms of the Transaction Documents to
which it is a party, (c) sell and assign an ownership interest in the
Collateral, and (d) receive Advances and sell the Collateral on the terms and
conditions provided herein and (ii) has duly authorized by all necessary limited
liability company action, the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and the
sale and assignment of an ownership interest in the Collateral on the terms and
conditions herein provided. This Agreement and each other Transaction Document
to which the Borrower is a party have been duly executed and delivered by the
Borrower.

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

(e) No Violation. The consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which it is a party and the
fulfillment of the terms hereof and thereof will not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the Borrower’s
certificate of formation, operating agreement or any Contractual Obligation of
the Borrower, (ii) result in the creation or imposition of any Lien (other than
Permitted Liens) upon

 

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any of the Borrower’s properties pursuant to the terms of any such Contractual
Obligation, other than this Agreement, or (iii) violate any Applicable Law.

(f) No Proceedings. There is no litigation, proceeding or investigation 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 other 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 other Transaction Document to which the Borrower is a party or
(iii) seeking any determination or ruling that could reasonably be expected to
have Material Adverse Effect.

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

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

(i) Solvency. The Borrower is not the subject of any Insolvency Proceedings or
Insolvency Event. The transactions under this Agreement and any other
Transaction Document to which the Borrower is a party do not and will not render
the Borrower not Solvent.

(j) Selection Procedures. No procedures believed by the Borrower to be adverse
to the interests of the Lender were utilized by the Borrower in identifying
and/or selecting the Loans in the Collateral. In addition, each Loan shall have
been underwritten in accordance with and satisfy the standards of any Credit and
Collection Policy that has been established by the Originator and is then in
effect.

(k) Taxes. The Borrower has filed or caused to be filed all tax returns that are
required to be filed by it. The Borrower has paid or made adequate provisions
for the payment of 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) Exchange Act Compliance; Regulations T, U and X. None of the transactions
contemplated herein (including, without limitation, the use of the proceeds from
the sale of the Collateral) will violate or result in a violation of Section 7
of the Exchange Act, or any regulations issued pursuant thereto, including,
without limitation, Regulations T, U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II. The Borrower does not own or
intend to carry or purchase, and no proceeds from the Advances will be used to
carry or purchase, any “margin stock” within the meaning of Regulation U or to
extend “purpose credit” within the meaning of Regulation U.

 

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(m) Security Interest.

(i) This Agreement creates a valid and continuing security interest (as defined
in the applicable UCC) in the Collateral in favor of the Trustee, 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;

(ii) the Collateral is comprised of “instruments”, “security entitlements”,
“general intangibles”, “accounts”, “certificated securities”, “uncertificated
securities” or “securities accounts” (each as defined in the applicable UCC)
and/or such other category of collateral under the applicable UCC as to which
the Borrower has complied with its obligations under Section 4.1(m);

(iii) with respect to Collateral that constitute “security entitlements”:

(1) all of such security entitlements have been credited to one of the Accounts
and the securities intermediary for each Account has agreed to treat all assets
credited to such Account as “financial assets” within the meaning of the
applicable UCC;

(2) the Borrower has taken all steps necessary to cause the securities
intermediary to identify in its records the Trustee as the Person having a
security entitlement against the securities intermediary in each of the
Accounts; and

(3) the Accounts are not in the name of any Person other than the Borrower,
subject to the lien of the Trustee. The Borrower has not authorized or allowed
the securities intermediary of any Account to comply with the entitlement order
of any Person other than the Trustee; provided that, until the Trustee delivers
a notice of exclusive control under the Securities Account Control Agreement,
the Borrower and the Servicer may cause cash in the Accounts to be invested in
Permitted Investments.

(iv) all Accounts constitute Securities Accounts;

(v) the Borrower owns and has good and marketable title to the Collateral free
and clear of any Lien (other than Permitted Liens), claim or encumbrance of any
Person;

(vi) the Borrower has received all consents and approvals required by the terms
of any Loan to the Granting of a security interest in the Loans hereunder to the
Trustee, on behalf of the Secured Parties;

(vii) 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 the Collateral granted to the
Trustee, on behalf of the Secured Parties, under this Agreement;

 

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(viii) other than the security interest granted to the Trustee, 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 the
Collateral. 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 the Collateral other than any financing statement
(A) relating to the security interest granted to the Borrower under the Sale
Agreement, or (B) that has been terminated. The Borrower is not aware of the
filing of any judgment or tax lien filings against the Borrower;

(ix) all original executed copies of each underlying promissory note that
constitute or evidence each Loan has been or, subject to the delivery
requirements contained herein, will be delivered to the Trustee;

(x) other than in the case of Noteless Loans, with respect to Loans originated
by the Originator which are sold by the Originator to the Borrower, the Borrower
has received, or subject to the delivery requirements contained herein will
receive, a written acknowledgment from the Trustee that the Trustee or its
bailee is holding the underlying promissory notes that constitute or evidence
the Loans solely on behalf of and for the benefit of the Secured Parties;

(xi) none of the underlying promissory notes, if any, that constitute or
evidence the Loans has any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the Trustee, on
behalf of the Secured Parties;

(xii) with respect to Collateral that constitutes a “certificated security,”
such certificated security has been delivered to the Trustee and, if in
registered form, has been specially indorsed to the Trustee, on behalf of the
Secured Parties, or in blank by an effective indorsement or has been registered
in the name of the Trustee, on behalf of the Secured Parties, upon original
issue or registration of transfer by the seller of such certificated security;
and

(xiii) with respect to Collateral that constitutes an “uncertificated security”,
that the seller of such uncertificated security has registered the Trustee as
the registered owner of such uncertificated security.

(n) Reports Accurate. All Servicing Reports (if prepared by the Borrower, or to
the extent that information contained therein is supplied by the Borrower),
information, exhibits, financial statements, documents, books, records or
reports furnished or to be furnished by the Borrower to the Administrative
Agent, each Lender Agent or any Lender in connection with this Agreement are
true, complete and correct in all material respects as of the date it is or
shall be dated.

(o) Location of Offices. The Borrower’s location (within the meaning of Article
9 of the UCC) is Delaware. The office where the Borrower keeps all the Records
is at the address of the Borrower referred to in Section 13.2 hereof (or at such
other locations as to which the notice and other requirements specified in
Section 5.2(g) shall have been satisfied). The

 

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Borrower’s Federal Employee Identification Number is correctly set forth on
Exhibit F-1. The Borrower has not changed its name, whether by amendment of its
certificate of formation, by reorganization or otherwise, and has not changed
its location within the four months preceding the Closing Date.

(p) Concentration Account. The name and address of the Concentration Account
Bank, together with the account number of the Concentration Account of the
Borrower at such Concentration Account Bank is specified in Schedule II. The
Concentration Account and the Custodial Account are the only accounts to which
Collections on the Collateral are sent. Except as contemplated by the
Intercreditor Agreement, the Borrower has not granted any Person other than the
Administrative Agent and Trustee an interest in the Concentration Account at a
future time or upon the occurrence of a future event.

(q) 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.

(r) Sale Agreement. The Sale Agreement is the only agreement pursuant to which
the Borrower purchases Collateral.

(s) Value Given. The Borrower shall have given reasonably equivalent value to
the Originator or the applicable third party transferor of Collateral in
consideration for the transfer to the Borrower of such Collateral, no such
transfer shall have been made for or on account of an antecedent debt, and no
such transfer is or may be voidable or subject to avoidance under any section of
the Bankruptcy Code.

(t) Accounting. The Borrower accounts for the transfers to it from the
Originator of interests in Collateral under the Sale Agreement as financings of
such Collateral for consolidated accounting purposes (with a notation that it is
treating the transfers as a sale for legal and, where relevant, tax and all
other purposes on its books, records and financial statements, in each case
consistent with GAAP and with the requirements set forth herein); provided that
for federal income tax reporting purposes, the Borrower is treated as a
disregarded entity and therefore the transfer is not recognized.

(u) Special Purpose Entity. The Borrower has not and shall not:

(i) engage in any business or activity other than the purchase and receipt of
Collateral and related assets, the Grant of Collateral under the Transaction
Documents, and such other activities as are incidental thereto;

(ii) acquire or own any material assets other than (a) the Collateral and
related assets, and (b) incidental property as may be necessary for the
operation of the Borrower;

(iii) except as otherwise expressly permitted in this Agreement, merge into or
consolidate with any Person or dissolve, terminate or liquidate in whole or in
part, transfer or otherwise dispose of all or substantially all of its assets or
change its legal structure, without in each case first obtaining the consent of
the Administrative Agent and each Lender Agent;

 

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(iv) except as otherwise expressly permitted in this Agreement, fail 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 Administrative Agent and each Lender Agent,
amend, modify, terminate or fail to comply with the provisions of Sections 1.05,
1.07, 1.08, 4.02(b) and 10.01 of its operating agreement and any of the defined
terms in Section 1.01 of its operating agreement that are contained in any of
the above-mentioned sections thereof, or fail to observe limited liability
company formalities;

(v) own any Subsidiary or make any investment in any Person without the consent
of the Administrative Agent and each Lender Agent;

(vi) except as permitted by this Agreement and the Intercreditor Agreement,
commingle its assets with the assets of any of its Affiliates, or of any other
Person;

(vii) incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than (A) indebtedness to the Secured Parties
hereunder, (B) under the Borrower ISDA Guaranty or (C) in conjunction with a
repayment of all Advances owed to the Lenders, except for trade payables in the
ordinary course of its business; provided that such debt is not evidenced by a
note and is paid when due;

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

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

(x) enter into any contract or agreement with any Affiliate, except upon terms
and conditions that are commercially reasonable and intrinsically fair and
substantially similar to those that would be available on an arm’s-length basis
with unrelated third parties;

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

(xii) fail 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) guarantee, become obligated for, or hold itself out to be responsible for
the debt of another Person other than under the Borrower ISDA Guaranty;

(xiv) make any loan or advances to any third party, including any principal or
Affiliate, or hold evidence of indebtedness issued by any other Person (other
than the Loans, Cash, Permitted Investments and any Hedge Transaction);

 

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(xv) fail to file its own separate tax return, or file a consolidated federal
income tax return with any other Person, except as may be required by the Code
and regulations (without limiting the foregoing, it is acknowledged and agreed
that a single member limited liability company is a disregarded entity for
purposes of the Code);

(xvi) fail 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);

(xvii) fail 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;

(xviii) file or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or make an assignment for the benefit of
creditors;

(xix) except as may be required by the Code and regulations, share any common
logo with or hold itself out as or be 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;

(xx) permit any transfer (whether in any one or more transactions) of any direct
ownership interest in the Borrower to the extent it has the ability to control
the same, other than a pledge of the membership interests in the Borrower to
secure the Fortress Notes pursuant to a pledge agreement approved by the
Administrative Agent prior to the Closing Date, unless the Borrower delivers to
the Administrative Agent and each Lender Agent an acceptable non-consolidation
opinion and the Administrative Agent consents to such transfer;

(xxi) fail to maintain separate financial statements, showing its assets and
liabilities separate and apart from those of any other Person (without limiting
the foregoing, it is acknowledged that for accounting purposes, the Borrower may
be consolidated with another Person as required by GAAP and included in such
Person’s consolidated financial statements);

(xxii) fail to pay its own liabilities and expenses only out of its own funds;

(xxiii) fail to pay the salaries of its own employees, if any, in light of its
contemplated business operations;

(xxiv) acquire the obligations of or securities issued by its Affiliates or
members;

 

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(xxv) fail 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;

(xxvi) fail to use separate invoices and checks bearing its own name;

(xxvii) pledge or permit the pledge of its assets for the benefit of any other
Person, other than with respect to the payment of the indebtedness to the
Secured Parties hereunder;

(xxviii) (A) fail at any time to have at least one Independent Manager except
while a vacancy is being filled pursuant to the Borrower’s organizational
documents or (B) fail to ensure that all limited liability company actions
relating to the selection or replacement of the Independent Manager are duly
authorized and in accordance with the Borrower’s organizational documents;

(xxix) fail to provide that the unanimous consent of all its managers (including
the consent of the Independent Manager) 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; and

(xxx) take or refrain from taking, as applicable, each of the activities
specified in the non-consolidation opinion of Dechert LLP, dated as of the
Closing Date, upon which the conclusions expressed therein are based.

(v) Confirmation from the Originator. The Borrower has received in writing from
the Originator confirmation that the Originator will not cause the Borrower to
file a voluntary petition under the Bankruptcy Code or Insolvency Laws. Each of
the Borrower and the Originator is aware that in light of the circumstances
described in the preceding sentence and other relevant facts, the filing of a
voluntary petition under the Bankruptcy Code for the purpose of making any
Collateral or any other assets of the Borrower available to satisfy claims of
the creditors of the Originator would not result in making such assets available
to satisfy such creditors under the Bankruptcy Code.

(w) Investment Company Act. The Borrower is not an “investment company” within
the meaning of the 1940 Act or is exempt from the provisions of the 1940 Act.

(x) ERISA. The present value of all benefits vested under all “employee pension
benefit plans,” as such term is defined in Section 3 of ERISA, maintained by the
Borrower, or in which employees of the Borrower are entitled to participate, as
from time to time in effect (herein called the “Pension Plans”), does not exceed
the value of the assets of the

 

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Pension Plan allocable to such vested benefits (based on the value of such
assets as of the last annual valuation date). No prohibited transactions,
accumulated funding deficiencies, withdrawals or reportable events have occurred
with respect to any Pension Plans that, in the aggregate, could subject the
Borrower to any material tax, penalty or other liability. No notice of intent to
terminate a Pension Plan has been billed, nor has any Pension Plan been
terminated under Section 4041(f) of ERISA, nor has the Pension Benefit Guaranty
Corporation instituted proceedings to terminate, or appoint a trustee to
administer a Pension Plan and no event has occurred or condition exists that
might constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan.

(y) Compliance with Law. The Borrower has complied in all respects with all
Applicable Laws to which it may be subject, and no item of Collateral
contravenes any Applicable Laws (including, without limitation, all applicable
predatory and abusive lending laws, laws, rules and regulations relating to
licensing, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy).

(z) Credit and Collection Policy. The Borrower has complied in all material
respects with all provisions applicable to it under the Credit and Collection
Policy with respect to all of the Collateral.

(aa) Collections. The Borrower acknowledges that all Collections received by it
with respect to the Collateral sold hereunder are held and shall be held in
trust for the benefit of the Trustee on behalf of the Secured Parties until
deposited into the Collection Account within two Business Days from receipt as
required herein.

(bb) Set-Off, etc. No Collateral has been compromised, adjusted, extended,
satisfied, subordinated, rescinded, set-off or modified by the Borrower or, to
the best of the Borrower’s knowledge, by the Originator or the Obligor thereof,
and no Collateral is subject to compromise, adjustment, extension, satisfaction,
subordination, rescission, set-off, counterclaim, defense, abatement,
suspension, deferment, deduction, reduction, termination or modification,
whether arising out of transactions concerning the Collateral or otherwise, by
the Borrower, or, to the best of the Borrower’s knowledge, by the Originator or
the Obligor with respect thereto, except for amendments, extensions and
modifications, if any, to such Collateral otherwise permitted under
Section 6.4(a) of this Agreement and in accordance with the Credit and
Collection Policy and the Servicing Standard.

(cc) Full Payment. As of the Funding Date thereof, the Borrower has no knowledge
of any fact which should lead it to expect that any Collateral will not be paid
in full.

(dd) 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 in all material respects.

(ee) Representations and Warranties in Sale Agreement. The representations and
warranties made by the Borrower to the Originator in the Sale Agreement are
hereby remade by the Borrower on each date to which they speak in the Sale
Agreement as if such

 

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representations and warranties were set forth herein. For purposes of this
Section 4.1(ee), such representations and warranties are incorporated herein by
reference as if made by the Borrower to the Administrative Agent, each Lender
Agent and each of the Secured Parties under the terms hereof mutatis mutandis.

(ff) Reaffirmation of Representations and Warranties by the Borrower. On each
day that any Advance is made hereunder, the Borrower shall be deemed to have
certified that all representations and warranties described in this Section 4.1
are correct on and as of such day as though made on and as of such day, except
for any such representations or warranties which are made as of a specific date.

(gg) Environmental. With respect to each item of Related Property as of the
applicable Cut-Off Date for the Loan related to such Related Property, to the
actual knowledge of a Responsible Officer of the Borrower (without independent
inquiry): (a) the related Obligor’s operations comply in all material respects
with all applicable Environmental Laws; and (b) the related Obligor does not
have any material contingent liability in connection with any release of any
Hazardous Materials into the environment. As of the applicable Cut-Off Date for
the Loan related to such Related Property, the Borrower has not received any
written notice of, or inquiry from any Governmental Authority regarding, any
material violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Related Property.

(hh) USA PATRIOT Act. The Borrower is not (i) a country, territory,
organization, person or entity named on an Office of Foreign Asset Control
(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, 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 United States
Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as
warranting special measures due to money laundering concerns.

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

The Borrower hereby represents and warrants, as of the Closing Date and as of
each Cut-Off Date:

(a) Binding Obligation, Valid Transfer and Security Interest.

(i) This Agreement and each other Transaction Document to which the Borrower is
a party each constitute a legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its respective terms, except
as such enforceability may be limited by Insolvency Laws and except as such

 

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enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).

(ii) This Agreement constitutes a valid Grant of a security interest in all of
the Collateral to the Trustee, for the benefit of the Secured Parties, of all
right, title and interest of the Borrower in, to and under all of the
Collateral, free and clear of any Lien of any Person claiming through or under
the Borrower or its Affiliates, except for Permitted Liens, which security
interest is a valid and first priority perfected security interest in all
Collateral, subject only to Permitted Liens. Neither the Borrower nor any Person
claiming through or under Borrower shall have any claim to or interest in the
Collection Account or any other Account and, because this Agreement constitutes
the Grant of a security interest in such property, except for the interest of
Borrower in such property as a debtor for purposes of the UCC.

(b) Eligibility of Collateral. As of the Closing Date and each Cut-Off Date,
(i) the Loan Tape and the information contained in the Borrowing Notice
delivered pursuant to Section 2.3 is an accurate and complete listing of all
Collateral as of the Cut-Off Date and the information contained therein with
respect to the identity of such Collateral and the amounts owing thereunder is
true and correct as of the related Cut-Off Date, (ii) each such Loan that is
included in the Borrowing Base is an Eligible Loan, (iii) each such item of
Collateral is free and clear of any Lien of any Person (other than Permitted
Liens) and in compliance with all Applicable Laws, (iv) with respect to each
such item of Collateral, all consents, licenses, approvals or authorizations of
or registrations or declarations of any Governmental Authority or any Person
required to be obtained, effected or given by the Borrower in connection with
the Grant of a security interest in such Collateral to the Trustee for the
benefit of the Secured Parties have been duly obtained, effected or given and
are in full force and effect, and (v) the representations and warranties set
forth in Section 4.2(a) are true and correct with respect to each item of
Collateral.

(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.

Section 4.3. Representations and Warranties of the Servicer.

The Servicer represents and warrants as follows as of the Closing Date, each
Cut-Off Date, each Funding Date and as of each other date provided under this
Agreement or the other Transaction Documents on which such representations and
warranties are required to be (or deemed to be) made:

(a) Organization and Good Standing. The Servicer has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with all requisite corporate power and authority to own or lease
its properties and to conduct its business as such business is presently
conducted and to enter into and perform its obligations pursuant to this
Agreement.

 

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(b) Due Qualification. The Servicer is duly qualified to do business as a
corporation and is in good standing as a corporation, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of its property and or the conduct of its business requires such
qualification, licenses or approvals, except to the extent that the failure to
obtain any such qualification, license or approval could not be reasonably
expected to result in a Material Adverse Effect.

(c) Power and Authority; Due Authorization; Execution and Delivery. The Servicer
(i) has all necessary power, authority and legal right to (a) execute and
deliver this Agreement and the other Transaction Documents to which it is a
party, (b) carry out the terms of the Transaction Documents to which it is a
party, and (ii) has duly authorized by all necessary corporate action the
execution, delivery and performance of this Agreement and the other Transaction
Documents to which it is a party. This Agreement and each other Transaction
Document to which the Servicer is a party have been duly executed and delivered
by the Servicer.

(d) Binding Obligation. This Agreement and each other Transaction Document to
which the Servicer is a party constitutes a legal, valid and binding obligation
of the Servicer enforceable against the Servicer in accordance with its
respective terms, except as such enforceability may be limited by Insolvency
Laws and general principles of equity (whether considered in a suit at law or in
equity).

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

(f) No Proceedings. There is no litigation, proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer, before any Governmental Authority (i) asserting the invalidity of this
Agreement or any other Transaction Document to which the Servicer is a party,
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any other Transaction Document to which the Servicer 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,
licenses or other actions of any Person or of any Governmental Authority (if
any) required for the due execution, delivery and performance by the Servicer of
this Agreement and any other Transaction Document to which the Servicer is a
party have been obtained.

(h) Reports Accurate. All Servicer Certificates and other written and electronic
information, exhibits, financial statements, documents, books, records or
reports furnished by the Servicer to the Administrative Agent, each Lender Agent
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connection with this Agreement are accurate, true and correct in all material
respects as of the date it is or shall be dated.

(i) Credit and Collection Policy. The Servicer has complied in all material
respects with the Credit and Collection Policy with regard to the origination,
underwriting and servicing of the Loans or the acquisition and re-underwriting
and servicing of the Loans, as applicable.

(j) Collections. The Servicer acknowledges that all Collections received by it
or its Affiliates with respect to the Collateral sold hereunder are held and
shall be held in trust for the benefit of the Trustee on behalf of the Secured
Parties until deposited into the Collection Account within two Business Days
from receipt as required herein.

(k) Bulk Sales. The execution, delivery and performance of this Agreement do not
require compliance with any “bulk sales” act or similar law by the Servicer.

(l) Solvency. The Servicer is not the subject of any Insolvency Proceedings or
Insolvency Event. The transactions under this Agreement and any other
Transaction Document to which the Servicer is a party do not and will not render
the Servicer not Solvent.

(m) Taxes. The Servicer has filed or caused to be filed all tax returns that are
required to be filed by it. The Servicer has paid or made adequate provisions
for the payment of 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
Servicer), and no tax lien has been filed and, to the Servicer’s knowledge, no
claim is being asserted, with respect to any such Tax, fee or other charge.

(n) Exchange Act Compliance; Regulations T, U and X. None of the transactions
contemplated herein (including, without limitation, the use of the Proceeds from
the sale of the Collateral) will violate or result in a violation of Section 7
of the Exchange Act, or any regulations issued pursuant thereto, including,
without limitation, Regulations T, U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II. The Servicer does not own or
intend to carry or purchase, and no proceeds from the Advances will be used to
carry or purchase, any “margin stock” within the meaning of Regulation U or to
extend “purpose credit” within the meaning of Regulation U.

(o) Security Interest. The Servicer will take all steps necessary to ensure that
the Borrower has Granted a security interest (as defined in the UCC) to the
Trustee, for the benefit of the Secured Parties, in the Collateral, which is
enforceable in accordance with Applicable Law upon execution and delivery of
this Agreement. Upon the filing of UCC-1 financing statements naming the Trustee
as secured party and the Borrower as debtor, the Trustee, for the benefit of the
Secured Parties, shall have a valid and perfected first priority security
interest in the Collateral (except for any Permitted Liens). All filings
(including, without limitation, such UCC filings) as are necessary for the
perfection of the Secured Parties’ security interest in the Collateral have been
(or prior to the date of the applicable Advance will be) made.

 

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(p) ERISA. The present value of all benefits vested under all “employee pension
benefit plans,” as such term is defined in Section 3 of ERISA, maintained by the
Servicer, or in which employees of the Servicer are entitled to participate, as
from time to time in effect (herein called the “Pension Plans”), does not exceed
the value of the assets of the Pension Plan allocable to such vested benefits
(based on the value of such assets as of the last annual valuation date). No
prohibited transactions, accumulated funding deficiencies, withdrawals or
reportable events have occurred with respect to any Pension Plans that, in the
aggregate, could subject the Servicer to any material tax, penalty or other
liability. No notice of intent to terminate a Pension Plan has been billed, nor
has any Pension Plan been terminated under Section 4041(f) of ERISA, nor has the
Pension Benefit Guaranty Corporation instituted proceedings to terminate, or
appoint a trustee to administer, a Pension Plan and no event has occurred or
condition exists that might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan.

(q) Investment Company Act. The Servicer is not an “investment company” within
the meaning of the 1940 Act, as amended, or is exempt from the provisions of the
1940 Act.

(r) USA PATRIOT Act. The Servicer is not (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, 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 United States Secretary of the Treasury under Sections 311 or
312 of the USA PATRIOT Act as warranting special measures due to money
laundering concerns.

(s) Environmental. With respect to each item of Related Property as of the
applicable Cut-Off Date for the Loan related to such Related Property, to the
actual knowledge of a Responsible Officer of the Servicer (without independent
inquiry): (a) the related Obligor’s operations comply in all material respects
with all applicable Environmental Laws; and (b) the related Obligor does not
have any material contingent liability in connection with any release of any
Hazardous Materials into the environment. As of the applicable Cut-Off Date for
the Loan related to such Related Property, the Servicer has not received any
written notice of, or inquiry from any Governmental Authority regarding, any
material violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Related Property.

Section 4.4. Representations and Warranties of the Trustee.

The Trustee in its individual capacity and as Trustee represents and warrants as
follows (and any successor Trustee appointed pursuant to Sections 8.5 or 8.7
represents and warrants as follows in its individual capacity and as Trustee):

 

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(a) Organization and Corporate Power. It is a duly organized and validly
existing national banking association in good standing under the laws of the
United States. It has full corporate power, authority and legal right to
execute, deliver and perform its obligations as Trustee under this Agreement.

(b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for herein have been duly authorized
by all necessary association action on its part, either in its individual
capacity or as Trustee, as the case may be.

(c) No Conflict. The execution and delivery of this Agreement, the performance
of the transactions contemplated hereby and the fulfillment of the terms hereof
will not conflict with, result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which the Trustee is a party or by which it or any of its
property is bound.

(d) No Violation. The execution and delivery of this Agreement, the performance
of the transactions contemplated hereby and the fulfillment of the terms hereof
will not conflict with or violate, in any material respect, any Applicable Law.

(e) All Consents Required. All approvals, authorizations, consents, orders or
other actions of any Person or Governmental Authority applicable to the Trustee,
required in connection with the execution and delivery of this Agreement, the
performance by the Trustee of the transactions contemplated hereby and the
fulfillment by the Trustee of the terms hereof have been obtained.

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

(g) Non-Affiliated. The Trustee is not affiliated, as that term is defined in
Rule 405 under the Securities Act, with the Borrower or with any Person involved
in the organization or operation of the Borrower.

(h) Qualified Institutions. The Trustee meets the requirements of Rule
3a-7(a)(4)(i) under the 1940 Act.

ARTICLE V.

GENERAL COVENANTS

Section 5.1. Affirmative Covenants of the Borrower.

From the date hereof until the Collection Date:

(a) Compliance with Laws. The Borrower will comply in all material respects with
all Applicable Laws, including those with respect to the Collateral or any part
thereof.

 

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

(c) Performance and Compliance with Collateral. The Borrower will, at its
expense, timely and fully perform and comply (or cause the Originator to perform
and comply pursuant to the Sale Agreement) with all provisions, covenants and
other promises required to be observed by it under the Collateral and all other
agreements related to such Collateral.

(d) Keeping of Records and Books of Account. The Borrower will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Collateral in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all or any portion of the Collateral.

(e) Originator’s Collateral. With respect to the Collateral acquired by the
Borrower, the Borrower will (i) acquire such Collateral pursuant to and in
accordance with the terms of the Sale Agreement and the Transfer Documents,
(ii) (at the Servicer’s expense) take all action necessary to perfect, protect
and more fully evidence the Borrower’s ownership of such Collateral free and
clear of any Lien other than the Lien created hereunder and Permitted Liens,
including, without limitation, (a) filing and maintaining (at the Servicer’s
expense), effective financing statements against the Originator 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, (iii) permit the Administrative Agent, each Lender Agent or their
respective agents or representatives to visit the offices of the Borrower during
normal office hours and upon reasonable notice examine and make copies of all
documents, books, records and other information concerning the Collateral and
discuss matters related thereto with any of the Responsible Officers of the
Borrower having knowledge of such matters, and (iv) take all additional action
that the Administrative Agent may reasonably request to perfect, protect and
more fully evidence the respective interests of the parties to this Agreement in
the Collateral.

(f) Delivery of Collections. The Borrower will pay to the Servicer promptly (but
in no event later than two Business Days after receipt) all Collections received
by Borrower in respect of the Collateral and cause the same to be promptly
deposited into the Collection Account by the Servicer in accordance with
Section 5.4(k).

(g) Separate Limited Liability Company Existence. The Borrower shall be in
compliance with the Special Purpose Entity requirements set forth in
Section 4.1(u).

(h) Credit and Collection Policy. The Borrower will (a) comply in all material
respects with the Credit and Collection Policy in regard to the Collateral, and
(b) furnish to the Administrative Agent and each Lender Agent, prior to its
effective date, prompt written notice of any material changes in the Credit and
Collection Policy. The Borrower will not agree

 

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to or otherwise permit to occur any change in the Credit and Collection Policy
that could be reasonably expected to have a Material Adverse Effect without the
prior written consent of the Administrative Agent and each Lender Agent;
provided that no consent shall be required from the Administrative Agent or any
Lender Agent in connection with any change mandated by Applicable Law or a
Governmental Authority as evidenced by an Opinion of Counsel to that effect
delivered to the Administrative Agent and each Lender Agent.

(i) Termination Events. The Borrower will provide the Administrative Agent and
each Lender Agent (with copy to the Trustee) with immediate written notice of
the occurrence of each Termination Event and each Unmatured Termination Event of
which the Borrower has knowledge or has received notice. In addition, no later
than five Business Days following the Borrower’s knowledge or notice of the
occurrence of any Termination Event or Unmatured Termination Event, the Borrower
will provide to the Administrative Agent and each Lender Agent (with copy to the
Trustee) a written statement of the chief financial officer or Responsible
Officer handling financial matters of the Borrower setting forth the details of
such event and the action that the Borrower proposes to take with respect
thereto.

(j) Taxes. The Borrower will file and pay any and all Taxes required to meet its
obligations with respect thereto under the Transaction Documents.

(k) Use of Proceeds. The Borrower will use the proceeds of any Advances only
(i) to acquire Loans pursuant to the terms hereof, (ii) to fund unfunded
commitments pertaining to Revolving Loans and Delayed Draw Term Loans, (iii) to
deposit funds in the Unfunded Exposure Account and (iv) to make distributions to
its member(s) so long as no Termination Event or Unmatured Termination Event has
occurred and is continuing.

(l) Obligor Notification Forms. The Borrower shall furnish the Trustee with an
appropriate power of attorney to send (at the direction of the Administrative
Agent after the occurrence and during the continuance of a Termination Event)
Obligor notification forms to give notice to the Obligors and/or any appropriate
agent with respect to any Agented Loan of the Trustee’s interest in the
Collateral for the benefit of the Secured Parties and the obligation to make
payments as directed by the Trustee acting at the direction of the
Administrative Agent.

(m) Adverse Claims. The Borrower will not create, or participate in the creation
of, or permit to exist, any Liens in relation to the Concentration Account other
than in accordance with the terms of the Intercreditor Agreement.

(n) Borrower’s Collateral. With respect to each item of Collateral Granted to
the Trustee, for the benefit of the Secured Parties, the Borrower will (i) take
all action necessary to perfect, protect and more fully evidence the Grant of
the security interest in such Collateral to the Trustee, for the benefit of the
Secured Parties, including, without limitation, (a) filing and maintaining (at
the Servicer’s expense), effective financing statements against the Borrower 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 and (ii) take all additional action that the
Administrative Agent may reasonably request to perfect, protect and more fully
evidence the respective interests of the parties to this Agreement in such
Collateral.

 

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(o) Notices. The Borrower will furnish to the Administrative Agent and each
Lender Agent:

(i) Income Tax Liability. Within ten Business Days after the receipt of revenue
agent reports or other written proposals, determinations or assessments of the
Internal Revenue Service or any other taxing authority which propose, determine
or otherwise set forth positive adjustments to the Tax liability of the
Originator, the Servicer or the Borrower which equal or exceed $1,000,000 in the
aggregate, telephonic, facsimile or telecopy notice (confirmed in writing within
five Business Days) specifying the nature of the items giving rise to such
adjustments and the amounts thereof;

(ii) Auditors’ Management Letters. Promptly after the receipt thereof, any
auditors’ management letters are received by the Borrower or by its accountants;

(iii) Representations. Forthwith upon receiving knowledge of the same, the
Borrower shall notify the Administrative Agent and each Lender Agent if any
representation or warranty set forth in Section 4.1 was incorrect at the time it
was given or deemed to have been given and at the same time deliver to the
Administrative Agent and each Lender Agent a written notice setting forth in
reasonable detail the nature of such facts and circumstances. In particular, but
without limiting the foregoing, the Borrower shall notify the Administrative
Agent and each Lender Agent in the manner set forth in the preceding sentence
before any Funding Date of any facts or circumstances within the knowledge of
the Borrower which would render any of the said representations and warranties
untrue at the date when such representations and warranties were made or deemed
to have been made;

(iv) ERISA. Promptly after receiving notice of any “reportable event” (as
defined in Title IV of ERISA) with respect to the Borrower (or any Affiliate
thereof), a copy of such notice;

(v) Proceedings. As soon as possible and in any event within three Business Days
after any executive officer of the Borrower receives notice or obtains knowledge
thereof, notice of any settlement of, material judgment (including a material
judgment with respect to the liability phase of a bifurcated trial) in or
commencement of any material labor controversy, material litigation, material
action, material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Collateral, the Transaction Documents, the Trustee’s
interest in the Collateral on behalf of the Secured Parties, or the Borrower,
the Servicer or the Originator; provided that, notwithstanding the foregoing,
any settlement, judgment, labor controversy, litigation, action, suit or
proceeding affecting the Collateral, the Transaction Documents, the Trustee’s
interest in the Collateral on behalf of the Secured Parties, or the Borrower,
the Servicer or the Originator in excess of $1,000,000 or more shall be deemed
to be material for purposes of this Section 5.1(o); and

 

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(vi) Notice of Material Events. Promptly upon becoming aware thereof, notice of
any other event or circumstances that, in the reasonable judgment of the
Borrower, is likely to have a Material Adverse Effect.

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

Section 5.2. Negative Covenants of the Borrower.

From the date hereof until the Collection Date:

(a) Other Business. Borrower will not (i) engage in any business other than the
transactions contemplated by the Transaction Documents, (ii) incur any
Indebtedness, obligation, liability or contingent obligation of any kind other
than pursuant to this Agreement, under the Borrower ISDA Guaranty, or under any
Hedging Agreement required or permitted by Section 5.3(a), or (iii) form any
Subsidiary or make any Investments in any other Person.

(b) Loans Not to be Evidenced by Instruments. The Borrower will take no action
to cause any Loan that is not, as of the date hereof or the related Cut-Off
Date, as the case may be, evidenced by an Instrument, to be so evidenced except
in connection with the enforcement or collection of such Loan.

(c) Security Interests. Except as otherwise permitted herein, including, without
limitation, in respect of any Optional Sale, Discretionary Sale or Term
Securitization, 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
Collateral, whether now existing or hereafter transferred hereunder, or any
interest therein, and the Borrower will not sell, pledge, assign or suffer to
exist any Lien on its interest, if any, hereunder. The Borrower will promptly
notify the Administrative Agent and each Lender Agent of the existence of any
Lien on any Collateral and the Borrower shall defend the right, title and
interest of the Trustee for the benefit of the Secured Parties in, to and under
the Collateral against all claims of third parties; provided that nothing in
this Section 5.2(c) shall prevent or be deemed to prohibit the Borrower from
suffering to exist Permitted Liens upon any of the Collateral.

(d) Mergers, Acquisitions, Sales, etc. The Borrower will not be a party to any
merger or consolidation, or purchase or otherwise acquire any of the assets or
any stock of any class of, or any partnership or joint venture interest in, any
other Person or in connection with the exercise of remedies in connection with a
Loan, or sell, transfer, convey or lease any of its assets, or sell or assign
with or without recourse any Collateral or any interest therein (other than as
permitted pursuant to this Agreement or the Sale Agreement).

(e) Deposits to Special Accounts. Except as otherwise contemplated by the
Intercreditor Agreement, the Borrower will not deposit or otherwise credit, or
cause or permit to

 

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be so deposited or credited, to the Concentration Account Cash or Cash proceeds
other than Collections in respect of the Collateral.

(f) Restricted Payments. The Borrower shall not make any Restricted Junior
Payment, except that, so long as no Termination Event or Unmatured Termination
Event has occurred and is continuing or would result therefrom, the Borrower may
declare and make distributions to its members on their membership interests.

(g) Change of Name or Location of Loan Files. The Borrower shall not (x) change
its name, move the location of its principal place of business and chief
executive office, change the offices where it keeps the records from the
location referred to in Section 13.2, or change the jurisdiction of its
formation, or (y) move, or consent to the Trustee or Servicer moving, the
Required Loan Documents and the Loan Files from the location thereof on the
Closing Date, unless the Borrower has given at least 30 days’ written notice to
the Administrative Agent and has taken all actions required under the UCC of
each relevant jurisdiction in order to continue the first priority perfected
security interest of the Trustee, for the benefit of the Secured Parties, in the
Collateral.

(h) Accounting of Purchases. Other than for tax and consolidated accounting
purposes, the Borrower will not account for or treat (whether in financial
statements or otherwise) the transactions contemplated by the Sale Agreement in
any manner other than as a sale of the Collateral by the Originator to the
Borrower.

(i) ERISA Matters. The Borrower will not (a) engage or permit any ERISA
Affiliate to engage in any prohibited transaction that could result in any
liability to the Borrower 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
material liability to the Borrower, or (e) permit to exist any occurrence of any
reportable event described in Title IV of ERISA.

(j) Operating Agreement; Sale Agreement. The Borrower will not amend, modify,
waive or terminate any provision of Sections 1.05, 1.07, 1.08, 4.02(b) and 10.01
of its operating agreement or any of the defined terms in Section 1.01 of its
operating agreement that are contained in any of the above-mentioned sections
thereof, or any provision of the Sale Agreement without the prior written
consent of the Administrative Agent and each Lender Agent.

(k) Changes in Payment Instructions to Obligors. The Borrower will not add or
terminate the Concentration Account at the Concentration Account Bank listed in
Schedule II or make any change, or permit the Servicer to make any change, in
its instructions to Obligors regarding payments to be made with respect to the
Collateral to the Concentration Account Bank, unless the Administrative Agent
has consented to such addition, termination or change (which consent shall not
be unreasonably withheld) and has received duly executed copies of the

 

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Intercreditor Agreement (incorporating appropriate amendments), with each new
Concentration Account Bank being a party thereto.

(l) Extension or Amendment of Collateral. The Borrower will not, except as
otherwise permitted in Section 6.4(a), extend, amend or otherwise modify, or
permit the Servicer to extend, amend or otherwise modify, the terms of any
Collateral (including the Related Security).

(m) Credit and Collection Policy. The Borrower will furnish to the
Administrative Agent and each Lender Agent, prior to its effective date, written
notice of any material changes in the Credit and Collection Policy. The Borrower
will not agree to or otherwise permit to occur any change in the Credit and
Collection Policy that could reasonably be expected to have a Material Adverse
Effect without the prior written consent of the Administrative Agent and each
Lender Agent; provided that no consent shall be required from the Administrative
Agent or any Lender Agent in connection with any change mandated by Applicable
Law or a Governmental Authority as evidenced by an Opinion of Counsel to that
effect delivered to the Administrative Agent and each Lender Agent.

Section 5.3. Covenants of the Borrower Relating to the Hedging of Loans.

(a) At any time prior to the occurrence of a Termination Event, the Borrower may
enter into Hedging Agreements and Hedge Transactions with respect to Fixed Rate
Loans with the prior written consent of the Administrative Agent, not to be
unreasonably withheld, delayed or conditioned.

(b) As additional security hereunder, Borrower hereby assigns to the Trustee
(solely in its representative capacity and not individually), for the benefit of
the Secured Parties, all right, title and interest (but none of the obligations)
of the 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 Transactions with
that Hedge Counterparty (“Hedge Collateral”), and Grants a security interest to
the Trustee, for the benefit of the Secured Parties, in the Hedge Collateral,
provided that so long as no Termination Event has occurred and is continuing,
the Trustee, on behalf of the Secured Parties, hereby grants to the Borrower a
non-exclusive license (which shall be deemed revoked upon the occurrence of a
Termination Event) to exercise any rights under any related Hedging Agreement or
Hedge Transaction. Borrower acknowledges that, as a result of that assignment,
Borrower may not, except as set forth in the proviso to the immediately
preceding sentence, without the prior written consent of the Administrative
Agent and the Trustee, 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 5.3(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 Administrative
Agent, the Trustee or any Secured Party for the performance by Borrower of any
such obligations.

 

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(c) The Borrower shall, promptly upon execution thereof, provide to the
Administrative Agent and the Trustee, a copy of any Hedging Agreement (including
each “Confirmation” thereunder) entered into in connection with this Agreement.

Section 5.4. Affirmative Covenants of the Servicer.

From the date hereof until the Collection Date:

(a) Compliance with Law. The Servicer will comply in all material respects with
all Applicable Laws, including those with respect to the Collateral or any part
thereof.

(b) Preservation of Company 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
corporation in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification has had, or could
reasonably be expected to have, a Material Adverse Effect.

(c) Obligations and Compliance with Collateral. 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 the Collateral and will do nothing to
impair the rights of the Trustee, for the benefit of the Secured Parties, in, to
and under the Collateral.

(d) Keeping of Records and Books of Account.

(i) The Servicer will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Collateral in the event of the destruction of the originals thereof),
and keep and maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all Collateral and the
identification of the Collateral.

(ii) The Servicer shall permit the Trustee, the Administrative Agent, each
Lender Agent or their respective agents or representatives to visit the offices
of the Servicer during normal office hours and upon reasonable notice and
examine and make copies of all documents, books, records and other information
concerning the Collateral and discuss matters related thereto with any of the
Responsible Officers of the Servicer having knowledge of such matters.

(iii) The Servicer will, on or prior to the date hereof, mark its master data
processing records and other books and records relating to the Collateral with a
legend, acceptable to the Administrative Agent and each Lender Agent, describing
(A) the sale of the Collateral from the Originator to the Borrower, and (B) the
pledge of the Collateral from the Borrower to the Trustee for the benefit of the
Secured Parties.

(e) Preservation of Security Interest. The Servicer (in the case of the initial
Servicer, at its own expense) will execute and file such financing and
continuation statements and any other documents that may be required by any law
or regulation of any Governmental Authority to preserve and protect fully the
security interest of the Trustee for the benefit of the Secured Parties in, to
and under the Collateral.

 

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(f) Credit and Collection Policy. The Servicer will (i) comply in all material
respects with the Credit and Collection Policy in regard to the Collateral, and
(ii) furnish to the Administrative Agent and each Lender Agent, prior to its
effective date, prompt written notice of any material changes in the Credit and
Collection Policy. The Servicer will not agree to or otherwise permit to occur
any material change in the Credit and Collection Policy that could reasonably be
expected to have a Material Adverse Effect without the prior written consent of
the Administrative Agent and each Lender Agent; provided that no consent shall
be required from the Administrative Agent or any Lender Agent in connection with
any change mandated by Applicable Law or a Governmental Authority as evidenced
by an Opinion of Counsel to that effect delivered to the Administrative Agent
and each Lender Agent. Performance by the Servicer of its obligations under this
Section 5.4(f) shall be deemed performance by the Borrower of its similar
obligation under Section 5.1(h).

(g) Termination Events. The Servicer will provide the Administrative Agent and
each Lender Agent (with a copy to the Trustee) with immediate written notice of
the occurrence of each Termination Event and each Unmatured Termination Event of
which the Servicer has knowledge or has received notice. In addition, no later
than five Business Days following the Servicer’s knowledge or notice of the
occurrence of any Termination Event or Unmatured Termination Event, the Servicer
will provide to the Administrative Agent and each Lender Agent (with a copy to
the Trustee) a written statement of the chief financial officer or chief
accounting officer of the Servicer setting forth the details of such event and
the action that the Servicer proposes to take with respect thereto. Performance
by the Servicer of its obligations under this Section 5.4(g) shall be deemed
performance by the Borrower of its similar obligation under Section 5.1(i).

(h) Taxes. The Servicer will file and pay any and all Taxes required to meet the
obligations of the Borrower under the Transaction Documents. Performance by the
Servicer of its obligations under this Section 5.4(h) shall be deemed
performance by the Borrower of its similar obligation under Section 5.1(j).

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

(j) Proceedings. As soon as possible and in any event within three Business Days
after any executive officer of the Servicer receives notice or obtains knowledge
thereof, the Servicer will provide the Administrative Agent and each Lender
Agent with written notice of any settlement of, material judgment (including a
material judgment with respect to the liability phase of a bifurcated trial) in
or commencement of any material labor controversy, material litigation, material
action, material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Collateral, the Transaction Documents, the Trustee’s
interest in the Collateral on behalf of the Secured Parties, or the Borrower,
the Servicer or the Originator or any of their Affiliates; provided that,
notwithstanding the foregoing, any settlement, judgment, labor controversy,

 

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litigation, action, suit or proceeding affecting the Collateral, the Transaction
Documents, the Trustee’s interest in the Collateral on behalf of the Secured
Parties, or the Borrower, the Servicer or the Originator or any of their
Affiliates in excess of $1,000,000 or more shall be deemed to be material for
purposes of this Section 5.4(j).

(k) Deposit of Collections. The Servicer shall promptly (but in no event later
than two Business Days after receipt) deposit into the Collection Account any
and all Collections received by the Borrower, the Servicer or any of their
Affiliates.

(l) Change-in-Control. Upon the occurrence of a Change-in-Control, the Servicer
shall provide the Administrative Agent, each Lender Agent, the Trustee and the
Hedge Counterparties with notice of such Change-in-Control within 30 days after
completion of the same.

Section 5.5. Negative Covenants of the Servicer.

From the date hereof until the Collection Date:

(a) Deposits to Special Accounts. Except as otherwise contemplated by the
Intercreditor Agreement, the Servicer will not deposit or otherwise credit, or
cause or permit to be so deposited or credited to the Concentration Account Cash
or Cash proceeds other than Collections in respect of the Collateral.

(b) Mergers, Acquisition, Sales, etc. The Servicer will not consolidate with or
merge into any other Person or convey or sell its properties and assets
substantially as an entirety to any Person, unless the Servicer is the surviving
entity and unless:

(i) the Servicer has delivered to the Administrative Agent and each Lender Agent
an Officer’s Certificate and an Opinion of Counsel each stating that any
consolidation, merger, conveyance or sale and such supplemental agreement comply
with this Section 5.5(b) and that all conditions precedent herein provided for
relating to such transaction have been complied with and, in the case of the
Opinion of Counsel, that such supplemental agreement is legal, valid and binding
with respect to the Servicer and such other matters as the Administrative Agent
may reasonably request;

(ii) the Servicer shall have delivered notice of such consolidation, merger,
conveyance or sale to the Administrative Agent and each Lender Agent;

(iii) after giving effect thereto, no Termination Event or event that with
notice or lapse of time would constitute a Termination Event shall have
occurred; and

(iv) the Administrative Agent and each Lender Agent have consented in writing to
such consolidation, merger, conveyance or sale.

(c) Change of Name or Location of Loan Files. The Servicer shall not (x) change
its name, move the location of its principal place of business and chief
executive office, change the offices where it keeps records concerning the
Collateral from the location referred to in Section 13.2, or change the
jurisdiction of its formation, or (y) move, or consent to the Trustee

 

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moving, the Required Loan Documents and Loan Files from the location thereof on
the Closing Date, unless the Servicer has given at least 30 days’ written notice
to the Administrative Agent and the Trustee and has taken all actions required
under the UCC of each relevant jurisdiction in order to continue the first
priority perfected security interest of the Trustee for the benefit of the
Secured Parties in the Collateral.

(d) Change in Payment Instructions to Obligors. The Servicer will not add a new
Concentration Account or terminate the Concentration Account at the
Concentration Account Bank listed in Schedule II or make any change in its
instructions to Obligors regarding payments to be made to the Borrower or the
Servicer or payments to be made to the Concentration Account Bank, unless the
Administrative Agent has consented to such addition, termination or change
(which consent shall not be unreasonably withheld) and has received duly
executed copies of each Intercreditor Agreement (incorporating appropriate
amendments), with each new Concentration Account Bank being a party thereto.

(e) Extension or Amendment of Loans. The Servicer will not, except as otherwise
permitted in Section 6.4(a), extend, amend or otherwise modify the terms of any
Loans.

Section 5.6. Affirmative Covenants of the Trustee.

From the date hereof until the Collection Date:

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

(b) Preservation of Existence. The Trustee 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 preserve and maintain such existence, rights,
franchises, privileges and qualification could reasonably be expected to have a
Material Adverse Effect.

(c) Location of Required Loan Documents. Subject to Section 8.8, the Required
Loan Documents shall remain at all times in the possession of the Trustee at the
address set forth on Annex A to this Agreement unless notice of a different
address is given in accordance with the terms hereof or unless the
Administrative Agent agrees to allow certain Required Loan Documents to be
released to the Servicer on a temporary basis in accordance with the terms
hereof except as such Required Loan Documents may be released pursuant to this
Agreement.

Section 5.7. Negative Covenants of the Trustee.

(a) No Changes in Trustee Fee. From the date hereof until the Collection Date,
the Trustee will not make any changes to the Trustee Fee set forth in the
Trustee Fee Letter without the prior written approval of the Administrative
Agent, each Lender Agent, the Borrower and the Servicer.

 

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

ARTICLE VI.

ADMINISTRATION AND SERVICING OF LOANS

Section 6.1. Designation of the Servicer.

(a) Servicer. The servicing, administering and collection of the Collateral
shall be conducted by the Person designated as the Servicer hereunder from time
to time in accordance with this Section 6.1. Until the Administrative Agent
gives to the Company a Servicer Termination Notice, the Company is hereby
designated as, and hereby agrees to perform the duties and responsibilities of,
the Servicer pursuant to the terms hereof.

(b) Successor Servicer. Upon the Servicer’s receipt of a Servicer Termination
Notice (with a copy to the Trustee) from the Administrative Agent pursuant to
the terms of Section 6.18, the Servicer agrees that it will terminate its
activities as Servicer hereunder in a manner that the Administrative Agent
reasonably believes will facilitate the transition of the performance of such
activities to a Successor Servicer, and the Successor Servicer shall assume each
and all of the Servicer’s obligations to service and administer the Collateral,
on the terms and subject to the conditions herein set forth, and the Servicer
shall use its best reasonable efforts to assist the Successor Servicer in
assuming such obligations.

(c) Subcontracts. The Servicer may, with the prior consent of the Administrative
Agent, subcontract with any other Person for servicing, administering or
collecting the Collateral; provided that the Servicer shall remain liable for
the performance of the duties and obligations of the Servicer pursuant to the
terms hereof and that any such subcontract may be terminated upon the occurrence
of a Servicer Default.

(d) Servicing Programs. In the event that the Servicer uses any software program
in servicing the Collateral that it licenses from a third party, the Servicer
shall use its best reasonable efforts to obtain whatever licenses or approvals
are necessary to allow the Servicer to assign such licenses to any other
Successor Servicer appointed as provided in this Agreement.

(e) Waiver. The Borrower acknowledges that the Administrative Agent or any of
its Affiliates may act as the Successor Servicer, and the Borrower waives any
and all claims against the Administrative Agent or any of its respective
Affiliates (other than claims relating to such party’s gross negligence or
willful misconduct) relating in any way to the servicing functions having been
performed by the Administrative Agent or any of its Affiliates in accordance
with the terms and provisions (including the standard of care) set forth in the
Transaction Documents.

 

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Section 6.2. Duties of the Servicer.

(a) Appointment. The Borrower hereby appoints the Servicer as its agent, as from
time to time designated pursuant to Section 6.1, to service the Collateral and
enforce its respective rights in and under such Collateral. In order to
facilitate the servicing of the Collateral, the Trustee is hereby directed to
and does authorize the Company to perform the duties of the Servicer under this
Agreement and the other Transaction Documents. The Servicer hereby accepts such
appointment and agrees to perform the duties and obligations with respect
thereto as set forth herein. The Servicer and the Borrower hereby acknowledge
that the Administrative Agent, each Lender Agent, the Trustee and the Secured
Parties are third party beneficiaries of the obligations undertaken by the
Servicer hereunder. The parties hereto each acknowledge that the Servicer, as
Servicer under this Agreement, possesses only such rights with respect to the
enforcement of rights and remedies with respect to the Loans and the Related
Property and under the Required Loan Documents as have been transferred to the
Borrower and the Trustee with respect to the related Loan.

(b) Duties. The Servicer shall take or cause to be taken all such actions as may
be necessary or advisable to collect on the Collateral from time to time, all in
accordance with Applicable Laws, and in accordance with the Credit and
Collection Policy and the Servicing Standard. Without limiting the foregoing,
the duties of the Servicer shall include the following:

(i) servicing and managing the Loans and consenting to and negotiating
amendments, modifications and waivers to the Loans in the Collateral in
accordance with the Credit and Collection Policy;

(ii) preparing and submitting of claims to, and post-billing liaison with,
Obligors on each Loan;

(iii) maintaining all necessary servicing records with respect to the Collateral
and providing such reports to the Administrative Agent, each Lender Agent and
the Trustee in respect of the servicing of the Collateral (including information
relating to its performance under this Agreement) as may be required hereunder
or as the Administrative Agent and each Lender Agent may reasonably request;

(iv) maintaining and implementing administrative and operating procedures
(including, without limitation, an ability to recreate servicing records
evidencing the Collateral 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
Collateral;

(v) promptly delivering to the Administrative Agent, each Lender Agent, or the
Trustee, from time to time, such information and servicing records (including
information relating to its performance under this Agreement) as the
Administrative Agent, each Lender Agent or the Trustee may from time to time
reasonably request;

(vi) identifying each Loan clearly and unambiguously in its servicing records to
reflect that such Loan is owned by the Borrower and that the Borrower is

 

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Granting a security interest therein to the Trustee for the benefit of the
Secured Parties pursuant to this Agreement;

(vii) notifying the Administrative Agent and each Lender Agent of any material
action, suit, proceeding, dispute, offset, deduction, defense or counterclaim
(1) that is or is threatened to be asserted by an Obligor with respect to any
Loan (or portion thereof) of which it has knowledge or has received notice; or
(2) that is reasonably expected to have a Material Adverse Effect;

(viii) providing prompt written notice to the Administrative Agent and each
Lender Agent, prior to the effective date thereof, of any changes in the Credit
and Collection Policy that could be reasonably expected to have a Material
Adverse Effect;

(ix) maintaining the perfected security interest of the Trustee, for the benefit
of the Secured Parties, in the Collateral;

(x) maintaining the Loan Files with respect to Loans included as part of the
Collateral, provided that, so long as the Servicer is in possession of any
Required Loan Documents, the Servicer will hold such Required Loan Documents in
a fireproof safe or fireproof file cabinet; and

(xi) directing the Trustee to make payments pursuant to the terms of the
Servicing Report in accordance with Section 2.10 and Section 2.11.

(c) Notwithstanding anything to the contrary contained herein, the exercise by
the Trustee, the Administrative Agent, each Lender Agent and the Secured Parties
of their rights hereunder shall not release the Servicer, the Originator or the
Borrower from any of their duties or responsibilities with respect to the
Collateral as expressly provided in the Transaction Documents entered into
respectively by them. The Secured Parties, the Administrative Agent, each Lender
Agent shall not have any obligation or liability with respect to any Collateral,
nor shall any of them be obligated to perform any of the obligations of the
Servicer or the Trustee hereunder.

Section 6.3. Authorization of the Servicer.

(a) Each of the Borrower, the Trustee and 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 Grant of the Collateral to the Trustee, for the benefit of the Secured
Parties, in the determination of the Servicer, to collect all amounts due under
any and all Collateral, 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 Collateral and, after the delinquency of any Collateral 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 Collateral. The
Originator, the Borrower and the Trustee, for the benefit of the Secured
Parties, shall furnish the Servicer (and any successors thereto) with any powers
of attorney and other documents

 

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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 Collateral. In no
event shall the Servicer be entitled to make the Trustee, the Secured Parties,
the Administrative Agent or the Lender Agents a party to any litigation without
such party’s express prior written consent, or to make the Borrower a party to
any litigation, in each such case arising out of or relating to the
administration, collection or enforcement of any Loan (other than any routine
foreclosure or similar collection procedure), without the Administrative Agent’s
consent.

(b) After a Termination Event has occurred and is continuing, at the direction
of the Administrative Agent, the Servicer shall take such action as the
Administrative Agent may deem necessary or advisable to enforce collection of
the Collateral; provided that the Administrative Agent may or may request the
Trustee to, at any time that a Termination Event or Unmatured Termination Event
has occurred and is continuing, notify any Obligor or any agent under any
Agented Loan with respect to any Collateral of the Grant of such Collateral to
the Trustee and direct that payments of all amounts due or to become due be made
directly to the Trustee or any servicer, collection agent or lock-box or other
account designated by the Trustee and, upon such notification and at the expense
of the Borrower, the Administrative Agent may enforce collection of any such
Collateral, and adjust, settle or compromise the amount or payment thereof or
request that the Trustee do the same at its direction subject to the applicable
provisions of this Agreement.

Section 6.4. Collection of Payments.

(a) Collection Efforts; Modification of Collateral. The Servicer will collect,
or cause to be collected, all payments called for under the terms and provisions
of the Loans included in the Collateral as and when the same become due in
accordance with the Credit and Collection Policy and the Servicing Standard, and
will follow those collection procedures that it follows with respect to all
comparable Collateral that it services for itself or others. The Servicer may
not waive, modify or otherwise vary any provision of an item of Collateral in a
manner that would impair in any material respect the collectibility of the
Collateral or in any manner contrary to the Credit and Collection Policy and the
Servicing Standard.

(b) Prepaid Loan. The Servicer may not voluntarily permit a Loan to become a
Prepaid Loan in whole or in part, unless (x) the Servicer provides a Substitute
Loan in accordance with Section 2.19 (provided that a substitution shall only be
permitted prior to a Termination Event) or (y) such prepayment will not result
in the Collection Account receiving an amount (the “Prepayment Amount”) less
than the sum of (a) the OLB (or portion thereof to be prepaid) on the date of
such payment, (b) any accrued and unpaid interest thereon, and (c) all Hedge
Breakage Costs owing to the relevant Hedge Counterparty for any termination of
one or more Hedge Transactions, in whole or in part, as required by the terms of
any Hedging Agreement as the result of any such Loan becoming a Prepaid Loan.

(c) Acceleration. If required by the Credit and Collection Policy and the
Servicing Standard, the Servicer shall accelerate the maturity of all or any
Scheduled Payments and other amounts due under any Loan in which a default under
the terms thereof has occurred

 

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and is continuing (after the lapse of any applicable grace period) promptly
after such Loan becomes a Defaulted Loan.

(d) Taxes and other Amounts. The Servicer will use its best efforts to collect
all payments with respect to amounts due for taxes, assessments and insurance
premiums relating to each Loan to the extent required to be paid to Borrower for
such application under the Underlying Instruments and remit such amounts to the
appropriate Governmental Authority or insurer as required by the Underlying
Instruments.

(e) Payments to Concentration Account. On or before the applicable Cut-Off Date,
the Servicer shall have instructed all Obligors to make all payments in respect
of the Collateral directly to the Concentration Account, provided that the
Servicer is not required to so instruct any Obligor which is solely a guarantor
unless and until the Servicer calls on the related guaranty.

(f) Accounts. Each of the parties hereto hereby agrees that (i) each Account
shall be deemed to be a Securities Account and (ii) except as otherwise
expressly provided herein, the Trustee shall be exclusively entitled to exercise
the rights that comprise each Financial Asset held in each Account. Each of the
parties hereto hereby agrees to cause the Trustee, or any other Securities
Intermediary that holds any money or other property for the Borrower in an
Account, to agree with the parties hereto that (A) the Cash and other property
(subject to Section 6.4(g) below with respect to any property other than
investment property, as defined in Section 9-102(a)(49) of the UCC) is to be
treated as a Financial Asset and (B) the “securities intermediary’s
jurisdiction” (within the meaning of Section 8-110 of the UCC) for that purpose
shall be the State of New York. In no event may any Financial Asset held in any
Account be registered in the name of, payable to the order of, or specially
indorsed to, the Borrower, unless such Financial Asset has also been indorsed in
blank or to the Trustee or other Securities Intermediary that holds such
Financial Asset in such Account.

(g) Underlying Instruments. Notwithstanding any term hereof (or any term of the
UCC that might otherwise be construed to be applicable to a “securities
intermediary” as defined in the UCC) to the contrary, neither the Trustee nor
any Securities Intermediary shall be under any duty or obligation in connection
with the acquisition by the Borrower, or the Grant by the Borrower to the
Trustee, for the benefit of the Secured Parties, of any Loan in the nature of a
loan or a participation in a loan to examine or evaluate the sufficiency of the
documents or instruments delivered to it by or on behalf of the Borrower under
the related Underlying Instruments, or otherwise to examine the Underlying
Instruments, in order to determine or compel compliance with any applicable
requirements of or restrictions on transfer (including without limitation any
necessary consents). The Trustee shall hold any Instrument delivered to it
evidencing any Loan Granted to the Trustee hereunder as trustee and custodial
agent for the Secured Parties in accordance with the terms of this Agreement.

(h) Establishment of the Collection Account. The Servicer shall cause to be
maintained with the Trustee and in the name of the Borrower, subject to the lien
of the Trustee, for the benefit of the Secured Parties, a segregated corporate
trust account entitled “Collection Account for NewStar CP Funding LLC, subject
to the lien of U.S. Bank National Association, as Trustee for the benefit of the
Secured Parties” (the “Collection Account”), and the Servicer shall

 

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further cause to be maintained two subaccounts linked to and constituting part
of the Collection Account for the purpose of segregating, within two Business
Days of the receipt of any Collections, Principal Collections (the “Principal
Collections Account”) and Interest Collections (the “Interest Collections
Account”), respectively, over which the Trustee for the benefit of the Secured
Parties shall have control and from which none of the Originator, the Servicer
or the Borrower shall have any right of withdrawal.

(i) Establishment of the Custodial Account. The Borrower shall maintain at the
Trustee a single, segregated trust account which shall be designated as the
“Custodial Account”, which shall be held by the Trustee in trust in the name of
Borrower, subject to the lien of the Trustee for the benefit of the Secured
Parties and over which the Trustee, for the benefit of the Secured Parties,
shall have exclusive control and sole right of withdrawal and into which the
Trustee shall from time to time deposit Collateral. All Collateral deposited
from time to time in the Custodial Account pursuant to this Agreement shall be
held by the Trustee as part of the Collateral and shall be applied to the
purposes herein provided. The Trustee agrees to give the Borrower immediate
notice if the Custodial Account or any funds on deposit therein, or otherwise to
the credit of the Custodial Account, shall become subject to any writ, order,
judgment, warrant of attachment, execution or similar process. The Borrower
shall not have any legal, equitable or beneficial interest in the Custodial
Account other than in accordance with Section 2.10 and Section 2.11.

(j) Adjustments. If (i) the Servicer makes a deposit into the Collection Account
in respect of a Collection of an item of 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 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.

(k) Establishment of the Unfunded Exposure Account. The Servicer shall cause to
be maintained with the Trustee and in the name of the Borrower, subject to the
lien of the Trustee, for the benefit of the Secured Parties, a segregated
corporate trust account entitled “Unfunded Exposure Account for NewStar CP
Funding LLC” (the “Unfunded Exposure Account”). Funds on deposit in the Unfunded
Exposure Account as of any date of determination may be withdrawn to fund draw
requests of the relevant Obligors under any Delayed Draw Term Loan or Revolving
Loan. Any such draw request made by an Obligor, along with wiring instructions
for the applicable Obligor, shall be forwarded by the Borrower or the Servicer
to the Administrative Agent, and the Servicer shall instruct the Trustee (with a
copy to the Administrative Agent) to fund such draw request in accordance with
the Underlying Instrument pertaining to such Delayed Draw Term Loan or Revolving
Loan. As of any date of determination, any amounts on deposit in the Unfunded
Exposure Account that exceed (i) the aggregate of all Unfunded Exposure Equity
Amounts prior to the earlier to occur of the end of the Revolving Period or the
Termination Date and (ii) the Aggregate Exposure Amount following the earlier to
occur of the end of the Revolving Period or the Termination Date, in each case,
shall be transferred at the direction of the Servicer into the Principal
Collection Account as Principal Collections. Prior to the occurrence of a
Termination Event, at the Servicer’s

 

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discretion, the Servicer may direct the Trustee to deposit in the Unfunded
Exposure Account all Principal Collections received by the Borrower in respect
of the Revolving Loans included in the Collateral to the extent necessary to
cause the amount on deposit in the Unfunded Exposure Account to equal the
Aggregate Exposure Amount; provided that after the occurrence of a Termination
Event, the foregoing deposit will be required to be made by the Servicer.

Section 6.5. [Reserved].

Section 6.6. Realization upon Loans Subject to an Assigned Value Adjustment
Event.

The Servicer will use reasonable efforts consistent with the Servicing Standard
to exercise available remedies (which may include foreclosing upon or
repossessing, as applicable, or otherwise comparably convert the ownership of
any Related Property) with respect to any Loan that has become subject to one or
more of the events specified in clauses (i) through (iv) or (viii) (solely with
respect to a Material Modification of the type described in clause (a) of the
definition thereof) of the definition of Assigned Value Adjustment Event and as
to which no satisfactory arrangements can be made for collection of delinquent
payments. The Servicer will comply with the Credit and Collection Policy, the
Servicing Standard and Applicable Law in realizing upon such Related Property,
which practices and procedures may include reasonable efforts to enforce all
obligations of Obligors foreclosing upon, repossessing and causing the sale of
such Related Property at public or private sale in circumstances other than
those described in the preceding sentence. 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 foreclosure or repossession of such Related
Property unless it reasonably determines that such repair and/or foreclosure 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 relating to any Loan hereunder.

Section 6.7. Maintenance of Insurance Policies.

The Servicer shall obtain and maintain at its own expense and keep in full force
and effect throughout the term of this Agreement a blanket fidelity bond and an
errors and omissions insurance policy covering the Servicer’s officers and
employees in connection with its activities under this Agreement in an amount
not less than $2,000,000. Coverage of the Servicer under a policy or bond
obtained by an Affiliate of the Servicer and providing the coverage required by
this Section 6.7 shall satisfy the requirements of this Section 6.7.

Section 6.8. [Reserved.]

Section 6.9. [Reserved.]

Section 6.10. [Reserved.]

Section 6.11. Servicing Compensation.

As compensation for its servicing activities hereunder and reimbursement for its
expenses, the Servicer shall be entitled to receive the Servicing Fee; provided
that it shall be

 

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entitled to receive such fee from Collections only to the extent of funds
available therefor pursuant to the provisions of Section 2.10 and/or
Section 2.11.

Section 6.12. Payment of Certain Expenses by Servicer.

The Servicer will be required to pay all expenses incurred by it in connection
with its activities under this Agreement, including fees and disbursements of
its independent accountants, Taxes imposed on the Servicer, expenses incurred by
the Servicer 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, but excluding Liquidation Expenses incurred as a
result of activities contemplated by Section 6.6; provided that, for avoidance
of doubt, to the extent Liquidation Expenses relate to a Loan and a Retained
Interest such Liquidation Expenses shall be allocated pro rata. 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 Accounts and the
Concentration Account. Notwithstanding the foregoing, and for the avoidance of
doubt, nothing contained in this Section 6.12 shall prohibit the Borrower from
reimbursing the Servicer for expenses incurred by it hereunder provided such
amounts are paid from amounts permitted to be released under this Agreement to
the Borrower.

Section 6.13. Reports.

(a) Borrowing or Repayment Notice. On each Funding Date, on each reduction of
Advances Outstanding pursuant to Section 2.5, and on each reinvestment of
Principal Collections pursuant to Section 2.10, the Borrower (and the Servicer
on its behalf) will provide a Borrowing Notice or a Repayment Notice, as
applicable, a Borrowing Base Certificate, updated as of such date, and a Loan
Tape, updated as of such date, to the Administrative Agent and each Lender Agent
(with a copy to the Trustee).

(b) Servicing Report. On each Reporting Date, the Servicer will provide to the
Borrower, the Administrative Agent, each Lender Agent and the Trustee a monthly
statement determined as of the related Determination Date (a “Servicing
Report”), signed by a Responsible Officer of the Servicer and the Borrower and
substantially in the form of Exhibit C hereto (as such form may be amended from
time to time by such changes as are mutually agreeable to the Servicer and the
Administrative Agent) which shall include (i) a Borrowing Base calculated as of
the most recent Determination Date, (ii) the Loan Tape calculated as of the most
recent Determination Date and (iii) if such Reporting Date precedes a Payment
Date, amounts to be remitted pursuant to Section 2.10 or 2.11, as applicable, to
the applicable parties (which shall include any applicable wiring instructions
of the parties receiving payment).

(c) Servicer’s Certificate. Together with each Servicing Report, the Servicer
shall submit to the Administrative Agent, each Lender Agent and the Trustee, a
certificate (a “Servicer’s Certificate”) signed by a Responsible Officer of the
Servicer and substantially in the form of Exhibit I.

(d) Financial Statements. The Servicer will submit to the Administrative Agent,
each Lender Agent, each Lender and the Trustee, (i) within 45 days after the end
of each of its fiscal quarters (excluding the fiscal quarter ending on the date
specified in clause (ii)),

 

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consolidated and consolidating unaudited financial statements of the Servicer
for the most recent fiscal quarter, and (ii) within 90 days after the end of
each fiscal year, consolidated and consolidating audited financial statements of
the Servicer, audited by a firm of nationally recognized independent public
accountants, as of the end of such fiscal year.

(e) Tax Returns. Upon demand by the Administrative Agent or any Lender Agent,
the Servicer shall deliver copies of all federal, state and local Tax returns
and reports filed by the Borrower and Servicer, or in which the Borrower or
Servicer was included on a consolidated or combined basis (excluding sales, use
and like taxes).

(f) Obligor Financial Statements; Valuation Reports; Other Reports. The Servicer
will deliver to the Administrative Agent and each Lender Agent with respect to
each Obligor, (i) to the extent received by the Borrower and/or the Servicer
pursuant to the Underlying Instruments, the complete financial reporting package
with respect to such Obligor and with respect to each Loan for such Obligor
(including any covenant compliance certificates with respect to such Obligor and
with respect to each Loan for such Obligor) provided to the Borrower and/or the
Servicer either monthly or quarterly, as the case may be, by such Obligor, which
delivery shall be made within 45 days (or such longer period as specified in the
Underlying Instruments) after the end of each such month or such Obligor’s
fiscal quarters, as applicable (excluding the last month or fiscal quarter, as
applicable, of each such Obligor’s fiscal year), and within 90 days (or such
longer period as specified in the Underlying Instruments) after the end of each
such Obligor’s fiscal year, and (ii) a quarterly update to the “tear sheet”
prepared by the Servicer with respect to such Obligor and with respect to each
Loan for such Obligor, which delivery shall be made within 45 days (or such
longer period as specified in the Underlying Instruments) after the end of each
such Obligor’s fiscal quarters (excluding the last fiscal quarter of each such
Obligor’s fiscal year) and within 90 days (or such longer period as specified in
the Underlying Instruments) after the end of each such Obligor’s fiscal year.
The Servicer will promptly deliver to the Administrative Agent, upon reasonable
request and to the extent received by the Borrower and/or the Servicer, all
other documents and information required to be delivered by the Obligors to the
Borrower with respect to any Loan included in the Collateral.

(g) Amendments to Loans. The Servicer will deliver to the Administrative Agent a
copy of any material amendment, restatement, supplement, waiver or other
modification to the Underlying Instruments of any Loan (along with any internal
documents prepared by the Servicer and provided to its investment committee in
connection with such amendment, restatement, supplement, waiver or other
modification) within ten (10) Business Days of the effectiveness of such
amendment, restatement, supplement, waiver or other modification.

Section 6.14. Annual Statement as to Compliance.

The Servicer will provide to the Administrative Agent, each Lender Agent and the
Trustee, within 90 days following the end of each fiscal year of the Servicer
(beginning with the fiscal year ending December 31, 2011), a fiscal 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 fiscal period ending on the last day of such fiscal year has
been made under such Person’s supervision and (b) the Servicer has performed or

 

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has caused to be performed in all material respects all of its obligations under
this Agreement throughout such year and no Servicer Default has occurred and is
continuing.

Section 6.15. 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 Administrative Agent, each Lender Agent and the Trustee, within 90 days
following the end of each fiscal year of the Servicer: (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 Collateral, and (b) based on such
examination, such firm is of the opinion that the Servicing 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 (a draft of
which procedures are attached hereto as Schedule V, it being understood that the
Servicer and the Administrative Agent will provide an updated Schedule V
reflecting any further amendments relating to such Schedule V prior to the
issuance of the first such agreed-upon procedures report) to certain documents
and records relating to the Collateral under any Transaction Document, compared
the information contained in the Servicing 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, 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 6.16. Limitation on Liability of the Servicer and Others.

Except as provided herein, the Servicer shall not be under any liability to the
Administrative Agent, any Lender Agent, the Trustee, the Secured Parties or any
other Person for any action taken or for refraining from taking any action
pursuant to this Agreement whether arising from express or implied duties under
this Agreement; provided that, notwithstanding anything to the contrary
contained herein, nothing shall protect the Servicer against any liability that
would otherwise be imposed by reason of its willful misfeasance, bad faith or
negligence in the performance of duties or by reason of its willful misconduct
hereunder.

Section 6.17. The Servicer Not to Resign.

The Servicer shall not resign from the obligations and duties hereby imposed on
it except upon the Servicer’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 the Servicer could take to make the performance of
its duties hereunder permissible under Applicable Law. Any such determination
permitting the resignation of the Servicer shall be evidenced as to clause
(i) above by an Opinion of Counsel to such effect delivered to the
Administrative Agent, each Lender Agent and the Trustee. No such resignation
shall become effective until a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 6.2
and Section 6.19.

 

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Section 6.18. Servicer Defaults.

If any one of the following events (each, a “Servicer Default”) shall occur and
be continuing:

(a) any failure by the Servicer to make any payment, transfer or deposit into
the Collection Account or the Unfunded Exposure Account (including, without
limitation, with respect to bifurcation and remittance of Collections) as
required by this Agreement which continues unremedied for a period of two
Business Days;

(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 the other Transaction Documents to which the Servicer is a
party (including, without limitation, any material delegation of the Servicer’s
duties that is not permitted by Section 6.1) and the same continues unremedied
for a period of 30 days (if such failure can be remedied) after the earlier 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 Administrative
Agent, any Lender Agent or the Trustee and (ii) the date on which a Responsible
Officer of the Servicer acquires knowledge thereof;

(c) the failure of the Servicer to make any payment when due (after giving
effect to any related grace period) with respect to any recourse debt or other
obligations, which debt or other obligations are in excess of United States
$5,000,000, individually or in the aggregate, or the occurrence of any event or
condition that has resulted in the acceleration of such recourse debt or other
obligations, if such event or condition has not been waived;

(d) an Insolvency Event shall occur with respect to the Servicer;

(e) the Servicer fails in any material respect to comply with the Credit and
Collection Policy and the Servicing Standard regarding the servicing of the
Collateral and the same continues unremedied for a period of 30 days (if such
failure can be remedied) after the earlier 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 Administrative Agent, any Lender Agent or the
Trustee and (ii) the date on which a Responsible Officer of the Servicer
acquires knowledge thereof;

(f) the failure of the initial Servicer to maintain Liquidity of at least
$25,000,000 for more than the greater of three (3) Business Days or five
(5) days; provided, however, on one occurrence from and after the Closing Date
only on which the initial Servicer fails to maintain such Liquidity for more
than five (5) days, no Servicer Default shall occur unless such failure
continues for thirty (30) days or more; provided, further, however, in the event
a Servicer Default of the type described in this clause (f) shall occur or be
expected to occur, the Servicer may request a waiver of such Servicer Default
and, in connection therewith, submit to the Administrative Agent and each Lender
Agent a cash flow forecast which forecasts the cure of such Servicer Default
(for the avoidance of doubt, Administrative Agent and each Lender Agent may
approve or disapprove such request in their sole and absolute discretion); or

 

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(g) the Servicer consents or agrees to, or otherwise permits to occur, under
circumstances in which the Servicer could have reasonably prevented the
occurrence thereof, any material amendment, modification, change, supplement or
rescission (any of the foregoing an “amendment” for purposes of this
Section 6.18(g)) of or to the Credit and Collection Policy (after the adoption
of same) in whole or in part that could have a Material Adverse Effect on the
Collateral, the Administrative Agent, any Lender Agent or the other Secured
Parties, without the prior written consent of the Administrative Agent and each
Lender Agent which amendment shall remain in effect for a period of ten Business
Days after notice thereof is delivered to the Administrative Agent (which notice
shall be delivered within seven days after the effectiveness of such amendment)
and the Administrative Agent shall not have delivered a written consent thereto
during such ten Business Day period; provided that such prior written consent
shall not be required in the case of an amendment which was mandated by any
Applicable Law or Governmental Authority;

(h) the Company or an Affiliate thereof shall cease to be the Servicer;

(i) the occurrence or existence of any change with respect to the Servicer which
has a Material Adverse Effect;

(j) with respect to the initial Servicer only, the Company fails to maintain the
aggregate of its GAAP stockholders’ equity and subscribed stockholders’ equity
in an amount equal to $475,000,000, as (i) increased by 80% of the proceeds of
any equity offerings (including capital contributions) of the Company
consummated after the Closing Date, (ii) increased by 50% of cumulative positive
GAAP net income earned by the Company after the Closing Date and (iii) as
decreased, due to an accounting change or changes in tax rates imposed after the
Closing Date, by the amounts of any reductions in the assets designated on the
Company’s consolidated balance sheet as “deferred income taxes, net” and/or
“deferred financing costs, net” from the amounts thereof shown on the Company’s
consolidated balance sheet as of September 30, 2010; or

(k) any failure by the Servicer to deliver any required Servicing Report or
other Required Reports hereunder on or before the date occurring two Business
Days after the date such report is required to be made or given, as the case may
be, under the terms of this Agreement;

(l) any representation, warranty or certification made by the Servicer in any
Transaction Document or in any certificate delivered pursuant to any Transaction
Document shall prove to have been incorrect in any materially adverse respect
when made which continues to be unremedied for a period of 30 days after the
earlier 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
Administrative Agent, any Lender Agent or the Trustee and (ii) the date on which
a Responsible Officer of the Servicer acquires knowledge thereof;

(m) the failure of the initial Servicer to maintain Liquidity of at least
$15,000,000 for more than three (3) Business Days; or

 

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(n) any financial or other information reasonably requested by the
Administrative Agent, any Lender Agent or any Lender is not provided as
requested within the greater of (i) three (3) Business Days or (ii) five
(5) days following such request;

(o) the rendering against the Servicer of one or more final judgments, decrees
or orders for the payment of money in excess of United States $7,500,000,
individually or in the aggregate, and the continuance of such judgment, decree
or order unsatisfied and in effect for any period of more than 60 consecutive
days without a stay of execution;

(p) any change in the management of the Servicer (whether by resignation,
termination, disability, death or lack of day to day management) relating to any
three of Tim Conway, Peter Schmidt-Fellner, John Frishkopf, Bob Clemmens, John
Bray and Rob Brown, or any failure by any three of the aforementioned Persons to
provide active and material participation in the Servicer’s daily activities
including, but not limited to, general management, underwriting, and the credit
approval process and credit monitoring activities, which no later than 60 days
after the occurrence of any event specified above is not cured by the Servicer
hiring a reputable, experienced individual reasonably satisfactory to the
Administrative Agent and each Lender Agent to replace the Person who is no
longer actively participating in the management of the Servicer or which is not
waived in writing by the Administrative Agent and each Lender Agent; provided
that time relating to an individual’s vacation within the Servicer’s employee
policy and customary industry standards shall not constitute lack of day-to-day
management or failure to provide active and material participation in the
Servicer’s daily activities;

(q) any change in the control of the Servicer that takes the form of either a
merger or consolidation that does not comply with the provisions of
Section 5.5(b); or

(r) a Termination Event of the type described in Section 10.1(b), (c), (g)(2),
(g)(3), (h), (k), (m), (p) or (r) occurs; provided that a Termination Event
pursuant to Section 10.1(p) shall be deemed not to have occurred for a period
not to exceed 30 days pending the resolution of any lien being contested in good
faith by the Borrower or the Originator, as applicable; or

(s) the Company or any majority-owned Affiliate thereof defaults beyond any
applicable grace period in performing any obligation as servicer under any term
loan or revolving credit facility (for the avoidance of doubt, excluding this
Agreement except as expressly provided herein and any 144A or publicly
registered CLOs) with any Lender or any Affiliate thereof which is
majority-owned, directly or indirectly, by the ultimate parent of any Lender;

then, notwithstanding anything herein to the contrary, so long as any such
Servicer Default shall not have been remedied within any applicable cure period
prior to the date of delivery of a Servicer Termination Notice (defined below),
the Administrative Agent, by written notice to the Servicer (with a copy to the
Trustee) (a “Servicer Termination Notice”), may terminate all of the rights and
obligations of the Servicer as Servicer under this Agreement.

 

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Section 6.19. Appointment of Successor Servicer.

(a) On and after the receipt by the Servicer of a Servicer Termination Notice
pursuant to Section 6.18, 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 Administrative Agent in writing
or, if no such date is specified in such Servicer Termination Notice or
otherwise specified by the Administrative Agent, until a date mutually agreed
upon by the Servicer and the Administrative Agent and shall be entitled to
receive, to the extent of funds available therefor pursuant to Section 2.10 or
Section 2.11, as applicable, the Servicing Fee therefor until such date,
together with all other amounts to be paid or reimbursed to them as Servicer
which remain outstanding as of such date. The Administrative Agent shall as
promptly as possible appoint a successor servicer (the “Successor Servicer”),
and such Successor Servicer shall accept its appointment by a written assumption
in a form acceptable to the Administrative Agent and each Lender Agent. In the
event that a Successor Servicer has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Administrative Agent shall
petition a court of competent jurisdiction to appoint any established financial
institution, having a net worth of not less than United States $50,000,000 and
whose regular business includes the servicing of assets similar to the
Collateral, as the Successor Servicer hereunder.

(b) Upon its appointment, the Successor Servicer shall be the successor in all
respects to the Servicer with respect to servicing functions under this
Agreement 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 Successor Servicer; provided that the Successor Servicer shall have
(i) no liability with respect to any action performed by the terminated Servicer
prior to the date that the Successor Servicer becomes the successor to the
Servicer or any claim of a third party based on any alleged action or inaction
of the terminated Servicer, (ii) no obligation to perform any advancing
obligations, if any, of the Servicer unless it elects to in its sole discretion,
(iii) no obligation to pay any taxes required to be paid by the Servicer
(provided that the Successor Servicer shall pay any income taxes for which it is
liable), (iv) no obligation to pay any of the fees and expenses of any other
party to the transactions contemplated hereby, and (v) no liability or
obligation with respect to any Servicer indemnification obligations of any prior
Servicer, including the original Servicer. The indemnification obligations of
the Successor Servicer, upon becoming a Successor Servicer, are expressly
limited to those arising on account of its failure to act in good faith and with
reasonable care under the circumstances. In addition, the Successor Servicer
shall have no liability relating to the representations and warranties of the
Servicer contained in Article IV.

(c) All authority and power granted to the Servicer under this Agreement shall
automatically cease and terminate upon termination of this Agreement and shall
pass to and be vested in the Borrower and, without limitation, the Borrower 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 Borrower in effecting the termination of the responsibilities
and rights of the Servicer to conduct servicing of the Collateral.

 

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(d) As compensation, any Successor Servicer (including, without limitation, the
Administrative Agent) so appointed shall be entitled to receive the Servicing
Fee, together with any other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided herein that accrued prior
thereto.

(e) Notwithstanding anything contained in this Agreement to the contrary, a
Successor Servicer if appointed as the 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, and such
Successor Servicer shall have no duty, responsibility, obligation or liability
for the acts and omissions of the prior Servicer. If any error, inaccuracy,
omission or incorrect or non-standard practice or procedure (collectively,
“Errors”) exist in any Predecessor Servicer Work Product and such Errors make it
materially more difficult to service or should cause or materially contribute to
the Successor Servicer making or continuing any Errors (collectively, “Continued
Errors”), such Successor Servicer shall have no duty, responsibility, obligation
or liability for such Continued Errors; provided that such Successor Servicer
agrees to use its best efforts to prevent further Continued Errors. In the event
that the Successor Servicer becomes aware of Errors or Continued Errors, it
shall, with the prior consent of the Administrative Agent, reconstruct and
reconcile such data as is commercially reasonable to correct such Errors and
Continued Errors and to prevent future Continued Errors. Such Successor Servicer
shall be entitled to recover its costs thereby expended in accordance with
Section 2.10 or Section 2.11, as applicable.

(f) In connection with the transfer of servicing, the Servicer agrees to
cooperate and use its best efforts in effecting the transition of the
responsibilities and rights of servicing of the Loans, including, without
limitation, the transfer to the Successor Servicer for the administration by it
of all cash amounts that shall at the time be held by Servicer for deposit, or
have been deposited by the Servicer, or thereafter received with respect to the
Loans and the delivery to the Successor Servicer in an orderly and timely
fashion of all files and records with respect to the Loans and a computer tape
in readable form containing all information necessary to enable the Successor
Servicer to service the Loans. In addition, the Servicer agrees to cooperate and
use its best efforts in providing at its expense to the Successor Servicer,
reasonable access (including at the premises of the Servicer) to Servicer’s
employees, and any and all of the books, records (in electronic or other form)
or other information reasonably requested by it to enable the Successor
Servicer, to assume the servicing functions hereunder.

 

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ARTICLE VII.

[RESERVED]

ARTICLE VIII.

THE TRUSTEE

Section 8.1. Designation of Trustee.

(a) Initial Trustee. The role of Trustee hereunder and under the other
Transaction Documents to which the Trustee is a party shall be conducted by the
Person designated as Trustee hereunder from time to time in accordance with this
Section 8.1. Until the Administrative Agent shall give to US Bank a Trustee
Termination Notice and the provisions of Section 8.5 have been satisfied, US
Bank is hereby designated as, and hereby agrees to perform the duties and
obligations of, Trustee pursuant to the terms hereof and of the other
Transaction Documents to which it, as Trustee, is a party.

(b) Successor Trustee. Upon the Trustee’s receipt of a Trustee Termination
Notice from the Administrative Agent of the designation and acceptance of
appointment of a successor Trustee pursuant to the provisions of Section 8.5,
the Trustee agrees that it will terminate its activities as Trustee hereunder.

(c) Secured Party. The Administrative Agent, the Lender Agents and the Lenders
hereby appoint US Bank, in its capacity as Trustee, as their trustee for
purposes of perfection of a security interest in the Collateral. US Bank, in its
capacity as Trustee, hereby accepts such appointment and agrees to perform the
duties set forth in Section 8.2(b) and (c).

Section 8.2. Duties of Trustee.

(a) Appointment. The Borrower and the Administrative Agent each hereby appoints
US Bank to act as Trustee for the benefit of the Secured Parties. The Trustee
hereby accepts such appointment and agrees to perform the duties and obligations
with respect thereto set forth herein and in the other Transaction Documents to
which it, as Trustee, is a party.

(b) Duties. Until its removal pursuant to Section 8.5, the Trustee shall perform
on behalf of the Administrative Agent and the Secured Parties the following
duties and obligations:

(i) The Trustee, as custodian hereunder, shall take and retain custody of the
Required Loan Documents delivered by the Borrower pursuant to Sections 3.2 and
3.3 hereof in accordance with the terms and conditions of this Agreement, all
for the benefit of the Secured Parties. Within five Business Days of its receipt
(excluding, for the avoidance of doubt, any Required Loan Documents in the
custody of the Trustee as of the Closing Date) of any Required Loan Documents,
the Trustee shall review the related Required Loan Documents (as identified on
the related Loan Checklist) to confirm that (A) such documents have been
properly executed and have no missing or mutilated pages, (B) as identified on
the Loan Checklist, there is evidence in the file that UCC and

 

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other filings (required by the Required Loan Documents) have been made, (C) if
listed on the Loan Checklist, an Insurance Policy exists with respect to any
real or personal property constituting the Related Property, and (D) the
original principal balance of such Loan, Loan number and Obligor name with
respect to such Loan is referenced on the related electronic file delivered with
such loan documents as specified below and is not a duplicate Loan (such items
(A) through (D) collectively, the “Review Criteria”). In order to facilitate the
foregoing review by the Trustee, in connection with each delivery of Required
Loan Documents hereunder to the Trustee, the Servicer shall provide to the
Trustee an electronic file (in EXCEL or a comparable format) that contains the
related Loan Checklist or that otherwise contains the Loan identification
number, the original principal balance of such Loan and the name of the Obligor
with respect to each related Loan. If, at the conclusion of such review, the
Trustee shall determine that (i) the original principal balance of each Loan for
which it has received Required Loan Documents is less than as set forth on the
electronic file, the Trustee shall immediately notify the Administrative Agent
and the Servicer of such discrepancy, and (ii) any Review Criteria are not
satisfied, the Trustee shall within one Business Day notify the Servicer of such
determination and provide the Servicer with a list of the non-complying Loans
and the applicable Review Criteria that they fail to satisfy. The Servicer shall
have five Business Days to correct any non-compliance with any Review Criteria.
In addition, if the Servicer does not cure any such non-compliance, it shall
provide a written request to the Trustee (such request subject to the approval
of the Administrative Agent) for the return by the Trustee to the Borrower of
any Loan which fails to satisfy any Review Criteria. Other than the foregoing,
the Trustee shall not have any responsibility for reviewing any Required Loan
Documents.

(ii) In taking and retaining custody of the Required Loan Documents, the Trustee
shall be deemed to be acting as the agent of the Administrative Agent and the
Secured Parties; provided that the Trustee makes no representations as to the
existence, perfection or priority of any Lien on the Required Loan Documents or
the instruments therein; and provided further that the Trustee’s duties as agent
shall be limited to those expressly contemplated herein.

(iii) All Required Loan Documents shall be kept in fire resistant vaults, rooms
or cabinets at the locations specified on Schedule III attached hereto, or at
such other office as shall be specified to the Administrative Agent and the
Servicer by the Trustee in a written notice delivered at least 45 days prior to
such change. All Required Loan Documents shall be placed together with an
appropriate identifying label and maintained in such a manner so as to permit
retrieval and access. All Required Loan Documents shall be clearly segregated
from any other documents or instruments maintained by the Trustee.

(iv) On each Reporting Date, the Trustee shall provide a written report to the
Administrative Agent and the Servicer (in a form acceptable to the
Administrative Agent) identifying each Loan for which it holds Required Loan
Documents, the non-complying Loans and the applicable Review Criteria that any
non-complying Loan fails to satisfy.

 

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(v) Prior to acquiring a Loan, the Borrower or the Servicer will provide the
Trustee with a Trade Ticket, together with the proposed form of Borrowing Notice
to be used in connection therewith.

(vi) Not later than 12:00 noon four Business Days following the related
Determination Date, the Servicer shall provide to the Administrative Agent and
the Trustee via e-mail certain asset level information, which shall include but
not be limited to the following information: (x) for each Loan, the name and
number of the related Obligor, the collection status, the loan status, the date
of each Scheduled Payment, as applicable, and the OLB, (y) the Borrowing Base
and (z) the Adjusted Borrowing Value and such other items as may reasonably be
expected in connection with the transactions contemplated by this Agreement.

(vii) Promptly after receipt thereof, the Trustee shall provide to the Servicer
a copy of all written notices and communications identified as being sent to it
in connection with the Collateral held hereunder which it receives from the
related Obligor or any other Person. In no instance shall the Trustee be under
any duty or obligation to take any action on behalf of the Servicer (or
Borrower) in respect of the exercise of any voting or consent rights, or similar
actions, unless it receives specific written instructions from the Servicer
(prior to the occurrence of a Termination Event) or the Administrative Agent
(after the occurrence of a Termination Event) in which event the Trustee shall
vote, consent or take such other action in accordance with such instructions.

(viii) In performing its duties, the Trustee shall use the same degree of care
and attention as it employs with respect to similar collateral that it holds as
Trustee for others.

(c) Additional Duties. Until its removal pursuant to Section 8.5 (after which
the successor Trustee shall perform the duties of the Trustee hereunder), the
Trustee shall perform, on behalf of the Borrower and the Servicer, the following
duties and obligations:

(i) No later than 11:00 a.m. on each Business Day, the Trustee shall deliver to
the Servicer either via e-mail or via the Trustee’s Internet website a daily
“cash availability report” which will detail all cash receipts with respect to
the Loans received as of the close of business of the prior Business Day,
identifying which portion thereof constitutes Interest Collections, which
portion thereof constitutes Principal Collections and any other amounts received
not classified as either Interest Collections or Principal Collections. No later
than the close of business on the Business Day the Servicer receives such a
daily cash availability report, the Servicer shall review the same and identify
any discrepancies between the cash receipts shown on the Trustee’s daily cash
availability report and the cash receipts relating to the Loans shown on the WSO
System. Thereafter the Trustee and the Servicer will cooperate to promptly
resolve any discrepancies.

(ii) The Trustee shall provide a list of all Required Loan Documents held in
custody by the Trustee pursuant to this Agreement to the Administrative Agent on
at least a monthly basis, either via e-mail or via the Trustee’s Internet
website.

 

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(iii) The Trustee shall maintain all necessary or appropriate records, operating
procedures and systems with respect to its express duties under this Agreement
and shall provide with reasonable promptness such additional reports and
information (which information is reasonably available to the Trustee) as may be
reasonably requested from time to time by the Servicer.

(iv) The Trustee shall make payments pursuant to the terms of the Servicing
Report in accordance with Section 2.10 and Section 2.11 (the “Payment Duties”).

(d) (i) Each of the Administrative Agent, each Lender Agent and each Secured
Party further authorizes the Trustee to take such action as Trustee hereunder
and to exercise such powers under this Agreement and the other Transaction
Documents as are delegated to the Trustee by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. In furtherance,
and without limiting the generality of the foregoing, each Secured Party hereby
appoints the Trustee (acting at the direction of the Administrative Agent) as
its agent to execute and deliver all further instruments and documents, and take
all further action that the Administrative Agent deems necessary in order to
perfect, protect or more fully evidence the security interests granted by the
Borrower hereunder, or to enable any of them to exercise or enforce any of their
respective rights hereunder, including, without limitation, the execution by the
Trustee as secured party/assignee of such financing or continuation statements,
or amendments thereto or assignments thereof, relative to all or any of the
Loans now existing or hereafter arising, and such other instruments or notices,
as may be necessary or appropriate for the purposes stated hereinabove. Nothing
in this Section 8.2(d)(i) shall be deemed to relieve the Servicer or Borrower of
its obligation to protect the interest of the Trustee (for the benefit of the
Secured Parties) in the Collateral, including to file financing and continuation
statements in respect of the Collateral in accordance with Section 5.4(e) or to
require the Administrative Agent or the Trustee to assume any of the obligations
of the Servicer or the Borrower.

(ii) The Administrative Agent may direct the Trustee to take any such incidental
action hereunder. With respect to other actions which are incidental to the
actions specifically delegated to the Trustee hereunder, the Trustee shall not
be required to take any such incidental action hereunder, but shall be required
to act or to refrain from acting (and shall be fully protected in acting or
refraining from acting) upon the direction of the Administrative Agent; provided
that the Trustee shall not be required to take any action hereunder if the
taking of such action, in the reasonable determination of the Trustee, (x) shall
be in violation of any Applicable Law or contrary to any provisions of this
Agreement or (y) shall expose the Trustee to liability hereunder or otherwise
(unless it has received an indemnity reasonably satisfactory to it with respect
thereto). In the event the Trustee requests the consent of the Administrative
Agent and the Trustee does not receive a response (either consenting or
declining to consent) from the Administrative Agent within 10 Business Days of
its receipt of such request, then the Administrative Agent shall be deemed to
have declined to consent to the relevant action.

(iii) Except as expressly provided herein, the Trustee shall not be under any
duty or obligation to take any affirmative action to exercise or enforce any
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right or remedy available to it under this Agreement or any of the Required Loan
Documents (x) unless and until expressly so directed by the Administrative Agent
or (y) prior to the occurrence of the Termination Date pursuant to clause (d) of
the definition of “Termination Date” (and upon such occurrence, the Trustee
shall act in accordance with the written instructions of the Administrative
Agent pursuant to clause (x)). The Trustee shall not be liable for any action
taken, suffered or omitted by it in accordance with the request or direction of
any Secured Party, to the extent that this Agreement provides such Secured Party
has the right to so direct the Trustee, or the Administrative Agent. The Trustee
shall not be deemed to have notice or knowledge of any matter hereunder,
including a Termination Event, unless a Responsible Officer of the Trustee has
knowledge of such matter or written notice thereof is received by the Trustee.

Section 8.3. Merger or Consolidation.

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

Section 8.4. Trustee Compensation.

As compensation for its Trustee activities hereunder, the Trustee shall be
entitled to a fee (the “Trustee Fee”) from the Servicer in accordance with the
Trustee Fee Letter. To the extent that such Trustee Fee is not paid by the
initial Servicer, the Trustee shall be entitled to receive the unpaid balance of
its Trustee Fee to the extent of funds available therefor pursuant to the
provision of Section 2.10 or Section 2.11, as applicable. The Trustee’s
entitlement to receive the Trustee Fee shall cease on the earlier to occur of:
(i) its removal as Trustee pursuant to Section 8.5 or (ii) the termination of
this Agreement.

Section 8.5. Trustee Removal.

The Trustee may be removed, with or without cause, by the Administrative Agent
by notice given in writing to the Trustee (the “Trustee Termination Notice”);
provided that, notwithstanding its receipt of a Trustee Termination Notice, the
Trustee shall continue to act in such capacity until a successor Trustee has
been appointed (with, so long as a Termination Event has not occurred and is not
continuing, the consent of the Borrower, such consent not to be unreasonably
withheld), has agreed to act as Trustee hereunder, has made the representations
and warranties contained in Section 4.4, and has received all Required Loan
Documents held by the previous Trustee.

Section 8.6. Limitation on Liability.

(a) The Trustee 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 Trustee
hereunder. Without limiting the generality of the foregoing, the Trustee, except
as expressly set forth herein, shall have no

 

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obligation to supervise, verify, monitor or administer the performance of the
Servicer or the Borrower. The Trustee may act through its agents, nominees,
attorneys and custodians (each selected with due care) in performing any of its
duties and obligations under this Agreement, it being understood by the parties
hereto that the Trustee 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 Trustee. Neither the
Trustee nor any of its officers, directors, employees or agents shall be liable,
directly or 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 willful misconduct of it or them or the failure to
perform materially in accordance with this Agreement.

(b) The Trustee shall not be liable for any obligation of the Servicer or the
Borrower contained in this Agreement or for any errors of the Servicer or the
Borrower contained in any computer tape, certificate or other data or document
delivered to the Trustee hereunder or on which the Trustee must rely in order to
perform its obligations hereunder, and the Secured Parties, the Administrative
Agent and the Trustee each agree to look only to the Servicer to perform such
obligations. The Trustee 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 its duties under this Agreement if such failure
or delay results from the Trustee acting in accordance with information prepared
or provided by a Person other than the Trustee or the failure of any such other
Person to prepare or provide such information. The Trustee 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 Trustee from
any third party, (iii) the invalidity or unenforceability of any Collateral
under Applicable Law, (iv) the breach or inaccuracy of any representation or
warranty made with respect to any Collateral, or (v) the acts or omissions of
any successor Trustee.

(c) The Trustee may conclusively rely on and shall be fully protected in acting
upon any certificate (including any Officer’s Certificate of the Servicer or the
Borrower), 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. The Trustee may rely
conclusively on and shall be fully protected in acting upon (i) the written
instructions of any designated officer of the Administrative Agent or (ii) the
verbal instructions of the Administrative Agent. The Trustee shall not be liable
for any action taken by it in good faith and reasonably believed by it to be
within the discretion or powers conferred upon it, or taken by it pursuant to
any direction or instruction by which it is governed hereunder, or omitted to be
taken by it by reason of the lack of direction or instruction required hereby
for such action.

(d) The Trustee 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.

(e) The Trustee 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

 

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willful misconduct or grossly negligent performance or omission of its duties
and in the case of the negligent performance of its Payment Duties and in the
case of its negligent performance of its duties in taking and retaining custody
of the Required Loan Documents.

(f) The Trustee 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 Collateral, and will not be
required to and will not make any representations as to the validity or value
(except as expressly set forth in this Agreement) of any of the Collateral. The
Trustee 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.

(g) The Trustee 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 Trustee.

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

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

(j) In case any reasonable question arises as to its duties hereunder, the
Trustee may, prior to the occurrence of a Termination Event or the Termination
Date, request instructions from the Servicer and may, after the occurrence of a
Termination Event or the Termination Date, request instructions from the
Administrative Agent, and shall be entitled at all times to refrain from taking
any action unless it has received instructions from the Servicer or the
Administrative Agent, as applicable, except where it would be grossly negligent
to do so. The Trustee shall in all events have no liability, risk or cost for
any action taken pursuant to and in compliance with the instruction of the
Administrative Agent. In no event shall the Trustee be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

(k) The Trustee shall not be liable for failing to perform or delay in
performing its specified duties hereunder which results from or is caused by a
failure or delay on the part of the Borrower or the Servicer or another Person
in furnishing necessary, timely and accurate information to the Trustee.

(l) The Trustee shall be without liability to the Borrower, Servicer or any
Secured Party for any damage or loss resulting from or caused by events or
circumstances beyond the Trustee’s reasonable control including nationalization,
expropriation, currency restrictions, the interruption, disruption or suspension
by any Governmental Authority of any securities market, power, mechanical,
communications or other technological failures or interruptions, computer
viruses or the like, fires, floods, earthquakes or other natural disasters,
civil and military disturbance, acts of war or terrorism, riots, revolution,
acts of God, work

 

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stoppages, strikes, national disasters of any kind, or other similar events or
acts; errors by the Servicer or any Secured Party in its instructions to the
Trustee; or changes in applicable law, regulation or orders.

Section 8.7. The Trustee Not to Resign.

The Trustee shall not resign from the obligations and duties hereby imposed on
it except upon the Trustee’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 the Trustee could take to make the performance of
its duties hereunder permissible under Applicable Law. Any such determination
permitting the resignation of the Trustee shall be evidenced as to clause
(i) above by an Opinion of Counsel to such effect delivered to the
Administrative Agent and each Lender Agent. No such resignation shall become
effective until a successor Trustee (which successor Trustee, so long as a
Termination Event has not occurred and is not continuing, shall be reasonably
acceptable to Borrower) shall have assumed the responsibilities and obligations
of the Trustee hereunder and has made the representations and warranties
contained in Section 4.4.

Section 8.8. Release of Documents.

(a) Release for Servicing. From time to time and as appropriate for the
enforcement or servicing of any of the Collateral, the Trustee is hereby
authorized (unless and until such authorization is revoked by the Administrative
Agent), upon written receipt from the Servicer of a request for release of
documents and receipt in the form annexed hereto as Exhibit H, to release to the
Servicer the related Required Loan Documents or the documents set forth in such
request and receipt to the Servicer. All documents so released to the Servicer
shall be held by the Servicer in trust for the Trustee for the benefit of the
Secured Parties in accordance with the terms of this Agreement. The Servicer
shall return to the Trustee the Required Loan Documents or other such documents
(i) immediately upon the request of the Administrative Agent, or (ii) 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 Trustee in the form annexed hereto as
Exhibit H, the Servicer’s request and receipt submitted pursuant to the first
sentence of this subsection shall be released by the Trustee to the Servicer.

(b) Limitation on Release. The foregoing provision respecting release to the
Servicer of the Required Loan Documents and documents by the Trustee upon
request by the Servicer shall be operative only to the extent that at any time
the Trustee shall not have released to the Servicer active Required Loan
Documents (including those requested) pertaining to more than 15 Loans at the
time being serviced by the Servicer under this Agreement. Any additional
Required Loan Documents or documents requested to be released by the Servicer
may be released only upon written authorization of the Administrative Agent
(other than with respect to the release of Required Loan Documents in connection
with Sections 2.19, 2.20 and 2.21). The limitations of this paragraph shall not
apply to the release of Required Loan Documents to the Servicer pursuant to the
immediately succeeding subsection.

(c) Release for Payment. Upon receipt by the Trustee of the Servicer’s request
for release of documents and receipt in the form annexed hereto as Exhibit H
(which

 

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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 Trustee shall promptly
release the related Required Loan Documents to the Servicer.

Section 8.9. Return of Required Loan Documents.

The Borrower may, with the prior written consent of the Administrative Agent
(such consent not to be unreasonably withheld and which consent shall not be
required in connection with the release of Required Loan Documents as specified
in Section 2.23), require that the Trustee return each Required Loan Document
(a) delivered to the Trustee in error, (b) as to which the lien on the Related
Property has been released pursuant to Section 9.2, or (c) that is required to
be redelivered to the Borrower in connection with the termination of this
Agreement, in each case by submitting to the Trustee and the Administrative
Agent a written request in the form of Exhibit H hereto (signed by both the
Borrower and the Administrative Agent (provided that the signature of the
Administrative Agent shall not be required in connection with the release of
Required Loan Documents as specified in Section 2.23)) specifying the Collateral
to be so returned and reciting that the conditions to such release have been met
(and specifying the Section or Sections of this Agreement being relied upon for
such release). The Trustee shall upon its receipt of each such request for
return executed by the Borrower and the Administrative Agent (when required to
be signed by the Administrative Agent) promptly, but in any event within five
Business Days, return the Required Loan Documents so requested to the Borrower.

Section 8.10. Access to Certain Documentation and Information Regarding the
Collateral; Audits.

The Trustee shall provide to the Administrative Agent and each Lender Agent
access to the Required Loan Documents and all other documentation regarding the
Collateral including in such cases where the Administrative Agent and each
Lender Agent is required in connection with the enforcement of the rights or
interests of the Secured Parties, 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 Trustee’s normal security and
confidentiality procedures. Prior to the Closing Date and periodically
thereafter at the discretion of the Administrative Agent and each Lender Agent,
the Administrative Agent and each Lender Agent may review the Servicer’s
collection and administration of the Collateral in order to assess compliance by
the Servicer with the Credit and Collection Policy and the Servicing Standard,
as well as with this Agreement and may conduct an audit of the Collateral and
Required Loan Documents in conjunction with such a review. Such review shall be
reasonable in scope and shall be completed in a reasonable period of time. Prior
to the occurrence of a Termination Event or an Unmatured Termination Event, the
Servicer shall be required to bear the expense of no more than two such reviews
within any 12-month period and any additional reviews shall be at the expense of
the Administrative Agent and each Lender Agent. On and after the occurrence of a
Termination Event or an Unmatured Termination Event, the Servicer shall be
required to bear the expense of all such reviews. Without limiting the foregoing
provisions of this Section 8.10, from time to time on request of the
Administrative Agent, the Trustee shall permit certified public accountants or
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acceptable to the Administrative Agent to conduct, at the Servicer’s expense, a
review of the Required Loan Documents and all other documentation regarding the
Collateral.

ARTICLE IX.

SECURITY INTEREST

Section 9.1. Grant of Security Interest.

(a) The Borrower hereby Grants to the Trustee, for the benefit of 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 Aggregate
Unpaids 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, including, without limitation,
all Aggregate Unpaids. The Trustee acknowledges such Grant, accepts the trust
hereunder in accordance with the provisions hereof and agrees to hold the
Collateral in trust as provided herein. The Grant of a security interest under
this Section 9.1 does not constitute and is not intended to result in a creation
or an assumption by the Trustee, the Administrative Agent, the Lender Agents,
any Hedge Counterparty or any of the 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, (a) the Borrower shall remain liable under the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Trustee, on behalf of the Secured Parties, of
any of its rights in the Collateral shall not release the Borrower from any of
its duties or obligations under the Collateral, and (c) none of the
Administrative Agent, the Lender Agents, any Hedge Counterparty or any Secured
Party shall have any obligations or liability under the Collateral by reason of
this Agreement, nor shall the Trustee, the Administrative Agent, the Lender
Agents, any Hedge Counterparty or any 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) Each of the Borrower, the Trustee, the Administrative Agent and the Lender
Agents, on behalf of the Secured Parties, hereby acknowledges and agrees that
the security interest Granted hereby in the Collateral constitutes continuing
collateral security for all of the obligations of the Borrower arising in
connection with this Agreement and each other Transaction Document, whether now
existing or hereafter arising.

(c) Each of the parties to this Agreement and each Hedge Counterparty (by its
acceptance of the benefits hereof) hereby acknowledges and agrees as follows:

(i) Each of the Administrative Agent, each Lender Agent and each other Secured
Party hereby transfers and assigns to the Trustee, for the benefit of the
Secured Parties, its entire right, title and interest in and to the Collateral
to the extent

 

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previously sold, transferred, assigned or conveyed by sale, Grant of a security
interest, or otherwise, to it on and after the Initial Closing Date to and
including the date of this Agreement so that the Trustee, on behalf of the
Secured Parties, shall have the benefit of a perfected security interest in the
Collateral and the Hedge Collateral from and including the date such Collateral
or Hedge Collateral, as applicable, first became Collateral or Hedge Collateral,
as applicable, hereunder to but excluding the date of the release of any such
Collateral or Hedge Collateral, as applicable, from the Lien of this Agreement
in accordance with this Agreement.

(ii) The Administrative Agent hereby transfers and assigns to the Trustee its
entire right, title and interest as Conduit Administrative Agent under the
Intercreditor Agreement.

(iii) To the extent any Transaction Document, Transfer Document or Required Loan
Document which refers to the Collateral and was delivered prior to the date of
this Agreement refers to the “Collateral Administrator” or “Collateral
Custodian” thereunder, such references are hereby deemed to refer to the Trustee
hereunder for all purposes hereunder or thereunder.

Section 9.2. Release of Lien on Collateral.

At the same time as (i) any 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 Loan becomes a Prepaid Loan in full and all
amounts in respect thereof have been paid in full by the related Obligor and
deposited in the Collection Account, (iii) any Loan is repurchased, substituted,
replaced or sold in accordance with Section 2.19, (iv) any Loan has been the
subject of an Optional Sale pursuant to Section 2.20, (v) any Loan has been the
subject of a Discretionary Sale pursuant to Section 2.21, or (vi) the earlier of
(a) the termination of the Facility Amount in whole pursuant to Section 2.5(a)
and (b) the Collection Date, the Trustee for the benefit of the Secured Parties
will, to the extent requested by the Servicer, release its interest in such
Collateral or contemporaneously release its interest in the Collateral as
provided herein upon completion of such substitution or deposit of the required
amounts into the Collection Account. In connection with any sale of such Related
Property, the Trustee for the benefit of the Secured Parties will after the
deposit of the Proceeds of such sale 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
of such Related Property; provided that the Trustee for the benefit of the
Secured Parties will make no representation or warranty, express or implied,
with respect to any such Related Property in connection with such sale or
transfer and assignment. Nothing in this section shall diminish the Servicer’s
obligations pursuant to Section 6.6 with respect to the Proceeds of any such
sale.

Section 9.3. Further Assurances.

The provisions of Section 13.12 shall apply to the security interest Granted
under Section 9.1 as well as to the Advances hereunder.

 

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Section 9.4. Remedies.

Upon the occurrence of a Termination Event, the Trustee, on behalf of the
Secured Parties, shall have, with respect to the Collateral granted pursuant to
Section 9.1, and in addition to all other rights and remedies available to the
Trustee, the Administrative Agent and Secured Parties under this Agreement or
other Applicable Law, all rights and remedies of a secured party upon default
under the UCC, subject to the provisions of Section 10.2(c) and 10.2(d).

Section 9.5. Waiver of Certain Laws.

Each of the Borrower and the Servicer agrees, to the fullest 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 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 purchasers 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 fullest 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 Trustee, on behalf of the Secured Parties, 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 Trustee, on behalf of the
Secured Parties, or such court may determine.

Section 9.6. Power of Attorney.

Each of the Borrower and the Servicer hereby irrevocably appoints the Trustee
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 Trustee, the
Administrative Agent or a Lender Agent, the Borrower shall ratify and confirm
any such sale or other disposition by executing and delivering to the Trustee
all proper bills of sale, assignments, releases and other instruments as may be
designated in any such request.

 

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ARTICLE X.

TERMINATION EVENTS

Section 10.1. Termination Events.

The following events shall be Termination Events (each, a “Termination Event”)
hereunder:

(a) the Borrower or the Originator defaults in making any payment required to be
made under an agreement for borrowed money to which it is a party in an
aggregate principal amount in excess of $500,000 in the case of the Borrower and
$5,000,000 in the case of the Originator and such default is not cured within
the applicable cure period, if any, provided for under such agreement; or

(b) any failure on the part of the Borrower or the Originator duly to observe or
perform in any material respect any other covenants or agreements of the
Borrower or the Originator set forth in this Agreement or the other Transaction
Documents to which the Borrower or the Originator is a party and the same
continues unremedied for a period of thirty days (if such failure can be
remedied) after the earlier 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
Borrower or the Originator by the Administrative Agent and (ii) the date on
which the Borrower or the Originator acquires knowledge thereof; or

(c) the occurrence of an Insolvency Event relating to the Borrower or the
Originator; or

(d) a Servicer Default (so long as NewStar Financial, Inc. is the Servicer)
occurs and is continuing for a period of two (2) days after expiration of the
applicable cure period, if any; or

(e) (1) the rendering of one or more final judgments, decrees or orders by a
court or arbitrator of competent jurisdiction for the payment of money in excess
individually or in the aggregate of $7,500,000, against the Originator, or
$500,000 against the Borrower, and the Borrower or the Originator, as
applicable, shall not have either (i) discharged or provided for the discharge
of any such judgment, decree or order in accordance with its terms or
(ii) perfected a timely appeal of such judgment, decree or order and caused the
execution of same to be stayed during the pendency of the appeal or (2) the
Originator or the Borrower shall have made payments of amounts by the Originator
in excess of $5,000,000, or by the Borrower in excess of $500,000, in the
settlement of any litigation, claim or dispute (excluding payments made from
insurance proceeds); or

(f) the Borrower shall cease to be an Affiliate of the Originator or shall fail
to qualify as a bankruptcy-remote entity based upon customary criteria such that
reputable counsel of national standing could no longer render a substantive
nonconsolidation opinion with respect thereto; or

 

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(g) (1) any Transaction Document, or any lien or security interest granted
thereunder, shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of the Borrower, the Originator, or the Servicer,

(2) the Borrower, the Originator or the Servicer shall, directly or indirectly,
contest in any manner the effectiveness, validity, binding nature or
enforceability of any Transaction Document or any lien or security interest
thereunder, or

(3) any security interest securing any obligation under any Transaction Document
shall, in whole or in part, cease to be a perfected first priority security
interest except as otherwise expressly permitted to be released in accordance
with the applicable Transaction Document; or

(h) the Borrower engages in any activities other than those related to the
Transaction Documents and the Collateral; or

(i) a Borrowing Base Deficiency exists and the same continues unremedied for
three Business Days (provided that if such Borrowing Base Deficiency is solely
the result of a decrease in the Assigned Value of a Loan by the Administrative
Agent pursuant to clause (b) of the definition of Assigned Value, the applicable
cure period shall be 10 Business Days); or

(j) an “Event of Default” which has resulted in an acceleration occurs under and
as defined in the Note Purchase Agreement, dated as of January 25, 2011, among
NewStar Equipment Finance I, LLC, as the borrower, NewStar Financial, Inc., as
the servicer and the originator, Wells Fargo Bank, National Association, as the
lender, the trustee and the backup servicer, and Wells Fargo Securities, LLC, as
the deal agent, as amended from time to time; or

(k) (i) failure of the Borrower to maintain at least one Independent Manager (it
being understood that the Borrower shall not be in violation of the requirement
to have at least one Independent Manager after the earlier of an Independent
Manager resigning or becoming deceased so long as a new Independent Manager is
appointed within 30 days after the Borrower has actual knowledge or receives
written notice thereof), (ii) the removal of any Independent Manager of the
Borrower without “cause” (as such term is defined in the organizational document
of the Borrower) or without giving prior written notice to the Administrative
Agent, each as required in the organizational documents of the Borrower or
(iii) an Independent Manager of the Borrower which is not provided by a
nationally recognized service reasonably acceptable to the Administrative Agent
shall be appointed without the consent of the Administrative Agent; or

(l) failure to pay all Aggregate Unpaids in full on the Termination Date; or

(m) failure on the part of the Borrower or Originator to make any payment or
deposit (including, without limitation, with respect to bifurcation and
remittance of Collections or any other payment or deposit required to be made
hereunder, including, without limitation, to any Secured Party, Affected Party
or Indemnified Party) required by the terms of any Transaction Document on the
day such payment or deposit is required to be made and the same continues
unremedied for two Business Days; or

 

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(n) the Borrower shall become required to register as an “investment company”
within the meaning of 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

(o) there shall exist any event or occurrence of which any Responsible Officer
of the Borrower shall have notice or knowledge, that has caused a Material
Adverse Effect; or

(p) the Internal Revenue Service shall file notice of a lien pursuant to
Section 6323 of the Code with regard to any assets of the Borrower or the
Originator and such lien shall not have been released within five Business Days,
or the Pension Benefit Guaranty Corporation shall file notice of a lien pursuant
to Section 4068 of ERISA with regard to any of the assets of the Borrower or the
Originator and such lien shall not have been released within five Business Days;
or

(q) any Change-in-Control shall occur; or

(r) any representation, warranty or certification made by the Borrower or the
Originator in any Transaction Document or in any certificate delivered pursuant
to any Transaction Document shall prove to have been incorrect when made, which
has a Material Adverse Effect on the Secured Parties and which continues to be
unremedied for a period of 30 days after the earlier 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 Borrower or the Originator by the Administrative
Agent and (ii) the date on which a Responsible Officer of the Borrower or the
Originator acquires knowledge thereof.

Section 10.2. Remedies.

(a) Upon the occurrence of a Termination Event (other than a Termination Event
described in Section 10.1(c)), the Administrative Agent shall, at the request
of, or may, with the consent of, any of the Lenders, by notice to the Borrower
(with a copy to the Trustee), declare the Termination Date to have occurred and
the Termination Period to have commenced.

(b) Upon the occurrence of a Termination Event described in Section 10.1(c), the
Termination Date shall occur immediately and the Termination Period shall
commence automatically.

(c) Subject to Section 10.2(i), upon the occurrence of any Termination Event
described in Section 10.1, no further Advances will be made, and the Trustee, on
behalf of the Secured Parties and at the direction of the Administrative Agent,
shall have, in addition to all of the rights and remedies under this Agreement
or otherwise, all other rights and remedies provided under the UCC of each
applicable jurisdiction and other Applicable Laws, in each case subject to
clause (ii) of this Section 10.2(c), and Sections 10.2(d) through (h), which
rights shall be cumulative. Without limiting the generality of the foregoing
sentence, the Trustee (at the direction of the Administrative Agent) or the
Administrative Agent may (i) require the Borrower and Servicer to, and the
Borrower and Servicer hereby agree that they will at the Servicer’s expense and
upon request of the Trustee or the Administrative Agent, forthwith assemble all
or any part of the Collateral as directed by the Trustee or the Administrative
Agent and make the

 

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same available to the Trustee or the Administrative Agent at a place to be
designated by the Trustee or the Administrative Agent and (ii) sell the
Collateral or any part thereof in one or more parcels at a public or private
sale subject to the requirements set forth in Sections 10.2(d) through (h).
Neither the Administrative Agent nor the Trustee (acting as directed by the
Administrative Agent) shall market, hold discussions with or otherwise prepare
or make arrangements for the sale of any part of the Collateral prior to sending
the notice specified in Section 10.2(d).

(d) The Trustee or the Administrative Agent shall provide at least 30 Business
Days’ prior notice to the Borrower and the Servicer of its intention to sell any
Collateral (a “Notice of Intended Sale”), but no such Notice of Intended Sale
shall be valid if given prior to the occurrence or declaration of a Termination
Event. During such 30 Business Day period, the Administrative Agent shall use
its commercially reasonable efforts to obtain Eligible Bids with respect to the
Collateral, subject to the Notice of Intended Sale. The delivery of a Notice of
Intended Sale shall not obligate or otherwise commit the Trustee or the
Administrative Agent to sell any Collateral.

(e) If the Trustee (acting as directed by the Administrative Agent) or the
Administrative Agent proposes to sell the Collateral or any part thereof in one
or more parcels at a public or private sale, at the request of the Trustee or
the Administrative Agent, as applicable, the Borrower and the Servicer shall
make available to each prospective bidder, on a timely basis, all reasonable
information relating to the Collateral subject to sale, including, without
limitation, copies of any disclosure documents, contracts, financial statements
of the applicable Obligors, covenant certificates and any other materials
reasonably requested by the Administrative Agent or such bidders; provided that
neither the Borrower nor the Servicer shall be required to disclose any
information which it is required by law or contract to keep confidential.

(f) At any time after the Borrower has received notice of a Termination Date
from the Administrative Agent and before the Collateral has been sold, the
Borrower may pay to the Trustee an amount equal to the Aggregate Unpaids, and,
once such payment is applied by the Trustee to reduce Aggregate Unpaids to $0,
the Collection Date shall have occurred.

(g) (i) If the Trustee (acting as directed by the Administrative Agent) or the
Administrative Agent elects to sell the Collateral in whole, but not in part, at
a public or private sale, the Borrower may exercise its right of first refusal
to repurchase the Collateral, in whole but not in part, prior to such sale at a
purchase price that is not less than the amount of Aggregate Unpaids as of the
date of such proposed sale. The Borrower’s right of first refusal shall
terminate not later than 4:00 p.m. on the Business Day following the Business
Day on which the Borrower receives notice of the Trustee’s or the Administrative
Agent’s election to sell such Collateral, such notice to attach copies of all
Eligible Bids received by the Trustee or the Administrative Agent in respect of
such Collateral.

(ii) If the Trustee (acting as directed by the Administrative Agent) or the
Administrative Agent elects to sell less than all of the Collateral in one or
more parcels at a public or private sale, the Borrower may exercise its right of
first refusal to repurchase such portion of the Collateral prior to such sale at
a purchase price of not less than highest Eligible Bid received in respect of
such portion of the Collateral as of the date of such proposed sale, as notified
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Borrower. The Borrower’s right of first refusal shall terminate not later than
4:00 p.m. on the Business Day on which the Borrower receives notice of the
Trustee’s or the Administrative Agent’s election to sell such portion of the
Collateral, if such notice is delivered by 12:00 noon on such Business Day;
provided that if such notice is delivered after 12:00 noon on the Business Day
on which the Borrower receives such notice, or if the highest Eligible Bid
received in respect of such portion of the Collateral is greater than
$25,000,000, the Borrower’s right of first refusal shall terminate not later
than 12:00 noon on the following Business Day.

(iii) If the Borrower elects not to exercise its right of first refusal as
provided in clauses (i) or (ii) above, the Trustee (acting as directed by the
Administrative Agent) or the Administrative Agent shall sell such Collateral or
portion thereof for a purchase price equal to the highest of the Eligible Bids
then received. For the avoidance of doubt, any determination of the highest
Eligible Bid shall only consider bids for the same parcels of Collateral.

(iv) It is understood that the Borrower may submit its bid for the Collateral or
any portion thereof as a combined bid with the bids of other members of a group
of bidders, and shall have the right to find bidders to bid on the Collateral or
any portion thereof.

(v) It is understood that the Borrower’s right of first refusal shall apply to
each proposed sale of the same parcel of Collateral.

(h) All Cash Proceeds received by the Trustee in respect of any sale of,
collection from, or other realization upon, all or any part of the Collateral
(after payment of any amounts incurred in connection with such sale) shall be
deposited into the Collection Account and be applied against all or any part of
the Aggregate Unpaids pursuant to Section 2.11 or otherwise in such order as the
Trustee, as directed by the Administrative Agent, shall elect in its discretion.

ARTICLE XI.

INDEMNIFICATION

Section 11.1. 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 Administrative
Agent, the Lender Agents, the Trustee, the Secured Parties, the Affected Parties
and each of their respective assigns and officers, directors, employees and
agents (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 the “Indemnified Amounts”) awarded
against or incurred by such Indemnified Party or any of them arising out of or
as a result of this Agreement or any interest in the Collateral or in respect of
any Loan included in the Collateral, excluding, however, Indemnified Amounts to
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misconduct on the part of such Indemnified Party. If the Borrower has made any
indemnity payment pursuant to this Section 11.1 and such payment fully
indemnified the recipient thereof and the recipient thereafter collects any
payments from others in respect of such Indemnified Amounts, then the recipient
shall repay to the Borrower an amount equal to the amount it has collected from
others in respect of such indemnified amounts. Without limiting the foregoing,
the Borrower shall indemnify each Indemnified Party for Indemnified Amounts
relating to or resulting from:

(i) any representation or warranty made or deemed made by the Borrower, the
Servicer (if the Originator or one of its Affiliates is the Servicer) or any of
their respective officers under or in connection with this Agreement or any
other Transaction Document, which shall have been false or incorrect in any
material respect when made or deemed made or delivered;

(ii) the failure by the Borrower or the Servicer (if the Originator or one of
its Affiliates is 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 Collateral or the
nonconformity of any Collateral with any such Applicable Law;

(iii) the failure to vest and maintain vested in the Trustee, for the benefit of
the Secured Parties, a perfected security interest in the Collateral, together
with all Collections, free and clear of any Lien (other than Permitted Liens)
whether existing at the time of any Advance or at any time thereafter;

(iv) the failure to maintain, as of the close of business on each Business Day
prior to the Termination Date, an amount of Advances Outstanding that is less
than or equal to the Maximum Availability on such Business Day;

(v) the failure to file, or any delay in filing, financing statements,
continuation 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 at any subsequent time;

(vi) any dispute, claim, offset or defense (other than the discharge in
bankruptcy of the Obligor) of the Obligor to the payment with respect to any
Collateral (including, without limitation, a defense based on the Collateral not
being a legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim related to such Collateral;

(vii) any failure of the Borrower or the Servicer (if the Originator or one of
its Affiliates is the Servicer) to perform its duties or obligations in
accordance with the provisions of this Agreement or any of the other Transaction
Documents to which it is a party or any failure by the Originator, the Borrower
or any Affiliate thereof to perform its respective duties under any Collateral;

(viii) the failure of any Concentration Account Bank to remit any amounts held
in a Concentration Account pursuant to the instructions of the Servicer or

 

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the Trustee (to the extent such Person is entitled to give such instructions in
accordance with the terms hereof and of the Intercreditor Agreement) whether by
reason of the exercise of set-off rights or otherwise;

(ix) any inability to obtain any judgment in, or utilize the court or other
adjudication system of, any state in which an Obligor may be located as a result
of the failure of the Borrower or the Originator to qualify to do business or
file any notice or business activity report or any similar report;

(x) any action taken by the Borrower or the Originator (in its capacity as
Servicer) in the enforcement or collection of any Collateral;

(xi) any products 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 any Related Property or Collateral;

(xii) any claim, suit or action of any kind arising out of or in connection with
Environmental Laws, including any vicarious liability;

(xiii) 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;

(xiv) except as required by the second sentence in Section 11.1(a) of this
Agreement and Section 2(c) of the Intercreditor Agreement, any repayment by the
Administrative Agent, the Lender Agents or a Secured Party of any amount
previously distributed in reduction of Advances Outstanding or payment of
Interest or any other amount due hereunder or under any Hedging Agreement, in
each case which amount the Administrative Agent, the Lender Agents or a Secured
Party believes in good faith is required to be repaid;

(xv) except for funds held in the Concentration Account, the commingling of
Collections on the Collateral at any time with other funds;

(xvi) any investigation, litigation or proceeding related to this Agreement or
the use of proceeds of Advances or the Collateral;

(xvii) any failure by the Borrower to give reasonably equivalent value to the
Originator or, at the direction of the Originator, the applicable third party
transferor, in consideration for the transfer to the Borrower of any item of
Collateral 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;

(xviii) the use of the proceeds of any Advance in a manner other than as
provided in this Agreement and the Sale Agreement;

 

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(xix) the failure of the Borrower, the Originator or any of their respective
agents or representatives to remit to the Servicer or the Trustee, on behalf of
the Secured Parties, Collections on the Collateral remitted to the Borrower, the
Originator, the Servicer or any such agent or representative as provided in this
Agreement; or

(xx) 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 11.1
shall be paid by the Borrower to the Indemnified Party within five Business Days
following such Person’s demand therefor.

(c) If for any reason the indemnification provided above in this Section 11.1 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 11.1 shall survive the
resignation or removal of the Administrative Agent, the Lender Agents, the
Servicer or the Trustee and the termination of this Agreement.

Section 11.2. 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 Document, any Servicing Report, any 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 this 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. The parties agree
that the provisions of this Section 11.2 shall not be interpreted to provide
recourse to the Servicer against loss by reason of the bankruptcy, insolvency or
lack of creditworthiness of an Obligor with respect to any Loan. The provisions
of this indemnity shall run directly to and be enforceable by an injured party
subject to the limitations hereof.

 

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(b) Any amounts subject to the indemnification provisions of this Section 11.2
shall be paid by the Servicer to the Indemnified Party within five Business Days
following such Person’s demand therefor.

(c) The Servicer shall have no liability for making indemnification hereunder to
the extent any such indemnification constitutes recourse for uncollectible or
uncollected Loans.

(d) The obligations of the Servicer under this Section 11.2 shall survive the
resignation or removal of the Administrative Agent, the Lender Agents or the
Trustee and the termination of this Agreement.

(e) Any indemnification pursuant to this Section 11.2 shall not be payable from
the Collateral.

Section 11.3. After-Tax Basis.

Indemnification under Section 11.1 and Section 11.2 shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the receipt of the indemnity provided
hereunder, including the effect of such tax or refund on the amount of tax
measured by net income or profits that is or was payable by the Indemnified
Party.

ARTICLE XII.

THE ADMINISTRATIVE AGENT

AND LENDER AGENTS

Section 12.1. The Administrative Agent.

(a) Appointment. Each Lender Agent and each Secured Party hereby appoints and
authorizes the Administrative Agent as its agent hereunder and hereby further
authorizes the Administrative Agent to appoint additional agents to act on its
behalf and for the benefit of each of the Lender Agents and each Secured Party.
Each Lender Agent and each Secured Party further authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Transaction Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto. In furtherance, and without limiting the
generality of the foregoing, each Secured Party hereby appoints the
Administrative Agent as its agent to execute and deliver all further instruments
and documents, and take all further action, that the Administrative Agent may
deem necessary or appropriate or that a Secured Party may reasonably request in
order to perfect, protect or more fully evidence the security interests granted
by the Borrower hereunder, or to enable any of them to exercise or enforce any
of their respective rights hereunder, including, without limitation, the
direction of the execution by the Trustee as secured party/assignee of such
financing or continuation statements, or amendments thereto or assignments
thereof, relative to all or any of the Collateral now existing or hereafter
arising, and such other instruments or notices, as may be necessary or
appropriate for the purposes stated hereinabove. Notwithstanding any provision
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in this Agreement or in any other Transaction Document, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set forth
in this Agreement, nor shall the Administrative Agent have or be deemed to have
any fiduciary relationship with any Lender or Lender Agent, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Transaction Document or otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” in this Agreement with reference
to the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any Applicable
Law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

(b) Standard of Care; Delegation of Duties. The Administrative Agent shall
exercise such rights and powers vested in it by this Agreement and the other
Transaction Documents, and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person’s own affairs. The Administrative Agent may execute
any of its duties under this Agreement or any other Transaction Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.

(c) Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Administrative Agent under
or in connection with this Agreement or any of the other Transaction Documents,
except for its or their own gross negligence or willful misconduct. Each Secured
Party hereby waives any and all claims against the Administrative Agent or any
of its Affiliates for any action taken or omitted to be taken by the
Administrative Agent or any of its Affiliates under or in connection with this
Agreement or any of the other Transaction Documents, except for its or their own
gross negligence or willful misconduct. Without limiting the foregoing, the
Administrative Agent: (i) may consult with legal counsel (including counsel for
the Borrower or the Originator), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no warranty or representation and shall not
be responsible for any statements, warranties or representations made in or in
connection with this Agreement; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any of the other Transaction Documents on the
part of the Borrower, the Originator, or the Servicer or to inspect the property
(including the books and records) of the Borrower, the Originator, or the
Servicer; (iv) shall not be responsible for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any of the other Transaction Documents or any other instrument or document
furnished pursuant hereto or thereto; and (v) shall incur no liability under or
in respect of this Agreement or any of the other Transaction Documents by acting
upon any notice (including notice by telephone), consent, certificate or other
instrument or writing (which may be by facsimile) believed by it to be genuine
and signed or sent by the proper party or parties.

 

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(d) Actions by Administrative Agent. The Administrative Agent shall 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 the Lenders as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Transaction Document in accordance with a request or consent of the
Lenders; provided, that, notwithstanding anything to the contrary herein, the
Administrative Agent shall not be required to take any action hereunder if the
taking of such action, in the reasonable determination of the Administrative
Agent, shall be in violation of any Applicable Law or contrary to any provision
of this Agreement or shall expose the Administrative Agent to liability
hereunder or otherwise. In the event the Administrative Agent requests the
consent of a Lender pursuant to the foregoing provisions and the Administrative
Agent does not receive a consent (either positive or negative) from such Person
within ten Business Days of such Person’s receipt of such request, then such
Lender shall be deemed to have declined to consent to the relevant action.

(e) Notice of Termination Event, Unmatured Termination Event or Servicer
Default. The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of a Termination Event, Unmatured Termination Event or
Servicer Default, unless the Administrative Agent has received written notice
from a Lender, Lender Agent, the Borrower or the Servicer referring to this
Agreement, describing such Termination Event, Unmatured Termination Event or
Servicer Default and stating that such notice is a “Notice of Termination
Event,” “Notice of Unmatured Termination Event” or “Notice of Servicer Default,”
as applicable. The Administrative Agent shall (subject to Section 12.1(c)) take
such action with respect to such Termination Event, Unmatured Termination Event
or Servicer Default as may be requested by the Lenders or as the Administrative
Agent shall deem advisable or in the best interest of the Lenders.

(f) Credit Decision with Respect to the Administrative Agent. Each Lender Agent
and Secured Party acknowledges that none of the Administrative Agent or any of
its Affiliates has made any representation or warranty to it, and that no act by
the Administrative Agent hereinafter taken, including any consent to and
acceptance of any assignment or review of the affairs of the Borrower, the
Servicer or any of their respective Affiliates or review or approval of any of
the Collateral, shall be deemed to constitute any representation or warranty by
any of the Administrative Agent or its Affiliates to any Lender as to any
matter, including whether the Administrative Agent has disclosed material
information in its possession. Each Lender and Secured Party acknowledges that
it has, independently and without reliance upon the Administrative Agent, or any
of the Administrative Agent’s Affiliates, and based upon such documents and
information as it has deemed appropriate, made its own evaluation and decision
to enter into this Agreement and the other Transaction Documents to which it is
a party. Each Lender Agent and Secured Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent, or any of the
Administrative Agent’s Affiliates, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement and the other Transaction
Documents to which it is a party. Each Secured Party hereby agrees that the
Administrative Agent shall not have any duty or responsibility to provide any
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any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrower, the
Servicer or their respective Affiliates which may come into the possession of
the Administrative Agent or any of its Affiliates.

(g) Indemnification of the Administrative Agent. Each Lender Agent and Lender
agrees to indemnify the Administrative Agent (to the extent not reimbursed by
the Borrower or the Servicer), ratably in accordance with its Pro-Rata Share,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Administrative Agent in any way relating to or arising out of this
Agreement or any of the other Transaction Documents, or any action taken or
omitted by the Administrative Agent hereunder or thereunder; provided that the
Lender Agents shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent’s gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender Agent and Lender agrees to reimburse the Administrative Agent, ratably in
accordance with its Pro-Rata Share, promptly upon demand for any out-of-pocket
expenses (including counsel fees) incurred by the Administrative Agent in
connection with the administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and the
other Transaction Documents, to the extent that such expenses are incurred in
the interests of or otherwise in respect of the Lender Agents or the Lenders
hereunder and/or thereunder and to the extent that the Administrative Agent is
not reimbursed for such expenses by the Borrower or the Servicer.

(h) Successor Administrative Agent. The Administrative Agent may resign at any
time, effective upon the appointment and acceptance of a successor
Administrative Agent as provided below, by giving at least five days’ written
notice thereof to each Lender Agent and the Borrower and may be removed at any
time with cause by the Lender Agents acting jointly. Upon any such resignation
or removal, the Lender Agents acting jointly shall appoint a successor
Administrative Agent. Each Lender Agent agrees that it shall not unreasonably
withhold or delay its approval of the appointment of a successor Administrative
Agent. If no such successor Administrative Agent shall have been so appointed,
and shall have accepted such appointment, within 30 days after the retiring
Administrative Agent’s giving of notice of resignation or the removal of the
retiring Administrative Agent, then the retiring Administrative Agent may, on
behalf of the Secured Parties, appoint a successor Administrative Agent which
successor Administrative Agent shall be either (i) a commercial bank organized
under the laws of the United States or of any state thereof and have a combined
capital and surplus of at least $50,000,000 or (ii) an Affiliate of such a bank.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Administrative Agent’s resignation or removal hereunder as
Administrative Agent, the provisions of this Article XII shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.

 

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(i) Payments by the Administrative Agent. Unless specifically allocated to a
specific Lender Agent pursuant to the terms of this Agreement, all amounts
received by the Administrative Agent on behalf of the Lender Agents shall be
paid by the Administrative Agent to the Lender Agents in accordance with their
respective Pro-Rata Shares in the applicable Advances Outstanding or, if there
are no Advances Outstanding, in accordance with the most recent applicable
Commitment, on the Business Day received by the Administrative Agent, unless
such amounts are received after 12:00 noon on such Business Day, in which case
the Administrative Agent shall use its reasonable efforts to pay such amounts to
each Lender Agent on such Business Day, but, in any event, shall pay such
amounts to such Lender Agent not later than the following Business Day.

Section 12.2. Lender Agents.

(a) Authorization and Action. Each Lender hereby designates and appoints its
related 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. No Lender Agent
shall have any duties or responsibilities, except those expressly set forth
herein or in any other Transaction Document, or any fiduciary relationship with
such 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, each Lender Agent shall act solely as
agent for the 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, the Servicer or any other Lender. No Lender Agent shall 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 of each Lender Agent hereunder shall terminate
upon the indefeasible payment in full of all Aggregate Unpaids.

(b) Delegation of Duties. Any Lender Agent 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. No Lender Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

(c) Exculpatory Provisions. No 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 any
Lender for any recitals, statements, representations or warranties made by the
Borrower or the Servicer contained in any 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
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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. No Lender Agent shall be under
any obligation to any 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. No Lender Agent
shall 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 Lenders.

(d) Reliance by Lender Agents. Each Lender 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 such Lender Agent. Each
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 the related Lender as it deems
appropriate and it shall first be indemnified to its satisfaction by such
Lender; provided that unless and until such Lender Agent shall have received
such advice, the Lender Agent may take or refrain from taking any action, as the
Lender Agent shall deem advisable and in the best interests of its related
Lenders. Each Lender Agent shall in all cases be fully protected in acting, or
in refraining from acting, in accordance with a request of the related Lenders,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon such Lenders.

(e) Non-Reliance on Lender Agents. Each Lender 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 Lender represents and warrants to the related Lender Agent
that it has made and will make, independently and without reliance upon such
Lender Agent, such Lender and based on such documents and information as it has
deemed appropriate, its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Borrower and 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 Individual Capacity. Each Lender Agent 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, each 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 the terms “Lender,”
and “Lenders,” shall include the Lender Agent in its individual capacity.

(g) Successor Lender Agents. Each Lender Agent may, upon five days’ notice to
the Borrower, and its related Lenders, and such Lender Agent will, upon the
direction

 

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of such related Lenders, resign as Lender Agent. If any Lender Agent shall
resign, then the related Lenders during such five day period shall appoint a
successor agent. If for any reason no successor Lender Agent is appointed by the
related Lenders 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
Aggregate Unpaids directly to such Lenders, and for all purposes shall deal
directly with such Lenders. 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 XIII.

MISCELLANEOUS

Section 13.1. Amendments and Waivers.

Except as provided in this Section 13.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective without the
written agreement of the Borrower, the Servicer, the Administrative Agent and
each of the Lenders; provided that no such amendment, waiver or modification
adversely affecting the rights or obligations of the Trustee or 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. The Borrower or the Servicer on its behalf
will deliver a copy of all amendments, waivers and modifications to the Trustee.

Section 13.2. Notices, Etc.

All notices, reports and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including communication by email
and facsimile copy) and mailed, e-mailed, faxed, transmitted or delivered, as to
each party hereto, at its address set forth on Annex A to this Agreement 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 email, when verbal or electronic communication of receipt is
obtained, or (c) notice by facsimile copy, when verbal communication of receipt
is obtained.

Section 13.3. Ratable Payments.

If any Secured Party, whether by setoff or otherwise, has payment made to it
with respect to any portion of the Aggregate Unpaids owing to such Secured Party
(other than payments received pursuant to Section 11.1) in a greater proportion
than that received by any other Secured Party, such Secured Party agrees,
promptly upon demand, to purchase for Cash without recourse or warranty a
portion of the Aggregate Unpaids held by the other Secured Parties so that after
such purchase each Secured Party will hold its ratable proportion of the
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Secured Party, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.

 

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Section 13.4. No Waiver; Remedies.

No failure on the part of the Administrative Agent, the Trustee or 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 13.5. Binding Effect; Benefit of Agreement.

This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Servicer, the Administrative Agent, the Trustee, the Secured Parties and
their respective successors and permitted assigns. Each Affected Party and each
Indemnified Party shall be an express third party beneficiary of this Agreement.

Section 13.6. Term of this Agreement.

This Agreement, including, without limitation, the Borrower’s representations
and covenants set forth in Articles IV and V, and the Servicer’s
representations, covenants and duties set forth in Articles VI and VIII, create
and constitute the continuing obligation of the parties hereto in accordance
with its terms, and shall remain in full force and effect until the Collection
Date; provided that the rights and remedies with respect to any breach of any
representation and warranty made or deemed made by the Borrower or the Servicer
pursuant to Articles III and IV, the indemnification and payment provisions of
Article XI and the provisions of Section 13.9, Section 13.10 and Section 13.11,
shall be continuing and shall survive any termination of this Agreement.

Section 13.7. Governing Law; Consent to Jurisdiction; Waiver of Objection to
Venue, Service of Process.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
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 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.

Each of the Borrower and the Servicer agrees that service of process may be
effected by mailing a copy thereof by registered or certified mail, postage
prepaid, to the Borrower or the Servicer, as applicable, at its address
specified in Annex A to this Agreement or at such other address as the
Administrative Agent shall have been notified in accordance herewith. Nothing in
this Section 13.7 shall affect the right of the Lenders or the Administrative
Agent to serve legal process in any other manner permitted by law.

 

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Section 13.8. Waiver of Jury Trial.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO AND EACH
HEDGE COUNTERPARTY HEREBY 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.

Section 13.9. Costs, Expenses and Taxes.

(a) In addition to the rights of indemnification granted to the Indemnified
Parties under Article XI hereof, the Borrower agrees to pay on demand (or, if
the Borrower does not pay such amounts, the Servicer shall pay on demand) all
reasonable costs and expenses of the Administrative Agent, the Trustee and the
Secured Parties incurred in connection with the preparation, execution,
delivery, administration (including periodic auditing), renewal, 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 Administrative
Agent, the Trustee and the Secured Parties with respect thereto and with respect
to advising the Administrative Agent, the Trustee and the 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 reasonable costs and expenses, if any (including
reasonable counsel fees and expenses), incurred by the Administrative Agent, the
Trustee or the Secured Parties in connection with the enforcement of this
Agreement by such Person and the other documents to be delivered hereunder or in
connection herewith (including any Hedging Agreement).

(b) The Borrower shall pay on demand (or, if the Borrower does not pay such
amounts, the Servicer shall pay on demand) any and all stamp, sales, excise and
other Taxes and fees payable or determined to be payable to any Governmental
Authority in connection with the execution, delivery, filing and recording of
this Agreement, the other documents to be delivered hereunder or any 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 hereunder.

(c) The Borrower shall pay on demand (or, if the Borrower does not pay such
amounts, the Servicer shall pay on demand) all other reasonable costs, expenses
and Taxes (excluding income taxes) incurred by the Administrative Agent, the
Trustee, the Lender Agents and the Secured Parties (“Other Costs”) under or in
connection with this Agreement, including, without limitation, all costs and
expenses incurred by the Administrative Agent and the Lender Agents in
connection with periodic audits of the Borrower’s, the Originator’s or the
Servicer’s books and records.

 

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Section 13.10. No Proceedings.

(a) Each of the parties hereto and each Hedge Counterparty (by accepting the
benefits of this Agreement) hereby agrees that it will not institute against, or
join any other Person in instituting against, any Conduit Lender, the
Administrative Agent, or any Liquidity Banks any Insolvency Proceeding so long
as any commercial paper issued by the applicable Conduit Lender shall be
outstanding and there shall not have elapsed one year and one day since the last
day on which any such commercial paper shall have been outstanding.

(b) Each of the parties hereto (other than the Administrative Agent with the
consent of the Lender Agents) 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 and one day since
the Collection Date.

Section 13.11. 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 any party hereto 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 administrator of any such Person,
or any incorporator, affiliate, stockholder, member, manager, officer, employee
or director of any such Person by the enforcement of any assessment or by any
legal or equitable proceeding, by virtue of any statute or otherwise; it being
expressly agreed and understood that the agreements of each of the parties
hereto contained in this Agreement and all of the other agreements, instruments
and documents entered into by it pursuant hereto or in connection herewith are,
in each case, solely the corporate or limited liability company obligations of
such Person and that no personal liability whatsoever shall attach to or be
incurred by any administrator of any such Person or any incorporator,
stockholder, affiliate, member, manager, officer, employee or director of any
such Person under or by reason of any of the obligations, covenants or
agreements of such Person contained in this Agreement or in any other such
instruments, documents or agreements, or that are implied therefrom, and that
any and all personal liability of every such administrator of any such Person
and each incorporator, stockholder, affiliate, member, manager, officer,
employee or director of any such Person or any of them, for breaches by any such
Person of any such obligations, covenants or agreements, which liability may
arise either at common law or at equity, by statute or constitution, or
otherwise, is hereby expressly waived as a condition of and in consideration for
the execution of this Agreement

(b) Notwithstanding anything in this Agreement to the contrary, no Conduit
Lender shall have any obligation to pay any amount required to be paid by it
hereunder 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 a Conduit Lender hereunder are contingent on the availability of
funds in excess of the amounts necessary to pay its Commercial Paper Notes; and
each of the other parties hereto agrees that it will not have a claim under
Section 101(5) of the Bankruptcy Code if and to the extent that any such payment
obligation owed to it by such Conduit Lender exceeds the amount available to
such Conduit

 

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Lender to pay such amount after paying or making provision for the payment of
its Commercial Paper Notes.

(c) Notwithstanding any contrary provision set forth herein, no claim may be
made by the Borrower, the Originator or the Servicer or any other Person against
the Administrative Agent, the Secured Parties or the Trustee or their respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect, consequential or punitive damages in respect to any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Borrower, the Originator and the
Servicer each hereby waives, releases, and agrees not to sue upon any claim for
any such damages, whether or not accrued and whether or not known or suspected.

(d) No obligation or liability to any Obligor under any of the Loans is intended
to be assumed by the Trustee, the Administrative Agent or any Secured Party
under or as a result of this Agreement and the transactions contemplated hereby.

(e) The provisions of this Section 13.11 shall survive the termination of this
Agreement.

Section 13.12. Protection of Right, Title and Interest in the Collateral;
Further Action Evidencing Advances.

(a) The Servicer shall cause all financing statements and continuation
statements and any other necessary documents perfecting the security and
interest of the Trustee, for the benefit of the Secured Parties, in the
Collateral to be promptly recorded, registered and filed, and at all times 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 perfection and priority
of the security interest of the Trustee, for the benefit of the Secured Parties,
in all property comprising the Collateral. The Servicer shall deliver to the
Administrative Agent and the Trustee 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 shall
cooperate fully with the Servicer in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill the
intent of this Section 13.12(a).

(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
the Administrative Agent may reasonably request in order to perfect, protect or
more fully evidence the Advances hereunder and the security interest granted in
the Collateral, or to enable the Administrative Agent or the Trustee, for the
benefit of the Secured Parties, to exercise and enforce their rights and
remedies hereunder or under any Transaction Document.

(c) If the Borrower or the Servicer fails to perform any of its obligations
hereunder, the Administrative Agent or any Secured Party may (but shall not be
required to) perform, or cause performance of, such obligation; and the
Administrative Agent’s or such Secured Party’s costs and expenses incurred in
connection therewith shall be payable by the Borrower as provided in Article XI.
The Borrower irrevocably authorizes the Administrative

 

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Agent and appoints the Administrative 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 Administrative Agent’s
sole discretion to perfect and to maintain the perfection and priority of the
security interest of the Trustee, for the benefit 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 Administrative Agent in its sole
discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the security interest of the Trustee, for the benefit
of the Secured Parties, in the Collateral. This appointment is coupled with an
interest and is irrevocable.

(d) Without limiting the generality of the foregoing, Borrower will, not earlier
than six months and not later than three months prior to the fifth anniversary
of the date of filing of the financing statement referred to in Section 3.1 or
any other financing statement filed pursuant to this Agreement or in connection
with any Advance hereunder, unless the Collection Date shall have occurred:

(i) deliver and file or cause to be filed an appropriate continuation statement
with respect to such financing statement; and

(ii) deliver or cause to be delivered to the Administrative Agent an opinion of
the counsel for Borrower, in form and substance reasonably satisfactory to the
Administrative Agent, confirming and updating the opinion delivered pursuant to
Section 3.1 with respect to perfection and otherwise to the effect that the
security interest hereunder continues to be an enforceable and perfected
security interest, 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 13.13. Confidentiality.

(a) Each of the Administrative Agent, the Secured Parties, the Servicer, the
Trustee and the Borrower shall maintain and shall cause each of its employees
and officers to maintain the confidentiality of the Agreement and all
information with respect to the other parties, including all information
regarding the Borrower and the Servicer 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 Loans contemplated
herein and the agents of such Persons (“Excepted Persons”); provided that each
Excepted Person shall, as a condition to any such disclosure, agree for the
benefit of the Administrative Agent, the Secured Parties, the Servicer, the
Trustee and the Borrower that such information shall be used solely in
connection with such Excepted Person’s evaluation of, or relationship with, the
Borrower and its affiliates, (ii) disclose the existence of the Agreement, but
not the financial terms thereof, (iii) disclose such information as is required
by Applicable Law and (iv) disclose this 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 for the

 

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purpose of defending itself, reducing its liability, or protecting or exercising
any of its claims, rights, remedies, or interests under or in connection with
any of the Transaction Documents. It is understood that the financial terms that
may not be disclosed except in compliance with this Section 13.13(a) include,
without limitation, all fees and other pricing terms, and all Termination
Events, Servicer Defaults, and priority of payment provisions.

(b) Anything herein to the contrary notwithstanding, the Borrower and the
Servicer each hereby consents to the disclosure of any nonpublic information
with respect to it (i) to the Administrative Agent, the Trustee or the Secured
Parties by each other, (ii) by the Administrative Agent, the Trustee and the
Secured Parties to any prospective or actual assignee or participant of any of
them provided such Person agrees to hold such information confidential, or
(iii) by the Administrative Agent, and the Secured Parties to any commercial
paper dealer or provider of a surety, guaranty or credit, liquidity or first
loss enhancement to any Lender or any Person providing financing to, or holding
equity interests in, any Lender, as applicable, 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. In
addition, the Secured Parties and the Administrative Agent may disclose any such
nonpublic information as required pursuant to any law, rule, regulation,
direction, request or order of any judicial, administrative or regulatory
authority or proceedings (whether or not having the force or effect of law).

(c) Notwithstanding anything herein to the contrary, the foregoing shall not be
construed to prohibit (i) disclosure of any and all information that is or
becomes publicly known; (ii) disclosure of any and all information (a) if
required to do so by any applicable statute, law, rule or regulation, (b) to any
government agency or regulatory body having or claiming authority to regulate or
oversee any respects of the Administrative Agent’s, the Secured Parties’, the
Trustee’s, the Servicer’s or the Borrower’s business or that of their
affiliates, (c) pursuant to any subpoena, civil investigative demand or similar
demand or request of any court, regulatory authority, arbitrator or arbitration
to which the Administrative Agent, the Secured Parties, the Trustee, the
Servicer or the Borrower or an officer, director, employer, shareholder or
affiliate of any of the foregoing is a party, (d) in any preliminary or final
offering circular, registration statement or contract or other document approved
in advance by the Borrower, the Servicer or the Originator or (e) to any
affiliate, independent or internal auditor, agent, employee or attorney of the
Trustee having a need to know the same, provided that the Trustee advises such
recipient of the confidential nature of the information being disclosed; or
(iii) any other disclosure authorized by the Borrower, Servicer or Originator.

Section 13.14. Execution in Counterparts; Severability; Integration.

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts (including by facsimile), 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, the other Transaction Documents and any agreements or letters
(including fee letters) executed in connection herewith contain the final

 

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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.

Section 13.15. Waiver of Setoff.

Each of the parties hereto hereby waives any right of setoff it may have or to
which it may be entitled under this Agreement from time to time against any
Lender or its assets.

Section 13.16. Assignments.

(a) With the prior written consent of the Borrower (which consent shall not be
unreasonably withheld), each Lender may at any time assign, grant a security
interest or sell a participation interest in such Lender’s rights and
obligations hereunder and interest herein in whole or in part and/or any Advance
(or portion thereof) or any VFN (or any portion thereof) to any Person rated
“A2” or higher by Moody’s or “A” or higher by S&P; provided that (i) no transfer
of any Advance (or any portion thereof) or of any VFN (or any portion thereof)
shall be made unless such transfer is exempt from the registration requirements
of the Securities Act and any applicable state securities laws or is made in
accordance with the Securities Act and such laws, and is made only to either an
“accredited investor” as defined in paragraphs (a)(1), (2), (3), or (7) of Rule
501 of Regulation D under the Securities Act (or any entity in which all of the
equity owners are entities described within such paragraphs) or to a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act,
(ii) following the occurrence of a Termination Event, no such consent of the
Borrower shall be required and the Person to whom the Lender assigns, grants a
security interest or sells a participation interest of any Advance (or portion
thereof) or VFN (or portion thereof) shall not be required to meet the
aforementioned rating threshold of “A2” or higher by Moody’s or “A” or higher by
S&P, (iii) in the case of an assignment of any Advance (or any portion thereof)
or of any VFN (or of any portion thereof), the assignee executes and delivers to
the Servicer, the Borrower and the Administrative Agent a fully executed
Transferee Letter substantially in the form of Exhibit J hereto (a “Transferee
Letter”), (iv) any Lender may assign or participate all or a portion of its
interests hereunder or under its VFN without the consent of the Borrower to any
Person rated “A2” or higher by Moody’s or “A” or higher by S&P upon such
Lender’s good faith determination that such assignment or participation is
required for regulatory reasons, (v) no Conduit or Lender shall need prior
consent of the Borrower to assign, grant a security interest in, sell a
participation interest in any Advance (or portion thereof) or any VFN (or
portion thereof) to a Liquidity Bank, an Affiliate or its related Lender Agent
and (vi) no Lender shall need prior written consent of the Borrower to assign,
grant a security interest in, or sell a participation interest in any Advance
(or portion thereof) or any VFN (or portion thereof) to an Affiliate or another
Lender. The parties to any such assignment, grant or sale of a participation
interest shall execute and deliver to the Administrative Agent, for its
acceptance and recording in its books and records, such agreement or document as
may be satisfactory to such parties and the Administrative 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 Administrative Agent.

 

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(b) Notwithstanding any other provision of this Section 13.16, any Lender may at
any time pledge or grant a security interest in all or any portion of its rights
(including, without limitation, rights to payment of principal and interest)
under this Agreement to secure obligations of such Lender to a Federal Reserve
Bank, without notice to or consent of the Borrower or the Administrative Agent;
provided that no such pledge or grant of a security interest shall release such
Lender from any of its obligations hereunder, or substitute any such pledgee or
grantee for such Lender as a party hereto.

Section 13.17. Heading and Exhibits.

The headings 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 13.18. 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 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 13.18
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.

Section 13.19. Cooperation with Trustee and the Servicer.

The Administrative Agent and each of the Lender Agents agree to provide to the
Trustee or to the Servicer, as applicable, such information that the Trustee or
the Servicer may reasonably request from time to time in connection with the
preparation and delivery of any reports required pursuant to this Agreement or
in connection with the performance of their other duties under this Agreement or
any other Transaction Document; provided that the Administrative Agent and each
Lender Agent shall not be required to assume any undue burden or incur any undue
expense in connection with this Section 13.19.

[Remainder of Page Intentionally Left Blank.]

 

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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.

 

THE BORROWER:     NEWSTAR CP FUNDING LLC       By:  

NewStar Financial, Inc.,

its Designated Manager

            By:   /s/ JOHN KIRBY BRAY         Name: John Kirby Bray        
Title: Chief Financial Officer

 

THE ORIGINATOR AND SERVICER:     NEWSTAR FINANCIAL, INC.       By:   /s/ JOHN
KIRBY BRAY         Name: John Kirby Bray         Title: Chief Financial Officer

[Signatures Continued on the Following Page]

 

   S-1   

Fourth Amended and Restated

Loan and Servicing Agreement

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

LENDERS:

Commitment:

$125,000,000

   

WELLS FARGO BANK,

NATIONAL ASSOCIATION

      By:   /s/ RAJ SHAH         Name: Raj Shah         Title: Managing Director

 

THE ADMINISTRATIVE AGENT

AND A LENDER AGENT:

    WELLS FARGO SECURITIES, LLC       By:   /s/ MATT JENSEN         Name: Matt
Jensen         Title: Vice President

[Signatures Continued on the Following Page]

 

   S-2   

Fourth Amended and Restated

Loan and Servicing Agreement

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

THE TRUSTEE:    

U.S. BANK NATIONAL ASSOCIATION,

not in its individual capacity but solely as Trustee

      By:   /s/ KYLE HARCOURT         Name: Kyle Harcourt         Title: Vice
President

 

   S-3   

Fourth Amended and Restated

Loan and Servicing Agreement

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

Annex A

NEWSTAR CP FUNDING LLC

500 Boylston Street, Suite 1250

Boston, Massachusetts 02116

Attention: Brian Forde

Telephone: (617) 848-4373

Fax: (617) 848-4300

NEWSTAR FINANCIAL, INC.

500 Boylston Street, Suite 1250

Boston, Massachusetts 02116

Attention: Brian Forde

Telephone: (617) 848-4373

Fax: (617) 848-4300

WELLS FARGO SECURITIES, LLC,

as Administrative Agent and a Lender Agent

One Wells Fargo Center, Mail Code: D1053-082

Charlotte, NC 28288

Attention: Kevin Sunday

Facsimile: (704) 715-0067

Confirmation: (704) 383-5267

[All electronic dissemination of Notices should be sent to
scp.mmloans@wellsfargo.com]

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Lender

One Wells Fargo Center, Mail Code: D1053-082

Charlotte, NC 28288

Attention: Kevin Sunday

Facsimile: (704) 715-0067

Confirmation: (704) 383-5267

[All electronic dissemination of Notices should be sent to
scp.mmloans@wellsfargo.com]

U.S. BANK NATIONAL ASSOCIATION

1719 Range Way

Mail Code: Ex - SC - FLOR

Florence, South Carolina 29501

Attn: Sandra Farrow

Ref: NewStar CP Funding/Wells Fargo Warehouse

Facsimile No.: 843-673-4925

Confirmation No: 843-673-4929

U.S. BANK NATIONAL ASSOCIATION

Corporate Trust Services - CDO Unit

One Federal Street, Third Floor

Boston, Massachusetts 02110

Attn: Kyle Harcourt

Reference: NewStar CP Funding/Wells Fargo Warehouse

 

Annex A-1

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

Facsimile No.: 503-258-6028

Confirmation No: 617-603-6506

 

Annex A-2