Exhibit 10.1

 

 

 

FRC FUNDING I, LLC,

 

as Borrower

 

FLAT ROCK CAPITAL CORP., as Servicer

 

 

 

LOAN AND SECURITY AGREEMENT

 

Dated as of October 12, 2018

 

$20,000,000

 

 

 

CERTAIN FINANCIAL INSTITUTIONS,

 

as Lenders

 

STATE BANK AND TRUST COMPANY,

 

as Administrative Agent

 

and

 

ALOSTAR CAPITAL FINANCE,

 

as Lead Arranger and Bookrunner

 

 

 

 

 

TABLE OF CONTENTS

 

    Page       SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION 1       1.1
Definitions 1 1.2 Accounting Terms 23 1.3 Uniform Commercial Code 23 1.4 Certain
Matters of Construction 23       SECTION 2. CREDIT FACILITIES 24       2.1
Revolver Commitment 24       SECTION 3. INTEREST, FEES AND CHARGES 26       3.1
Interest 26 3.2 Fees 27 3.3 Computation of Interest, Fees, Yield Protection 27
3.4 Reimbursement Obligations 27 3.5 Illegality 28 3.6 Inability to Determine
Rates 28 3.7 Increased Costs; Capital Adequacy 28 3.8 Mitigation 29 3.9 Reserved
29 3.10 Maximum Interest 29       SECTION 4. LOAN ADMINISTRATION 30       4.1
Manner of Borrowing and Funding Revolver Loans 30 4.2 Defaulting Lender 31 4.3
One Obligation 32 4.4 Effect of Termination 32       SECTION 5. PAYMENTS 32    
  5.1 General Payment Provisions 32 5.2 Repayment of Revolver Loans 32 5.3
Reserved 33 5.4 Payment of Other Obligations 33 5.5 Dominion Account 33 5.6
Marshaling; Payments Set Aside 33 5.7 Allocation of Payments 34 5.8 Application
of Payments 35 5.9 Loan Account; Account Stated 36 5.10 Taxes 36 5.11 Lender Tax
Information 37       SECTION 6. CONDITIONS PRECEDENT 38       6.1 Conditions
Precedent to Initial Loans 38 6.2 Conditions Precedent to All Credit Extensions
39

 

i

 

TABLE OF CONTENTS
(continued)

 

SECTION 7. COLLATERAL 39       7.1 Grant of Security Interest 39 7.2 Lien on
Other Collateral 40 7.3 Reserved 40 7.4 Other Collateral 41 7.5 No Assumption of
Liability 41 7.6 Further Assurances 41 7.7 Continuation of Security Interest 41
      SECTION 8. REPRESENTATIONS AND WARRANTIES 41       8.1 General
Representations and Warranties 41 8.2 Complete Disclosure 49 8.3 Updated
Representations and Warranties 49       SECTION 9. COVENANTS AND CONTINUING
AGREEMENTS 50       9.1 Affirmative Covenants 50 9.2 Negative Covenants 61 9.3
Financial Covenants 63       SECTION 10. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
64       10.1 Events of Default 64 10.2 Remedies upon Default 66 10.3 License 67
10.4 Setoff 68 10.5 Remedies Cumulative; No Waiver 68       SECTION 11. AGENT 68
      SECTION 12. BENEFIT OF AGREEMENT; ASSIGNMENTS 68       12.1 Successors and
Assigns 68 12.2 Participations 69 12.3 Assignments 69 12.4 Replacement of
Certain Lenders 70       SECTION 13. MISCELLANEOUS 71       13.1 Consents,
Amendments and Waivers 71 13.2 Indemnity 72 13.3 Notices and Communications. 72
13.4 Performance of Borrower’s Obligations 73 13.5 Credit Inquiries 73 13.6
Severability 73 13.7 Cumulative Effect; Conflict of Terms 73 13.8 Counterparts
74 13.9 Entire Agreement 74 13.10 Relationship with Lenders 74 13.11 No Advisory
or Fiduciary Responsibility 74 13.12 Confidentiality 75 13.13 GOVERNING LAW 75
13.14 Consent to Forum 75 13.15 Waivers by BORROWER AND SERVICER 76 13.16 Power
of Attorney 76 13.17 PATRIOT Act Notice; Beneficial Ownership Regulation 76    
  SECTION 14. Custodian 77     14.1 Designation of Custodian 77 14.2 Duties of
Custodian 77 14.3 Custodian Removal 77 14.4 Access to Certain Documentation and
Information Regarding the Collateral; Audits 77

 

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LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A Assignment and Assumption Exhibit B Compliance Certificate Exhibit C
Conditions Precedent Exhibit D Agency Provisions Exhibit E Borrowing Base
Certificate     Schedule 1 Commitments of Lenders Schedule 2 Deposit and Other
Accounts Schedule 3 Business Locations Schedule 4 Names and Capital Structure
Schedule 5 Patents, Trademarks, Copyrights and Licenses Schedule 6 Restrictive
Agreements Schedule 7 Litigation Schedule 8 Plans Schedule 9 Intentionally
Omitted Schedule 10 Existing Affiliate Transactions Schedule 11 Approved Dealers
and Approved Pricing Services Schedule 12 Eligible Portfolio Investment Criteria

 

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LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is dated as of October 12,
2018, among FRC FUNDING I, LLC, a Delaware limited liability company
(“Borrower”), FLAT ROCK CAPITAL CORP., a Maryland corporation (“Servicer”), the
financial institutions party to this Agreement from time to time as lenders
(collectively, “Lenders”), and STATE BANK AND TRUST COMPANY, a state banking
institution incorporated or otherwise organized under the laws of the State of
Georgia, as agent for the Lenders (in such capacity, “Agent”).

 

R E C I T A L S:

 

Borrower has requested that Lenders make available a revolving credit facility
to Borrower, which shall be used by Borrower to finance its general working
capital and corporate needs. Lenders will make loans to Borrower under the
revolving credit facility in accordance with the provisions hereinafter set
forth.

 

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

 

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

 

1.1 Definitions. As used herein, the following terms have the meanings set forth
below:

 

“Administrative Expenses” means (a) fees and expenses (including indemnities)
and other amounts owed by the Borrower or any Subsidiary paid or payable to the
Custodian or the Backup Servicer, and (b) fees and expenses incurred by, or
owing to, the Servicer in connection with the services provided under the
Servicing Agreement.

 

“Advance Rate” means, as to any Eligible Portfolio Investment and subject to
adjustment as provided above: (a) 75% for such time that Parent is required
pursuant to Applicable Law to maintain an Asset Coverage Ratio greater than or
equal to 200%, and (b) 70% after such time that Parent has fulfilled all
requirements pursuant to Applicable Law to maintain an Asset Coverage Ratio of
less than 200%.

 

“Affiliate” means a Person: (a) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
another Person; (b) which beneficially owns or holds 10% or more of any class of
the Equity Interests of a Person; or (c) 10% or more of the Equity Interests
with power to vote of which is beneficially owned or held by another Person or a
Subsidiary of another Person. For purposes hereof, “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of any Equity Interest, by contract or otherwise.

 

“Agent Indemnitees” means Agent and all of Agent’s officers, directors,
employees, Affiliates, agents and attorneys.

 

“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction
applicable to Borrower or any of its Subsidiaries from time to time concerning
or relating to bribery or corruption.

 

 

 

“AloStar” means AloStar Capital Finance, a division of State Bank and Trust
Company, a state banking institution incorporated or otherwise organized under
the laws of the State of Georgia, and its successors and assigns.

 

“Anti-Terrorism Law” means any law relating to terrorism or money laundering,
including the PATRIOT Act.

 

“Applicable Law” means all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question,
including all applicable statutory law, ordinances, common law and equitable
principles, and all provisions of constitutions, treaties, statutes, rules,
regulations, orders and decrees of all governmental authorities, including all
Environmental Laws, the Occupational Safety and Hazard Act of 1970, ERISA, the
Fair Labor Standards Act of 1938, and any other laws regarding the collection,
payment and deposit of Taxes.

 

“Applicable Margin” means 2.88% per annum.

 

“Approved Dealer” means (a) in the case of any Eligible Portfolio Investment
that is not a U.S. Government Security, a bank or a broker-dealer registered
under the Exchange Act of nationally recognized standing or an Affiliate thereof
and (b) in the case of a U.S. Government Security, any primary dealer in U.S.
Government Securities, in the case of each of clauses (a) and (b) above, as set
forth on Schedule 11, or (c) any other bank or broker-dealer acceptable to the
Agent in its Permitted Discretion.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender (c) an entity or an Affiliate of an entity that
administers or manages a Lender, or (d) the same investment advisor or an
advisor under common control with such Lender, Affiliate or advisor, as
applicable.

 

“Approved Pricing Service” means (a) a pricing or quotation service as set forth
in Schedule 11 or (b) any other pricing or quotation service (i) approved by the
Borrower, (ii) designated in writing by Borrower to the Agent, and (iii)
acceptable to the Agent in its Permitted Discretion.

 

“Approved Third-Party Appraiser” means any Independent nationally recognized
third-party appraisal firm engaged by the Borrower, at its own expense, as part
of its valuation procedures or any other third-party appraisal firm selected by
the Borrower and acceptable to the Agent; provided that, if any proposed
appraiser requests or requires a non-reliance letter, confidentiality agreement
or similar agreement prior to allowing the Agent to review any written valuation
report, such Person shall only be deemed an Approved Third-Party Appraiser if
the Agent and such Approved Third-Party Appraiser shall have entered into such a
letter or agreement. Subject to the foregoing, it is understood and agreed that
each of CTS Capital Advisors, Cherry Bekaert LLP, Duff & Phelps LLC, Murray,
Devine and Company, Lincoln Partners Advisors, LLC, Houlihan Lokey, Stout Risius
Ross, Inc., Valuation Research Corporation and Alvarez & Marsal are acceptable
to the Agent.

 

“Asset Coverage Ratio” means the ratio, determined on a consolidated basis,
without duplication, in accordance with GAAP, of (a) the value of total assets
of Borrower (excluding any Investment constituting the Equity Interest in any
other Person to the extent such Equity Interest (x) is not pledged as Collateral
or (y) is not subject to a first priority perfected lien in favor of the Agent),
less all liabilities not constituting Indebtedness of Borrower to (b) the
aggregate amount of Indebtedness of Borrower.

 

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“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 12.3.1), and accepted by Agent, in the form of Exhibit A.

 

“Availability” means an amount equal to the Borrowing Base minus the principal
balance of all outstanding Revolver Loans, provided, that on and after the
Commitment Termination Date, Availability shall be zero.

 

“Backup Servicer” means a backup servicer appointed by Borrower after the
Closing Date and acceptable to Agent and any successor in interest or such other
Person as shall have been appointed as Backup Servicer pursuant an agreement
acceptable to Agent.

 

“Bank Loans” means commercial loans (including term loans, debtor-in-possession
financings and other similar loans and investments including interim loans,
bridge loans and senior subordinated loans, Unitranche Loans, and Participation
Interests in any of the foregoing) that are generally provided under a
syndicated loan or credit facility or pursuant to any loan agreement or other
similar credit facility, whether or not syndicated.

 

“Bank Product” means any of the following products, services or facilities
extended to Borrower or any Subsidiary by a Lender or any of its Affiliates: (a)
Cash Management Services; (b) products under Hedging Agreements; (c) commercial
credit card and merchant card services; and (d) leases and other banking
products or services as may be requested by Borrower or a Subsidiary.

 

“Bank Product Reserve” means the aggregate amount of reserves established by
Agent from time to time in its discretion in respect of Secured Bank Product
Obligations.

 

“Bankruptcy Code” means Title 11 of the United States Code.

 

“Base Rate” means, on any day, a per annum rate equal to the U.S. prime rate as
shown in The Wall Street Journal on such day, or, if such day is not a Business
Day, on the immediately preceding Business Day. If The Wall Street Journal for
any reason ceases to publish a U.S. prime rate, then the Base Rate shall be such
prime rate as published from time to time in any other publication or reference
source designated by Agent in its discretion. The prime rate is a reference rate
and does not necessarily represent the best or lowest rate charged by any
Lender.

 

“Base Rate Loan” means a Loan, or portion thereof, during any period in which it
bears interest at a rate based upon the Base Rate.

 

“Base Rate Revolver Loan” means a Revolver Loan, or portion thereof, during any
period in which it bears interest at a rate based upon the Base Rate.

 

“Beneficial Ownership Certification” means a certification regarding beneficial
ownership as required by the Beneficial Ownership Regulation.

 

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

“Board of Governors” means the Board of Governors of the Federal Reserve System.

 

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“Borrowed Money” means with respect to any Person, without duplication, its (a)
Debt that (i) arises from the lending of money by any other Person to such
Person, (ii) is evidenced by notes, drafts, bonds, debentures, credit documents
or similar instruments, (iii) accrues interest or is a type upon which interest
charges are customarily paid (excluding trade payables owing in the Ordinary
Course of Business), or (iv) was issued or assumed as full or partial payment
for Property; (b) Capitalized Lease Obligations and Debt for the deferred
payment by one year or more of any purchase money obligation; (c) reimbursement
obligations with respect to letters of credit; (d) guaranties of any Debt of the
foregoing types owing by another Person; and (e) any Debt payable by such Person
which is subordinate in right of payment to the Obligations or with respect to
which the Liens securing such Debt are subordinated to Agent’s Liens.

 

“Borrower EBITDA” means, on a consolidated basis for Borrower, net income,
calculated before interest expense, provision for income taxes, depreciation and
amortization expense, realized gains or losses arising from the sale of capital
assets, gains arising from the write-up of assets, and any extraordinary gains
or losses (in each case, to the extent included in determining net income).

 

“Borrower Expenses” means (a) taxes, registration, registered office and filing
fees, if any, of the Borrower or any Subsidiary, (b) indemnification obligations
paid or payable by Borrower or any Subsidiary to Borrower’s or any Subsidiary’s
directors or managers under its Organic Documents, and (c) any other fees or
expenses (including indemnities) paid or payable by Borrower or any Subsidiary
to any other Person and not prohibited under, or incurred pursuant to or in
connection with, the Transaction Documents.

 

“Borrower External Unquoted Value” has the meaning given to such term in Section
9.1.11(b)(ii)(B)(x).

 

“Borrower Tested Assets” has the meaning given to such term in Section
9.1.11(b)(ii)(B)(x).

 

“Borrowing” means a borrowing consisting of Loans made on the same day by
Lenders (or by Agent in the case of a Borrowing funded by Swingline Loans).

 

“Borrowing Base” has the meaning set forth in Section 9.1.10 hereto.

 

“Borrowing Base Certificate” means a certificate, in the form of Exhibit E
attached hereto, by which Borrower certifies calculation of the Borrowing Base,
with appropriate insertions, and which is submitted to Agent by Borrower
pursuant to this Agreement and certified as true and correct by a Senior Officer
(which certificate may be submitted electronically subject to the limitations
set forth in Section 13.3.2).

 

“Business Day” means any day other than a Saturday, Sunday, each day on which
Agent is otherwise closed for transacting business with the public or other day
on which commercial banks are authorized to close under the laws of, or are in
fact closed in, Georgia, Massachusetts, or New York, and if such day relates to
a LIBOR Index Loan, any such day on which dealings in Dollar deposits are
conducted between banks in the London interbank Eurodollar market.

 

“Capital Expenditures” means all liabilities incurred or expenditures made by a
Borrower or Subsidiary for the acquisition of fixed assets, or any improvements,
replacements, substitutions or additions thereto with a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations.

 

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“Capitalized Lease Obligation” means any Debt represented by obligations under a
lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.

 

“Cash” means any immediately available funds in Dollars.

 

“Cash Collateral” means cash, and any interest or other income earned thereon,
that is delivered to Agent to Cash Collateralize any Obligations and all
interest and other income earned (if any) on such cash.

 

“Cash Collateral Account” means a demand deposit, money market or other account
maintained with Custodian and subject to Agent’s Liens and a deposit account
control agreement in favor of Agent.

 

“Cash Collateralize” means the delivery of cash to Agent, as security for the
payment of Obligations, in an amount equal to Agent’s good faith estimate of the
amount that is due or could become due, including all fees and other amounts
relating to such Obligations. “Cash Collateralization” has a correlative
meaning.

 

“Cash Equivalents” means investments (other than Cash) that are one or more of
the following obligations:

 

(a)  Short-Term U.S. Government Securities;

 

(b)  investments in commercial paper maturing within 180 days from the date of
acquisition thereof and having, at such date of acquisition, a credit rating of
at least A-1 from S&P and at least P-1 from Moody’s;

 

(c)  investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof (i)
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof; provided that such
certificates of deposit, banker’s acceptances and time deposits are held in a
securities account (as defined in the Uniform Commercial Code) through which the
Agent can perfect a security interest therein and (ii) having, at such date of
acquisition, a credit rating of at least A-1 from S&P and at least P-1 from
Moody’s;

 

(d)  fully collateralized repurchase agreements with a term of not more than 30
days from the date of acquisition thereof for U.S. Government Securities and
entered into with (i) a financial institution satisfying the criteria described
in clause (c) of this definition or (ii) an Approved Dealer having (or being a
member of a consolidated group having) at such date of acquisition, a credit
rating of at least A-1 from S&P and at least P-1 from Moody’s;

 

(e)  certificates of deposit or bankers’ acceptances with a maturity of ninety
(90) days or less of any Lender or any other financial institution that is a
member of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $1,000,000,000;

 

(f)  investments in money market funds and mutual funds, which invest
substantially all of their assets in Cash or assets of the types described in
clauses (a) through (e) above; and

 

(g)  any “Eligible Investments” as such term is defined in the Custodian
Agreement.

 

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provided, that (i) in no event shall Cash Equivalents include any obligation
that provides for the payment of interest alone (for example, interest-only
securities or “IOs”); (ii) if any of Moody’s or S&P changes its rating system,
then any ratings included in this definition shall be deemed to be an equivalent
rating in a successor rating category of Moody’s or S&P, as the case may be;
(iii) Cash Equivalents (other than U.S. Government Securities, certificates of
deposit or repurchase agreements) shall not include any such investment
representing more than 25% of total assets of Borrower in any single issuer; and
(iv) in no event shall Cash Equivalents include any obligation that is not
denominated in Dollars.

 

“Cash Management Services” means any services provided from time to time by
AloStar or any of its Affiliates to Borrower in connection with operating,
collections, payroll, trust, or other depository or disbursement accounts,
including automated clearinghouse, e-payable, electronic funds transfer, wire
transfer, controlled disbursement, overdraft, depository, information reporting,
lockbox and stop payment services.

 

“Change in Law” means (i) the adoption of any applicable law, rule or regulation
after the date of this Agreement, (ii) any change in any applicable law, rule or
regulation, or any change in the interpretation, implementation or application
thereof, by any governmental authority after the date of this Agreement, or
(iii) compliance by Lender with any request, guideline or directive (whether or
not having the force of law) of any governmental authority made or issued after
the date of this Agreement; provided that for purposes of this Agreement, (x)
the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted or issued.

 

“Change of Control” means (a) Parent ceases to own and control, beneficially and
of record, directly or indirectly, all Equity Interests in Borrower; (b) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Exchange Act and the rules of the
SEC thereunder as in effect on the date hereof) of shares representing more than
25% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Parent; (c) Robert Grunewald shall resign,
become unable to perform, or cease to serve in his position as of the Closing
Date and a replacement acceptable to Agent in its reasonable discretion is not
appointed; (d) the sale or transfer of all or substantially all of Parent’s or
Borrower’s assets; or (e) Borrower ceases to own and control, beneficially and
of record, directly, all Equity Interests in all of its Subsidiaries existing as
of the Closing Date or formed after the Closing Date in accordance with the
Transaction Documents.

 

“Closing Date” is as defined in Section 6.1.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” means all Property described in Section 7.1, all Property described
in any Security Documents as security for any Obligations, and all other
Property that now or hereafter secures (or is intended to secure) any
Obligations.

 

“Commitment” means for any Lender, the aggregate amount of such Lender’s
Revolver Commitment. “Commitments” means the aggregate amount of all Revolver
Commitments. The initial aggregate amount of the Commitments shall not exceed
$20,000,000.

 

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“Commitment Termination Date” means the earliest to occur of (a) the Scheduled
Revolving Period End Date; (b) the date on which Borrower terminates the
Revolver Commitments pursuant to Section 2.1.4; or (c) the date on which the
Revolver Commitments are terminated pursuant to Section 10.2.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.).

 

“Compliance Certificate” means a compliance certificate, in the form of Exhibit
B attached hereto, with appropriate insertions, to be submitted to Agent by
Borrower pursuant to this Agreement and certified as true and correct by a
Senior Officer.

 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

 

“Contingent Obligation” means with respect to any Person, any obligation of such
Person arising from any guaranty, indemnity or other assurance of payment or
performance of any Debt, lease, dividend or other obligation of any other Person
in any manner, whether directly or indirectly.

 

“Custodian” means U.S. Bank, National Association acting in the role of
custodian under the Custodian Agreement.

 

“Custodian Agreement” means, collectively, (a) the Custody Agreement, dated as
of the Closing Date, between the Custodian and Borrower, and (b) the Custody
Agreement, dated as of the Closing Date, among the Custodian, Borrower,
Servicer, and Agent, each as amended, modified, waived, supplemented, restated
or replaced from time to time.

 

“Daily LIBOR Rate” means, on any day the LIBOR Rate as shown in the Wall Street
Journal on such day for United States dollar deposits for the one month delivery
of funds in amounts approximately equal to the principal amount of the Loan for
which such rate is being determined or, if such day is not a Business Day on the
immediately preceding Business Day. If The Wall Street Journal for any reason
ceases to publish a LIBOR Rate, then the Daily LIBOR Rate shall be as published
from time to time and any other publication or reference source designated by
Agent in its discretion. The Daily LIBOR Rate is a reference rate and does not
necessarily represent the best or lowest rate charged by Lender.

 

“Debt” means, as applied to any Person, without duplication, (a) all items that
would be included as liabilities on a balance sheet in accordance with GAAP,
including Capitalized Lease Obligations; (b) all Contingent Obligations; (c) all
reimbursement obligations in connection with letters of credit issued for the
account of such Person; and (d) in the case of Borrower, the Obligations. The
Debt of a Person shall include any recourse Debt of any partnership in which
such Person is a general partner or joint venturer.

 

“Debt to EBITDA Ratio” means with respect to any Portfolio Company, the ratio of
Funded Debt to Portfolio Company EBITDA as of the last day of each fiscal
quarter of such Portfolio Company (and any applicable parent or subsidiary) as
provided by such Portfolio Company to the Servicer pursuant to the Underlying
Instruments, and if not so provided, as determined by the Servicer in accordance
with the Servicing Standard.

 

“Default” means an event or condition that, with the lapse of time or giving of
notice, or both, would constitute an Event of Default.

 

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“Default Rate” means for any Obligation (including, to the extent permitted by
law, interest not paid when due), two percent (2%) plus the interest rate
otherwise applicable thereto.

 

“Defaulted Obligation” means any Investment in Indebtedness (i) as to which, (x)
a default as to the payment of principal and/or interest has occurred and is
continuing for a period of thirty-two (32) consecutive days with respect to such
Indebtedness (without regard to any grace period applicable thereto, or waiver
thereof) or (y) a default not set forth in clause (x) has occurred and the
holders of such Indebtedness have accelerated all or a portion of the principal
amount thereof as a result of such default; (ii) as to which a default as to the
payment of principal and/or interest has occurred and is continuing beyond any
applicable grace period on another material debt obligation of the Portfolio
Company under such Indebtedness which is senior or pari passu in right of
payment to such Indebtedness; (iii) such Portfolio Company has filed for
protection under the Bankruptcy Code or has been adjudicated bankrupt or
insolvent or placed into receivership, or an involuntary petition has been filed
against such Portfolio Company under the Bankruptcy Code and either an order for
relief is entered on such petition or such petition has not been dismissed
within sixty (60) days from the date such petition was filed; (iv) as to which
Borrower has delivered written notice to the Portfolio Company declaring such
Indebtedness in default; or (v) which has (A) a rating by S&P of “CC” or below
or “SD” or (B) a Moody’s probability of default rating (as published by Moody’s)
of “D” or “LD” or, in each case, had such ratings before they were withdrawn by
S&P or Moody’s, as applicable.

 

“Defaulting Lender” means any Lender that, as determined by Agent, (a) has
failed to perform any funding obligations hereunder, and such failure is not
cured within three Business Days; (b) has notified Agent or Borrower that such
Lender does not intend to comply with its funding obligations hereunder or has
made a public statement to the effect that it does not intend to comply with its
funding obligations hereunder or under any other credit facility; (c) has
failed, within three Business Days following request by Agent, to confirm in a
manner satisfactory to Agent that such Lender will comply with its funding
obligations hereunder; or (d) has, or has a direct or indirect parent company
that has, become the subject of an Insolvency Proceeding or taken any action in
furtherance thereof; provided, however, that a Lender shall not be a Defaulting
Lender solely by virtue of a governmental authority’s ownership of an equity
interest in such Lender or parent company.

 

“Discretionary Distribution” means any Distribution that is not a Mandatory
Distribution.

 

“Distribution” means any declaration or payment of a distribution, interest or
dividend on any Equity Interest (other than payment-in-kind); any distribution,
advance or repayment of Debt to a holder of Equity Interests; or any purchase,
redemption, or other acquisition, surrender or retirement for value of any
Equity Interest, sinking fund or similar payment.

 

“Dollars” and the sign “$” mean lawful money of the United States.

 

“Dominion Account” means a special account established by Borrower and
maintained with the Custodian or another bank acceptable to Agent and subject to
a deposit account control agreement in favor of Agent, which account is subject
to withdrawal limitations that permit only payments to Agent in accordance with
Section 5.8.1.

 

“Eligible Assignee” means a Person that is (a) a Lender or an Affiliate of a
Lender; (b) an Approved Fund; (c) any Person to whom a Lender assigns its rights
and obligations under this Agreement as part of an assignment and transfer of
such Lender’s rights in and to a material portion of such Lender’s portfolio of
asset based credit facilities; (d) any other financial institution approved by
Agent and, unless an Event of Default has occurred, Borrower (which approval by
Borrower shall not be unreasonably withheld or delayed, and shall be deemed
given if no objection is made within five Business Days after notice of the
proposed assignment); and (e) during any Event of Default, any Person acceptable
to Agent in its discretion; provided, that in no event shall (i) Parent,
Borrower or an Affiliate of Borrower or Parent, or (ii) any Defaulting Lender or
any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder,
would constitute a Defaulting Lender or a Subsidiary thereof, be deemed to be an
Eligible Assignee.

 

-8-

 

“Eligible Portfolio Investment” means any Portfolio Investment held by Borrower
(and solely for purposes of determining the Borrowing Base, Cash and Cash
Equivalents held by Borrower) that, in each case, meets all of the criteria set
forth on Schedule 12 hereto; provided, that no Portfolio Investment, Cash or
Cash Equivalent shall constitute an Eligible Portfolio Investment or be included
in the Borrowing Base if the Agent does not at all times maintain a first
priority, perfected Lien (subject to no other Liens other than Permitted Liens)
on such Portfolio Investment, Cash or Cash Equivalent. Notwithstanding the
foregoing, nothing herein shall limit the provisions of Section 9.1.11(b)(i),
which provide that, for purposes of this Agreement, all determinations of
whether an Investment is to be included as an Eligible Portfolio Investment
shall be determined on a Settlement-Date Basis, provided that no such Investment
shall be included as an Eligible Portfolio Investment to the extent it has not
been paid for in full.

 

“Environmental Laws” means all Applicable Laws (including all programs, permits
and guidance promulgated by regulatory agencies and all implementing
regulations), relating to public health (but excluding occupational safety and
health, to the extent regulated by the Occupational Safety and Hazard Act of
1970) or the protection or pollution of the environment, including the Clean
Water Act (33 U.S.C. §§ 1251 et seq.), the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. § 9601 et seq.) and the Resource
Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

 

“Equity Interest” means the interest of any (a) shareholder in a corporation;
(b) partner in a partnership (whether general, limited, limited liability or
joint venture); (c) member in a limited liability company; or (d) other Person
having any other form of equity security or ownership interest in any other type
of legal entity.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 and all rules
and regulations from time to time promulgated thereunder.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with Parent or Borrower within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).

 

“Event of Default” is as defined in Section 10.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Excluded Tax” means any of the following Taxes imposed on or with respect to a
Lender or required to be withheld or deducted from a payment to a Lender, (a)
Taxes imposed on or measured by net income (however denominated), franchise
Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such
Lender being organized under the laws of, or having its principal office or, in
the case of any Lender, its applicable lending office located in, the
jurisdiction imposing such Tax (or any political subdivision thereof) or (ii)
that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a law in effect on the date on which (i) such Lender acquires such interest
in the Loan or Commitment (other than pursuant to an assignment request by the
Borrower under Section 12.4) or (ii) such Lender changes its lending office,
except in each case to the extent that, pursuant to Section 5.10, amounts with
respect to such Taxes were payable either to such Lender’s assignor immediately
before such Lender became a party hereto or to such Lender immediately before it
changed its lending office, (c) Taxes attributable to such Lender’s failure to
comply with Section 5.11, and (d) any U.S. federal withholding Taxes imposed
under FATCA.

 

-9-

 

“Executive Order No. 13224” means Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.

 

“External Quoted Value” has the meaning assigned to such term in Section
9.1.11(b)(ii)(A).

 

“Extraordinary Expenses” means all costs, expenses or advances that Agent or
Lenders may suffer or incur during a Default or Event of Default, or during the
pendency of an Insolvency Proceeding of Parent or Borrower, including those
relating to (a) any audit, inspection, repossession, storage, repair, appraisal,
insurance, manufacture, preparation or advertising for sale, sale, collection,
or other preservation of or realization upon any Collateral; (b) subject to the
same limitations in respect of Borrower’s indemnification obligations under
Section 13.2, any action, arbitration or other proceeding (whether instituted by
or against Agent, any Lender, Parent, Borrower, any representative of creditors
of Parent or Borrower or any other Person) in any way relating to any Collateral
(including the validity, perfection, priority or avoidability of Agent’s Liens
with respect to any Collateral), Transaction Documents, or Obligations,
including any lender liability and all other claims, liabilities, costs,
expenses and other amounts of any kind in any way related to the Transaction
Documents or Collateral at any time; (c) the exercise, protection or enforcement
of any rights or remedies of Agent and Lenders, in, or the monitoring of, any
Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or
Liens with respect to any Collateral; (e) any enforcement action or exercise of
rights or remedies, of any kind, in connection with the Obligations, the
Collateral or the Transaction Documents; (f) negotiation and documentation of
any modification, waiver, workout, restructuring or forbearance with respect to
any Transaction Documents or Obligations; and (g) Protective Advances. Such
costs, expenses and advances include transfer fees, Other Taxes, storage fees,
insurance costs, permit fees, utility reservation and standby fees, legal fees
and expenses of counsel for Agent and Lenders, appraisal fees, brokers’ fees and
commissions, auctioneers’ fees and commissions, accountants’ fees, environmental
study fees, wages and salaries paid to employees of Borrower or independent
contractors in liquidating any Collateral, and travel expenses.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to any intergovernmental
agreement, treaty or convention among governmental authorities and implementing
such Sections of the Code.

 

“Fee Letter” means the Fee Letter dated as of the Closing Date between Borrower
and Agent.

 

-10-

 

“First Lien Bank Loan” means a Bank Loan (a) that is entitled to the benefit of
a first lien and first priority perfected security interest on a portion of the
assets of a Portfolio Company, (b) for which the Servicer determines in good
faith that the value of the collateral securing the Bank Loan on or about the
time of origination equals or exceeds the outstanding principal balance of the
Bank Loan plus the aggregate outstanding balances of all other loans of equal or
higher seniority secured by the same collateral, (c) that is not (and cannot by
its terms become) subordinate in right of payment to any obligation of the
Portfolio Company in any bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceedings and (d) that is not (and cannot by its
terms become) subject to any payment blockage or standstill provisions. For the
avoidance of doubt, in no event shall a First Lien Bank Loan include a Last Out
Loan.

 

“Fiscal Quarter” means each period of three months, commencing on the first day
of a Fiscal Year.

 

“Fiscal Year” means the fiscal year of Parent, Borrower and Borrower’s
Subsidiaries for accounting and tax purposes, ending on December 31 of each
year.

 

“Fixed Charge Coverage Ratio” means, as of any date, the quotient obtained by
dividing (a) the difference between (i) Borrower EBITDA for the most recently
four (4) Fiscal Quarter period, minus (ii) the sum of (A) all of Borrower’s
Capital Expenditures made in such period, and (B) any Distributions paid by
Borrower in such period (other than Distributions permitted under Section 2.1.3
and Section 9.2.3), and (C) cash Taxes paid by Borrower in such period (without
benefit of any refund), divided by (b) the sum of (i) the current portion of
Debt for Borrowed Money (other than any Debt arising pursuant to this Agreement)
plus (ii) cash interest payments paid by Borrower in such period.

 

“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is
not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that
is resident or organized under the laws of a jurisdiction other than that in
which the Borrower is resident for Tax purposes.

 

“FRC Participation Interests” means any Participation Interests granted by
Parent to the Borrower in and to a Portfolio Investment pursuant to the Sale
Agreement (to the extent constituting a Participation Interest pending
completion of the assignment thereof in accordance with Section 2.2 of the Sale
Agreement) and in which a Lien is granted therein by the Borrower to the Agent
pursuant to this Agreement.

 

“Full Payment” means with respect to any Obligations, (a) the full and
indefeasible cash payment thereof, including any interest, fees and other
charges accruing during an Insolvency Proceeding (whether or not allowed in the
proceeding); (b) if such Obligations are inchoate or contingent in nature, Cash
Collateralization thereof (or delivery of a standby letter of credit acceptable
to Agent in its discretion, in the amount of required Cash Collateral); and (c)
termination of the Commitments and release by Borrower (and by any
representative of creditors of Borrower in any Insolvency Proceeding of
Borrower) of any claims that Borrower has or asserts to have against Agent,
Lenders or any of their Affiliates. No Loans shall be deemed to have been paid
in full until all Commitments related to such Loans have expired or been
terminated.

 

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the Ordinary Course of Business.

 

-11-

 

“Funded Debt” means as of any date with respect to any Portfolio Company, the
meaning of “Funded Debt” or any comparable definition in the Underlying
Instruments of the related Portfolio Investment, and in any case that “Funded
Debt” or such comparable definition is not defined in such Underlying
Instruments, the amount of the outstanding obligations for borrowed money of the
principal obligor of such Portfolio Investment and any of its parents or
subsidiaries that are obligated pursuant to the Underlying Instruments for such
Portfolio Investment.

 

“GAAP” means generally accepted accounting principles in effect in the United
States from time to time.

 

“Guarantors” means each Subsidiary of Borrower who guarantees (or has pledged
assets to secure) payment or performance of any Obligations.

 

“Guaranty” means each guaranty agreement executed by a Guarantor in favor of
Agent.

 

“Hedging Agreement” means any “swap agreement” as defined in Section 101(53B)(A)
of the Bankruptcy Code.

 

“Indebtedness” of any Person means at any date without duplication, (a) all
indebtedness of such Person for borrowed money (whether by loan or the issuance
and sale of debt securities) or for the deferred purchase price of Property or
services (other than current trade liabilities incurred in the Ordinary Course
of Business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person in respect of letters of
credit, acceptances or similar instruments issued or created for the account of
such Person, (d) all liabilities secured by (or for which the holder of such
obligations has an existing right, contingent or otherwise, to be 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) any guaranty of
payment by such Person in respect of obligations of the kind referred to in
clauses (a) through (d) above. The amount of any Indebtedness under clause (d)
shall be equal to the lesser of (A) the stated amount of the relevant
obligations and (B) the fair market value of the Property subject to the
relevant Lien. The amount of any Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness expressly provide that such
Person is not liable therefor.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of the
Borrower under any Transaction Document and (b) to the extent not otherwise
described in (a), Other Taxes.

 

“Indemnitees” means (i) Agent Indemnitees and (ii) the Lenders and Agent and
each of their respective officers, directors, employees, Affiliates, agents and
attorneys.

 

“Independent” when used with respect to any specified Person means the more
restrictive of the following: (a) that such Person (i) does not have any direct
financial interest or any material indirect financial interest in Borrower or
any of its Subsidiaries or Affiliates (including its investment adviser or any
Affiliate thereof) other than ownership of publicly traded stock, as applicable,
of Borrower or any such Subsidiary or Affiliate with a market value not to
exceed $1,000,000 and (ii) is not an officer, employee, promoter, underwriter,
trustee, partner, director or a Person performing similar functions of Borrower
or of its Subsidiaries or Affiliates (including its investment advisor or any
Affiliate thereof), (b) the definition of “disinterested” as defined in the
Investment Company Act, (c) that such Person is not an “interested person” as
defined in Section 2(a)(19) of the Investment Company Act or (d) the definition
of “independent” as defined in the Exchange Act.

 

-12-

 

“Independent Valuation Provider” means any of CTS Capital Advisors, Cherry
Bekaert LLP, Duff & Phelps LLC, Murray, Devine and Company, Lincoln Partners
Advisors, LLC, Houlihan Lokey, Stout Risius Ross, Inc., Valuation Research
Corporation and Alvarez & Marsal, or any other Independent nationally recognized
third-party appraisal firm selected by the Agent in its reasonable discretion.

 

“Insolvency Proceeding” means any action, case or proceeding commenced by or
against a Person under any state, federal or foreign law for, or any agreement
of such Person to, (a) the entry of an order for relief under the Bankruptcy
Code, or any other insolvency, debtor relief or debt adjustment law, (b) any
involuntary petition for relief under the Bankruptcy Code where either an order
for relief is entered or such petition is not dismissed within sixty (60) days
after the date such petition is filed; (b) the appointment of a receiver,
trustee, liquidator, administrator, conservator or other custodian for such
Person or any part of its Property; (c) an assignment or trust mortgage for the
benefit of creditors; or (d) the liquidation, dissolution or winding up of the
affairs of such Person.

 

“Intellectual Property” means all intellectual and similar Property of a Person,
including inventions, designs, patents, copyrights, trademarks, service marks,
trade names, trade secrets, confidential or proprietary information, customer
lists, know-how, software and databases; all embodiments or fixations thereof
and all related documentation, applications, registrations and franchises; all
licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.

 

“Investment” means, for any Person: (a) Equity Interests, bonds, notes,
debentures or other securities of any other Person (including convertible
securities) or any agreement to acquire any Equity Interests, bonds, notes,
debentures or other securities of any other Person (including any “short sale”
or any sale of any securities at a time when such securities are not owned by
the Person entering into such sale); (b) deposits, advances, loans or other
extensions of credit made to any other Person (including purchases of property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such Person); or (c) Hedging Agreements.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended
from time to time.

 

“Investment and Valuation Policies” means Parent’s investment objectives and
strategy as set forth in Parent’s Credit Policies & Procedures dated July 10,
2018, in the form delivered to the Agent prior to the Closing Date, as amended
from time to time in accordance with the terms and conditions of this Agreement.

 

“IRS” means the United States Internal Revenue Service.

 

“IVP External Unquoted Value” has the meaning given to such term in Section
9.1.11(b)(ii)(B)(w).

 

“IVP Tested Assets” has the meaning given to such term in Section
9.1.11(b)(ii)(B)(w).

 

-13-

 

“Last Out Loan” shall mean any Bank Loan that would otherwise be a First Lien
Bank Loan except that, in the case of an event of default under the applicable
Underlying Instruments, any portion of such Bank Loan will be repaid after one
or more tranches of other first lien loans issued by the same Portfolio Company
have been paid in accordance with a specific waterfall of payments, including by
reason of a payment blockage or a standstill period with respect to the exercise
of remedies.

 

“Lenders” is as defined in the preamble to this Agreement, including Agent in
its capacity as a provider of Swingline Loans and any other Person who hereafter
becomes a “Lender” pursuant to an Assignment and Assumption.

 

“Lending Office” means the office designated as such by the applicable Lender at
the time it becomes party to this Agreement or thereafter by notice to Agent and
Borrower.

 

“LIBOR Index Loan” means a Loan, or portion thereof, during any period in which
it bears interest at a rate based upon the Daily LIBOR Rate.

 

“LIBOR Index Revolver Loan” means a Revolver Loan, or portion thereof, during
any period in which it bears interest at a rate based upon the Daily LIBOR Rate.

 

“Lien” means any Person’s interest in Property securing an obligation owed to,
or a claim by, such Person, including any lien, security interest, pledge,
hypothecation, trust, reservation, encroachment, easement, right-of-way,
covenant, condition, restriction, leases, or other title exception or
encumbrance.

 

“Loan” means a Revolver Loan or a Base Rate Loan.

 

“Loan Account” is as defined in Section 5.9.1.

 

“Loan Year” means each 12 month period commencing on the Closing Date and on
each anniversary of the Closing Date.

 

“Long-Term U.S. Government Securities” means U.S. Government Securities maturing
more than three months from the applicable date of determination.

 

“Mandatory Distribution” means a Distribution that Borrower is required to make
pursuant to Applicable Law.

 

“Margin Stock” is as defined in Regulation U of the Board of Governors.

 

“Material Adverse Effect” means the effect of any event or circumstance that,
taken alone or in conjunction with other events or circumstances, (a) has or
could be reasonably expected to have a material adverse effect on the business,
operations, Properties, assets, liabilities, or financial condition of Borrower
or the Servicer, both individually or taken as a whole, on the value of any
material Collateral, on the enforceability of any Transaction Documents, or on
the validity or priority of Agent’s Liens on any Collateral; (b) impairs the
ability of Servicer or Borrower to perform its respective obligations under the
Transaction Documents, including repayment of any Obligations; or (c) otherwise
impairs the ability of Agent or any Lender to enforce or collect any Obligations
or to realize upon any Collateral.

 

-14-

 

“Material Contract” means any agreement or arrangement to which Borrower is
party (other than the Transaction Documents) (a) that is deemed to be a material
contract under any securities law applicable to such Person, including the
Securities Act of 1933; or (b) for which breach, termination, nonperformance or
failure to renew could reasonably be expected to have a Material Adverse Effect.

 

“Maturity Date” means the earliest of (a) the date that is four (4) years from
the Closing Date, (b) the date on which Borrower terminates the Revolver
Commitments pursuant to Section 2.1.4; or (c) the date on which the Revolver
Commitments are terminated pursuant to Section 10.2.

 

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

 

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which Borrower or ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

 

“Notice of Borrowing” means a Notice of Borrowing to be provided by Borrower to
request a Borrowing of Revolver Loans, in form satisfactory to Agent.

 

“Notice of Conversion/Continuation” means a Notice of Conversion/Continuation to
be provided by Borrower to request conversion of Loans into or from LIBOR Index
Loans or Base Rate Loans, in form satisfactory to Agent.

 

“Noteless Assigned Loan” means a First Lien Bank Loan with respect to which: (a)
the underlying documentation either (i) does not require the Portfolio Company
to execute and deliver a promissory note to evidence the indebtedness created
under such First Lien Bank Loan or (ii) requires execution and delivery of such
a promissory note only upon the request of any holder of the indebtedness
created under such First Lien Bank Loan, and as to which the Borrower and Parent
have not requested a promissory note from the related Portfolio Company; and (b)
neither Borrower nor any of its Affiliates was an agent with respect to such
First Lien Bank Loan at the time of origination.

 

“Obligations” means all (a) principal of and premium, if any, on the Loans, (b)
interest, expenses, fees, indemnification obligations, reimbursement
obligations, Extraordinary Expenses and other amounts payable by Borrower under
the Transaction Documents, (c) Secured Bank Product Obligations, and (d) all
other Debts, covenants, duties, obligations and liabilities of any kind
(including Contingent Obligations) owing by Borrower pursuant to the Transaction
Documents, whether now existing or hereafter arising, whether evidenced by a
note or other writing, whether allowed in any Insolvency Proceeding, whether
arising from an extension of credit, issuance of a letter of credit, acceptance,
loan, guaranty, indemnification or otherwise, and whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, or joint or
several.

 

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

 

“Ordinary Course of Business” means, with respect to any transaction involving
any Person, the ordinary course of such Person’s business, as conducted by such
Person in accordance with past practices and undertaken by such Person in good
faith and not for the purpose of evading any covenant or restriction in any
Transaction Document.

 

“Organic Documents” means with respect to any Person, its charter, certificate
or articles of incorporation, bylaws, articles of organization, limited
liability agreement, operating agreement, members agreement, shareholders
agreement, partnership agreement, certificate of partnership, certificate of
formation, voting trust agreement, or similar agreement or instrument governing
the formation or operation of such Person.

 

-15-

 

“Other Connection Taxes” means, with respect to any Lender, Taxes imposed as a
result of a present or former connection between such Lender and the
jurisdiction imposing such Tax (other than connections arising from such Lender
having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Transaction
Document, or sold or assigned an interest in any Loan or Transaction Document).

 

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Transaction Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 12.4 of this Agreement).

 

“Overadvance” is as defined in Section 2.1.5.

 

“Overadvance Loan” means a LIBOR Index Revolver Loan made when an Overadvance
exists or is caused by the funding thereof.

 

“Parent” means Flat Rock Capital Corp., a Maryland corporation.

 

“Participant” is as defined in Section 12.2.1.

 

“Participation Interest” means a participation interest in a loan that would, at
the time of acquisition or Borrower’s commitment to acquire the same, satisfy
each of the following criteria: (i) such participation would constitute an
Eligible Portfolio Investment were the underlying loan acquired directly, (ii)
the seller of the participation is the lender on the subject loan, (iii) the
aggregate participation in the loan does not exceed the principal amount or
commitment of such loan, (iv) such participation does not grant, in the
aggregate, to the participant in such participation a greater interest than the
seller holds in the loan or commitment that is the subject of the participation,
(v) the entire purchase price for such participation is paid in full at the time
of its acquisition, and (vi) the participation provides the participant all of
the economic benefit and risk of the whole or part of the loan or commitment
that is the subject of the loan participation.

 

“PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001).

 

“Payment Item” means each check, draft or other item of payment payable to
Borrower, including those constituting proceeds of any Collateral.

 

“Performing” means with respect to any Eligible Portfolio Investment, such
Eligible Portfolio Investment is not a Defaulted Obligation.

 

“Permitted Discretion” means a determination made in the exercise of reasonable
credit judgment, from the perspective of a secured asset-based lender.

 

-16-

 

“Permitted Liens” is as defined in Section 9.2.2.

 

“Person” means any individual, corporation, limited liability company,
partnership, limited liability partnership, joint stock company, joint venture,
association, trust, unincorporated organization, governmental authority or other
entity.

 

“Plan” means any employee benefit plan (as defined in Section 3(3) of ERISA)
established by Borrower or, with respect to any such plan that is subject to
Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

 

“Pledge Agreement” means that certain Pledge Agreement dated the Closing Date by
and between Agent and Parent.

 

“Portfolio Company” means the issuer or obligor under any Portfolio Investment
held by Borrower or any of its Subsidiaries.

 

“Portfolio Company EBITDA” means with respect to any period and any Portfolio
Company, the meaning of “EBITDA,” “Adjusted EBITDA” or any comparable definition
in the Underlying Instruments of the related Portfolio Investment, 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 of
such Portfolio Investment and any of its parents or subsidiaries that are
obligated pursuant to the Underlying Instruments for such Portfolio Investment
(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 Servicer may deem appropriate in
accordance with the Servicing Standard.

 

“Portfolio Investment” means any Investment held by Borrower in its asset
portfolio.

 

“Pro Rata” means with respect to any Lender, a percentage (rounded to the ninth
decimal place) determined while (a) Revolver Commitments are outstanding, by
dividing the amount of such Lender’s Revolver Commitment by the aggregate amount
of all Revolver Commitments; and (b) at any other time, by dividing the amount
of such Lender’s Loans by the aggregate amount of all outstanding Loans.

 

“Properly Contested” means with respect to any obligation of any Person, (a) the
obligation is subject to a bona fide dispute regarding amount or such Person’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued; (c)
appropriate reserves have been established in accordance with GAAP; (d)
non-payment could not have a Material Adverse Effect, nor result in forfeiture
or sale of any assets of such Person; (e) no Lien is imposed on assets of such
Person, unless bonded and stayed to the satisfaction of Agent; and (f) if the
obligation results from entry of a judgment or other order, such judgment or
order is stayed pending appeal or other judicial review; and (g) if such contest
is abandoned, settled, or determined adversely (in whole or in part) to such
Person, such Person forthwith pays such amounts and all penalties, interest, and
other amounts due in connection therewith. Only that portion of a Debt or Tax
which is in dispute may be deemed Properly Contested.

 

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

 

-17-

 

“Protective Advances” is as defined in Section 2.1.6.

 

“Quoted Investments” means an Eligible Portfolio Investment (including Cash
Equivalents) which is traded in an active and orderly market for which market
quotations are readily available.

 

“Report” is as defined in Section II(c) on Exhibit D.

 

“Required Lenders” means Lenders (subject to Section 4.2) having (a) Revolver
Commitments in excess of 50% of the aggregate Revolver Commitments; and (b) if
the Revolver Commitments have terminated, Loans in excess of 50% of all
outstanding Loans; provided, however, that the Commitments and Loans of any
Defaulting Lender shall be excluded from such calculation and at any time there
are two Lenders, Required Lenders shall mean both Lenders.

 

“Restrictive Agreement” means an agreement (other than a Transaction Document)
that conditions or restricts the right of Borrower to incur or repay Borrowed
Money, to grant Liens on any assets, to declare or make Distributions, to
modify, extend or renew any agreement evidencing Borrowed Money, or to repay any
intercompany Debt.

 

“Revolver Commitment” means, for any Lender, its obligation to make Revolver
Loans up to the maximum principal amount shown on Schedule 1, as hereafter
modified pursuant to an Assignment and Assumption to which it is a party.
“Revolver Commitments” means the aggregate amount of such commitments of all
Lenders.

 

“Revolver Loan” means a loan made pursuant to Section 2.1, and any Swingline
Loan, Overadvance Loan or Protective Advance.

 

“Royalties” means all royalties, fees, expense reimbursement and other amounts
payable by Borrower under a license.

 

“S&P” means S&P Global Ratings, a division of S&P Global Inc., a New York
corporation, or any successor thereto.

 

“Sale Agreement” means the Sale, Contribution and Master Participation
Agreement, dated as of the Closing Date, between the Parent and Borrower, as
amended, modified, waived, supplemented, restated or replaced from time to time.

 

“Sanctioned Country” means, at any time, a country, region or territory that is,
or whose government is, the subject or target of any Sanctions.

 

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by OFAC, the U.S.
Department of State, the United Nations Security Council, the European Union or
any EU member state, (b) any Person located, organized, incorporated or resident
in a Sanctioned Country or (c) any Person controlled by any such Person.

 

“Sanctions” means economic or financial sanctions or trade embargoes
administered or enforced from time to time by (a) the U.S. government, including
those administered by OFAC or the U.S. Department of State or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.

 

-18-

 

“Scheduled Revolving Period End Date” means the date that is three (3) years
from the Closing Date.

 

“SEC” means the Securities and Exchange Commission, and any successor agency
thereto.

 

“Secured Bank Product Obligations” means Debt, obligations and other liabilities
with respect to Bank Products owing by Borrower to a Secured Bank Product
Provider.

 

“Secured Bank Product Provider” means (a) AloStar or any of its Affiliates; and
(b) any other Lender or Affiliate of a Lender that is providing a Bank Product,
provided such provider delivers written notice to Agent, in form and substance
satisfactory to Agent, within 10 days following the later of the Closing Date
creation of the Bank Product, (i) describing the Bank Product and setting forth
the maximum amount to be secured by the Collateral and the methodology to be
used in calculating such amount, and (ii) agreeing to be bound by Section XII of
Exhibit D.

 

“Secured Parties” means Agent, Lenders and Secured Bank Product Providers.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Security Documents” means the deposit account control agreements, the Pledge
Agreement, securities account control agreements, commodity account control
agreements (or, without limitation, other agreements providing Agent “control”
(as contemplated by Section 9-104 of the UCC) of a deposit account, securities
account, commodity account or similar account), and all other documents,
instruments and agreements now or hereafter securing or perfecting (or given
with the intent to secure or perfect) any Obligations.

 

“Senior Officer” means a manager or member of Borrower or, if the context
requires, a manager, managing director, principal, president, chief executive
officer, chief financial officer, vice president or treasurer of the Parent or
Servicer.

 

“Servicer” has the meaning set forth in the preamble hereto.

 

“Servicer Termination Event” means the occurrence of any one of the following:

 

(a) any failure by the Servicer to make any payment, transfer or deposit into
the Dominion Account as required by this Agreement, which failure continues
unremedied for a period of two (2) Business Days;

 

(b) any failure on the part of the Servicer to observe or perform in any
material respect any covenants or agreements of the Servicer set forth in any
Transaction Document to which the Servicer is a party (including, without
limitation, any material delegation of the Servicer’s duties) and the same
continues unremedied for a period of thirty (30) days after the earlier to occur
of (i) the date on which written notice of such failure shall have been given to
the Servicer by the Agent and (ii) the date on which a Senior 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 Indebtedness, which
Indebtedness is in excess of $200,000 in the aggregate, or the occurrence of any
event or condition that has resulted in the acceleration of such Indebtedness,
whether or not waived;

 

-19-

 

(d) an Insolvency Proceeding is commenced by or against the Servicer (subject to
the grace period in the definition thereof in the case of any involuntary
proceeding commenced against the Servicer);

 

(e) the occurrence of an Event of Default;

 

(f) the occurrence of any Change of Control;

 

(g) any failure by the Servicer to deliver any reports required to be delivered
by the Servicer pursuant to the Servicing Agreement on or before the date
occurring two (2) Business Days after the date such report is required to be
made or given, as the case may be;

 

(h)  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 when made, which has a Material
Adverse Effect and which continues to be unremedied for a period of thirty (30)
days after the earlier to occur of (i) the date on which written notice of such
incorrectness shall have been given to the Servicer by the Agent and (ii) the
date on which a Senior Officer of the Servicer acquires knowledge thereof;

 

(i) the rendering against the Servicer of one or more final judgments, decrees
or orders for the payment of money in excess of $200,000 in 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;

 

(j) a finding by any court or governmental body of competent jurisdiction in a
final, non-appealable judgment, or an admission by Servicer in a settlement of
any lawsuit, that Servicer has committed fraud, willful misconduct, or a
material violation of applicable securities laws, in each case which has a
material adverse effect on the performance of its obligations under any of the
Transaction Documents to which it is a party; or

 

(j) any Senior Officer of the Servicer is indicted for a criminal offense
related to the business of the Servicer and is not terminated within ten (10)
days after such indictment.

 

“Servicing Agreement” means the Servicing Agreement, dated as of the Closing
Date, between the Servicer and Borrower, as may be amended, modified, waived,
supplemented, restated or replaced from time to time, and of which the Agent
shall be an express third-party beneficiary.

 

“Servicing Standard” has the meaning given such term in the Servicing Agreement.

 

“Settlement-Date Basis” means that any Investment that has been purchased will
not be treated as an Eligible Portfolio Investment until such purchase has
settled, and any Eligible Portfolio Investment which has been sold will not be
excluded as an Eligible Portfolio Investment until such sale has settled.

 

“Settlement Report” means a report summarizing Revolver Loans outstanding as of
a given settlement date, allocated to Lenders on a Pro Rata basis in accordance
with their Revolver Commitments.

 

-20-

 

“Short Term Loan” means a First Lien Bank Loan that has not been approved by
Parent’s investment committee to be held as a Portfolio Investment in accordance
with the Investment and Valuation Policies.

 

“Short-Term U.S. Government Securities” means U.S. Government Securities
maturing within three months of the applicable date of determination.

 

“Solvent” means, as to any Person, such Person (a) owns Property whose fair
salable value is greater than the amount required to pay all of its debts
(including contingent, subordinated, unmatured and unliquidated liabilities);
(b) owns Property whose present fair salable value (as defined below) is greater
than the probable total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Person as they become absolute
and matured; (c) is able to pay all of its debts as they mature; (d) has capital
that is not unreasonably small for its business and is sufficient to carry on
its business and transactions and all business and transactions in which it is
about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of
the Bankruptcy Code; and (f) has not incurred (by way of assumption or
otherwise) any obligations or liabilities (contingent or otherwise) under any
Transaction Documents, or made any conveyance in connection therewith, with
actual intent to hinder, delay or defraud either present or future creditors of
such Person or any of its Affiliates. “Fair salable value” means the amount that
could be obtained for assets within a reasonable time, either through collection
or through sale under ordinary selling conditions by a capable and diligent
seller to an interested buyer who is willing (but under no compulsion) to
purchase.

 

“Subsidiary” means, with respect to any Person, a corporation, partnership,
limited liability company or other entity in which that Person directly or
indirectly owns or controls more than 50% of the Equity Interests or more than
50% of the voting power of such corporation, partnership, limited liability
company or other entity. Unless otherwise specified, each reference to
Subsidiary in this Agreement means a Subsidiary of the Borrower.

 

“Structured Finance Obligation” means any obligation issued by a special purpose
vehicle and secured directly by, referenced to, or representing ownership of or
investment in, a pool of receivables or other financial assets of any obligor,
including collateralized loan obligations, collateralized debt obligations and
mortgaged-backed securities. For the avoidance of doubt, if an obligation
satisfies the definition of “Structured Finance Obligation”, such obligation
shall not (a) qualify as any other category of Portfolio Investment and (b) be
included in the Borrowing Base.

 

“Swap Obligations” means, with respect to any Person, its obligations under a
Hedging Agreement that constitutes a “swap” within the meaning of Section 1a(47)
of the Commodity Exchange Act.

 

“Swingline Loan” means any Borrowing of Base Rate Revolver Loans funded with
Agent’s funds, until such Borrowing is settled among Lenders or repaid by
Borrower.

 

“Tangible Net Worth” means, as of any date, the total assets of Parent,
calculated in accordance with GAAP, minus the total Debt of Parent, calculated
on a consolidated basis in accordance with GAAP, minus the amount of all
intangible items reflected therein, including all unamortized debt discount and
expense, unamortized research and development expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
and all similar items that should properly be treated as intangibles in
accordance with GAAP, minus all amounts due from Parent’s Affiliates.

 

-21-

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any governmental authority, including any interest, additions to tax
or penalties applicable thereto.

 

“Third Party Finance Company” means a Person that is (i) an operating company
with employees, officers and directors, (ii) in the primary business of
originating loans or factoring or financing receivables, inventory or other
current assets and (iii) an unaffiliated third party business organized under
the laws of any State of the United States of America, domiciled in the United
States of America, and with its principal operations and property located in the
United States of America.

 

“Transaction Documents” means this Agreement, the Sale Agreement, the Servicing
Agreement, the Custodian Agreement, each Guaranty, the Security Documents, any
fee letter to which Agent is a party (including the Fee Letter), each Borrowing
Base Certificate, each Compliance Certificate, any flow of funds agreement or
disbursement letter delivered in connection with this Agreement or the
transactions contemplated hereby, promissory note or other note (including,
without limitation, any notes issued pursuant to Section 2.1.2 of this
Agreement), each document, instrument, certificate (including any information
certificate, solvency certificate, incumbency certificate, closing certificate,
or certificate with respect to Material Contracts)) or agreement now or
hereafter delivered by Borrower, Parent or the Servicer to Agent or a Lender in
connection with any transactions relating hereto, all Borrowing Base
information, reports, financial statements and other materials delivered by
Borrower hereunder, as well as other Reports and information provided by Agent
to Lenders.

 

“Transferee” means any actual or potential Eligible Assignee, Participant or
other Person acquiring an interest in any Obligations.

 

“Type” means any type of a Loan (i.e., Base Rate Loan or LIBOR Index Loan) that
has the same interest option.

 

“UCC” means the Uniform Commercial Code as in effect in the State of New York
or, when the laws of any other jurisdiction govern the perfection or enforcement
of any Lien, the Uniform Commercial Code of such jurisdiction.

 

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

 

“Unitranche Loan” means each Bank Loan determined by Borrower in accordance with
the Investment and Valuation Policies to be a “unitranche” loan or otherwise
underwritten as such. For the avoidance of doubt, in no event shall a Unitranche
Loan include a Last Out Loan.

 

“Unquoted Investment” means an Eligible Portfolio Investment which is not a
Quoted Investment.

 

“Unquoted Reported Value” has the meaning assigned to such term in Section
9.1.11(b)(ii)(B).

 

“US Bank Agreements” means collectively: (a) that certain BDC Fund Accounting
Servicing Agreement dated as of August 14, 2017 between Flat Rock Global, LLC
and U.S. Bancorp Fund Services, LLC, (b) that certain BDC Sub-Administration
Servicing Agreement dated as of August 14, 2017 between Flat Rock Global, LLC
and U.S. Bancorp Fund Services, LLC, and (c) that certain Portfolio Information
Agency Agreement dated as of June 30, 2017 by and between Parent and U.S. Bank
National Association.

 

-22-

 

“U.S. Government Securities” means securities that are direct obligations of,
and obligations the timely payment of principal and interest on which is fully
guaranteed by, the United States or any agency or instrumentality of the United
States the obligations of which are backed by the full faith and credit of the
United States and in the form of conventional bills, bonds, and notes.

 

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

 

“Valuation Testing Date” has the meaning given to such term in Section
9.1.11(b)(ii)(B)(w).

 

“Value” means, with respect to any Eligible Portfolio Investment, the value
thereof determined for purposes of this Agreement in accordance with Section
9.1.11(b)(ii).

 

1.2 Accounting Terms. Under the Transaction Documents (except as otherwise
specified herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Borrower delivered to Agent before the Closing Date and
using the same asset valuation method as used in such financial statements,
except for any change required or permitted by GAAP if Borrower’s certified
public accountants concur in such change, the change is disclosed to Agent, and
Section 9.3 is amended in a manner satisfactory to Required Lenders to take into
account the effects of the change.

 

1.3 Uniform Commercial Code. All other terms contained in this Agreement shall
have, when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein. Without limiting the generality of
the foregoing, the following terms shall have the meaning ascribed to them in
the UCC: Account, Chattel Paper, Commercial Tort Claim, Commodity Account,
Deposit Account, Document, Electronic Chattel Paper, Equipment, Fixtures, Goods,
General Intangible, Instrument, Inventory, Investment Property, Letter-of-Credit
Right, Payment Intangible, Proceeds, Securities Account, Software and Supporting
Obligations.

 

1.4 Certain Matters of Construction . The terms “herein,” “hereof,” “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. In the computation of periods of time from a
specified date to a later specified date, “from” means “from and including,” and
“to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Transaction Document, the parties agree that the rule of ejusdem generis shall
not be applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Transaction
Document. All references to (a) laws or statutes include all related rules,
regulations, interpretations, amendments and successor provisions; (b) any
document, instrument or agreement include any amendments, waivers and other
modifications, extensions or renewals (to the extent permitted by the
Transaction Documents); (c) any section mean, unless the context otherwise
requires, a section of this Agreement; (d) any exhibits or schedules mean,
unless the context otherwise requires, exhibits and schedules attached hereto,
which are hereby incorporated by reference; (e) any Person include successors
and assigns; (f) time of day means time of day at Agent’s notice address under
Section 13.3.1; or (g) discretion of Agent or any Lender mean the sole and
absolute discretion of such Person. The recitals and preamble hereto are
incorporated by reference and shall be deemed an integral part of this
Agreement. All calculations of Value, fundings of Loans, and payments of
Obligations shall be in Dollars and, unless the context otherwise requires, all
determinations (including calculations of Borrowing Base and financial
covenants) made from time to time under the Transaction Documents shall be made
in light of the circumstances existing at such time. Borrowing Base calculations
shall be consistent with historical methods of valuation and calculation, and
otherwise satisfactory to Agent (and not necessarily calculated in accordance
with GAAP). Borrower shall have the burden of establishing any alleged
negligence, misconduct or lack of good faith by Agent or any Lender under any
Transaction Documents. No provision of any Transaction Documents shall be
construed against any party by reason of such party having, or being deemed to
have, drafted the provision. Whenever the phrase “to the best of Borrower’s
knowledge” or words of similar import are used in any Transaction Documents, it
means actual knowledge of a Senior Officer, or knowledge that a Senior Officer
would have obtained if he or she had engaged in good faith and diligent
performance of his or her duties, including reasonably specific inquiries of
employees or agents and a good faith attempt to ascertain the matter to which
such phrase relates.

 

-23-

 

SECTION 2. CREDIT FACILITIES

 

2.1 Revolver Commitment

 

2.1.1 Revolver Loans. Each Lender agrees, severally on a Pro Rata basis up to
its Revolver Commitment, on the terms set forth herein, to make Revolver Loans
to Borrower from time to time through the Commitment Termination Date. The
Revolver Loans may be repaid and reborrowed as provided herein. In no event
shall Lenders have any obligation to honor a request for a Revolver Loan if the
unpaid balance of Revolver Loans outstanding at such time (including the
requested Loan) would exceed the Borrowing Base.

 

2.1.2 Revolver Notes. The Revolver Loans made by each Lender and interest
accruing thereon shall be evidenced by the records of Agent and such Lender. At
the request of any Lender, Borrower shall deliver a promissory note to such
Lender evidencing Borrower’s obligations in respect of the Revolver Commitments
of such Lender.

 

2.1.3 Use of Proceeds. The proceeds of Revolver Loans shall be used by Borrower
solely (a) to pay fees and transaction expenses associated with the closing of
this credit facility; (b) to pay Obligations (including interest when due) in
accordance with this Agreement; (c) for working capital and other lawful
corporate purposes of Borrower; (d) to acquire Eligible Portfolio Investments
pursuant to the Sale Agreement; (e) to make Eligible Portfolio Investments; (f)
to pay cash Distributions to Parent in accordance with Section 9.2.3; (g) to pay
Administrative Expenses (to the extent that funds on deposit in the Dominion
Account are insufficient to pay such expenses when due), and (h) to pay Borrower
Expenses (to the extent that funds on deposit in the Dominion Account are
insufficient to pay such expenses when due). Borrower will not request any Loan,
and Borrower and its Subsidiaries will not use, and its directors, officers,
employees and agents will not use, the proceeds of any Loan (i) in the
furtherance of an offer, payment, promise to pay, or authorization of the
payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Laws, (ii) for the purpose of funding,
financing or facilitating any activities, business or transaction of or with any
Sanctioned Person, or in any Sanctioned Country, to the extent such activities,
businesses or transaction would be prohibited by Sanctions if conducted by a
corporation incorporated in the United States or in an European Union member
state or (iii) in any manner that would result in the violation of any Sanctions
applicable to any party hereto.

 

-24-

 

2.1.4 Termination of Revolver Commitments.

 

(a)   The Revolver Commitments shall terminate on the Commitment Termination
Date, unless sooner terminated in accordance with this Agreement. Upon at least
30 days prior written notice to Agent, Borrower may, at its option, terminate
the Revolver Commitments and this credit facility prior to the Scheduled
Revolving Period End Date. Any notice of termination given by Borrower shall be
irrevocable and on the effective date of such termination, Borrower shall make
Full Payment of all Obligations.

 

(b)   Concurrently with any termination of the Revolver Commitments and this
credit facility during the first two Loan Years, for whatever reason (including
an Event of Default), Borrower shall pay to Agent, for the Pro Rata benefit of
Lenders and as liquidated damages for loss of bargain (and not as a penalty), a
termination fee amount equal to (i) 2% of the Revolver Commitments if the
Revolver Commitments are terminated in the first month of the first Loan Year,
and (ii) if the Revolver Commitments are terminated in subsequent months through
the end of the second Loan Year, an amount equal to the product of (x) the
difference between (1) 2% and (2) (A) 0.08333%, times (B) the number of months
elapsed since the Closing Date, and (y) the Revolver Commitments. No termination
charge shall be payable after the end of the second Loan Year.

 

2.1.5 Overadvances. If the aggregate Revolver Loans exceed the Borrowing Base
(“Overadvance”) at any time, the excess amount shall be payable by Borrower
within five (5) Business Days of demand by Agent, but all such Revolver Loans
shall nevertheless constitute Obligations secured by the Collateral and entitled
to all benefits of the Transaction Documents. Agent may require Lenders to honor
requests for Overadvance Loans and to forbear from requiring Borrower to cure an
Overadvance, (a) when no other Event of Default is known to Agent, as long as
the Overadvance does not continue for more than 30 consecutive days (and no
Overadvance may exist for at least five consecutive days thereafter before
further Overadvance Loans are required); and (b) regardless of whether an Event
of Default exists, if Agent discovers an Overadvance not previously known by it
to exist, as long as from the date of such discovery the Overadvance does not
continue for more than 30 consecutive days. In no event shall Overadvance Loans
be required that would cause the outstanding Revolver Loans to exceed the
aggregate Revolver Commitments. Any funding of an Overadvance Loan or sufferance
of an Overadvance shall not constitute a waiver by Agent or Lenders of the Event
of Default caused thereby. In no event shall Borrower be deemed a beneficiary of
this Section nor authorized to enforce any of its terms.

 

2.1.6 Protective Advances. Agent shall be authorized, in its discretion, at any
time that any conditions in Section 6 are not satisfied, and without regard to
the aggregate Commitments, to make Revolver Loans (“Protective Advances”) (a) if
Agent deems such Loans necessary or desirable to preserve or protect Collateral,
or to enhance the collectibility or repayment of Obligations; or (b) to pay any
other amounts chargeable to Borrower under any Transaction Documents, including
costs, fees and expenses. Each Lender shall participate in each Protective
Advance on a Pro Rata basis. Required Lenders may at any time revoke Agent’s
authority to make further Protective Advances under clause (a) by written notice
to Agent. Absent such revocation, Agent’s determination that funding of a
Protective Advance is appropriate shall be conclusive.

 

-25-

 

SECTION 3. INTEREST, FEES AND CHARGES

 

3.1 Interest

 

3.1.1 Rates and Payment of Interest.

 

(a)   The Obligations shall bear interest (i) if a Base Rate Loan, at the Base
Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR
Index Loan, at the Daily LIBOR Rate in effect from time to time, plus the
Applicable Margin; and (iii) if any other Obligation (including, to the extent
permitted by law, interest not paid when due), at the Base Rate in effect from
time to time, plus the Applicable Margin for Base Rate Revolver Loans; provided
that with respect to any Loans for the period beginning on the (A) 90th day
after the Closing Date until the 180th day after the Closing Date, interest
shall accrue on the greater of (x) the amount of the outstanding Loans on any
day during such period, and (y) $3,000,000, and (B) 181st day after the Closing
Date through the Maturity Date, interest shall accrue on the greater of (x) the
amount of the outstanding Loans on any day during such period, and (y)
$7,500,000. Interest shall accrue from the date the Loan is advanced or the
Obligation is incurred or payable, until paid by Borrower. If a Loan is repaid
on the same day made, one day’s interest shall accrue. All Loans shall bear
interest at the Daily LIBOR Rate except as otherwise provided in Section 3.6 of
this Agreement.

 

(b)   During an Insolvency Proceeding with respect to Borrower, or during any
other Event of Default if Agent or Required Lenders in their discretion so
elect, Obligations shall bear interest at the Default Rate (whether before or
after any judgment). Borrower acknowledges that the cost and expense to Agent
and Lenders due to an Event of Default are difficult to ascertain and that the
Default Rate is a fair and reasonable estimate to compensate Agent and Lenders
for this.

 

(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on
the first day of each calendar month; (ii) on any date of prepayment, with
respect to the principal amount of Loans being prepaid; and (iii) on the
Maturity Date or the date the Obligations are accelerated pursuant to the terms
of this Agreement. Interest accrued on any other Obligations shall be due and
payable as provided in the Transaction Documents and, if no payment date is
specified, shall be due and payable on demand. Notwithstanding the foregoing,
interest accrued at the Default Rate shall be due and payable on demand.

 

3.1.2 Application of LIBOR to Outstanding Loans. Borrower may on any Business
Day, subject to delivery of a Notice of Conversion/Continuation, elect to
convert any portion of the Base Rate Loans to LIBOR Index Loans or LIBOR Index
Loans to Base Rate Loans.

 

3.1.3 Types of Loans. Except as otherwise provided in this Agreement, including
pursuant to Sections 3.1.2, 3.5 or 3.6, all Loans shall be made as LIBOR Index
Revolver Loans.

 

-26-

 

3.2 Fees

 

3.2.1 Unused Line Fee. Commencing on the two month anniversary of the Closing
Date, Borrower shall pay to Agent, for the Pro Rata benefit of Lenders, a fee
equal to (a) 0.375% per annum times the amount by which the Revolver Commitments
exceed the average daily balance of Revolver Loans during any month if the daily
unused amount as of the close of business on such day (or, if greater, the
Commitments minus the amount used to calculate the interest rate in Section
3.1.1(a) for such day) is less than 50% of the Commitments, (b) 0.50% per annum
times the amount by which the Revolver Commitments exceed the average daily
balance of Revolver Loans during any month if the daily unused amount as of the
close of business on such day (or, if greater, the Commitments minus the amount
used to calculate the interest rate in Section 3.1.1(a) for such day) is greater
than or equal to 50% of the Commitments but less than 75% of the Commitments,
and (c) 1.00% per annum times the amount by which the Revolver Commitments
exceed the average daily balance of Revolver Loans during any month if the daily
unused amount as of the close of business on such day (or, if greater, the
Commitments minus the amount used to calculate the interest rate in Section
3.1.1(a) for such day) is greater than 75% of the Commitments. Such fee shall be
payable in arrears, on the first day of each month and on the Commitment
Termination Date.

 

3.2.2 Reserved.

 

3.2.3 Closing Fee. On the Closing Date and on each other date set forth in the
Fee Letter, Borrower shall pay to Agent the fees described in the Fee Letter.

 

3.2.4 Agent Fees. Borrower shall pay to Agent, for its own account, the fees
described in the Fee Letter. Borrower shall also pay to Agent its standard wire
fee for each outgoing wire made by Agent at the request of Borrower.

 

3.3 Computation of Interest, Fees, Yield Protection. All interest, as well as
fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days. Each determination by
Agent of any interest, fees or interest rate hereunder shall be final,
conclusive and binding for all purposes, absent manifest error. All fees shall
be fully earned when due and shall not be subject to rebate, refund or
proration. All fees payable under Section 3.2 are compensation for services and
are not, and shall not be deemed to be, interest or any other charge for the
use, forbearance or detention of money. A certificate as to amounts payable by
Borrower under Section 3.4, 3.6, 3.7, or 5.10, submitted to Borrower by Agent or
the affected Lender, as applicable, shall be final, conclusive and binding for
all purposes, absent manifest error, and Borrower shall pay such amounts to the
appropriate party within 10 days following receipt of the certificate.

 

3.4 Reimbursement Obligations. Borrower shall reimburse Agent and Lenders for
all Extraordinary Expenses. Borrower shall also reimburse Agent and, as
applicable, Lenders, solely to the extent that such amounts do not constitute
Extraordinary Expenses, for all (i) legal fees and expenses of one outside
counsel for Agent and Lenders, taken as a whole (and, in the case of an actual
conflict of interest, one additional counsel to the applicable Persons, taken as
a whole, and to the extent reasonably necessary one local counsel in each
relevant jurisdiction to Agent and Lenders, taken as a whole), in each case
prior to an Event of Default, provided that after the occurrence and during the
continuation of an Event of Default, Borrower shall reimburse Agent and Lenders
for all legal fees and expenses of outside counsel incurred after the occurrence
of such Event of Default, (ii) accounting, appraisal, consulting, and other
fees, costs and expenses incurred by Agent, in connection with (a) negotiation
and preparation of any Transaction Documents, including any amendment or other
modification thereof; (b) administration of and actions relating to any
Collateral, Transaction Documents and transactions contemplated thereby,
including any actions taken to perfect or maintain priority of Agent’s Liens on
any Collateral, to maintain any insurance required hereunder or to verify
Collateral; and (c) subject to the limits of Section 9.1.2(b), each inspection,
audit or appraisal with respect to Borrower, Servicer or Collateral, whether
prepared by Agent’s personnel or a third party. All legal, accounting and
consulting fees shall be charged to Borrower by Agent’s and Lenders’ respective
professionals at their full hourly rates, regardless of any reduced or
alternative fee billing arrangements that Agent, any Lender, or any of their
Affiliates may have with such professionals with respect to this or any other
transaction; provided, that the foregoing shall in no way limit Borrower’s
obligations to reimburse Agent, or Lenders as provided for elsewhere in the
Transaction Documents, including, without limitation, reimbursement of
Extraordinary Expenses pursuant to this Section 3.4 and reimbursements
contemplated pursuant to Section 9.1.2(b). All amounts payable by Borrower under
this Section shall be due on demand.

 

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3.5 Illegality. If any Lender determines that any Applicable Law has made it
unlawful, or that any governmental authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to determine or charge interest
rates based upon the Daily LIBOR Rate, or any governmental authority has imposed
material restrictions on the authority of such Lender to purchase or sell, or to
take deposits of, Dollars in the London interbank market, then, on notice
thereof by such Lender to Agent, any obligation of such Lender to make LIBOR
Index Loans or to convert Base Rate Loans to LIBOR Index Loans shall be
suspended until such Lender notifies Agent that the circumstances giving rise to
such determination no longer exist. Upon delivery of such notice, Borrower shall
prepay or, if applicable, convert all LIBOR Index Loans of such Lender to Base
Rate Loans immediately if such Lender may not lawfully continue to maintain such
LIBOR Index Loans. Upon any such prepayment or conversion, Borrower shall also
pay accrued interest on the amount so prepaid or converted.

 

3.6 Inability to Determine Rates. If Required Lenders notify Agent for any
reason in connection with a request for a Borrowing of, or conversion to or
continuation of, a LIBOR Index Loan that (a) Dollar deposits are not being
offered to banks in the London interbank Eurodollar market for the Daily LIBOR
Rate, (b) adequate and reasonable means do not exist for determining the Daily
LIBOR Rate, or (c) the Daily LIBOR Rate does not adequately and fairly reflect
the cost to such Lenders of funding such Loan, then Agent will promptly so
notify Borrower and each Lender. Thereafter, the obligation of Lenders to make
or maintain LIBOR Index Loans shall be suspended until Agent (upon instruction
by Required Lenders) revokes such notice. Upon receipt of such notice, Borrower
may revoke any pending request for a Borrowing of, conversion to or continuation
of a LIBOR Index Loan or, failing that, will be deemed to have submitted a
request for a Base Rate Loan.

 

3.7 Increased Costs; Capital Adequacy

 

3.7.1 Change in Law. If any Change in Law shall:

 

(a)   impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(including any reserve requirement);

 

(b)   subject any Lender to any Taxes (other than (A) Indemnified Taxes, (B)
Taxes described in clauses (b) through (d) of the definition of Excluded Taxes
and (C) Connection Income Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto; or

 

(c) impose on any Lender or interbank market any other condition, cost or
expense (other than Taxes) affecting any Loan, Transaction Document, or
Commitment;

 

and the result thereof shall be to increase the cost to such Lender of making or
maintaining any Loan or Commitment, or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or any
other amount) then, upon request of such Lender, Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.

 

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3.7.2 Capital Adequacy. If any Lender determines that any Change in Law
affecting such Lender or any Lending Office of such Lender or such Lender’s
holding company, if any, regarding capital or liquidity requirements has or
would have the effect of reducing the rate of return on such Lender’s or holding
company’s capital as a consequence of this Agreement, or such Lender’s
Commitments or Loans to a level below that which such Lender or holding company
could have achieved but for such Change in Law (taking into consideration such
Lender’s and holding company’s policies with respect to capital adequacy and
liquidity), then from time to time Borrower will pay to such Lender such
additional amount or amounts as will compensate it or its holding company for
any such reduction suffered.

 

3.7.3 Compensation. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of its right
to demand such compensation, but Borrower shall not be required to compensate a
Lender for any increased costs incurred or reductions suffered more than nine
months prior to the date that the Lender notifies Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s intention
to claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

 

3.8 Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if Borrower is required to pay additional
amounts with respect to a Lender under Section 5.10, then, at the request of
Borrower, such Lender shall use reasonable efforts to designate a different
Lending Office or to assign its rights and obligations hereunder to another of
its offices, branches or Affiliates, if, in the judgment of such Lender, such
designation or assignment (a) would eliminate the need for such notice or reduce
amounts payable or to be withheld in the future, as applicable; and (b) would
not subject the Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to it or unlawful. Borrower shall pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

3.9 Reserved.

 

3.10 Maximum Interest. Notwithstanding anything to the contrary contained in any
Transaction Document, the interest paid or agreed to be paid under the
Transaction Documents shall not exceed the maximum rate of non-usurious interest
permitted by Applicable Law (“maximum rate”). If Agent or any Lender shall
receive interest in an amount that exceeds the maximum rate, the excess interest
shall be applied to the principal of the Obligations or, if it exceeds such
unpaid principal, refunded to Borrower. In determining whether the interest
contracted for, charged or received by Agent or a Lender exceeds the maximum
rate, such Person may, to the extent permitted by Applicable Law, (a)
characterize any payment that is not principal as an expense, fee or premium
rather than interest; (b) exclude voluntary prepayments and the effects thereof;
and (c) amortize, prorate, allocate and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.

 

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SECTION 4. LOAN ADMINISTRATION

 

4.1 Manner of Borrowing and Funding Revolver Loans

 

4.1.1 Notice of Borrowing.

 

(a)   Whenever Borrower desires funding of a Borrowing of Revolver Loans,
Borrower shall give Agent a Notice of Borrowing signed by a Senior Officer,
which shall be in such form as may be required by Agent (and which notice may be
given electronically subject to the limitations set forth in Section 13.3.2) and
which shall specify the account of Borrower into which the proceeds of such
Revolver Loans should be disbursed. Such notice must be received by Agent no
later than 11:00 a.m. on the Business Day of the requested funding date, in the
case of Base Rate Loans or LIBOR Index Loans. Notices received after 11:00 a.m.
shall be deemed received on the next Business Day. Each Notice of Borrowing
shall be irrevocable and shall specify (A) the amount of the Borrowing, and (B)
the requested funding date (which must be a Business Day).

 

(b)   Unless payment is otherwise timely made by Borrower, the becoming due of
any Obligations (whether principal, interest, fees or other charges, including
Extraordinary Expenses, Cash Collateral and Secured Bank Product Obligations)
shall be deemed to be a request for LIBOR Index Loan on the due date, in the
amount of such Obligations. The proceeds of such LIBOR Index Loans shall be
disbursed as direct payment of the relevant Obligation. In addition, Agent may,
at its option, charge such Obligations against any operating, investment or
other account of Borrower maintained with Agent or any of its Affiliates.

 

(c) If Borrower establishes a controlled disbursement account with Agent or any
Affiliate of Agent, then the presentation for payment of any check, ACH or
electronic debit, or other payment item at a time when there are insufficient
funds to cover it shall be deemed to be a request for Base Rate Revolver Loans
on the date of such presentation, in the amount of such payment item. The
proceeds of such Revolver Loans may be disbursed directly to the controlled
disbursement account or other appropriate account.

 

4.1.2 Fundings by Lenders. Each Lender shall timely honor its Revolver
Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans
that is properly requested hereunder. Except for Borrowings to be made as
Swingline Loans, Agent shall endeavor to notify Lenders of each Notice of
Borrowing (or deemed request for a Borrowing) by 12:00 noon on the proposed
funding date for Base Rate Loans or LIBOR Index Loans. Each Lender shall fund to
Agent such Lender’s Pro Rata share of the Borrowing to the account specified by
Agent in immediately available funds not later than 2:00 p.m. on the requested
funding date, unless Agent’s notice is received after the time provided above,
in which case Lender shall fund its Pro Rata share by 11:00 a.m. on the next
Business Day. Subject to its receipt of such amounts from Lenders, Agent shall
disburse the proceeds of the Revolver Loans as directed by Borrower. Unless
Agent shall have received (in sufficient time to act) written notice from a
Lender that it does not intend to fund its Pro Rata share of a Borrowing, Agent
may assume that such Lender has deposited or promptly will deposit its share
with Agent, and Agent may disburse a corresponding amount to Borrower. If a
Lender’s share of any Borrowing or of any settlement pursuant to Section
4.1.3(b) is not received by Agent, then Borrower agrees to repay to Agent on
demand the amount of such share, together with interest thereon from the date
disbursed until repaid, at the rate applicable to the Borrowing.

 

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4.1.3 Swingline Loans; Settlement.

 

(a)   Agent may, but shall not be obligated to, advance Swingline Loans to
Borrower, up to an aggregate outstanding amount of $3,500,000. Each Swingline
Loan shall constitute a Revolver Loan for all purposes, except that payments
thereon shall be made to Agent for its own account. The obligation of Borrower
to repay Swingline Loans shall be evidenced by the records of Agent and need not
be evidenced by any promissory note.

 

(b)   Settlement of Swingline Loans and other Revolver Loans among Lenders and
Agent shall take place on a date determined from time to time by Agent (but at
least weekly), in accordance with the Settlement Report delivered by Agent to
Lenders. Between settlement dates, Agent may in its discretion apply payments on
Revolver Loans to Swingline Loans, regardless of any designation by Borrower or
any provision herein to the contrary. Each Lender’s obligation to make
settlements with Agent is absolute and unconditional, without offset,
counterclaim or other defense, and whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6 are satisfied.
If, due to an Insolvency Proceeding with respect to Borrower or for any other
reason, any Swingline Loan may not be settled among Lenders hereunder, then each
Lender shall be deemed to have purchased from Agent a Pro Rata participation in
such Loan and shall transfer the amount of such participation to Agent, in
immediately available funds, within one Business Day after Agent’s request
therefor.

 

4.1.4 Notices. Borrower may request, convert or continue Loans, select interest
rates and transfer funds based on telephonic or e-mailed instructions to Agent
(subject to the limitations set forth in Section 13.3.2). Borrower shall confirm
each such request by prompt delivery to Agent of a Notice of Borrowing or Notice
of Conversion/Continuation, if applicable, but if it differs materially from the
action taken by Agent or Lenders, the records of Agent and Lenders shall govern.
Neither Agent nor any Lender shall have any liability for any loss suffered by
Borrower as a result of Agent or any Lender acting upon its understanding of
telephonic or e-mailed instructions (subject to the limitations set forth in
Section 13.3.2) from a person believed in good faith by Agent or any Lender to
be a person authorized to give such instructions on Borrower’s behalf.

 

4.2 Defaulting Lender

 

4.2.1 Reallocation of Pro Rata Share; Amendments. For purposes of determining
Lenders’ obligations to fund or participate in Loans, to share in fees or for
any other determination permitted hereunder, Agent may exclude the Commitments
and Loans of any Defaulting Lender(s) from the calculation of Pro Rata shares. A
Defaulting Lender shall have no right to vote on any amendment, waiver or other
modification of a Transaction Document, except as provided in Section 13.1.1(b).

 

4.2.2 Payments; Fees. Agent may, in its discretion, receive and retain any
amounts payable to a Defaulting Lender under the Transaction Documents, and a
Defaulting Lender shall be deemed to have assigned to Agent such amounts until
all Obligations owing to Agent, non-Defaulting Lenders and other Secured Parties
have been paid in full. Agent may apply such amounts to the Defaulting Lender’s
defaulted obligations or readvance the amounts to Borrower hereunder. A Lender
shall not be entitled to receive any fees accruing hereunder during the period
in which it is a Defaulting Lender, and the unfunded portion of its Commitment
shall be disregarded for purposes of calculating the unused line fee under
Section 3.2.1.

 

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4.2.3 Cure. Agent may determine in its reasonable discretion that a Lender
constitutes a Defaulting Lender and the effective date of such status shall be
conclusive and binding on all parties, absent manifest error. Borrower and Agent
may agree in writing that a Lender is no longer a Defaulting Lender. At such
time, Pro Rata shares shall be reallocated without exclusion of such Lender’s
Commitments and Loans, and all outstanding Revolver Loans and other exposures
under the Revolver Commitments shall be reallocated among Lenders and settled by
Agent (with appropriate payments by the reinstated Lender) in accordance with
the readjusted Pro Rata shares. Unless expressly agreed by Borrower and Agent,
no reinstatement of a Defaulting Lender shall constitute a waiver or release of
claims against such Lender. The failure of any Lender to fund a Loan or
otherwise to perform its obligations hereunder shall not relieve any other
Lender of its obligations, and no Lender shall be responsible for default by
another Lender.

 

4.3 One Obligation. The Loans and other Obligations constitute one general
obligation of Borrower and are secured by Agent’s Lien (for the benefit of the
Secured Parties) on all Collateral; provided, however, that Agent and each
Lender shall be deemed to be a creditor of, and the holder of a separate claim
against, Borrower to the extent of any Obligations jointly or severally owed by
Borrower.

 

4.4 Effect of Termination. On the Maturity Date, all Obligations shall be
immediately due and payable, and any Lender may terminate its and its
Affiliates’ Bank Products (including, only with the consent of Agent, any Cash
Management Services). All undertakings of Borrower contained in the Transaction
Documents shall survive any termination, and Agent shall retain its Liens in the
Collateral for the benefit of the Secured Parties and all of its rights and
remedies under the Transaction Documents until Full Payment of the Obligations.
Notwithstanding Full Payment of the Obligations, Agent shall not be required to
terminate its Liens in any Collateral unless, with respect to any damages Agent
may incur as a result of the dishonor or return of Payment Items applied to
Obligations, Agent receives (a) a written agreement satisfactory to Agent,
executed by Borrower and any Person whose advances are used in whole or in part
to satisfy the Obligations, indemnifying Agent and Lenders from such damages;
and (b) such Cash Collateral as Agent, in its discretion, deems appropriate to
protect against such damages. Sections 3.4, 3.6, 3.7, 5.6, 5.10, 5.11, 11, 13.2
and this Section 4.4, and the obligation of Borrower and Lender with respect to
each indemnity given by it in any Transaction Document, shall survive Full
Payment of the Obligations and any release relating to this credit facility.

 

SECTION 5. PAYMENTS

 

5.1 General Payment Provisions. All payments of Obligations shall be made in
Dollars, without offset, counterclaim or defense of any kind, free of (and
without deduction for) any Taxes (except as required by Applicable Law), and in
immediately available funds, not later than 12:00 noon on the due date. Any
payment after such time shall be deemed made on the next Business Day. Any
prepayment of Loans shall be applied first to Base Rate Loans, then to LIBOR
Index Loans.

 

5.2 Repayment of Revolver Loans. Revolver Loans shall be due and payable in full
on the Maturity Date, unless payment is sooner required hereunder. Subject to
Section 2.1.4(b), Revolver Loans may be prepaid from time to time, without
penalty or premium in accordance with the terms of Section 5.7 of this
Agreement. If any asset disposition includes the disposition of Bank Loans or
other Property outside of, in the case of such other Property, the Ordinary
Course of Business, then the net proceeds thereof shall be applied to the
Revolver Loans in an amount equal to not less than the value allocated to such
Bank Loans in the Borrowing Base. Notwithstanding anything herein to the
contrary, if an Overadvance exists, Borrower shall, on the sooner of Agent’s
demand or the first Business Day after Borrower has knowledge thereof, repay the
outstanding Revolver Loans in an amount sufficient to reduce the principal
balance of Revolver Loans to the Borrowing Base.

 

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5.3 Reserved.

 

5.4 Payment of Other Obligations. Obligations other than Loans, including
Extraordinary Expenses, shall be paid by Borrower as provided in the Transaction
Documents or, if no payment date is specified, on demand.

 

5.5 Dominion Account. Borrower shall maintain one or more Dominion Accounts with
Custodian pursuant to lockbox or other arrangements with Custodian. Borrower
shall obtain an agreement (in form and substance satisfactory to Agent) from
each lockbox servicer and Dominion Account bank, establishing Agent’s control
over and Lien in (for the benefit of the Secured Parties) the lockbox or a
Dominion Account, requiring immediate deposit of all remittances received in the
lockbox to a Dominion Account, providing for a daily sweep of such remittances
to the Agent and waiving offset rights of such servicer or bank, except for
customary administrative charges. Agent and Lenders assume no responsibility to
Borrower for any lockbox arrangement or a Dominion Account, including any claim
of accord and satisfaction or release with respect to any Payment Items accepted
by any bank. Agent shall have the right at any time after the occurrence and
during the continuation of an Event of Default to contact directly any or all
administrative agents with respect to Portfolio Investments (or if there is no
administrative agent for such Portfolio Investment, any Portfolio Company) to
ensure that payments on the Bank Loans are directed to a Dominion Account.
Borrower shall request in writing and otherwise take all necessary steps to
ensure that all payments on Bank Loans or otherwise relating to Collateral are
made directly to a Dominion Account (or a lockbox relating to a Dominion
Account). If Borrower or Servicer receives cash or Payment Items with respect to
any Collateral, it shall hold the same in trust and as agent for Agent (and
shall not be commingled with Borrower’s or Servicer’s other funds) and promptly
(not later than the next Business Day) deposit same into a Dominion Account. All
such cash and Payment Items shall be subject to the Lien of Agent upon the
earlier of the receipt thereof by Agent, Borrower or Servicer. Borrower hereby
grants to Agent (for the benefit of the Secured Parties) a Lien upon all items
and balances held in any lockbox and the Dominion Account as security for the
payment of the Obligations, in addition to and cumulative with the general
security interest in all other assets of Borrower (including all Deposit
Accounts) as provided elsewhere in this Agreement or any other Transaction
Document. Agent shall be entitled to apply immediately to the Obligations any
wire transfer, check or other item of payment received by Agent. Interest shall
continue accruing on the amount of any wire transfer, check or other Payment
Item for one Business Day after the date that the proceeds of such wire
transfer, check or other payment item become good, collected funds received by
Agent and are applied to the Obligations. Borrower irrevocably waives the right
to direct the application of any and all payments and collections at any time or
times hereafter received by Agent from or on behalf of Borrower, and Borrower
does hereby irrevocably agree that Agent shall have the continuing exclusive
right to apply and reapply any and all such payments and collections received at
any time or times hereafter by Agent or its agent against the Obligations in
such manner as set forth herein.

 

5.6 Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of Borrower or any of its Affiliates
or against any Obligations. If any payment by or on behalf of Borrower is made
to Agent or any Lender, or Agent or any Lender exercises a right of setoff, and
such payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by Agent or such Lender in
its discretion) to be repaid to a trustee, receiver or any other Person, then to
the extent of such recovery, the Obligation originally intended to be satisfied,
and all Liens, rights and remedies relating thereto, shall be revived and
continued in full force and effect as if such payment had not been made or such
setoff had not occurred.

 

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5.7 Allocation of Payments

 

5.7.1 Allocation.

 

(a)   Except as provided in clause (b) below, monies to be applied to the
Obligations, whether arising from payments by Portfolio Companies, realization
on Collateral, setoff or otherwise, shall be allocated as follows:

 

1.first, to all Administrative Expenses then due and payable;

 

2.second, to all costs and expenses, including Extraordinary Expenses, owing to
Agent;

 

3.third, to all Obligations constituting fees then due and payable (other than
Secured Bank Product Obligations);

 

4.fourth, to all Obligations constituting interest then due and payable (other
than Secured Bank Product Obligations);

 

5.fifth, to all amounts owing to Agent on Swingline Loans;

 

6.sixth, to the principal amount of the Loans; and

 

7.last, to all other Obligations, including all Borrower Expenses then due and
payable.

 

(b)   Notwithstanding anything to the contrary contained in this Agreement, upon
the occurrence and during the continuation of an Event of Default, all payments
when due hereunder shall be applied by the Agent as follows:

 

1.first, to all Administrative Expenses then due and payable (other than
Administrative Expenses arising pursuant to clause (b) of the definition
thereof);

 

2.second, to all costs and expenses, including Extraordinary Expenses, owing to
Agent;

 

3.third, to all amounts owing to Agent on Swingline Loans;

 

4.fourth, to all Obligations constituting fees (other than Secured Bank Product
Obligations);

 

5.fifth, to all Obligations constituting interest (other than Secured Bank
Product Obligations);

 

6.sixth, to all Loans and Secured Bank Product Obligations, including Cash
Collateralization of Secured Bank Product Obligations; and

 

7.last, to all other Obligations, including all Borrower Expenses and costs and
expenses owing to Servicer (including Administrative Expenses arising pursuant
to clause (b) of the definition thereof).

 

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Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category. If amounts are insufficient
to satisfy a category, they shall be applied on a pro rata basis among the
Obligations in the category. Amounts distributed with respect to any Secured
Bank Product Obligations shall be the lesser of the maximum Secured Bank Product
Obligations last reported to Agent or the actual Secured Bank Product
Obligations as calculated by the methodology reported to Agent for determining
the amount due. Agent shall have no obligation to calculate the amount to be
distributed with respect to any Secured Bank Product Obligations, and may
request a reasonably detailed calculation of such amount from the applicable
Secured Party. If a Secured Party fails to deliver such calculation within five
days following request by Agent, Agent may assume the amount to be distributed
is zero. The allocations set forth in this Section are solely to determine the
rights and priorities of Agent and Secured Parties as among themselves, and may
be changed by agreement among them without the consent of Borrower. This Section
is not for the benefit of or enforceable by Borrower.

 

5.7.2 Erroneous Application. Agent shall not be liable for any application of
amounts made by it in good faith and, if any such application is subsequently
determined to have been made in error, the sole recourse of any Lender or other
Person to which such amount should have been made shall be to recover the amount
from the Person that actually received it (and, if such amount was received by
any Lender, such Lender hereby agrees to return it).

 

5.8 Application of Payments

 

5.8.1 Dominion Account. On any Business Day on which the entire ledger balance
in the Dominion Account exceeds $10,000, an amount equal to the lesser of (a)
the entire balance in the Dominion Account, or (b) the outstanding amount of the
Obligations shall be directed to Agent and applied by Agent to the Obligations
at the beginning of the next Business Day in accordance with Section 5.7. If, as
a result of such application, a credit balance exists, the balance shall not
accrue interest in favor of Borrower and shall be made available to Borrower as
long as no Default or Event of Default exists. Borrower irrevocably waives the
right to direct the application of any payments or Collateral proceeds, and
agrees that Agent shall have the continuing, exclusive right to apply and
reapply same against the Obligations, in such manner as set forth in Section
5.7.

 

5.8.2 Insurance and Condemnation Proceeds. Any proceeds of insurance (other than
proceeds from workers’ compensation or D&O insurance) and any awards arising
from condemnation of any Collateral shall be paid to Agent. Any such proceeds or
awards shall be applied to payment of the Revolver Loans, and then to any other
Obligations outstanding.

 

5.8.3 Reinvestment. If requested by Borrower in writing within 15 days after
Agent’s receipt of any insurance proceeds or condemnation awards relating to any
loss or destruction of Equipment or real estate, Borrower may use such proceeds
or awards to repair or replace such Equipment or real estate (and until so used,
the proceeds shall be held by Agent as Cash Collateral or applied to the
Revolver Loans) as long as (i) no Default or Event of Default exists; (ii) such
repair or replacement is promptly undertaken and concluded, in accordance with
plans satisfactory to Agent (but in any event concluded within 180 days after
the date of such loss); (iii) replacement buildings are constructed on the sites
of the original casualties and are of comparable size, quality and utility to
the destroyed buildings; (iv) the repaired or replaced Property is free of Liens
(except in favor of Agent); (v) Borrower complies with disbursement procedures
for such repair or replacement as Agent may reasonably require; and (vi) the
aggregate amount of such proceeds or awards from any single casualty or
condemnation does not exceed $50,000.

 

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5.9 Loan Account; Account Stated

 

5.9.1 Loan Account. Agent shall maintain in accordance with its usual and
customary practices an account or accounts (“Loan Account”) evidencing the Debt
of Borrower resulting from each Loan from time to time. Any failure of Agent to
record anything in the Loan Account, or any error in doing so, shall not limit
or otherwise affect the obligation of Borrower to pay any amount owing
hereunder. Agent may maintain a single Loan Account in the name of Borrower, and
Borrower confirms that such arrangement shall have no effect on its liability
for the Obligations.

 

5.9.2 Entries Binding. Entries made in the Loan Account shall constitute
presumptive evidence of the information contained therein. If any information
contained in the Loan Account is provided to or inspected by any Person, then
such information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific information is
subject to dispute.

 

5.10 Taxes

 

5.10.1   Payments Free of Taxes. All payments by Borrower of Obligations shall
be free and clear of and without reduction for any Taxes, except as required by
Applicable Law. If Applicable Law requires Borrower or Agent to withhold or
deduct any Tax (as determined in the good faith discretion of Borrower or Agent,
as applicable, and including backup withholding or withholding Tax), the
withholding or deduction shall be based on information provided pursuant to
Section 5.11 and Agent shall pay the amount withheld or deducted to the relevant
governmental authority. If the withholding or deduction is made on account of
Indemnified Taxes or Other Taxes, the sum payable by Borrower shall be increased
so that Agent or Lender, as applicable, receives an amount equal to the sum it
would have received if no such withholding or deduction (including deductions
applicable to additional sums payable under this Section) had been made. Without
limiting the foregoing, Borrower shall timely pay all Other Taxes to the
relevant governmental authorities.

 

5.10.2   Payment. Borrower shall indemnify, hold harmless and reimburse (within
10 days after demand therefor) Agent and Lenders for any Indemnified Taxes or
Other Taxes (including those attributable to amounts payable under this Section)
withheld or deducted by Borrower or Agent, or paid by Agent or any Lender with
respect to any Obligations or Transaction Documents, whether or not such Taxes
were properly asserted by the relevant governmental authority, and including all
penalties, interest and reasonable expenses relating thereto. A certificate as
to the amount of any such payment or liability delivered to Borrower by Agent,
or by a Lender (with a copy to Agent), shall be conclusive, absent manifest
error. As soon as practicable after any payment of Taxes by Borrower, Borrower
shall deliver to Agent a receipt from the governmental authority or other
evidence of payment satisfactory to Agent.

 

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5.10.3 Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section (including by the
payment of additional amounts pursuant to this Section), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section with respect to the Taxes giving rise
to such refund), net of all out-of-pocket expenses (including Taxes) of such
indemnified party and without interest (other than any interest paid by the
relevant governmental authority with respect to such refund). Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this Section 5.10.3 (plus any
penalties, interest or other charges imposed by the relevant governmental
authority) in the event that such indemnified party is required to repay such
refund to such governmental authority. Notwithstanding anything to the contrary
in this Section 5.10.3, in no event will the indemnified party be required to
pay any amount to an indemnifying party pursuant to this Section 5.10.3, the
payment of which would place the indemnified party in a less favorable net
after-Tax position than the indemnified party would have been in if the Tax
subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional
amounts with respect to such Tax had never been paid. This paragraph shall not
be construed to require any indemnified party to make available its Tax returns
(or any other information relating to its Taxes that it deems confidential) to
the indemnifying party or any other Person.

 

5.11 Lender Tax Information

 

5.11.1 Status of Lenders. Each Lender shall deliver documentation and
information to Agent and Borrower, at the times and in form required by
Applicable Law or reasonably requested by Agent or Borrower, sufficient to
permit Agent or Borrower to determine (a) whether or not payments made with
respect to Obligations are subject to Taxes, (b) if applicable, the required
rate of withholding or deduction, and (c) such Lender’s entitlement to any
available exemption from, or reduction of, applicable Taxes for such payments or
otherwise to establish such Lender’s status for withholding tax purposes in the
applicable jurisdiction.

 

5.11.2 Documentation. If Borrower is a U.S. Person:

 

(a) any Lender that is a U.S. Person shall deliver to Agent and Borrower on or
prior to the date on which such Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of Agent and
Borrower) executed copies of IRS Form W-9 certifying that such Lender is exempt
from U.S. federal backup withholding Tax to backup withholding or information
reporting requirements.;

 

(b) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Agent and Borrower on or prior to the date on which such Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of Agent and Borrower), whichever of the following is
applicable

 

(i) in the case of a Foreign Lender that is claiming eligibility for benefits of
an income tax treaty to which the United States is a party, executed copies of
IRS Form W-8BEN or IRS For W-8BEN-E as applicable, establishing an exemption
from, or reduction of, U.S. federal withholding Tax pursuant to the “interest”
article of such tax treaty and (y) with respect to any other applicable payments
under any Transaction Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as
applicable, establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “business profits” or “other income” article of
such tax treaty;

 

(ii) executed copies of IRS Form W-8ECI;

 

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(iii) executed copies of IRS Form W-8IMY and all required supporting
documentation; or

 

(iv) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, IRS Form W-8BEN or IRS Form
W-8BEN-E, as applicable and a certificate showing such Foreign Lender is not (A)
a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of
the Code, (C) a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code, or (D) any other form prescribed by Applicable Law as
a basis for claiming exemption from or a reduction in withholding tax, together
with such supplementary documentation necessary to allow Agent and Borrower to
determine the withholding or deduction required to be made; and

 

(c) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Agent and Borrower on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the reasonable request of Agent or Borrower), executed copies of any other
form prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit
Agent or Borrower to determine the withholding or deduction required to be made.

 

5.11.3 Lender Obligations. Each Lender agrees that if any form or certification
it previously delivered expires or becomes obsolete or inaccurate in any
respect, it shall update such form or certification and promptly notify Borrower
and Agent of any change in circumstances that would change any claimed Tax
exemption or reduction. Each Lender shall indemnify, hold harmless and reimburse
(within 10 days after demand therefor) Borrower and Agent for any Taxes, losses,
claims, liabilities, penalties, interest and expenses (including reasonable
attorneys’ fees) incurred by or asserted against Borrower or Agent by any
governmental authority due to such Lender’s failure to deliver, or inaccuracy or
deficiency in, any documentation required to be delivered by it pursuant to this
Section. Each Lender authorizes Agent to set off any amounts due to Agent under
this Section against any amounts payable to such Lender under any Transaction
Document.

 

5.11.4 FATCA. If a payment made to a Lender under this Agreement would be
subject to U.S. Federal withholding Tax imposed by FATCA, such Lender shall
deliver to Agent, at the time or times prescribed by law and at such time or
times reasonably requested by Agent, such documentation prescribed by Applicable
Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by Agent as may be necessary for
Agent to comply with its obligations under FATCA, to determine that such Lender
has complied with such Lender’s obligations under FATCA, applicable reporting
requirements of FATCA (including those contained in Section 1471(b) or 1472(b)
of the Code, as applicable) or to determine the amount to deduct and withhold
from such payment. Solely for purposes of this paragraph, “FATCA” shall include
any amendments made to FATCA after the Closing Date.

 

SECTION 6. CONDITIONS PRECEDENT

 

6.1 Conditions Precedent to Initial Loans. In addition to the conditions set
forth in Section 6.2, Lenders shall not be required to fund any requested Loan,
or otherwise extend credit to Borrower hereunder, until the date (“Closing
Date”) that each of the conditions set forth on Exhibit C attached hereto have
been satisfied or waived in writing by Agent.

 

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6.2 Conditions Precedent to All Credit Extensions. Agent and Lenders shall not
be required to fund any Loans or grant any other accommodation to or for the
benefit of Borrower, unless the following conditions are satisfied:

 

(a) No Default or Event of Default shall exist at the time of, or result from,
such funding, issuance or grant;

 

(b) The representations and warranties of Borrower in the Transaction Documents
shall be true and correct in all material respects on the date of, and upon
giving effect to, such funding, issuance or grant (except for representations
and warranties that expressly relate to an earlier date, in which case such
representations and warranties shall have been true and correct on such earlier
date, and that any representation or warranty which is subject to any
materiality qualifier shall be required to be true and correct in all respects);

 

(c) All conditions precedent in any other Transaction Document that are
applicable to the funding of any credit extension shall be satisfied; and

 

(d) No event shall have occurred or circumstance exist that has or could
reasonably be expected to have a Material Adverse Effect and no action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental authority or legislative
body to enjoin, restrain or prohibit, or to obtain damages in respect of, or
which is related to or arises out of, this Agreement or any of the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby.

 

Each request (or deemed request) by Borrower for funding of a Loan or grant of
an accommodation shall constitute a representation by Borrower that the
foregoing conditions are satisfied on the date of such request and on the date
of such funding, issuance or grant. As an additional condition to any funding,
issuance or grant, Agent shall have received such other information, documents,
instruments and agreements as it deems appropriate in connection therewith
including, but not limited to, an updated Borrowing Base Certificate. Each
representation and warranty contained in this Agreement and the other
Transaction Documents shall be deemed to be reaffirmed by Borrower as being true
and correct in all material respects (except for representations and warranties
that expressly relate to an earlier date, in which case such representations and
warranties shall have been true and correct on such earlier date, and that any
representation or warranty which is subject to any materiality qualifier shall
be required to be true and correct in all respects) on each day that Borrower
requests or is deemed to have requested an extension of credit hereunder, except
for changes in the nature of Borrower’s or, if applicable, any Subsidiary’s
business or operations that may occur after the date hereof in the Ordinary
Course of Business so long as Agent has consented to such changes or such
changes are not violative of any provision of this Agreement.

 

SECTION 7. COLLATERAL

 

7.1 Grant of Security Interest. To secure the prompt payment and performance of
all Obligations, Borrower hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon the following Property,
whether now owned or hereafter acquired, and wherever located: (a) all Accounts;
(b) all Chattel Paper, including electronic chattel paper; (c) all Commercial
Tort Claims, including those shown on Schedule 7; (d) all Deposit Accounts; (e)
all Documents; (f) all General Intangibles, including Intellectual Property; (g)
all Goods, including Inventory, Equipment and fixtures; (h) all Instruments; (i)
all Investment Property; (j) all Letter-of-Credit Rights; (k) all Supporting
Obligations; (l) all monies, whether or not in the possession or under the
control of Agent, a Lender, or a bailee or Affiliate of Agent or a Lender,
including any Cash Collateral; (m) all accessions to, substitutions for, and all
replacements, products, and cash and non-cash proceeds of the foregoing,
including proceeds of and unearned premiums with respect to insurance policies,
and claims against any Person for loss, damage or destruction of any Collateral;
(n) all books and records (including customer lists, files, correspondence,
tapes, computer programs, print-outs and computer records) pertaining to the
foregoing; and (o) all other personal Property of Borrower.

 

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7.2 Lien on Other Collateral

 

7.2.1 Deposit and other Accounts. To further secure the prompt payment and
performance of all Obligations, Borrower hereby grants to Agent, for the benefit
of Secured Parties, a continuing security interest in and Lien upon all amounts
credited to any Deposit Account, Securities Account and Commodity Account of
Borrower, including any sums in any blocked or lockbox accounts or in any
accounts into which such sums are swept. Borrower hereby authorizes and directs
each bank or other depository to deliver to Agent, upon request, all balances in
any Deposit Account, Securities Account and Commodity Account maintained by
Borrower, without inquiry into the authority or right of Agent to make such
request. Borrower shall take all actions (including, without limitation, the
delivery of one or more control agreements) necessary to establish Agent’s
control (including through the execution of a deposit account control agreement
as required by Agent) of each such Deposit Account, Securities Account and
Commodity Account (other than a Deposit Account exclusively used for payroll,
payroll taxes or employee benefits, or an account containing not more than
$10,000 at any time). Borrower shall be the sole account holder of each Deposit
Account and shall not allow any other Person (other than Agent) to have control
over a Deposit Account or any Property deposited therein (other than a Deposit
Account exclusively used for payroll, payroll taxes or employee benefits).
Borrower shall promptly notify Agent of any opening or closing of a Deposit
Account and, with the consent of Agent, will amend Schedule 2 to reflect same.
At all times on and after the Closing Date, all Deposit Accounts, Securities
Accounts and Commodity Accounts shall be primarily maintained with the
Custodian.

 

7.2.2 Cash Collateral. Any Cash Collateral may be invested, at Agent’s
discretion (and with the consent of Borrower, as long as no Event of Default
exists), but Agent shall have no duty to do so, regardless of any agreement or
course of dealing with Borrower, and shall have no responsibility for any
investment or loss. Borrower hereby grants to Agent, for the benefit of Secured
Parties and as security for the Obligations, a security interest in all Cash
Collateral held from time to time and all proceeds thereof, whether held in a
Cash Collateral Account or otherwise. Agent may apply Cash Collateral to the
payment of Obligations as they become due, as provided in Section 5.7 hereof.
Each Cash Collateral Account and all Cash Collateral shall be under the sole
dominion and control of Agent, and neither Borrower nor other Person shall have
any right to any Cash Collateral, until Full Payment of all Obligations.

 

7.3 Reserved.

 

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7.4 Other Collateral

 

7.4.1 Commercial Tort Claims. Borrower shall promptly notify Agent in writing if
Borrower has a Commercial Tort Claim (other than, as long as no Default or Event
of Default exists, a Commercial Tort Claim for less than $200,000), shall
promptly amend Schedule 7 to include such claim, and shall take such actions as
Agent deems appropriate to subject such claim to a duly perfected, first
priority Lien in favor of Agent (for the benefit of Secured Parties).

 

7.4.2 Certain After-Acquired Collateral. Borrower shall promptly notify Agent in
writing if, after the Closing Date, Borrower obtains any interest in any
Collateral consisting of Deposit Accounts, Securities Accounts, Commodity
Accounts, Chattel Paper (including, without limitation, tangible Chattel Paper
and Electronic Chattel Paper), Documents, Instruments, Intellectual Property,
Investment Property or Letter-of-Credit Rights and, upon Agent’s request, shall
promptly take such actions as Agent deems appropriate to effect Agent’s duly
perfected, first priority Lien upon such Collateral, including obtaining any
appropriate possession, or control agreement and delivery of any applicable
Collateral to the Custodian for the benefit of the Agent, provided that prior to
an Event of Default, Agent shall not require Borrower to deliver any such
Collateral to Agent or any Person other than the Custodian. If any Collateral is
in the possession of a third party, at Agent’s request, Borrower shall obtain an
acknowledgment that such third party holds the Collateral for the benefit of
Agent.

 

7.5 No Assumption of Liability. The Lien on Collateral granted hereunder is
given as security only and shall not subject Agent or any Lender to, or in any
way modify, any obligation or liability of Borrower relating to any Collateral.

 

7.6 Further Assurances. Promptly upon request, Borrower shall deliver such
instruments, assignments, title certificates, or other documents or agreements,
and shall take such actions, as Agent deems appropriate under Applicable Law to
evidence or perfect its Lien on any Collateral, or otherwise to give effect to
the intent of this Agreement. Borrower authorizes Agent to file any financing
statement that indicates the Collateral as “all assets” or “all personal
property” of Borrower, or words to similar effect, and ratifies any action taken
by Agent before the Closing Date to effect or perfect its Lien on any
Collateral.

 

7.7 Continuation of Security Interest. Notwithstanding termination of this
Agreement or of Lenders’ commitments to extend Loans hereunder, until Full
Payment of all Obligations, Agent shall retain its security interest in all
presently owned and hereafter arising or acquired Collateral.

 

SECTION 8. REPRESENTATIONS AND WARRANTIES

 

8.1 General Representations and Warranties. To induce Agent and Lenders to enter
into this Agreement and to make available the Commitments and Loans, Borrower
represents and warrants that:

 

8.1.1 Organization and Qualification. Borrower is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Borrower is duly qualified, authorized to do business and in good
standing as a foreign corporation in each jurisdiction where failure to be so
qualified could reasonably be expected to have a Material Adverse Effect.
Borrower has not changed its legal status or the jurisdiction in which it is
organized or moved its chief executive office within the five (5) years
preceding the Closing Date.

 

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8.1.2 Power and Authority. Borrower is duly authorized to execute, deliver and
perform its obligations under Transaction Documents to which it is a party. The
execution, delivery and performance of the Transaction Documents have been duly
authorized by all necessary action, and do not (a) require any consent or
approval of any holders of Equity Interests of Parent or Borrower, other than
those already obtained; (b) contravene the Organic Documents of Borrower; (c)
violate or cause a default under any Applicable Law or Material Contract; or (d)
result in or require the imposition of any Lien (other than Permitted Liens) on
any Property of Borrower.

 

8.1.3 Enforceability. Each Transaction Document to which it is a party is a
legal, valid and binding obligation of Borrower, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally.

 

8.1.4 Capital Structure. Schedule 4 shows, for Borrower, its name, its
jurisdiction of organization, its authorized and issued Equity Interests, the
holders of its Equity Interests, and all agreements binding on such holders with
respect to their Equity Interests. Except as disclosed on Schedule 4, in the
five years preceding the Closing Date, Borrower has not acquired any substantial
assets from any other Person nor been the surviving entity in a merger or
combination. Borrower has no Subsidiaries and does not own any Equity Interest
in any other Person, other than Equity Interests acquired in connection with a
Portfolio Investment. There are no outstanding purchase options, warrants,
agreements to buy, subscription rights, agreements to issue or sell, convertible
interests, phantom rights or powers of attorney relating to Equity Interests of
Borrower.

 

8.1.5 Title to Properties; Priority of Liens. Borrower has good and marketable
title to (or valid leasehold interests in) all of its real estate, and good
title to all of its personal Property, including all Property reflected in any
financial statements delivered to Agent or Lenders, in each case free of Liens
except Permitted Liens. Borrower has paid and discharged all lawful claims that,
if unpaid, could become a Lien on its Properties, other than Permitted Liens.
All Liens of Agent in the Collateral are duly perfected, first priority Liens,
subject only to Permitted Liens that are expressly allowed to have priority over
Agent’s Liens.

 

8.1.6 Reserved.

 

8.1.7 Financial Statements. The consolidated balance sheets, and related
statements of income, cash flow and shareholder’s equity, of Parent and its
respective Subsidiaries that have been and are hereafter delivered to Agent and
Lenders, are prepared in accordance with GAAP, and fairly present the financial
positions and results of operations of Parent and its consolidated Subsidiaries
at the dates and for the periods indicated. All projections delivered from time
to time to Agent and Lenders have been prepared in good faith, based on
reasonable assumptions in light of the circumstances at such time. Since
December 31, 2017, there has been no change in the condition, financial or
otherwise, of Parent, Borrower or Subsidiary that could reasonably be expected
to have a Material Adverse Effect. No financial statement delivered to Agent or
Lenders at any time contains any untrue statement of a material fact, nor fails
to disclose any material fact necessary to make such statement not materially
misleading. Each of Parent and Borrower is Solvent. No transfer of property has
been or will be made by Borrower or any of its Affiliates and no obligation has
been or will be incurred by Borrower or any of its Affiliates in connection with
the transactions contemplated by this Agreement or the other Transaction
Documents with the intent to hinder, delay, or defraud either present or future
creditors of Borrower or any of its Affiliates.

 

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8.1.8 Surety Obligations. Borrower is not obligated as surety or indemnitor
under any bond or other contract that assures payment or performance of any
obligation of any Person, except as permitted hereunder.

 

8.1.9 Taxes. Each of Borrower and Parent has filed all federal, state and local
tax returns and other reports that it is required by law to file, and has paid,
or made provision for the payment of, all such Taxes upon it, its income and its
Properties that are due and payable, except to the extent being Properly
Contested (and, in the case of matters being Properly Contested as of the
Closing Date, fully disclosed to Agent and Lenders on or before the Closing
Date). The provision for Taxes on the books of each of Borrower and Parent is
adequate for all years not closed by applicable statutes, and for its current
Fiscal Year.

 

8.1.10 Brokers. There are no brokerage commissions, finder’s fees or investment
banking fees payable in connection with any transactions contemplated by the
Transaction Documents.

 

8.1.11 Intellectual Property. Borrower owns or has the lawful right to use all
Intellectual Property necessary for the conduct of its business, without
conflict with any rights of others. There is no pending or, to Borrower’s
knowledge, threatened Intellectual Property claim with respect to Borrower or
any of its Property (including any Intellectual Property). Except as disclosed
on Schedule 5, Borrower does not pay or owe any Royalty or other compensation to
any Person with respect to any Intellectual Property. All Intellectual Property
owned, used or licensed by, or otherwise subject to any interests of, Borrower
is shown on Schedule 5.

 

8.1.12 Governmental Approvals. Borrower has, is in compliance with, and is in
good standing with respect to, all approvals from all governmental authorities
necessary to conduct its business and to own, lease and operate its Properties.
All necessary import, export or other licenses, permits or certificates for the
import or handling of any goods or other Collateral have been procured and are
in effect, and Borrower has complied with all foreign and domestic laws with
respect to the shipment and importation of any goods or Collateral.

 

8.1.13 Compliance with Laws. Borrower has duly complied, and its Properties and
business operations are in compliance, in all material respects with all
Applicable Law, except where noncompliance could not reasonably be expected to
have a Material Adverse Effect. There have been no citations, notices or orders
of material noncompliance issued to Borrower under any Applicable Law.

 

8.1.14 Burdensome Contracts. Borrower is not a party or subject to any contract,
agreement or charter restriction that could reasonably be expected to have a
Material Adverse Effect. Borrower is not party or subject to any Restrictive
Agreement, except as shown on Schedule 6. No such Restrictive Agreement
prohibits the execution, delivery or performance of any Transaction Document by
Borrower.

 

8.1.15 Litigation. Except as shown on Schedule 7, there are no proceedings or
investigations pending or, to Borrower’s knowledge, threatened against Borrower
or Parent, or any of their businesses, operations, Properties, prospects or
conditions, that (a) relate to any Transaction Documents or transactions
contemplated thereby; or (b) could reasonably be expected to have a Material
Adverse Effect if determined adversely to Borrower or Parent. Except as shown on
such Schedule, Borrower does not have a Commercial Tort Claim (other than, as
long as no Default or Event of Default exists, a Commercial Tort Claim for less
than $50,000). Borrower is not in default with respect to any order, injunction
or judgment of any governmental authority.

 

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8.1.16 No Defaults. No event or circumstance has occurred or exists that
constitutes a Default or Event of Default. Borrower is not in default, and no
event or circumstance has occurred or exists that with the passage of time or
giving of notice would constitute a default, under any Material Contract or in
the payment of any Borrowed Money. There is no basis upon which any party (other
than Borrower) could terminate a Material Contract prior to its scheduled
termination date.

 

8.1.17 ERISA. Except as disclosed on Schedule 8, neither Borrower nor any of its
Affiliates has any Plan on the date hereof. Borrower and each of its Affiliates
is in full compliance with the requirements of ERISA and the regulations
promulgated thereunder with respect to each Plan. No fact or situation that is
reasonably likely to result in a Material Adverse Effect exists in connection
with any Plan. Neither Borrower nor any of its Affiliates has any withdrawal
liability in connection with a Multiemployer Plan.

 

8.1.18 [Reserved].

 

8.1.19 Labor Relations. Borrower is not party to or bound by any collective
bargaining agreement, management agreement or consulting agreement. There are no
material grievances, disputes or controversies with any union or other
organization of Borrower’s employees, or, to Borrower’s knowledge, any asserted
or threatened strikes, work stoppages or demands for collective bargaining. No
goods or services have been or will be produced by Borrower in violation of any
applicable labor laws or regulations or any collective bargaining agreement or
other labor agreements or in violation of any minimum wage, wage-and-hour or
other similar laws or regulations.

 

8.1.20 [Reserved].

 

8.1.21 Not a Regulated Entity. (a) Borrower is not required to register as an
“investment company” under the Investment Company Act; (b) Borrower is not
subject to regulation under the Federal Power Act, the Interstate Commerce Act,
or any public utilities code, and (c) Borrower is not subject to regulation
under any other Applicable Law regarding its authority to incur Debt which would
prohibit the Borrower from making a Borrowing or otherwise limit, impair, or
affect in any manner the rights of Agent and Lenders under the Loan Agreement.

 

8.1.22 Margin Stock. Borrower is not engaged, principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. No Loan proceeds will be used by
Borrower to purchase or carry, or to reduce or refinance any Debt incurred to
purchase or carry, any Margin Stock or for any related purpose governed by
Regulations T, U or X of the Board of Governors.

 

8.1.23 Deposit and Other Accounts. Schedule 2 sets forth all Deposit Accounts,
Securities Accounts and Commodity Accounts maintained by Borrower with entities
other than Agent, including all Dominion Accounts.

 

8.1.24 Anti-Terrorism Laws, Anti-Corruption Laws and Sanctions.

 

(a) Neither Borrower nor any of its Affiliates is in violation of any
Anti-Terrorism Law; engages in or conspires to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law; or is a
Sanctioned Person. Neither Borrower nor any of its Affiliates conducts any
business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any Sanctioned Person or deals in, or
otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order No. 13224.

 

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(b) Borrower and its Affiliates have implemented and maintain in effect policies
and procedures designed to ensure compliance by Borrower and such Affiliates and
their respective directors, officers, employees and agents with Anti-Corruption
Laws and applicable Sanctions, and Borrower and its Affiliates, their respective
Subsidiaries and their respective directors, officers and employees and, to the
knowledge of Borrower, its agents, are in compliance with Anti-Corruption Laws
and applicable Sanctions. None of (i) Borrower, its Affiliates or any of their
respective directors, officers or employees, or (ii) to the knowledge of
Borrower, any agent of Borrower or its Affiliates or any of their respective
Subsidiaries that will act in any capacity in connection with or benefit from
the credit facilities established hereby, is a Sanctioned Person. No borrowing,
use of proceeds or other transactions contemplated herein will violate
Anti-Corruption Laws or applicable Sanctions.

 

8.1.25 Additional Collateral Matters.

 

(a) As of the date hereof: (i) no amount payable under or in connection with any
of the Collateral is evidenced by any Instrument or tangible Chattel Paper
(other than promissory notes delivered to the Custodian); (ii) (1) Borrower does
not hold, own or have any interest in any certificated securities or
uncertificated securities other than those constituting Collateral with respect
to which Agent has a perfected security interest in such Collateral, and (2) it
has entered into a duly authorized, executed and delivered control agreement in
form and substance satisfactory to Agent with respect to each Deposit Account,
Securities Account and Commodity Account listed in Schedule 2 with respect to
which Agent has a perfected security interest in such accounts by “control” (as
contemplated by Section 9-104 of the UCC); (iii) no amount payable under or in
connection with any of the Collateral is evidenced by any Electronic Chattel
Paper or any “transferable record” (as that term is defined in Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction; and (iv) no amount payable under or in connection with
any of the Collateral is evidenced by any Letter-of-Credit Rights.

 

(b) This Agreement and the other Security Documents create in favor of Agent,
for the benefit of the Secured Parties referred to therein, a legal, valid,
continuing and enforceable security interest and Lien in the Collateral, the
enforceability of which is subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law. The financing statements, releases and other
filings are in appropriate form and have been or will be filed in appropriate
filing offices. Upon such filings and/or the obtaining of “control” (as
contemplated by Section 9-104 of the UCC), Agent will have a perfected Lien on,
and security interest in, to and under all right, title and interest of the
grantors thereunder in all Collateral that may be perfected under the UCC (in
effect on the date this representation is made) by filing, recording or
registering a financing statement or analogous document (including without
limitation the proceeds of such Collateral subject to the limitations relating
to such proceeds in the UCC) or by obtaining control. The Pledged Collateral (as
defined in the Pledge Agreement) has been delivered to Agent (together with
stock powers or other appropriate instruments of transfer executed in blank
form).

 

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(c) If applicable, when a trademark security agreement or patent security
agreement (or a short form thereof) is filed in the United States Patent and
Trademark Office and when financing statements, releases and other filings in
appropriate form are filed in the applicable filing offices, Agent shall have a
fully perfected Lien on, and security interest in, all right, title and interest
of Borrower in trademarks, patents and related assets constituting trademark and
patent Collateral (as set forth in the applicable trademark security agreement
or patent security agreement) in which a security interest may be perfected by
filing, recording or registering a security agreement, financing statement or
analogous document in the United States Patent and Trademark Office, as
applicable. If applicable, when a copyright security agreement or patent
security agreement is filed in the United States Copyright Office and when
financing statements, releases and other filings in appropriate form are filed
in the applicable filing offices, Agent shall have a fully perfected Lien on,
and security interest in, all right, title and interest of Borrower in
copyrights and assets constituting copyright Collateral (as set forth in the
applicable trademark security agreement or patent security agreement) in which a
security interest may be perfected by filing, recording or registering a
security agreement, financing statement or analogous document in the United
States Copyright Office, as applicable.

 

(d) Neither the businesses nor the properties of Borrower are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance).

 

(e) Neither Borrower nor any property of Borrower has (i) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii) has become
subject to any liability under any Environmental Law, (iii) has received notice
of any claim or investigation with respect to any material liability or
non-compliance under any Environmental Law or (iv) knows of any basis for any
liability under any Environmental Law, except, in each case, as could not,
individually or in the aggregate, reasonably be expected to result in any
material liability under Environmental Laws or have a Material Adverse Effect.
Borrower is not is undertaking, and Borrower has not completed, either
individually or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to any
actual or threatened release, discharge or disposal of hazardous materials at
any site, location or operation, either voluntarily or pursuant to the order of
any governmental authority or the requirements of any Environmental Law; and all
hazardous materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or operated by
Borrower have been disposed of in a manner not reasonably expected to result in
material liability to Borrower.

 

8.1.26 Special Purpose Entity. Borrower has not and shall not:

 

(a) engage in any business or activity other than the purchase, receipt and
management of Collateral, the transfer and pledge of Collateral pursuant to the
terms of the Transaction Documents, the entry into and the performance under the
Transaction Documents and such other activities as are incidental thereto;

 

(b) acquire or own any assets other than (a) the Collateral or (b) incidental
property as may be necessary for the operation of Borrower and the performance
of its obligations under the Transaction Documents;

 

(c) merge into or consolidate with any Person or dissolve, divide, terminate or
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets (other than in accordance with the provisions
hereof), without in each case first obtaining the prior written consent of the
Agent, or except as permitted by this Agreement, change its legal structure, or
jurisdiction of formation;

 

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(d) 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 Agent, amend, modify,
terminate or fail to comply with the provisions of its operating agreement, or
fail to observe limited liability company formalities;

 

(e) form, acquire or own any Subsidiary, own any equity interest in any other
entity, or make any Investment in any Person (other than Portfolio Investments,
Cash and Cash Equivalents) without the prior written consent of the Agent;

 

(f) commingle its assets with the assets of any of its Affiliates, or of any
other Person;

 

(g) incur any Indebtedness, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than Indebtedness to the Lenders
hereunder or in conjunction with a repayment of all Loans owed to the Lenders
and a termination of all the Commitments;

 

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

 

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

 

(j) enter into any contract or agreement with any Person, except (i) the
Transaction Documents and (ii) other contracts or agreements that are upon terms
and conditions that are commercially reasonable and that would be available on
an arms-length basis with third parties other than such Affiliate;

 

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

 

(l) fail to correct any known misunderstandings regarding the separate identity
of Borrower and the Parent or any other Person;

 

(m) except as provided in this Agreement, guarantee, become obligated for, or
hold itself out to be responsible for the debt of another Person;

 

(n) 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 (i) to mislead others as to the identity of the Person with which
such other party is transacting business, or (ii) to suggest that it is
responsible for the debts of any third party (including any of its principals or
Affiliates);

 

(o) 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;

 

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(p) 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;

 

(q) except as may be required or permitted by the Code and regulations or other
applicable state or local tax law, hold itself out as or be considered as a
department or division of (i) any of its principals or Affiliates, (ii) any
Affiliate of a principal or (iii) any other Person;

 

(r) fail to maintain separate financial statements, showing its assets and
liabilities separate and apart from those of any other Person and not have its
assets listed on any financial statement of any other Person; provided, however,
that Borrower’s assets may be included in a consolidated financial statement of
its Affiliate provided that (a) appropriate notation shall be made on such
consolidated financial statements to indicate the separateness of Borrower from
such Affiliate and to indicate that Borrower’s assets and credit are not
available to satisfy the debts and other obligations of such Affiliate or any
other Person and (b) such assets shall also be listed on Borrower’s own separate
balance sheet;

 

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

 

(t) acquire the obligations or securities of its Affiliates or members;

 

(u) guarantee any obligation of any person, including an Affiliate;

 

(v) 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;

 

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

 

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

 

(y) (i) fail at any time to have at least one (1) independent manager (the
“Independent Manager”) which Independent Manager must, in each such instance, be
a natural person who has prior experience as an independent director,
independent manager or independent member with at least three years of
employment experience, and who is provided by Cogency Global Inc., CT
Corporation, Corporation Service Company, Global Securitization Services,
National Registered Agents, Inc., Wilmington Trust Company, Stewart Management
Company, Lord Securities Corporation or, if none of those companies is then
providing professional independent managers, another nationally recognized
company reasonably approved by the Lenders, in each case that is not an
Affiliate of Borrower and that provides professional independent managers and
other corporate services in the Ordinary Course of Business, and which
individual is duly appointed as an Independent Manager and is not, and has never
been, and will not while serving as Independent Manager be, any of the
following: (v) a member, partner, equityholder, manager, director, officer or
employee of Borrower or any of its respective equityholders or Affiliates (other
than as an independent manager or special member of Borrower or an Affiliate of
Borrower that is not in the direct chain of ownership of Borrower and that is
required by a creditor to be a single purpose bankruptcy remote entity); (x) a
creditor, supplier or service provider (including provider of professional
services) to Borrower or any of its equityholders or Affiliates (other than an
employee of a nationally recognized company that routinely provides professional
independent managers and other corporate services to Borrower or any of its
equityholders or Affiliates in the Ordinary Course of Business); (y) a family
member of any such member, partner, equityholder, manager, director, officer,
employee, creditor, supplier or service provider; or (z) a Person that controls
(whether directly, indirectly or otherwise) any of (v), (x) or (y) above; or
(ii) fail to ensure that all limited liability company action relating to the
selection, maintenance or replacement of the Independent Manager shall require
the written consent of the Agent. A natural person who otherwise satisfies the
foregoing definition and satisfies subparagraph (v) by reason of being the
independent manager or special member of a “special purpose entity” affiliated
with Borrower shall be qualified to serve as an Independent Manager of Borrower,
provided that the fees that such individual earns from serving as independent
manager of affiliates of Borrower in any given year constitute in the aggregate
less than five percent (5%) of such individual’s annual income for that year;

 

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(z) fail to provide that the unanimous consent of all managers (including the
consent of Borrower’s Independent Manager) is required for Borrower to
(a) 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 consenting 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 Borrower, (e) make
any assignment for the benefit of 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;

 

(aa) fail to file its own tax returns separate from those of any other Person,
except to the extent that Borrower is treated as a “disregarded entity” for tax
purposes and is not required to file tax returns under applicable law, and pay
any taxes required to be paid under applicable law; or

 

(bb) fail to comply with the special purpose entity requirements set forth in
this Section 8.1.26 such that Moore & Van Allen PLLC or another law firm
reasonably acceptable to the Agent could no longer render a substantive
nonconsolidation opinion with respect to Borrower.

 

8.2 Complete Disclosure. No Transaction Document, nor any other agreement,
document, certificate, or statement, delivered by or on behalf of Borrower or
any of its Affiliates to Agent or any Lender contains any untrue statement of a
material fact, nor fails to disclose any material fact necessary to make the
statements contained therein not misleading. There is no fact or circumstance
that Borrower or any of its Affiliates has failed to disclose to Agent in
writing that could reasonably be expected to have a Material Adverse Effect. As
of the Closing Date, the information included in the Beneficial Ownership
Certification is true and correct in all respects.

 

8.3 Updated Representations and Warranties. Each representation and warranty
contained in this Agreement and the other Transaction Documents shall be deemed
to be reaffirmed by Borrower on each day that Borrower delivers or is required
to deliver a Borrowing Base Certificate hereunder and on each day a Loan is made
hereunder, except for changes in the nature of Borrower’s business or operations
that may occur after the date hereof in the Ordinary Course of Business so long
as Agent has provided its prior written consent (in its sole discretion) to such
changes or such changes are not violative of any provision of this Agreement.

 

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SECTION 9. COVENANTS AND CONTINUING AGREEMENTS

 

9.1 Affirmative Covenants. As long as any Commitments or Obligations are
outstanding, Borrower and/or Servicer, as applicable, shall do the following:

 

9.1.1 Collateral Reporting and Records.

 

(a) Borrowing Base. Borrower shall (or shall cause Servicer to) deliver to
Agent, by the 15th day of each month, a Borrowing Base Certificate prepared as
of the close of business of the previous month, and at such other times as Agent
may request; provided that, while all calculations of Availability in any
Borrowing Base Certificate shall originally be made by Borrower and certified by
a Senior Officer, Agent may from time to time review and adjust any such
calculation in its Permitted Discretion (i) to reflect its reasonable estimate
of declines in value of any Collateral, due to collections received in the
Dominion Account or otherwise; (ii) to adjust advance rates to reflect changes
in dilution, quality, mix and other factors affecting Collateral; and (iii) to
the extent the calculation is not made in accordance with this Agreement.
Borrower, Agent and Lenders agree that the Borrowing Base Certificate and other
information required to be delivered to Agent pursuant to this Section 9.1.1 may
be delivered electronically utilizing Agent’s “Stucky Netlink” system or any
other electronic transmission system approved by Agent, and any such information
delivered electronically shall be deemed to be delivered with the following
certification: “As of the date of this Certificate, no Event of Default exists
or has occurred and is continuing. Borrower acknowledges that the Loans made by
Agent and Lenders to, or for the benefit of, Borrower are based upon Agent’s and
Lenders’ reliance on the information contained herein and all representations
and warranties with respect to Collateral in the Loan Agreement are applicable
to the Collateral included in this Certificate. The reliance by Agent and
Lenders on this Certificate should not be deemed to limit the right of Agent to
establish or revise, in each case in its Permitted Discretion, criteria of
eligibility or other reserves (including, but not limited to, rent reserves) or
otherwise limit, impair, or affect in any manner the rights of Agent and Lenders
under the Loan Agreement. In the event of any conflict between the determination
of Agent of the amount of the Loans to Borrower in accordance with the terms of
the Loan Agreement and the determination by Borrower of such amounts, the
determination of Agent shall govern. All capitalized terms used in this
Certificate shall have the meaning assigned to them in the Loan Agreement.”

 

(b) Servicing Reports. Borrower shall cause Servicer to deliver to Agent all
reports provided to Borrower pursuant to the terms of the Servicing Agreement.

 

9.1.2 Inspections; Appraisals

 

(a) Borrower and Servicer shall permit Agent from time to time, subject (except
when a Default or Event of Default exists) to reasonable notice and normal
business hours, to (i) visit and inspect Borrower’s or, to the extent relating
to the Transaction Documents and the Collateral, Servicer’s Properties, (ii)
inspect, audit and make extracts from Borrower’s or, to the extent relating to
the Transaction Documents and the Collateral, Servicer’s books and records, and
(iii) discuss with its officers, employees, agents, advisors and independent
accountants of Borrower’s or, to the extent relating to the Transaction
Documents and the Collateral, Servicer’s business, financial condition, assets,
prospects and results of operations. Lenders may participate in any such visit
or inspection, at their own expense. Neither Agent nor any Lender shall have any
duty to Borrower or Servicer to make any inspection, nor to share any results of
any inspection, appraisal or report with Borrower or Servicer. Borrower and
Servicer acknowledge that all inspections, appraisals and reports are prepared
by Agent and Lenders for their purposes, and Borrower and Servicer shall not be
entitled to rely upon them.

 

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(b) Borrower shall reimburse Agent for all charges, costs and expenses of Agent
in connection with (i) examinations of Servicer or Borrower’s books and records
or any other financial or Collateral matters as Agent deems appropriate for each
day that an employee or agent of Agent shall be engaged in an examination or
review of any of Servicer’s or Borrower’s properties), plus reasonable expenses,
(ii) valuations of Portfolio Investments; (iii) the establishment of electronic
collateral reporting systems performed by employees or agents of Agent; and (iv)
the actual charges paid or incurred by Agent if it elects to employ the services
of one or more third parties to perform financial audits of Borrower, establish
electronic collateral reporting of Servicer or Borrower, appraise the Collateral
or to assess Borrower’s business valuation; provided, that so long as no Event
of Default has occurred and is continuing, the Borrower shall be responsible for
all costs and expenses for only two (2) such visits per Fiscal Year by the Agent
or its designees. Borrower agrees to pay Agent’s then standard charges for
examination activities, including the standard charges of Agent’s internal
examination and appraisal groups ($1,000 per person per day as of the Closing
Date), as well as the charges of any third party used for such purpose.

 

9.1.3 Financial and Other Information. Borrower and Parent shall keep adequate
records and books of account with respect to its business activities, in which
proper entries are made in accordance with GAAP reflecting all financial
transactions, and shall furnish to Agent and Lenders:

 

(a) as soon as available, and in any event within 90 days after the close of
each Fiscal Year, balance sheets as of the end of such Fiscal Year and the
related statements of income, cash flow and shareholders’ equity for such Fiscal
Year, for Parent and its consolidated Subsidiaries, together in each case with
all supporting schedules and footnotes, which consolidated statements shall be
audited and certified (without qualification) by KPMG LLP or any other firm of
independent certified public accountants of recognized national standing
selected by Parent and acceptable to Agent, and shall set forth in comparative
form corresponding figures for the preceding Fiscal Year and other information
acceptable to Agent;

 

(b) as soon as available, and in any event within 45 days after the end of each
of the first three Fiscal Quarters of each Fiscal Year, unaudited balance sheets
as of the end of such Fiscal Quarter and the related statements of income and
cash flow for such period and for the portion of the Fiscal Year then elapsed,
for Parent and its consolidated Subsidiaries setting forth in comparative form
corresponding figures for the preceding Fiscal Year and certified by a Senior
Officer of Borrower stating that the information contained therein fairly
presents the financial position and results of operations Parent and its
consolidated Subsidiaries for such quarter and period, subject to normal
year-end adjustments and the absence of footnotes;

 

(c) as soon as available, and in any event within 45 days after the end of each
Fiscal Quarter (but within 60 days after the last Fiscal Quarter in a Fiscal
Year), an unaudited balance sheet as of the end of such Fiscal Quarter and the
related statements of income and cash flow for such period and for the portion
of the Fiscal Year then elapsed, for Borrower setting forth in comparative form
corresponding figures for the preceding Fiscal Year and certified by a Senior
Officer of Borrower as prepared in accordance with GAAP;

 

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(d) concurrently with delivery of financial statements under clause (c) above,
or more frequently if requested by Agent while a Default or Event of Default
exists, a Compliance Certificate executed by a Senior Officer of Borrower;

 

(e) concurrently with delivery of financial statements under clause (a) above,
copies of all management letters and other material reports submitted to Parent
by its accountants in connection with such financial statements, and promptly
upon receipt thereof, copies of each report to Parent and/or Borrower (or any of
them) concerning accounting practices and systems and any final comment letter
submitted by such accountants to management in connection with an annual audit;

 

(f) not later than 30 days prior to the end of each Fiscal Year, projections of
Borrower’s consolidated balance sheets, results of operations, cash flow and
Availability for the next Fiscal Year, month by month;

 

(g) within 45 days after the last day of each Fiscal Quarter of Borrower, all
internal and external valuation reports and reviews relating to the Eligible
Portfolio Investments (including all valuation reports delivered by CTS Capital
Advisors and any other Approved Third-Party Appraiser in connection with the
quarterly appraisals of Unquoted Investments in accordance with Section
9.1.11(b)(ii)(B), and any other information relating to the Eligible Portfolio
Investments as requested by the Agent or any Lender;

 

(h) as soon as available, and in any event within 45 days after the end of each
Fiscal Quarter, a copy of Borrower’s loan data tape in a format reasonably
acceptable to Agent, which shall include but not be limited to the following
information: (i) for each Portfolio Investment, the name and number of the
related Portfolio Company, the collection status, the loan status, an indication
of whether or not such Portfolio Investment is an Eligible Portfolio Investment,
the date of each scheduled payment and the outstanding balance, (ii) the
Borrowing Base for each Eligible Portfolio Investment, and (iii) such other
information as may be reasonably required for the Backup Servicer to perform its
duties under the Servicing Agreement;

 

(i) promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or reports that Borrower or Parent has made
generally available to its shareholders; copies of any regular, periodic and
special reports or registration statements or prospectuses that Borrower or
Parent files with the SEC or any other governmental authority, or any securities
exchange; and copies of any press releases or other statements made available by
Borrower or Parent to the public concerning material changes to or developments
in the business of Borrower or Parent;

 

(j) promptly after the sending or filing thereof, copies of any annual report to
be filed in connection with each Plan or any employee benefit plan or similar
employee benefit arrangement maintained or contributed to by Parent or Borrower
that is not subject to the laws of the United States or is mandated by a
government other than the United States for employees of Parent or Borrower;

 

(k) promptly following any request therefor, information and documentation
reasonably requested by the Agent or any Lender for purposes of compliance with
applicable “know your customer” requirements under the PATRIOT Act or other
applicable Anti-Terrorism Law;

 

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(l) concurrently with the delivery of the Borrowing Base Certificate in Section
9.1.1(a) above, a report of all gains and losses on trades of Portfolio
Investments over the prior calendar month; and

 

(m) such other reports and information (financial or otherwise) as Agent may
reasonably request from time to time in connection with any Collateral or
Borrower’s or Servicer’s financial condition or business.

 

Notwithstanding the foregoing, the requirement to deliver financial statements
and other information set forth in clauses (a), (b) and (i) of this Section
9.1.3 may be satisfied with respect to Parent by furnishing (A) the applicable
financial statements of Parent, (B) the Parent’s Form 10-K or 10-Q, or (C) such
other instruments, documents or agreements filed with the SEC, as applicable,
filed with the SEC, or by delivering notice to Agent (which notice may be sent
via automated email through Parent’s website) that such financial statements
have been filed with the SEC, in each case, within the time periods specified in
such paragraphs.

 

9.1.4 Notices. Borrower shall notify Agent and Lenders in writing, promptly
after an Borrower’s obtaining knowledge thereof, of any of the following that
affects Borrower: (a) the threat or commencement of any proceeding or
investigation, whether or not covered by insurance, if an adverse determination
could have a Material Adverse Effect; (b) any pending or threatened labor
dispute, strike or walkout, or the expiration of any material labor contract;
(c) any default under or termination of a Material Contract; (d) the existence
of any Default or Event of Default (together with what action, if any, Borrower
is taking to correct the same); (e) any litigation involving an amount at issue
in excess of $50,000 or changes in existing litigation or any judgment against
it or its assets with an amount at issue or assets involved exceeding $50,000;
(f) the assertion of any Intellectual Property claim, if an adverse resolution
could have a Material Adverse Effect; (g) any violation or asserted violation of
any Applicable Law by Borrower or with respect to the Collateral; (i) the
occurrence of any event or occurrence which could possibly, as a result of the
passage of time or otherwise, result in any of the events described in Section
10.1(k); (j) the discharge of or any withdrawal or resignation by Parent’s or
Borrower’s independent accountants; (k) any proposed opening of a new office or
place of business, at least 30 days prior to such opening; (l) any failure of
Borrower to pay rent at any of its business locations; (m) the filing of any
Lien against Borrower (other than the Lien of Agent), notice from any taxing
authorities as to claimed deficiencies or any tax lien or any notice relating to
alleged ERISA violations, the occurrence of any reportable event (consisting of
any of the events set forth in Section 4043(b) of ERISA) or the occurrence of
any Servicer Termination Event; (n) any damage or loss to property in excess of
$50,000; (o) any rejection, return, offset, dispute, loss or other circumstance
in an amount equal to or greater than $50,000 or otherwise having a Material
Adverse Effect on any Collateral; (p) any acceleration of the maturity of any
Debt or the occurrence or existence of any event or circumstance which gives the
holder of such Debt the right to accelerate, and (q) any change in the
information provided in the Beneficial Ownership Certification that would result
in a change to the list of beneficial owners identified in parts (c) or (d) of
such certification.

 

9.1.5 Backup Servicing Agreement. If this Agreement is amended to increase the
Commitments and join additional Lenders other than AloStar to this Agreement,
then Borrower shall, within thirty (30) days after the date of such amendment,
enter into a backup servicing agreement with a Backup Servicer in form and
substance satisfactory to Agent.

 

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9.1.6 Compliance with Laws; Taxes. Borrower and Servicer shall comply with all
Applicable Laws, including laws regarding collection and payment of Taxes, and
pay and discharge all Taxes prior to the date on which they become delinquent or
penalties attach (unless such Taxes are being Properly Contested) and maintain
all approvals from all governmental authorities necessary to the ownership of
its Properties or conduct of its business, except where the failure to do so
would not reasonably be expected to result in a Material Adverse Effect, and,
without limiting the generality of the foregoing, act promptly and diligently to
make appropriate remedial actions with respect to any Environmental Laws,
whether or not directed to do so by any governmental authority. If an Account
includes a charge for any Taxes, Agent is authorized, in its discretion, to pay
the amount thereof to the proper taxing authority for the account of Borrower
and to charge Borrower therefor; provided, however, that neither Agent nor
Lenders shall be liable for any Taxes that may be due from Borrower or with
respect to any Collateral.

 

9.1.7 Insurance. Parent shall maintain a fidelity bond with respect to Parent
and all Subsidiaries of Parent covering certain (a) loss resulting from
dishonest or fraudulent acts committed by an employee, (b) loss of property on
premises or in transit, (c) loss resulting from forgery or alteration of
instruments and other documents, (e) loss related to securities and (f) loss
resulting from counterfeit currency, each as more specifically described in the
fidelity bond filing previously provided to Agent. Parent shall also maintain
insurance on the Collateral, with Borrower as a named insured, with financially
sound and reputable insurance companies, in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business. Upon
request, the Borrower shall promptly furnish the Agent copies of all such
insurance policies or certificates evidencing such insurance and such other
documents and evidence of insurance as the Agent shall request.

 

9.1.8 Licenses and Other Rights. Borrower and Servicer shall keep each license
affecting any Collateral or any other material Property of Borrower and Servicer
each in full force and effect; promptly notify Agent of any proposed
modification to any such license, or entry into any new license, in each case at
least 30 days prior to its effective date; pay all Royalties when due; notify
Agent of any default or breach asserted by any Person to have occurred under any
license; preserve and maintain its legal existence, authorities to transact
business, rights and franchises, trade names, patents, trademarks, and permit
necessary to the proper conduct of its business; and, except as could not
reasonably be expected to have a Material Adverse Effect, remain in good
standing and qualified to transact business as a foreign entity in any state or
other jurisdiction in which it is required to be qualified to transact business
as a foreign entity.

 

9.1.9 Other Affirmative Covenants. (a) If any amount payable under or in
connection with any of the Collateral shall be evidenced by any Instrument or
tangible Chattel Paper, Borrower shall forthwith endorse, assign and deliver the
same to Custodian, accompanied by such instruments of transfer or assignment
duly executed in blank as Agent may reasonably request from time to time; and
(b) Borrower shall at all times defend its title to Collateral and Agent’s Liens
therein against all Persons, claims and demands whatsoever, except Permitted
Liens.

 

9.1.10 Calculation of Borrowing Base. For purposes of this Agreement, the
“Borrowing Base” shall be determined, as at any date of determination, as the
sum of the products obtained by multiplying (x) the Value of each Eligible
Portfolio Investment by (y) the applicable Advance Rate; provided that:

 

(a) the Advance Rate applicable to the aggregate Value of all Eligible Portfolio
Investments in their entirety shall be 0% at any time when the Borrowing Base is
composed entirely of Eligible Portfolio Investments issued by fewer than eight
(8) different issuers;

 

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(b) not more than (i) 35% of the Borrowing Base may consist of Eligible
Portfolio Investments of the same Portfolio Company, and (ii) 50% of the
Borrowing Base may consist of Eligible Portfolio Investments of two Portfolio
Companies;

 

(c) not more than $8,000,000 of the Borrowing Base may consist of Eligible
Portfolio Investments of the same Portfolio Company;

 

(d) not more than 10% of the Borrowing Base may consist of Eligible Portfolio
Investments where the primary obligor or issuer of such Eligible Portfolio
Investment is organized under the laws of Canada or any province thereof;

 

(e) Eligible Portfolio Investments for which the applicable Portfolio Company
had Portfolio Company EBITDA equal to or greater than $3,000,000 but less than
$10,000,000 for the 12 month period most recently ended shall be excluded from
the Borrowing Base to the extent such Eligible Portfolio Investments would
exceed, in the aggregate, 10% of the Borrowing Base, and all Portfolio
Investments for which the applicable Portfolio Company had Portfolio Company
EBITDA of less than $3,000,000 shall be excluded from the Borrowing Base; and

 

(f) not more than 10% of the Borrowing Base may consist of Eligible Portfolio
Investments consisting of Short Term Loans.

 

For all purposes of this Section 9.1.10, all issuers of Eligible Portfolio
Investments that are Affiliates of one another shall be treated as a single
issuer (unless such issuers are Affiliates of one another solely because they
are under the common Control of the same private equity sponsor or similar
sponsor). For the avoidance of doubt, no Portfolio Investment shall be an
Eligible Portfolio Investment unless, among the other requirements set forth in
this Agreement, (i) such Investment is subject only to Permitted Liens and (ii)
such Investment is Transferable (as defined on Schedule 12).

 

9.1.11 Portfolio Value and Diversification.

 

(a) Intentionally Omitted.

 

(b) Portfolio Valuation, Etc.

 

(i) Settlement Date Basis. For purposes of this Agreement, all determinations of
whether a Portfolio Investment is an Eligible Portfolio Investment shall be
determined on a Settlement-Date Basis, provided that no such investment shall be
included as an Eligible Portfolio Investment to the extent it has not been paid
for in full.

 

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(ii) Determination of Values. Borrower will conduct reviews of the value to be
assigned to each of its Eligible Portfolio Investments as follows:

 

(A) Quoted Investments External Review. With respect to Quoted Investments,
Borrower shall, on the date of any Notice of Borrowing and otherwise not less
frequently than once each calendar month, determine the market value of such
Quoted Investments which shall, in each case, be determined in accordance with
one of the following methodologies as selected by Borrower (each such value, an
“External Quoted Value”):

 

(w) in the case of public and 144A securities, the average of the recent bid
prices as determined by two Approved Dealers selected by Borrower,

 

(x) in the case of Bank Loans, the average of the recent bid prices as
determined by two Approved Dealers selected by Borrower or an Approved Pricing
Service which makes reference to at least two Approved Dealers with respect to
such Bank Loans,

 

(y) in the case of any Quoted Investment traded on an exchange, the closing
price for such Eligible Portfolio Investment most recently posted on such
exchange, and

 

(z) in the case of any other Quoted Investment, the fair market value thereof as
determined by an Approved Pricing Service.

 

(B) Unquoted Investments External Review. With respect to Unquoted Investments:

 

(w) Commencing with the quarter ending December 31, 2018 and for each Fiscal
Quarter thereafter (or such other dates as are reasonably agreed by Borrower and
the Agent (provided that such testing dates shall occur not less than
quarterly), each a “Valuation Testing Date”), the Agent through an Independent
Valuation Provider may, in its Permitted Discretion, solely for the purposes of
determining the Borrowing Base, test the values as of such Valuation Testing
Date of those Unquoted Investments that are Portfolio Investments included in
the Borrowing Base selected by the Agent (such selected assets, the “IVP Tested
Assets” and such value, the “IVP External Unquoted Value”); provided that for
the avoidance of doubt, in the case of any Unquoted Investments acquired during
a Fiscal Quarter, the value shall be as determined pursuant to clause
(b)(ii)(E)(z)(2) below); provided, further that the Agent shall provide written
notice to Borrower, setting forth a description of which Unquoted Investments
shall be IVP Tested Assets as of such Valuation Testing Date, not later than 15
days prior to the Valuation Testing Date (or such later date as agreed to
between the Agent and Borrower).

 

(x) With respect to all Unquoted Investments that are not IVP Tested Assets as
of such Valuation Testing Date and which were acquired at least 45 days prior to
such Valuation Testing Date (the “Borrower Tested Assets”), Borrower shall
request an Approved Third-Party Appraiser to assist the Borrower in determining
the fair market value of the remaining Unquoted Investments, as of each
Valuation Testing Date (such value, the “Borrower External Unquoted Value”), and
to provide the Borrower with a written independent valuation report as part of
that assistance each quarter. The fair market value of any Portfolio Investment
that has been determined without the assistance of an Independent Valuation
Provider or an Approved Third-Party Appraiser shall be deemed to be zero until
such asset is valued by an Independent Valuation Provider or an Approved
Third-Party Appraiser (but effective upon the date upon which the Borrowing Base
Certificate for such last day is required to be delivered); provided that for
the avoidance of doubt, in the case of any Unquoted Investments acquired during
a Fiscal Quarter, the value shall be as determined pursuant to clause
(b)(ii)(E)(z)(2) below.

 

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(y) Each Unquoted Investment shall receive an valuation pursuant to either
Section 9.1.11(b)(ii)(B)(w) or Section 9.1.11(b)(ii)(B)(x) at least once during
each three (3) month period.

 

(z) The Agent shall have sole and absolute discretion to revise the value of any
Portfolio Investment included in the Borrowing Base, or to reject Collateral
from inclusion in the Borrowing Base.

 

(C)Internal Review. Borrower shall conduct internal reviews to determine the
value of all Eligible Portfolio Investments (x) at least once each calendar
quarter, in the case of Unquoted Investments, (y) once each month, in the case
of each Quoted Investment or (z) in each case at such other times as Borrower
has knowledge of any event that may adversely affect the value of any Eligible
Portfolio Investment (each such value, an “Internal Value”).

 

(D)Value of Quoted Investments. Subject to Sections 9.1.11(b)(ii)(G) and
9.1.11(b)(v), the “Value” of each Quoted Investment for all purposes of this
Agreement shall be the lowest of (1) the Internal Value of such Quoted
Investment as most recently determined by Borrower pursuant to
Section 9.1.11(b)(ii)(C), (2) the External Quoted Value of such Quoted
Investment as most recently determined pursuant to Section 9.1.11(b)(ii)(A) and
(3) if such Quoted Investment is a debt investment, the par or face value of
such Quoted Investment; provided that in no event shall the Value of any Quoted
Investment be greater than par for Borrowing Base purposes.

 

(E)Value of Unquoted Investments. Subject to Sections 9.1.11(ii)(G) and
9.1.11(v),

 

(x) if the Internal Value of any Unquoted Investment as most recently determined
by Borrower pursuant to Section 9.1.11(b)(ii)(C) falls below the range of the
IVP External Unquoted Value or the Borrower External Unquoted Value of such
Unquoted Investment as most recently determined pursuant to
Section 9.1.11(b)(ii)(B), then the “Value” of such Unquoted Investment for all
purposes of this Agreement shall be deemed to be the lower of (i) the Internal
Value and (ii) if such Unquoted Investment is a debt investment, the par or face
value of such Unquoted Investment;

 

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(y) (i) if the Internal Value of any Unquoted Investment as most recently
determined by Borrower pursuant to Section 9.1.11(b)(ii)(C) falls above the
range of the Borrower External Unquoted Value of such Unquoted Investment as
most recently determined pursuant to Section 9.1.11(b)(ii)(B), then the “Value”
of such Unquoted Investment for all purposes of this Agreement shall be deemed
to be the lower of (i) the midpoint of the range of the Borrower External
Unquoted Value and (ii) if such Unquoted Investment is a debt investment, the
par or face value of such Unquoted Investment;

 

(ii) if the Internal Value of any Unquoted Investment as most recently
determined by Borrower pursuant to Section 9.1.11(b)(ii)(C) falls more than 5%
above the midpoint of the range of the IVP External Unquoted Value of such
Unquoted Investment as most recently determined pursuant to
Section 9.1.11(b)(ii)(B), then the “Value” of such Unquoted Investment for all
purposes of this Agreement shall be deemed to be the lower of (i) the midpoint
of the range of the IVP External Unquoted Value and (ii) if such Unquoted
Investment is a debt investment, the par or face value of such Unquoted
Investment; and

 

(z) if the Internal Value of any Unquoted Investment as most recently determined
by Borrower pursuant to Section 9.1.11(b)(ii)(C) is within the range of the
Borrower External Unquoted Value, or within or not more than 5% above the
midpoint of the range of the IVP External Unquoted Value, of such Unquoted
Investment as most recently determined pursuant to Section 9.1.11(b)(ii)(B),
then the “Value” of such Unquoted Investment for all purposes of this Agreement
shall be deemed to be the lower of (i) the Internal Value and (ii) if such
Unquoted Investment is a debt investment, the par or face value of such Unquoted
Investment;

 

except that:

 

(1) if the difference between the highest and lowest Borrower External Unquoted
Value in such range exceeds an amount equal to 6% of the midpoint of such range,
the “Value” of such Unquoted Investment for all purposes of this Agreement shall
instead be deemed to be the lowest of (i) the lowest Borrower External Unquoted
Value in such range, (ii) the Internal Value determined pursuant to
Section 9.1.11(b)(ii)(C), and (iii) if such Unquoted Investment is a debt
investment, the par or face value of such Unquoted Investment;

 

(2) if an Unquoted Investment is acquired during a Fiscal Quarter, the “Value”
of such Unquoted Investment for all purposes of this Agreement shall be deemed
to be equal to the lowest of (x) the Internal Value of such Unquoted Investment
as determined by Borrower pursuant to Section 9.1.11(b)(ii)(C), (y) the cost of
such Unquoted Investment until such time as the Borrower External Unquoted Value
or IVP External Unquoted Value of such Unquoted Investment is determined in
accordance with Section 9.1.11(b)(ii)(B) as at the applicable Valuation Testing
Date, and (z)  if such Unquoted Investment is a debt investment, the par or face
value of such Unquoted Investment; and

 

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(3) in no event shall the Value of any Unquoted Investment be greater than par
for Borrowing Base purposes.

 

(F)Actions Upon an Overadvance. If, based upon such internal review, Borrower
determines that an Overadvance exists or that the Borrowing Base has declined by
more than 15% from the Borrowing Base stated in the Borrowing Base Certificate
last delivered by Borrower to the Agent, then Borrower shall, promptly and in
any event within two Business Days as provided in Section 9.1.3(a), deliver a
Borrowing Base Certificate reflecting the new amount of the Borrowing Base and
shall take the actions, and make the payments and prepayments (if any), all as
more specifically set forth in Section 2.1.5.

 

(G)Failure to Determine Values. If Borrower shall fail to determine the value of
any Eligible Portfolio Investment as at any date pursuant to the requirements
(but subject to the exclusions) of the foregoing subclauses (A), (B), (C),
(D) or (E) (or if the Agent shall fail to determine the value of any Eligible
Portfolio Investment as described in the foregoing subclause (B) as a result of
any action, inaction or lack of cooperation of Borrower or any of its
Affiliates), then the “Value” of such Eligible Portfolio Investment as at such
date shall be deemed to be zero. Except as provided in the immediately preceding
sentence, if the Agent shall fail to determine the value of any Eligible
Portfolio Investment as at any date pursuant to clause (B)(x), then the “Value”
of such Eligible Portfolio Investment as at such date (subject to clause (iii)
below) shall be the lower of (x) the Internal Value and (y) if such Unquoted
Investment is a debt investment, the par or face value of such Unquoted
Investment, provided, however, that if a Borrower External Unquoted Value or IVP
External Unquoted Value has been obtained with respect to such asset, then the
“Value” of such Eligible Portfolio Investment will be determined as provided in
clause (E) above.

 

(H)Initial Value of Assets. Notwithstanding anything to the contrary contained
herein, from the Closing Date until the date when valuation reports are required
to be delivered under Section 9.1.3(g) for the Fiscal Quarter ending December
31, 2018, the Value of any Unquoted Investment included in the Borrowing Base
shall be the lower of (i) the Internal Value of such Unquoted Investment
determined by Borrower pursuant to Section 9.1.11(b)(ii)(C) and (ii) if such
Unquoted Investment is a debt investment, the par or face value of such Unquoted
Investment.

 

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(v) Supplemental Testing of Values; Valuation Dispute Resolutions.
Notwithstanding the foregoing, the Agent, individually or at the request of the
Required Lenders, shall at any time have the right to request any Eligible
Portfolio Investment (other than IVP Tested Assets as of the most recent
Valuation Testing Date) included in the Borrowing Base with a value determined
pursuant to Section 9.1.11(b)(ii) to be independently valued by an Independent
Valuation Provider. There shall be no limit on the number of such appraisals
requested by the Agent and the costs of any such valuation shall be at the
expense of Borrower. If the value of any Borrower Tested Asset determined
pursuant to Section 9.1.11(b)(ii) differs from the value determined by the
Independent Valuation Provider and the difference between such values is
(1) less than or equal to 5% of the value determined pursuant to
Section 9.1.11(b)(ii), then the value determined pursuant to
Section 9.1.11(b)(ii) shall become the “Value” of such Portfolio Investment,
(2) greater than 5% and less than or equal to 20% of the value determined
pursuant to Section 9.1.11(b)(ii), then the average of the value determined
pursuant to Section 9.1.11(b)(ii) and the value determined by the Independent
Valuation Provider shall become the “Value” of such Portfolio Investment, and
(3) greater than 20% of the value determined pursuant to Section 9.1.11(b)(ii),
then either (i) the “Value” of such Portfolio Investment shall be the lesser of
the value determined pursuant to Section 9.1.11(b)(ii) and the value determined
by the Independent Valuation Provider or (ii) if Borrower so elects, Borrower
and the Agent shall retain (at Borrower’s sole cost and expense) an additional
Approved Third-Party Appraiser and, upon completion of such appraisal, the
“Value” of such Portfolio Investment shall be the average of the three
valuations (with the average of the value determined pursuant to Section
9.1.11(b)(ii) and the value determined by the Independent Valuation Provider to
be used until the third value is obtained). For purposes of this Section
9.1.11(v), the “Value” of any Portfolio Investment for which the Independent
Valuation Provider’s value is used shall be the midpoint of the range (if any)
determined by the Independent Valuation Provider.

 

(iii) Generally Applicable Valuation Provisions.

 

(A) The Independent Valuation Provider shall apply a recognized valuation
methodology that is commonly accepted in Borrower’s industry for valuing
Portfolio Investments of the type being valued and held by Borrower. Other
procedures relating to the valuation will be reasonably agreed upon by the Agent
and Borrower.

 

(B) All valuations shall be on a Settlement-Date Basis. For the avoidance of
doubt, the value of any Portfolio Investments determined in accordance with any
provision of this Section 9.1.11 shall be the Value of such Portfolio Investment
for purposes of this Agreement until a new Value for such Portfolio Investment
is subsequently determined in good faith in accordance with this Section 9.1.11.

 

(C) The documented out-of-pocket costs of any valuation reasonably incurred by
the Agent under this Section 9.1.11 shall be at the expense of Borrower.

 

(D) The Agent shall provide a copy of the final results of any valuation
received by the Agent and performed by the Independent Valuation Provider or the
Approved Third-Party Appraiser to any Lender upon such Lender’s request, except
to the extent that such recipient (or proposed recipient) has not executed and
delivered a non-reliance letter, confidentiality agreement or similar agreement,
in each case, requested or required by such Independent Valuation Provider or
Approved Third-Party Appraiser, as applicable.

 

(E) The foregoing valuation procedures shall only be required to be used for
purposes of calculating the Borrowing Base and shall not be required to be
utilized by Borrower for any other purpose, including the delivery of financial
statements or valuations required under ASC 820 or the Investment Company Act.

 

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9.1.12 Special Purpose Entity. Borrower shall be in compliance with the special
purpose entity requirements set forth in Section 8.1.26.

 

9.1.13 Investment and Valuation Policies. Borrower will (a) comply in all
material respects with the Investment and Valuation Policies in regard to each
Portfolio Investment, and in regard to compliance with Transaction Documents,
including determinations with respect to the enforcement of its rights
thereunder, and (b) furnish to the Agent, at least 20 days prior to its proposed
effective date, prompt notice of any material changes in the Investment and
Valuation Policies. Borrower will not agree or otherwise permit to occur any
material change in the Investment and Valuation Policies, which change would
impair the collectibility of any Portfolio Investment or otherwise adversely
affect the interests or remedies of the Agent or the Lenders under this
Agreement or any other Transaction Document, without the prior written consent
of the Agent and the Required Lenders (in the sole discretion of each such
Lender; provided, that each Lender shall respond within 10 days following their
receipt of any request for approval (as confirmed by such Lender via return
e-mail), and any response not given within such 10 day period shall be deemed to
be a consent to such request).

 

9.2 Negative Covenants. As long as any Commitments or Obligations are
outstanding:

 

9.2.1 Permitted Debt. Borrower shall not create, incur, guarantee or suffer to
exist any Debt, except the Obligations.

 

9.2.2 Permitted Liens. Borrower shall not create or suffer to exist any Lien
upon any of its Property, except the following (collectively, “Permitted
Liens”):

 

(a) Liens in favor of Agent;

 

(b) Liens in favor of the Custodian under the Transaction Documents;

 

(c) Liens for Taxes (excluding any Lien imposed pursuant to any of the
provisions of ERISA) not yet due or being Properly Contested; and

 

(d) statutory Liens (other than Liens for Taxes or imposed under ERISA) arising
in the Ordinary Course of Business, but only if (i) payment of the obligations
secured thereby is not yet due or is being Properly Contested, and (ii) such
Liens do not materially impair the value or use of the Property or materially
impair operation of the business of Borrower or Subsidiary.

 

9.2.3 Distributions. Declare or make any Distributions provided that Borrower
may make Distributions to Parent so long as prior to and after giving pro forma
effect to such Distribution (a) no Event of Default has occurred and is
continuing, or would result from such Distribution, and (b) if such Distribution
is a Discretionary Distribution, Availability is greater than or equal to
$500,000.

 

9.2.4 Restricted Investments. Borrower shall not create make any investment,
other than (a) Portfolio Investments in the Ordinary Course of Business; and (b)
to the extent subject to Agent’s Lien and control, pursuant to documentation in
form and substance satisfactory to Agent, and no other Liens, Cash and Cash
Equivalents.

 

9.2.5 Disposition of Assets. (a) Borrower shall not make any disposition of
assets (including a sale, lease, license, consignment or other transfer or
disposition of assets (real or personal, tangible or intangible), a division of
the Borrower under Delaware law, or a disposition of property in connection with
a sale-leaseback transaction or synthetic lease and including any sale or
disposition of Equity Interests by any Subsidiary), except as expressly
permitted by this Section 9.2.5 or any other provision of this Agreement.

 

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(b) Borrower may sell, transfer or otherwise dispose of Portfolio Investments
that are not Eligible Portfolio Investments so long as (i) prior to and after
giving effect to such sale, transfer or other disposition (and any concurrent
acquisitions of Portfolio Investments) no Event of Default exists and the
Borrower delivers to the Agent a certificate of a Senior Officer to such effect,
(ii) such sale, transfer or disposition is for fair market value (as reasonably
determined by Servicer), (iii) the proceeds of such sale, transfer or
disposition, if Cash, are deposited in the Dominion Account, and (iv) if the
Portfolio Investment had been in the most recent Borrowing Base Certificate
submitted by Borrower, an updated Borrowing Base Certificate.

 

(c) Borrower may sell, transfer or otherwise dispose of Portfolio Investments
that are Eligible Portfolio Investments so long as (i) prior to and after giving
effect to such sale, transfer or other disposition (and any concurrent
acquisitions of Portfolio Investments) no Default or Event of Default exists
(unless, in the case of such a Default, such Default will be cured upon giving
effect to such sale, transfer or disposition and the application of the proceeds
thereof) and the Borrower delivers to the Agent a certificate of a Senior
Officer to such effect along with an updated Borrowing Base Certificate, (ii)
such sale, transfer or disposition is for either the greater of (A) fair market
value, or (B) the amount allocable to such Portfolio Investment in the Borrowing
Base, (iii) such sale, transfer or disposition is made for Cash, all of which is
deposited in the Dominion Account, and (iv) upon giving effect to such sale,
transfer or disposition and the application of the proceeds thereof, no
Overadvance exists.

 

(d) Notwithstanding anything above that would otherwise prohibit the sale of a
Portfolio Investment after the occurrence or during the continuance of a Default
or an Event of Default, if the Borrower entered into a binding agreement to sell
any such Portfolio Investment prior to the occurrence of such Default or an
Event of Default, but such sale did not settle prior to the occurrence of such
Default or an Event of Default, then the Borrower shall be permitted to
consummate such sale notwithstanding the occurrence of such Default or an Event
of Default; provided that the settlement for such sale occurs within the
customary settlement period for similar trades.

 

(e) Agent’s Lien on any Collateral that is sold or transferred pursuant to a
disposition permitted under this Section 9.2.5 shall be automatically released
except as to Agent’s Lien on the proceeds of such Collateral, which shall
continue to attach to such proceeds.

 

(f) Any sale of a Portfolio Investment by Borrower to any of its Affiliates
(other than a sale to Parent in connection with Parent’s repurchase obligation
for Warranty Collateral Loans (as defined in the Sale Agreement)) shall require
the prior written consent of Agent.

 

9.2.6 Fundamental Changes. Borrower shall not merge, combine, divide,
reorganize, or consolidate with any Person, or liquidate, wind up its affairs or
dissolve itself, in each case whether in a single transaction or in a series of
related transactions, except for mergers or consolidations of a wholly-owned
Subsidiary with another wholly-owned Subsidiary or into Borrower; change its
name or conduct business under any fictitious name; change its tax, charter or
other organizational identification number or federal employer identification
number (or equivalent); or change its form or state of organization.

 

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9.2.7 Restrictive Agreements. Borrower shall not become a party to any
Restrictive Agreement.

 

9.2.8 Conduct of Business. Borrower shall not engage in any business, other than
its business as conducted on the Closing Date and any activities incidental
thereto, and in each case only such businesses and other activities which are
insured by the policies of insurance required by this Agreement; make any loans
or other advances of money to any Person; form or acquire any Subsidiary after
the Closing Date or permit any existing Subsidiary to issue any additional
Equity Interests except to its parent; acquire any business, line of business,
division, license rights or brand of another Person, or all or substantially all
of another Person’s assets; amend, modify or otherwise change or cause to be
changed any of its Organic Documents or any US Bank Agreements as in effect on
the Closing Date, unless consented to in writing by Agent; file or consent to
the filing of any consolidated income tax return with any Person other than
Parent; make any change in accounting methods or treatment or reporting
practices; change its Fiscal Year; enter into any Hedging Agreement, except to
hedge risks arising in the Ordinary Course of Business and not for speculative
purposes; or become a party to a Multiemployer Plan or any employee benefit plan
or arrangement maintained or contributed to by Parent.

 

9.2.9 Affiliate Transactions. Borrower shall not enter into or be party to any
transaction with an Affiliate, except (a) transactions contemplated by the
Transaction Documents; (b) payment of reasonable compensation to officers,
managers and employees for services actually rendered; (c) payment of customary
directors’ and managers’ fees and indemnities; (d) transactions with Affiliates
that were consummated prior to the Closing Date, as shown on Schedule 10; and
(e) transactions with Affiliates in the Ordinary Course of Business, upon fair
and reasonable terms fully disclosed to Agent and no less favorable than would
be obtained in a comparable arm’s-length transaction with a non-Affiliate.

 

9.2.10 Other Collateral Negative Covenants. Borrower shall not (a) keep, store
or otherwise maintain any Collateral at any location other than with Custodian
or Agent, unless (i) Borrower is the owner of such location, (ii) Borrower
leases such location and if Agent agrees in its discretion, Agent has
established a reserve with respect to such location); (b) change its chief
executive office or principal place of business, or other office where books and
records are kept; or (c) amend, restate, supplement, or otherwise modify any
Material Contract without Agent’s prior written consent. In no event shall the
Administrative Expenses payable to Custodian by Servicer exceed the pro rata
portion of Borrower’s Collections or any portion of any administrative services
provided by Custodian that are fairly attributable to Borrower.

 

9.3 Financial Covenants. As long as any Commitments or Obligations are
outstanding:

 

9.3.1 Asset Coverage Ratio. Parent shall maintain at all times an Asset Coverage
Ratio of not less than (a) 200% until such time that Parent is able to elect,
pursuant to Applicable Law, a lower Asset Coverage Ratio, and (b) 167% after
such time that Parent has fulfilled all requirements pursuant to Applicable Law
to lower its Asset Coverage Ratio.

 

9.3.2 Fixed Charge Coverage Ratio. Borrower shall maintain, as of the last date
of each Fiscal Quarter, commencing with the Fiscal Quarter ending December 31,
2018, a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00.

 

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9.3.3 Tangible Net Worth. Parent shall maintain, as of the end of each Fiscal
Quarter, commencing with the Fiscal Quarter ending December 31, 2018, a Tangible
Net Worth of not less than $20,000,000.

 

SECTION 10. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

 

10.1 Events of Default. Each of the following shall be an “Event of Default”
hereunder, if the same shall occur for any reason whatsoever, whether voluntary
or involuntary, by operation of law or otherwise:

 

(a) Borrower fails to pay any Obligations when due (whether at stated maturity,
on demand, upon acceleration or otherwise);

 

(b) Any representation, warranty or other written statement of Borrower or
Parent made in connection with any Transaction Documents or transactions
contemplated thereby is incorrect or misleading in any material respect (or, if
any such representation, warranty or other written statement is qualified by
“materiality”, “Material Adverse Effect” or similar language, in any respect)
when given or deemed given;

 

(c) Borrower or Servicer breaches or fail to perform any covenant contained in
Section 5.5, 7.2, 7.4, 9.1.1, 9.1.2, 9.1.3, 9.1.4, 9.1.6, 9.1.7, 9.1.10, 9.1.11,
9.1.12, 9.2 or 9.3;

 

(d) Borrower or Parent breaches or fails to perform any other covenant contained
in any Transaction Documents, and such breach or failure is not cured within 30
days after a Senior Officer of Parent or Borrower has knowledge thereof or
receives notice thereof from Agent, whichever is sooner;

 

(e) A Guarantor repudiates, revokes or attempts to revoke its Guaranty; Parent
or Borrower denies or contests the validity or enforceability of any Transaction
Documents or Obligations, or the perfection or priority of any Lien granted to
Agent; or any Transaction Document ceases to be in full force or effect for any
reason (other than a waiver or release by Agent and Lenders);

 

(f) Any breach or default of an Borrower occurs under any Hedging Agreement, or
any document, instrument or agreement to which it is a party or by which it or
any of its Properties is bound, relating to any Debt (other than the
Obligations) in excess of $200,000, if the maturity of or any payment with
respect to such Debt may be accelerated or demanded due to such breach
(including, without limitation, pursuant to a required mandatory prepayment or
“put” of such Debt to any person);

 

(g) (i) Any judgment or order for the payment of money is entered against
Borrower or its assets in an amount that exceeds, individually or cumulatively
with all unsatisfied judgments or orders against Borrower, $200,000 or (ii) any
one or more non-monetary judgments that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of 30 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending appeal
or otherwise, is not in effect;

 

(h) (i) a loss, theft, damage or destruction occurs with respect to any
Collateral if the amount not covered by insurance exceeds $200,000 or if a
material portion of the Collateral is effected, or (ii) there shall occur any
levy upon, or attachment, garnishment, or other seizure of, any portion of the
Collateral or other assets of Borrower in excess of $200,000;

 

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(i) Borrower is enjoined, restrained or in any way prevented by any governmental
authority from conducting any material part of its business; Borrower suffers
the loss, revocation or termination of any material license, permit, lease or
agreement necessary to its business; there is a cessation of any material part
of Borrower’s business for a material period of time; Borrower shall take any
action, or shall make a determination, whether or not formally approved by
Borrower’s managers, to suspend the operation of its business in the Ordinary
Course of Business, liquidate all or a material portion of its assets, or employ
an agent or other third party to conduct sales of any material portion of its
business; any material Collateral or Property of Borrower is taken or impaired
through condemnation; there occurs any uninsured loss to any material Collateral
or Property of Borrower; Borrower agrees to or commences any liquidation,
dissolution or winding up of its affairs; or Borrower is not Solvent;

 

(j) An Insolvency Proceeding is commenced by Borrower; Borrower makes an offer
of settlement, extension or composition to its unsecured creditors generally; a
trustee, receiver or similar official is appointed to take possession of any
substantial Property of or to operate any of the business of Borrower; or an
Insolvency Proceeding is commenced against Borrower and Borrower consents to
institution of the proceeding, the petition commencing the proceeding is not
timely contested by Borrower, the petition is not dismissed within 30 days after
filing, or an order for relief is entered in the proceeding;

 

(k) A reportable event (consisting of any of the events set forth in Section
4043(b) of ERISA) shall occur which results in (i) the termination by the
Pension Benefit Guaranty Corporation of any Plan or the appointment by the
appropriate United States district court of a trustee for any Plan; or (ii) if
any Plan shall be terminated or any such trustee shall be requested or
appointed; or (iii) if Borrower is in “default” (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting
from Borrower’s complete or partial withdrawal from such Multiemployer Plan; or
(iv) any similar event as any of the foregoing occurs in respect of any employee
benefit plan or arrangement maintained or contributed to by Borrower that is not
subject to the laws of the United States or is mandated by a government other
than the United States for employees of Borrower;

 

(l) Borrower, Servicer or any of their Senior Officers is criminally indicted or
convicted for (i) a felony committed in the conduct of such Person’s business,
or (ii) violating any state or federal law (including the Controlled Substances
Act, Money Laundering Control Act of 1986 and Illegal Exportation of War
Materials Act) that could lead to forfeiture of any material Property or any
Collateral;

 

(m) A Change of Control occurs; or any event occurs or condition exists that has
a Material Adverse Effect;

 

(n) Borrower shall become required to register as an “investment company” within
the meaning of the Investment Company Act or the arrangements contemplated by
the Transaction Documents shall require registration as an “investment company”
within the meaning of the Investment Company Act or (ii) Parent ceases to be a
“business development company” within the meaning of the Investment Company Act;

 

(o) A Servicer Termination Event occurs;

 

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(p) Borrower shall fail to qualify as a bankruptcy remote entity based upon the
criteria set forth in Section 8.1.26 such that Moore & Van Allen PLLC or another
law firm reasonably acceptable to the Agent could no longer render a substantive
nonconsolidation opinion with respect thereto;

 

(q) Any Transaction Document, or any Lien 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 Borrower;

 

(r) Borrower fails to make any payment when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) in respect of any
Material Contract or fails to observe or perform any other agreement or
condition relating to any such Material Contract or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
occurs, the effect of which default or other event is to cause the termination
of such Material Contract or to permit the counterparty to such Material
Contract to terminate such Material Contract; or

 

(s) The US Bank Agreements are terminated or are otherwise no longer in full
force and effect and are not replaced with similar agreements in form and
substance satisfactory to Agent.

 

10.2 Remedies upon Default. If an Event of Default described in Section 10.1(j)
occurs, then to the extent permitted by Applicable Law, all Obligations (other
than Secured Bank Product Obligations) shall become automatically due and
payable and all Commitments shall terminate, without any action by Agent or
notice of any kind. In addition, or if any Event of Default exists, Agent may in
its discretion (and shall upon written direction of Required Lenders) do any one
or more of the following from time to time:

 

(a) declare any Obligations (other than Secured Bank Product Obligations)
immediately due and payable and the Maturity Date to have occurred, whereupon
the Obligations shall be due and payable without diligence, presentment, demand,
protest or notice of any kind, all of which are hereby waived by Borrower to the
fullest extent permitted by law;

 

(b) terminate, reduce or condition any Commitment, or make any adjustment to the
Borrowing Base;

 

(c) solely with respect to the Event of Default described in Section 10.1(o),
terminate the Servicing Agreement with Servicer;

 

(d) require Borrower to Cash Collateralize Secured Bank Product Obligations and
other Obligations that are contingent or not yet due and payable, and, if
Borrower fails promptly to deposit such Cash Collateral, Agent may (and shall
upon the direction of Required Lenders) advance the required Cash Collateral as
Revolver Loans (whether or not an Overadvance exists or is created thereby, or
the conditions in Section 6 are satisfied); and

 

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(e) exercise any other rights or remedies afforded under any agreement, by law,
at equity or otherwise, including the rights and remedies of a secured party
under the UCC. Such rights and remedies include the rights to (i) take
possession of any Collateral; (ii) exercise all rights and obligations of
Servicer under the Transaction Documents; (iii) require Borrower and Servicer to
assemble Collateral, at Borrower’s expense, and make it available to Agent at a
place designated by Agent; (iv) enter any premises where Collateral is located
and store Collateral on such premises until sold (and if the premises are owned
or leased by Borrower or Servicer, Borrower and Servicer agree not to charge for
such storage); (v) demand, sue for, collect or receive any money or property at
any time payable or receivable in respect of the Collateral including, without
limitation, instructing the obligor or obligors on any agreement, instrument or
other obligation constituting part of the Collateral to make any payment
required by the terms of such agreement, instrument or other obligation directly
to Agent, and in connection with any of the foregoing, compromise, settle,
extend the time for payment and make other modifications with respect thereto;
provided, however, that in the event that any such payments are made directly to
Borrower or Servicer, prior to receipt by any such obligor of such instruction,
Borrower and/or Servicer shall segregate all amounts received pursuant thereto
in trust for the benefit of Agent and shall promptly pay such amounts to Agent;
(vi) direct Servicer to sell, assign, grant a license to use or otherwise
liquidate, any and all investments made in whole or in part with the Collateral
or any part thereof, and take possession of the proceeds of any such sale,
assignment, license or liquidation; (vii) withdraw all moneys, instruments,
securities and other property with Agent, Custodian or any other bank, financial
securities, deposit or other account of Borrower constituting Collateral for
application to the Obligations as provided herein; (viii) exercise any and all
rights as beneficial and legal owner of the Collateral, including, without
limitation, perfecting assignment of and exercising any and all voting,
consensual and other rights and powers with respect to any Collateral; (ix)
exercise all the rights and remedies of a secured party under the UCC; and (x)
direct the sale or disposition and otherwise dispose of any Collateral in its
then condition at public or private sale, with such notice as may be required by
Applicable Law, in lots or in bulk, at such locations, all as Agent, in its
discretion, deems advisable. Borrower agrees that (a) 10 days’ notice (unless
the Collateral is perishable or threatens to decline speedily in value, or is of
a type customarily sold on a recognized market (in which event, such advance
notice as may be practicable under the circumstances)) of any proposed sale or
other disposition of Collateral by Agent shall be reasonable and (b) Quoted
Investments constitute Collateral of a type customarily sold on a recognized
market. Agent shall have the right to conduct such sales on Borrower’s or
Servicer’s premises, without charge, and such sales may be adjourned from time
to time in accordance with Applicable Law. Agent shall have the right to direct
the sale or other disposition of any Collateral for cash, credit or any
combination thereof, and Agent may purchase any Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of the purchase
price, may credit bid and set off the amount of such price against the
Obligations. Each purchaser, assignee, licensee or recipient at any such sale
shall acquire the property sold, assigned or licensed absolutely free from any
claim or right on the part of Borrower, and Borrower hereby waives, to the
fullest extent permitted by Applicable Law, all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. To the fullest extent permitted by Applicable Law, Borrower hereby
waives any claims against Agent arising by reason of the fact that the price at
which any Collateral may have been sold, assigned or licensed at such a private
sale was less than the price which might have been obtained at a public sale,
even if Agent accepts the first offer received and does not offer such
Collateral to more than one offeree.

 

10.3 License. Agent is hereby granted an irrevocable, non-exclusive license or
other right to use, license or sub-license (without payment of royalty or other
compensation to any Person) any or all Intellectual Property of Borrower or
Servicer, computer hardware and software, trade secrets, brochures, customer
lists, promotional and advertising materials, labels, packaging materials and
other Property, in advertising for sale, marketing, selling, collecting,
completing manufacture of, or otherwise exercising any rights or remedies with
respect to, any Collateral. Borrower’s rights and interests under Intellectual
Property shall inure to Agent’s benefit.

 

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10.4 Setoff. At any time during an Event of Default, Agent, Lenders, and any of
their Affiliates are authorized, to the fullest extent permitted by Applicable
Law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by Agent, such Lender or
such Affiliate to or for the credit or the account of Borrower against any
Obligations, regardless of the adequacy of any other Collateral and regardless
of whether or not Agent, such Lender or such Affiliate shall have made any
demand under this Agreement or any other Transaction Document and although such
Obligations may be contingent or unmatured or are owed to a branch or office of
Agent, such Lender or such Affiliate different from the branch or office holding
such deposit or obligated on such indebtedness. The rights of Agent, each Lender
and each such Affiliate under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Person may have.

 

10.5 Remedies Cumulative; No Waiver.

 

10.5.1 Cumulative Rights. All agreements, warranties, guaranties, indemnities
and other undertakings of Borrower and Servicer under the Transaction Documents
are cumulative and not in derogation of each other. The rights and remedies of
Agent and Lenders are cumulative, may be exercised at any time and from time to
time, concurrently or in any order, and are not exclusive of any other rights or
remedies available by agreement, by law, at equity or otherwise. All such rights
and remedies shall continue in full force and effect until Full Payment of all
Obligations.

 

10.5.2 Waivers. No waiver or course of dealing shall be established by (a) the
failure or delay of Agent or any Lender to require strict performance by
Borrower and Servicer with any terms of the Transaction Documents, or to
exercise any rights or remedies with respect to Collateral or otherwise; (b) the
making of any Loan during a Default, Event of Default or other failure to
satisfy any conditions precedent, or Agent’s or any Lender’s permitting to
remain outstanding any Loan during a Default or Event of Default; or (c)
acceptance by Agent or any Lender of any payment or performance by Borrower
under any Transaction Documents in a manner other than that specified therein.
It is expressly acknowledged by Borrower that any failure to satisfy a financial
covenant on a measurement date shall not be cured or remedied by satisfaction of
such covenant on a subsequent date.

 

SECTION 11. AGENT

 

This Section 11 and the provisions contained in Exhibit D attached hereto (which
are hereby incorporated by reference) are an agreement solely among Secured
Parties and Agent, and shall survive Full Payment of the Obligations. Neither
Exhibit D, nor this Section 11, confer any rights or benefits upon Borrower or
any other Person. As between Borrower, Servicer and Agent, any action that Agent
may take under any Transaction Documents or with respect to any Obligations
shall be conclusively presumed to have been authorized and directed by Secured
Parties.

 

SECTION 12. BENEFIT OF AGREEMENT; ASSIGNMENTS

 

12.1 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Borrower, Servicer, Agent, Lenders, Secured Parties, and their
respective successors and assigns, except that (a) neither Servicer nor Borrower
shall have the right to assign its rights or delegate its obligations under any
Transaction Documents; and (b) any assignment by a Lender must be made in
compliance with Section 12.3. Agent may treat the Person which made any Loan as
the owner thereof for all purposes until such Person makes an assignment in
accordance with Section 12.3. Any authorization or consent of a Lender shall be
conclusive and binding on any subsequent transferee or assignee of such Lender.

 

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12.2 Participations

 

12.2.1 Permitted Participants; Effect. Any Lender may, subject to Section 12.3.3
and with the prior written consent of Agent, in the Ordinary Course of Business
and in accordance with Applicable Law, at any time sell to a financial
institution (“Participant”) a participating interest in the rights and
obligations of such Lender under any Transaction Documents. Despite any sale by
a Lender of participating interests to a Participant, such Lender’s obligations
under the Transaction Documents shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for performance of such
obligations, such Lender shall remain the holder of its Loans and Commitments
for all purposes, all amounts payable by Borrower shall be determined as if such
Lender had not sold such participating interests, and Borrower and Agent shall
continue to deal solely and directly with such Lender in connection with the
Transaction Documents. Each Lender shall be solely responsible for notifying its
Participants of any matters under the Transaction Documents, and Agent and the
other Lenders shall not have any obligation or liability to any such
Participant. A Participant that would be a Foreign Lender if it were a Lender
shall not be entitled to the benefits of Section 5.10 unless Borrower agrees
otherwise in writing.

 

12.2.2 Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of any Transaction Documents other than that which forgives
principal, interest or fees, reduces the stated interest rate or fees payable
with respect to any Loan or Commitment in which such Participant has an
interest, postpones the Commitment Termination Date, Maturity Date, or any date
fixed for any regularly scheduled payment of principal, interest or fees on such
Loan or Commitment, or releases Borrower, Guarantor or substantial portion of
the Collateral.

 

12.2.3 Benefit of Set-Off. Borrower agrees that each Participant, if consented
to in writing by Agent, shall have a right of set-off in respect of its
participating interest to the same extent as if such interest were owing
directly to a Lender, and each Lender shall also retain the right of set-off
with respect to any participating interests sold by it. By exercising any right
of set-off, a Participant agrees to share with Lenders all amounts received
through its set-off, in accordance with Section V of Exhibit D as if such
Participant were a Lender.

 

12.3 Assignments.

 

12.3.1 Permitted Assignments. A Lender may assign to an Eligible Assignee any of
its Loans, rights and obligations under the Transaction Documents, as long as
(a) each assignment is of a constant, and not a varying, percentage of the
transferor Lender’s rights and obligations under the Transaction Documents and,
in the case of a partial assignment, is in a minimum principal amount of
$5,000,000 (unless otherwise agreed by Agent in its discretion); (b) Agent shall
have consented to such assignment (except to the extent such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund with respect to such
Lender), (c) Borrower shall have consented to such assignment (except to the
extent such assignment is to a Lender, an Affiliate of a Lender or an Approved
Fund with respect to such Lender), with such consent not to be unreasonably
withheld, provided that Borrower shall be deemed to have consented to such
assignment within five (5) Business Days after Borrower receives notice of such
proposed assignment, and provided further that no such consent shall be required
after the occurrence of an Event of Default, and (d) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Assumption. Nothing herein shall limit the right of a Lender
to pledge or assign any rights under the Transaction Documents to secure
obligations of such Lender, including a pledge or assignment to a Federal
Reserve Bank; provided, however, that no such pledge or assignment shall release
the Lender from its obligations hereunder nor substitute the pledge or assignee
for such Lender as a party hereto.

 

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12.3.2 Effect; Effective Date. Upon delivery to Agent of an assignment notice in
form and substance satisfactory to Agent and a processing fee of $3,500 (unless
otherwise agreed by Agent in its discretion), the assignment shall become
effective as specified in the notice, if it complies with this Section 12.3.
From such effective date, the Eligible Assignee shall for all purposes be a
Lender under the Transaction Documents, and shall have all rights and
obligations of a Lender thereunder. Upon consummation of an assignment, the
transferor Lender, Agent and Borrower shall make appropriate arrangements for
issuance of replacement and/or new promissory notes, as applicable, in favor of
such assignee Lender. The transferee Lender shall comply with Section 5.11 and
deliver, upon request, an administrative questionnaire satisfactory to Agent.

 

12.3.3 Certain Assignees. No assignment or participation may be made to
Borrower, Affiliate of Borrower, Defaulting Lender or natural person. In
connection with any assignment by a Defaulting Lender, such assignment shall be
effective only upon payment by the Eligible Assignee or Defaulting Lender to
Agent of an aggregate amount sufficient, upon distribution (through direct
payment, purchases of participations or other compensating actions as Agent
deems appropriate), (a) to satisfy all funding and payment liabilities then
owing by the Defaulting Lender hereunder, and (b) to acquire its Pro Rata share
of all Loans. If an assignment by a Defaulting Lender shall become effective
under Applicable Law for any reason without compliance with the foregoing
sentence, then the assignee shall be deemed a Defaulting Lender for all purposes
until such compliance occurs.

 

12.3.4 Certain Pledges. Any Lender may, at any time and without consent of
Borrower or Agent, pledge or assign a security interest in all or any portion of
its rights under this Agreement (including under any notes issued for its
benefit) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank or any funding source
of such Lender; provided that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

 

12.4 Replacement of Certain Lenders.

 

If a Lender (a) requests compensation under Section 3.7.1 or requires Borrower
to pay any Indemnified Taxes or additional amounts to any Lender or any
governmental authority for the account of any Lender pursuant to Section 5.10
and, in each case, such Lender has declined or is unable to designate a
different lending office in accordance with Section 3.8, (b) fails to give its
consent to any amendment, waiver or action for which consent of all Lenders was
required and Required Lenders consented, or (b) is a Defaulting Lender, then, in
addition to any other rights and remedies that any Person may have, Agent or
Borrower may, by notice to such Lender within 120 days after such event, require
such Lender to assign all of its rights and obligations under the Transaction
Documents to Eligible Assignee(s), pursuant to appropriate Assignment and
Assumption(s), within 20 days after the notice; provided, that in the case of
any such assignment resulting from a claim for compensation under Section 3.7.1
or payments required to be made pursuant to Section 5.10, such assignment will
result in a reduction in such compensation or payments thereafter. Agent is
irrevocably appointed as attorney-in-fact to execute any such Assignment and
Assumption if the Lender fails to execute it. Such Lender shall be entitled to
receive, in cash from such Eligible Assignee, concurrently with such assignment,
all amounts owed to it under the Transaction Documents, including all principal,
interest and fees through the date of assignment (but excluding any prepayment
charge).

 

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SECTION 13. MISCELLANEOUS

 

13.1 Consents, Amendments and Waivers.

 

13.1.1 Amendment. No modification of any Transaction Document, including any
extension or amendment of a Transaction Document or any waiver of a Default or
Event of Default, shall be effective without the prior written agreement of
Agent (with the consent of Required Lenders) and Borrower party to such
Transaction Document; provided, however, that (a) without the prior written
consent of Agent, no modification shall be effective with respect to any
provision in a Transaction Document that relates to any rights, duties or
discretion of Agent; (b) without the prior written consent of each affected
Lender, including a Defaulting Lender, no modification shall be effective that
would (i) increase the Commitment of such Lender; (ii) reduce the amount of, or
waive or delay payment of, any principal, interest or fees payable to such
Lender (except as provided in Section 4.2); (iii) extend the Commitment
Termination Date or the Maturity Date applicable to such Lender’s Obligations;
or (iv) amend this clause (b); (c) without the prior written consent of all
Lenders (except any Defaulting Lender), no modification shall be effective that
would (i) alter Section 5.7, 7.1 (except to add Collateral) or 13.1.1; (ii)
amend the definition of Required Lenders; (iii) release all or substantially all
of the Collateral, except as currently contemplated by the Transaction
Documents; or (iv) release Borrower or any Guarantor from liability for any
Obligations; (e) without the prior written consent of all Lenders (i) increase
any advance rate with respect to the Borrowing Base or (ii) amend the definition
of Borrowing Base (or any defined term used in such definition), in each case,
if the effect if as a result thereof the amounts available to be borrowed by
Borrower would be immediately increased; and (f) without the prior written
consent of a Secured Bank Product Provider, no modification shall be effective
that affects its relative payment priority under Section 5.7. Notwithstanding
anything to the contrary herein the Agent may, with the consent of the Borrower
only, amend, modify or supplement this Agreement or any of the other Transaction
Documents to cure any ambiguity, omission, mistake, defect or inconsistency.

 

13.1.2 Limitations. The agreement of Borrower or Servicer shall not be necessary
to the effectiveness of any modification of a Transaction Document that deals
solely with the rights and duties of Lenders, and/or Agent as among themselves.
Only the consent of the parties to the Fee Letter or any agreement relating to a
Bank Product shall be required for any modification of such agreement, and any
non-Lender that is party to a Bank Product agreement shall have no right to
participate in any manner in modification of any other Transaction Document. Any
waiver or consent granted by Agent or Lenders hereunder shall be effective only
if in writing and only for the matter specified.

 

13.1.3 Payment for Consents. Borrower will not, directly or indirectly, pay any
remuneration or other thing of value, whether by way of additional interest, fee
or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any
Transaction Documents, unless such remuneration or value is concurrently paid,
on the same terms, on a Pro Rata basis to all Lenders providing their consent.

 

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13.2 Indemnity. BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY CLAIMS, LIABILITIES, COSTS, EXPENSES AND OTHER AMOUNTS OF ANY KIND
THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE IN ANY WAY RELATED TO
THE TRANSACTION DOCUMENTS, THE COLLATERAL, ANY BREACH BY BORROWER, SERVICER OR
ANY OF THEIR RESPECTIVE SUBSIDIARIES OF APPLICABLE LAW, OR OTHERWISE IN
CONNECTION WITH THE TRANSACTION DOCUMENTS, INCLUDING CLAIMS ASSERTED BY BORROWER
OTHER PERSON OR ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE; provided, however,
in no event shall Borrower have any obligation to indemnify or hold harmless an
Indemnitee with respect to (a) any claims, liabilities, costs, expenses and
other amounts of any kind in any way related to the Transaction Documents or
Collateral that are determined in a final, non-appealable judgment by a court of
competent jurisdiction to result from the gross negligence or willful misconduct
of any Indemnitee, or (b) any claims, liabilities, costs, expenses and other
amounts of any kind arising from disputes brought by an Indemnitee against
another Indemnitee that does not arise out of any act or omission of Borrower,
Servicer or any of their respective Subsidiaries.

 

13.3 Notices and Communications.

 

13.3.1 Notice Address. Subject to Section 4.1.4, all notices and other
communications by or to a party hereto shall be in writing and shall be given to
Borrower, at Borrower’s address shown on the signature pages hereof, and to any
other Person at its address shown on the signature pages hereof (or, in the case
of a Person who becomes a Lender after the Closing Date, at the address shown on
its Assignment and Assumption), or at such other address as a party may
hereafter specify by notice in accordance with this Section 13.3. Each such
notice or other communication shall be effective only (a) if given by mail,
three Business Days after deposit in the U.S. mail, with first-class postage
pre-paid, addressed to the applicable address; (b) if given by personal
delivery, when duly delivered to the notice address with receipt acknowledged;
or (c) if given by electronic means, only at the time and to the extent provided
in Section 13.3.2. In no event shall a voicemail message be effective as a
notice, communication or confirmation under any of the Transaction Documents.
Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4,
3.1.2, or 4.1.1 shall be effective until actually received by the individual to
whose attention at Agent such notice is required to be sent. Any written notice
or other communication that is not sent in conformity with the foregoing
provisions shall nevertheless be effective on the date actually received by the
noticed party.

 

13.3.2 Electronic Communications. (i) Borrower authorizes Agent and Lenders to
extend Loans, effect selections of interest rates, and transfer funds to or on
behalf of Borrower based on instructions sent by electronic mail. Borrower shall
confirm each such request by prompt delivery to Agent of a Notice of Borrowing,
if applicable, but if the foregoing differs in any material respect from the
action taken by Agent, the records of Agent shall govern.

 

(ii) Electronic mail and internet websites may be used for delivery of financial
statements, Borrowing Base Certificates and other information required by
Section 9.1.3 (other than notices), administrative matters and distribution of
Transaction Documents for execution, pursuant to procedures approved by Agent or
as otherwise determined by Agent. Anything herein to the contrary
notwithstanding, except as expressly provided Section 13.2.2(i), notices
delivered by electronic mail may not be used as effective notice under the
Transaction Documents.

 

(iii) Unless Agent otherwise requires, communications sent to an electronic mail
address of Agent shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail, or other written
acknowledgement); provided that if such communication is not sent during the
normal business hours of the recipient, such communication shall be deemed to
have been sent at the opening of business on the next Business Day for the
recipient.

 

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(iv) Agent shall not have any liability for any loss suffered by Borrower as a
result of Agent’s acting upon its understanding of electronic mail requests or
instructions from a Person believed in good faith by Agent to be a Person
authorized to give such requests or instructions on Borrower’s behalf. Borrower
shall indemnify, defend and hold harmless each Indemnitee from any claims
arising from any electronic communication purportedly given by or on behalf of
Borrower.

 

(v) Agent may, in its discretion and upon notice to Borrower (A) cease or
suspend any actual or implied obligation it may have to act based on such
electronic communications and (B) thereafter, disregard any such electronic
communications.

 

13.3.3 Non-Conforming Communications. Agent and Lenders may rely upon any
notices purportedly given by or on behalf of Borrower even if such notices were
not made in a manner specified herein, were incomplete or were not confirmed, or
if the terms thereof, as understood by the recipient, varied from a later
confirmation. Borrower shall indemnify and hold harmless each Indemnitee from
any liabilities, losses, costs and expenses arising from any telephonic
communication purportedly given by or on behalf of Borrower.

 

13.4 Performance of Borrower’s Obligations. Agent may, in its discretion at any
time and from time to time, at Borrower’s expense, pay any amount or do any act
required of Borrower under any Transaction Documents or otherwise lawfully
requested by Agent to (a) enforce any Transaction Documents or collect any
Obligations; (b) protect, insure, maintain or realize upon any Collateral; or
(c) defend or maintain the validity or priority of Agent’s Liens in any
Collateral, including any payment of a judgment, insurance premium, or landlord
claim, or any discharge of a Lien. All payments, costs and expenses (including
Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent
by Borrower, on demand, with interest from the date incurred to the date of
payment thereof at the Default Rate applicable to Base Rate Revolver Loans. Any
payment made or action taken by Agent under this Section shall be without
prejudice to any right to assert an Event of Default or to exercise any other
rights or remedies under the Transaction Documents.

 

13.5 Credit Inquiries. Borrower hereby authorizes Agent and Lenders (but they
shall have no obligation) to respond to usual and customary credit inquiries
from third parties concerning Borrower.

 

13.6 Severability. Wherever possible, each provision of the Transaction
Documents shall be interpreted in such manner as to be valid under Applicable
Law. If any provision is found to be invalid under Applicable Law, it shall be
ineffective only to the extent of such invalidity and the remaining provisions
of the Transaction Documents shall remain in full force and effect.

 

13.7 Cumulative Effect; Conflict of Terms. The provisions of the Transaction
Documents are cumulative. The parties acknowledge that the Transaction Documents
may use several limitations, tests or measurements to regulate similar matters,
and they agree that these are cumulative and that each must be performed as
provided. Except as otherwise provided in another Transaction Document (by
specific reference to the applicable provision of this Agreement), if any
provision contained herein is in direct conflict with any provision in another
Transaction Document, the provision herein shall govern and control.

 

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13.8 Counterparts. Any Transaction Document may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall become effective when
Agent has received counterparts bearing the signatures of all parties hereto.
Delivery of a signature page of any Transaction Document by telecopy or other
electronic means shall be effective as delivery of a manually executed
counterpart of such agreement.

 

13.9 Entire Agreement. Time is of the essence of the Transaction Documents. The
Transaction Documents constitute the entire contract among the parties relating
to the subject matter hereof, and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.

 

13.10 Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Agreement and no action of Agent, Lenders or any other Secured
Party pursuant to the Transaction Documents or otherwise shall be deemed to
constitute Agent and any Secured Party to be a partnership, association, joint
venture or any other kind of entity, nor to constitute control of Borrower.

 

13.11 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated by any Transaction Document, Borrower and Servicer
acknowledge and agree that (a)(i) this credit facility and any related arranging
or other services by Agent, any Lender, any of their Affiliates or any arranger
are arm’s-length commercial transactions between Borrower, Servicer and such
Person; (ii) Borrower and Servicer have consulted their own legal, accounting,
regulatory and tax advisors to the extent they have deemed appropriate; and
(iii) Borrower and Servicer are capable of evaluating, and understand and
accept, the terms, risks and conditions of the transactions contemplated by the
Transaction Documents; (b) each of Agent, Lenders, their Affiliates and any
arranger is and has been acting solely as a principal and, except as expressly
agreed in writing by the relevant parties, has not been, is not, and will not be
acting as an advisor, agent or fiduciary for Borrower or Servicer, any of their
Affiliates or any other Person, and has no obligation with respect to the
transactions contemplated by the Transaction Documents except as expressly set
forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be
engaged in a broad range of transactions that involve interests that differ from
those of Borrower and Servicer and their Affiliates, and have no obligation to
disclose any of such interests to Borrower and Servicer or their Affiliates. To
the fullest extent permitted by Applicable Law, Borrower and Servicer hereby
waives and releases any claims that it may have against Agent, Lenders, their
Affiliates and any arranger with respect to any breach of agency or fiduciary
duty in connection with any transaction contemplated by a Transaction Document.

 

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13.12 Confidentiality. Each of Agent and Lenders shall maintain the
confidentiality of all Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and funding or financing sources, and to
its and their partners, directors, officers, employees, agents, advisors and
representatives (provided such Persons are informed of the confidential nature
of the Information and instructed to keep it confidential); (b) to the extent
requested by any governmental, regulatory or self-regulatory authority
purporting to have jurisdiction over it or its Affiliates; (c) to the extent
required by Applicable Law or by any subpoena or other legal process (provided
that such Agent or Lender shall, to the extent permitted by law, endeavor to
promptly notify the Borrower in advance of such pending disclosure); (d) to any
other party hereto; (e) in connection with any action or proceeding, or other
exercise of rights or remedies, relating to any Transaction Documents or
Obligations; (f) subject to an agreement containing provisions substantially the
same as this Section, to any Transferee or any actual or prospective party (or
its advisors) to any Bank Product; (g) with the consent of Borrower; or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) is available to Agent, any Lender, or
any of their Affiliates on a nonconfidential basis from a source other than
Borrower. Notwithstanding the foregoing, Agent and Lenders may publish or
disseminate general information describing this credit facility, including the
names and addresses of Borrower and a general description of Borrower’s and
Parent’s businesses, and may use Borrower’s and Parent’s logos, trademarks or
product photographs in advertising materials, including, without limitation,
“tombstones”, league tables and press releases. As used herein, “Information”
means all information received from Borrower or Parent relating to it or its
business that is identified as confidential when delivered. Any Person required
to maintain the confidentiality of Information pursuant to this Section shall be
deemed to have complied if it exercises the same degree of care that it accords
its own confidential information. Each of Agent and Lenders acknowledges that
(i) Information may include material non-public information concerning Parent or
Borrower; (ii) it has developed compliance procedures regarding the use of
material non-public information; and (iii) it will handle such material
non-public information in accordance with Applicable Law, including federal and
state securities laws. Borrower and Parent consent to the publication by Agent
or any Lender of advertising material relating to the financing transactions
contemplated by this Agreement using Borrower’s or Parent’s name, product
photographs, logo or trademark. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.

 

13.13 GOVERNING LAW. THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO
FEDERAL LAWS RELATING TO NATIONAL BANKS).

 

13.14 Consent to Forum. BORROWER AND SERVICER EACH HEREBY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH
JURISDICTION OVER NEW YORK, NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN
ANY WAY TO ANY TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL
BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. BORROWER AND SERVICER EACH
IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE
REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR
INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 13.3.1. Nothing herein shall limit
the right of Agent or any Lender to bring proceedings against Borrower or
Servicer in any other court, nor limit the right of any party to serve process
in any other manner permitted by Applicable Law. Nothing in this Agreement shall
be deemed to preclude enforcement by Agent of any judgment or order obtained in
any forum or jurisdiction.

 

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13.15 Waivers by BORROWER AND SERVICER. To the fullest extent permitted by
Applicable Law, Borrower and SERVICER EACH hereby knowingly, intentionally and
intelligently waives (with the benefit of advice of legal counsel of its own
choosing), (a) the right to trial by jury (which Agent and each Lender hereby
also waives) in any proceeding or dispute of any kind relating in any way to any
Transaction Documents, Obligations or Collateral; (b) presentment, demand,
protest, notice of presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any commercial paper, accounts,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which Borrower may in any way be liable, and hereby ratifies anything Agent
may do in this regard; (c) notice prior to taking possession or control of any
Collateral; (d) any bond or security that might be required by a court prior to
allowing Agent to exercise any rights or remedies; (e) the benefit of all
valuation, appraisement and exemption laws; (f) any claim against Agent or any
Lender, on any theory of liability, for special, indirect, consequential,
exemplary or punitive damages (as opposed to direct or actual damages) in any
way relating to any enforcement action or exercise of rights or remedies, of any
kind, the Obligations, Transaction Documents or transactions relating thereto;
(g) notice of acceptance hereof; and (h) the right to assert any confidential
relationship that it may have under applicable law with any accounting firm
and/or service bureau in connection with any information requested by Agent
pursuant to or in accordance with this Agreement (and BORROWER and SERVICER EACH
agree that Agent may contact directly and such accounting firm and/or service
bureau in order to obtain any such information). BORROWER AND SERVICER Each
acknowledges that the foregoing waivers are a material inducement to Agent and
Lenders entering into this Agreement and that they are relying upon the
foregoing in their dealings with Borrower. BORROWER AND SERVICER Each has
reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial and other rights following consultation with
legal counsel. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

 

13.16 Power of Attorney. Borrower and Servicer hereby irrevocably constitutes
and appoints Agent (and all Persons designated by Agent) as Borrower or
Servicer’s true and lawful attorney (and agent-in-fact) for the purposes
provided in this Section. Agent, or Agent’s designee, may, without notice and in
either its or Borrower’s name, but at the cost and expense of Borrower: (a)
endorse Borrower’s name on any Payment Item or other proceeds of Collateral
(including proceeds of insurance) that come into Agent’s possession or control;
and (b) during an Event of Default, (i) collect, liquidate and receive balances
in Deposit Accounts or investment accounts, and take control, in any manner, of
proceeds of Collateral; (ii) prepare, file and sign Borrower’s name to a proof
of claim or other document in a bankruptcy of a Portfolio Company, or to any
notice, assignment or satisfaction of Lien or similar document; (iii) receive,
open and dispose of mail addressed to Borrower, and notify postal authorities to
deliver any such mail to an address designated by Agent; (iv) endorse any
Chattel Paper, Document, Instrument, bill of lading, or other document or
agreement relating to any Collateral; (v) use Borrower’s stationery and sign its
name to verifications of Bank Loans; (vi) use information contained in any data
processing, electronic or information systems relating to Collateral; (vii) make
and adjust claims under insurance policies; (viii) take any action as may be
necessary or appropriate to obtain payment under any letter of credit, banker’s
acceptance or other instrument for which Borrower is a beneficiary; and (ix)
take all other actions as Agent deems appropriate to fulfill Borrower’s
obligations under the Transaction Documents.

 

13.17 PATRIOT Act Notice; Beneficial Ownership Regulation. Agent and Lenders
hereby notify Borrower and Servicer that pursuant to the requirements of the
PATRIOT Act, Agent and Lenders are required to obtain, verify and record
information that identifies Borrower and Servicer, including its legal name,
address, tax ID number and other information that will allow Agent and Lenders
to identify it in accordance with the PATRIOT Act. Agent and Lenders will also
require information regarding each personal guarantor, if any, and may require
information regarding Borrower’s and Servicer’s management and owners, such as
legal name, address, social security number and date of birth. Upon the
reasonable request of any Lender made at least ten (10) days prior to the
Closing Date, the Borrower shall have provided to such Lender the documentation
and other information so requested in connection with applicable “know your
customer” and anti-money-laundering rules and regulations, including the PATRIOT
Act, in each case at least five days prior to the Closing Date. At least five
days prior to the Closing Date, any Borrower that qualifies as a “legal entity
customer” under the Beneficial Ownership Regulation shall deliver a Beneficial
Ownership Certification in relation to such Borrower.

 

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SECTION 14. Custodian

 

14.1 Designation of Custodian. The role of Custodian with respect to the
Underlying Instruments relating to the Portfolio Investments shall be conducted
by the Person designated as Custodian hereunder until the resignation or removal
of Custodian pursuant to the terms of the Custodian Agreement.

 

14.2 Duties of Custodian. The duties of the Custodian shall be set forth in the
Custodian Agreement.

 

14.3 Custodian Removal. The Custodian may be removed pursuant to the terms of
the Custodian Agreement; provided, however, the Custodian shall continue to act
in such capacity until a successor Custodian has been appointed and has received
all Underlying Instruments held by the previous Custodian.

 

14.4 Access to Certain Documentation and Information Regarding the Collateral;
Audits. The Servicer, Borrower and the Custodian shall provide to the Agent
access to the Underlying Instruments and all other documentation regarding the
Collateral including in such cases where the Agent is required in connection
with the enforcement of the rights or interests of the Lenders, or by applicable
statutes or regulations, to review such documentation, such access being
afforded without charge and upon reasonable prior written notice from the Agent.
From time to time at the discretion of the Agent, the Agent may review the
Servicer’s collection and administration of the Collateral and may conduct an
audit of the Collateral and Underlying Instruments in conjunction with such a
review.

 

[Remainder of page intentionally left blank; signatures begin on following page]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

ATTEST:     BORROWER:         /s/ Matthew J. Cahill     FRC FUNDING I, LLC,
Name: Matthew J. Cahill     a Delaware limited liability company       By: Flat
Rock Capital Corp.,       a Maryland corporation, its sole member              
  By: /s/ Richard A. Petrocelli       Name: Richard A. Petrocelli       Title:
Chief Operating Officer       Address:    1350 Avenue of the Americas, 18th
Floor         New York, New York  10019         Attn: Richard A. Petrocelli    
    Email:rich@flatrockglobal.com           ATTEST:     SERVICER:        
Matthew J. Cahill     FLAT ROCK CAPITAL CORP., a Maryland corporation Name:
Matthew J. Cahill               By: /s/ Richard A. Petrocelli       Name:
Richard A. Petrocelli       Title: Chief Operating Officer       Address: 1350
Avenue of the Americas, 18th Floor         New York, New York  10019        
Attn: Richard A. Petrocelli         Email:rich@flatrockglobal.com

 

Signature Page – Loan and Security Agreement

 

 

 

 

  AGENT AND LENDERS:       STATE BANK AND TRUST COMPANY,   as Agent and a Lender
        By: /s/ Jessica Ernst   Name: Jessica Ernst   Title: Vice President  
Address:  State Bank and Trust Company     3399 Peachtree Road, N.E., Suite 1900
    Atlanta, GA 30326     Attn: FRC Loan Administration Officer     Telecopy:
(404) 365-7112         with courtesy copies to (which shall not be deemed
notice):       Troutman Sanders LLP   600 Peachtree Street, NE Suite 5200  
Atlanta, Georgia 30308   Attention: Hazen Dempster, Esq.   Facsimile: (404)
885-3900

 

Signature Page – Loan and Security Agreement