Exhibit 10.1

U.S. $225,000,000

SECOND AMENDED AND RESTATED

LOAN FUNDING AND SERVICING AGREEMENT

by and among

PATRIOT CAPITAL FUNDING LLC I,

as the Borrower

PATRIOT CAPITAL FUNDING, INC.,

as the Servicer

EACH OF THE CONDUIT LENDERS AND INSTITUTIONAL LENDERS FROM TIME TO TIME PARTY
HERETO,

as the Lenders

EACH OF THE LENDER AGENTS FROM TIME TO TIME PARTY HERETO

as the Lender Agents

BMO CAPITAL MARKETS CORP.,

as the Agent

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Backup Servicer and as the Trustee

Dated as of April 11, 2008

                  ARTICLE IDEFINITIONS 2
       
Section 1.1
  Certain Defined Terms     2  
Section 1.2
  Other Terms     42  
Section 1.3
  Computation of Time Periods     43  
Section 1.4
  Interpretation     43  
Section 1.5
  Section References     43  
Section 1.6
  Calculations     44   ARTICLE IIPURCHASE OF THE VARIABLE FUNDING NOTES
    44  
Section 2.1
  The Variable Funding Notes     44  
Section 2.2
  Procedures for Advances by the Lenders     45  
Section 2.3
  Optional Changes in Facility Amount; Prepayments     47  
Section 2.4
  Deemed Collections     47  
Section 2.5
  Notations on the Variable Funding Notes     48  
Section 2.6
  Principal Repayments     48  
Section 2.7
  Interest Payments     49  
Section 2.8
  Settlement Procedures     49  
Section 2.9
  Collections and Allocations     53  
Section 2.10
  Payments, Computations, Etc     54  
Section 2.11
  [Reserved]     54  
Section 2.12
  Fees     54  
Section 2.13
  Increased Costs; Capital Adequacy; Illegality     55  
Section 2.14
  Taxes     56  
Section 2.15
  Assignment of the Purchase Agreement     58  
Section 2.16
  Lien Release Dividend     58  
Section 2.17
  Appointment of Registrar and Duties     60  

      Section 2.18 Substitution of Loans; Repurchase or Substitution of
Ineligible Loans 61  

                  ARTICLE IIICLOSING; CONDITIONS OF CLOSING AND ADVANCES
    64  
Section 3.1
  Conditions to Closing and Initial Advances     64  
Section 3.2
  Conditions Precedent to All Advances     65   ARTICLE IVREPRESENTATIONS AND
WARRANTIES
    67  
Section 4.1
  Representations and Warranties of the Borrower     67  

      Section 4.2 Representations and Warranties of the Borrower Relating to the
Agreement and the Loans 75  

                          ARTICLE VGENERAL COVENANTS OF THE BORROWER
    76          
Section 5.1
  Covenants of the Borrower     76          
Section 5.2
  Hedging Agreement     81          
Section 5.3
  Delivery of Loan Files     82           ARTICLE VIPERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
            83  
Section 6.1
  Custody of Transferred Loans     83          
Section 6.2
  Filing     83          
Section 6.3
  Changes in Name, Structure or Location     83          
Section 6.4
  Chief Executive Office     84          
Section 6.5
  Costs and Expenses     84          
Section 6.6
  Sale Treatment     84          
Section 6.7
  Separateness from the Borrower     84           ARTICLE VIIADMINISTRATION AND
SERVICING OF LOANS
    84          
Section 7.1
  Appointment of the Servicer     84          
Section 7.2
  Duties and Responsibilities of the Servicer     84          
Section 7.3
  Authorization of the Servicer     86          
Section 7.4
  Collection of Payments     87          
Section 7.5
  Servicer Advances     89          
Section 7.6
  Realization Upon Defaulted Loans or Charged-Off Loans     89          
Section 7.7
  Maintenance of Insurance Policies     90          
Section 7.8
  Representations and Warranties of the Servicer     90          
Section 7.9
  Covenants of the Servicer     91          
Section 7.10
  The Trustee     94          
Section 7.11
  Representations and Warranties of the Trustee     99          
Section 7.12
  Covenants of the Trustee100                
Section 7.13
  The Backup Servicer101                
Section 7.14
  Representations and Warranties of the Backup Servicer104                
Section 7.15
  Covenants of the Backup Servicer105                
Section 7.16
  Payment of Certain Expenses by the Servicer and the Borrower105              
 
Section 7.17
  Reports106                
Section 7.18
  Annual Statement as to Compliance106                
Section 7.19
  Annual Independent Public Accountant’s Servicing Reports107                
Section 7.20
  Limitation on Liability of the Servicer and Others107                
Section 7.21
  The Servicer, the Backup Servicer and the Trustee Not to Resign     108      
   

      Section 7.22 Access to Certain Documentation and Information Regarding the
Loans 108  

                 
Section 7.23
  [Reserved]     108  
Section 7.24
  Identification of Records     108  
Section 7.25
  Servicer Termination Events     108  
Section 7.26
  Appointment of Successor Servicer     110  
Section 7.27
  Market Servicing Fee     111   ARTICLE VIIISECURITY INTEREST
    112  
Section 8.1
  Grant of Security Interest     112  
Section 8.2
  Release of Lien on Loans     112  
Section 8.3
  [Reserved]     113  
Section 8.4
  Further Assurances     113  
Section 8.5
  Remedies     113  
Section 8.6
  Waiver of Certain Laws     113  
Section 8.7
  Power of Attorney     114   ARTICLE IXTERMINATION EVENTS
    114  
Section 9.1
  Termination Events     114  
Section 9.2
  Remedies     116   ARTICLE XINDEMNIFICATION
    118  
Section 10.1
  Indemnities by the Borrower     118  
Section 10.2
  Indemnities by the Servicer     120   ARTICLE XITHE AGENT
    121  
Section 11.1
  Authorization and Action     121  
Section 11.2
  Delegation of Duties     121  
Section 11.3
  Exculpatory Provisions     122  
Section 11.4
  Reliance     122  
Section 11.5
  Non-Reliance on Agent     122  
Section 11.6
  The Agent in its Individual Capacity     123  
Section 11.7
  Successor Agent     123  
Section 11.8
  Payments by the Agent     124  
Section 11.9
  Indemnification of the Agent     124   ARTICLE XIIMISCELLANEOUS
    124  
Section 12.1
  Amendments and Waivers     124  
Section 12.2
  Notices, Etc     125  
Section 12.3
  Liabilities to Obligors     125  
Section 12.4
  No Waiver, Rights and Remedies     125  
Section 12.5
  Binding Effect     126  
Section 12.6
  Term of this Agreement     126  

      Section 12.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION
TO VENUE 126  

                 
Section 12.8
  WAIVER OF JURY TRIAL     126  
Section 12.9
  Costs, Expenses and Taxes     127  
Section 12.10
  No Proceedings     127  
Section 12.11
  Recourse Against Certain Parties     128   Section 12.12   Protection of
Security Interest; Appointment of Attorney-in-Fact128
Section 12.13
  Confidentiality     129  
Section 12.14
  Third Party Beneficiaries     130  
Section 12.15
  Execution in Counterparts; Severability; Integration     130  
Section 12.16
  Waiver of Setoff     131  
Section 12.17
  Assignments by the Lenders     131  
Section 12.18
  Heading and Exhibits     131  

      Section 12.19 Sharing of Payments on Transferred Loans Subject to the
Retained Interest Provisions 131  

                 
Section 12.20
  Non-Confidentiality of Tax Treatment     132  
Section 12.21
  Condition to Effectiveness     132  
Section 12.22
  Lender Agents     132  

1

ANNEXES

     
ANNEX A
ANNEX B
  Notice Information
Commitments
EXHIBITS
 

EXHIBIT A-1
EXHIBIT A-2
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
EXHIBIT G
EXHIBIT H
EXHIBIT I
EXHIBIT J
EXHIBIT K
EXHIBIT L
EXHIBIT M
EXHIBIT N
EXHIBIT O-1
EXHIBIT O-2
EXHIBIT P-1
EXHIBIT P-2
EXHIBIT Q-1
EXHIBIT Q-2
EXHIBIT R
  Borrower Notice (Funding Request)
Borrower Notice (Reduction of Advances Outstanding and Reduction of
Facility Amount)
Form of Variable Funding Note
Form of Operating Agreement
Form of Assignment and Acceptance
Form of Monthly Report
Form of Servicer’s Certificate
Credit and Collection Policy
Form of Hedging Agreement (including Schedule and Confirmation)
Form of Certificate of Borrower’s Counsel
Form of Trust Receipt and Initial Certification
Form of Trust Receipt and Final Certification
Form of Request for Release of Loan Files and Receipt
Form of Assignment of Mortgage
Form of Reinvestment Certification
Officer’s Certificate as to Solvency from Originator
Officer’s Certificate as to Solvency from Borrower
Officer’s Closing Certificate from Originator
Officer’s Closing Certificate from Borrower
Power of Attorney from Servicer
Power of Attorney from Borrower
[Reserved]
 
   
EXHIBIT S
  [Reserved]
 
   
EXHIBIT T
EXHIBIT U
EXHIBIT V
EXHIBIT W
  Form of Agent and Intercreditor Provisions for Agented Notes
Form of Intercreditor and Subordination Agreement
Form of Transferee Letter
Form of Certificate of a Responsible Officer of the Servicer

SCHEDULES

     
SCHEDULE I
SCHEDULE II
  Schedule of Documents
[Reserved]
 
   
SCHEDULE III
  [Reserved]
 
   
SCHEDULE IV
SCHEDULE V
  Loan List
Location of Loan Files

2

P R E A M B L E

THIS SECOND AMENDED AND RESTATED LOAN FUNDING AND SERVICING AGREEMENT (such
agreement as amended, modified, waived, supplemented or restated from time to
time, the “Agreement”) is made as of this 11th day of April, 2008, by and among:

(1) PATRIOT CAPITAL FUNDING LLC I, a Delaware limited liability company, as the
borrower (together with its successors and assigns in such capacity, the
“Borrower”);

(2) PATRIOT CAPITAL FUNDING, INC., a Delaware corporation (“Patriot Capital”),
as the servicer (together with its successors and assigns in such capacity, the
“Servicer”);

(3) EACH OF THE CONDUIT LENDERS AND INSTITUTIONAL LENDERS, which may from time
to time become party hereto (each a “Lender”, and collectively, the “Lenders”);

(4) EACH OF THE LENDER AGENTS, which may from time to time become party hereto,
as Lender Agent;

(5) BMO CAPITAL MARKETS CORP. (formerly known as Harris Nesbitt Corp.), a
Delaware corporation (“BMO”), as the Agent (together with its successors and
assigns in such capacity, the “Agent”); and

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

R E C I T A L S

WHEREAS, the Borrower, the Servicer, the Conduit Lender, the Agent, the Backup
Servicer and the Trustee have entered into the Loan Funding and Servicing
Agreement, dated as of July 27, 2005, as amended and restated as of
September 18, 2006 (such agreement as amended, modified, waived, supplemented or
restated from time to time, the “Existing Agreement”);

WHEREAS, the Borrower, the Servicer, the Conduit Lender, the Agent, the Backup
Servicer and the Trustee desire to amend and restate the Existing Agreement;

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

ARTICLE I

DEFINITIONS

      Section 1.1 Certain Defined Terms.

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

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

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

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

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

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

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

“Advance”: Defined in Section 2.1(b).

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

“Affected Party”: The Agent, each Lender, each Liquidity Bank, all assignees and
participants of each Lender and each Liquidity Bank, any successor to BMO as
Agent and any sub-agent of the Agent.

“Affiliate”: With respect to a Person, means any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” or “controlled” have meanings correlative
to the foregoing; provided that (x) in the case of the Servicer or any
Subsidiary, “Affiliate” shall not include any Person that is a Portfolio
Investment and (y) the term Affiliate shall not include any Affiliate
relationship which may exist solely as a result of direct or indirect ownership
of, or control by, a common owner which is a financial institution, fund or
other investment vehicle which is in the business of making diversified
investments.

“Agent”: Defined in the Preamble.

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

“Aggregate Net Mark to Market Amount”: As of each Determination Date, the sum of
all Net Mark to Market Amounts for such date for all Hedge Transactions;
provided, however, that if such sum shall be a negative number, the Aggregate
Net Mark to Market Amount shall be deemed to be $0.

“Aggregate Outstanding Loan Balance”: As of any date of determination, the sum
of the Outstanding Loan Balances of all Eligible Loans included as part of the
Collateral on such date minus, without duplication, the Outstanding Loan Balance
of all Charged-Off Loans, Defaulted Loans, Delinquent Loans, Restructured Loans
and Recapitalized Loans included as part of the Collateral on such date.

“Aggregate Purchased Loan Balance”: As of any date of determination, the sum of
the Purchased Loan Balances of all Eligible Loans included as part of the
Collateral on such date minus, without duplication, the Purchased Loan Balance
of all Charged-Off Loans, Defaulted Loans, Delinquent Loans, Restructured Loans
and Recapitalized Loans included as part of the Collateral on such date.

“Agreement”: Defined in the Preamble.

“Alternative Rate”: An interest rate per annum equal to the Adjusted Eurodollar
Rate; provided, however, that the Alternative Rate shall be the Base Rate if a
Eurodollar Disruption Event occurs; provided, further, that the Alternative Rate
for the first two (2) Business Days following any Advance made by a Liquidity
Bank shall be the Base Rate unless such Liquidity Bank has received at least two
Business Days prior notice of such Advance.

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

“Annual Reporting Date”: July 23 of each year.

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

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

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

“Availability”: On any day, the excess, if any, of (a) the Maximum Availability
over (b) the Advances Outstanding on such day; provided, however, that during
the Amortization Period, for all purposes of this Agreement other than
determining whether a Termination Event has occurred under Section 9.1(f), the
Availability shall be $0.

“Available Funds”: With respect to any Payment Date, (a) all amounts received in
the Collection Account (including, without limitation, any Collections on any of
the Collateral) as of the later of (i) the immediately preceding Determination
Date or (ii) the date of the calculations set forth in the most recent Borrower
Notice and (b) to the extent that the amounts in the preceding clause (a) of
this definition are insufficient on any Payment Date to make the payments
required by (I) Section 2.8(a)(1)(iii), (iv), (v), (vi) and (vii), then amounts
on deposit in the Reserve Account on such date, (II) Section 2.8(b)(iii), (iv),
(v), (vi) and (vii), then amounts on deposit in the Reserve Account on such
date.

“Backup Servicer”: Defined in the Preamble.

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

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

“Backup Servicer and Trustee Fee Letter”: The Backup Servicer and Trustee Fee
Letter, dated as of July 27, 2005, among the Servicer, the Backup Servicer, the
Trustee and the Agent.

“Bank of Montreal”: The Bank of Montreal, a Canadian chartered bank, acting
through its Chicago, Illinois branch.

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

“Base Rate”: On any date, a fluctuating rate of interest per annum equal to the
higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 0.5%.

“BB&T”: Branch Banking and Trust Company, a North Carolina banking corporation.

“BB&T LIBOR Rate”: For any Accrual Period and any Advance funded by BB&T, the
rate per annum determined on the basis of the rate for deposits in Dollars of
amounts equal or comparable to the principal amount of such Advance offered for
a term comparable to such Accrual Period, which rate appears on the display
designated as Reuters Screen LIBOR01 (or such other page as may replace Reuters
Screen LIBOR01 or such other service or services as may be nominated by the
British Banker’s Association for the purpose of displaying London InterBank
Offered Rates for U.S. dollar deposits) determined as of 11:00 a.m. London,
England time, on the first day of such Accrual Period or on the immediately
preceding Business Day if the first day of such Accrual Period is not a Business
Day.

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

“BMO”: Defined in the Preamble.

“Borrower”: Defined in the Preamble.

“Borrowing Base”: On any date of determination, an amount equal to the sum of
(i) the Aggregate Purchased Loan Balance on such date and (ii) the Purchased
Loan Balance of all Eligible Loans to become included as part of the Collateral
on such date.

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

“Borrower Notice”: A written notice, in the form of Exhibit A-1, A-1-X or A-2,
as applicable, to be used for each Advance, repayment of each Advance or
termination or reduction of the Facility Amount or Prepayments of Advances or
any reinvestment of Principal Collections under Section 2.8(a)(2).

“Breakage Costs”: With respect to any Lender, any amount or amounts as shall
compensate such Lender for any loss, cost or expense incurred by such Lender (as
reasonably determined by such Lender) as a result of (i) a prepayment by the
Borrower of Advances Outstanding or (ii) any difference between the CP Rate and
the Adjusted Eurodollar Rate. All Breakage Costs shall be due and payable upon
demand. The determination by a Lender of the amount of any such loss or expense
shall be set forth in a written notice to the Borrower and shall be conclusive
absent manifest error.

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

“Capital Expenditures”: With respect to any Person and for any period, the sum
of capital expenditures and payments under Capitalized Leases of such Person for
such period determined and consolidated in accordance with GAAP.

“Capitalized Leases”: With respect to any Person, leases of (or other agreements
conveying the right to use) any property (whether real, personal or mixed) by
such Person as lessee that, in accordance with GAAP, either would be required to
be classified and accounted for as capital leases on a balance sheet of such
Person or otherwise be disclosed as such in a note to such balance sheet.

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

“Charged-Off Loan”: Any Transferred Loan:

(a) that is more than 90 days past due (without giving effect to any Servicer
Advance thereon) with respect to any interest or principal payment;

(b) as to which an Insolvency Event has occurred with respect to the related
Obligor;

(c) as to which the related Obligor has suffered any Material Adverse Change
which materially affects its viability as a going concern;

(d) that is or otherwise should be written off as uncollectible by the Servicer
in accordance with the Credit and Collection Policy;

(e) that has been placed on “non-accrual” status in accordance with the Credit
and Collection Policy;

(f) that has been assigned a risk rating of “Grade 4” or “Grade 5” on the
Patriot Capital standard credit rating scale in accordance with the Credit and
Collection Policy; or

(g) that has been sold for less than its Outstanding Loan Balance upon
foreclosure or upon exercise of remedies, provided that, only the portion of the
Transferred Loan not recouped in such sale shall be deemed to be “charged-off”
for purposes of this clause (g).

“Charged-Off Portfolio Loan”: Any Portfolio Loan:

(a) that is 90 days or more past due (without giving effect to any Servicer
Advance thereon) with respect to any interest or principal payment,

(b) as to which an Insolvency Event has occurred with respect to the related
Obligor,

(c) as to which the related Obligor has suffered any Material Adverse Change
which materially affects its viability as a going concern,

(d) that is or otherwise should be written off as uncollectible by the Servicer
in accordance with the Credit and Collection Policy or

(e) that has been placed on “non-accrual” status in accordance with the Credit
and Collection Policy;

(f) that has been assigned a risk rating of “Grade 4” or “Grade 5” on the
Patriot Capital standard credit rating scale in accordance with the Credit and
Collection Policy; or

(g) that has been sold for less than its Outstanding Loan Balance upon
foreclosure or upon exercise of remedies, provided, that, only the portion of
the Portfolio Loan not recouped in such sale shall be deemed to be “charged-off”
for purposes of this clause (g).

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

“Closing Date”: July 27, 2005.

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

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

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

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

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

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

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

(vi) all Insurance Policies;

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

(viii) the Collection Account, the Reserve Account, and, to the extent that
amounts on deposit therein or credited thereto relate to the Transferred Loans,
the Concentration Account, together with all funds held in or credited to such
accounts, and all certificates and instruments, if any, from time to time
representing or evidencing each of the foregoing or such funds;

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

(x) the Purchase Agreement and the assignment to the Trustee on behalf of the
Secured Parties of all UCC financing statements filed by the Borrower against
the Originator under or in connection with the Purchase Agreement.

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

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

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

“Collections”: (a) All cash collections or other cash proceeds received by the
Borrower or by the Servicer or Originator on behalf of the Borrower from any
source in payment of any amounts owed in respect of a Transferred Loan,
including, without limitation, Interest Collections, Principal Collections,
Deemed Collections, Insurance Proceeds, interest earnings in the Collection
Account, all Recoveries, finance charges and all other charges, (b) all amounts
received by the Borrower in connection with the repurchase of an Ineligible Loan
pursuant to Section 2.18(b), (c) any other funds received by or on behalf of the
Borrower with respect to any Transferred Loan or Related Property including,
without limitation, insurance payments and net proceeds of sale or other
disposition of repossessed goods, and (d) all payments received pursuant to any
Hedging Agreement or Hedge Transaction, but excluding, in the case of (a),
(b) or (c), as applicable, amounts in respect of any Retained Interest and
Excluded Amounts.

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

“Commitment”: With respect to each Conduit Lender or Institutional Lender, the
commitment of such Lender to make Advances in accordance herewith in an amount
not to exceed (a) prior to the Termination Date, the amount set forth opposite
such Lender’s name in Annex B of this Agreement, under the heading “Commitment,”
or the amount set forth as such Lender’s “Commitment” in the Assignment and
Acceptance relating to such Lender, as applicable, and (b) on and after the
Termination Date, the Pro Rata Share of such Conduit Lender or Institutional
Lender, as applicable, of the aggregate Advances Outstanding.

“Commitment Termination Date”: April 11, 2011, or such later date as the Agent,
in its sole discretion, shall notify the Borrower of in writing in accordance
with Section 2.1(c).

“Concentration Account”: Account number 743028-701 maintained in the name of
Patriot Capital Funding, Inc. with the Concentration Account Bank for the
purpose of receiving Collections.

“Concentration Account Agreement”: The Concentration Account Agreement, dated as
of July 27, 2005, by and among U.S. Bank, as Concentration Account Bank and
Patriot Capital Funding, Inc. as such agreement may be amended, modified,
waived, supplemented or restated from time to time.

“Concentration Account Bank”: U.S. Bank, as Concentration Account Bank.

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

(a) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral to Obligors with a National Revenue Base shall not be less than 70%;

(b) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral to Obligors (i) which are in the same Industry shall not exceed the
greater of $20,000,000 or 10%;

(c) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral to any one Obligor shall not exceed $20,000,000;

(d) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral which are not Senior Secured Loans shall not exceed 60%;

(e) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral which are Junior Secured Loans shall not exceed 25%;

(f) the sum of the Outstanding Loan Balances of Eligible Loans which are Grade 3
Loans shall not exceed 20%;

(g) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral that have interest due and payable monthly shall not be less than
40%;

(h) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral that are secured by a security interest in a material portion or all
of the assets of the related Obligor shall not be less than 70%;

(i) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral which are Subordinated Loans shall not exceed 35%;

(j) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral the entire principal amount of which is due in a single installment
at the maturity of such Loan shall not exceed 70%;

(k) the sum of the Outstanding Loan Balances of each Eligible Loan included in
the Collateral which is a PIK Loan and which is either (a) a Fixed Rate Loan
having a cash coupon of less than 10% per annum or (b) a Floating Rate Loan
shall not exceed 0%;

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

(m) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral which are Revolving Loans shall not exceed 7.5%;

(n) the sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral to Obligors in which the Originator holds a direct or indirect
ownership interest (on a fully-diluted basis) of 20% or greater shall not exceed
10%;

(o) the sum of the Outstanding Loan Balance of Eligible Loans to Obligors in
Canada shall not exceed 7.5%; and

(p) the sum of the Outstanding Loan Balance of Eligible Loans relating to
purchased and re-underwritten Loans shall not exceed 35%; provided that (i) such
Loans rated either Caa1 or CCC+ or less or that are unrated shall not exceed
$30,000,000; and (ii) no individual Loan purchased and re-underwritten by the
Originator shall exceed $12,500,000.

For the avoidance of doubt, while determining the ratings under clause (p)(i) of
this definition, in case of any Loan with respect to which the ratings issued by
Moody’s and S&P differ, the rating of such Loan shall be deemed to be the
average of the ratings issued by Moody’s and S&P with respect to such Loan,
provided that if the ratings issued by Moody’s and S&P with respect to such Loan
differ only by a single notch the rating of such Loan shall be deemed to be
higher of the ratings issued by Moody’s and S&P with respect to such Loan.

“Conduit Lender”: Each Lender designated as such on its signature page hereto
and each financial institution, other than an Institutional Lender, which may
from time to time become a Lender hereunder by executing and delivering to the
Agent, the Trustee, the Borrower and the Servicer an Assignment and Acceptance
and a Transferee Letter as contemplated by Section 12.17.

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

“CP Rate”: With respect to any Conduit Lender, for any Accrual Period, means
(a) the per annum rate equivalent to the weighted average of the per annum rates
paid or payable by such Conduit Lender from time to time as interest on or
otherwise in respect of those promissory notes issued by such Conduit Lender
that are allocated, in whole or in part, by such Conduit Lender’s agent to fund
the purchase or maintenance of an Advance during an Accrual Period as determined
by such Conduit Lender’s agent and reported to the Agent, the Borrower and the
Servicer, which rates shall include and give effect to the commissions of
placement agents and dealers in respect of such promissory notes, incremental
carrying costs incurred with respect to such promissory notes maturing on dates
other than those on which corresponding funds are received by such Conduit
Lender, and any other costs associated with the issuance of promissory notes, in
each case to the extent such commissions and other costs are allocated, in whole
or in part, to such promissory notes by such Conduit Lender’s agent; provided,
however, that if any component of such rate is a discount rate, in calculating
the “CP Rate” for such Accrual Period the Conduit Lender (or its agent on its
behalf) shall for such component use the rate resulting from converting such
discount rate to an interest bearing equivalent rate per annum; provided,
further, that notwithstanding anything in this Agreement or any other
Transaction Document to the contrary, the Borrower agrees that any amounts
payable to any Conduit Lender in respect of Interest for any Accrual Period with
respect to any Advance funded by such Conduit Lender at the CP Rate shall
include an amount equal to the portion of the face amount of the outstanding
promissory notes issued to fund or maintain such Advance that corresponds to the
portion of the proceeds of such promissory notes that was used to pay the
interest component of maturing promissory notes issued to fund or maintain such
Advance, to the extent that such Conduit Lender had not received payments of
interest in respect of such interest component prior to the maturity date of
such maturing promissory notes (for purposes of the foregoing, the “interest
component” of promissory notes equals the excess of the face amount thereof over
the net proceeds received by such Conduit Lender from the issuance of promissory
notes, except that if such promissory notes are issued on an interest-bearing
basis its “interest component” will equal the amount of interest accruing on
such promissory notes through maturity).

“Credit and Collection Policy”: Those credit, collection, customer relation and
service policies: (a) determined by the Borrower, the Originator and the initial
Servicer as of the date hereof relating to the Loans and related Loan Documents,
described in Exhibit G, as the same may be amended or modified from time to time
in accordance with Section 7.9(g); and (b) with respect to any Successor
Servicer, the collection procedures and policies of such person (as approved by
the Agent) at the time such Person becomes Successor Servicer.

“Current Fixed Charges”: For any period, the sum of (i) total cash interest
expense of an Obligor and its Subsidiaries in connection with Indebtedness and
any other obligations required by GAAP to be shown as liabilities on the
consolidated balance sheet of an Obligor and its Subsidiaries, plus (ii) all
Scheduled Debt Amortization for such period plus (iii) all scheduled payments on
Capitalized Leases for such period determined in accordance with GAAP; but
including, in each case, as applicable, all commissions, discounts and other
fees and charges in connection with letters of credit and bankers’ acceptances
and net costs or benefits under Interest Rate Protection Agreements and
excluding any original issue discount related to the issuance of Indebtedness
pursuant to the applicable Loan Documents.

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

“Debt/EBITDA Ratio”: As of any date of determination, the ratio of (i) the
Indebtedness of the Obligor (other than Deeply Subordinated Debt) and its
Subsidiaries on a consolidated basis as of the last day of the most recent
fiscal quarter for which financial statements are available to (ii) EBITDA of
the Obligor and its Subsidiaries on a consolidated basis for the twelve month
period ended on the last day of the most recent fiscal quarter for which
financial statements are available.

“Debt Service Coverage Ratio”: As of any date of determination, the ratio of (i)
EBITDA of the Obligor and its Subsidiaries on a consolidated basis for the
twelve month period ended on the last day of the most recent fiscal quarter for
which financial statements are available to (ii) the amount of all scheduled
principal payments due and payable by the Obligor and its Subsidiaries on a
consolidated basis during such period plus the interest on Indebtedness payable
in cash accrued during such period.

“Deemed Collection”: Defined in Section 2.4.

“Deeply Subordinated Debt”: Any debt instrument issued by an Obligor or any of
its Subsidiaries which shall permit cash payments of current interest at a rate
not to exceed 10% per annum, but containing terms providing for the suspension
of any right to payment under such debt instrument during the occurrence and
continuation of an event of default under the related Loan.

“Defaulted Loan”: Any Transferred Loan (other than a Delinquent Loan or
Charged-Off Loan) (a) that is more than 60 days past due (without giving effect
to any Servicer Advance thereon) with respect to any interest or principal
payments or (b) that is or otherwise should be considered a Defaulted Loan by
the Servicer in accordance with the Credit and Collection Policy.

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

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

“Delinquent Loan”: Any Loan (other than a Charged-Off Loan or Defaulted Loan)
(a) that is more than 45 days past due (without giving effect to any Servicer
Advance thereon) with respect to any interest or principal payments or (b) that
is or otherwise should be considered a Delinquent Loan by the Servicer in
accordance with the Credit and Collection Policy.

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

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

“DIP Loan”: A loan to an Obligor that is a “debtor-in-possession” as defined
under the Bankruptcy Code.

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

“EBITDA”: For any period, EBIT plus the amount of all depreciation and
amortization expense deducted in determining net income for such period, which
will include adjustments deemed reasonable by the Servicer and in accordance
with the Servicer’s underwriting methodology and in accordance with the Credit
and Collection Policy.

“EBIT”: For any period, net income for such period plus the interest on
Indebtedness, provisions for taxes based on income, and any extraordinary losses
for such period, minus any extraordinary gains for such period, but without
adjustment for any noncash income or noncash charges that are classified as such
under GAAP.

“Eligible Loan”: On any date of determination, any Loan that satisfies each of
the following requirements; provided that any Loan that is a Permitted
Investment which, upon acquisition by the Borrower is credited to the Principal
Collection Account, shall be deemed to constitute an Eligible Loan for all
purposes of this Agreement:

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

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

(iii) the Loan has an original term to maturity of no more than 90 months, and
is either fully amortizing in installments (which installments need not be in
identical amounts) over such term or the principal amount thereof is due in a
single installment at the end of such term;

(iv) the Loan is not a loan or extension of credit made by the Originator or one
of its Affiliates to an Obligor for the purpose of making any principal,
interest (other than deferred interest) or other payment on a loan to the same
Obligor necessary in order to keep such loan from becoming delinquent and such
Loan is not being kept current by the Originator or one of its Affiliates making
other Loans to the Obligor;

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

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

(vii) the Loan was documented and closed in accordance with the Credit and
Collection Policy, and there is only one current original promissory note (other
than with respect to a Noteless Loan) representing the portion of such Loan
constituting a Transferred Loan, which has been delivered to the Trustee, duly
endorsed as collateral;

(viii) the Loan has not been modified or extended in any way unless in the
normal course of business in accordance with the Originator’s or the Servicer’s
policies and procedures and unless such modification in no way adversely
affected the Loan’s otherwise eligible status or its collectibility;

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

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

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

(xii) for purposes of the initial Advance made with respect to such Loan, no
payment of principal or interest or portion thereof is more than ten days past
due;

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

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

(xv) the Loan has not had any material term, provision or covenant amended,
rewritten, extended, modified or waived in a manner that would materially and
adversely affect the collectibility of such Loan more than two times in the
preceding 12 months;

(xvi) the Loan is not a DIP Loan;

(xvii) the Loan Documents with respect to such Loan require the related Obligor
to provide ongoing financial information to the Originator, including, without
limitation, quarterly financial statements, annual audited financial statements
audited by an independent third-party auditor, and ongoing covenant compliance
certificates;

(xviii) a third party audit or due diligence has been performed to the
satisfaction of the Originator and the Obligor has agreed to provide the
Servicer or a Successor Servicer with rights to inspect any Records or Related
Property;

(xix) the Weighted Average Life of the Transferred Loans in the aggregate does
not exceed 5 years;

(xx) the minimum coupon on Fixed Rate Loans shall be at least (a) 10% per annum
in the event such Loan is a Subordinated Loan, (b) 7% per annum in the event
such Loan is a Junior Secured Loan and (c) 5.75% per annum in the event such
Loan is a Senior Secured Loan; and the minimum spread on Floating Rate Loans
shall be at least: (a) 7% per annum in the event such Loan is a Subordinated
Loan, (b) 4% per annum in the event such Loan is a Junior Secured Loan and
(c) 2.75% per annum in the event such Loan is a Senior Secured Loan;

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

(xxii) the Loan was originated by the Originator or purchased and
re-underwritten by the Originator;

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

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

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

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

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

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

(xxix) the Obligor of such Loan is legally responsible for all taxes relating to
the Related Property, and all payments in respect of the Loan are required to be
made free and clear of, and without deduction or withholding for or on account
of, any taxes, unless such withholding or deduction is required by Applicable
Law in which case the Obligor thereof is required to make “gross-up” payments
that cover the full amount of any such withholding taxes on an after-tax basis
(taking into account all available credits or deductions attributable to the
payment or accrual of such taxes);

(xxx) neither the Loan nor any portion of the Related Property constitute Margin
Stock;

(xxxi) the Obligor of such Loan has waived all rights of set-off and/or
counterclaim against the Originator of the Loan and all assignees thereof;

(xxxii) after giving effect to the inclusion of such Loan in the Collateral, the
sum of the Outstanding Loan Balances of Eligible Loans included in the
Collateral principally secured by real property shall not exceed 40%;

(xxxiii) the Loan has an Eligible Risk Rating;

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

(xxxv) with respect to Agented Notes, the Originator has been appointed the
collateral agent of the security and the payment agent for all such notes prior
to such Agented Note becoming a part of the Collateral;

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

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

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

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

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

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

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

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

(iii) unless the Agent shall have otherwise consented in writing, such Obligor
is not nor has been for the previous six years the subject of any Insolvency
Event;

(iv) such Obligor is not an Affiliate of any of the parties hereto;

(v) such Obligor’s principal office and any Related Property are located in the
United States or Canada (excluding the province of Quebec);

(vi) no other Loan of such Obligor is more than 45 days past due;

(vii) such Obligor is not a Governmental Authority;

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

(ix) such Obligor and/or its operating subsidiaries each have an Operating
History in its primary business of at least 60 months from the date of its
incorporation or formation; and

(x) such Obligor satisfies, as of the Cut-Off Date with respect to a Loan of
such Obligor, the following Debt/EBITDA and Fixed Charge Coverage Ratios (as
calculated on an “adjusted basis” by the Servicer pursuant to and in accordance
with the Credit and Collection Policy), as applicable, as of the most recent
date for which financial statements are available:

     
Ratio
  Required Level
 
   
Debt/EBITDA Ratio
  Less than or equal to 5.50 to 1.0
 
   
Fixed Charge Coverage Ratio
  At least 1.15 to 1.0
 
   

“Eligible Risk Rating”: With respect to any Loan, (i) as of the Cut-Off Date for
such Loan, a risk rating of “Grade 2” or better, and (ii) as of any other date
of determination, a risk rating of “Grade 3” or better.

“Equity Contribution”: As of any date of determination, an amount equal to the
excess, if any, of (a) the sum of (i) the Aggregate Purchased Loan Balance on
such date plus (ii) all Principal Collections on deposit in the Principal
Collection Account on such date, minus (b) the Advances Outstanding on such
date.

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

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

“Estimated Payment Amount”: As of each Determination Date, an amount (to be
calculated by the Servicer in good faith in its reasonable judgment) equal to
the sum of the following: (a) the Interest, (b) the Program Fee, (c) the
Facility Fee, (d) the Servicing Fee, (e) the Backup Servicer Fee, and (f) the
Trustee Fee, each as estimated by the Servicer to be due and payable on the next
succeeding Payment Date; provided, however, notwithstanding the foregoing, in no
event without the prior written approval of the Agent shall the Estimated
Payment Amount be less than the product of (i) 1.1 and (ii) the sum of the
Interest, the Program Fee, the Facility Fee, the Servicing Fee, the Backup
Servicer Fee and the Trustee Fee actually due and payable on the Payment Date
with respect to the preceding Collection Period.

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

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

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

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

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

“Existing Agreement”: Defined in the Recitals.

“Facility Amount”: $225,000,000, as such amount may vary from time to time upon
the written agreement of the parties hereto; provided, that, on or after the
Termination Date, the Facility Amount shall be $0.

“Facility Fee”: With respect to any applicable Lender, the fee set forth as such
in such Lender’s Fee Letter.

“Fair Market Value”: As of any date of determination with respect to each
Eligible Loan included in the Collateral, if such Eligible Loan has been reduced
in value on such date of determination below the original principal amount
(other than as a result of the allocation of a portion of the original principal
amount to warrants), the fair market value of such Eligible Loan, as determined
in accordance with the quarterly loan grading and asset valuation functions
specified in the Credit and Collection Policy, and as required by, and in
accordance with, the 1940 Act and any orders of the Securities and Exchange
Commission issued to the Originator, to be determined by the Board of Directors
of the Originator and reviewed by its auditors.

“Fairway”: Fairway Finance Company, LLC, as Conduit Lender hereunder.

“Fairway LIBOR Rate”: For any Accrual Period and any Advance funded by Fairway,
an interest rate per annum equal to:

(a) the posted rate for one-month deposits in Dollars appearing on Reuters
Screen LIBOR01 as of 11:00 a.m. (London time) on the Business Day that is the
Business Day immediately preceding the applicable Funding Date (with respect to
the initial Accrual Period for such Advance) and as of the Business Day
immediately preceding the first (1st) day of the applicable Accrual Period (with
respect to all subsequent Accrual Periods for such Advance); or

(b) if no rate appears on Reuters Screen LIBOR01 at such time and day, then the
Fairway LIBOR Rate shall be determined by the Agent as its rate (each such
determination, absent manifest error, to be conclusive and binding on all
parties hereto and their assignees) at which one-month deposits in Dollars are
being, have been, or would be offered or quoted by the Agent to major banks in
the applicable interbank market for Eurodollar deposits at or about 11:00 a.m.
(New York, New York time) on such day.

“FATF”: Defined in Section 4.1(jj).

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

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

“Fee Letter”: With respect to any Lender, the fee letter among such Lender, the
Borrower, the Servicer and any other parties thereto relating to the fees
payable to such Lender in connection with the transactions contemplated hereby,
as any such letter may be amended, modified, waived, supplemented, restated or
replaced from time to time.

“Fixed Charge Coverage Ratio”: For any twelve-month period, the ratio of
(i) EBITDA of an Obligor and its Subsidiaries on a consolidated basis during
such period plus scheduled payments on Capitalized Leases included in the
computation of EBITDA for such period minus Capital Expenditures during such
period minus Taxes paid in cash during such period to (ii) the Current Fixed
Charges during such period.

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

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

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

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

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

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

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

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

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

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

“Grade 4 Loan”: As of any date of determination, any Loan that the Servicer
determines to be or, in accordance with the Credit and Collection Policy and
Section 7.9(l), should have determined to be, classified as “Grade 4.”

“Grade 5 Loan”: As of any date of determination, any Loan that the Servicer
determines to be or, in accordance with the Credit and Collection Policy and
Section 7.9(l), should have determined to be, classified as “Grade 5.”

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

“Hedge Amount”: On any day, an amount equal to the excess, if any, of (a) the
product of (i) the product of (1) the Borrowing Base (excluding, solely for the
purposes of this calculation, the Purchased Loan Balance of any Permitted
Investment which is deemed to be an Eligible Loan by operation of the proviso to
the initial paragraph of Eligible Loan) and (2) the Fixed Rate Loan Percentage
and (ii) the Advances Outstanding divided by the Aggregate Outstanding Loan
Balance over (b)(i) at any time any of the conditions set forth in clauses (b),
(c), (d) or (e) in the definition of Hedge Trigger shall exist, zero and (ii) at
all other times, $15,000,000, unless otherwise consented to by the Agent.

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

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

“Hedge Counterparty”: Means (a) Bank of Montreal and (b) any other entity that
(i) on the date of entering into any Hedge Transaction (x) is an interest rate
swap dealer that has been approved in writing by the Agent (which approval shall
not be unreasonably withheld), and (y) has a long-term unsecured debt rating of
not less than “A” by S&P and not less than “A2” by Moody’s (the “Long-term
Rating Requirement”) and a short-term unsecured debt rating of not less than
“A-1” by S&P and not less than “P-1” by Moody’s (the “Short-term Rating
Requirement”), and (ii) in a Hedging Agreement (x) consents to the assignment of
the Borrower’s rights under the Hedging Agreement to the Trustee on behalf of
the Secured Parties pursuant to Section 5.2(b) and (y) agrees that in the event
that Moody’s or S&P reduces its long-term unsecured debt rating below the
Long-term Rating Requirement, it shall either collateralize its obligations in a
manner satisfactory to the Agent or transfer its rights and obligations under
each Hedging Agreement (excluding, however, any right to net payments or Hedge
Breakage Costs under any Hedge Transaction, to the extent accrued to such date
or to accrue thereafter and owing to the transferring Hedge Counterparty as of
the date of such transfer) to another entity that meets the requirements of
clauses (b)(i) and (b)(ii) hereof and has entered into a Hedging Agreement with
the Borrower on or prior to the date of such transfer.

“Hedge Notional Amount”: The aggregate notional amount in effect on any day
under all Hedge Transactions entered into pursuant to Section 5.2(a), that have
not matured, been terminated or cancelled.

“Hedge Percentage”: On any day (a) prior to the occurrence of a Hedge Trigger,
0%, and (b) on or after the day on which a Hedge Trigger occurs, 100%.

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

“Hedge Trigger”: The occurrence of any of the following: (a) the Hedge Amount
shall be greater than $0; (b) on any two consecutive Determination Dates, the
Rolling Three-Month Portfolio Yield shall be less than 6.0%; (c) the occurrence
of a Termination Event; (d) on any date during the Revolving Period, the
Liquidity Purchase Agreement as in effect on the date hereof (without giving
effect to any amendment, modification, waiver, supplement or restatement), shall
cease to be in full force and effect; or (e) during the Amortization Period, the
Liquidity Purchase Agreement shall expire in accordance with its terms and fail
to be renewed for an additional period of 364 days pursuant to Section 2.1(c) or
shall otherwise cease to be in full force and effect.

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

“Increased Costs”: Any amounts required to be paid by the Borrower to an
Affected Party pursuant to Section 2.13.

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

“Indemnified Amounts”: Defined in Section 10.1.

“Indemnified Parties”: Defined in Section 10.1.

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

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

“Ineligible Loan”: Defined in Section 2.18(b)(i).

“Initial Advance”: The first Advance.

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

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

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

“Institutional Lender”: Each Lender designated as such on its signature page
hereto and each financial institution, other than a Conduit Lender, which may
from time to time become a Lender hereunder by executing and delivering to the
Agent, the Trustee, the Borrower and the Servicer an Assignment and Acceptance
and a Transferee Letter as contemplated by Section 12.17.

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

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

“Intercreditor Agreement”: The Intercreditor and Concentration Account
Administration Agreement, dated as of July 27, 2005, among U.S. Bank, as the
Concentration Account Bank, Wells Fargo, as the account custodian, each
Securitization Agent that from time to time executes a joinder thereto, and
Patriot Capital Funding, Inc., as Originator, Original Servicer and
Concentration Account Servicer, as such agreement may be amended, modified,
waived, supplemented or restated from time to time.

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

             
 
  IR x P x    1   
         
where
 
IR
P   D

=
=  

the Interest Rate applicable on such day;
the principal amount of such Advance on such day; and

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

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

“Interest Collection Account”: The subaccount of the Collection Account into
which all Interest Collections are deposited by the Borrower or the Servicer on
behalf of the Borrower in accordance with Section 2.9.

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

“Interest Coverage Ratio”: For any twelve month period, the ratio of (i) EBITDA
of the Obligor and its Subsidiaries on a consolidated basis during such twelve
month period to (ii) the interest on Indebtedness payable in cash accrued during
such twelve month period.

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

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

(b) to the extent the applicable Conduit Lender or Institutional Lender did not
fund the Advance through the issuance of Commercial Paper Notes, a rate equal to
the Alternative Rate;

provided, that: (i) the Interest Rate shall be the Base Rate for any Accrual
Period for any Advance as to which a Conduit Lender has funded the making or
maintenance thereof by a sale of an interest therein to any Liquidity Bank under
the applicable Liquidity Purchase Agreement on any day other than the first day
of such Accrual Period and without giving such Liquidity Bank at least two
Business Days’ prior notice of such assignment; (ii) the Interest Rate shall be
the Base Rate if such Conduit Lender or Liquidity Bank shall have notified the
Agent that a Eurodollar Disruption Event has occurred; and (iii) the Interest
Rate shall be the rate set forth in the applicable Fee Letter for each day
during any Accrual Period following the Termination Date.

“Interest Rate Protection Agreement”: Any interest rate swap, interest rate cap,
interest rate collar or other interest rate hedging agreement or arrangement.

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

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

“Junior Secured Loan”: Any Loan that (i) is secured by a second priority Lien on
substantially all the Obligor’s assets constituting collateral for the Loan or
(ii) contains provisions that, upon the occurrence of an event of default under
the related Loan Documents or in the case of any liquidation or foreclosure on
the related collateral, the Borrower’s portion of such Loan would be paid only
after certain other lenders party to such Loan are paid in full.  Such Loan
cannot contain provisions (x) blocking payments on such Loan by the related
Obligor for a period exceeding 90 days upon the occurrence of a payment default
on loans held by senior lenders to such Obligor or upon the exercise of remedies
by such senior lenders upon a default under such senior indebtedness or
(y) prohibiting the holder of such Loan from exercising remedies following a
default under such Loan for a period exceeding 180 days.

“Lender” and “Lenders”: Defined in the Preamble.

“Lender’s Account”: With respect to (i) Fairway, a special account (ABA number
071000288; account number 2545804) in the name of BMO at Harris Trust and
Savings Bank and (ii) BB&T, a special account (ABA number 053101121; account
number 4990025482) in the name of BB&T at Branch Banking and Trust Company.

“Lender Agent”: With respect to (i) Fairway, BMO and (ii) each Conduit Lender
which may from time to time become a party hereto, the Person designated as the
“Lender Agent” with respect to such Conduit Lender in the applicable Assignment
and Acceptance.

“Leverage Ratio”: With respect to any person, the ratio of Indebtedness of such
Person to stockholders’ equity (as defined in accordance with GAAP) of such
Person.

“LIBOR Rate”: The BB&T LIBOR Rate or the Fairway LIBOR Rate, as applicable.

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

“Lien Release Dividend”: Defined in Section 2.16(a).

“Lien Release Dividend Date”: The date specified by the Borrower, which date may
be any Business Day, provided written notice is given in accordance with
Section 2.16(a).

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

“Liquidity Bank”: Each liquidity bank that is a party to a Liquidity Purchase
Agreement.

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

“Loan”: (i) Any Senior Secured Loan, Junior Secured Loan or Subordinated Loan
arising from the extension of credit to an Obligor by the Originator or
purchased and re-underwritten in the ordinary course of the Originator’s
business including, without limitation, all Add-On Loans, Revolving Loans, PIK
Loans and Noteless Loans, monies due and owing and all Interest Collections,
Principal Collections and other amounts received from time to time with respect
to such loan or note receivable and all Proceeds thereof, and (ii) any Permitted
Investments; provided that at no time shall the total amount of Permitted
Investments that constitute Loans exceed $70,000,000 in the aggregate.

“Loan Checklist”: With respect to any Loan, the index prepared by the Servicer
identifying each of the Loan Documents and any other document contained in the
related Loan File.

“Loan Documents”: With respect to any Loan (other than in the case of a Noteless
Loan), the related Underlying Note, and in the case of a Noteless Loan a copy of
the Loan Register with respect to such Loan (together with a copy of an executed
certificate of a Responsible Officer of the Servicer, in substantially the form
of Exhibit W, certifying to the accuracy of such Loan Register as of the date
such Loan is included as part of the Collateral), and with respect to any Loan,
any related loan agreement, security agreement, mortgage, assignment of Loans,
all guarantees, note purchase agreement, intercreditor and/or subordination
agreement, and UCC financing statements and continuation statements (including
amendments or modifications thereof) executed by the Obligor thereof or by
another Person on the Obligor’s behalf in respect of such Loan and any related
promissory note, including, without limitation, general or limited guaranties
and, for each Loan secured by real property by a mortgage document, an
Assignment of Mortgage, and for all Loans with an Underlying Note, an assignment
(which may be by allonge), in blank, signed by an officer of the Originator.

“Loan File”: With respect to any Loan, each of the Loan Documents and any other
documents identified on the Loan Checklist, related thereto.

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

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

“Loan Register”: Defined in Section 7.9(r).

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

“Market Servicing Fee”: Defined in Section 7.27.

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

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

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

“Maximum Availability”: On any day, the lesser of (i) the sum of (A) the excess
of (1) the Borrowing Base over (2) the Minimum Overcollateralization Amount plus
(B) the amount of Principal Collections on deposit in the Principal Collection
Account and (ii) the Facility Amount; provided, however, that during the
Amortization Period, the Maximum Availability shall be equal to the Advances
Outstanding.

“Maximum Lawful Rate”: Defined in Section 2.7(c).

“Minimum Overcollateralization Amount”: As of any date of determination, an
amount equal to the sum of (I) the greater of (a) the amount determined by
multiplying (i) the Borrowing Base on such date times (ii) one minus the
Weighted Average Advance Rate, and (b) the Required Equity Contribution plus
(II) the Aggregate Net Mark to Market Amount, as reported in the most recent
Monthly Report.

“Minimum Portfolio Yield”: 6.0%

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

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

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

“National Revenue Base”: With respect to any Obligor, means such Obligor derives
revenues from at least 14 states.

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

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

“Non-Extending Lender”: Defined in Section 2.1(d).

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

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

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

“Obligor”: With respect to any Loan, the Person or Persons obligated to make
payments pursuant to such Loan, including any guarantor thereof. For purposes of
calculating any of the Concentration Limits, all Loans included in the
Collateral or to become part of the Collateral the Obligor of which is an
Affiliate of another Obligor shall be aggregated with all Loans of such other
Obligor, for example, if Corporation A is an Affiliate of Corporation B; and the
aggregate Outstanding Loan Balance of all of Corporation A’s Loans in the
Collateral constitutes 10% of the Aggregate Outstanding Loan Balance and the
aggregate Outstanding Loan Balance of all Corporation B’s Loans in the
Collateral constitute 10% of the Aggregate Outstanding Loan Balance, the Obligor
concentration for Corporation A would be 20% and the Obligor concentration for
Corporation B would be 20%.

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

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

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

“Originator”: Patriot Capital Funding, Inc.

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

“Outstanding Loan Balance”: As of any date of determination, (a) with respect to
any Loan other than a Permitted Investment, the total remaining amounts of
principal payable by the Obligor thereof exclusive of interest payments and
Accreted Interest; provided that any principal previously covered by a Servicer
Advance will be excluded from the principal amounts payable for purposes of this
definition; and (b) with respect to any Loan that is a Permitted Investment the
purchase price paid by the Borrower for such Permitted Investment; provided
further that the Outstanding Loan Balance of any Permitted Investment which is
deemed to be an Eligible Loan by operation of the proviso to the initial
paragraph of the definition of Eligible Loan shall be deemed to equal zero for
all purposes hereunder other than the determination of the Purchased Loan
Balance of such Loan.

“Overcollateralization Amount”: As of any date of determination, the excess of
(a) the sum of the Borrowing Base plus the amount of Principal Collections on
deposit in the Collection Account on such date over (b) the Advances Outstanding
on such date.

“Overcollateralization Shortfall”: As of any date of determination, the excess,
if any, of (a) Minimum Overcollateralization Amount on such date over (b) the
Overcollateralization Amount on such date.

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

“Patriot Capital”: Defined in the Preamble.

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

“Payment Date”: The 12th day of each calendar month or, if such day is not a
Business Day, the next succeeding Business Day, commencing August 12, 2005.

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

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

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

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

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

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

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

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

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

“Permitted Liens”: (a) With respect to the Loans, Liens in favor of the Trustee
on behalf of the Secured Parties, created pursuant to this Agreement, and
(b) with respect to the Borrower’s interest in the related Collateral, any of
the following as to which no enforcement, collection, execution, levy or
foreclosure proceedings shall have been commenced: (i) materialmen’s,
warehousemen’s, mechanics’ and other liens arising by operation of law in the
ordinary course of business for sums not due or sums that are being contested in
good faith, (ii) Liens for state, municipal and other local taxes if such taxes
are not at the time due and payable or if the Obligor shall currently be
contesting the validity thereof in good faith by appropriate proceedings,
(iii) Liens held by senior lenders with respect to subordinated Loans,
(iv) Liens created pursuant to this Agreement in favor of the Trustee on behalf
of the Secured Parties (v) the rights of a Hedge Counterparty under its Hedging
Agreement, (vi) with respect to Agented Notes, Liens in favor of the collateral
agent on behalf of all noteholders of the related Obligor and (vii) any Liens
permitted under the terms of the related Loan Documents.

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

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

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

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

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

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

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

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

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

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

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

“Principal Collection Account”: The subaccount of the Collection Account into
which all Principal Collections are deposited by the Borrower or by the Servicer
on its behalf in accordance with Section 2.9.

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

“Pro Rata Share”: With respect to a Lender, the percentage obtained by dividing
the Commitment of such Lender (as determined under clause (a) of the definition
of Commitment) by the aggregate Commitments of all the Lenders (other than
Non-Extending Lenders), as determined under clause (a) of the definition of
Commitment.

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

“Program Fee”: With respect to any applicable Lender, the fee set forth as such
in such Lender’s Fee Letter.

“Purchase Agreement”: The Purchase and Sale Agreement, dated as of July 27,
2005, by and between the Originator and the Borrower, as such agreement may be
amended, modified, waived, supplemented or restated from time to time.

“Purchased Loan Balance”: As of any date of determination and any Loan, an
amount equal to (a) the lesser of (i) the Outstanding Loan Balance of such Loan
on such date, and (ii) the Fair Market Value of such Loan on such date, minus
(b) all amounts in excess of applicable Concentration Limits on such date;
provided that no deduction under clause (b) shall be made in respect of Loans
which are Permitted Investments.

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

“Recapitalized Loans”: With respect to any Loan and its related Obligor, a Loan
which, as of the date such Loan was included in the Collateral, was to an
Obligor in which the Originator held a direct or indirect ownership interest (on
a fully-diluted basis) in such Obligor of less than 50%, but as of any
subsequent date of determination, the Originator holds a direct or indirect
ownership interest (on a fully-diluted basis) in the related Obligor of greater
than or equal to 50%, unless the Agent, in its sole discretion, shall have
consented in writing to such Loan not being designated as a Recapitalized Loan.

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

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

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

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

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

“Replaced Loan”: Defined in Section 2.18(a).

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

“Repurchased Loan”: Defined in Section 2.4.

“Required Advance Reduction Amount”: On any day, the amount of Advances
Outstanding required to be repaid to cause the Availability to equal or exceed
$0.

“Required Equity Contribution”: As of any date of determination prior to the
Termination Date, an Equity Contribution in an amount equal to $140,000,000.

“Required Equity Shortfall”: On any day, the excess, if any, of the Required
Equity Contribution over the Equity Contribution on such day.

“Required Lenders”: At any time, Lenders representing in aggregate more than 50%
of the aggregate Commitments of the Lenders then in effect.

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

“Reserve Account”: Defined in Section 7.4(f).

“Reserve Account Required Amount”: An amount payable on each Payment Date, as
determined on the related Determination Date, equal to the sum of (a) 2.0 times
the Estimated Payment Amount plus (b) for any Payment Date and the related
Determination Date during the Revolving Period on which the Default Ratio
exceeds 4.0%, an amount equal to 5.0% of the Aggregate Outstanding Loan Balance.

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

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

“Restructured Loan”: Any Loan as to which the terms of payment of principal and
interest have been modified by the Originator, the Servicer or any subservicer
due to an Obligor’s inability to pay, including, without limitation, to permit
the Obligor to pay interest in kind rather than in cash when due but excluding
any Loans re-underwritten that conform to the Credit and Collection Policy.

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

“Retransfer Price”: Defined in Section 2.18(b).

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

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

“RIC/BDC Requirements”: The requirements (including, without limitation,
requirements pertaining to asset diversification) Patriot Capital Funding, Inc.
must satisfy to maintain its status as a “business development company,” within
the meaning of the Small Business Incentive Act of 1980, and its election to be
treated as a “registered investment company” under the Code.

“Rolling Three-Month Charged-Off Ratio”: As of any Determination Date, the
percentage equivalent of a fraction (a) the numerator of which equals the sum of
the Charged-Off Ratios for the Collection Period ending on such Determination
Date and each of the two preceding Determination Dates (or such lesser number of
Charged-Off Ratios as are available), and (b) the denominator of which equals
three (or the corresponding number of Charged-Off Ratios available, if less than
three).

“Rolling Three-Month Default Ratio”: As of any Determination Date, the
percentage equivalent of a fraction (a) the numerator of which equals the sum of
the Default Ratios for the Collection Period ending on such Determination Date
and each of the two preceding Determination Dates (or such lesser number of
Default Ratios as are available), and (b) the denominator of which equals three
(or the corresponding number of Default Ratios available if less than three).

“Rolling Three-Month Portfolio Yield”: As of any Determination Date, the
percentage equivalent of a fraction (a) the numerator of which equals the sum of
the Portfolio Yields for the Collection Period ending on such Determination Date
and each of the two preceding Determination Dates (or such lesser number of
Portfolio Yields as are available), and (b) the denominator of which equals
three (or the corresponding number of Portfolio Yields available if less than
three).

“Rolling Twelve-Month Portfolio Charged-Off Ratio”: As of any Determination
Date, the percentage equivalent of a fraction (i) the numerator of which is
equal to the excess of (A) the sum of the Portfolio Outstanding Loan Balance of
all Portfolio Loans that became Charged-Off Portfolio Loans during the
Collection Period related to such Determination Date and during the Collection
Periods related to each of the 11 preceding Determination Dates, respectively
(or such lesser number as shall have elapsed as of such Determination Date) over
(B) the sum of any Recoveries received during such twelve-month period (or such
shorter period as shall have elapsed as of such Determination Date) with respect
to all Portfolio Loans that became Charged-Off Portfolio Loans, and (ii) the
denominator of which is equal to a fraction, the numerator of which is equal to
the sum of the Portfolio Aggregate Outstanding Loan Balance as of the first day
of the Collection Period related to such Determination Date and as of the first
day of the Collection Period related to each of the 11 preceding Determination
Dates, respectively (or such lesser number as shall have elapsed as of such
Determination Date), and the denominator of which is equal to 12 (or the
corresponding lesser number of Determination Dates included in the calculations
described herein).

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

“Scheduled Debt Amortization”: The principal amount of Indebtedness scheduled to
be amortized in any period on Indebtedness other than revolving Indebtedness.

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

“Secured Party”: (a) The Lenders, (b) the Lender Agents, (c) the Agent, and
(d) each Hedge Counterparty that is either a Lender or an Affiliate of the Agent
that executes a counterpart of this Agreement agreeing to be bound by the terms
of this Agreement applicable to a Secured Party.

“Senior Secured Loan”: Any Loan that (i) is secured by a first priority Lien on
substantially all the assets of an Obligor or a specifically identified property
of an Obligor securing such Loan (subject to Permitted Liens) and (ii) provides
that the payment obligation of the related Obligor on such Loan is either senior
to, or pari passu with, all other loans or financings to such Obligor.

“Servicer”: Defined in the Preamble.

“Servicer Advance”: Defined in Section 7.5.

“Servicer Termination Event”: Defined in Section 7.25.

“Servicer Termination Notice”: Defined in Section 7.25.

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

“Servicing Duties”: Defined in Section 7.2.

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

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

“Servicing Records”: All documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, data processing
software and related property rights) prepared and maintained by the Servicer
with respect to the Loans and the related Obligors.

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

“Subordinated Debt”: Any debt that is subordinated in right of payment to
another class of indebtedness of a Person.

“Subordinated Loan”: Any Loan other than a Senior Secured Loan or a Junior
Secured Loan the priority of payment of which is subordinated to one or more
classes of creditors or contains provisions (x) blocking payments on such Loan
by the related Obligor for a period greater than 90 days upon the occurrence of
a payment default on loans held by senior lenders to such Obligor or upon the
exercise of remedies by such senior lenders upon a default under such senior
indebtedness or (y) prohibiting the holder of such Loan from exercising remedies
following a default under such Loan for a period greater than 180 days (it being
understood that all of an Obligor’s senior obligations shall be defined as one
“class” for purposes of this definition).

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

“Substitute Loan”: Defined in Section 2.18.

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

“Tangible Net Worth”: With respect to any Person, the Net Worth of such Person
after subtracting therefrom the aggregate amount of such Person’s intangible
assets, including, without limitation, goodwill, franchises, licenses, patents,
trademarks, tradenames, copyrights and service marks.

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

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

“Termination Date”: The earliest to occur of (a) the Business Day designated by
the Borrower to the Agent upon at least two Business Days’ prior written notice,
(b) the date of the occurrence of a Termination Event pursuant to Section 9.1,
(c) (i) with respect to any Conduit Lender, the date on which a Liquidity
Purchase Agreement shall expire in accordance with its terms and fail to be
renewed for an additional period of 364 days pursuant to Section 2.1(c) or shall
otherwise cease to be in full force and effect as in effect on the date hereof
(without giving effect to any amendment, modification, waiver, supplement or
restatement), and (ii) with respect to an Institutional Lender, April 10, 2009,
unless such date is extended for an additional period of 364 days pursuant to
Section 2.1(c), and (d) the second Business Day prior to the Commitment
Termination Date.

“Termination Event”: Defined in Section 9.1.

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

“Transferred Loans”: Each Loan that is acquired by the Borrower under the
Purchase Agreement and all Loans received by the Borrower in respect of the
Required Equity Contribution; provided, that, the term Transferred Loan shall
not include any Retained Interests.

“Transition Costs”: The reasonable costs and expenses incurred by the Backup
Servicer in transitioning to Servicer; provided, however, in no event shall such
Transition Costs exceed $100,000.00 in the aggregate.

“Trustee”: Defined in the Preamble.

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

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

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

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

“United States”: The United States of America.

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

“Unreimbursed Servicer Advances”: At any time, the amount of all previous
Servicer Advances (or portions thereof) as to which the Servicer has not been
reimbursed as of such time pursuant to Section 2.8(a)(1)(ii) and (b)(ii) and
that the Servicer has determined in its sole discretion will not be recoverable
from Collections with respect to the related Transferred Loan.

“U.S. Bank”: U.S. Bank National Association.

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

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

“Weighted Average Advance Rate”: The percentage equivalent of the sum of (a) the
product of (i) 65% times (ii) a fraction, the numerator of which is the sum of
the Purchased Loan Balances of all Subordinated Loans included in the Aggregate
Purchased Loan Balance as of such date and the denominator of which is the
Aggregate Purchased Loan Balance as of such date plus (b) the product of (i) 70%
times (ii) a fraction, the numerator of which is the sum of the Purchased Loan
Balances of all Junior Secured Loans included in the Aggregate Purchased Loan
Balance as of such date and the denominator of which is the Aggregate Purchased
Loan Balance as of such date plus (c) the product of (i) 75% times (ii) a
fraction, the numerator of which is the sum of the Purchased Loan Balances of
all Senior Secured Loans included in the Aggregate Purchased Loan Balance as of
such date and the denominator of which is the Aggregate Purchased Loan Balance
as of such date plus (d) the product of (i) 100% times (ii) a fraction, the
numerator of which is the sum of the Purchased Loan Balances of all Loans which
are Permitted Investments included in the Aggregate Purchased Loan Balance as of
such date and the denominator of which is the Aggregate Purchased Loan Balance
as of such date.

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

      “Wells Fargo”: Wells Fargo Bank, National Association.
 

Section 1.2
  Other Terms.
 
   

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

      Section 1.3 Computation of Time Periods.

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

      Section 1.4 Interpretation.

In each Transaction Document, unless a contrary intention appears:

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

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

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

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

(v) unless otherwise stated, reference to any time means New York City time;

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

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

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

      Section 1.5 Section References.

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

      Section 1.6 Calculations.

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

ARTICLE II

PURCHASE OF THE VARIABLE FUNDING NOTES

      Section 2.1 The Variable Funding Notes.

(a) On the terms and conditions hereinafter set forth, on the Closing Date, the
Borrower shall deliver (i) (A) to Fairway on the Closing Date and (B) to BB&T on
the date hereof, in each case at the applicable address set forth on Annex A to
this Agreement, and (ii) on the effective date of any Assignment and Acceptance,
to each successor Lender or additional Lender, as applicable, at the address set
forth in the applicable Assignment and Acceptance, a duly executed variable
funding note (each, a “Variable Funding Note”), in substantially the form of
Exhibit B, dated as of the date of this Agreement, in a face amount equal to the
applicable Lender’s Commitment as of the Closing Date or the effective date of
any Assignment and Acceptance, as applicable, and otherwise duly completed. Each
Variable Funding Note evidences, and at all times on and after the date hereof
shall continue to evidence, each Lender’s ratable share of the security interest
in the Collateral granted pursuant to Section 8.1 in an amount equal, at any
time, to the percentage equivalent of a fraction, (x) the numerator of which is
the outstanding Advances by such Lender under the applicable Variable Funding
Note on such day and (y) the denominator of which is the Advances Outstanding on
such day. Interest shall accrue, and each Variable Funding Note shall be
payable, as described herein.

(b) During the Revolving Period, the Borrower may, at its option, request the
Lenders to make advances of funds (each, an “Advance”) under the Variable
Funding Notes, each such Funding Request to be substantially in the form of
Exhibit A-1 hereto, in an aggregate amount up to the Availability as of the
proposed Funding Date of the Advance. Following the receipt of a Funding
Request, subject to the terms and conditions hereinafter set forth, during the
Revolving Period, each Lender shall fund its Pro Rata Share of such Advance.
Notwithstanding anything to the contrary contained herein, no Lender shall be
obligated to provide the Borrower with aggregate funds in connection with an
Advance that would exceed the least of (i) such Lender’s unused Commitment then
in effect, (ii) the aggregate unused Commitments then in effect or (iii) the
Availability, in each case on the proposed Funding Date of such Advance.

(c) The Borrower may, within 75 days but not less than 60 days prior to (x) the
date on which any Liquidity Purchase Agreement terminates, in the case of an
extension of such Liquidity Purchase Agreement or (y) the Termination Date then
in effect pursuant to clause (c) of the definition thereof, in the case of an
extension of the Termination Date, request by written notice to the Agent that
(i) each applicable Liquidity Bank extend the term of its related Liquidity
Purchase Agreement for an additional period of 364 days and (ii) each Lender
extend the Termination Date then in effect pursuant to clause (c) of the
definition thereof for an additional period of 364 days. The Agent will give
prompt notice to each applicable Liquidity Bank and each applicable Lender of
its receipt of such request, and each such Liquidity Bank and Lender shall make
a determination, each in its respective sole discretion, not less than 30 days
prior to the expiration of the Liquidity Purchase Agreement, the date set forth
in clause (c) of the definition of Termination Date or the Commitment
Termination Date, as applicable, as to whether or not it will agree to the
extension requested, and shall notify the Agent thereof. The failure of the
Agent to provide timely notice of any Liquidity Bank’s or Lender’s decision to
the Borrower shall be deemed to constitute a refusal by such Liquidity Bank or
Lender to extend the Commitment Termination Date, the date set forth in clause
(c) of the definition of Termination Date or the term of the applicable
Liquidity Purchase Agreement, respectively. Any Lender which fails to extend the
term of its Liquidity Purchase Agreement or the date set forth in clause (c) of
the definition of Termination Date, as applicable, shall be a Non-Extending
Lender subject to Section 2.1(d). The Borrower confirms that each Liquidity Bank
and the Lenders, in their sole and absolute discretion, without regard to the
value or performance of the Collateral or any other factor, may elect not to
extend the term of any Liquidity Purchase Agreement, the date set forth in
clause (c) of the definition of Termination Date or the Commitment Termination
Date, as applicable.

(d) If, during the Revolving Period, a Conduit Lender that funds the Advances to
be made hereunder through the issuance of Commercial Paper Notes under a 364-day
facility does not extend such facility or an Institutional Lender does not
extend the date set forth in clause (c) of the definition of Termination Date
(such Lender, a “Non-Extending Lender”), the Borrower shall have the right to
replace such Non-Extending Lender with a new Lender by causing the Non-Extending
Lender, at any time prior to the next succeeding Payment Date, to assign its
Variable Funding Note to such new Lender in accordance with Section 12.17. Upon
the effective date of such assignment, the Commitment of each Non-Extending
Lender shall immediately terminate, and the Non-Extending Lender shall surrender
its Variable Funding Note to the Registrar. If a Non-Extending Lender is not
replaced prior to the next succeeding Payment Date, the Borrower shall, on such
Payment Date, repay the Advances outstanding to such Non-Extending Lender in
accordance with Section 2.8. The Borrower’s right to replace a Non-Extending
Lender shall be exercisable by the Borrower before and after the Termination
Date for such Non-Extending Lender.

      Section 2.2 Procedures for Advances by the Lenders.

(a) Subject to the limitations set forth in Section 2.1, the Borrower may
request an Advance from the Lenders by delivering to the Agent and each Lender
at the times set forth below, the information and documents set forth in this
Section 2.2.

(b) No later than 2:00 p.m. (New York City time) one Business Day prior to the
proposed Funding Date the Borrower shall deliver:

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

(ii) subject to its receipt of a written request from the Agent or a Lender, to
the Agent and such Lender a credit report and transaction summary for each
Pre-Positioned Loan that is to be funded with the proceeds of the proposed
Advance setting forth the credit underwriting by the Originator of such
Pre-Positioned Loan, including, without limitation, a description of the Obligor
and the proposed Loan transaction in a form reasonably acceptable to the Agent
and each Lender; and

Each Funding Request shall (i) specify the aggregate amount of the requested
Advance, which shall be in an amount equal to at least $1,000,000 or an integral
multiple of $100,000 in excess thereof, (ii) specify the proposed Funding Date
of the requested Advance, (iii) specify the amount of Advances Outstanding,
(iv) include a representation that all conditions precedent for a funding have
been met, (v) include a Borrowing Base Certificate calculated as of the date the
Advance is requested and after giving effect to the Advance requested therein
and the use of proceeds thereof, (vi) include a wire disbursement and
authorization form and (vii) include an updated Loan List including each
Pre-Positioned Loan to be funded with the proceeds of the requested Advance. Any
Funding Request shall be irrevocable. If any Funding Request is received by the
Agent and the Lenders after 2:00 p.m. (New York City time) on the Business Day
that is one Business Day prior to the Business Day for which such Advance is
requested or on a day that is not a Business Day, such Funding Request shall be
deemed to be received by the Agent and the Lenders at 9:00 a.m. on the next
Business Day.

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

(d) On the Funding Date, subject to the limitations set forth in Section 2.1,
and upon satisfaction of the applicable conditions set forth in Article III,
each Lender (other than a Non-Extending Lender) shall make available to the
Borrower in same day funds, at such bank or other location reasonably designated
by the Borrower in the Funding Request given pursuant to this Section 2.2, an
amount equal to such Lender’s Pro Rata Share of the least of (x) the amount
requested by the Borrower for such Advance, (y) the aggregate unused Commitments
then in effect and (z) an amount equal to the Availability on such Funding Date.

(e) On each Funding Date, each Conduit Lender, to the extent such Conduit Lender
will fund the requested Advance through the issuance of Commercial Paper Notes,
will use commercially reasonable efforts to select maturities for such
Commercial Paper Notes which will correspond as nearly as practicable to the
periodic settlement date of any Hedge Transaction the Borrower may be required
to enter into on such Funding Date pursuant to Section 5.2; provided, that prior
to the occurrence of a Hedge Trigger, the maturities of the Commercial Paper
Notes will be selected at the discretion of each Conduit Lender; and provided
further, that, no Conduit Lender shall incur any liability or obligation to any
party under this Agreement or any other Transaction Document by reason of its
failure or inability to cause the maturities of its Commercial Paper Notes then
issued to correspond to the tenor of any such Hedge Transaction as described
herein.

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

      Section 2.3 Optional Changes in Facility Amount; Prepayments.

(a) The Borrower shall be entitled at its option, at any time prior to the
occurrence of a Termination Event, to terminate in whole or reduce in part the
portion of the Facility Amount that exceeds the sum of the Advances Outstanding,
accrued Interest, Breakage Costs and Hedge Breakage Costs; provided, that, the
Borrower shall give prior written notice in the form of Exhibit A-2 of such
reduction to the Agent and each Lender as provided in Section 2.3(b) and that
any partial reduction of the Facility Amount shall be in an amount equal to
$1,000,000 or integral multiples thereof to a minimum of $100,000. Any request
for a reduction or termination pursuant to this Section 2.3(a) shall be
irrevocable. The Commitment of each Lender shall be reduced by an amount equal
to its Pro Rata Share (prior to giving effect to any reduction of Commitments
hereunder) of the aggregate amount of any reduction under this Section 2.3(a).

(b) Prior to the occurrence of a Termination Event, the Borrower may, upon one
Business Day’s prior written notice (such notice to be received by the Lenders
and the Hedge Counterparty no later than 5:00 p.m. (New York City time) on such
day) to each Lender, the Trustee, and each applicable Hedge Counterparty, reduce
the Advances Outstanding by delivering to each Lender, (i) immediately available
funds in the amount of such Lender’s Pro Rata Share, and (ii) instructions to
reduce such Advances Outstanding, and to pay accrued Interest, Breakage Costs
and Hedge Breakage Costs related to Advances Outstanding so reduced; provided,
that, no such reduction shall be given effect unless the Borrower has complied
with the terms of any Hedging Agreement requiring that one or more Hedge
Transactions be terminated in whole or in part as the result of any such
reduction of the Advances Outstanding, and the Borrower has paid in full all
Hedge Breakage Costs owing to the relevant Hedge Counterparty for any such
termination. Any reduction of the Advances Outstanding (other than (i) with
respect to prepayments of Advances Outstanding to be made by the Borrower to
reduce Advances Outstanding such that the Availability is greater than or equal
to $0 or (ii) permanent reductions in the Facility Amount) shall be in a minimum
amount of $1,000,000 with integral multiples of $100,000. Any such reduction
will occur only if sufficient funds have been remitted to pay all such amounts
in the succeeding sentence in full. Upon receipt of such amounts, the Lenders
shall apply such amounts to the payment of any Hedge Breakage Costs, to the pro
rata reduction of the Advances Outstanding, to the payment of accrued Interest
on the amount of the Advances Outstanding to be repaid and to the payment of any
Breakage Costs. Any Advance so prepaid may, subject to the terms and conditions
hereof, be reborrowed during the Revolving Period. Any Borrower Notice relating
to any prepayment pursuant to this Section 2.3(b) shall be irrevocable.

      Section 2.4 Deemed Collections.

If on any day (a) the Trustee on behalf of the Secured Parties does not own or
have a valid and perfected first priority security interest in any Loan and
Related Property (subject to Permitted Liens) or (b) any representation or
warranty that such Loan was an Eligible Loan was not true when made, then upon
the earlier of the Borrower’s receipt of notice from the Agent or the Borrower
becoming aware thereof and the Borrower’s failure to cure such breach within
30 days (if cure is reasonably possible and otherwise immediately upon receipt
of such notice or the Borrower becoming aware), the Borrower shall be deemed to
have received on such day a collection (a “Deemed Collection”) of such Loan in
full and shall on such day pay to the Trustee on behalf of the Secured Parties
an amount equal to (x) the sum of (i) the amount determined by multiplying the
percentage set forth in the definition of Weighted Average Advance Rate herein
applicable to such Loan times the Outstanding Loan Balance of such Loan on the
date of repurchase, plus (ii) accrued Interest to be applied to the pro rata
reduction of the Advances Outstanding, plus (y) any Breakage Costs and Hedge
Breakage Costs and any other payments owing to the applicable Hedge Counterparty
in respect of the termination of any Hedge Transaction required as a result of
the Deemed Collection, plus (z) any other costs and expenses related to the
retransfer of such Loan and any Related Property contemplated by this
Section 2.4. In connection with any such Deemed Collection, the Trustee on
behalf of the Secured Parties shall automatically and without further action
(unless otherwise necessary or requested by the Borrower or Servicer) be deemed
to release the Lien on such Loan and any Related Property created by this
Agreement in favor of the Trustee on behalf of the Secured Parties and transfer
to the Borrower, free and clear of any Lien created by the Trustee on behalf of
the Secured Parties, all of the right, title and interest of the Trustee on
behalf of the Secured Parties in, to, and under the Loan and any Related
Property with respect to which the Agent has received such Deemed Collection
(such Loan a “Repurchased Loan”), but without any recourse, representation and
warranty of any kind, express or implied.

      Section 2.5 Notations on the Variable Funding Notes.

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

      Section 2.6 Principal Repayments.

(a) Unless sooner prepaid pursuant to Section 2.3(b) or Section 9.1, the
Advances Outstanding shall be repaid in full on the date that occurs twenty-four
(24) months following the Termination Date. In addition, Advances Outstanding
shall be repaid as and when necessary to cause the Availability to equal or
exceed $0, and any amount so repaid may, subject to the terms and conditions
hereof, be reborrowed hereunder during the Revolving Period.

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

      Section 2.7 Interest Payments.

(a) Interest shall accrue on each Advance during each Accrual Period at the
applicable Interest Rate. The Borrower shall pay Interest on the unpaid
principal amount of each Advance for the period commencing on and including the
Funding Date of such Advance, as applicable, through but excluding the date that
such Advance, as applicable, shall be paid in full. Interest shall accrue during
each Accrual Period and be payable on each Advance on each Payment Date, unless
earlier paid pursuant to (i) a prepayment in accordance with Section 2.3 or
(ii) a reimbursement or repayment in accordance with Section 2.4.

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

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

      Section 2.8 Settlement Procedures.

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

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

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

(iii) Third, to the Servicer, in an amount equal to its accrued and unpaid
Servicing Fees and, to any Successor Servicer, Market Servicing Fee Differential
to the end of the preceding Collection Period, for the payment thereof;
provided, that, the amount of Market Servicing Fee Differential payable in any
12-month period under this clause Third shall not exceed 1.0% of the Aggregate
Outstanding Loan Balance;

(iv) Fourth, to the Backup Servicer, in an amount equal to any accrued and
unpaid currently due Backup Servicer Fee and Transition Costs, for the payment
thereof; provided, that, the amount of Transition Costs payable under this
clause Fourth shall not exceed $100,000.00 in the aggregate with respect to such
Payment Date;

(v) Fifth, to the Trustee in an amount equal to any accrued and unpaid currently
due Trustee Fee, for the payment thereof;

(vi) Sixth, pro rata to each Lender in an amount equal to any accrued and unpaid
Interest and Breakage Costs, for the payment thereof;

(vii) Seventh, pro rata to each Lender in an amount equal to any accrued and
unpaid Program Fee and Facility Fee, for the payment thereof;

(viii) Eighth, pro rata to each Affected Party in accordance with the amount
owed to such Person under this clause Eighth, in an amount equal to any unpaid
Increased Costs, Taxes and any Other Costs, for the payment thereof;

(ix) Ninth, pro rata to each Lender, if the Required Advance Reduction Amount is
greater than zero, an amount necessary to reduce the Required Advance Reduction
Amount to zero;

(x) Tenth, to the Reserve Account, an amount, if necessary, required for the
amount on deposit in the Reserve Account to equal the Reserve Account Required
Amount;

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

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

(xiii) Thirteenth, to the extent not paid by the Servicer, to the Backup
Servicer, to the Trustee, and to any Successor Servicer, as applicable, pro rata
in accordance with the amount owed to such Person under this clause Thirteenth,
in an amount equal to any accrued and unpaid Backup Servicer Expenses, Trustee
Expenses and, to the extent not previously paid pursuant to (x) clause Third
above, the Market Servicing Fee Differential, and (y) clause Fourth above,
Transition Costs, for the payment thereof;

(xiv) Fourteenth, pro rata in accordance with the amount owed to such Persons
under this clause Fourteenth pursuant to Section 2.1(d), in an amount equal to
all Advances outstanding made by each Non-Extending Lender, together with any
accrued and unpaid interest thereon (to the extent not paid in clause Sixth
above);

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

(xvi) Sixteenth, to the extent of remaining Available Funds representing
Principal Collections, to deposit in the Principal Collection Account;

(xvii) Seventeenth, any amounts on deposit in the Reserve Account in excess of
the Reserve Account Required Amount and all remaining amounts shall be
distributed to the Borrower.

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

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

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

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

c. the notice required in clause (b) above shall be accompanied by a Borrower
Notice in the form of Exhibit A-2 and a Borrowing Base Certificate and the same
are executed by the Borrower and at least one Responsible Officer of the
Servicer;

d. the Trustee provides to the Agent by facsimile or email (to be received no
later than 2:00 p.m. (New York time) on that same date) a statement reflecting
the total amount on deposit on such day in the Principal Collection Account; and

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

(ii) withdraw such funds for the purpose of making payments in respect of the
Advances Outstanding at such time in accordance with and subject to the terms of
Section 2.3(b).

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

(i) First, pro rata to each Hedge Counterparty, any amounts, including any Hedge
Breakage Costs and any payments due in respect of the termination of any Hedge
Transactions owing to that Hedge Counterparty under its respective Hedging
Agreement in respect of any Hedge Transaction(s), for the payment thereof;
provided, that, the amount of Hedge Breakage Costs payable under this clause
First shall not exceed $250,000.00 in the aggregate;

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

(iii) Third, to the Servicer, in an amount equal to its accrued and unpaid
Servicing Fees and, to any Successor Servicer, Market Servicing Fee Differential
to the end of the preceding Collection Period, for the payment thereof;
provided, that, the amount of Market Servicing Fee Differential payable in any
12-month period under this clause Third shall not exceed 1.0% of the Aggregate
Outstanding Loan Balance;

(iv) Fourth, to the Backup Servicer, in an amount equal to any accrued and
unpaid currently due Backup Servicer Fee and Transition Costs, for the payment
thereof; provided, that, the amount of Transition Costs payable under this
clause Fourth shall not exceed $100,000.00 in the aggregate with respect to such
Payment Date;

(v) Fifth, to the Trustee in an amount equal to any accrued and unpaid currently
due Trustee Fee, for the payment thereof;

(vi) Sixth, pro rata to each Lender, in an amount equal to any accrued and
unpaid Interest and Breakage Costs, for the payment thereof;

(vii) Seventh, pro rata to each Lender, in an amount equal to any accrued and
unpaid Program Fee and Facility Fee, for the payment thereof;

(viii) Eighth, pro rata to each Affected Party in accordance with the amount
owed to such Person under this clause Eighth, in an amount equal to any unpaid
Increased Costs, Taxes and any Other Costs, for the payment thereof;

(ix) Ninth, to the Reserve Account, an amount, if necessary, required for the
amount on deposit in the Reserve Account to equal the Reserve Account Required
Amount;

(x) Tenth, to the extent of all remaining Available Funds and any amounts on
deposit in the Reserve Account in excess of the Reserve Account Required Amount,
pro rata to the Lenders, in an amount necessary to reduce the Advances
Outstanding and Obligations to zero, for the payment thereof;

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

(xii) Twelfth, to the extent not previously paid pursuant to clause First above,
pro rata to each Hedge Counterparty, any Hedge Breakage Costs owing to that
Hedge Counterparty under its respective Hedging Agreement in respect of any
Hedge Transaction(s), for the payment thereof;

(xiii) Thirteenth, to the extent not paid by the Servicer, to the Backup
Servicer, to the Trustee, and to any Successor Servicer, as applicable, pro rata
in accordance with the amount owed to such Person under this clause Thirteenth,
in an amount equal to any accrued and unpaid Backup Servicer Expenses, Trustee
Expenses and, to the extent not previously paid pursuant to (x) clause Third
above, the Market Servicing Fee Differential, and (y) clause Fourth above,
Transition Costs, for the payment thereof;

     
(xiv)
  Fourteenth, any remaining amounts shall be distributed to the Borrower.
 
   
Section 2.9
  Collections and Allocations.
 
   

(a) The Borrower or the Servicer on behalf of the Borrower shall promptly (but
in no event later than two (2) Business Days after the receipt thereof) identify
any Collections received by it as being Interest Collections or Principal
Collections and deposit all such Interest Collections or Principal Collections
received directly by it into the Collection Account and corresponding Interest
Collection Account or Principal Collection Account. The Servicer on behalf of
the Borrower shall make such deposits or payments on the date indicated by wire
transfer, in immediately available funds.

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

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

      Section 2.10 Payments, Computations, Etc.

(a) Unless otherwise expressly provided herein, all amounts to be paid or
deposited by the Borrower, the Servicer on behalf of the Borrower hereunder
shall be paid or deposited in accordance with the terms hereof no later than
12:00 p.m. (New York City time) on the day when due in lawful money of the
United States in immediately available funds to each Lender’s Account of the
Lenders entitled to such amounts. The Borrower shall, to the extent permitted by
law, pay to the Secured Parties interest on all amounts not paid or deposited
when due hereunder at 2% per annum above the Base Rate, and in the case of any
amounts not paid or deposited under any Hedging Agreement, interest at the
“rate” specified in the applicable Hedging Agreement, in each case, payable on
demand; provided, however, that such interest rate shall not at any time exceed
the Maximum Lawful Rate. All computations of interest and all computations of
the Interest Rate and other fees hereunder shall be made on the basis of a year
of 360 (other than calculations with respect to the Base Rate which shall be
based on a year consisting of 365 or 366 days, as applicable) days for the
actual number of days (including the first but excluding the last day) elapsed.

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

(c) All payments hereunder shall be made without set-off or counterclaim and in
such amounts as may be necessary in order that all such payments shall not be
less than the amounts otherwise specified to be paid under this Agreement (after
withholding for or on account of any Taxes). Promptly following the Collection
Date, the Agent and each Lender (or any agent acting on any Lender’s behalf)
shall mark each applicable Variable Funding Note “Paid” and return it to the
Borrower.

     
Section 2.11
  [Reserved].
 
   
Section 2.12
  Fees.
 
   

(a) The Borrower shall pay to each Lender, to the extent of Available Funds,
from the Collection Account and, as applicable, from the Reserve Account, on
each Payment Date, monthly in arrears, in accordance with Section 2.8(a)(1)(vii)
and Section 2.8(b)(vii), the Program Fee and Facility Fee.

(b) The Borrower shall pay to the Servicer, to the extent of Available Funds,
from the Collection Account and, as applicable, from the Reserve Account, on
each Payment Date, monthly in arrears, in accordance with Section 2.8(a)(1)(iii)
and Section 2.8(b)(iii), the Servicing Fee and, as applicable to any Successor
Servicer, the Market Servicing Fee Differential.

(c) The Backup Servicer shall be entitled to receive, to the extent of Available
Funds, from the Collection Account and, as applicable, from the Reserve Account,
on each Payment Date, monthly in arrears, in accordance with
Section 2.8(a)(1)(iv) and Section 2.8(b)(iv), the Backup Servicer Fee.

(d) The Trustee shall be entitled to receive, to the extent of Available Funds,
from the Collection Account and, as applicable, from the Reserve Account, on
each Payment Date, monthly in arrears, in accordance with Section 2.8(a)(1)(v)
and Section 2.8(b)(v), the Trustee Fee.

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

      Section 2.13 Increased Costs; Capital Adequacy; Illegality.

(a) If either (i) the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
in or in the interpretation of any Applicable Law or regulation or (ii) the
compliance by an Affected Party with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
(A) shall subject an Affected Party to any Tax (except for Taxes on the overall
net income of such Affected Party), duty or other charge with respect to an
Advance hereunder, or on any payment made hereunder or (B) shall impose, modify
or deem applicable any reserve requirement (including, without limitation, any
reserve requirement imposed by the Federal Reserve Board, but excluding any
reserve requirement, if any, included in the determination of Interest), special
deposit or similar requirement against assets of, deposits with or for the
amount of, or credit extended by, any Affected Party or (C) shall impose any
other condition affecting an Advance or any Lender’s rights hereunder (or of
maintaining a Lender’s obligation to make any such Advance), the result of which
is to increase the cost to any Affected Party or to reduce the amount of any sum
received or receivable by an Affected Party under this Agreement, then within
ten (10) days after demand by such Affected Party (which demand shall be
accompanied by a statement setting forth the basis for such demand), the
Borrower shall pay directly to such Affected Party such additional amount or
amounts as will compensate such Affected Party for such additional or increased
cost incurred or such reduction suffered.

(b) If either (i) the introduction of or any change in or in the interpretation
of any Applicable Law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any Applicable Law, guideline, rule,
regulation, directive or request from any central bank or other Governmental
Authority (whether or not having the force of law), including, without
limitation, compliance by an Affected Party with any request or directive
regarding capital adequacy, has or would have the effect of reducing the rate of
return on the capital of any Affected Party as a consequence of its obligations
hereunder or arising in connection herewith to a level below that which any such
Affected Party could have achieved but for such introduction, change or
compliance (taking into consideration the policies of such Affected Party with
respect to capital adequacy) by an amount deemed by such Affected Party to be
material, then from time to time, within ten (10) days after demand by such
Affected Party (which demand shall be accompanied by a statement setting forth
the basis for such demand), the Borrower shall pay directly to such Affected
Party such additional amount or amounts as will compensate such Affected Party
for such reduction. For avoidance of doubt, any interpretation of Accounting
Research Bulletin No. 51 by the Financial Accounting Standards Board shall
constitute an adoption, change, request or directive subject to this
Section 2.13(b)

(c) If as a result of any event or circumstance similar to those described in
Sections 2.13(a) and (b), any Affected Party is required to compensate a bank or
other financial institution providing liquidity support, credit enhancement or
other similar support to such Affected Party in connection with this Agreement
or the funding or maintenance of Advances hereunder, then within ten days after
demand by such Affected Party, the Borrower shall pay to such Affected Party
such additional amount or amounts as may be necessary to reimburse such Affected
Party for any such amounts paid by it.

(d) In determining any amount provided for in this Section 2.13, the Affected
Party may use any reasonable averaging and attribution methods. Any Affected
Party making a claim under this section shall submit to the Borrower a
certificate as to such additional or increased cost or reduction, which
certificate shall calculate in reasonable detail any such charges and shall be
conclusive absent demonstrable error.

(e) If a Eurodollar Disruption Event as described in clause (a) of the
definition of “Eurodollar Disruption Event” occurs, each affected Lender shall
notify the Agent thereof and the Agent shall in turn so notify the Borrower,
whereupon all Advances funded by the affected Lender in respect of which
Interest accrues at the applicable LIBOR Rate shall immediately be converted
into Advances in respect of which Interest accrues at the Base Rate.

(f) Failure or delay on the part of any Affected Party to demand compensation
pursuant to this Section 2.13 shall not constitute a waiver of such Affected
Party’s right to demand such compensation.

      Section 2.14 Taxes.

(a) All payments made by the Borrower in respect of any Advance and all payments
made by the Borrower or the Servicer on behalf of the Borrower under this
Agreement will be made free and clear of and without deduction or withholding
for or on account of any Taxes, unless such withholding or deduction is required
by law. In such event, the Borrower shall pay to the appropriate taxing
authority any such Taxes required to be deducted or withheld and the amount
payable to the Agent and each other Secured Party (as the case may be) will be
increased (such increase, the “Additional Amount”) such that every net payment
made under this Agreement after deduction or withholding for or on account of
any Taxes (including, without limitation, any Taxes on such increase) is not
less than the amount that would have been paid had no such deduction or
withholding been deducted or withheld. The foregoing obligation to pay
Additional Amounts, however, will not apply with respect to, and the term
“Additional Amount” shall be deemed not to include net income or franchise taxes
imposed on the Agent or another Secured Party, respectively, with respect to
payments required to be made by the Borrower or Servicer on behalf of the
Borrower under this Agreement, by a taxing jurisdiction in which such Secured
Party or the Agent is organized, conducts business or is paying taxes as of the
Closing Date (as the case may be). If the Agent or another Secured Party pays
any Taxes in respect of which the Borrower is obligated to pay Additional
Amounts under this Section 2.14(a), the Borrower shall promptly reimburse such
Secured Party or the Agent, as applicable, in full.

(b) The Borrower will indemnify each Secured Party and the Agent for the full
amount of Taxes in respect of which the Borrower is required to pay Additional
Amounts (including, without limitation, any Taxes imposed by any jurisdiction on
such Additional Amounts) paid by such Secured Party or the Agent (as the case
may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto; provided, however, that such Secured Party or
the Agent, as appropriate, making a demand for indemnity payment, shall provide
the Borrower, at its address set forth under its name on Annex A hereto, with a
certificate from the relevant taxing authority or from a Responsible Officer of
such Secured Party or the Agent stating or otherwise evidencing that such
Secured Party or the Agent has made payment of such Taxes and will provide a
copy of or extract from documentation, if available, furnished by such taxing
authority evidencing assertion or payment of such Taxes. This indemnification
shall be made within ten (10) days from the date the Secured Party or the Agent
(as the case may be) makes written demand therefor.

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

(d) If the Secured Party is not created or organized under the laws of the
United States or a political subdivision thereof, the Secured Party shall, to
the extent that it may then do so under Applicable Laws, deliver to the Borrower
with a copy to the Agent (i) within 15 days after the date hereof, or, if later,
the date on which the Secured Party becomes a Secured Party hereunder two (or
such other number as may from time to time be prescribed by Applicable Laws)
duly completed copies of IRS Form W-8ECI or Form W-8BEN (or any successor forms
or other certificates or statements that may be required from time to time by
the relevant United States taxing authorities or Applicable Laws), as
appropriate, to permit the Borrower to make payments hereunder for the account
of such Secured Party, as the case may be, without deduction or withholding of
United States federal income or similar Taxes and (ii) upon the obsolescence of
or after the occurrence of any event requiring a change in, any form or
certificate previously delivered pursuant to this Section 2.14(d), two copies
(or such other number as may from time to time be prescribed by Applicable Laws)
of such additional, amended or successor forms, certificates or statements as
may be required under Applicable Laws to permit the Borrower to make payments
hereunder for the account of such Secured Party, without deduction or
withholding of United States federal income or similar Taxes.

(e) For any period with respect to which the applicable Secured Party has failed
to provide the Borrower with the appropriate form, certificate or statement
described in Section 2.14(d) (other than if such failure is due to a change in
law occurring after the date of this Agreement), the applicable Secured Party
shall not be entitled to indemnification under clauses (a) or (b) of this
Section 2.14 with respect to any Taxes.

(f) Within 30 days of the written request of the Borrower therefor, the
applicable Secured Party shall execute and deliver to the Borrower such
certificates, forms or other documents that can be furnished consistent with the
facts and that are reasonably necessary to assist the Borrower in applying for
refunds of Taxes remitted hereunder; provided, however, that such Secured Party
shall not be required to deliver such certificates forms or other documents if
in its respective sole discretion it is determined that the delivery of such
certificate, form or other document would have a material adverse effect on such
Secured Party; provided further, however, that the Borrower shall reimburse the
applicable Secured Party for any reasonable expenses incurred in the delivery of
such certificate, form or other document.

(g) If, in connection with an agreement or other document providing liquidity
support, credit enhancement or other similar support to any Lender in connection
with this Agreement or the funding or maintenance of Advances hereunder, such
Lender is required to compensate a bank or other financial institution in
respect of Taxes under circumstances similar to those described in this
Section 2.14, then within ten days after demand by such Lender, the Borrower
shall pay to such Lender such additional amount or amounts as may be necessary
to reimburse such Lender for any amounts paid by them.

      Section 2.15 Assignment of the Purchase Agreement.

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

      Section 2.16 Lien Release Dividend.

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

(i) The Borrower and the Originator shall have given the Agent at least two (2)
Business Days’ prior written notice of their intent to effectuate a Lien Release
Dividend, unless such notice is waived by the Agent;

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

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

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

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

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

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

(viii) The Borrower shall have paid in full an aggregate amount equal to the sum
of all amounts due and owing to the Agent, the Lenders and the Hedge
Counterparty, as applicable, under this Agreement and the other Transaction
Documents, to the extent accrued to such date (including, without limitation,
Breakage Costs and Hedge Breakage Costs) with respect to the Transferred Loans
to be transferred pursuant to a Lien Release Dividend and incurred in connection
with the transfer of such Transferred Loans pursuant to such Lien Release
Dividend and the termination of any Hedge Transactions, in whole or in part, in
connection therewith.

(b) In connection with the Lien Release Dividend, there shall be sold and
assigned to the Borrower, without recourse, representation or warranty, all of
the right, title and interest of the Trustee on behalf of the Secured Parties
in, to and under the Transferred Loans or portions thereof so transferred
(together with, in the case of the transfer of the Transferred Loans but not
portions thereof, any related Collateral) and such Transferred Loans or portions
thereof so transferred (together with, in the case of the transfer of the
Transferred Loans but not portions thereof, any related Collateral) shall be
released from the Lien of this Agreement (subject to the requirements of
Section 2.16(a)(iii) above).

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

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

      Section 2.17 Appointment of Registrar and Duties.

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

(b) As long as any Advances remain outstanding under any Variable Funding Note,
the Borrower shall maintain a Registrar therefor.

(c) The Borrower shall cause to be kept a register (the “Note Register”) that
contains an accurate and complete list of those Persons who from time to time
shall be holders of the Variable Funding Notes. The Note Register shall be
maintained by the Registrar, and so long as BMO is the Registrar, the Registrar
may not be removed by the Borrower. Upon the resignation of any Registrar, the
Borrower shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Registrar. So long as BMO is the Registrar,
the Note Register shall be kept at 115 South LaSalle Street, 13th Floor West,
Chicago, Illinois 60603.

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

      Section 2.18 Substitution of Loans; Repurchase or Substitution of
Ineligible Loans.

(a) Substitution of Loans. On any day prior to the occurrence of a Termination
Event (and after the Termination Date at the discretion of the Agent), the
Borrower may, subject to the conditions set forth in this Section 2.18 and
subject to the other restrictions contained herein, replace any Transferred Loan
with one or more Eligible Loans (each, a “Substitute Loan”), provided that no
such replacement shall occur unless each of the following conditions is
satisfied as of the date of such replacement and substitution:

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

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

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

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

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

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

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

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

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

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

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

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

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

In addition, the Borrower shall in connection with such substitution deliver to
the Trustee the related Loan Documents and shall pay to the Lenders and the
Hedge Counterparty, as applicable, all Breakage Costs or Hedge Breakage Costs,
if any, incurred in connection with the substitution of such Loan pursuant to
this Section 2.18 and the termination of any Hedge Transactions, in whole or in
part, in connection therewith. In connection with any such substitution, the
Trustee on behalf of the Secured Parties shall, automatically and without
further action (unless otherwise necessary or requested by the Borrower or the
Servicer), be deemed to transfer to the Borrower, free and clear of any Lien
created by the Trustee on behalf of the Secured Parties, all of the right, title
and interest of the Trustee on behalf of the Secured Parties in, to and under
such Replaced Loan, but without any representation and warranty of any kind,
express or implied.

(b) Repurchase or Substitution of Ineligible Loans.

(i) In the event of a breach of any representation or warranty set forth in
Section 4.2 with respect to a Transferred Loan, Related Property and other
related Collateral (each such Loan, Related Property and other related
Collateral, an “Ineligible Loan”), no later than 30 days after the earlier of
(x) knowledge of such breach on the part of the Borrower and (y) receipt by the
Borrower of written notice thereof given by the Agent, the Borrower shall either
(1) repay Advances Outstanding in an amount equal to the aggregate Retransfer
Price of such Ineligible Loan(s) to which such breach relates on the terms and
conditions set forth below, or (2) substitute for such Ineligible Loan a
Substitute Loan; provided, however, that no such repayment shall be required to
be made with respect to such Ineligible Loan (and such Loan shall cease to be an
Ineligible Loan) if, on or before the expiration of such 30 day period, the
representations and warranties in Section 4.2 with respect to such Ineligible
Loan shall be made true and correct in all material respects with respect to
such Ineligible Loan as if such Ineligible Loan had become part of the
Collateral on such day. Notwithstanding anything contained in this
Section 2.18(b) to the contrary, in the event of a breach of any representation
and warranty set forth in Section 4.2 with respect to each Transferred Loan,
Related Property and other related Collateral having been (A) granted to the
Trustee on behalf of the Secured Parties free and clear of any Lien of any
Person claiming through or under the Borrower and its Affiliates and (B) in
compliance, in all material respects, with all requirements of laws applicable
to the Borrower, immediately upon the earlier to occur of the discovery of such
breach by the Borrower or receipt by the Borrower of written notice of such
breach given by the Agent, the Borrower shall repay Advances Outstanding in an
amount equal to the sum of (i) the amount determined by multiplying the
percentage set forth in the definition of Weighted Average Advance Rate herein
applicable to such Loan times the Outstanding Loan Balance of such Loan on the
date of repurchase, plus (ii) any accrued and unpaid Interest thereon, plus
(iii) all Hedge Breakage Costs owed to any relevant Hedge Counterparty for any
termination of one or more Hedge Transactions, in whole or in part, as required
by the terms of any Hedge Agreement, plus (iv) any Breakage Costs incurred in
connection with the retransfer of such Loan pursuant to this Section 2.18(b) and
the termination of any Hedge Transactions in whole or in part in connection
therewith (collectively, the “Retransfer Price”), and the Trustee on behalf of
the Secured Parties shall release to Borrower any such Ineligible Loan(s) and
relinquish any Lien created pursuant to this Agreement or otherwise, and the
Secured Parties shall, in connection with such conveyance and without further
action, be deemed to represent and warrant that they have the corporate
authority and have taken all necessary corporate action to accomplish such
release, but without any other representation or warranty, express or implied.
In the foregoing instances, the Borrower shall make such repayment and on and
after the date of such repayment, each Ineligible Loan so repaid shall not be
included in the Collateral. In consideration of any such release by the Secured
Parties, the Borrower shall, on the date of such repayment, remit to the Agent,
on behalf of the Secured Parties, in immediately available funds an amount equal
to the Retransfer Price therefor. Upon each such repayment, the Trustee on
behalf of the Secured Parties shall automatically and without further action be
deemed to release to the Borrower all the right, title and interest of the
Secured Parties in, to and under such Ineligible Loan(s) and all monies due or
to become due with respect thereto, all proceeds thereof and all rights to
security for any such Ineligible Loan, and all proceeds and products of the
foregoing. The Agent shall, at the sole expense of the Borrower, execute such
documents and instruments of transfer as may be prepared by the Borrower and
take such other actions as shall reasonably be requested by the Borrower to
effect the transfer of such Ineligible Loan pursuant to this Section 2.18(b).

(ii) The Borrower hereby agrees that (x) if any real property collateral
securing any Transferred Loan becomes the subject of any claims, proceedings,
Liens or encumbrances with respect to any material violation or claimed material
violation of any federal or state environmental laws or regulations or (y) in
the event of a breach of the representation and warranty in Section 4.1(ee),
such Transferred Loan shall for all purposes hereunder be, at and following the
time of discovery by the Servicer, the Borrower, the Agent or any other Secured
Party of such fact, deemed an Ineligible Loan and the Borrower shall either
repay Advances Outstanding in an amount equal to the aggregate Retransfer Price
of such Ineligible Loan or substitute for such Ineligible Loan a Substitute
Loan. Such Ineligible Loan shall otherwise be treated in accordance with
Section 2.18(b) and shall be subject to the same remedial and recourse
provisions hereunder as other Transferred Loans determined to be Ineligible
Loans hereunder.

(c) Notwithstanding anything in Section 2.17 or Section 2.18, the Borrower shall
not, and the Servicer shall not on the Borrower’s behalf, acquire, sell or
substitute any Loan with the primary purpose of recognizing gain or decreasing
losses on such Loan or in any manner that would cause the Borrower not to be in
compliance with the requirements of Rule 3a-7 under the 1940 Act.

ARTICLE III

CLOSING; CONDITIONS OF CLOSING AND ADVANCES

      Section 3.1 Conditions to Closing and Initial Advances.

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

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

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

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

(d) The Agent shall have received acknowledgment copies of proper financing
statements filed in all jurisdictions required by the Lenders.

(e) The Agent shall have become a party to the Intercreditor Agreement by its
execution of a joinder thereto and such agreement shall be in full force and
effect.

(f) The Agent shall have received a copy of the Credit and Collection Policy
from the initial Servicer.

      Section 3.2 Conditions Precedent to All Advances.

Each Advance (including the Initial Advance) and each reinvestment of Principal
Collections made pursuant to Section 2.8(a)(1)(xv) or Section 2.8(a)(2) shall be
subject to the further conditions precedent that:

(a) On the related Funding Date or date of reinvestment, the Borrower or the
Servicer, as the case may be, shall have certified in the related Borrower
Notice that:

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

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

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

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

(b) with respect to the initial Funding Date, the Agent shall have received all
Transaction Documents listed on the Schedule of Documents, attached hereto as
Schedule I, as due on the initial Funding Date, or counterparts thereof, each of
which has been duly executed by, and delivered to, the parties hereto and each
shall be in form and substance satisfactory to the Agent and (ii) on any date on
which Principal Collections are reinvested pursuant to Section 2.8(a)(1)(xv), or
Section 2.8(a)(2), the Agent shall have received a certification in the form of
Exhibit N;

(c) the Termination Date shall not have occurred;

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

(ii) in the case of each Advance, each Loan submitted by the Borrower for
funding on the related Funding Date or date of reinvestment of Available Funds
pursuant to Section 2.8(a)(1)(xv) or Section 2.8(a)(2) is an Eligible Loan;

(e) with respect to each Pre-Positioned Loan that is funded with the proceeds of
such Advance, the Agent, the Lenders and the Trustee shall have received a faxed
copy of the executed Underlying Note (other than in the case of a Noteless Loan)
and the Certificate of Borrower in the form of Exhibit I, and, if requested in
writing by the Agent, the Agent shall have received a copy of the credit report
and transaction summary for each such Pre-Positioned Loan;

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

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

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

(i) no law, rule, regulation, judgment, order or decree applicable to any party
shall prohibit such purchase or any transaction contemplated by any Transaction
Document;

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

(k) the weighted average Interest Coverage, Debt Service Coverage and
Debt/EBITDA Ratios (as calculated by the Servicer pursuant to and in accordance
with the Credit and Collection Policy) of all Obligors as of the end of most
recent fiscal quarter of the Servicer for which financial statements are
available, satisfy the following required levels, as applicable:

     
Ratio
  Required Level
 
   
Interest Coverage Ratio
  At least 2.2 to 1.0
 
   
Debt Service Coverage Ratio
  At least 1.30 to 1.0
 
   
Debt/EBITDA Ratio
  Less than or equal to 4.70 to 1.0
 
   

(l) the Borrower shall have delivered an Officer’s Certificate stating that,
after giving effect to such Advance or reinvestment of Available Funds, as
applicable, each of the foregoing conditions precedent has been satisfied;

(m) the Portfolio Yield shall be greater than the Minimum Portfolio Yield;

(n) the Reserve Account shall contain an amount greater than or equal to the
Reserve Account Required Amount;

(o) solely in the case of the Initial Advance, the Agent shall have received
evidence satisfactory to it of the reduction to zero of all outstanding amounts
under, and the termination of, that certain Credit Agreement, dated as of
February 11, 2003, by and between Wilton Funding, LLC, as borrower and iStar
Financial Inc., as lender, the release of all Liens created in connection
therewith and the termination of all UCC financing statements filed in
connection therewith; and

(p) solely in the case of the Initial Advance, the Borrower shall have paid all
fees required to be paid by it hereunder, including all fees payable pursuant to
each Fee Letter, and shall have reimbursed the Lenders and the Agent for all
fees, costs and expenses of closing the transactions contemplated hereunder and
under the other Transaction Documents, including the legal and other document
preparation costs incurred by the Lenders and the Agent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

      Section 4.1 Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a) Organization and Good Standing; Power and Authority. The Borrower is a
Delaware limited liability company duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its formation, and has full
limited liability company power, authority and legal right to own or lease its
properties and conduct its business as such business is presently conducted and
to enter into and perform its obligations under this Agreement and each other
Transaction Document to which it is a party.

(b) Due Qualification. The Borrower is qualified to do business as a limited
liability company, is in good standing, and has obtained all licenses and
approvals as required under the laws of all jurisdictions in which the ownership
or lease of its property and or the conduct of its business (other than the
performance of its obligations hereunder) requires such qualification, standing,
license or approval, except to the extent that the failure to so qualify,
maintain such standing or be so licensed or approved would not have an adverse
effect on the interests of the Lenders.

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

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

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

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

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

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

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

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

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

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

(m) [Reserved].

(n) Reports Accurate. All Monthly Reports (if prepared by the Borrower, or to
the extent that information contained therein is supplied by the Borrower),
information, exhibits, financial statements, documents, books, records or
reports furnished or to be furnished by the Borrower to the Agent, the Trustee
or the Lenders in connection with this Agreement are accurate, true and correct
in all material respects.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(u) Security Interest.

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

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

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

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

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

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

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

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

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

(x) the Borrower has received a written acknowledgment from the Trustee that the
Trustee or its bailee is holding the Underlying Notes that constitute or
evidence the Transferred Loans solely on behalf of and for the benefit of the
Secured Parties; provided, however, notwithstanding the foregoing, (1) with
respect to any Pre-Positioned Loan to be funded with the proceeds of an Advance,
the Borrower shall have received a written acknowledgment from the Trustee
(A) that the Trustee has received a faxed copy of the Underlying Note and
(B) within two Business Days after such Funding Date, that the Trustee or its
bailee is holding the Underlying Note that constitutes or evidences the Loans
included in the Collateral solely on behalf of the Secured Parties and (2) with
respect to any Noteless Loan to be funded with the proceeds of an Advance, the
Borrower shall have received written acknowledgment from the Trustee that the
Trustee has received a copy of the Loan Register for such Loan; and

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

(v) [Reserved].

(w) [Reserved].

(x) [Reserved].

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

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

(aa) Investment Company Act.

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

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

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

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

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

(dd) [Reserved].

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

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

(gg) Credit and Collection Policy. Since the Closing Date, there have been no
material changes in the Credit and Collection Policy other than in accordance
with this Agreement. Since such date, the Borrower has at all times complied
with the Credit and Collection Policy with respect to each Loan.

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

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

(jj) USA PATRIOT Act. Neither the Borrower nor any Affiliate of the Borrower is
(1) a country, territory, organization, person or entity named on an OFAC list,
(2) a Person that resides or has a place of business in a country or territory
named on such lists or which is designated as a Non-Cooperative Jurisdiction by
the Financial Action Task Force on Money Laundering (“FATF”), or whose
subscription funds are transferred from or through such a jurisdiction; (3) a
“Foreign Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a foreign
bank that does not have a physical presence in any country and that is not
affiliated with a bank that has a physical presence and an acceptable level of
regulation and supervision; or (4) a person or entity that resides in or is
organized under the laws of a jurisdiction designated by the United States
Secretary of the Treasury under Section 311 or 312 of the USA PATRIOT Act as
warranting special measures due to money laundering concerns.

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

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

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

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

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

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

ARTICLE V

GENERAL COVENANTS OF THE BORROWER

      Section 5.1 Covenants of the Borrower.

The Borrower hereby covenants that:

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

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

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

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

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

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

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

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

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

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

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

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

(m) Separate Existence. The Borrower shall not take any action or permit or
acquiesce in any action to be taken which would have the effect, directly or
indirectly, of causing (i) its representations and warranties made pursuant to
Section 4.1(t)(i)-(xxix) to be inaccurate in any respect, or (ii) any breach of
the covenants of the Borrower set forth in Section 9(j) of the Borrower’s
operating agreement.

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

(o) Collateral Acquired from the Originator. With respect to each item of
Collateral granted to the Trustee, for the benefit of the Secured Parties, the
Borrower will (i) acquire such Collateral pursuant to and in accordance with the
terms of the Purchase Agreement, (ii) take all action necessary to perfect,
protect and more fully evidence the Trustee’s, for the benefit of the Secured
Parties, ownership of such Collateral, including, without limitation, (A) filing
and maintaining, at the Servicer’s expense, effective financing statements
against the Borrower in all necessary or appropriate filing offices, and filing
continuation statements, amendments or assignments with respect thereto in such
filing offices and (B) executing or causing to be executed such other
instruments or notices as may be necessary or appropriate, and (iii) take all
additional action that the Agent or the Trustee may reasonably request to
perfect, protect and more fully evidence the respective interests of the parties
to this Agreement in the Collateral.

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

(q) Change in the Transaction Documents. The Borrower shall provide notice of
any proposed amendment, modification, waiver or termination of any terms or
conditions of the Transaction Documents other than this Agreement to the Agent
and the Lenders. The Borrower will not amend, modify, waive or terminate any
terms or conditions of any of the Transaction Documents other than this
Agreement to which it is a party, without the prior written consent of the Agent
and the Lenders and, if so requested by the Agent, the opinions of counsel
delivered pursuant to Section 3.1(a) with respect to (x) the creation,
perfection and priority of the security interest of the Secured Parties in the
Collateral, (y) the sale of the Transferred Loans and Related Property from
Patriot Capital to the Borrower constituting a true sale, and (z) the assets of
the Borrower not constituting property of the estate of Patriot Capital
following an Insolvency Event with respect to Patriot Capital can be confirmed,
after giving effect to the proposed amendment, modification, waiver or
termination. For the avoidance of doubt, the amendment, modification or waiver
of this Agreement is governed by Section 12.1.

(r) Credit and Collection Policy. The Borrower will (i) comply in all material
respects with the Credit and Collection Policy in regard to each Loan and the
Related Property included in the Collateral, and (ii) furnish to the Agent and
each Lender, prior to its effective date, prompt notice of any changes in the
Credit and Collection Policy. The Borrower will not agree to or otherwise
(x) permit any change in the Credit and Collection Policy which would materially
and adversely affect or impair the collectibility of any Loan, or (y) any
material change in the Credit and Collection Policy without the prior written
consent of the Agent and each Lender (in their sole discretion).

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

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

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

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

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

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

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

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

(aa) Notice of Litigation. The Borrower will promptly, but in no event later
than two (2) Business Days after any officer of the Borrower becoming aware
thereof, deliver written notice to the Agent and each Lender regarding any
claim, action, investigation or proceeding pending or threatened against the
Borrower and shall provide copies of any and all notices, certificates or
documents delivered to it in connection therewith.

      Section 5.2 Hedging Agreement.

(a) Immediately upon the occurrence of a Hedge Trigger and on or prior to each
Funding Date following the occurrence of a Hedge Trigger, the Borrower shall
enter into one or more Hedge Transactions, provided that each such Hedge
Transaction shall:

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

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

(iii) have an amortizing notional amount (a) corresponding to a prepayment speed
not to exceed a 15% constant prepayment rate and (b) such that the Hedge
Notional Amount in effect on each day during the term of such Hedge Transactions
shall be at least equal to the product of the Hedge Percentage and the Hedge
Amount, subject to any permitted excess or shortfall in the Hedge Amount as may
be allowed by a Hedge Amount notional band as agreed by the Agent in its sole
discretion;

(iv) provide, in the case of any interest rate swap, for two series of monthly
(or quarterly, as applicable) payments to be netted against each other, one such
series being payments to be made by the Borrower to a Hedge Counterparty by
reference to a fixed rate for that Hedge Transaction, and the other such series
being payments to be made by the Hedge Counterparty at a floating rate equal to
“USD-LIBOR-BBA” (as defined in the ISDA Definitions), the net amount of which
shall be paid into the Collection Account (if payable by the Hedge Counterparty)
or, to the extent of Available Funds and from the Collection Account, under
Sections 2.8(a)(1)(i) and 2.8(b)(i) and (xii) of this Agreement (if payable by
the Borrower); and

(v) have a fixed rate or strike price and ensure that the Portfolio Yield on any
Determination Date after such Hedge Transaction has been entered into shall be
not less than the Minimum Portfolio Yield.

(b) Subject to, and without limiting the provisions of, Article VIII of this
Agreement, the Borrower hereby assigns to the Trustee on behalf of the Secured
Parties, all right, title and interest of Borrower in each Hedging Agreement,
each Hedge Transaction, and all present and future amounts payable by a Hedge
Counterparty to Borrower under or in connection with the respective Hedging
Agreement and Hedge Transaction(s) with that Hedge Counterparty (“Hedge
Collateral”), and grants a security interest to the Trustee on behalf of the
Secured Parties, in the Hedge Collateral; provided, however, that so long as the
Hedge Counterparty is the Agent or any Affiliate thereof, the Trustee hereby
grants to the Servicer a non-exclusive license (which shall be deemed revoked
upon the occurrence of a Termination Event) to exercise any rights under any
related Hedging Agreement or Hedge Transaction. The Borrower acknowledges that
as a result of such assignment the Borrower may not, except as set forth in the
proviso to the immediately preceding sentence, without the prior written consent
of the Agent, exercise any rights under any Hedging Agreement or Hedge
Transaction, except for Borrower’s right under any Hedging Agreement to enter
into Hedge Transactions in order to meet the Borrower’s obligations under
Section 5.2(a) hereof. Nothing herein shall have the effect of releasing the
Borrower from any of its obligations under any Hedging Agreement or any Hedge
Transaction, nor be construed as requiring the consent of the Agent or any
Secured Party for the performance by Borrower of any such obligations.

      Section 5.3 Delivery of Loan Files

(a) The Borrower, or the Servicer on its behalf, shall deliver possession of all
“instruments” (within the meaning of Article 9 of the UCC) not constituting part
of “chattel paper” (within the meaning of Article 9 of the UCC) that evidence
any Transferred Loan set forth on a Loan List, including all Underlying Notes,
and all portions of the Loan Files to the Trustee on behalf of the Trustee on
behalf of the Secured Parties prior to the applicable Funding Dates, in each
case endorsed in blank without recourse; provided, however, that notwithstanding
the foregoing, (A) with respect to any Pre-Positioned Loan, the Borrower shall
(i) have a copy of the executed Underlying Note faxed to the Trustee on the
applicable Funding Date with the original to be received by the Trustee within
two (2) Business Days after such Funding Date and (ii) within ten Business Days
of the Funding Date deliver all other portions of the Loan File in each case
endorsed in blank without recourse, where applicable and (B) with respect to any
Noteless Loan, the Borrower shall deliver a copy of the Loan Register for such
Loan. Pursuant to Section 7.10, the Borrower is required to deliver such
instruments and Loan Files to the Trustee for the benefit of the Secured
Parties. Accordingly, the Borrower hereby authorizes and directs the Servicer to
deliver possession of all such instruments and Loan Files to the Trustee on
behalf of the Secured Parties, and agrees that such delivery shall satisfy the
condition set forth in the first sentence of this Section 5.3(a). The Servicer
shall also identify on the Loan List (including any amendment thereof), whether
by attached schedule or marking or other effective identifying designation, all
Transferred Loans that are not evidenced by such instruments.

(b) Prior to the occurrence of a Termination Event or Servicer Termination
Event, the Trustee shall not record the Assignments of Mortgage delivered
pursuant to Section 5.3(a) and the definition of Loan Documents. Upon the
occurrence of a Termination Event or a Servicer Termination Event, the Trustee
shall, if so directed by the Agent, cause to be recorded in the appropriate
offices each Assignment of Mortgage delivered to it with respect to all
Transferred Loans except those Transferred Loans covered by the proviso to the
definition of Assignment of Mortgage. Each such recording shall be at the
expense of the Servicer; provided, however, to the extent the Servicer does not
pay such expenses, the Trustee shall be reimbursed pursuant to the provisions of
Section 2.8.

ARTICLE VI

PERFECTION OF TRANSFER AND

PROTECTION OF SECURITY INTERESTS

      Section 6.1 Custody of Transferred Loans.

The contents of each Loan File relating to a Transferred Loan shall be held in
the custody of the Trustee under the terms of the Purchase Agreement and this
Agreement for the benefit of the Secured Parties.

      Section 6.2 Filing.

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

      Section 6.3 Changes in Name, Structure or Location.

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

(b) If any change in either the Servicer’s or the Borrower’s name, identity,
structure, existence, location (as defined in Article 9 of the UCC) or other
action would make any financing or continuation statement or notice of ownership
interest or Lien relating to any Collateral seriously misleading within the
meaning of applicable provisions of the UCC, the Servicer, no later than five
(5) Business Days after the effective date of such change, shall file such
amendments as may be required to preserve and protect the security interest of
the Trustee on behalf of the Secured Parties in the Collateral and the proceeds
thereof. Promptly after taking any of the foregoing actions, the Servicer shall
deliver to the Agent and each other Secured Party an Opinion of Counsel
reasonably acceptable to the Agent stating that, in the opinion of such counsel,
all financing statements or amendments necessary to preserve and protect the
security interest of the Trustee on behalf of the Secured Parties in the
Collateral have been filed, and reciting the details of such filing.

      Section 6.4 Chief Executive Office.

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

      Section 6.5 Costs and Expenses.

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

      Section 6.6 Sale Treatment.

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

      Section 6.7 Separateness from the Borrower.

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

ARTICLE VII

ADMINISTRATION AND SERVICING OF LOANS

      Section 7.1 Appointment of the Servicer.

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

      Section 7.2 Duties and Responsibilities of the Servicer.

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

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

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

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

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

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

(v) identifying each Transferred Loan clearly and unambiguously in its Servicing
Records to reflect that such Transferred Loan is owned by the Borrower and
pledged to the Trustee on behalf of the Secured Parties;

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

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

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

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

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

      Section 7.3 Authorization of the Servicer.

(a) Each of the Borrower and the Trustee on behalf of the Secured Parties hereby
authorizes the Servicer (including any successor thereto) to take any and all
reasonable steps in its name and on its behalf necessary or desirable and not
inconsistent with the pledge of the Transferred Loans to the Secured Parties, in
the determination of the Servicer, to collect all amounts due under any and all
Transferred Loans, including, without limitation, endorsing any of their names
on checks and other instruments representing Collections, executing and
delivering any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Transferred Loans and, after the delinquency of any Transferred
Loan and to the extent permitted under and in compliance with Applicable Law, to
commence proceedings with respect to enforcing payment thereof, to the same
extent as the Originator could have done if it had continued to own such Loan.
The Borrower shall furnish the Servicer (and any successors thereto) with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder, and
shall cooperate with the Servicer to the fullest extent in order to ensure the
collectibility of the Transferred Loans. In no event shall the Servicer be
entitled to make the Borrower, the Trustee, the Agent or any other Secured Party
a party to any litigation without such party’s express prior written consent, or
to make the Borrower a party to any litigation (other than any routine
foreclosure or similar collection procedure) without the Agent’s and each
Lender’s consent.

(b) After a Termination Event has occurred and is continuing, at the Agent’s
direction, the Servicer shall take such action as the Agent may deem necessary
or advisable to enforce collection of the Transferred Loans; provided, however,
that (i) the Servicer shall not be required to take any action hereunder at the
request of the Agent if the taking of such action, in the reasonable
determination of the Servicer (after consultation with the Agent) would be in
violation of any Applicable Law; and (ii) the Agent may, at any time after a
Termination Event has occurred and is continuing, notify any Obligor with
respect to any Transferred Loans of the assignment of such Transferred Loans to
the Agent and direct that payments of all amounts due or to become due to the
Borrower thereunder be made directly to the Agent or any servicer, collection
agent or lock-box or other account designated by the Agent and, upon such
notification and at the expense of the Borrower, the Agent may enforce
collection of any such Transferred Loans and adjust, settle or compromise the
amount or payment thereof. The Agent shall give written notice to any Successor
Servicer of the Agent’s actions or directions pursuant to this Section 7.3(b),
and no Successor Servicer shall take any actions pursuant to this Section 7.3(b)
that are outside of its Credit and Collection Policy.

Section 7.4 Collection of Payments.

(a) Collection Efforts, Modification of Loans. The Servicer will make reasonable
efforts to collect all payments called for under the terms and provisions of the
Transferred Loans as and when the same become due, and will follow those
collection procedures which it follows with respect to all comparable Loans that
it services for itself or others. The Servicer may not waive, modify or
otherwise vary any provision of a Transferred Loan, except as may be in
accordance with the provisions of the Credit and Collection Policy, which
permits, among other things, the waiver of any late payment charge or any other
fees that may be collected in the ordinary course of servicing any Loan included
in the Collateral.

(b) [Reserved].

(c) Taxes and other Amounts. To the extent provided for in any Transferred Loan,
the Servicer will use its best efforts to collect all payments with respect to
amounts due for taxes, assessments and insurance premiums relating to such
Transferred Loans or the Related Property and remit such amounts to the
appropriate Governmental Authority or insurer on or prior to the date such
payments are due.

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

(e) Establishment of the Collection Account. The Borrower or the Servicer on its
behalf shall cause to be established, on or before the Closing Date, and
maintained in the name of the Borrower but under the control of the Trustee on
behalf of the Secured Parties with an office or branch of a depository
institution or trust company organized under the laws of the United States or
any one of the States thereof or the District of Columbia (or any domestic
branch of a foreign bank) a segregated corporate trust account (the “Collection
Account”) with subaccounts thereof, including the Principal Collections Account
and the Interest Collections Account, for the purpose of receiving Collections
from the Collateral; provided, however, that at all times such depository
institution or trust company shall be a depository institution organized under
the laws of the United States or any one of the States thereof or the District
of Columbia (or any domestic branch of a foreign bank), (i) (A) that has either
(1) a long-term unsecured debt rating of “A-” or better by S&P and “A-3” or
better by Moody’s or (2) a short-term unsecured debt rating or certificate of
deposit rating of “A-1” or better by S&P or “P-1” or better by Moody’s, (B) the
parent corporation of which such depository institution is a Subsidiary has
either (1) a long-term unsecured debt rating of “A-” or better by S&P and “A-3”
or better by Moody’s or (2) a short-term unsecured debt rating or certificate of
deposit rating of “A-1” or better by S&P and “P-1” or better by Moody’s or
(C) is otherwise acceptable to the Agent and (ii) whose deposits are insured by
the Federal Deposit Insurance Corporation (any such depository institution or
trust company, a “Qualified Institution”) which Qualified Institution has agreed
with the Borrower, the Servicer and the Agent to comply with any and all orders,
notices, requests and other instructions originated by the Agent directing
disposition of the funds in the Collection Account without any further consent
from the Borrower or the Servicer. In order to provide the Agent with control
over the Collection Account within the meaning of Section 9-104(a) of the UCC
and any other applicable law, the Borrower and the Servicer hereby agree that
the Agent may at any time provide Wells Fargo or any successor Person that
maintains the Collection Account with instructions as to the disposition of
funds in the Collection Account or as to any other matters relating to the
Collection Account without any further consent from the Borrower or the
Servicer. Wells Fargo agrees with the Borrower, the Servicer and the Agent to
comply with any and all orders, notices, requests and other instructions
originated by the Agent directing disposition of the funds in the Collection
Account without any further consent from the Borrower or the Servicer.

(f) Establishment of Reserve Account. The Borrower or the Servicer on its behalf
shall cause to be established, on or before the Closing Date, and maintained in
the name of the Borrower but under the control of the Trustee on behalf of the
Secured Parties with an office or branch of a Qualified Institution a segregated
corporate trust account (the “Reserve Account”) for the purpose of receiving
deposits with respect to and maintaining therein the Reserve Account Required
Amount and, to the extent required pursuant to Section 2.8, to fund payments
thereunder; provided, however, that at all times such depository institution or
trust company shall be a Qualified Institution.

(g) Adjustments. If (i) the Servicer makes a deposit into the Collection Account
in respect of a Collection of a Loan in the Collateral and such Collection was
received by the Servicer in the form of a check that is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Scheduled Payment in respect of which a dishonored check
is received shall be deemed not to have been paid.

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

      Section 7.5 Servicer Advances.

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

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

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

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

Section 7.7 Maintenance of Insurance Policies.

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

      Section 7.8 Representations and Warranties of the Servicer.

The Servicer hereby represents and warrants as follows:

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

(b) Due Qualification. The Servicer is qualified to do business as a
corporation, is in good standing, and has obtained all licenses and approvals as
required under the laws of all jurisdictions in which the ownership or lease of
its property and or the conduct of its business (other than the performance of
its obligations hereunder) requires such qualification, standing, license or
approval, except to the extent that the failure to so qualify, maintain such
standing or be so licensed or approved would not have an adverse effect on the
interests of the Borrower or of the Lenders.

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

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

(e) No Consents. All approvals, authorizations, consents, orders or other
actions of any Person or of any Governmental Authority (if any) required in
connection with the due execution, delivery and performance by the Servicer of
this Agreement and any Transaction Document to which the Servicer is a party,
have been obtained.

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

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

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

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

(j) Material Adverse Change. Since March 31, 2005, there has been no Material
Adverse Change with respect to the initial Servicer.

(k) Credit and Collection Policy. Since the Closing Date, there have been no
material changes in any Credit and Collection Policy other than in accordance
with this Agreement. Since such date, the Servicer has at all times complied
with the Credit and Collection Policy with respect to each Loan.

(l) RIC/BDC Requirements. The initial Servicer is in compliance with the RIC/BDC
Requirements.

      Section 7.9 Covenants of the Servicer.

The Servicer hereby covenants that:

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

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

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

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

(e) RIC/BDC Requirements. The initial Servicer shall at all times maintain
compliance with the RIC/BDC Requirements.

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

(g) Credit and Collection Policy. The initial Servicer will (i) comply in all
material respects with the Credit and Collection Policy in regard to each Loan
and the Related Property included in the Collateral, including, without
limitation, performing the Loan grading and asset valuation functions specified
in the Credit and Collection Policy on a quarterly basis, and (ii) furnish to
the Agent, prior to its effective date, prompt notice of any change in the
Credit and Collection Policy. The initial Servicer will not agree or otherwise
permit (x) any change in the Credit and Collection Policy which would materially
and adversely affect or impair the collectibility of any Loan, or (y) any
material change in the Credit and Collection Policy without the prior written
consent of each Lender and the Agent (in their sole discretion).

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

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

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

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

(l) Grade 4 Loan. In the event that the Originator or an Affiliate thereof
provides to any Obligor an Add-On Loan the proceeds of which are intended to be
used for the purpose of providing funds for the Obligor to make an interest
and/or principal payment on a Loan included in the Collateral, the Servicer
shall designate such Loan a Grade 4 Loan or a Grade 5 Loan through the date that
is one year after the date that such Add-On Loan is made; provided, that, this
Section 7.9(l) shall not apply in connection with Add-On Loans that are part of
a single plan of financing (regardless of when such plan of financing is
actually funded) involving Add-On Loans to the Obligor by, in addition to the
Originator, a Person who is neither the Originator nor an Affiliate thereof;
provided, further, that, the restriction set forth in this Section 7.9(l) shall
not apply after the date on which a subsequent Add-On Loan is made to the
Obligor and neither the Originator nor an Affiliate thereof is a party to such
subsequent Add-On Loan.

(m) Inspection of Records. The Servicer will, at any time and from time to time
during regular business hours, as requested by the Agent or any Lender, permit
the Agent or such Lender, or its agents or representatives, (i) to examine and
make copies of and take abstracts from all books, records and documents
(including computer tapes and disks) relating to the Loans and the related Loan
Documents and (ii) to visit the offices and properties of the Borrower, the
Originator or the Servicer, as applicable, for the purpose of examining such
materials described in clause (i), and to discuss matters relating to the Loans
or the Borrower’s, the Originator’s or the Servicer’s performance hereunder,
under the Loan Documents and under the other Transaction Documents to which such
Person is a party with such officers, directors, employees or independent public
accountants of the Borrower, the Originator or the Servicer, as applicable, as
might reasonably be determined to have knowledge of such matters; provided that
at all times prior to the occurrence of a Termination Event, the Agent and any
requesting Lender will give the Servicer at least two Business Days’ notice of
any examination or audit to be undertaken pursuant to this Section 7.9(m).

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

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

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

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

(r) Loan Register.

(i) The Servicer shall maintain with respect to each Noteless Loan a register
(each, a “Loan Register”) in which it will record (v) the amount of such Loan,
(w) the amount of any principal or interest due and payable or to become due and
payable from the Obligor thereunder, (x) the amount of any sum in respect of
such Loan received from the Obligor, (y) the date of origination of such Loan
and (z) the maturity date of such Loan. The entries made in each Loan Register
maintained pursuant to this Section 7.9(r) shall be prima facie evidence of the
existence and amounts of the obligations therein recorded; provided, however,
that the failure of the Servicer to maintain any such Loan Register or any error
therein shall not in any manner affect the obligations of the Obligor to repay
the related Loans in accordance with their terms or any lender’s interest
therein.

(ii) At any time a Noteless Loan is included as part of the Collateral pursuant
to this Agreement, the Servicer shall deliver to the Trustee a copy of the
related Loan Register, together with a copy of an executed certificate of a
Responsible Officer of the Servicer, in substantially the form of Exhibit W,
certifying to the accuracy of such Loan Register as of the date such Loan is
included as part of the Collateral.

      Section 7.10 The Trustee.

(a) Appointment; Custodial Duties. The Borrower and the Agent each hereby
appoints Wells Fargo to act as Trustee hereunder, for the benefit of the
Borrower, the Agent and the Secured Parties, as provided herein. Wells Fargo
hereby accepts such appointment and agrees to perform the duties and
responsibilities with respect thereto set forth herein.

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

In taking and retaining custody of the Loan Files, the Trustee shall be acting
as the agent of the Agent and the other Secured Parties; provided, that, the
Trustee makes no representations as to the existence, perfection or priority of
any Lien on the Loan Files or the instruments therein; provided, further, that,
the Trustee’s duties as agent shall be limited to those expressly contemplated
herein. All Loan Files shall be kept in fire-resistant vaults or cabinets at the
locations specified on Schedule V attached hereto, or at such other office as
shall be specified to the Agent and the Borrower by the Trustee in a written
notice delivered at least 45 days prior to such change. All Loan Files shall be
segregated with an appropriate identifying label and maintained in such a manner
so as to permit retrieval and access. All Loan Files shall be clearly segregated
from any other documents or instruments maintained by the Trustee. The Trustee
shall clearly indicate that such Loan Files are the sole property of Borrower,
subject to the security interest of the Trustee on behalf of the Secured
Parties. In performing its duties, the Trustee shall use the same degree of care
and attention as it employs with respect to similar loan files that it holds as
trustee for others. Except as otherwise provided herein, the Trustee shall have
no power or authority to assign, hypothecate or otherwise dispose of Loan Files.

(b) Concerning the Trustee.

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

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

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

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

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

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

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

(viii) In case any reasonable question arises as to its duties hereunder, the
Trustee may, prior to the occurrence of a Termination Event or the Termination
Date, request instructions from the Servicer and may, after the occurrence of a
Termination Event or the Termination Date, request instructions from the Agent,
and shall be entitled at all times to refrain from taking any action unless it
has received instructions from the Servicer or the Agent, as applicable. The
Trustee shall in all events have no liability, risk or cost for any action taken
pursuant to and in compliance with the instruction of the Agent.

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

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

(e) Trustee Compensation. As compensation for its activities hereunder, the
Trustee shall be entitled to a Trustee Fee to the extent of funds available
therefor pursuant to the provision of Sections 2.8(a)(1)(v) and 2.8(b)(v). The
Trustee’s entitlement to receive the Trustee Fee (other than due and unpaid
Trustee Fees owed through such date) shall cease on the earlier to occur of:
(i) its removal as Trustee or (ii) the termination of this Agreement.

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

(g) Release of Loan Documents Following a Lien Release Dividend. To the extent
that portions of Transferred Loans are transferred pursuant to a Lien Release
Dividend under Section 2.16 and such portions of transferred Loans are part of a
Permitted Securitization Transaction, the Trustee may, but only with the Agent’s
prior written consent, and upon terms and conditions satisfactory to the Agent,
including without limitation the execution by the servicer of the sold Loans of
all such documents as the Agent may require, release original Loan Documents
(excluding the related original Underlying Note(s) evidencing the portion of the
Transferred Loan remaining as part of the Collateral) to the servicer of such
sold Transferred Loans for the purposes of enforcing or servicing such Loans in
connection with a Permitted Securitization Transaction.

(h) The Agent and the Lenders hereby appoint Wells Fargo, in its capacity as
Trustee hereunder, as their agent for the purposes of perfection of a security
interest in the Loans. Wells Fargo, in its capacity as Trustee hereunder, hereby
accepts such appointment and agrees to perform the duties set forth in
Section 7.10.

(i) The Trustee shall provide to the Servicer and the Backup Servicer (if the
Backup Servicer is not the Trustee) a copy of all written notices and
communications identified as being sent to it in connection with the Loans and
the other Collateral held hereunder which it receives from the related Obligor,
participating bank and/or agent bank. In no instance shall the Trustee be under
any duty or obligation to take any action on behalf of the Servicer in respect
of the exercise of any voting or consent rights, or similar actions, unless it
receives specific written instructions from the Servicer, prior to the
occurrence of a Termination Event or the Agent, after the occurrence of a
Termination Event, in which event the Trustee shall vote, consent or take such
other action in accordance with such instructions.

(j) (i) Each of the Agent and each other Secured Party further authorizes the
Trustee to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Transaction Documents as are expressly
delegated to the Trustee by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. In furtherance, and without
limiting the generality of the foregoing, each Secured Party hereby appoints the
Trustee as its agent to execute and deliver all further instruments and
documents, and take all further action that the Trustee or the Agent deems
necessary or desirable in order to perfect, protect or more fully evidence the
security interests granted by the Borrower hereunder, or to enable any of them
to exercise or enforce any of their respective rights hereunder, including,
without limitation, the execution by the Trustee as secured party/assignee of
such financing or continuation statements, or amendments thereto or assignments
thereof, relative to all or any of the Loans now existing or hereafter arising,
and such other instruments or notices, as may be necessary or appropriate for
the purposes stated hereinabove. Nothing in this Section 7.10(i) shall be deemed
to relieve the Borrower of its obligation to protect the interest of the Trustee
(for the benefit of the Secured Parties) in the Collateral, including to file
financing and continuation statements in respect of the Collateral in accordance
with this Agreement.

(ii) The Agent may direct the Trustee to take any such incidental action
hereunder. With respect to other actions which are incidental to the actions
specifically delegated to the Trustee hereunder, the Trustee shall not be
required to take any such incidental action hereunder, but shall be required to
act or to refrain from acting (and shall be fully protected in acting or
refraining from acting) upon the direction of the Agent; provided that the
Trustee shall not be required to take any action hereunder at the request of the
Agent, any Secured Parties or otherwise if the taking of such action, in the
reasonable determination of the Trustee, (x) shall be in violation of any
Applicable Law or contrary to any provisions of this Agreement or (y) shall
expose the Trustee to liability hereunder or otherwise (unless it has received
indemnity which it reasonably deems to be satisfactory with respect thereto). In
the event the Trustee requests the consent of the Agent and the Trustee does not
receive a consent (either positive or negative) from the Agent with 10 Business
Days of its receipt of such request, then the Agent shall be deemed to have
declined to consent to the relevant action.

(iii) Except as expressly provided herein, the Trustee shall not be under any
duty or obligation to take any affirmative action to exercise or enforce any
power, right or remedy available to it under this Agreement or any of the Loan
Documents (i) unless and until (and to the extent) expressly so directed by the
Agent or (ii) prior to the occurrence of the Termination Date pursuant to clause
(b) of the definition of “Termination Date” (and upon such occurrence, the
Trustee shall act in accordance with the written instructions of the Agent
pursuant to clause (i)). The Trustee shall not be liable for any action taken,
suffered or omitted by it in accordance with the request or direction of any
Secured Party, to the extent that this Agreement provides such Secured Party the
right to so direct the Trustee, or the Agent. The Trustee shall not be deemed to
have notice or knowledge of any matter hereunder, including a Termination Event,
unless a Responsible Officer of the Trustee has knowledge of such matter or
written notice thereof is received by the Trustee.

      Section 7.11 Representations and Warranties of the Trustee.

The Trustee represents and warrants as follows:

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

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

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

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

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

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

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

      Section 7.12 Covenants of the Trustee.

The Trustee hereby covenants that:

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

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

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

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

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

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

      Section 7.13 The Backup Servicer.

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

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

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

(ii) Not later than 1:00 p.m. (New York City time) on each Reporting Date, the
Servicer shall provide to the Backup Servicer and the Backup Servicer shall
accept delivery of tape in an agreed upon electronic format (the “Tape”) from
the Servicer, which shall include but not be limited to the following
information: (x) for each Transferred Loan, the name and number of the related
Obligor, the collection status, the Loan status, the date of each Scheduled
Payment, the Outstanding Loan Balance and the Purchased Loan Balance, (y) the
Aggregate Purchased Loan Balance, and (z) the Aggregate Outstanding Loan
Balance.

(iii) Prior to the related Payment Date, the Backup Servicer shall review the
Monthly Report to ensure that it is complete on its face and that the following
items in such Monthly Report have been accurately calculated, if applicable, and
reported: (A) the Availability, (B) the Aggregate Purchased Loan Balance,
(C) the Aggregate Outstanding Loan Balance, (D) the Backup Servicer Fee, (E) the
Loans that are 45 or more days Delinquent (other than Defaulted Loans and
Charged-Off Loans), (F) the Defaulted Loans (other than Charged-Off Loans),
(G) the Charged-Off Loans, (H) the Portfolio Yield, (I) the Rolling Three-Month
Portfolio Yield, (J) the Rolling Three-Month Default Ratio, (K) the Rolling
Three-Month Charged-Off Ratio, (L) the Estimated Payment Amount and (M) the
Reserve Account Required Amount. The Backup Servicer shall notify the Agent, the
Borrower and the Servicer of any disagreements with the Monthly Report based on
such review not later than the Business Day preceding such Payment Date to such
Persons.

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

With respect to the duties described in this Section 7.13(b), in the absence of
bad faith or gross negligence, the Backup Servicer, in the performance of its
duties and obligations hereunder, is entitled to rely conclusively, and shall be
fully protected in so relying, on the contents of each Tape, including, but not
limited to, the completeness and accuracy thereof, provided by the Servicer.

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

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

(e) Backup Servicing Compensation. As compensation for its backup servicing
activities hereunder, the Backup Servicer shall be entitled to receive the
Backup Servicer Fee to the extent of funds available therefor pursuant to the
provision of Sections 2.8(a)(1)(iv) and 2.8(b)(iv). The Backup Servicer’s
entitlement to receive the Backup Servicer Fee (other than due and unpaid Backup
Servicer Fees owed through such date) shall cease on the earliest to occur of:
(i) it becoming the Successor Servicer, (ii) its removal as Backup Servicer, or
(iii) the Termination of this Agreement.

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

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

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

(i) Possible Dual Capacity. The parties expressly acknowledge and consent to
Wells Fargo acting in the possible dual capacity of Backup Servicer or successor
Servicer and in the capacity of Trustee. Wells Fargo may, in such dual capacity,
discharge its separate functions fully, without hindrance or regard to conflict
of interest principles, duty of loyalty principles or other breach of fiduciary
duties to the extent that any such conflict or breach arises from the
performance by Wells Fargo of express duties set forth in this Agreement in any
of such capacities, all of which defenses, claims or assertions are hereby
expressly waived by the other parties hereto except in the case of negligence,
acts of bad faith and willful misconduct by Wells Fargo.

(j) Subservicers. The Backup Servicer may, with the prior written consent of the
Agent, subservice any and all of its duties and responsibilities hereunder,
including but not limited to its duties as successor Servicer hereunder should
the Backup Servicer become the successor Servicer pursuant to Section 7.26
hereof. Notwithstanding any subservicing agreement or other delegation of duties
to a subservicer, so long as this Agreement shall remain effective, the Backup
Servicer (whether in its capacity as Backup Servicer or as a successor Servicer)
shall remain obligated and primarily liable to the Trustee and the other Secured
Parties, for the servicing and administering of the Loans in accordance with the
provisions of this Agreement, and, to the extent applicable, the Credit and
Collection Policy, without diminution of such obligation or liability by virtue
of such subservicing agreement or other arrangements with third parties pursuant
to this clause (j) or by virtue of indemnification from any subservicer and to
the same extent and under the same terms and conditions as if the Backup
Servicer alone were, as applicable, servicing and administering the Loans.

      Section 7.14 Representations and Warranties of the Backup Servicer.

The Backup Servicer hereby represents and warrants as follows:

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

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

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

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

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

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

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

      Section 7.15 Covenants of the Backup Servicer.

The Backup Servicer hereby covenants that:

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

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

(c) No Bankruptcy Petition. With respect to each Conduit Lender, prior to the
date that is one (1) year and one day (or such longer preference period as shall
then be in effect) after the payment in full of all amounts owing in respect of
all outstanding Commercial Paper Notes issued by such Conduit Lender and with
respect to the Borrower, prior to the date that is one year and one day (or such
longer preference period as shall then be in effect) after the Collection Date,
the Backup Servicer will not institute against the Borrower or such Conduit
Lender, or join any other Person in instituting against the Borrower or such
Conduit Lender, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 7.15(c) will
survive the termination of this Agreement.

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

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

(a) The Servicer will be required to pay all fees and expenses incurred by it in
connection with the transactions and activities contemplated by this Agreement
(subject, as applicable, to the conditions set forth in Section 7.6), including
fees and disbursements of legal counsel and independent accountants, Taxes
imposed on the Servicer, expenses incurred in connection with payments and
reports pursuant to this Agreement, and all other fees and expenses not
expressly stated under this Agreement for the account of the Borrower. In
consideration for the payment by the Borrower of the Servicing Fee, the Servicer
will be required to pay all reasonable fees and expenses owing to any bank or
trust company in connection with the maintenance of the Collection Accounts and
the Reserve Account and the Backup Servicer Fee and Trustee Fee pursuant to the
Backup Servicer and Trustee Fee Letter. The Servicer shall be required to pay
such expenses for its own account and shall not be entitled to any payment
therefor other than the Servicing Fee.

(b) The Borrower will be required to pay all fees and expenses incurred by the
Agent and the Lenders in connection with the transactions and activities
contemplated by this Agreement, including reasonable fees and disbursements of
legal counsel and independent accountants.

Section 7.17 Reports.

(a) Monthly Report. With respect to each Determination Date and the related
Collection Period, the Servicer will provide to the Borrower, the Backup
Servicer, the Trustee, the Agent and each Lender, on the related Reporting Date,
a monthly statement (a “Monthly Report”), signed by a Responsible Officer of the
Servicer and substantially in the form of Exhibit E. Except as otherwise set
forth herein, the Backup Servicer shall have no obligation to review any
information in the Monthly Report.

(b) Servicer’s Certificate. Together with each Monthly Report, the Servicer
shall submit to the Borrower, the Backup Servicer, the Trustee, the Agent and
each Lender a certificate substantially in the form of Exhibit F (a “Servicer’s
Certificate”), signed by a Responsible Officer of the Servicer, which shall
include a certification by such Responsible Officer that no Termination Event or
Unmatured Termination Event has occurred and is continuing (or if a Termination
Event or Unmatured Termination Event has occurred and is continuing, specifying
each such event, the nature and status thereof and the steps necessary to remedy
such event). Except as otherwise set forth herein, the Backup Servicer shall
have no duty to review any information set forth in the Servicer’s Certificate.

(c) Financial Statements. The Servicer will submit to the Borrower, the Backup
Servicer, the Trustee, the Agent and each Lender, within 45 days following the
end of each of the Servicer’s fiscal quarters (other than the final fiscal
quarter), commencing for the fiscal quarter ending on September 30, 2005,
unaudited financial statements of the Servicer (including an analysis of
delinquencies and losses for each fiscal quarter) as of the end of each such
fiscal quarter. The Servicer shall submit to the Borrower, the Agent and each
Lender, within 90 days following the end of the Servicer’s fiscal year,
commencing with the fiscal year ending on December 31, 2005, annual audited
financial statements as of the end of such fiscal year. Except as otherwise set
forth herein, the Backup Servicer shall have no duty to review any of the
financial information set forth in such financial statements.

(d) Quarterly Valuation Report. The Servicer will submit to the Borrower, the
Backup Servicer, the Trustee, the Agent and each Lender, within 45 days
following the end of each of the Servicer’s fiscal quarters, commencing with the
fiscal quarter ending on December 31, 2005, a valuation report prepared by Duff
& Phelps, LLC in form and substance reasonably satisfactory to the Agent. Except
as otherwise set forth herein, the Backup Servicer shall have no duty to review
any of the information set forth in such quarterly valuation reports.

Section 7.18 Annual Statement as to Compliance.

The Servicer will provide to the Borrower, the Backup Servicer, the Agent and
each Lender within 90 days following the end of each fiscal year of the
Servicer, commencing with the fiscal year ending on December 31, 2005, an annual
report signed by a Responsible Officer of the Servicer certifying that (a) a
review of the activities of the Servicer, and the Servicer’s performance
pursuant to this Agreement, for the period ending on the last day of such fiscal
year has been made under such Responsible Officer’s supervision and (b) the
Servicer has performed or has caused to be performed in all material respects
all of its obligations under this Agreement throughout such year and no Servicer
Termination Event has occurred and is continuing (or if a Servicer Termination
Event has so occurred and is continuing, specifying each such event, the nature
and status thereof and the steps necessary to remedy such event.

Section 7.19 Annual Independent Public Accountant’s Servicing Reports.

At its own expense, the Servicer will cause a firm of nationally recognized
independent public accountants acceptable to the Agent in its reasonable
discretion (who may also render other services to the Servicer) to furnish to
the Borrower, the Agent and each Lender, no later than the Annual Reporting
Date, commencing with the Annual Reporting Date occurring in 2006, (i) a report
relating to such fiscal year to the effect that (A) such firm has reviewed
certain documents and records relating to the servicing of the Loans, and
(B) based on such examination, such firm is of the opinion that the Monthly
Reports for such year were prepared in compliance with this Agreement, except
for such exceptions as it believes to be immaterial and such other exceptions as
will be set forth in such firm’s report and (ii) a report covering such fiscal
year to the effect that such accountants have applied certain agreed-upon
procedures (which procedures shall not be amended from those procedures in
effect as of the Closing Date without the prior approval of the Borrower and
Agent) to certain documents and records relating to the servicing of Loans under
this Agreement, compared the information contained in the Monthly Reports and
the Servicer’s Certificates delivered during the period covered by such report
with such documents and records and that no matters came to the attention of
such accountants that caused them to believe that such servicing was not
conducted in compliance with this Article VI of this Agreement, except for such
exceptions as such accountants shall believe to be immaterial and such other
exceptions as shall be set forth in such statement.

      Section 7.20 Limitation on Liability of the Servicer and Others.

Except as provided herein, neither the Servicer nor any of the directors or
officers or employees or agents of the Servicer shall be under any liability to
the Borrower, the Agent, the Secured Parties or any other Person for any action
taken or for refraining from the taking of any action expressly provided for in
this Agreement; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability that would otherwise be
imposed by reason of its willful misfeasance, bad faith or gross negligence in
the performance of duties or by reason of its failure to perform materially in
accordance with this Agreement.

The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties to service the Loans in
accordance with this Agreement that in its reasonable opinion may involve it in
any expense or liability. The Servicer may, in its sole discretion, undertake
any legal action relating to the servicing, collection or administration of
Loans and the Related Property that it may reasonably deem necessary or
appropriate for the benefit of the Borrower and the Secured Parties with respect
to this Agreement and the rights and duties of the parties hereto and the
respective interests of the Borrower and the Secured Parties hereunder.

      Section 7.21 The Servicer, the Backup Servicer and the Trustee Not to
Resign.

None of the Servicer, the Backup Servicer or the Trustee shall resign from the
obligations and duties hereby imposed on such Person except upon such Person’s
determination that (i) the performance of its duties hereunder is or becomes
impermissible under Applicable Law and (ii) there is no reasonable action that
such Person could take to make the performance of its duties hereunder
permissible under Applicable Law. Any such determination permitting the
resignation of the Servicer, the Backup Servicer or the Trustee shall be
evidenced as to clause (i) above by an Opinion of Counsel to such effect
delivered to the Borrower, the Agent and each Lender. No such resignation shall
become effective until a successor shall have assumed the responsibilities and
obligations of such Person in according with the terms of this Agreement.

      Section 7.22 Access to Certain Documentation and Information Regarding the
Loans.

The Borrower, the Servicer or the Trustee, as applicable, shall provide to the
Agent and each Lender access to the Loan Documents and all other documentation
regarding the Loans included as part of the Collateral and the Related Property
in such cases where the Agent or such Lender is required in connection with the
enforcement of the rights or interests of such Lender or of the Agent on behalf
of the Lenders, or by applicable statutes or regulations, to review such
documentation, such access being afforded without charge but only (i) upon two
Business Days’ prior written request, (ii) during normal business hours and
(iii) subject to the Servicer’s and the Trustee’s normal security and
confidentiality procedures. From and after the Closing Date and periodically
thereafter at the discretion of the Agent or if the Agent is so directed by any
Lender, the Agent or its respective agents may review the Borrower’s and the
Servicer’s collection and administration of the Loans in order to assess
compliance by the Servicer with the Servicer’s written policies and procedures,
as well as with this Agreement and may conduct an audit of the Loans, Loan
Documents and Records in conjunction with such a review. Such review shall be
reasonable in scope and shall be completed in a reasonable period of time. The
Borrower shall bear the cost of such audits; provided, however that prior to the
date on which a Termination Event shall have occurred and be continuing, the
Borrower shall not be required to bear the cost of more than one audit in any
12-month period.

     
Section 7.23
  [Reserved].
 
   
Section 7.24
  Identification of Records.
 
   

The Servicer shall clearly and unambiguously identify each Loan that is part of
the Collateral and the Related Property in its computer or other records to
reflect that the interest in such Loans and Related Property have been
transferred to and are owned by the Borrower and that the Trustee on behalf of
the Secured Parties has the interest therein Granted by Borrower pursuant to
this Agreement.

      Section 7.25 Servicer Termination Events.

If any one of the following events (a “Servicer Termination Event”) shall occur
and be continuing on any date:

(a) any failure by the Servicer to make any payment, transfer or deposit or to
give instructions or notice to the Borrower, the Agent or any Lender as required
by this Agreement on or before the date such payment, transfer, deposit,
instruction or notice is required to be made or given, as the case may be, under
the terms of this Agreement;

(b) any failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement or any other Transaction Document to which it is a party as
Servicer that continues unremedied for a period of 30 days after the first to
occur of (i) the date on which written notice of such failure requiring the same
to be remedied shall have been given to the Servicer by the Agent, any Lender or
the Borrower and (ii) the date on which an officer of the Servicer becomes aware
thereof;

(c) an Insolvency Event shall occur with respect to the Servicer or any of its
Affiliates;

(d) the Servicer shall fail in any material respect to service the Transferred
Loans in accordance with the Credit and Collection Policy;

(e) the Servicer agrees to or otherwise permits any material change in the
Credit and Collection Policy without the prior written consent of the Agent and
each Lender;

(f) any Change in Control of the Servicer is made without the prior written
consent of the Agent and each Lender;

(g) as of any date after the date of the Initial Funding, the Servicer fails to
maintain a minimum Net Worth of at least $100,000,000 plus seventy-five (75%)
percent of any new equity issued after August 2, 2005;

(h) the Servicer shall fail to maintain its status as a business development
company or as a registered investment company under the 1940 Act;

(i) the Servicer’s Leverage Ratio shall exceed 1.0:1.0;

(j) any failure by the Servicer to deliver any Required Reports hereunder on or
before the date occurring five Business Days after the date such report is
required to be made or given, as the case may be, under the terms of this
Agreement;

(k) any representation, warranty or certification made by the Servicer in this
Agreement or in any certificate delivered pursuant to this Agreement shall prove
to have been incorrect when made;

(l) the rendering against the Servicer of one or more final judgments, decrees
or orders for the payment of money in excess of 10% of the Tangible Net Worth of
the Servicer (individually or in the aggregate);

(m) the failure of the Servicer to make any payment due with respect to
aggregate recourse debt or other obligations with an aggregate principal amount
exceeding U.S. $1,000,000 or the occurrence of any event or condition that would
permit acceleration of such recourse debt or other obligations if such event or
condition has not been waived; or

(n) the Servicer shall incur additional Indebtedness in excess of $30,000,000
after the Closing Date;

then notwithstanding anything herein to the contrary, so long as any such
Servicer Termination Events shall not have been remedied at the expiration of
any applicable cure period, the Agent, by written notice to the Servicer and the
Backup Servicer (a “Servicer Termination Notice”), may, subject to the
provisions of Section 7.26, terminate all of the rights and obligations of the
Servicer as Servicer under this Agreement. The Borrower shall pay all reasonable
set-up and conversion costs associated with the transfer of servicing rights to
the Successor Servicer.

      Section 7.26 Appointment of Successor Servicer.

(a) On and after the receipt by the Servicer of a Servicer Termination Notice
pursuant to Section 7.25, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Servicer
Termination Notice or otherwise specified by the Agent to the Servicer and the
Backup Servicer in writing. The Agent may at the time described in the
immediately preceding sentence, in its sole discretion, appoint the Backup
Servicer as the Servicer hereunder, and the Backup Servicer shall on such date
assume all obligations of the Servicer hereunder, and all authority and power of
the Servicer under this Agreement shall pass to and be vested in the Backup
Servicer; provided, however, that any successor Servicer shall not (i) be
responsible or liable for any past actions or omissions of the outgoing
Servicer, (ii) be obligated to make Servicer Advances, (iii) have any obligation
to pay any taxes required to be paid by the Servicer, if any, (iv) have no
obligation to pay the fees and expenses of any other party involved in this
transaction or any third party, or (v) have any liability or obligation with
respect to any Servicer indemnification obligations of any prior servicer
including the initial Servicer. In the event that the Agent does not so appoint
the Backup Servicer, there is no Backup Servicer or the Backup Servicer is
unwilling or unable to assume such obligations on such date, the Agent shall as
promptly as possible appoint a successor servicer (in such capacity, the
“Successor Servicer”), and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Agent. In the event that a
Successor Servicer has not been appointed and has not accepted its appointment
at the time when the Servicer ceases to act as Servicer, the Agent shall
petition a court of competent jurisdiction to appoint any established financial
institution having a net worth of not less than U.S. $100,000,000 and whose
regular business includes the servicing of Loans as the Successor Servicer
hereunder.

(b) Upon its appointment as successor to the Servicer, the Backup Servicer
(subject to Section 7.26(a)) or the Successor Servicer, as applicable, shall be
the successor in all respects to the Servicer (except as otherwise expressly
provided for herein) with respect to servicing functions under this Agreement,
shall assume all Servicing Duties hereunder and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, and all references in this Agreement to the
Servicer shall be deemed to refer to the Backup Servicer or the Successor
Servicer, as applicable. Any Successor Servicer shall be entitled, with the
prior consent of the Agent, to appoint agents to provide some or all of its
duties hereunder, provided that no such appointment shall relieve such Successor
Servicer of the duties and obligations of the Successor Servicer pursuant to the
terms hereof and that any such subcontract may be terminated upon the occurrence
of a Servicer Termination Event.

(c) All authority and power granted to the Servicer under this Agreement shall
automatically cease and terminate upon termination of the Servicer under this
Agreement and shall pass to and be vested in the Successor Servicer, and,
without limitation, the Successor Servicer is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Servicer agrees to cooperate with the
Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing on the Collateral.

(d) Upon the Backup Servicer receiving notice that it is required to serve as
the Servicer hereunder pursuant to the foregoing provisions of this
Section 7.26, the Backup Servicer will promptly begin the transition to its role
as Servicer.

(e) The Backup Servicer shall be entitled to receive its reasonable costs
incurred in transitioning to Servicer.

(f) Notwithstanding anything contained in this Agreement to the contrary, any
successor Servicer is authorized to accept and rely on all of the accounting,
records (including computer records) and work of the prior Servicer relating to
the Loans (collectively, the “Predecessor Servicer Work Product”) without any
audit or other examination thereof, except, in all cases, where audit,
examination or other inquiry would be required in the exercise of reasonable
care or the degree of skill and attention the successor Servicer exercises with
respect to all comparable loans that it services for itself and others, and the
successor Servicer shall have no liability for the acts and omissions of the
prior Servicer; provided, however, if any successor Servicer discovers any
error, inaccuracy, omission or incorrect or non-standard practice or procedure
(collectively, “Errors”) in any Predecessor Servicer Work Product, then such
successor Servicer shall use its best commercially reasonable efforts to correct
such Errors. Wells Fargo agrees to use its best efforts to prevent further
errors, inaccuracies or omissions relating to Errors (collectively, “Continued
Errors”) previously discovered by the successor Servicer and shall, with the
prior consent of the Agent, use its best commercially reasonable efforts to
reconstruct and reconcile such data to correct such Errors and Continued Errors
and to prevent future Continued Errors. The successor Servicer shall be entitled
to recover its costs incurred pursuant to this Section 7.26(f).

      Section 7.27 Market Servicing Fee.

Notwithstanding anything to the contrary herein, in the event that a Successor
Servicer is appointed, the Servicing Fee shall equal the market rate for
comparable servicing duties to be fixed upon the date of such appointment by
such Successor Servicer with the consent of the Agent; in the event that the
Backup Servicer becomes the Successor Servicer, the Backup Servicer shall
solicit three bids, with a copy to the Borrower and the Agent, from not less
than three entities experienced in the servicing of loans similar to the Loans
and that are not Affiliates of the Backup Servicer, the Servicer or the
Borrower, and the Servicing Fee shall be equal to the average of the fees
proposed as determined by the Backup Servicer with the consent of the Agent (the
“Market Servicing Fee”).

ARTICLE VIII

SECURITY INTEREST

      Section 8.1 Grant of Security Interest.

(a) The parties hereto intend that this Agreement constitute a security
agreement and the transactions effected hereby constitute secured loans by the
Secured Parties to the Borrower under Applicable Law. For such purpose, the
Borrower hereby Grants as of the Closing Date to the Trustee, on behalf of the
Secured Parties, a lien and continuing security interest in all of the
Borrower’s right, title and interest in, to and under (but none of the
obligations under) all Collateral (including any Hedging Agreements), whether
now existing or hereafter arising or acquired by the Borrower, and wherever the
same may be located, to secure the prompt, complete and indefeasible payment and
performance in full when due, whether by lapse of time, acceleration or
otherwise, of the Obligations of the Borrower owed to the Secured Parties. The
Grant of a security interest under this Section 8.1 does not constitute and is
not intended to result in a creation or an assumption by the Trustee, the Agent
or any of the other Secured Parties of any obligation of the Borrower or any
other Person in connection with any or all of the Collateral or under any
agreement or instrument relating thereto. Anything herein to the contrary
notwithstanding, (a) the Originator and the Borrower shall remain liable under
the Transferred Loans and related Collateral to the extent set forth therein to
perform all of their respective duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Trustee on behalf of the Secured Parties or the Agent, as agent for the Secured
Parties, of any of its rights in the Collateral shall not release the Originator
and the Borrower from any of their respective duties or obligations under the
Transferred Loans and other Collateral, and (c) none of the Trustee, the Agent
nor any other Secured Party shall have any obligations or liability under the
Loans and other Collateral by reason of this Agreement, nor shall the Trustee,
the Agent or any other Secured Party be obligated to perform any of the
obligations or duties of the Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.

(b) The Borrower, the Trustee and the Agent, on behalf of the Secured Parties,
hereby acknowledge and agree that the security interest Granted hereby in the
Collateral constitutes continuing collateral security for all of the
Obligations, whether now existing or hereafter arising.

      Section 8.2 Release of Lien on Loans.

If (a) there is no Overcollateralization Shortfall, and (b) no Termination Event
or Unmatured Termination Event has occurred and is continuing, at the same time
as (i) any Transferred Loan in the Collateral expires by its terms and all
amounts in respect thereof have been paid in full by the related Obligor and
deposited in the Collection Account, (ii) any Transferred Loan becomes a Prepaid
Loan and all amounts in respect thereof have been paid in full by the related
Obligor and deposited in the Collection Account, (iii) any Transferred Loan is
replaced in accordance with Section 2.18(a), (iv) any Transferred Loan is
repurchased in accordance with Section 2.18(b), (v) any Transferred Loan is
subject to a Lien Release Dividend in accordance with Section 2.16, or (vi) this
Agreement terminates in accordance with Section 12.6, the Trustee, on behalf of
the Secured Parties, will be deemed to automatically release its interest in
such Loan without representation or warranty express or implied. In connection
with any such prepayment, release or substitution, the Trustee, on behalf of the
Secured Parties, will, after the deposit by the Servicer of the Proceeds of such
event into the Collection Account, at the sole expense of the Servicer, execute
and deliver to the Servicer any assignments, bills of sale, termination
statements and any other releases and instruments as the Servicer may reasonably
request in order to effect the release and transfer the Related Property if such
Related Property is not also serving as Collateral to secure the repayment of
another Transferred Loan; provided, that, the Trustee on behalf of the Secured
Parties will make no representation or warranty, express or implied, with
respect to any such Related Property in connection with such prepayment, release
or substitution. Nothing in this Section 8.2 shall diminish the Servicer’s
obligations pursuant to Section 7.6 with respect to the Proceeds of any such
sale.

      Section 8.3   [Reserved].
Section 8.4
  Further Assurances.
 
   

The provisions of Section 12.12 shall apply to the security interest granted
under Section 8.1 as well as to the Advances hereunder.

      Section 8.5 Remedies.

Upon the occurrence of a Termination Event, the Trustee, on behalf of the
Secured Parties, the Agent and other Secured Parties shall have, with respect to
the Collateral granted pursuant to Section 8.1, and in addition to all other
rights and remedies available to the Trustee on behalf of the Secured Parties,
the Agent and the other Secured Parties under this Agreement or other Applicable
Law, all rights and remedies of a secured party upon default under the UCC.

      Section 8.6 Waiver of Certain Laws.

Each of the Borrower and the Servicer agrees, to the full extent that it may
lawfully so agree, that neither it nor anyone claiming through or under it will
set up, claim or seek to take advantage of any appraisement, valuation, stay,
extension or redemption law now or hereafter in force in any locality where any
Collateral may be situated in order to prevent, hinder or delay the enforcement
or foreclosure of this Agreement, or the absolute sale of any of the Collateral
or any part thereof, or the final and absolute putting into possession thereof,
immediately after such sale, of the Secured Parties thereof, and each of the
Borrower and the Servicer, for itself and all who may at any time claim through
or under it, hereby waives, to the full extent that it may be lawful so to do,
the benefit of all such laws, and any and all right to have any of the
properties or assets constituting the Collateral marshaled upon any such sale,
and agrees that the Trustee, on behalf of the Secured Parties, the Agent on its
behalf or any court having jurisdiction to foreclose the security interests
granted in this Agreement may sell the Collateral as an entirety or in such
parcels as the Trustee on behalf of the Secured Parties, the Agent or such court
may determine.

      Section 8.7 Power of Attorney.

Each of the Borrower and the Servicer, upon the occurrence and during the
continuance of a Termination Event, hereby irrevocably appoints the Trustee on
behalf of the Secured Parties its true and lawful attorney (with full power of
substitution) in its name, place and stead and at its expense, in connection
with the enforcement of the rights and remedies provided for in this Agreement,
including without limitation the following powers: (a) to give any necessary
receipts or acquittance for amounts collected or received hereunder, (b) to make
all necessary transfers of the Collateral in connection with any such sale or
other disposition made pursuant hereto, (c) to execute and deliver for value all
necessary or appropriate bills of sale, assignments and other instruments in
connection with any such sale or other disposition, the Borrower and the
Servicer hereby ratifying and confirming all that such attorney (or any
substitute) shall lawfully do hereunder and pursuant hereto, and (d) to sign any
agreements, orders or other documents in connection with or pursuant to any
Transaction Document or Hedging Agreement. Nevertheless, if so requested by the
Trustee, the Borrower shall ratify and confirm any such sale or other
disposition by executing and delivering to the Trustee and the Agent all proper
bills of sale, assignments, releases and other instruments as may be designated
in any such request. The appointment by each of the Servicer and the Borrower of
the Trustee on behalf of the Secured Parties as its attorney-in-fact shall be
evidenced by its execution and delivery of a Power of Attorney substantially in
the form of Exhibit Q-1 and Q-2, respectively.

ARTICLE IX

TERMINATION EVENTS

      Section 9.1 Termination Events.

If any of the following events (each, a “Termination Event”) shall occur and be
continuing:

(a) the Borrower or the Servicer shall default in the payment of any amount
required to be made under the terms of this Agreement; or

(b) (i) the Borrower shall fail to perform or observe in any material respect
any other covenant or other agreement of the Borrower set forth in this
Agreement and any other Transaction Document to which it is a party, or (ii) the
Originator shall fail to perform or observe in any material respect any term,
covenant or agreement of the Originator set forth in any other Transaction
Document to which it is a party, in each case when such failure continues
unremedied for more than 20 days after written notice thereof shall have been
given by the Agent or any Secured Party to such Person; or

(c) an Insolvency Event shall occur with respect to the Borrower or the
Originator; or

(d) a Servicer Termination Event occurs; or

(e) any representation or warranty made or deemed made hereunder shall prove to
be incorrect as of the time when the same shall have been made, and such
incorrect representation or warranty shall not have been eliminated or otherwise
cured within a period of 20 days after written notice thereof shall have been
given by the Agent or any Secured Party to the Borrower; or

(f) the amount of Advances Outstanding shall exceed the Maximum Availability,
for more than three consecutive Business Days; or

(g) an Overcollateralization Shortfall exists and continues unremedied for a
period of three Business Days; or

(h) a Required Equity Shortfall exists and continues unremedied for a period of
three Business Days; or

(i) the Borrower or the Originator agrees or consents to, or otherwise permits
any amendment, modification, change, supplement or rescission of or to the
Credit and Collection Policy in whole or in part that could have a material
adverse effect upon the Loans or the interests of the Lenders without the prior
written consent of the Agent and each Lender; or

(j) any Change in Control of the Borrower or Originator occurs; or

(k) on each day during a period of five consecutive days, either (i) the
aggregate Hedge Notional Amount is less than the product of the Hedge Percentage
on such day and the Hedge Amount on that day, or (ii) any Hedge Transaction
fails to meet the requirements set forth in subsection 5.2(a); or

(l) the Trustee on behalf of the Secured Parties, shall fail for any reason to
have a valid and perfected first priority security interest in any of the
Collateral; or

(m) the Rolling Three-Month Portfolio Yield does not equal or exceed 5.0% and
such failure continues for a period of 15 consecutive days; or

(n) the Rolling Three-Month Default Ratio shall exceed the percentage equivalent
of a fraction, the numerator of which is $22,600,000 and the denominator of
which is the Aggregate Outstanding Loan Balance; or

(o) the Rolling Three-Month Charged-Off Ratio shall exceed the percentage
equivalent of a fraction, the numerator of which is $15,100,000 and the
denominator of which is the Aggregate Outstanding Loan Balance; or

(p) the Rolling Twelve-Month Portfolio Charged-Off Ratio shall exceed 15.0%; or

(q) both Rich Buckanavage and Tim Hassler shall cease to be employed by the
Borrower or Originator in the capacity as executive officers thereof; or

(r) the Borrower or the Originator defaults in making any payment required to be
made with respect to any material recourse debt or other obligation to which
either is a party and such default is not cured within the relevant cure period
or any event or condition shall occur or exist that would cause or permit the
acceleration of such recourse debt or other obligation, whether or not such
event or condition has been waived or any such recourse debt or other obligation
shall be declared to be due and payable or required to be prepaid (other than by
scheduled payment) prior to maturity; or

(s) (i) a final judgment for the payment of money in excess of 10% of the
Tangible Net Worth of the Originator shall have been rendered against the
Originator or $100,000 against the Borrower by a court of competent jurisdiction
and, if such judgment relates to the Originator, the Originator shall not have
either: (1) discharged or provided for the discharge of such judgment in
accordance with its terms, or (2) perfected a timely appeal of such judgment and
caused the execution thereof to be stayed (by supersedes or otherwise during the
pendency of such appeal or (ii) the Originator or the Borrower, as the case may
be, shall have made payments of amounts in excess of $1,000,000 or $100,000,
respectively, in settlement of any litigation; or

(t) the Borrower shall become required to register as an “investment company”
under the 1940 Act or the arrangements contemplated by the Transaction Documents
shall require registration as an “investment company” within the meaning of the
1940 Act or any rules, regulations or orders issued by the SEC thereunder; or

(u) the business and other activities of the Borrower or the Originator,
including but not limited to, the acceptance of the Advances by the Borrower
made by the Lenders, the application and use of the proceeds thereof by the
Borrower and the consummation and conduct of the transactions contemplated by
the Transaction Documents to which the Borrower or the Originator is a party
result in a violation by the Originator, the Borrower, or any other person or
entity of the 1940 Act or the rules and regulations promulgated thereunder; or

(v) a Material Adverse Change in the operations of the Originator, the Servicer
or the Borrower shall occur; or

(w) a change in any binding law or any rule or regulation having the force of
law shall occur, which would cause the legal conclusions made in the true sale,
non-consolidation and perfection opinions delivered in connection with the
Transaction Documents to be incorrect; or

(x) the Borrower or its Affiliates shall enter into a binding engagement letter
or similar letter of intent with any third party contemplating a structured
financing transaction including the Collateral or assets comparable to the Loans
included in the Collateral as of any date prior to the date on which the
Borrower or its Affiliates shall have consummated (or irrevocably committed to
consummate) one or more structured financing transactions in which BMO or an
Affiliate thereof shall act as administrative agent or sole or lead initial
purchaser (or in a comparable capacity) representing an aggregate notional
amount of at least $250,000,000, if BMO shall have agreed to negotiate in good
faith to offer to the Borrower or its affiliates substantially similar terms for
a structured financing transaction comparable to the financing contemplated by
such engagement letter or letter of intent (or similar agreement or
undertaking).

      Section 9.2 Remedies.

(a) Upon the occurrence of a Termination Event, the Agent may, by notice to the
Borrower, declare the Termination Date to have occurred, without demand, protest
or future notice of any kind, all of which are hereby expressly waived by the
Borrower, and all Obligations owing by the Borrower under this Agreement shall
be accelerated and become immediately due and payable; provided, that, in the
event that the Termination Event described in Section 9.1(c) herein has
occurred, the Termination Date shall automatically occur, without demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.

(b) Upon any such declaration or automatic occurrence of the Termination Date,
no Advances will be made, and the Agent and the other Secured Parties shall
have, in addition to all other rights and remedies under this Agreement or
otherwise, all rights and remedies provided under the UCC of each applicable
jurisdiction and other Applicable Laws, including the right to sell the
Collateral, which rights and remedies shall be cumulative.

(c) At any time on and after the Termination Date, the Borrower and the Servicer
hereby agree that they will, at the Servicer’s expense and upon request of the
Trustee, or the Agent on its behalf, forthwith, (i) assemble all or any part of
the Collateral as directed by the Trustee, or the Agent on its behalf, and make
the same available to the Trustee, or the Agent on its behalf, at a place to be
designated by the Trustee, or the Agent on its behalf, and (ii) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at a public or private sale, at any of the Agent’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Agent may deem commercially reasonable. The Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten days’ notice to the
Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Trustee
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Trustee, if so requested by the Agent, shall adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. All cash Proceeds received by the
Trustee in respect of any sale of, collection from, or other realization upon,
all or any part of the Collateral (after payment of any amounts incurred by the
Trustee or any of the Secured Parties in connection with such sale) shall be
deposited into the Collection Account and to be applied against all or any part
of the Obligations pursuant to Section 2.09(b) or otherwise in such order as the
Trustee shall elect in its discretion.

(d) If the Trustee, or the Agent on its behalf, proposes to sell the Collateral
or any part thereof in one or more parcels at a public or private sale, the
Borrower shall have the right of first refusal to repurchase the Collateral, in
whole but not in part, prior to such sale at a price not less than the
Obligations as of the date of such proposed repurchase. The aforementioned
rights and remedies shall be without limitation, and shall be in addition to all
other rights and remedies of the Agent and the Secured Parties otherwise
available under any provision of this Agreement by operation of law, at equity
or otherwise, each of which are expressly preserved.

ARTICLE X

INDEMNIFICATION

      Section 10.1 Indemnities by the Borrower.

(a) Without limiting any other rights that any such Person may have hereunder or
under Applicable Law, the Borrower hereby agrees to indemnify the Agent, the
Backup Servicer, the Trustee, any other Secured Party or its assignee and each
of their respective Affiliates and officers, directors, employees and agents
thereof (collectively, the “Indemnified Parties”), forthwith on demand, from and
against any and all damages, losses, claims, liabilities and related costs and
expenses, including reasonable attorneys’ fees and disbursements (all of the
foregoing being collectively referred to as “Indemnified Amounts”) awarded
against or incurred by, any such Indemnified Party or other non-monetary damages
of any such Indemnified Party any of them arising out of or as a result of this
Agreement, excluding, however, (a) Indemnified Amounts to the extent resulting
from gross negligence or willful misconduct on the part of any Indemnified
Party, and (b) under any Federal, state or local income or franchise taxes or
any other Tax imposed on or measured by income (or any interest or penalties
with respect thereto or arising from a failure to comply therewith) required to
be paid by such Indemnified Party in connection herewith to any taxing
authority. The provisions of this indemnity shall run directly to and be
enforceable by the applicable Indemnified Party subject to the limitations
hereof. If the Borrower has made any indemnity payment pursuant to this Section
10.1 and such payment fully indemnified the recipient thereof and the recipient
thereafter collects any payments from others in respect of such Indemnified
Amounts, the recipient shall repay to the Borrower an amount equal to the amount
it has collected from others in respect of such indemnified amounts. Without
limiting the foregoing, the Borrower shall indemnify the Indemnified Parties for
Indemnified Amounts relating to or resulting from:

(i) any Transferred Loan treated as or represented by the Borrower to be an
Eligible Loan that is not at the applicable time an Eligible Loan;

(ii) reliance on any representation or warranty made or deemed made by the
Borrower, the Servicer or any of their respective officers under or in
connection with this Agreement, which shall have been false or incorrect in any
material respect when made or deemed made or delivered;

(iii) the failure by the Borrower or the Servicer to comply with any term,
provision or covenant contained in this Agreement or any agreement executed in
connection with this Agreement, or with any Applicable Law with respect to any
Transferred Loan comprising a portion of the Collateral, or the nonconformity of
any Transferred Loan, the Related Property with any such Applicable Law or any
failure by the Originator, the Borrower or any Affiliate thereof to perform its
respective duties under the Transferred Loans included as a part of the
Collateral;

(iv) the failure to vest and maintain vested in the Trustee on behalf of the
Secured Parties a first priority perfected security interest in the Collateral;

(v) the failure to file, or any delay in filing, financing statements or other
similar instruments or documents under the UCC of any applicable jurisdiction or
other Applicable Laws with respect to any Collateral whether at the time of any
Advance or at any subsequent time and as required by the Transaction Documents;

(vi) any dispute, claim, offset or defense (other than the discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Transferred Loan
included as part of the Collateral that is, or is purported to be, an Eligible
Loan (including, without limitation, a defense based on the Transferred Loan not
being a legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms);

(vii) any failure of the Borrower or the Servicer (if the Originator or one of
its Affiliates) to perform its duties or obligations in accordance with the
provisions of this Agreement or any failure by the Originator, the Borrower or
any Affiliate thereof to perform its respective duties under the Transferred
Loans;

(viii) any products liability claim or environmental liability claim or personal
injury or property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with the Related Property,
merchandise or services that are the subject of any Transferred Loan included as
part of the Collateral or the Related Property included as part of the
Collateral;

(ix) the failure by the Borrower to pay when due any Taxes for which the
Borrower is liable, including without limitation, sales, excise or personal
property taxes payable in connection with the Collateral;

(x) any repayment by the Agent or another Secured Party of any amount previously
distributed in reduction of Advances Outstanding or payment of Interest or any
other amount due hereunder or under any Hedging Agreement, in each case which
amount the Agent or another Secured Party believes in good faith is required to
be repaid;

(xi) any investigation, litigation or proceeding related to this Agreement or
the use of proceeds of Advances or in respect of any Transferred Loan included
as part of the Collateral or the Related Property included as part of the
Collateral;

(xii) any failure by the Borrower to give reasonably equivalent value to the
Originator in consideration for the transfer by the Originator to the Borrower
of any Transferred Loan or the Related Property or any attempt by any Person to
void or otherwise avoid any such transfer under any statutory provision or
common law or equitable action, including, without limitation, any provision of
the Bankruptcy Code; or

(xiii) the failure of the Borrower, the Originator or any of their respective
agents or representatives to remit to the Servicer or the Agent, Collections on
the Collateral remitted to the Borrower or any such agent or representative in
accordance with the terms hereof or the commingling by the Borrower or any
Affiliate of any collections.

(b) Any amounts subject to the indemnification provisions of this Section 10.1
shall be paid by the Borrower to the applicable Indemnified Party within two
(2) Business Days following such Person’s demand therefor.

(c) If for any reason the indemnification provided above in this Section 10.1 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then the Borrower, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and the Borrower, on
the other hand but also the relative fault of such Indemnified Party as well as
any other relevant equitable considerations.

(d) The obligations of the Borrower under this Section 10.1 shall survive the
removal of the Agent, the Backup Servicer or the Trustee and the execution,
delivery, performance and termination of this Agreement for a period of three
years following the Termination Date, regardless of any investigation made by
the Lenders or the Agent.

(e) The parties hereto agree that the provisions of this Section 10.1 shall not
be interpreted to provide recourse to the Borrower against loss by reason of the
bankruptcy, insolvency or lack of creditworthiness of an Obligor on any
Transferred Loan.

      Section 10.2 Indemnities by the Servicer.

(a) Without limiting any other rights that any such Person may have hereunder or
under Applicable Law, the Servicer hereby agrees to indemnify each Indemnified
Party, forthwith on demand, from and against any and all Indemnified Amounts
awarded against or incurred by any such Indemnified Party by reason of any acts,
omissions or alleged acts or omissions of the Servicer, including, but not
limited to (i) any representation or warranty made by the Servicer under or in
connection with any Transaction Documents to which it is a party, any Monthly
Report, Servicer’s Certificate or any other information or report delivered by
or on behalf of the Servicer pursuant hereto, which shall have been false,
incorrect or misleading in any material respect when made or deemed made,
(ii) the failure by the Servicer to comply with any Applicable Law, (iii) the
failure of the Servicer to comply with its duties or obligations in accordance
with the Agreement, or (iv) any litigation, proceedings or investigation against
the Servicer, excluding, however, (a) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, and (b) under any Federal, state or local income or franchise
taxes or any other Tax imposed on or measured by income (or any interest or
penalties with respect thereto or arising from a failure to comply therewith)
required to be paid by such Indemnified Party in connection herewith to any
taxing authority. The provisions of this indemnity shall run directly to and be
enforceable by the applicable Indemnified Party subject to the limitations
hereof. If the Servicer has made any indemnity payment pursuant to this Section
10.2 and such payment fully indemnified the recipient thereof and the recipient
thereafter collects any payments from others in respect of such Indemnified
Amounts, the recipient shall repay to the Servicer an amount equal to the amount
it has collected from others in respect of such indemnified amounts.

(b) Any amounts subject to the indemnification provisions of this Section 10.2
shall be paid by the Servicer within two Business Days following such Person’s
demand therefor.

(c) If for any reason the indemnification provided above in this Section 10.2 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then Servicer shall contribute to the amount paid or payable to
such Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party on the one hand and Servicer on the other
hand but also the relative fault of such Indemnified Party as well as any other
relevant equitable considerations.

(d) The obligations of the Servicer under this Section 10.2 shall survive the
resignation or removal of the Agent, the Backup Servicer or the Trustee and the
execution, delivery, performance and termination of this Agreement for a period
of three years following the Termination Date, regardless of any investigation
made by the Conduit Lender or the Agent.

(e) The parties hereto agree that the provisions of this Section 10.2 shall not
be interpreted to provide recourse to the Servicer against loss by reason of the
bankruptcy or insolvency (or other credit condition) of, or default by, related
Obligor on, any Loan.

(f) Any indemnification pursuant to this Section 10.2 shall not be payable from
the Collateral.

ARTICLE XI

THE AGENT

      Section 11.1 Authorization and Action.

Each Lender and each other Secured Party hereby designates and appoints BMO as
the Agent hereunder, and authorizes the Agent to take such actions as agent on
its behalf and to exercise such powers as are delegated to the Agent by the
terms of this Agreement together with such powers as are reasonably incidental
thereto. The Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender or
other Secured Party, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities on the part of the Agent shall be read into
this Agreement or otherwise exist for the Agent. In performing its functions and
duties hereunder, the Agent shall act solely as agent for the Lenders and the
other Secured Parties and does not assume nor shall be deemed to have assumed
any obligation or relationship of trust or agency with or for the Borrower or
any of its successors or assigns. The Agent shall not be required to take any
action that exposes the Agent to personal liability or that is contrary to this
Agreement, any other Transaction Document or Applicable Law. The appointment and
authority of the Agent hereunder shall terminate at the indefeasible payment in
full of the Obligations.

      Section 11.2 Delegation of Duties.

The Agent may execute any of its duties under this Agreement by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.

      Section 11.3 Exculpatory Provisions.

Neither the Agent nor any of its directors, officers, agents or employees shall
be (i) liable for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement (except for its, their or such
Person’s own gross negligence or willful misconduct or, in the case of the
Agent, the breach of its obligations expressly set forth in this Agreement), or
(ii) responsible in any manner to any Lender or the other Secured Parties for
any recitals, statements, representations or warranties made by the Borrower
contained in Article IV of, any other Transaction Document or in any
certificate, report, statement or other document referred to or provided for in,
or received under or in connection with, this Agreement or any other Transaction
Document, for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other document furnished in connection
herewith, for any failure of the Borrower to perform its obligations hereunder,
or for the satisfaction of any condition specified in Article III. The Agent
shall not be under any obligation to any Lender or the other Secured Parties to
ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement or any
other Transaction Document, or to inspect the properties, books or records of
the Borrower. The Agent shall not be deemed to have knowledge of any Unmatured
Termination Event, Termination Event or Servicer Termination Event unless the
Agent has received notice from the Borrower or a Secured Party.

      Section 11.4 Reliance.

The Agent shall in all cases be entitled to rely, and shall be fully protected
in relying, upon any document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrower), independent accountants and other experts selected by
the Agent. The Agent shall in all cases be fully justified in failing or
refusing to take any action under this Agreement or any other document furnished
in connection herewith unless it shall first receive such advice or concurrence
of each Secured Party, as it deems appropriate, or it shall first be indemnified
to its satisfaction by each Secured Party, provided, that, unless and until the
Agent shall have received such advice, the Agent may take or refrain from taking
any action as the Agent shall deem advisable and in the best interests of the
Secured Parties. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, in accordance with a request of a Secured Party, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon such Secured Party.

      Section 11.5 Non-Reliance on Agent.

Each Lender represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of the Borrower and made its own decision
to enter into this Agreement, the other Transaction Documents and all other
documents related hereto or thereto. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them as Agent under or in connection with this Agreement or
any of the other Transaction Documents, except for its or their own gross
negligence, bad faith or willful misconduct. Without limiting the foregoing, the
Agent: (i) may consult with legal counsel (including counsel for the Borrower or
the Originator), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation and shall not be responsible
for any statements, warranties or representations made in or in connection with
this Agreement; (iii) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
this Agreement or any of the other Transaction Documents on the part of the
Borrower, the Originator or the Servicer or to inspect the property (including
the books and records) of the Borrower, the Originator or the Servicer; (iv)
shall not be responsible for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any of the
other Transaction Documents or any other instrument or document furnished
pursuant hereto or thereto; and (v) shall incur no liability under or in respect
of this Agreement or any of the other Transaction Documents by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by facsimile) believed by it to be genuine and signed
or sent by the proper party or parties.

      Section 11.6 The Agent in its Individual Capacity.

The Agent and any of its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower or any Affiliate of
the Borrower as though the Agent were not the Agent hereunder. With respect to
the Advances made pursuant to this Agreement, the Agent and each of its
Affiliates shall have the same rights and powers under this Agreement as the
Lenders and may exercise the same as though it were not the Agent and in such
context the term “Lenders” shall include the Agent in its individual capacity.

      Section 11.7 Successor Agent.

The Agent may, upon five days’ notice to the Borrower and each Lender, and the
Agent will, upon the direction of the Required Lenders, resign as Agent. If the
Agent shall resign, then the Required Lenders, during such five (5) day period,
shall appoint a successor agent. If for any reason no successor Agent is
appointed by the Required Lenders during such five (5) day period, then
effective upon the expiration of such five (5) day period, the Borrower or the
Agent, as applicable, shall make all payments it otherwise would have made to
the Agent in respect of the Obligations or under any fee letter delivered in
connection herewith directly to the Lenders and for all purposes shall deal
directly with the Lenders. After any retiring Agent’s resignation hereunder as
Agent, the provisions of Article X and this Article XI shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Agent under this Agreement. Notwithstanding the resignation or removal of BMO as
the Agent, BMO, as the Hedge Counterparty, shall continue to be a Secured Party
hereunder.

      Section 11.8 Payments by the Agent.

Unless specifically allocated to a specific Lender pursuant to the terms of this
Agreement, all amounts received by the Agent on behalf of the Lenders shall be
paid by the Agent to the Lenders in accordance with their respective Pro Rata
Shares in the applicable Advances Outstanding, or if there are no Advances
Outstanding in accordance with their most recent Commitments, on the Business
Day received by the Agent, unless such amounts are received after 12:00 p.m.
(New York City time) on such Business Day, in which case the Agent shall use its
reasonable efforts to pay such amounts to each Lender on such Business Day, but,
in any event, shall pay such amounts to such Lender not later than the following
Business Day.

      Section 11.9 Indemnification of the Agent.

Each Lender agrees to indemnify the Agent (to the extent not reimbursed by the
Borrower or the Servicer), ratably in accordance its Pro Rata Share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or any of the
other Transaction Documents, or any action taken or omitted by the Agent
hereunder or thereunder; provided that the Lenders shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent’s
fraud, gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent, ratably in accordance with
its Pro Rata Share, promptly upon demand, for any out-of-pocket expenses
(including counsel fees) incurred by the Agent in connection with the
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Transaction
Documents, to the extent that such expenses are incurred in the interests of or
otherwise in respect of the Lenders, or the Lenders hereunder and/or thereunder
and to the extent that the Agent is not reimbursed for such expenses by the
Borrower or the Servicer.

ARTICLE XII

MISCELLANEOUS

      Section 12.1 Amendments and Waivers.

(a) Except as provided in this Section 12.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective without the
written agreement of the Borrower, the Agent, each Lender and the Servicer;
provided, that, any amendment of this Agreement that is solely for the purpose
of adding a Lender may be effected with the written consent of the Agent;
provided, further, that any amendment to this Agreement which would (i) reduce
or impair Collections or the payment of Interest or fees to any Lender,
(ii) modify any provisions of this Agreement relating to the timing of payments
required to be made by the Borrower or the application of the proceeds of such
payments, including, without limitation, any provisions of Section 2.8,
(iii) release any Collateral from the Lien of this Agreement (other than as
provided herein), or (iv) increase the Facility Amount, any Conduit Lender’s
Commitment or extend the Commitment Termination Date or (v) make any
modification to the definitions of “Advance”, “Advances Outstanding”, “Aggregate
Net Mark to Market Amount”, “Availability”, “Borrowing Base”, “Concentration
Limits”, “Eligible Loan”, “Eligible Obligor” “Facility Amount”, “Fair Market
Value”, “Maximum Availability”, “Required Equity Contribution”, “Required
Lenders” or “Termination Event” (each of the amendments described in clauses (i)
through (iv) of this proviso, a “Material Amendment”), shall not be effective
without the written agreement of the Borrower, the Agent, each Lender and the
Servicer. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

(b) No amendment, waiver or other modification (i) affecting the rights or
obligations of any Hedge Counterparty or (ii) having a material effect on the
rights or obligations of the Trustee or the Backup Servicer (including any
duties of the Servicer that the Backup Servicer would have to assume as
Successor Servicer) shall be effective against such Person without the written
agreement of such Person. The Borrower or the Servicer on its behalf will
deliver a copy of all waivers and amendments to the Trustee and the Backup
Servicer.

      Section 12.2 Notices, Etc.

All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or hand
delivered, as to each party hereto, at its address set forth on Annex A hereto
or specified in such party’s Assignment and Acceptance or at such other address
as shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, upon receipt, or
in the case of (a) notice by mail, five days after being deposited in the United
States mail, first class postage prepaid, (b) notice by telex, when telexed
against receipt of answer back, or (c) notice by facsimile copy, when verbal
communication of receipt is obtained, except that notices and communications
pursuant to Article XII shall not be effective until received with respect to
any notice sent by mail or telex.

      Section 12.3 Liabilities to Obligors.

No obligation or liability to any Obligor under any of the Transferred Loans is
intended to be assumed by the Agent and the other Secured Parties under or as a
result of this Agreement and the transactions contemplated hereby.

      Section 12.4 No Waiver, Rights and Remedies.

No failure on the part of the Agent or any other Secured Party or any assignee
of any Secured Party to exercise, and no delay in exercising, any right or
remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right. The rights and remedies
herein provided are cumulative and not exclusive of any rights and remedies
provided by law.

      Section 12.5 Binding Effect.

This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Agent, the Secured Parties, the Backup Servicer and their respective
successors and permitted assigns and, in addition, the provisions of
Section 2.8(a)(1)(i) and Section 2.8(b)(i) and (xii) shall inure to the benefit
of each Hedge Counterparty, whether or not that Hedge Counterparty is a Secured
Party.

      Section 12.6 Term of this Agreement.

This Agreement, including, without limitation, the Borrower’s obligation to
observe its covenants set forth in Article V and VI, and the Servicer’s
obligation to observe its covenants set forth in Article VII, shall remain in
full force and effect until the Collection Date; provided, however, that the
rights and remedies with respect to any breach of any representation and
warranty made or deemed made by the Borrower pursuant to Article IV and the
indemnification and payment provisions of Article X and the provisions of
Section 12.10 and Section 12.11 shall be continuing and shall survive any
termination of this Agreement. For the avoidance of doubt, amounts remaining on
deposit in the Reserve Account, the Collection Account, the Principal Collection
Account and the Interest Collection Account after the Collection Date shall be
the property of the Borrower.

      Section 12.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION
TO VENUE.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND THE HEDGE COUNTERPARTY
HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED
WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AND THE HEDGE
COUNTERPARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

      Section 12.8 WAIVER OF JURY TRIAL.

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO AND THE
HEDGE COUNTERPARTY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES
HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

      Section 12.9 Costs, Expenses and Taxes.

(a) In addition to the rights of indemnification granted to the Agent, the other
Secured Parties, the Backup Servicer and the Trustee and its or their Affiliates
and officers, directors, employees and agents thereof under Article X hereof,
the Borrower agrees to pay on demand all reasonable costs and expenses of the
Agent and the other Secured Parties incurred in connection with the preparation,
execution, delivery, administration including periodic auditing), amendment or
modification of, or any waiver or consent issued in connection with, this
Agreement and the other documents to be delivered hereunder or in connection
herewith, (including any Hedging Agreement) including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent and the
other Secured Parties with respect thereto and with respect to advising the
Agent and the other Secured Parties as to their respective rights and remedies
under this Agreement and the other documents to be delivered hereunder or in
connection herewith (including any Hedging Agreement) and all costs and
expenses, if any (including reasonable counsel fees and expenses), incurred by
the Agent or the other Secured Parties in connection with the enforcement of
this Agreement and the other documents to be delivered hereunder or in
connection herewith (including any Hedging Agreement).

(b) The Borrower shall pay on demand any and all stamp, sales, excise and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the other documents
to be delivered hereunder or any agreement or other document providing liquidity
support, credit enhancement or other similar support to any Lender in connection
with this Agreement or the funding or maintenance of Advances hereunder.

(c) The Borrower shall pay on demand all other costs, expenses and taxes
(excluding income taxes) (“Other Costs”), including, without limitation, all
reasonable costs and expenses incurred by the Agent in connection with periodic
audits of the Borrower’s or the Servicer’s books and records (subject to the
limitations set forth in Section 7.22), and the amount of any taxes and
insurance (to the extent that maintenance of insurance with respect to the
applicable Related Property would be commercially reasonable and consistent with
prudent servicing practices) due and unpaid by an Obligor with respect to any
Transferred Loan or Related Property.

      Section 12.10 No Proceedings.

(a) Each of the parties hereto (other than any Conduit Lender) and each Hedge
Counterparty hereby agrees that it will not institute against, or join any other
Person in instituting against, any Conduit Lender any Insolvency Proceeding so
long as any Commercial Paper Notes issued by any Conduit Lender shall be
outstanding and there shall not have elapsed two years and one day (or such
longer preference period as shall then be in effect) since the last day on which
any such Commercial Paper Notes shall have been outstanding.

(b) Each of the parties hereto (other than the Agent and the other Secured
Parties) hereby agrees that it will not institute against, or join any other
Person in instituting against the Borrower any Insolvency Proceeding so long as
there shall not have elapsed two years and one day (or such longer preference
period as shall then be in effect) since the Collection Date.

      Section 12.11 Recourse Against Certain Parties.

(a) No recourse under or with respect to any obligation, covenant or agreement
(including, without limitation, the payment of any fees or any other
obligations) of the Borrower, the Servicer, the Agent or any other Secured Party
as contained in this Agreement or any other agreement, instrument or document
entered into by it pursuant hereto or in connection herewith shall be had
against any Person or any manager or administrator of such Person or any
incorporator, affiliate, stockholder, officer, employee or director of such
Person or of the Borrower or of any such manager or administrator, as such, by
the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise.

(b) Notwithstanding anything in this Agreement or any other Transaction Document
to the contrary, no Conduit Lender shall have any obligation to pay any amount
required to be paid by it hereunder or thereunder in excess of any amount
available to such Conduit Lender after paying or making provision for the
payment of its Commercial Paper Notes. All payment obligations of any Conduit
Lender hereunder are contingent upon the availability of funds in excess of the
amounts necessary to pay Commercial Paper Notes; and each of the Borrower, the
Servicer, the Backup Servicer, the Trustee, the Agent and the other Secured
Parties agree that they shall not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation exceeds
the amount available to such Conduit Lender to pay such amounts after paying or
making provision for the payment of its Commercial Paper Notes.

(c) The provisions of this Section 12.11 shall survive the termination of this
Agreement.

      Section 12.12 Protection of Security Interest; Appointment of
Attorney-in-Fact.

(a) The Borrower shall, or shall cause the Servicer to, cause this Agreement,
all amendments hereto and/or all financing statements and continuation
statements and any other necessary documents covering the right, title and
interest of the Trustee, on behalf of for the Secured Parties, and of the
Secured Parties to the Collateral to be promptly recorded, registered and filed,
and at all time to be kept recorded, registered and filed, all in such manner
and in such places as may be required by law fully to preserve and protect the
right, title and interest of the Trustee, on behalf of the Secured Parties,
hereunder to all property comprising the Collateral. The Borrower shall deliver
or, shall cause the Servicer to deliver, to the Trustee (with a copy to the
Agent) file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Borrower and the Servicer shall cooperate
fully in connection with the obligations set forth above and will execute any
and all documents reasonably required to fulfill the intent of this
Section 12.12.

(b) The Borrower agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents, and take all actions, that
may reasonably be necessary or desirable, or that the Agent may reasonably
request, to perfect, protect or more fully evidence the security interest
Granted to the Trustee, on behalf of the Secured Parties, in the Collateral, or
to enable the Trustee, on behalf of the Secured Parties, the Agent or the
Secured Parties to exercise and enforce their rights and remedies hereunder.

(c) If the Borrower or the Servicer fails to perform any of its obligations
hereunder after five Business Days’ notice from the Trustee, on behalf of the
Secured Parties, the Agent or any other Secured Party, the Trustee, on behalf of
the Secured Parties, the Agent or any other Secured Party may (but shall not be
required to) perform, or cause performance of, such obligation; and the
Trustee’s, the Agent’s or such other Secured Party’s reasonable costs and
expenses incurred in connection therewith shall be payable by the Borrower (if
the Servicer that fails to so perform is the Borrower or an Affiliate thereof)
as provided in Article X, as applicable. The Borrower irrevocably authorizes the
Trustee and appoints the Trustee as its attorney-in-fact to act on behalf of the
Borrower, (i) to file financing statements necessary or desirable in either of
the Agent’s or the Trustee’s sole discretion to perfect and to maintain the
perfection and priority of the interest of the Secured Parties in the Collateral
and (ii) to file a carbon, photographic or other reproduction of this Agreement
or any financing statement with respect to the Collateral as a financing
statement in such offices as either of the Trustee or the Agent in its sole
discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Secured Parties in the
Collateral. This appointment is coupled with an interest and is irrevocable.

(d) Without limiting the generality of the foregoing, Borrower will, on or prior
to June 30 of each year unless the Collection Date shall have occurred, if
requested by the Agent in its reasonable discretion, deliver or cause to be
delivered to the Agent an Opinion of the Counsel for Borrower, in form and
substance reasonably satisfactory to the Agent, confirming and updating the
opinion delivered pursuant to Section 3.1 with respect to perfection and
otherwise to the effect that the Collateral hereunder continues to be subject to
a perfected security interest in favor of the Trustee on behalf of the Secured
Parties, subject to no other Liens of record except as provided herein or
otherwise permitted hereunder, which opinion may contain usual and customary
assumptions, limitations and exceptions.

      Section 12.13 Confidentiality.

(a) Each of the Agent, the Secured Parties, the Borrower and the Servicer shall
maintain and shall cause each of its employees and officers to maintain the
confidentiality of this Agreement and the other confidential proprietary
information with respect to the other parties hereto and their respective
businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except that
each such party and its officers and employees may (i) disclose such information
to its external accountants, investigators, auditors, attorneys, investors,
potential investors or other agents engaged by such party in connection with any
due diligence or comparable activities with respect to the transactions and
Collateral contemplated herein and the agents of such Persons, (ii) disclose any
information as required to be publicly filed with or furnished to the Securities
and Exchange Commission, or as required by Applicable Law, (iii) disclose the
existence of this Agreement, but not the financial terms thereof and
(iv) disclose the Agreement and such information in any suit, action, proceeding
or investigation (whether in law or in equity or pursuant to arbitration)
involving any of the Transaction Documents or any Hedging Agreement for the
purpose of defending itself, reducing its liability, or protecting or exercising
any of its claims, rights, remedies, or interests under or in connection with
any of the Transaction Documents or any Hedging Agreement.

(b) Anything herein to the contrary notwithstanding, the Borrower hereby
consents to the disclosure of any nonpublic information with respect to it for
use in connection with the transactions contemplated herein and in the
Transaction Documents (i) to the Agent or the Secured Parties by each other,
(ii) by the Agent or the other Secured Parties to any prospective or actual
Eligible Assignee or participant of any of them or (iii) by the Agent or the
Lenders to any rating agency, commercial paper dealer or provider of a surety,
guaranty or credit or liquidity enhancement to any Lender and to any officers,
directors, employees, outside accountants and attorneys of any of the foregoing,
provided each such Person is informed of the confidential nature of such
information and agree to be bound hereby. In addition, any Lender, the Agent and
the Hedge Counterparty may disclose any such nonpublic information pursuant to
any law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings.

(c) The Borrower and the Servicer each agrees that it shall not (and shall not
permit any of its Affiliates to) issue any news release or make any public
announcement pertaining to the transactions contemplated by this Agreement and
the Transaction Documents without the prior written consent of the Agent (which
consent shall not be unreasonably withheld) unless such news release or public
announcement is required by law, in which case the Borrower or the Servicer
shall consult with the Agent prior to the issuance of such news release or
public announcement. The Borrower and the Servicer each may, however, disclose
the general terms of the transactions contemplated by this Agreement and the
Transaction Documents to trade creditors, suppliers and other similarly situated
Persons so long as such disclosure is not in the form of a news release or
public announcement.

      Section 12.14 Third Party Beneficiaries.

Except as otherwise specifically provided herein, the parties hereto hereby
manifest their intent that no third party, other than the Hedge Counterparties,
shall be deemed a third party beneficiary of this Agreement, and specifically
that the Obligors are not third party beneficiaries of this Agreement.

      Section 12.15 Execution in Counterparts; Severability; Integration.

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby. This Agreement contains the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings other than any fee letter
delivered to the Agent and the Lenders.

      Section 12.16 Waiver of Setoff.

Each of the parties hereto hereby waives any right of setoff it may have or
which it may be entitled under this Agreement from time to time against any
Lender or its assets.

      Section 12.17 Assignments by the Lenders.

(a) With the prior written consent of the Borrower (which consent shall not be
unreasonably withheld), each Lender may at any time assign, or grant a security
interest or sell a participation interest in, any Advance (or portion thereof)
to any Person; provided, that, (i) no such consent of the Borrower shall be
required following the occurrence of a Termination Event, (ii) in the case of an
assignment of the Variable Funding Note with respect to any Lender, the assignee
(other than any assignee described in the following provision) executes and
delivers to the Servicer and the Agent a fully-executed Assignment and
Acceptance substantially in the form of Exhibit D hereto and a Transferee Letter
substantially in the form of Exhibit V hereto); and (iii) any Conduit Lender
shall not need prior consent to at any time assign, or grant a security interest
or sell a participation interest in, any Advance (or portion thereof) to a
Liquidity Bank or an Affiliate of the Agent. The Borrower shall not assign or
delegate, or grant any interest in, or permit any Lien to exist upon, any of the
Borrower’s rights, obligations or duties under this Agreement without the prior
written consent of the Agent, each Lender and the Hedge Counterparty.

      Section 12.18 Heading and Exhibits.

The headings of the various Articles and Sections herein are for purposes of
references only and shall not otherwise affect the meaning or interpretation of
any provision hereof. The schedules and exhibits attached hereto and referred to
herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.

      Section 12.19 Sharing of Payments on Transferred Loans Subject to the
Retained Interest Provisions.

(a) With respect to any Transferred Loan (including, without limitation, any
Revolving Loan) subject to the Retained Interest provisions of this Agreement,
the Borrower will own only the principal portion of such Transferred Loans
outstanding as of the applicable Cut-off Date. Principal Collections received by
the Servicer on any such Transferred Loan will be allocated first to the portion
of such Transferred Loan owned by the Borrower, until the principal amount of
such portion is reduced to zero, and then to the portion not owned by the
Borrower; provided, however, if a payment with respect to such Transferred Loan
is delinquent beyond any applicable grace period, then Principal Collections
received on the applicable Transferred Loan will be allocated between the
portion owned by the Borrower and the portion not owned by the Borrower, pro
rata based upon the outstanding principal amount of each such portion.

(b) With respect to any Transferred Loan (including, without limitation, any
Revolving Loan) subject to the Retained Interest provisions of this Agreement,
Interest Collections received by the Servicer on those Transferred Loans will be
allocated between the portion not owned by the Borrower and the portion owned by
the Borrower on a pro rata basis according to the outstanding principal amount
of each such portion.

(c) Notwithstanding the foregoing or anything to the contrary contained herein
or any Transaction Document, any payments made by any Hedge Counterparty
pursuant to the terms of the Hedge Agreements shall be solely for the benefit of
the Borrower, subject to the lien of the Trustee on behalf of the Secured
Parties, and shall not be subject to the pro rata sharing provisions of
Section 12.19(a). In furtherance of the foregoing clause of this paragraph, the
Originator hereby releases any right, title, or interest it may have in or to
any payment made or to be made at any time by any Hedge Counterparty pursuant to
the terms of any Hedge Agreement.

      Section 12.20 Non-Confidentiality of Tax Treatment.

All parties hereto agree that each of them and each of their employees,
representatives, and other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transaction
and all materials of any kind (including, without limitation, opinions or other
tax analyses) that are provided to any of them relating to such tax treatment
and tax structure. “Tax treatment” and “tax structure” shall have the same
meaning as such terms have for purposes of Treasury Regulation Section 1.6011-4;
provided, however, that with respect to any document or similar item that in
either case contains information concerning the tax treatment or tax structure
of the transaction as well as other information, the provisions of this Section
12.20 shall only apply to such portions of the document or similar item that
relate to the tax treatment or tax structure of the transactions contemplated
hereby.

      Section 12.21 Condition to Effectiveness.

All parties hereto agree that notwithstanding anything to the contrary contained
in this Agreement, this amendment and restatement of the Existing Agreement
shall not be effective if any fee due to be paid on or prior to the date hereof
pursuant to any Fee Letter has not been paid.

      Section 12.22 Lender Agents.

Each Lender Agent that is a party hereto shall be entitled to act on behalf of
its respective Lender in all matters which such Lender could or is entitled to
undertake pursuant to the terms of this Agreement, and shall be entitled to
exercise any of the rights and powers of such Lender to the same extent as such
Lender, including, without limitation, the right to receive any payments due to
such Lender hereunder, to exercise any consent rights on behalf of such Lender
and to receive any reports, notices and other information on behalf of such
Lender.

[The remainder of this page is intentionally left blank.]

3

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto, duly authorized, as of the date first above
written.

PATRIOT CAPITAL FUNDING LLC I, as the Borrower

By:
Name:      
Title:

By:
Name:      
Title:

PATRIOT CAPITAL FUNDING, INC., as the Originator and

the Servicer

By:
Name:      
Title:

By:
Name:      
Title:

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

4

FAIRWAY FINANCE COMPANY, LLC,

as a Conduit Lender

By:
Name:
Title:

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

5

BMO CAPITAL MARKETS CORP., as the Agent and a Lender Agent

By:
Name:
Title:

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

6

BRANCH BANKING AND TRUST COMPANY, as an Institutional Lender

By:
Name:
Title:

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

7

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Backup Servicer and as the Trustee

By:
Name:
Title:

8

Annex A

Addresses for Notices

The Borrower:

      Patriot Capital Funding LLC I
c/o Patriot Capital Funding, Inc.

274 Riverside Ave.
 
Westport, Connecticut 06880
Attention:Compliance Officer

Facsimile No.:
Confirmation No.:
  (203) 227-5257
(203) 227-7778 or (203) 429-2700

The Originator and Servicer:

      Patriot Capital Funding, Inc.

274 Riverside Ave.
 
Westport, Connecticut 06880
Attention:Compliance Officer

Facsimile No.:
Confirmation No.:
  (203) 227-5257
(203) 227-7778 or (203) 429-2700

Conduit Lender(s):

          Fairway Finance Company, LLC
c/o Lord Securities Corporation
48 Wall Street, 27th Floor

New York, New York
    10005  
Attention:
        Facsimile No.(212) 346-9012

Telephone No.
    (212) 346-9000  

With a copy to:

          c/o BMO Capital Markets Corp.
115 South LaSalle Street

13th Floor West Chicago, Illinois
    60603   Attention:Keith Niebrugge
Facsimile No.(312) 293-4908

Telephone No.
    (312) 461-3134  

Institutional Lender(s):

Branch Banking and Trust Company
200 West Second Street, 16th Floor
Winston-Salem, North Carolina 27101
Attention: Beth Cook
Facsimile No.: (336) 733-2740
Telephone No. (336) 733-2726

The Agent:

          BMO Capital Markets Corp.
115 South LaSalle Street

13th Floor West
        Chicago, Illinois 60603

Attention:
  Keith Niebrugge
Facsimile No.
    (312) 293-4908  

The Backup Servicer and Trustee:

          Wells Fargo Bank, National Association

MAC N9311-161
        Sixth Street and Marquette Avenue
Minneapolis, MN 55479
Attention:Corporate Trust Services
Asset-Backed Administration

Facsimile No.:
    (612) 667-3539  

Location of Loan Files:

Wells Fargo Bank, National Association
ABS Custody Vault
1055 10th Avenue SE
MAC N9401-011
Minneapolis, MN 55414

9

Annex B

Commitments

          Lenders   Commitment
Fairway Finance Company, LLC
  $ 175,000,000  
Branch Banking and Trust Company
  $ 50,000,000  

10