Exhibit 10.1

 

 

[FORM OF CREDIT AND SECURITY AGREEMENT]

 

CREDIT AND SECURITY AGREEMENT

 

among

 

TICC FUNDING, LLC,
as Borrower,

 

THE LENDERS FROM TIME TO TIME PARTIES HERETO,

 

CITIBANK, N.A.,
as Administrative Agent,

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,
as Collateral Agent and as Custodian

 

and

 

TICC CAPITAL CORP.,
as Collateral Manager

 

 

 

 

 

Dated as of October 27, 2014

 

 

 

 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION; COMPUTATIONS 1     Section
1.01.   Definitions 1 Section 1.02.   Rules of Construction 42 Section
1.03.   Computation of Time Periods 42 Section 1.04.   Collateral Value
Calculation Procedures 43     ARTICLE II ADVANCES 44     Section
2.01.   Revolving Credit Facility; Approval Requests 44 Section 2.02.   Making
of the Advances 45 Section 2.03.   Evidence of Indebtedness; Notes 45 Section
2.04.   Payment of Principal and Interest 46 Section 2.05.   Prepayment of
Advances 47 Section 2.06.   Changes of Commitments 47 Section 2.07.   Maximum
Lawful Rate 48 Section 2.08.   Several Obligations 48 Section 2.09.   Increased
Costs 48 Section 2.10.   Compensation; Breakage Payments 49 Section
2.11.   Illegality; Inability to Determine Rates 50 Section 2.12.   Fees 50
Section 2.13.   Rescission or Return of Payment 51 Section 2.14.   Post-Default
Interest 51 Section 2.15.   Payments Generally 51 Section 2.16.   Replacement of
Lenders 51 Section 2.17.   Defaulting Lenders. 52     ARTICLE III CONDITIONS
PRECEDENT 53     Section 3.01.   Conditions Precedent to Initial Advances 53
Section 3.02.   Conditions Precedent to Each Borrowing 55     ARTICLE IV
REPRESENTATIONS AND WARRANTIES 56     Section 4.01.   Representations and
Warranties of the Borrower 56 Section 4.02.   Representations and Warranties of
the Collateral Manager 59     ARTICLE V COVENANTS 61     Section
5.01.   Affirmative Covenants of the Borrower 61 Section 5.02.   Negative
Covenants of the Borrower 64 Section 5.03.   Affirmative Covenants of the
Collateral Manager 67 Section 5.04.   Negative Covenant of the Collateral 
Manager 68 Section 5.05.   Certain Undertakings Relating to Separateness 68    
ARTICLE VI EVENTS OF DEFAULT 70     Section 6.01.   Events of Default 70 Section
6.02.   Remedies. 72     ARTICLE VII PLEDGE OF COLLATERAL; RIGHTS OF THE
COLLATERAL AGENT 73     Section 7.01.   Grant of Security 73 Section
7.02.   Release of Security Interest 74

 

i

 

 

TABLE OF CONTENTS
(continued)

 

Page

 

Section 7.03.   Rights and Remedies 74 Section 7.04.   Remedies Cumulative 75
Section 7.05.   Related Documents 75 Section 7.06.   Borrower Remains Liable 76
Section 7.07.   Protection of Collateral 76     ARTICLE VIII ACCOUNTS,
ACCOUNTINGS AND RELEASES 77     Section 8.01.   Collection of Money 77 Section
8.02.   Collection Account 77 Section 8.03.   Payment Account 78 Section
8.04.   The Unfunded Reserve Account; Fundings 78 Section 8.05.   The Cash
Diversion Reserve Account 79 Section 8.06.   Reinvestment of Funds in Covered
Accounts; Reports by Collateral Agent 80 Section 8.07.   Accountings 80 Section
8.08.   Release of Collateral 81 Section 8.09.   Reports by Independent
Accountants 82     ARTICLE IX APPLICATION OF FUNDS 83     Section
9.01.   Disbursements of Funds from Payment Account 83     ARTICLE X SALE OF
COLLATERAL LOANS; PURCHASE OF ADDITIONAL COLLATERAL LOANS 85     Section
10.01.   Sales of Collateral Loans 85 Section 10.02.   Purchase of Additional
Collateral Loans 87 Section 10.03.   Conditions Applicable to All Sale and
Purchase Transactions 87 Section 10.04.   Additional Equity Contributions 87
Section 10.05.   Transfer of Warranty Collateral Loans. 88     ARTICLE XI THE
AGENTS 88     Section 11.01.   Authorization and Action 88 Section
11.02.   Delegation of Duties 89 Section 11.03.   Agents’ Reliance, Etc. 89
Section 11.04.   Indemnification 91 Section 11.05.   Successor Agents 91    
ARTICLE XII MISCELLANEOUS 92     Section 12.01.   No Waiver; Modifications in
Writing 92 Section 12.02.   Notices, Etc. 93 Section 12.03.   Taxes 93 Section
12.04.   Costs and Expenses; Indemnification 96 Section 12.05.   Execution in
Counterparts 98 Section 12.06.   Assignability 98 Section 12.07.   Governing Law
100 Section 12.08.   Severability of Provisions 100 Section
12.09.   Confidentiality 100 Section 12.10.   Merger 101 Section
12.11.   Survival 101 Section 12.12.   Submission to Jurisdiction; Waivers; Etc.
101

 

ii

 

 

TABLE OF CONTENTS
(continued)

 

Page

 

Section 12.13.   IMPORTANT WAIVERS 102 Section 12.14.   PATRIOT Act Notice 103
Section 12.15.   Legal Holidays 103 Section 12.16.   Non-Petition 103 Section
12.17.   Waiver of Setoff 104 Section 12.18.   Option to Acquire Rating 104    
ARTICLE XIII 104     CUSTODIAN 104     Section 13.01.   Appointment of Custodian
104 Section 13.02.   Duties of Custodian 104 Section 13.03.   Delivery of
Collateral Loans to Custodian. 105 Section 13.04.   Release of Documents/Control
By Agents. 106 Section 13.05.   Records. 106 Section 13.06.   Reporting 106
Section 13.07.   Certain General Terms 106 Section 13.08.   Compensation of
Custodian 108 Section 13.09.   Responsibility of Custodian 108     ARTICLE XIV
112     COLLATERAL MANAGEMENT 112     Section 14.01.   Designation of the
Collateral Manager 112 Section 14.02.   Duties of the Collateral Manager 112
Section 14.03.   Authorization of the Collateral Manager 113 Section
14.04.   Realization Upon Defaulted Collateral Loans 113 Section
14.05.   Compensation 114 Section 14.06.   Expense Reimbursement;
Indemnification 114 Section 14.07.   The Collateral Manager Not to Resign;
Assignment; Collateral Manager Default 115 Section 14.08.   Appointment of
Successor Collateral Manager 116

 

iii

 

 

SCHEDULES

 

Schedule 1 Initial Commitments and Percentages Schedule 2 Contents of Monthly
Report Schedule 3 Contents of Payment Date Report Schedule 4 Initial Collateral
Loans Schedule 5 Moody’s Industry Classifications Schedule 6 Notice Information
Schedule 7 Authorized Persons Schedule 8 Diversity Score Calculations

 

 

EXHIBITS

 

Exhibit A Form of Approval Request Exhibit B Form of Notice of Borrowing (with
attached form of Borrowing Base Calculation) Exhibit C Form of Notice of
Prepayment Exhibit D Form of Assignment and Acceptance Exhibit E Form of Note

 

iv

 

 

CREDIT AND SECURITY AGREEMENT

 

CREDIT AND SECURITY AGREEMENT, dated as of October 27, 2014, among TICC FUNDING,
LLC, a Delaware limited liability company, as borrower (the “Borrower”), the
LENDERS from time to time party hereto, CITIBANK, N.A. (“Citibank”), as
administrative agent for the Secured Parties (as hereinafter defined) (in such
capacity, the “Administrative Agent”), THE BANK OF NEW YORK MELLON TRUST
COMPANY, NATIONAL ASSOCIATION (“BNYM”), as collateral agent for the Secured
Parties (as hereinafter defined) (in such capacity, the “Collateral Agent”) and
as collateral custodian for the Secured Parties (in such capacity, the
“Custodian”), and TICC CAPITAL CORP., a Maryland corporation, as collateral
manager (in such capacity, the “Collateral Manager”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower desires that the Lenders make advances on a revolving
basis to the Borrower on the terms and subject to the conditions set forth in
this Agreement; and

 

WHEREAS, each Lender is willing to make such advances to the Borrower on the
terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; COMPUTATIONS

 

Section 1.01. Definitions

 

As used in this Agreement, the following terms shall have the meanings
indicated:

 

“Account Control Agreement” means the Account Control Agreement, dated as of the
Closing Date, among the Borrower, the Collateral Agent and BNYM, as the
Securities Intermediary, as the same may be amended, modified, waived,
supplemented or restated from time to time.

 

“Adjusted Eurodollar Rate” means, for any Interest Accrual Period, an interest
rate per annum equal to a fraction, expressed as a percentage, (i) the numerator
of which is equal to the LIBOR Rate for such Interest Accrual Period and (ii)
the denominator of which is equal to 100% minus the Eurodollar Reserve
Percentage for such Interest Accrual Period.

 

“Administrative Agent” has the meaning assigned to such term in the introduction
to this Agreement.

 

“Administrative Agent Fee Letter” means that certain fee letter, dated as of the
Closing Date, by and among the Administrative Agent and the Borrower.

 

“Administrative Expense Cap” means, for any Payment Date, an amount equal (when
taken together with any Administrative Expenses paid during the period since the
preceding Payment Date or, in the case of the first Payment Date, the Closing
Date) to $50,000 per annum.

 

“Administrative Expenses” means the fees and expenses (including indemnities)
and other amounts of the Borrower (or any Permitted Subsidiary) due or accrued
with respect to any Payment Date and payable in the following order:

 

 

 

 

(a) first, to the Collateral Agent, the Collateral Administrator, the Custodian
and the Securities Intermediary, the Collateral Agent Fee in an amount not to
exceed $15,000 for such Payment Date and any other amounts and indemnities
payable to such entities pursuant to the Facility Documents;

 

(b) second, to the Administrative Agent, any amounts and indemnities payable to
such the Administrative Agent pursuant to the Facility Documents;

 

(b) third, to the Collateral Manager for expenses incurred by the Collateral
Manager in connection with the services provided under this Agreement, excluding
any Collateral Management Fee; and

 

(c) fourth, on a pro rata basis, to:

 

(i) the Independent Accountants, agents (other than the Collateral Manager) and
counsel of the Borrower (or any Permitted Subsidiary) for fees and expenses
related to the Collateral and the Facility Documents;

 

(ii) any rating agency for fees and expenses in connection with the rating of
(or provision of credit estimates in respect of) any Collateral Loan;

 

(iii) any other Person in respect of any other fees or expenses permitted under
or incurred pursuant to or in connection with the Facility Documents;

 

(iv) the Lenders and the Agents (or related indemnified parties) for fees,
expenses and other amounts payable by the Borrower under any Facility Document;
and

 

(v) indemnification obligations owing by the Borrower or any Permitted
Subsidiary to the Borrower’s or any Permitted Subsidiary’s directors under its
Constituent Documents;

 

provided that, for the avoidance of doubt, (1) amounts that are expressly
payable to any Person under the Priority of Payments in respect of an amount
that is stated to be payable as an amount other than as Administrative Expenses
(including Interest and principal and other amounts owing in respect of the
Advances and the Commitments and any Collateral Management Fee) shall not
constitute Administrative Expenses, (2) expenses paid for on the Closing Date
with proceeds of the Advances comprising the initial Borrowing shall not
constitute Administrative Expenses and (3) no amount shall be payable to the
Collateral Manager as Administrative Expenses in reimbursement of fees or
expenses of any third party until the Collateral Manager shall have first paid
the fees and expenses that are subject of such reimbursement.

 

“Advance” has the meaning assigned to such term in Section 2.01(c).

 

“Advance Rate” means, as of any date of determination, 50%, subject to
adjustment in accordance with this Agreement.

 

“Advances Outstanding” means, as of any date of determination, the aggregate
principal amount of all Advances outstanding on such date, after giving effect
to all repayments of Advances made on or prior to such date and any new Advances
made on such date.

 

2

 

 

“Affected Person” means (a) each Lender and (b) any assignee or participant of
any Lender (unless the benefit of any particular provision hereof to any such
Affected Person is otherwise expressly excluded herein).

 

“Affiliate” means, in respect of a referenced Person, another Person
Controlling, Controlled by or under common Control with such referenced Person;
provided that a Person shall not be deemed to be an “Affiliate” of an Obligor
solely because it is under the common ownership or control of the same financial
sponsor or affiliate thereof as such Obligor (except if any such Person or
Obligor provides collateral for, guarantees or otherwise supports the
obligations of the other such Person or Obligor).

 

“Agents” means, collectively, the Administrative Agent and the Collateral Agent.

 

“Aggregate Asset Cost” means, at any date of determination, the sum of the Asset
Costs of all Eligible Loans included in the Collateral at such date.

 

“Aggregate Funded Spread” means, as of any date, the sum of:

 

(a) in the case of each Eligible Loan (excluding any Floor Obligation) that
bears interest at a spread over an index (including any London interbank offered
rate based index), (i) the excess of the sum of such spread and such index over
the LIBOR Rate as then in effect (which spread or excess may be expressed as a
negative percentage) multiplied by (ii) the Principal Balance of such Eligible
Loan; and

 

(b) in the case of each Floor Obligation, (i) the excess of the interest rate on
such Floor Obligation as of such date over the LIBOR Rate as then in effect
(which spread or excess may be expressed as a negative percentage) multiplied by
(ii) the Principal Balance of each such Eligible Loan.

 

“Aggregate Principal Balance” means, when used with respect to all or a portion
of the Collateral Loans, the sum of the Principal Balances of all or of such
portion of such Collateral Loans (other than Ineligible Collateral Loans).

 

“Aggregate Unfunded Spread” means, as of any date, the sum of the products
obtained by multiplying (a) for each Delayed Drawdown Collateral Loan and
Revolving Collateral Loan, the related commitment fee or other analogous fees
(expressed at a per annum rate) then in effect for such Delayed Drawdown
Collateral Loan or Revolving Collateral Loan as of such date and (b) the
unfunded commitments of each such Delayed Drawdown Collateral Loan and Revolving
Collateral Loan as of such date.

 

“Agreement” means this Credit and Security Agreement.

 

“Applicable Law” means any Law of any Governmental Authority, including all
federal and state banking or securities laws, to which the Person in question is
subject or by which it or any of its assets or properties are bound.

 

“Applicable Margin” means 1.50% per annum.

 

“Approval Request” has the meaning assigned to such term in Section 2.01(a).

 

“Amortization Period” means the period beginning on the last day of the
Reinvestment Period and ending on the date on which all Obligations are paid in
full.

 

3

 

 

“Asset Cost” means, for each Collateral Loan included in the Collateral, the
product of (i) the Purchase Price paid by the Borrower for such Collateral Loan
times (ii) the Principal Balance of such Collateral Loan at such time.

 

“Assignment and Acceptance” means an Assignment and Acceptance in substantially
the form of Exhibit D hereto, entered into by a Lender, an assignee, the
Administrative Agent and, if applicable, the Borrower.

 

“Authorized Person(s)” has the meaning assigned to such term in Section
13.07(d)(i).

 

“Bankruptcy Code” means the United States Bankruptcy Code.

 

“Base Rate” means, on any date, a fluctuating interest rate per annum equal to
the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 1.50% or (c)
the LIBOR Rate for a one month period plus 1.0%. The Base Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer of any Agent or any Lender. Interest calculated pursuant to
clauses (a), (b) and (c) above will be determined based on a year of 360 days
and actual days elapsed.

 

“Block Notice” has the meaning assigned to such term in Section 13.04(b).

 

“BNYM” has the meaning assigned to such term in the introduction to this
Agreement.

 

“Borrower” has the meaning assigned to such term in the introduction to this
Agreement.

 

“Borrower Information” has the meaning assigned to such term in Section 12.09.

 

“Borrowing” has the meaning assigned to such term in Section 2.01.

 

“Borrowing Base” means, at any time, the least of:

 

(a) the Facility Amount at such time;

 

(b) the sum of:

 

(i) (x) the aggregate sum of the products of (A) the applicable Advance Rate for
each Eligible Loan as of such date and (B) Asset Cost of such Eligible Loan
minus (y) the Excess Concentration Amount, plus

 

(ii) the aggregate amount of cash then on deposit in the Principal Collection
Subaccount; and

 

(c) the sum of:

 

(i) the Aggregate Asset Cost, minus

 

(ii) the Excess Concentration Amount, minus

 

(iii) the Minimum Equity Amount, plus

 

(iv) the aggregate amount of cash then on deposit in the Principal Collection
Subaccount.

 

4

 

 

“Borrowing Base Calculation Statement” means a statement in substantially the
form attached to the form of Notice of Borrowing attached hereto as Exhibit B,
as such form of Borrowing Base Calculation Statement may be modified by the
Administrative Agent from time to time to the extent such form does not, in the
good faith opinion of the Administrative Agent, accurately reflect the
calculation of the Borrowing Base required hereunder.

 

“Borrowing Base Test” means a test that will be satisfied at any time if (a)
Advances Outstanding plus (b) the Net Aggregate Exposure Amount at such time are
less than or equal to (c) the Borrowing Base at such time.

 

“Borrowing Date” means the date of a Borrowing.

 

“Business Day” means any day of the year except: (a) a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close; and (b) if such day relates to any interest rate setting as to an
Advance determined by reference to the LIBOR Rate, any fundings, disbursements,
settlements and payments in respect of any such Advance, or any other dealings
to be carried out pursuant to this Agreement in respect of any such Advance (or
any Advance determined by reference to the Base Rate as to which such Base Rate
is determined by reference to the LIBOR Rate), any day on which dealings in
Dollars are not conducted by and between banks in the London interbank market.

 

“Cash” means Dollars immediately available on the day in question.

 

“Cash Diversion Required Amount” has the meaning assigned to such term in
Section 8.05.

 

“Cash Diversion Reserve Account” has the meaning assigned to such term in
Section 8.05.

 

“Cash Diversion Test” means a test that is satisfied if, as of any date of
determination, no Equity Coverage Deficiency exists and the Concentration
Limitations are satisfied.

 

“CCC Collateral Loan” means, at any time, a Collateral Loan with a Moody’s
Rating of “Caa1” or lower or an S&P Rating of “CCC+” or lower.

 

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

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the
Closing Date, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
Closing Date or (c) compliance by any Lender (or, for purposes of Section
2.09(b), by any lending office of such Lender or by such Lender’s holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the Closing
Date; provided that, notwithstanding anything herein to the contrary, (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines, requirements or directives thereunder or issued in connection
therewith or in implementation thereof and (y) all requests, rules, guidelines,
requirements or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”.

 

“Change of Control” means, at any time, the occurrence of one of the following
events: (a) the Borrower ceases to be 100% owned by the Equityholder; (b) the
Equityholder ceases to be managed by the TICC Adviser; (c) the dissolution,
termination or liquidation in whole or in part, transfer or other disposition,
in each case, of all or substantially all of the assets of, TICC Capital; (d)
the Equity Securities in the Collateral Manager shall cease to be publicly
traded on the NASDAQ Global Select Market or other recognized market acceptable
to the Administrative Agent in its sole discretion; (e) the Investment Advisory
Agreement shall fail to be in full force and effect; (f) BDC Partners, LLC
ceases to be the managing member of TICC Adviser; or (g) Jonathan H. Cohen and
Saul B. Rosenthal cease to be controlling members of BDC Partners, LLC.

 

5

 

 

“Citibank” has the meaning assigned to such term in the introduction of this
Agreement.

 

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

 

“Clearing Corporation” means each entity included within the meaning of
“clearing corporation” under Section 8-102(a)(5) of the UCC.

 

“Clearing Corporation Security” means securities which are in the custody of or
maintained on the books of a Clearing Corporation or a nominee subject to the
control of a Clearing Corporation and, if they are Certificated Securities in
registered form, properly endorsed to or registered in the name of the Clearing
Corporation or such nominee.

 

“Closing Date” means October 27, 2014.

 

“Closing Date Participation Agreements” means the TICC CLO Closing Date
Participation Agreement and, to the extent evidencing the sale of a
participation interest with respect to any Collateral Loan, the Sale Agreement.

 

“Closing Date Participation Interests” means the undivided 100% participation
interests granted by TICC CLO LLC or TICC Capital Corp., as applicable, to the
Borrower in and to each Collateral Loan identified on Annex A to the TICC CLO
Closing Date Participation Agreement or Schedule II to the Sale Agreement (to
the extent constituting a participation interest pending completion of the
assignment thereof in accordance with Section 2.4 of the Sale Agreement), as
applicable, and in which a Lien is granted therein by the Borrower to the
Collateral Agent pursuant to this Agreement.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” has the meaning assigned to such term in Section 7.01(a).

 

“Collateral Administration Agreement” means that certain Collateral
Administration Agreement, dated as of the Closing Date, among the Collateral
Administrator, the Borrower, the Collateral Manager and the Administrative
Agent.

 

“Collateral Administrator” means BNYM, and any successor thereto under the
Collateral Administration Agreement.

 

“Collateral Agent” has the meaning assigned to such term in the introduction to
this Agreement.

 

“Collateral Agent Fee Letter” means the fee letter, by and among the Borrower
and BNYM, setting forth the amounts payable by the Borrower to the Collateral
Agent, the Custodian, the Securities Intermediary and the Collateral
Administrator in connection with the transactions contemplated by this
Agreement.

 

6

 

 

“Collateral Agent Fee” means the fee payable to the Collateral Agent, the
Custodian, the Securities Intermediary and the Collateral Administrator pursuant
to the Collateral Agent Fee Letter.

 

“Collateral Loan” means a commercial loan or a Closing Date Participation
Interest owned or acquired by the Borrower.

 

“Collateral Management Fee” means the fee payable to the Collateral Manager in
arrears on each Payment Date (prorated for the related Interest Accrual Period)
pursuant to Section 9.01 of this Agreement, in an amount equal to 0.25% per
annum (calculated on the basis of a 360-day year and the actual number of days
elapsed during the applicable Interest Accrual Period) of the Quarterly Asset
Amount at the beginning of the Collection Period relating to such Payment Date;
provided that for so long as TICC Capital is the Collateral Manager, the
Collateral Management Fee shall be $0.

 

“Collateral Management Standard” means, with respect to any Collateral Loan
included in the Collateral, to service and administer such Collateral Loan in
accordance with the Related Documents and all customary and usual servicing
practices with reasonable care and in good faith, (i) using a degree of skill,
care, prudence, diligence and attention no less than the higher of (a) that
which the Collateral Manager exercises with respect to comparable assets that it
may manage for itself and its other clients having similar investment objectives
and restrictions and (b) the customary and usual collateral management practices
that a prudent collateral manager of national recognition in the United States
would use to manage comparable assets for its own account and for the account of
others, and (ii) in accordance with the Collateral Manager’s customary practices
and procedures involving assets of the nature and character of the Collateral
Loans.

 

“Collateral Manager” has the meaning assigned to such term in the introduction
to this Agreement.

 

“Collateral Manager Default” means the occurrence of any one of the following:

 

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

 

(b) any failure by the Collateral Manager to deliver any report required to be
delivered by it under this Agreement or the other Facility Documents on or
before the date that is two (2) Business Days after the date that such report is
required to be delivered;

 

(c) except as otherwise provided in this definition, a default in any material
respect in the performance, or breach in any material respect, of any covenant
or agreement of the Collateral Manager under this Agreement or the other
Facility Documents to which it is a party, or the failure of any representation
or warranty of the Collateral Manager made in this Agreement or in any other
Facility Document to be correct, in each case, in all material respects when the
same shall have been made, and the continuation of such default, breach or
failure for a period of ten (10) Business Days after the earlier of (i) written
notice to the Collateral Manager (which may be by e-mail) by either Agent, and
(ii) actual knowledge of a Responsible Officer of the Collateral Manager;

 

(d) an Insolvency Event shall occur with respect to the Collateral Manager;

 

(e) the occurrence of any Change of Control with respect to the Collateral
Manager;

 

7

 

 

(f) the rendering of one or more final judgments, decrees or orders by a court
or arbitrator of competent jurisdiction for the payment of money in excess
individually or in the aggregate of $2,500,000 against the Collateral Manager
(exclusive of judgment amounts fully covered by insurance), and the Collateral
Manager shall not have either (i) discharged or provided for the discharge of
any such judgment, decree or order in accordance with its terms or (ii)
perfected a timely appeal of such judgment, decree or order and caused the
execution of same to be stayed during the pendency of the appeal, in each case,
within thirty (30) Business Days from the date of entry thereof;

 

(g) the Collateral Manager shall have made payments totaling more than
$2,000,000 in the aggregate to settle any litigation, claim or dispute
(excluding the amount of any payment made from insurance proceeds);

 

(h) the failure of the Collateral Manager to make any payment when due (after
giving effect to any related grace period) under one or more agreements for
borrowed money to which it is a party in an aggregate amount in excess of
$2,500,000, individually or in the aggregate, or the occurrence of any event or
condition that has resulted in the acceleration of such indebtedness, whether or
not waived;

 

(i) (i) the Collateral Manager commits any act that constitutes fraud or
criminal activity in the performance of its obligations hereunder (as determined
pursuant to a final adjudication by a court of competent jurisdiction) or (ii)
any Responsible Officer of the Collateral Manager primarily responsible for the
performance by the Collateral Manager of its obligations hereunder (in the
performance of his or her investment management duties) is indicted for a
criminal offense materially related to the business of the Collateral Manager
providing management services and continues to have responsibility for the
performance by the Collateral Manager hereunder for a period of ten (10) days
after such indictment;

 

(j) any two (2) Key Individuals (or replacements reasonably acceptable to the
Administrative Agent) shall (i) cease to be officers, employees or partners of
TICC Adviser or (ii) cease to be actively involved in the management of the
Collateral Manager, including, but not limited to, general management (other
than with respect to Hari Srinivasan), management of the Collateral portfolio,
underwriting, the credit approval process and credit monitoring activities,
other than due to temporary absences for family leave, illness or injury and
such individuals are not replaced with other individuals reasonably acceptable
to the Administrative Agent within 60 days; or

 

(k) the Collateral Manager shall assign any of its rights or obligations under
any Facility Document to any Person (other than (i) an Affiliate thereof that is
reasonably acceptable to the Administrative Agent, (ii) a Person that becomes a
successor or assignee Collateral Manager hereunder in accordance with the terms
hereof or (iii) in accordance with Section 14.01(b)).

 

“Collateral Quality Test” means a test that is satisfied if, as of any date of
determination, in the aggregate, the Eligible Loans owned (or, in relation to a
proposed purchase of an Eligible Loan, both owned and proposed to be owned) by
the Borrower satisfy each of the tests set forth below, calculated, in each
case, in accordance with Section 1.04:

 

(a) the Maximum Moody’s Weighted Average Rating Factor Test;

 

(b) the Minimum Weighted Average Spread Test;

 

8

 

 

(c) the Maximum Weighted Average Life Test; and

 

(d) the Minimum Diversity Score Test.

 

“Collection Account” has the meaning assigned to such term in Section 8.02 and
includes the Principal Collection Subaccount and the Interest Collection
Subaccount.

 

“Collection Period” means, with respect to (a) the first Payment Date, the
period from and including the Closing Date to and including the Determination
Date immediately preceding the first Payment Date, and (b) any subsequent
Payment Date, the period from but excluding the Determination Date immediately
preceding the previous Payment Date to and including the Determination Date
immediately preceding the current Payment Date (or, in the case of the final
Payment Date, to and including such Payment Date).

 

“Collections” means all cash collections, distributions, payments or other
amounts received, or to be received, by the Borrower from any Person in respect
of any Collateral Loan constituting Collateral, including all principal,
interest, fees, distributions, recoveries and redemption and withdrawal proceeds
payable to the Borrower under or in connection with any such Collateral Loans
and all Proceeds from any sale or disposition of any such Collateral Loans, but
excluding any Excluded Amounts and any amounts received by the Borrower from an
Obligor following the sale of a Collateral Loan by the Borrower that the
Borrower is required to pay to the purchaser of such Collateral Loan so long
such amounts are not included in the net proceeds reported to be received by the
Borrower from such sale.

 

“Commitment” means, as to each Lender, the obligation of such Lender to make, on
and subject to the terms and conditions hereof, Advances to the Borrower
pursuant to Section 2.01 in an aggregate principal amount at any one time
outstanding for such Lender up to but not exceeding the amount set forth
opposite the name of such Lender on Schedule 1 or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Commitment, as
applicable, as such amount may be reduced from time to time pursuant to Section
2.06 or increased or reduced from time to time pursuant to assignments effected
in accordance with Section 12.06(a).

 

“Commitment Fee” has the meaning assigned to such term in Section 2.12(a).

 

“Commitment Termination Date” means the last day of the Reinvestment Period;
provided that, if the Commitment Termination Date would otherwise not be a
Business Day, then the Commitment Termination Date shall be the immediately
succeeding Business Day.

 

“Concentration Limitations” means, as of any date of determination, the
following limitations (as applied to the Aggregate Asset Cost of the Eligible
Loans owned (or, in relation to a proposed purchase of an Eligible Loan,
proposed to be owned) by the Borrower, calculated as a percentage of the
Aggregate Asset Cost of the Eligible Loans owned (or, in relation to a proposed
purchase of an Eligible Loan, proposed to be owned) by the Borrower plus the
aggregate amount of cash then on deposit in the Principal Collection Subaccount
and the Cash Diversion Reserve Account, and in each case in accordance with the
procedures set forth in Section 1.04; provided that for purposes of this
definition, in determining the Principal Balance of any Delayed Drawdown
Collateral Loan or Revolving Collateral Loan, any unfunded commitments in
respect of such Delayed Drawdown Collateral Loan or Revolving Collateral Loan
shall be assumed to have been fully funded as of such date of determination):

 

(a) not more than 4.00% consists of obligations of any one (1) Obligor
(and Affiliates thereof), except that the Asset Cost of up to five (5) Obligors
may constitute up to 4.50%;

 

9

 

 

(b) not more than 10.00% consists of Eligible Loans with Obligors in any one
Moody’s Industry Classification, except that Eligible Loans in up to two (2)
Moody’s Industry Classifications may each constitute up to 17.50% and Eligible
Loans in up to three (3) Moody’s Industry Classifications may each constitute up
to 15.00%;

 

(d) not more than 15.00% consists of Second Lien Obligations;

 

(e) not more than 3.00% consists of Partial PIK Loans;

 

(f) not more than 20.00% consists of CCC Collateral Loans;

 

(g) not more than 60.00% consists of Covenant Lite Loans;

 

(h) not more than 5.00% consists of DIP Collateral Loans; and

 

(i) not more than 5.00% consists of Delayed Drawdown Collateral Loans and
Revolving Collateral Loans.

 

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

 

“Constituent Documents” means, in respect of any Person, the certificate or
articles of formation or organization, the limited liability company agreement,
operating agreement, partnership agreement, joint venture agreement or other
applicable agreement of formation or organization (or equivalent or comparable
constituent documents) and other organizational documents and by-laws and any
certificate of incorporation, certificate of formation, certificate of limited
partnership and other agreement, similar instrument filed or made in connection
with its formation or organization, in each case, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

“Continued Errors” has the meaning assigned to such term in Section 14.08(c).

 

“Control” means the direct or indirect possession of the power to direct or
cause the direction of the management or policies of a Person, whether through
ownership, by contract, arrangement or understanding, or otherwise. “Controlled”
and “Controlling” have the meaning correlative thereto.

 

“Covenant Lite Loan” means a Collateral Loan that (a) does not contain any
financial covenants or (b) requires the borrower to comply with an Incurrence
Covenant, but does not require the borrower to comply with a Maintenance
Covenant (regardless of whether compliance with one or more Incurrence Covenants
is otherwise required by the Related Documents).

 

“Coverage Test” means each of (a) the Borrowing Base Test, (b) the Equity
Coverage Test and (c) the Net Equity Test.

 

“Covered Account” means each of the Collection Account (including the Interest
Collection Subaccount and Principal Collection Subaccount therein), the Payment
Account, the Unfunded Reserve Account and the Cash Diversion Reserve Account.

 

“Credit Risk Collateral Loan” means a loan which, in the judgment of the
Collateral Manager, (a) has a significant risk of declining in credit quality
and, with lapse of time, becoming a Defaulted Collateral Loan or (b) as a result
of one or more factors, including credit quality, has a significant risk of
declining in market price (but not including any such decline experienced by the
market generally as a result of interest rate movement, general economic
conditions or similar factors).

 

10

 

 

“Custodian” has the meaning assigned to such term in the introduction to this
Agreement.

 

“Data File” has the meaning specified in Section 8.07(a).

 

“Default” means any event which, with the passage of time, the giving of notice,
or both, would constitute an Event of Default.

 

“Defaulted Collateral Loan” means any loan as to which:

 

(a) a default as to all or any portion of one or more payments of principal
and/or interest has occurred with respect to such loan (giving effect to any
grace period applicable thereto but in no event exceeding three (3) Business
Days past the applicable due date); or

 

(b) except in the case of a DIP Collateral Loan, an Insolvency Event (without
giving effect to any grace period set forth in such definition) with respect to
the related Obligor of such loan has occurred; or

 

(c) a Material Modification with respect to such loan has occurred; or

 

(d) has (i) a Moody’s Rating below “Caa3” (or a Moody’s probability of default
rating of “D” or “LD”) or (ii) an S&P Rating below “CCC-” (or of “D” or “SD”),
or in each case had such rating before such rating was withdrawn and which has
not been reinstated as of the date of determination.

 

“Defaulting Lender” means, at any time, any Lender that (a) has failed for two
(2) or more Business Days after a Borrowing Date to fund its portion of an
Advance required pursuant to the terms of this Agreement (other than failures to
fund as a result of a bona fide dispute as to whether the conditions to
borrowing were satisfied on the relevant Borrowing Date), (b) has notified the
Borrower or the Administrative Agent in writing that it does not intend to
comply with its funding obligations hereunder, or has made a public statement to
that effect (unless such writing or public statement relates to such Lender’s
obligation to fund an Advance hereunder and states that such position is based
on such Lender’s determination that a condition precedent to funding (which
condition precedent, together with any applicable default, shall be specifically
identified in such writing or public statement) cannot be satisfied), (c) has
failed, within two (2) Business Days after written request by the Administrative
Agent or the Borrower, to confirm in writing to the Administrative Agent and the
Borrower that it will comply with its prospective funding obligations hereunder
(provided that such Lender shall cease to be a Defaulting Lender pursuant to
this clause (c) upon receipt of such written confirmation by the Administrative
Agent and the Borrower) or (d) has, or has a direct or indirect parent company
that has, (i) become the subject of a proceeding under the Bankruptcy Code or
any other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, receivership, insolvency, reorganization or similar
debtor relief laws of the United States or other applicable jurisdiction or (ii)
had appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar person charged with
reorganization or liquidation of its business or assets, including the Federal
Deposit Insurance Corporation or any other state or federal regulatory authority
acting in such a capacity; provided that a Lender shall not be a Defaulting
Lender solely by virtue of the ownership or acquisition of any equity interest
in that Lender or any direct or indirect parent company thereof by a
Governmental Authority so long as such ownership interest does not result in or
provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such
Lender. Any determination by the Administrative Agent that a Lender is a
Defaulting Lender under any one or more of clauses (a) through (d) shall be
conclusive and binding absent manifest error.

 

11

 

 

“Delayed Drawdown Collateral Loan” means a Collateral Loan that (a) requires the
Borrower to make one or more future advances to the Obligor under the Related
Documents, (b) specifies a maximum amount that can be borrowed on one or more
fixed borrowing dates, and (c) does not permit the re-borrowing of any amount
previously repaid by the Obligor thereunder; provided that any such Collateral
Loan will be a Delayed Drawdown Collateral Loan only to the extent of unfunded
commitments and solely until all commitments by the Borrower to make advances on
such Collateral Loan to the Obligor under the Related Documents expire or are
terminated or are reduced to zero.

 

“Deliver” or “Delivered” or “Delivery” means the taking of the following steps:

 

(a) with respect to such of the Collateral as constitutes an instrument, causing
the Custodian to take possession of such instrument indorsed to the Collateral
Agent by an effective indorsement;

 

(b) with respect to such of the Collateral as constitutes tangible chattel
paper, goods, a negotiable document, or money, causing the Custodian to take
possession of such tangible chattel paper, goods, negotiable document, or money;

 

(c) with respect to such of the Collateral as constitutes a Certificated
Security, causing the Custodian to acquire possession of the related security
certificate, registered in the name of the Collateral Agent, payable to the
order of the Collateral Agent, or specially indorsed to the Collateral Agent by
an effective indorsement, and not in any case indorsed to the Custodian or in
blank;

 

(d) with respect to such of the Collateral as constitutes an Uncertificated
Security, causing the issuer of such Uncertificated Security to register the
Collateral Agent as the registered owner of such Uncertificated Security, upon
original issue or registration of transfer by the issuer of such Uncertificated
Security;

 

(e) with respect to such of the Collateral as constitutes a Security
Entitlement, causing the Custodian as Securities Intermediary to indicate by
book entry that the Financial Asset relating to such Security Entitlement has
been credited to the appropriate Covered Account;

 

(f) with respect to such of the Collateral as constitutes a deposit account,
causing such deposit account to be maintained in the name of the Collateral
Agent and causing the bank with which such deposit account is maintained to
agree in writing with the parties hereto that (i) such bank shall comply with
instructions originated by the Collateral Agent directing disposition of the
funds in the deposit account without further consent of any other Person, (ii)
such bank will not agree with any Person other than the Collateral Agent to
comply with instructions originated by any Person other than the Collateral
Agent, (iii) such deposit account and the money on deposit therein shall not be
subject to any Lien or right of set-off in favor of such bank or anyone claiming
through it (other than the Collateral Agent), (iv) such agreement shall be
governed by the laws of the State of New York, and (v) with respect to such
bank, the State of New York shall be the “bank’s jurisdiction” for purposes of
Article 9 of the Uniform Commercial Code;

 

12

 

 

(g) with respect to such of the Collateral as constitutes an account or a
general intangible or is not otherwise described in the foregoing clauses
(a)-(f), causing to be filed with the Recorder of Deeds for the District of
Columbia a properly completed UCC financing statement that names the Borrower as
debtor and the Collateral Agent as secured party and that describes such
Collateral (which financing statement may have been previously filed) or any
equivalent filing in any applicable jurisdiction; or

 

(h) in the case of each of clauses (a) through (g) above, such additional or
alternative procedures as may hereafter become appropriate to perfect the
security interest granted to the Collateral Agent hereunder in such items of the
Collateral, consistent with Applicable Law.

 

In addition, the Collateral Manager on behalf of the Borrower will obtain any
and all consents required by the Related Documents relating to any Instruments,
accounts or general intangibles for the transfer of ownership and/or pledge
hereunder (except to the extent that the requirement for such consent is
rendered ineffective under Section 9-406 of the UCC).

 

“Determination Date” means, with respect to any Payment Date, the fifth (5th)
Business Day prior to such Payment Date; provided that, with respect to the
final Payment Date, the Determination Date shall be such Payment Date.

 

“DIP Collateral Loan” means an obligation:

 

(a) obtained or incurred after the entry of an order of relief in a case pending
under Chapter 11 of the Bankruptcy Code;

 

(b) to a debtor in possession as described in Chapter 11 of the Bankruptcy Code
or a trustee (if appointment of such trustee has been ordered pursuant to
Section 1104 of the Bankruptcy Code);

 

(c) on which the related Obligor is required to pay interest and/or principal on
a current basis; and

 

(d) approved by a Final Order or Interim Order of the bankruptcy court so long
as such obligation is (i) fully secured by a Lien on the debtor’s otherwise
unencumbered assets pursuant to Section 364(c)(2) of the Bankruptcy Code, (ii)
fully secured by a Lien of equal or senior priority on property of the debtor
estate that is otherwise subject to a Lien pursuant to Section 364(d) of the
Bankruptcy Code or (iii) secured by a junior Lien on the debtor’s encumbered
assets (so long as such loan is fully secured based on the most recent current
valuation or appraisal report, if any, of the debtor).

 

“Diversity Score” means a single number that indicates Collateral concentration
in terms of both Obligor and industry concentration. The Diversity Score for the
Eligible Loans is calculated as set forth in Schedule 8.

 

“Document Checklist” means an electronic or hard copy list delivered by the
Borrower (or by the Collateral Manager on behalf of the Borrower) to the
Custodian that identifies each of the documents contained in each Loan File and
whether such document is an original or a copy and whether a hard copy or
electronic copy will be delivered to the Custodian related to a Collateral Loan
and includes the name of the Obligor with respect to such Collateral Loan, in
each case as of the related date of Advance or acquisition by the Borrower.

 

13

 

 

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

 

“Due Date” means each date on which any payment is due on a Collateral Loan in
accordance with its terms.

 

“EBITDA” means, with respect to any trailing twelve month period and any
Collateral Loan, the meaning of the term “Adjusted EBITDA”, the term “EBITDA” or
any comparable definition in the Related Documents for such period and
Collateral Loan (or, in the case of a Collateral Loan for which the Related
Documents have not been executed, as set forth in the relevant marketing
materials or financial model in respect of such Collateral Loan) as determined
in the good faith discretion of the Collateral Manager, and in any case that the
term “Adjusted EBITDA”, the term “EBITDA” or such comparable definition is not
defined in such Related Documents, an amount, for the principal Obligor
thereunder and any of its parents or Subsidiaries that are obligated as
guarantor pursuant to the Related Documents for such Collateral Loan (determined
on a consolidated basis without duplication in accordance with GAAP (and also on
a pro forma basis as determined in good faith by the Collateral Manager in case
of any acquisitions)) equal to earnings from continuing operations for such
period plus interest expense, income taxes, unallocated depreciation and
amortization for such period (to the extent deducted in determining earnings
from continuing operations for such period), extraordinary, one-time and/or
non-recurring losses or charges, and any other item the Collateral Manager and
the Administrative Agent deem to be appropriate.

 

“Eligible Investment Required Ratings” means, with respect to any obligation or
security, with respect to ratings assigned by Moody’s, “Aa2” (and not on credit
watch for possible downgrade) or “P-1” for one-month instruments, “Aa2” (and not
on credit watch for possible downgrade) and “P-1” for three-month instruments,
“Aa3” (and not on credit watch for possible downgrade) and “P-1” for six-month
instruments and “Aa2” (and not on credit watch for possible downgrade) and “P-1”
for instruments with a term in excess of six months and (b) with respect to
rating assigned by S&P, “A-1” (and not on credit watch for possible downgrade)
for short-term instruments and “A” (and not on credit watch for possible
downgrade) for long-term instruments.

 

“Eligible Investments” means any Dollar investment that, at the time it is
Delivered, is Cash or one or more of the following obligations or securities:

 

(a) direct obligations of, and obligations the timely payment of principal and
interest on which is fully and expressly guaranteed by, the United States of
America or any agency or instrumentality of the United States of America the
obligations of which are expressly backed by the full faith and credit of the
United States of America;

 

(b) demand and time deposits in, certificates of deposit of, trust accounts
with, bankers’ acceptances payable within 183 days of issuance by, or federal
funds sold by any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof and subject to
supervision and examination by federal and/or state banking authorities, so long
as the commercial paper and/or the debt obligations of such depository
institution or trust company (or, in the case of the principal depository
institution in a holding company system, the commercial paper or debt
obligations of such holding company) at the time of such investment or
contractual commitment providing for such investment have the Eligible
Investment Required Ratings;

 

(c) non-extendable commercial paper or other short-term obligations with the
Eligible Investment Required Ratings and that either bear interest or are sold
at a discount from the face amount thereof and have a maturity of not more than
183 days from their date of issuance; and

 

14

 

 

(d) money market funds that have, at all times, ratings in the highest credit
rating category by Moody’s and S&P;

 

provided that (i) Eligible Investments purchased with funds in the Collection
Account shall be held until maturity except as otherwise specifically provided
herein and shall include only such obligations or securities, other than those
referred to in clause (d) above, as mature (or are putable at par to the issuer
thereof) no later than the earlier of (A) 90 days after the date of acquisition
thereof or (B) the Business Day prior to the next Payment Date; and (ii) none of
the foregoing obligations or securities shall constitute Eligible Investments if
(A) such obligation or security has an “f”, “r”, “p”, “pi”, “q”, “sf” or “t”
subscript assigned by S&P, (B) all, or substantially all, of the remaining
amounts payable thereunder consist of interest and not principal payments, (C)
such obligation or security is subject to U.S. withholding or foreign
withholding tax unless the issuer of the security is required to make “gross-up”
payments for the full amount of such withholding tax, (D) such obligation or
security is secured by real property, (E) such obligation or security is
purchased at a price greater than 100% of the principal or face amount thereof,
(F) such obligation or security is subject of a tender offer, voluntary
redemption, exchange offer, conversion or other similar action or (G) in the
Collateral Manager’s judgment, such obligation or security is subject to
material non-credit related risks. Any such investment may be made or acquired
from or through the Collateral Agent or any of its Affiliates, or any entity for
whom the Collateral Agent or any of its Affiliates provides services (so long as
such investment otherwise meets the applicable requirements of the foregoing
definition of Eligible Investment at the time of acquisition). Notwithstanding
the foregoing, unless the Borrower and the Collateral Manager have received the
written advice of counsel of national reputation experienced in such matters to
the contrary (together with an officer’s certificate of the Borrower or the
Collateral Manager to the Administrative Agent (on which the Administrative
Agent may rely) that the advice specified in this definition has been received
by the Borrower and the Collateral Manager) and the Administrative Agent
consents thereto, on and after July 21, 2015 (or such later date as may be
determined by the Borrower and the Collateral Manager based upon such advice),
Eligible Investments may only include obligations or securities that constitute
cash equivalents for purposes of the rights and assets in paragraph (c)(8)(i)(B)
of the exclusions from the definition of “covered fund” for purposes of the
Volcker Rule.

 

“Eligible Loan” means a Collateral Loan that (A) has been approved by the
Administrative Agent, in its sole discretion, prior to the date on which the
Borrower commits to acquire such Collateral, and (B) satisfies each of the
following eligibility requirements on any date of determination (unless the
Administrative Agent in its sole discretion agrees to waive any such eligibility
requirement with respect to such loan); provided that, that for purposes of
determining whether a Collateral Loan constitutes an Eligible Loan at any time
after the acquisition thereof by the Borrower (or its binding commitment to do
the same), the criteria set forth in clauses (c), (h), (k)(ii) and (y) shall be
evaluated solely as of the date the Borrower commits to acquire such Collateral
Loan:

 

(a) is (i) a First Lien Obligation, (ii) a Second Lien Obligation or (iii) prior
to the date that is sixty (60) days after the Closing Date (or such longer
period to which the Administrative Agent may agree in its sole discretion) a
Closing Date Participation Interest;

 

(b) permits the purchase thereof by or assignment thereof (or, in the case of a
Closing Date Participation Interest, participation thereof) to the Borrower and
the pledge to the Collateral Agent;

 

(c) is not in arrears;

 

15

 

 

(d) is denominated and payable in Dollars and does not permit the currency in
which such loan is payable to be changed;

 

(e) is an obligation of an Obligor organized or incorporated in (i) the United
States (or any state thereof) or (ii) Canada (or any province thereof);

 

(f) the Related Documents for which are governed by the laws of a state in the
United States;

 

(g) the proceeds of which are not permitted primarily to be used for personal,
family or household purposes;

 

(h) is not the subject of an offer other than a Permitted Offer or called for
redemption other than pursuant to a Permitted Offer;

 

(i) does not constitute Margin Stock;

 

(j) does not subject the Borrower to withholding tax unless the Obligor is
required to make “gross-up” payments constituting 100% of such withholding tax;

 

(k) is not (i) a Defaulted Collateral Loan or (ii) a Credit Risk Collateral
Loan;

 

(l) is not an Equity Security or a component thereof and does not provide for
mandatory or optional conversion or exchange into an Equity Security; provided
that any Equity Security purchased as part of a “unit” with a Collateral Loan
(including any attached warrants) and that itself is not eligible for purchase
by the Borrower as a Collateral Loan shall not cause the Collateral Loan portion
to lose its eligibility hereunder;

 

(m) is not a PIK Loan;

 

(n) is not a Structured Finance Obligation, a bridge loan or other obligation
that (i) is incurred in connection with a merger, acquisition, consolidation, or
sale of all or substantially all of the assets of a Person or similar
transaction and (ii) by its terms, is required to be repaid within one year of
the incurrence thereof with proceeds from additional borrowings or other
refinancing, a bond, a synthetic security, a finance lease or chattel paper;

 

(o) provides for the full principal balance to be payable at or prior to its
maturity;

 

(p) has an original term to maturity of not more than seven (7.0) years;

 

(q) provides for payment of interest at least quarterly;

 

(r) bears interest at a floating rate;

 

(s) is not subject to material non-credit related risk (such as a loan, the
payment of which is expressly contingent upon the non-occurrence of a
catastrophe), as determined by the Collateral Manager in its reasonable
discretion;

 

(t) is not an obligation (other than a Delayed Drawdown Collateral Loan or a
Revolving Collateral Loan) pursuant to which any future advances or payments to
the Obligor may be required to be made by the Borrower;

 

16

 

 

(u) if evidenced by a note or other instrument, such note or other instrument
has been delivered to the Custodian in accordance with this Agreement;

 

(v) except for a Closing Date Participation Interest, is not a participation
interest;

 

(w) the acquisition of such loan will not cause the Borrower or the pool of
Collateral to be (x) required to register as an “investment company” under the
Investment Company Act or (y) a “covered fund” under the Volcker Rule;

 

(x) such loan is not underwritten as a commercial real estate loan principally
secured by real property;

 

(y) as to which no payment default, breach of negative pledge or financial
covenant or other material default exists;

 

(z) is not a letter of credit (other than a Revolving Collateral Loan that
includes a letter of credit sub-facility as long as the Borrower is not the
letter of credit issuer with respect thereto);

 

(aa) is in “registered” form for U.S. federal income tax purposes;

 

(bb) constitutes indebtedness for U.S. federal income tax purposes;

 

(cc) the acquisition of such loan will not cause the Borrower to violate any
Law;

 

(dd) the transfer thereof is effected pursuant to either (i) in the case of a
Collateral Loan other than a Closing Date Participation Interest, an LSTA
Par/Near Par Trade Confirmation, subject to Standard Terms and Condition for
Par/Near Par Trade Confirmations, as published by The Loan Syndications and
Trading Association, Inc., or the equivalent thereof as published by the Loan
Market Association, or (ii) in the case of a Closing Date Participation
Interest, the applicable Closing Date Participation Agreement;

 

(ee) is not subject to any Lien other than Permitted Liens;

 

(ff) does not have an interest rate basis exceeding 6 months, except in the case
of loans in which the Related Documents allow the interest rate basis to be
extended to 12 months with the underlying lenders’ consent;

 

(gg) the obligor of such loan has an EBITDA greater than or equal to
$25,000,000;

 

(hh) was acquired for a Purchase Price of at least 85% of par;

 

(ii) as of any date of determination has a Moody’s Rating of at least “Caa2” and
an S&P Rating of at least “CCC”;

 

(jj) is on the date of purchase or other acquisition thereof by the Borrower
part of an applicable loan tranche (having the same initial borrowing date and
economic terms) of at least $100,000,000; and

 

(kk) is priced on each date by at least one independent source (as evidenced by
data from Loan X, Inc., Loan Pricing Corporation, MarkIt Partners or any other
nationally recognized loan pricing service selected by the Administrative
Agent); it being understood that the Administrative Agent shall notify the
Borrower of any failure of such Collateral Loan to be so priced and if such
failure shall continue for ten (10) Business Days following delivery of such
notice, the Advance Rate with respect to such Collateral Loan shall be reduced
to zero.

 

17

 

 

“Equity Coverage Amount” means, at any date of determination, the aggregate sum
of the Market Values of all Eligible Loans owned by the Borrower on such date
(determined for this purpose on a “settlement date” basis), plus (ii) the amount
on deposit in the Principal Collection Subaccount on such date, plus (iii) any
amounts retained in the Cash Diversion Reserve Account on such date minus (iv)
the Advances Outstanding.

 

“Equity Coverage Deficiency” means, as of any date of determination, an amount
equal to the positive difference, if any, of (a) the product of (i) the
Aggregate Asset Cost and (ii) 40.0% minus (b) the Equity Coverage Amount on such
date.

 

“Equity Coverage Test” means a test that will be satisfied if at any date of
determination no Equity Coverage Deficiency exists.

 

“Equityholder” means TICC Capital.

 

“Equityholder Collateral Loan” means each Collateral Loan sold and/or
contributed by the Equityholder to the Borrower pursuant to the Sale Agreement.

 

“Equityholder Purchased Loan Balance” means, as of any date of determination, an
amount equal to (a) the aggregate Principal Balance of all Equityholder
Collateral Obligations acquired by the Borrower prior to such date minus (b) the
aggregate Principal Balance of all Equityholder Collateral Obligations (other
than Warranty Collateral Obligations) repurchased by the Equityholder or an
Affiliate thereof prior to such date.

 

“Equity Security” means any stock or similar security, certificate of interest
or participation in any profit sharing agreement, reorganization certificate or
subscription, transferable share, voting trust certificate or certificate of
deposit for an equity security, limited partnership interest, interest in a
joint venture, or certificate of interest in a business trust; any security
future on any such security; or any security convertible, with or without
consideration into such a security, or carrying any warrant (other than a
detachable warrant) or right to subscribe to or purchase such a security; or any
such warrant or right.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated and rulings issued thereunder.

 

“Errors” has the meaning assigned to such term in Section 14.08(c).

 

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

 

“Eurodollar Disruption Event” means the occurrence of any of the following: (a)
any Lender shall have notified the Administrative Agent of a determination by
such 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) the
Collateral Agent shall have notified the Administrative Agent, the Borrower and
each Lender of the inability, for any reason, to determine the Adjusted
Eurodollar Rate, (c) the Required Lenders shall have notified the Administrative
Agent of a determination by such Lenders that the rate at which deposits of
Dollars are being offered to such Lenders in the London interbank market does
not accurately reflect the cost to such Lenders of making, funding or
maintaining any Advance or (d) any Lender shall have notified the Administrative
Agent of the inability of such Lender to obtain Dollars in the London interbank
market to make, fund or maintain any Advance.

 

18

 

 

“Eurodollar Reserve Percentage” means, for any period, the percentage, 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
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.

 

“Event of Default” means the occurrence of any of the events, acts or
circumstances set forth in Section 6.01.

 

“Excess Concentration Amount” means, at any time in respect of which any one or
more of the Concentration Limitations are exceeded, the portion of the Aggregate
Asset Cost (calculated without duplication) of each Eligible Loan that causes
such Concentration Limitations to be exceeded.

 

“Exchange Act” means the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.

 

“Excluded Amounts” means any amounts received in the Collection Account with
respect to any Collateral, which amounts are attributable to (i) the
reimbursement by the related Obligor of payment of out-of-pocket expenses by the
Collateral Manager or the Equityholder on behalf of the Borrower or (ii) amounts
deposited into the Collection Account in error; provided, that any such amounts
shall be Excluded Amounts only to the extent that such amounts (x) are in excess
of the principal and interest then due in respect of such Collateral, except
with respect to the amounts described in clause (ii) of this definition and (y)
were required to be paid by the related Obligor pursuant to a specific provision
of the Related Documents with respect to such Collateral.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Secured Party or required to be withheld or deducted from a payment to a
Secured Party (a) Taxes imposed on or measured by net income, net profits, or
capital (however denominated), or that are franchise Taxes or branch profits
Taxes, in each case, (i) imposed by the jurisdiction (or any political
subdivision thereof) under the laws of which such Secured Party is organized or
in which its principal office is located, or in the case of any Lender, in which
its applicable lending office is located or (ii) that are Other Connection
Taxes, (b) in the case of a Lender, United States federal withholding Taxes
imposed on amounts payable to or for the account of such Lender with respect to
an applicable interest in a Commitment pursuant to a Law in effect on the date
on which (i) such Lender acquires such interest in the Commitment (other than
pursuant to an assignment request by the Borrower under Sections 2.16 or
12.03(g)) or (ii) such Lender designates a new lending office (a “New Lending
Office”), except in each case to the extent that, pursuant to Section 12.03,
amounts with respect to such Taxes were payable either to such Lender's assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its lending office, (c) Taxes attributable to such
Secured Party’s failure to comply with Section 12.03(f) and (h), and (d) United
States federal withholding Taxes imposed by FATCA.

 

19

 

 

“Facility Amount” means (a) on or prior to the Commitment Termination Date,
$150,000,000 (as such amount may be reduced from time to time pursuant to
Section 2.06) and (b) following the Commitment Termination Date, the outstanding
principal balance of all the Advances.

 

“Facility Documents” means this Agreement, the Notes, the Account Control
Agreement, the Collateral Administration Agreement, the Administrative Agent Fee
Letter, the Collateral Agent Fee Letter, the Sale Agreement, the TICC CLO
Closing Date Participation Agreement and any other security agreements and other
instruments entered into or delivered by or on behalf of the Borrower pursuant
to Section 5.01(c) to create, perfect or otherwise evidence the Collateral
Agent’s security interest in the Collateral.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended versions of Sections 1471 through 1474 of the Code
that are substantively comparable and not materially more onerous to comply
with), any current or future regulations or official interpretations thereof,
any agreements entered into pursuant to Section 1471(b)(1) of the Code and any
intergovernmental agreements entered into in connection with the implementation
of such Sections.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it; provided that, if at any time a
Lender is borrowing overnight funds from a Federal Reserve Bank that day, the
Federal Funds Rate for such Lender for such day shall be the average rate per
annum at which such overnight borrowings are made on that day as promptly
reported by such Lender to the Borrower and the Agents in writing. Each
determination of the Federal Funds Rate by a Lender pursuant to the foregoing
proviso shall be conclusive and binding except in the case of manifest error.

 

“Final Maturity Date” means October 27, 2017; provided that, if such day is not
a Business Day, then the Final Maturity Date shall be the next succeeding
Business Day.

 

“Final Order” means an order, judgment, decree or ruling the operation or effect
of which has not been stayed, reversed or amended and as to which order,
judgment, decree or ruling (or any revision, modification or amendment thereof)
the time to appeal or to seek review or rehearing has expired and as to which no
appeal or petition for review or rehearing was filed or, if filed, remains
pending.

 

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

 

“Firm Bid” means with respect to any Collateral Loan, a good and irrevocable bid
for value, to purchase the par amount of such Collateral Loan, expressed as a
percentage of the par amount of such Collateral Loan and exclusive of accrued
interest and premium, for scheduled settlement substantially in accordance with
the then-current market practice in the principal market for such Collateral
Loan, as determined by the Administrative Agent, submitted as of 11:00 a.m. (New
York time) or as soon as practicable thereafter. The Administrative Agent shall
be entitled to disregard any Firm Bid submitted by a broker-dealer (a) if, in
the Administrative Agent's commercially reasonable judgment, (i) such
broker-dealer may be ineligible to accept assignment or transfer of the par
amount of such Collateral Loan substantially in accordance with the then-current
market practice in the principal market for such Collateral Loan, as determined
by the Administrative Agent, or (ii) such broker-dealer would not, through the
exercise of its commercially reasonable efforts, be able to obtain any consent
required under the Related Documents for such Collateral Loan to the assignment
or transfer to such broker-dealer of the par amount of such Collateral Loan or
(b) if the Administrative Agent determines that such Firm Bid is not bona fide,
including, without limitation, due to (i) the insolvency of the bidder, (ii) the
inability, failure or refusal of the bidder to settle the purchase of the par
amount of such Collateral Loan or otherwise settle transactions in the relevant
market or perform its obligations generally or (iii) the Administrative Agent
not having pre-approved trading lines with the broker-dealer that would permit
settlement of the sale to such broker-dealer of the par amount of such
Collateral Loan.

 

20

 

 

“First Lien Obligation” means any loan (and not a bond or similar security) that
meets the following criteria:

 

(i) is not (and is not expressly permitted by its terms to become) subordinate
in right of payment to any other obligation for borrowed money of the Obligor of
such loan;

 

(ii) is secured by a valid first priority (subject to customary permitted liens)
perfected Lien in, to or on specified collateral securing the Obligor’s
obligations under such loan (whether or not such loan is also secured by any
lower priority Lien on other collateral and whether or not a separate loan is
secured by a first lien on separate collateral);

 

(iii) is secured, pursuant to such first priority perfected Lien, by collateral
having a value (determined as set forth below) not less than the outstanding
principal balance of such loan plus the aggregate outstanding principal balances
of all other loans of equal seniority secured by a first Lien in the same
collateral; and

 

(iv) is not a loan which is secured solely or primarily by the common stock of
its Obligor or any of its Affiliates.

 

The determination as to whether clause (iii) of this definition is satisfied
shall be based on the Collateral Manager’s judgment at the time the loan is
acquired by the Borrower (which value may include an assessment of the Obligor’s
cash flow, enterprise value, general financial condition and other attributes).
The limitation set forth in clause (iv) above shall not apply with respect to a
loan made to a parent entity that is secured solely or primarily by the stock of
one or more of the subsidiaries of such parent entity to the extent that the
granting by any such subsidiary of a Lien on its own property would (1) in the
case of a subsidiary that is not part of the same consolidated group as such
parent entity for U.S. Federal income tax purposes, result in a deemed dividend
by such subsidiary to such parent entity for such tax purposes, (2) violate Law
applicable to such subsidiary (whether the obligation secured is such loan or
any other similar type of indebtedness owing to third parties) or (3) cause such
subsidiary to suffer adverse economic consequences under capital adequacy or
other similar rules, in each case, so long as (x) the Related Documents limit
the incurrence of indebtedness by such subsidiary and (y) the aggregate amount
of all such indebtedness is not material relative to the aggregate value of the
assets of such subsidiary.

 

“Floor Obligation” means, as of any date:

 

(a) a Collateral Loan (i) for which the Related Documents provides for a Libor
rate option and that such Libor rate is calculated as the greater of a specified
“floor” rate per annum and the London interbank offered rate for the applicable
interest period and (ii) that, as of such date, bears interest based on such
Libor rate option, but only if as of such date the London interbank offered rate
for the applicable interest period is less than such floor rate; and

 

21

 

 

(b) a Collateral Loan (i) for which the Related Documents provides for a base or
prime rate option and such base or prime rate is calculated as the greater of a
specified “floor” rate per annum and the base or prime rate for the applicable
interest period and (ii) that, as of such date, bears interest based on such
base or prime rate option, but only if as of such date the base or prime rate
for the applicable interest period is less than such floor rate.

 

“Fundamental Amendment” means any amendment, modification, waiver or supplement
(as determined by the Administrative Agent) of or to this Agreement that would
(a) increase or extend the term of the Commitments or change the Final Maturity
Date, (b) extend the date fixed for the payment of principal of or interest on
any Advance or any fee hereunder, (c) reduce the amount of any such payment of
principal, (d) reduce the rate at which Interest is payable thereon or any fee
is payable hereunder, (e) release any material portion of the Collateral, except
in connection with dispositions expressly permitted hereunder, (f) alter the
terms of Section 9.01 or Section 12.01(b), (g) modify the definition of the term
“Required Lenders” or modify in any other manner the number or percentage of the
Lenders required to make any determinations or waive any rights hereunder or to
modify any provision hereof or (h) extend the Reinvestment Period.

 

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

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, administrative tribunal, central bank, public office, court,
arbitration or mediation panel, or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of government, including the SEC, the stock exchanges, any federal, state,
territorial, county, municipal or other government or governmental agency,
arbitrator, board, body, branch, bureau, commission, court, department,
instrumentality, master, mediator, panel, referee, system or other political
unit or subdivision or other entity of any of the foregoing, whether domestic or
foreign.

 

“Governmental Authorizations” means all franchises, permits, licenses,
approvals, consents and other authorizations of all Governmental Authorities.

 

“Governmental Filings” means all filings, including franchise and similar tax
filings, and the payment of all fees, assessments, interests and penalties
associated with such filings with all Governmental Authorities.

 

“Incurrence Covenant” means a covenant by any Obligor to comply with one or more
financial covenants only upon the occurrence of certain actions of such Obligor,
including a debt issuance, dividend payment, share purchase, merger, acquisition
or divestiture.

 

“Indemnified Party” has the meaning assigned to such term in Section 12.04(b).

 

“Independent Accountants” has the meaning assigned to such term in Section
8.09(a).

 

“Independent Manager” means a natural person (a) that is not an Affiliate of the
Borrower, the Equityholder or the Collateral Manager and (b) who is provided by
Puglisi and Associates or Lord SPV or, if none of those companies is then
providing professional independent directors or managers, another nationally
recognized company that provides professional independent directors or managers
and other corporate services in the ordinary course of its business, in each
case approved by the Administrative Agent.

 

22

 

 

“Ineligible Collateral Loan” means, at any time, a loan or other obligation, or
any portion thereof, that fails to satisfy any criteria of the definition of
“Eligible Loan” giving effect to the proviso in the introductory language to the
definition of “Eligible Loan”.

 

“Insolvency Event” means, 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 the Bankruptcy Code or any other 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 sixty (60) consecutive days; or (b) the commencement by such Person of
a voluntary case under the Bankruptcy Code or any other 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.

 

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

 

“Interest” means, for each day during an Interest Accrual Period and each
Advance outstanding by a Lender on such day, the sum of the products (for each
day during such Interest Accrual Period) of:

 

[image_001.jpg]

 

where:

 

IR = the Interest Rate for such Advance on such day;

 

P = the principal amount of such Advance on such day; and

 

D = 360 days.

 

“Interest Accrual Period” means (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 preceding the first Payment Date, and (b) with respect to any
subsequent Payment Date, the period commencing on the first day of the calendar
month in which the preceding Payment Date occurred and ending on the last day of
the calendar month immediately preceding the month in which such Payment Date
occurs; provided, that the final Interest Accrual Period hereunder shall end on
and include the day prior to the payment in full of the Advances hereunder.

 

“Interest Collection Subaccount” has the meaning specified in Section 8.02(a).

 

“Interest Proceeds” means, with respect to any Collection Period or the related
Determination Date, without duplication, the sum of:

 

(a) all payments of interest and other income received by the Borrower during
such Collection Period on the Collateral Loans (including interest and other
income received on Ineligible Collateral Loans and the accrued interest received
in connection with a sale of any such Collateral Loan during such Collection
Period);

 

23

 

 

(b) all principal and interest payments received by the Borrower during such
Collection Period on Eligible Investments purchased with proceeds received
pursuant to clauses (a), (b) and (c) of this definition; and all interest
payments received by the Borrower during such Collection Period on Eligible
Investments purchased with Principal Proceeds or amounts credited to the
Unfunded Reserve Account;

 

(c) all amendment and waiver fees, late payment fees (including compensation for
delayed settlement or trades), and all protection fees and other fees and
commissions received by the Borrower during such Collection Period unless the
Collateral Manager has determined in its sole discretion that such payments are
to be treated as Principal Proceeds; and

 

(d) commitment fees, facility fees, anniversary fees, ticking fees and other
similar fees received by the Borrower during such Collection Period unless the
Collateral Manager has determined in its sole discretion that such payments are
to be treated as Principal Proceeds;

 

provided that:

 

(1) as to any Defaulted Collateral Loan (and only so long as it remains a
Defaulted Collateral Loan), any amounts received in respect thereof will
constitute Principal Proceeds (and not Interest Proceeds) until the aggregate of
all Collections in respect thereof since it became a Defaulted Collateral Loan
equals the outstanding principal balance of such Defaulted Collateral Loan at
the time as of which it became a Defaulted Collateral Loan and all amounts
received in excess thereof will constitute Interest Proceeds; and

 

(2) all payments received in respect of Equity Securities will constitute
Principal Proceeds.

 

“Interest Rate” means, for any Interest Accrual Period and for each Advance
outstanding by a Lender for each day during such Interest Accrual Period, an
interest rate per annum equal to (a) if a Eurodollar Disruption Event has
occurred and is continuing or an Event of Default has occurred (and has not
otherwise been waived by the Lenders pursuant to the terms hereof), the Base
Rate plus the Applicable Margin, or (b) in all other cases, the Adjusted
Eurodollar Rate plus the Applicable Margin.

 

“Interim Order” means an order, judgment, decree or ruling entered after notice
and a hearing conducted in accordance with Bankruptcy Rule 4001(c) granting
interim authorization, the operation or effect of which has not been stayed,
reversed or amended.

 

“Investment Advisory Agreement” means the Investment Advisory Agreement dated
July 1, 2011 between TICC Capital and TICC Adviser.

 

“Investment Company Act” means the Investment Company Act of 1940 and the rules
and regulations promulgated thereunder.

 

“Investment Guidelines” has the meaning assigned to such term in Section
14.02(a)(ix).

 

“Key Individuals” means each of Jonathan H. Cohen, Saul B. Rosenthal, Hari
Srinivasan and such other employee or employees of the Collateral Manager or an
Affiliate thereof proposed, from time to time, by the Collateral Manager and
reasonably acceptable to the Administrative Agent.

 

24

 

 

“Law” means any action, code, consent decree, constitution, decree, directive,
enactment, finding, guideline, law, injunction, interpretation, judgment, order,
ordinance, policy statement, proclamation, promulgation, regulation,
requirement, rule, rule of law, treaty, rule of public policy, settlement
agreement, statute, or writ, of any Governmental Authority, or any particular
section, part or provision thereof.

 

“Lender” means each Person listed on Schedule 1 and any other Person that shall
have become a party hereto in accordance with the terms hereof pursuant to an
Assignment and Acceptance, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Acceptance.

 

“Liabilities” means all liabilities, obligations, losses, claims, damages,
penalties, actions, judgments, suits, costs, expenses (including reasonable and
documented out-of-pocket attorneys’ fees and expenses) and disbursements of any
kind or nature whatsoever.

 

“LIBOR Rate” means, for any Interest Accrual Period, a rate per annum equal to
the rate appearing on Reuters Screen LIBOR01 Page (or any successor or
substitute page) for London interbank deposits for a three month period in
United States dollars at approximately 11:00 a.m. (London time) two London
Banking Days prior to the commencement of such Interest Accrual Period; provided
that, if no such rate so appears on Reuters Screen LIBOR01 Page (or any
successor or substitute page), the LIBOR Rate shall be the rate per annum equal
to the average of the rates at which deposits in Dollars are offered by the
Administrative Agent at approximately 11:00 a.m. (London time) on the rate
setting day to prime banks in the London interbank market for a three month
period. With respect to any Advance not made on the first day of an Interest
Accrual Period, the “LIBOR Rate” shall be a rate per annum for a term equal to
the period remaining in the applicable Interest Accrual Period; provided that if
no offered rate exists for such remaining period, the LIBOR Rate shall be
interpolated (rounded upwards, if necessary, to the nearest 1/100th of one
percent) on a straight-line basis based upon (i) the LIBOR Rate for the closest
quoted period greater than such remaining period and (ii) (A) the LIBOR Rate for
the closest quoted period shorter than such remaining period, if such remaining
period is one month or longer and (B) the overnight LIBOR Rate, if such
remaining period is shorter than one month, and commencing on the day on which
such Advance is made.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, encumbrance, lien
or security interest (statutory or other), or preference, priority or other
security agreement, charge or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing, and the filing authorized by the Borrower of any financing statement
under the UCC or comparable law of any jurisdiction).

 

“Loan File” means, with respect to each Collateral Loan delivered to the
Custodian, each of the Required Loan Documents in original or copy as identified
on the related Document Checklist and any other document delivered in connection
therewith.

 

“London Banking Day” means a day on which commercial banks are open for business
(including dealings in foreign exchange and foreign currency deposits) in
London, England.

 

“Losses” has the meaning assigned to such term in Section 13.09(d)(i).

 

“Maintenance Covenant” means a covenant by any Obligor to comply with one or
more financial covenants during each reporting period (but not more frequently
than quarterly), whether or not such Obligor has taken any specified action.

 

25

 

 

“Mandatory Amortization Amount” means, with respect to the applicable Payment
Dates set forth below and regardless of whether sufficient funds are on deposit
in the applicable Collection Account in respect of such Payment Date, an amount
sufficient to reduce Advances Outstanding as of such Payment Date to an amount
equal to the percentage of Advances Outstanding as of the last day of the
Reinvestment Period set forth opposite such Payment Date.

 

Payment Date  Percent of Advances Outstanding as of
last day of Reinvestment Period January 2017 75.00 April 2017 50.00

 

“Margin Stock” has the meaning assigned to such term in Regulation U.

 

“Market Value” means, with respect to any Collateral Loan, the amount
(determined by the Administrative Agent) equal to the product of (x) the
principal amount thereof (determined exclusive of accrued interest and premium)
and (y) the price (expressed as a percentage of par) determined in the following
manner:

 

(i) the bid-side quote determined by any of Loan X, Inc., Loan Pricing
Corporation, MarkIt Partners or any other nationally recognized loan pricing
service selected by the Administrative Agent; provided that, if the
Administrative Agent reasonably determines that the quote of any such loan
pricing service is not current or accurate, the Administrative Agent may reject
such quote; or

 

(ii) if the value of a Collateral Loan is not determined in accordance with
clause (i) above (either because no bid-side quote is available or the
Administrative Agent rejects one or more loan pricing services), the average of
the bid-side quotes determined by at least two independent broker-dealers active
in the trading of such asset; or if only one such bid can be obtained, such bid;
provided that, if the Administrative Agent determines that the quote of any such
independent broker-dealer is not current or accurate, the Administrative Agent
may reject such quote; or

 

(iii) if the value of a Collateral Loan is not determined in accordance with
clause (i) or (ii) above (either because no bid-side quote is available or the
Administrative Agent reasonably rejects on or more bid side quotes), the value
of such Collateral Loan (expressed as a percentage of par) shall be determined
by the Administrative Agent.

 

If the Borrower disputes the Market Value of any Collateral Loan determined
pursuant to the foregoing clause (i) or (ii), then the Borrower may (at its sole
expense), no later than three hours after the Borrower is given notice of such
determination, (i) designate two nationally recognized broker-dealers active in
the trading of such loan and (ii) provide to the Administrative Agent within
such three-hour period with respect to each such broker-dealer a Firm Bid with
respect to not less than the principal amount of such Collateral Loan. The
highest of such two Firm Bids will be the Market Value for the relevant date of
determination.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, financial condition or operations of the Borrower, (b) the business,
assets, financial condition or operations of the Collateral Manager, (c) the
validity or enforceability of this Agreement or any other Facility Document or
the validity, enforceability or collectability of the Collateral Loans or the
Related Documents generally or any material portion of the Collateral Loans or
the Related Documents, (d) the rights and remedies of the Administrative Agent,
the Lenders and the other Secured Parties with respect to matters arising under
this Agreement or any other Facility Document, (e) the ability of each of the
Borrower or the Collateral Manager to perform its obligations under any Facility
Document to which it is a party or (f) the status, existence, perfection,
priority or enforceability of the Collateral Agent’s Lien on the Collateral
(excluding in any case a decline in the asset value of the Borrower or a change
in general market conditions or values of the loans and investments held by the
Borrower).

 

26

 

 

“Material Modification” means, with respect to any Collateral Loan, any
amendment, waiver, consent or modification of a Related Document with respect
thereto executed or effected after the date on which such Collateral Loan is
acquired by the Borrower, that:

 

(a) reduces or waives one or more cash interest payments or permits any interest
due with respect to such Collateral Loan in cash to be deferred or capitalized
and added to the principal amount of such Collateral Loan (other than any
deferral or capitalization already expressly permitted by the terms of its
underlying instruments as of the date such Collateral Loan was acquired by the
Borrower);

 

(b) contractually or structurally subordinates such Collateral Loan by operation
of a priority of payments, turnover provisions or the transfer of assets in
order to limit recourse to the related Obligor or releases any material
guarantor or co-Obligor from its obligations with respect thereto;

 

(c) substitutes or releases the underlying assets securing such Collateral Loan
(other than as expressly permitted by the Related Documents as of the date such
Collateral Loan was acquired by the Borrower), and such substitution or release
materially and adversely affects the value of such Collateral Loan (as
determined in the sole, reasonable discretion of the Administrative Agent);

 

(d) waives, extends or postpones any date fixed for any scheduled payment or
mandatory prepayment of principal on such Collateral Loan; or

 

(e) reduces or forgives any principal amount of such Collateral Loan; or

 

(f) delays or extends the maturity date of such Collateral Loan.

 

“Maximum Moody’s Weighted Average Rating Factor Test” means a test that will be
satisfied on any date of determination if the Weighted Average Moody’s Rating
Factor of the Eligible Loans is 3490.

 

“Maximum Weighted Average Life Test” means a test that will be satisfied on any
date of determination if the Weighted Average Life of the Eligible Loans as of
such date is less than or equal to 7.0 years.

 

“Measurement Date” means (a) the Closing Date, (b) each Borrowing Date, (c) the
date on which a Collateral Loan is acquired or disposed of by the Borrower and
(d) each Monthly Report Determination Date.

 

“Minimum Diversity Score Level” means 20.

 

27

 

 

“Minimum Diversity Score Test” means a test that will be satisfied on any date
of determination if the Diversity Score as of such date equals or exceeds the
Minimum Diversity Score Level.

 

“Minimum Equity Amount” means, at any time, the greater of (a) $30,000,000 and
(b) the maximum Principal Balances of the six (6) largest Eligible Loans (it
being understood that multiple Eligible Loans to the same Obligor and its
Affiliates shall be treated as a single exposure).

 

“Minimum Weighted Average Spread Test” means a test that will be satisfied on
any date of determination if the Weighted Average Spread equals or exceeds
3.00%.

 

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

 

“Monthly Report” has the meaning specified in Section 8.07(a).

 

“Monthly Report Determination Date” has the meaning specified in Section
8.07(a).

 

“Monthly Reporting Date” has the meaning specified in Section 8.07(a).

 

“Moody’s” means Moody’s Investors Service, Inc., together with its successors.

 

“Moody’s Industry Classification” means the industry classifications set forth
in Schedule 5 hereto, as such industry classifications shall be updated at the
option of the Collateral Manager if Moody’s publishes revised industry
classifications.

 

“Moody’s Rating” means, with respect to any Collateral Loan, as of any date of
determination:

 

(a) if such Collateral Loan has a monitored rating, an unpublished monitored
rating expressly assigned to a debt obligation (or facility), or a monitored
estimated rating expressly assigned to a debt obligation (or facility) by
Moody’s that addresses the full amount of the principal interest promised, such
rating;

 

(b) if the foregoing paragraph is not applicable, then, if the related Obligor
has a corporate family rating by Moody’s, the rating specified in the applicable
row of the table below under “Relevant Rating” opposite the row in the table
below that describes such Collateral Loan:

 

Collateral Loan   Relevant Rating    

The Collateral Loan is a secured obligation, but is not a Second Lien Obligation
and is not subordinate 

  The rating by Moody’s that is one rating subcategory above such corporate
family rating    

The Collateral Loan is an unsecured obligation or is a Second Lien Obligation,
but is not subordinate

  The rating by Moody’s that is one rating subcategory below such corporate
family rating     The Collateral Loan is subordinate  

The rating by Moody’s that is two rating subcategories below such corporate
family rating

 

28

 

 

(c) if the foregoing paragraphs are not applicable, but there is a rating by
Moody’s on a secured obligation of the Obligor that is not a Second Lien
Obligation and is not subordinate (the “other obligation”), the rating specified
in the applicable row of the table below under “Relevant Rating” opposite the
row in the table below that describes such Collateral Loan:

 

Collateral Loan   Relevant Rating    

The Collateral Loan is a secured obligation, but is not a Second Lien Obligation
and is not subordinate

  The rating assigned by Moody’s to the other obligation    

The Collateral Loan is an unsecured obligation or is a Second Lien Obligation,
but is not subordinate

 

 

The rating by Moody’s that is one rating subcategory below the rating assigned
by Moody’s to the other obligation

    The Collateral Loan is subordinate   The rating by Moody’s that is two
rating subcategories below the rating assigned by Moody’s to the other
obligation 

 

(d) if the foregoing paragraphs are not applicable, but there is a rating by
Moody’s on an unsecured obligation of the Obligor (or, failing that, an
obligation that is a Second Lien Obligation) but is not subordinate (the “other
obligation”), the rating specified in the applicable row of the table below
under “Relevant Rating” opposite the row in the table below that describes such
Collateral Loan:

 

Collateral Loan   Relevant Rating     The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate  

The rating by Moody’s that is one rating subcategory above the rating assigned
by Moody’s to the other obligation

   

The Collateral Loan is an unsecured obligation or is a Second Lien Obligation,
but is not subordinate

  The rating assigned by Moody’s to the other obligation     The Collateral Loan
is subordinate  

The rating by Moody’s that is one rating subcategory below the rating assigned
by Moody’s to the other obligation 

 

(e) if the foregoing paragraphs are not applicable, but there is a rating by
Moody’s on an obligation of the Obligor that is subordinate (the “other
obligation”), the rating specified in the applicable row of the table below
under “Relevant Rating” opposite the row in the table below that describes such
Collateral Loan:

 

29

 

 

Collateral Loan   Relevant Rating    

The Collateral Loan is a secured obligation, but is not a Second Lien Obligation
and is not subordinate

 

The rating by Moody’s that is two rating subcategories above the rating assigned
by Moody’s to the other obligation

   

The Collateral Loan is an unsecured obligation or is a Second Lien Obligation,
but is not subordinate

 

 

The rating by Moody’s that is one rating subcategory above the rating assigned
by Moody’s to the other obligation

   

The Collateral Loan is subordinate

 

  The rating assigned by Moody’s to the other obligation

 

(f) if a rating cannot be assigned pursuant to clauses (a) through (e), the
Moody’s Rating may be determined using any of the methods below:

 

(1) for up to 5% of the Aggregate Asset Cost, the Borrower may apply to Moody’s
for a shadow rating or public rating of such Collateral Loan, which shall then
be the Moody’s Rating (and the Borrower may deem the Moody’s Rating of such
Collateral Loan to be “B3” pending receipt of such shadow rating or public
rating, as the case may be); provided that (x) a Collateral Loan will not be
included in the 5% limit of the Aggregate Asset Cost if the Borrower has
assigned a rating to such Collateral Loan in accordance with clause (2) below
and (y) upon receipt of a shadow rating or public rating, as the case may be,
such Collateral Loan will not be included in the 5% limit of the Aggregate Asset
Cost; or

 

(2) for up to 5% of the Aggregate Asset Cost, if there is a rating of an obligor
that has been provided by S&P to the Administrative Agent and the Borrower, the
Borrower may impute a Moody’s Rating that corresponds to such
rating; provided that a Collateral Loan will not be included in the 5% limit of
the Aggregate Asset Cost if the Borrower has applied to Moody’s for a shadow
rating.

 

For purposes of this Agreement, a “private rating” shall refer to a rating
obtained by the Administrative Agent, by the Borrower or by or on behalf of an
obligor on a Collateral Loan that is not disseminated publicly; whereas a
“shadow rating” shall refer to a credit estimate obtained (i) upon application
of the Borrower or a holder of a Collateral Loan or (ii) from the proper use of
the RiskCalc Plus probability of default model most recently made available by
Moody’s. Any private rating or shadow rating shall be required to be refreshed
annually. If the Borrower applies to Moody’s for a shadow rating or public
rating of a Collateral Loan, the Borrower shall provide evidence to the
Administrative Agent of such application and shall notify the Administrative
Agent of the expected rating. The Borrower shall notify the Administrative Agent
of the shadow rating or public rating assigned by Moody’s to a Collateral Loan.

 

“Moody’s Rating Factor” means, for each Collateral Loan, the number set forth in
the table below opposite the Moody’s Rating of such Collateral Loan.

 

30

 

 

Moody’s Rating Moody’s Rating Factor Moody’s Rating Moody’s Rating Factor Aaa 1
Ba1 940 Aa1 10 Ba2 1,350 Aa2 20 Ba3 1,766 Aa3 40 B1 2,220 A1 70 B2 2,720 A2 120
B3 3,490 A3 180     Baa1 260 Caa1 4,770 Baa2 360     Baa3 610 Caa2 6,500    
Caa3 or lower 10,000

 

provided that for purposes of the Maximum Moody’s Weighted Average Rating Factor
Test, any Collateral Loan issued or guaranteed by the United States government
or any agency or instrumentality thereof is assigned a Moody’s Rating Factor of
1; provided, further, however, to the extent any Collateral Loan has a rating
from S&P or a private rating, such rating will be converted to the Moody’s
equivalent for purposes of the Maximum Moody’s Weighted Average Rating Factor
Test.

 

“Net Aggregate Exposure Amount” means, at any time, the excess (if any) of (a)
the aggregate unfunded amounts in respect of all Delayed Drawdown Collateral
Loans and Revolving Collateral Loans at such time over (b) the aggregate amount
on deposit in the Unfunded Reserve Account at such time.

 

“Net Equity Test” means a test that will be satisfied at any time if the sum of
(a) the Aggregate Principal Balance of all Eligible Loans held by the Borrower
at such time, plus (b) the aggregate amount of cash then on deposit in the
Principal Collection Subaccount, minus (c) the sum of (x) the Advances
Outstanding at such time plus (y) all other Obligations due and owing at such
time is greater than the Minimum Equity Amount at such time.

 

“New Lending Office” has the meaning assigned to such term in the definition of
“Excluded Taxes”.

 

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

 

“Non-U.S. Lender” has the meaning assigned to such term in Section 12.03(g).

 

“Note” means each promissory note, if any, issued by the Borrower to a Lender in
accordance with the provisions of Section 2.03, substantially in the form of
Exhibit E hereto.

 

“Noteless Loan” means a Collateral Loan with respect to which (a) the related
loan agreement does not require the Obligor to execute and deliver an Underlying
Note to evidence the indebtedness created under such Collateral Loan and (b) no
Underlying Notes issued to the Borrower are outstanding with respect to the
portion of the Collateral Loan transferred to the Borrower.

 

“Notice of Borrowing” has the meaning assigned to such term in Section 2.02.

 

“Notice of Prepayment” has the meaning assigned to such term in Section 2.05.

 

“Obligations” means all indebtedness, whether absolute, fixed or contingent, at
any time or from time to time owing by the Borrower to any Secured Party or any
Affected Person under or in connection with this Agreement, the Notes or any
other Facility Document, including all amounts payable by the Borrower in
respect of the Advances, with interest thereon, and all other amounts payable
hereunder or thereunder by the Borrower.

 

31

 

 

“Obligor” means, in respect of any Collateral Loan, the Person primarily
obligated to pay Collections in respect of such Collateral Loan, including any
applicable guarantors.

 

“OFAC” has the meaning assigned to such term in Section 4.01(f).

 

“Other Connection Taxes” means, in the case of any Secured Party, any Taxes
imposed by any jurisdiction by reason of such Secured Party having any present
or former connection with such jurisdiction (other than a connection arising
solely from such Secured Party having executed, delivered, become a party to,
performed its obligations under, received any payment under, received or
perfected a security interest under, engaged in any other transaction pursuant
to or enforced its rights under this Agreement, the Notes or any other Facility
Document or sold or assigned an interest in any Collateral Loan or Facility
Document).

 

“Other Taxes” has the meaning assigned to such term in Section 12.03(b).

 

“Partial PIK Loan” means a Collateral Loan that requires the Obligor to pay only
a portion of the accrued and unpaid interest in Cash on a current basis, the
remainder of which is deferred and paid later together with interest thereon as
a lump sum and is treated as Interest Proceeds at the time it is received;
provided that such Collateral Loan shall not constitute a Partial PIK Loan if
the portion of such interest required to be paid in Cash pursuant to the terms
of the related underlying instruments carries a current Cash pay interest rate
of not less than 2.50% per annum over LIBOR.

 

“Participant” means any bank or other Person to whom a participation is sold as
permitted by Section 12.06(c).

 

“Participant Register” has the meaning assigned to such term in Section
12.06(c)(ii).

 

“PATRIOT Act” has the meaning assigned to such term in Section 4.01(f).

 

“Payment Account” has the meaning assigned to such term in Section 8.03.

 

“Payment Date” means the 18th day of January, April, July and October in each
year, the first of which shall be January 18, 2015; provided that, if any such
day is not a Business Day, then such Payment Date shall be the next succeeding
Business Day. The Final Maturity Date shall also be a Payment Date.

 

“Payment Date Report” has the meaning specified in Section 8.07(b).

 

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor agency
or entity performing substantially the same functions.

 

“Percentage” of any Lender means, (a) with respect to any Lender party hereto on
the date hereof, the percentage set forth opposite such Lender’s name on
Schedule 1 hereto, as such amount is reduced by any Assignment and Acceptance
entered into by such Lender with an assignee or increased by any Assignment and
Acceptance entered into by such Lender with an assignor, or (b) with respect to
a Lender that has become a party hereto pursuant to an Assignment and
Acceptance, the percentage set forth therein as such Lender’s Percentage,
as such amount is reduced by an Assignment and Acceptance entered into between
such Lender and an assignee or increased by any Assignment and Acceptance
entered into by such Lender with an assignor.

 

32

 

 

“Permitted Assignee” means (a) a Lender or any of its Affiliates, (b) any Person
managed by a Lender or any of its Affiliates or (c) any financial or other
institution or fund (other than the Borrower or an Affiliate thereof) acceptable
to the Administrative Agent and the Borrower (such consent not to be
unreasonably withheld and such consent shall not be required during the
existence of an Event of Default).

 

“Permitted Liens” means any of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens created in favor of the Collateral Agent hereunder or under the other
Facility Documents for the benefit of the Secured Parties; (b) Liens for state,
municipal or other local Taxes if such Taxes shall not at the time be due and
payable or if a Person shall currently be contesting the validity thereof in
good faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of such Person; (c) with
respect to agented Collateral Loans, security interests, liens and other
encumbrances in favor of the lead agent, the collateral agent or the paying
agent on behalf of all holders of indebtedness of the related Obligor under the
related facility; and (d) any security interests, liens and other rights or
encumbrances granted under any governing documents or other agreement between or
among or binding upon the Borrower as the holder of equity in an Obligor.

 

“Permitted Offer” means a tender offer or redemption notice (i) pursuant to the
terms of which the offeror offers to acquire a Collateral Loan in exchange for
consideration consisting solely of Cash in an amount equal to or greater than
the full face amount of such Collateral Loan plus any accrued and unpaid
interest and (ii) as to which the Collateral Manager has determined in its
reasonable commercial judgment that the offeror has sufficient access to
financing to consummate the offer or redemption.

 

“Permitted Subsidiary” means any subsidiary (a) that meets the then-current
general criteria of Moody’s and S&P for bankruptcy remote entities and that
includes, in its Constituent Documents, “special purpose” provisions
substantially similar to those in the Constituent Documents of the Borrower, and
(b) that is formed for the sole purpose of holding any Equity Security in one or
more Persons or other assets received in a workout of a Defaulted Collateral
Loan or otherwise acquired in connection with a workout of a Collateral Loan.

 

“Person” means an individual or a corporation (including a business trust),
partnership, trust, incorporated or unincorporated association, joint stock
company, limited liability company, government (or an agency or political
subdivision thereof) or other entity of any kind.

 

“PIK Loan” means a Collateral Loan (other than a Partial PIK Loan or a
Collateral Loan described in the proviso to the definition of “Partial PIK
Loan”) that permits the Obligor thereon to defer or capitalize any portion of
the accrued interest thereon.

 

“Post-Default Rate” means a rate per annum equal to the rate of interest
otherwise in effect pursuant to this Agreement (or, if no such rate is
specified, the Base Rate) plus 3.50% per annum.

 

“Potential Terminated Lender” has the meaning specified in Section 2.16(a).

 

“Predecessor Collateral Manager Work Product” has the meaning assigned to such
term in Section 14.08(c).

 

“Prepayment Fee” has the meaning assigned to such term in Section 2.12(b).

 

“Prime Rate” means the rate announced by Citibank 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 Citibank in connection with extensions of credit to debtors.

 

33

 

 

“Principal Balance” means, with respect to any loan, as of any date of
determination, the outstanding principal amount of such loan, excluding any
capitalized interest.

 

“Principal Collection Subaccount” has the meaning specified in Section 8.02(a).

 

“Principal Proceeds” means, with respect to any Collection Period or the related
Determination Date, all amounts received by the Borrower during such Collection
Period that do not constitute Interest Proceeds or Excluded Amounts, including
unapplied proceeds of the Advances and any amounts received by the Borrower as
equity contributions (howsoever designated).

 

“Priority of Payments” has the meaning specified in Section 9.01(a).

 

“Private Authorizations” means all franchises, permits, licenses, approvals,
consents and other authorizations of all Persons (other than Governmental
Authorities).

 

“Proceeds” has, with reference to any asset or property, the meaning assigned to
it under Section 9-102(a)(64) of the UCC and, in any event, shall include, but
not be limited to, any and all amounts from time to time paid or payable under
or in connection with such asset or property.

 

“Process Agent” has the meaning assigned to such term in Section 12.14.

 

“Prohibited Transaction” means a transaction described in Section 406(a) of
ERISA, that is not exempted by a statutory or administrative or individual
exemption pursuant to Section 408 of ERISA.

 

“Proper Instructions” means instructions (including Trade Confirmations)
received by the Custodian from the Borrower, or the Collateral Manager on behalf
of the Borrower, in any of the following forms acceptable to the Custodian: (a)
in writing signed by an Authorized Person (and delivered by hand, by mail, by
overnight courier or by telecopier); (b) by electronic mail from an Authorized
Person; (c) in tested communication; (d) in a communication utilizing access
codes effected between electro mechanical or electronic devices; or (e) such
other means as may be agreed upon from time to time by the Custodian and the
party giving such instructions.

 

“Purchase Price” means, with respect to any Collateral Loan, the aggregate
purchase price paid by the Borrower to purchase such Collateral Loan (which (a)
shall be expressed as a percentage of par and (b) shall be determined exclusive
of accrued interest and premium).

 

“QIB” has the meaning assigned to such term in Section 12.06(e).

 

“Qualified Institution” means a depository institution or trust company
organized under the laws of the United States of America or any one of the
States thereof or the District of Columbia (or any domestic branch of a foreign
bank), (a)(i) that has either (A) a long-term unsecured debt rating of “A” or
better by S&P and “A2” or better by Moody’s or (B) 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, (ii) the parent corporation of which has either (A) a
long-term unsecured debt rating of “A” or better by S&P and “A2” or better by
Moody’s or (B) 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 (iii) is
otherwise acceptable to the Administrative Agent and (b) the deposits of which
are insured by the Federal Deposit Insurance Corporation.

 

34

 

 

“Qualified Purchaser” has the meaning assigned to such term in Section 12.06(e).

 

“Quarterly Asset Amount” means, for any Payment Date, the arithmetical average
of (a) the Aggregate Principal Balance of all Eligible Loans and the cash and
the principal balance of any Eligible Investments on deposit in the Principal
Collection Subaccount, measured as of the first day of the related Collection
Period and (b) the Aggregate Principal Balance of all Eligible Loans and the
cash and the principal balance of any Eligible Investments on deposit in the
Principal Collection Subaccount, measured as of the related Determination Date.

 

“Register” has the meaning assigned to such term in Section 12.06(d).

 

“Regulation T”, “Regulation U”, “Regulation W” and “Regulation X” mean
Regulation T, U, W and X, respectively, of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

 

“Reinvestment Period” means the period from and including the Closing Date to
but excluding the earliest of (a) the date that is two (2) years after the
Closing Date; (b) the date of the termination of the Commitments pursuant to
Section 6.01; and (c) the date on which a Specified Key Individual Event has
occurred, provided that, in the case of this clause (c), the Reinvestment Period
may be reinstated upon the appointment of a replacement individual reasonably
acceptable to the Administrative Agent.

 

“Related Documents” means, with respect to any Collateral Loan, all agreements
or documents evidencing, securing, governing or giving rise to such Collateral
Loan.

 

“Replacement Lender” has the meaning assigned to such term in Section 2.16(a).

 

“Requested Amount” has the meaning assigned to such term in Section 2.02.

 

“Required Lenders” means, as of any date of determination, Lenders whose
aggregate principal amount of Advances Outstanding plus unused Commitments
aggregate more than 50% of the aggregate amount of the Commitments (used and
unused) or, if the Commitments have expired or been terminated or otherwise
reduced to zero, the aggregate principal amount of all Advances Outstanding;
provided, however, that if any Lender shall be a Defaulting Lender at such time,
then there shall be excluded from the determination of Required Lenders Advances
owing to such Defaulting Lender and such Defaulting Lender’s unfunded
Commitments.

 

“Required Loan Documents” means, for each Collateral Loan:

 

(a)other than in the case of a Closing Date Participation Interest, an executed
copy of the assignment for such Collateral Loan;

 

(b)other than in the case of a Noteless Loan or a Closing Date Participation
Interest, the original executed Underlying Note endorsed by the issuer or the
prior holder of record of such Collateral Loan in blank or to the Borrower;

 

(c)an executed copy of the Underlying Loan Agreement, together with a copy of
all amendments and modifications thereto;

 

(d)a copy of each related security agreement (if any) signed by each applicable
Obligor;

 

35

 

 

(e)a copy of each related guarantee (if any) then executed in connection with
such Collateral Loan;

 

(f)for the Closing Date Participation Interests, the applicable Closing Date
Participation Agreement; and

 

(g)a Document Checklist.

 

“Responsible Officer” means (a) in the case of (i) a corporation or (ii) a
partnership or limited liability company that, in each case, pursuant to its
Constituent Documents, has officers, any chief executive officer, chief
financial officer, chief administrative officer, managing director, president,
senior vice president, vice president, assistant vice president, treasurer,
director or manager, and, in any case where two Responsible Officers are acting
on behalf of such entity, the second such Responsible Officer may be a secretary
or assistant secretary (provided that a director of the Borrower shall be a
Responsible Officer regardless of whether its Constituent Documents provide for
officers), (b) without limitation of clause (a)(ii), in the case of a limited
partnership, the Responsible Officer of the general partner, acting on behalf of
such general partner in its capacity as general partner, (c) without limitation
of clause (a)(ii), in the case of a limited liability company, any Responsible
Officer of the sole member or managing member, acting on behalf of the sole
member or managing member in its capacity as sole member or managing member, (d)
in the case of a trust, the Responsible Officer of the trustee, acting on behalf
of such trustee in its capacity as trustee, (e) an “authorized signatory”
or ”authorized officer” that has been so authorized pursuant to customary
corporate proceedings, limited partnership proceedings, limited liability
company proceedings or trust proceedings, as the case may be, and that has
responsibilities commensurate with the matter for which it is acting as a
Responsible Officer, and (f) in the case of the Collateral Administrator, the
Collateral Agent or Administrative Agent, an officer of the Collateral
Administrator, the Collateral Agent or Administrative Agent, as applicable,
responsible for the administration of this Agreement.

 

“Revolving Collateral Loan” means any Collateral Loan (other than a Delayed
Drawdown Collateral Loan) that is a loan (including revolving loans, including
funded and unfunded portions of revolving credit lines and letter of credit
facilities, unfunded commitments under specific facilities and other similar
loans and investments) that by its terms may require one or more future advances
to be made to the related Obligor by the Borrower; provided that any such
Collateral Loan will be a Revolving Collateral Loan only until all commitments
to make advances to the Obligor expire or are terminated or irrevocably reduced
to zero.

 

“Sale Agreement” means the Sale, Contribution and Master Participation
Agreement, dated as of the date hereof, by and among the Equityholder and the
Borrower.

 

“S&P” means Standard & Poor’s Ratings Service, a Standard & Poor’s Financial
Services LLC business.

 

“S&P Rating” means, with respect to any Collateral Loan as of any date of
determination:

 

(a) if such Collateral Loan has a monitored rating expressly assigned to a debt
obligation (or facility) or a monitored estimated rating expressly assigned to a
debt obligation (or facility) by S&P, such rating,

 

(b) if the foregoing paragraph is not applicable, then, if the related Obligor
has a corporate issuer rating by S&P, the rating specified in the applicable row
of the table below under “Relevant Rating” opposite the row in the table below
that describes such Collateral Loan:

 

36

 

 

Collateral Loan   Relevant Rating    

The Collateral Loan is a secured obligation, but is not a Second Lien Obligation
and is not subordinate

 

The rating by S&P that is one rating subcategory above such corporate issuer
rating

   

The Collateral Loan is an unsecured obligation or is a Second Lien Obligation,
but is not subordinate

 

The rating by S&P that is one rating subcategory below such corporate issuer
rating 

   

The Collateral Loan is subordinate

 

 

 

The rating by S&P that is two rating subcategories below such corporate issuer
rating

 

(c) if the foregoing paragraphs are not applicable, but there is a rating by S&P
on a secured obligation of the Obligor that is not a Second Lien Obligation and
is not subordinate (the “other obligation”), the rating specified in the
applicable row of the table below under “Relevant Rating” opposite the row in
the table below that describes such Collateral Loan:

 

Collateral Loan   Relevant Rating    

The Collateral Loan is a secured obligation, but is not a Second Lien Obligation
and is not subordinate

 

The rating assigned by S&P to the other obligation

 

   

The Collateral Loan is an unsecured obligation or is a Second Lien Obligation,
but is not subordinate

 

 

The rating by S&P that is one rating subcategory below the rating assigned by
S&P to the other obligation

   

The Collateral Loan is subordinate

 

 

 

The rating by S&P that is two rating subcategories below the rating assigned by
S&P to the other obligation

 

(d) if the foregoing paragraphs are not applicable, but there is a rating by S&P
on an unsecured obligation of the Obligor (or, failing that, an obligation that
is a Second Lien Obligation) but is not subordinate (the “other obligation”),
the rating specified in the applicable row of the table below under “Relevant
Rating” opposite the row in the table below that describes such Collateral Loan:

 

Collateral Loan   Relevant Rating    

The Collateral Loan is a secured obligation, but is not a Second Lien Obligation
and is not subordinate

 

The rating by S&P that is one rating subcategory above the rating assigned by
S&P to the other obligation

   

The Collateral Loan is an unsecured obligation or is a Second Lien Obligation,
but is not subordinate

 

The rating assigned by S&P to the other obligation

   

The Collateral Loan is subordinate 

 

The rating by S&P that is one rating subcategory below the rating assigned by
S&P to the other obligation

 

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(e) if the foregoing paragraphs are not applicable, but there is a rating by S&P
on an obligation of the Obligor that is subordinate (the “other obligation”),
the rating specified in the applicable row of the table below under “Relevant
Rating” opposite the row in the table below that describes such Collateral Loan:

 

Collateral Loan   Relevant Rating    

The Collateral Loan is a secured obligation, but is not a Second Lien Obligation
and is not subordinate

 

The rating by S&P that is two rating subcategories above the rating assigned by
S&P to the other obligation

   

The Collateral Loan is an unsecured obligation or is a Second Lien Obligation,
but is not subordinate

 

The rating by S&P that is one rating subcategory above the rating assigned by
S&P to the other obligation

   

The Collateral Loan is subordinate

 

The rating assigned by S&P to the other obligation

 

(f) if the foregoing paragraphs are not applicable, then the S&P Rating shall be
“CC”; provided that (x) if application has been made to S&P to rate a Collateral
Loan and such Collateral Loan has a Moody’s Rating, then the S&P Rating with
respect to such Collateral Loan shall, pending the receipt of such rating from
S&P, be equal to the S&P Rating that is equivalent to such Moody’s Rating and
(y) Collateral Loans constituting no more than 10% of the Aggregate Asset Cost
may be given an S&P Rating based on a rating given by Moody’s as provided in
clause (x) (after giving effect to the addition of the relevant Collateral Loan,
if applicable).

 

“Scheduled Distribution” means, with respect to any Collateral Loan, for each
Due Date, the scheduled payment of principal and/or interest and/or fees due on
such Due Date with respect to such Collateral Loan.

 

“SEC” means the Securities and Exchange Commission or any other governmental
authority of the United States of America at the time administrating the
Securities Act, the Investment Company Act or the Exchange Act.

 

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“Second Lien Obligation” means any loan (and not a bond or similar security)
that meets the following criteria:

 

(i) is not (and is not expressly permitted by its terms to become) subordinate
in right of payment to any other obligation for borrowed money of the Obligor of
such loan (excluding customary terms applicable to a second lien lender under
customary intercreditor provisions, such as with respect to the liquidation of
the Obligor or of specified collateral for such loan);

 

(ii) is secured by a valid second priority perfected Lien in, to or on specified
collateral securing the Obligor’s obligations under such loan (whether or not
such loan is also secured by any higher or lower priority Lien on other
collateral); provided that if such loan is also secured by a valid first
priority perfected Lien in, to or on other specified collateral securing the
Obligor’s obligations under such loan and otherwise satisfies the requirements
of the definition of First Lien Obligation, then such loan shall be deemed to be
a First Lien Obligation for the purposes of this Agreement;

 

(iii) is secured, pursuant to such second priority perfected Lien, by collateral
having a value (determined as set forth below) not less than the outstanding
principal balance of such loan plus the aggregate outstanding principal balances
of all other loans of equal or higher seniority secured by a first or second
Lien in the same collateral;

 

(iv) is not a loan which is secured solely or primarily by the common stock of
its Obligor or any of its Affiliates; and

 

(v) such loan is priced by at least two independent sources (as evidenced by
data from Loan X, Inc., Loan Pricing Corporation, MarkIt Partners or any other
nationally recognized loan pricing service selected by the Administrative
Agent).

 

The determination as to whether clause (iii) of this definition is satisfied
shall be based on the Collateral Manager’s judgment at the time the loan is
acquired by the Borrower (which value may include an assessment of the Obligor’s
cash flow, enterprise value, general financial condition and other attributes).
The limitation set forth in clause (iv) above shall not apply with respect to a
loan made to a parent entity that is secured solely or substantially by the
stock of one or more of the subsidiaries of such parent entity to the extent
that the granting by any such subsidiary of a Lien on its own property would (1)
in the case of a subsidiary that is not part of the same consolidated group as
such parent entity for U.S. federal income tax purposes, result in a deemed
dividend by such subsidiary to such parent entity for such tax purposes, (2)
violate Law applicable to such subsidiary (whether the obligation secured is
such loan or any other similar type of indebtedness owing to third parties) or
(3) cause such subsidiary to suffer adverse economic consequences under capital
adequacy or other similar rules, in each case, so long as (x) the Related
Documents limit the incurrence of indebtedness by such subsidiary and (y) the
aggregate amount of all such indebtedness is not material relative to the
aggregate value of the assets of such subsidiary.

 

“Secured Parties” means the Administrative Agent, the Collateral Agent, the
Custodian, the Collateral Administrator and the Lenders.

 

“Secured Party Representative” has the meaning assigned to such term in Section
12.09.

 

“Securities Act” means the Securities Act of 1933 and the rules and regulations
promulgated thereunder, all as from time to time in effect.

 

39

 

 

“Securities Intermediary” has the meaning assigned to it in Section 8-102(a)(14)
of the UCC.

 

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

 

“Solvent” as to any Person means that such Person is not “insolvent” within the
meaning of Section 101(32) of the Bankruptcy Code or Section 271 of the New York
Debtor and Creditor Law.

 

“Specified Eligible Investment” means an Eligible Investment meeting the
requirements of Section 8.06(a) and that is available to the Collateral Agent,
to be specified by the Collateral Manager to the Collateral Agent (with a copy
to the Administrative Agent) on or prior to the initial Borrowing Date; provided
that, so long as no Default or Event of Default shall have occurred and then be
continuing, at any time with not less than five Business Days’ notice to the
Collateral Agent (with a copy to the Administrative Agent), the Collateral
Manager may (and, if the then Specified Eligible Investment is no longer
available to the Collateral Agent, shall) designate another Eligible Investment
that meets the requirements of Section 8.06(a) and that is available to the
Collateral Agent to be the Specified Eligible Investment for purposes hereof.
After the occurrence and continuation of a Default or Event of Default, a
Specified Eligible Investment shall mean an Eligible Investment meeting the
requirements of Section 8.06(a) and which has been selected by the
Administrative Agent.

 

“Specified Key Individual Event” means an event in which Hari Srinivasan shall
(i) cease to be an officer, employee or partner of TICC Adviser or (ii) cease to
be actively involved in the management of TICC Adviser, including, but not
limited to, management of the Collateral portfolio, underwriting, the credit
approval process and credit monitoring activities, other than due to temporary
absences for family leave, illness or injury, and such individual is not
replaced with another individual reasonably acceptable to the Administrative
Agent.

 

“Structured Finance Obligation” means any debt obligation owing by a special
purpose finance vehicle that is secured directly and primarily by, primarily
referenced to, and/or primarily representing ownership of, a pool of receivables
or a pool of other assets, including collateralized debt obligations,
residential mortgage-backed securities, commercial mortgage-backed securities,
other asset-backed securities, “future flow” receivable transactions and other
similar obligations; provided that asset based lending facilities, loans to
financial service companies, factoring businesses, health care providers and
other genuine operating businesses do not constitute Structured Finance
Obligations.

 

“Subject Laws” has the meaning assigned to such term in Section 4.01(f).

 

“Successor Collateral Manager” has the meaning assigned to such term in Section
14.07(c).

 

“Tangible Net Worth” means, at any time, the excess of the value of total assets
(excluding patents, trademarks, copyrights, trade names, licenses, operating
agreements, deferred or capitalized research and development costs, goodwill
(including any amounts, however designated, representing the cost of acquisition
of business and investments in excess of the book value thereof), unamortized
debt discount and expense, deferred research and development costs, any write-up
of asset value associated with intangible assets under GAAP, and any other
assets treated as intangible assets under GAAP) over total liabilities,
determined in accordance with GAAP, of the Equityholder and its Subsidiaries.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any taxing
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.

 

“TICC Adviser” means TICC Management, LLC, and its successors and assigns.

 

40

 

 

“TICC Capital” means TICC Capital Corp., a Maryland corporation, and its
permitted successors and assigns.

 

“TICC CLO Closing Date Participation Agreement” means that certain Master
Participation Agreement, dated as of the Closing Date, between TICC CLO LLC, as
transferor, and the Borrower, as transferee, relating to certain of the Closing
Date Participation Interests.

 

“Trade Confirmation” means a confirmation of the Borrower’s acquisition of a
Collateral Loan delivered to the Collateral Agent (with a copy to the Custodian
and the Administrative Agent) by the Borrower pursuant to Section 13.03(b), and
setting forth applicable information with respect to such Collateral Loan, which
confirmation shall contain such information in respect of such Collateral Loan
as the Custodian may reasonably require in order to enable the Custodian to
perform its duties hereunder in respect of such Collateral Loan in the form of a
customary trade confirmation as agreed to by, the Custodian and the Borrower
from time to time.

 

“Trade Date” has the meaning assigned to such term in Section 1.04(j).

 

“UCC” means the New York Uniform Commercial Code; provided that if, by reason of
any mandatory provisions of law, the perfection, the effect of perfection or
non-perfection or priority of the security interests granted to the Collateral
Agent pursuant to this Agreement are governed by the Uniform Commercial Code as
in effect in a jurisdiction of the United States of America other than the State
of New York, then “UCC” means the Uniform Commercial Code as in effect from time
to time in such other jurisdiction for purposes of such perfection, effect of
perfection or non-perfection or priority.

 

“Uncertificated Security” has the meaning specified in Section 8-102(a)(18) of
the UCC.

 

“Underlying Loan Agreement” means, with respect to any Collateral Loan, the
document or documents evidencing the commercial loan agreement or facility
pursuant to which such Collateral Loan is made.

 

“Underlying Note” means one or more promissory notes, if any, executed by an
Obligor evidencing a Collateral Loan.

 

“Unfunded Reserve Account” has the meaning specified in Section 8.04.

 

“Unfunded Reserve Required Amount” has the meaning specified in Section 8.04.

 

“Unused Amount” means, for any day, an amount equal to the excess of (a) the
Facility Amount on such day over (b) the Advances Outstanding on such day.

 

“Volcker Rule” means Section 13 of the U.S. Bank Holding Company Act of 1956, as
amended, and the applicable rules and regulations thereunder.

 

“Warranty Collateral Loan” has the meaning assigned to such term in the Sale
Agreement.

 

“Weighted Average Spread” means, as of any date, the number obtained by
dividing:

 

(a) the amount equal to (i) the Aggregate Funded Spread with respect to all
Eligible Loans plus (ii) the Aggregate Unfunded Spread, by

 

(b) the Aggregate Principal Balance of all Eligible Loans as of such date.

 

41

 

 

“Weighted Average Life” means, as of any date of determination with respect to
all Eligible Loans, the number of years following such date obtained by:

 

(a) summing the products of (i): the Average Life at such time of each Eligible
Loan multiplied by (ii) the Principal Balance of such Eligible Loan; and

 

(b) dividing such sum by the Aggregate Principal Balance of all Eligible Loans
as of such date.

 

For the purposes of the foregoing, the “Average Life” is, on any date of
determination with respect to any Eligible Loan, the quotient obtained by
dividing (i) the sum of the products of (A) the number of years (rounded to the
nearest one hundredth thereof) from such date of determination to the respective
dates of each successive Scheduled Distribution of principal of such Eligible
Loan and (B) the respective amounts of principal of such Scheduled Distributions
by (y) the sum of all successive Scheduled Distributions of principal on such
Eligible Loan.

 

“Weighted Average Moody’s Rating Factor” means, as of any date of determination
with respect to all Eligible Loans, the number (rounded up to the nearest whole
number) determined by:

 

(a) summing the products of (i) the Principal Balance of each Eligible Loan
(excluding for avoidance of doubt Equity Securities) multiplied by (ii) the
Moody’s Rating Factor of such Eligible Loan; and

 

(b) dividing such sum by the Aggregate Principal Balance of all such Eligible
Loans.

 

Section 1.02. Rules of Construction

 

For all purposes of this Agreement and the other Facility Documents, except as
otherwise expressly provided or unless the context otherwise requires, (a)
singular words shall connote the plural as well as the singular and vice versa
(except as indicated), as may be appropriate, (b) the words “herein,” “hereof”
and “hereunder” and other words of similar import used in any Facility Document
refer to such Facility Document as a whole and not to any particular article,
schedule, section, paragraph, clause, exhibit or other subdivision thereof, (c)
the headings, subheadings and table of contents set forth in any Facility
Document are solely for convenience of reference and shall not constitute a part
of such Facility Document nor shall they affect the meaning, construction or
effect of any provision hereof, (d) references in any Facility Document to
“include” or “including” shall mean include or including, as applicable, without
limiting the generality of any description preceding such term, and for purposes
hereof the rule of ejusdem generis shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters, to
matters similar to those specifically mentioned, (e) any definition of or
reference to any Facility Document, agreement, instrument or other document
shall be construed as referring to such Facility Document, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein or any other Facility Document), (f) any reference in any
Facility Document, including the introduction and recitals to such Facility
Document, to any Person shall be construed to include such Person’s successors
and assigns (subject to any restrictions set forth herein or in any other
applicable agreement), (g) any reference to any law or regulation herein shall
refer to such law or regulation as amended, modified or supplemented from time
to time and (h) any Event of Default shall be continuing until expressly waived
in writing by the Required Lenders.

 

Section 1.03. Computation of Time Periods

 

42

 

 

Unless otherwise stated in the applicable Facility Document, in the computation
of a period of time from a specified date to a later specified date, the word
“from” means “from and including”, the word “through” means “to and including”
and the words “to” and “until” both mean “to but excluding”. Periods of days
referred to in any Facility Document shall be counted in calendar days unless
Business Days are expressly prescribed. Unless otherwise indicated herein, all
references to time of day refer to Eastern standard time or Eastern daylight
saving time, as in effect in New York City on such day.

 

Section 1.04. Collateral Value Calculation Procedures

 

In connection with all calculations required to be made pursuant to this
Agreement with respect to Scheduled Distributions on any Collateral Loan, or any
payments on any other assets included in the Collateral, with respect to the
sale of and reinvestment in Collateral Loans, and with respect to the income
that can be earned on Scheduled Distributions on such Collateral Loans and on
any other amounts that may be received for deposit in the Collection Account,
the provisions set forth in this Section 1.04 shall be applied. The provisions
of this Section 1.04 shall be applicable to any determination or calculation
that is covered by this Section 1.04, whether or not reference is specifically
made to Section 1.04, unless some other method of calculation or determination
is expressly specified in the particular provision.

 

(a) All calculations with respect to Scheduled Distributions on any Collateral
Loan shall be made on the basis of information as to the terms of each such
Collateral Loan and upon reports of payments, if any, received on such
Collateral Loan that are furnished by or on behalf of the Obligor of such
Collateral Loan and, to the extent they are not manifestly in error, such
information or reports may be conclusively relied upon in making such
calculations.

 

(b) For purposes of calculating the Coverage Tests, except as otherwise
specified in the Coverage Tests, such calculations will not include (i)
scheduled interest and principal payments on Ineligible Collateral Loans unless
or until such payments are actually made and (ii) ticking fees and other similar
fees in respect of Collateral Loans, unless or until such fees are actually
paid.

 

(c) For each Collection Period and as of any date of determination, the
Scheduled Distribution on any Collateral Loan (other than an Ineligible
Collateral Loan, which, except as otherwise provided herein, shall be assumed to
have Scheduled Distributions of zero) shall be the total amount of (i) payments
and collections to be received during such Collection Period in respect of such
Collateral Loan, (ii) proceeds of the sale of such Collateral Loan received and,
in the case of sales which have not yet settled, to be received during such
Collection Period that are not reinvested in additional Collateral Loans or
retained in a Collection Account for subsequent reinvestment pursuant to Article
X, which proceeds, if received as scheduled, will be available in a Collection
Account and available for distribution at the end of such Collection Period and
(iii) amounts referred to in clause (i) or (ii) above that were received in
prior Collection Periods but were not disbursed on a previous Payment Date or
retained in a Collection Account for subsequent reinvestment pursuant to Article
X.

 

(d) Each Scheduled Distribution receivable with respect to a Collateral Loan
shall be assumed to be received on the applicable Due Date.

 

(e) References in the Priority of Payments to calculations made on a “pro forma
basis” shall mean such calculations after giving effect to all payments, in
accordance with the Priority of Payments, that precede (in priority of payment)
or include the clause in which such calculation is made.

 

(f) For purposes of determining the Minimum Weighted Average Spread Test (and
related computations of stated interest coupons and Aggregate Funded Spread),
capitalized or deferred interest (and any other interest that is not paid in
cash) will be excluded.

 

43

 

 

(g) Portions of the same Collateral Loan acquired by the Borrower on different
dates will, for purposes of determining the purchase price of such Collateral
Loan, be treated as separate purchases on separate dates (and not a weighted
average purchase price for any particular Collateral Loan).

 

(h) For the purposes of calculating compliance with each of the Concentration
Limitations all calculations will be rounded to the nearest 0.01%.

 

(i) Notwithstanding any other provision of this Agreement to the contrary,
all monetary calculations under this Agreement shall be in Dollars. For purposes
of this Agreement, calculations with respect to all amounts received or required
to be paid in a currency other than Dollars shall be valued at zero.

 

(j) Except as otherwise provided herein, for purposes of calculating compliance
with any test under this Agreement in connection with the acquisition or
disposition of a Collateral Loan or Eligible Investment, the trade date (the
“Trade Date”) (and not the settlement date) with respect to any such Collateral
Loan or Eligible Investment under consideration for acquisition or disposition
shall be used to determine whether such acquisition or disposition is permitted
hereunder.

 

ARTICLE II
ADVANCES

 

Section 2.01. Revolving Credit Facility; Approval Requests

 

(a) The Collateral Manager, on behalf of the Borrower, shall, prior to each
proposed acquisition of Collateral Loans (whether proposed to be funded by an
Advance or by the use of the cash proceeds contributed by the Equityholder)
provide to the Administrative Agent (with a copy to the Borrower) a notice by
electronic mail in the form of Exhibit A hereto (together with any attachments
required in connection therewith, an “Approval Request”). Such approval may take
the form of a standing list of pre-approved assets containing the
characteristics of each pre-approved asset specified in Exhibit A (other than
purchase price), together with a notice of intention to trade containing the par
amount and purchase price of the Collateral Loan(s) being acquired delivered on
or prior to the second Business Day preceding the proposed trade date.

 

(b) The Administrative Agent shall have the right to approve or reject any
Approval Request in its sole discretion and to request additional information
regarding any proposed Collateral Loan. The Administrative Agent shall promptly
notify the Collateral Manager and the Borrower (with a copy to the Collateral
Agent) in writing (including via electronic mail) whether each Approval Request
has been approved or rejected. If the Borrower provides an Approval Request to
the Administrative Agent on or prior to 12:00 noon on a Business Day, the
Administrative Agent shall use commercially reasonable efforts to approve or
reject such Approval Request no later than 3:00 p.m. on such Business Day. If
the Borrower provides an Approval Request to the Administrative Agent after
12:00 noon on a Business Day, the Administrative Agent shall use commercially
reasonable efforts to approve or reject such Approval Request no later than
12:00 noon on the following Business Day. Any approval may be withdrawn at any
time prior to the time at which the Borrower actually becomes obligated to
purchase or enter into documents governing such proposed Collateral Loan by
written notice (including via e-mail) of such withdrawal from the Administrative
Agent to the Collateral Manager. If the Administrative Agent has rejected an
Approval Request, or withdrawn or withheld its approval of any such request,
then the Borrower shall not be authorized to purchase such proposed Collateral
Loan unless, in the case of a withdrawn approval, the Administrative Agent has
not withdrawn its approval prior to the time at which the Borrower enters into a
commitment to purchase such proposed Collateral Loan.

 

44

 

 

(c) On the terms and subject to the conditions hereinafter set forth, including
Article III, each Lender severally agrees to make loans to the Borrower (each,
an “Advance”) from time to time on any Business Day during the Reinvestment
Period, on a pro rata basis in each case in an aggregate principal amount at any
one time outstanding up to but not exceeding such Lender’s Commitment and, as to
all Lenders, in an aggregate principal amount up to but not exceeding the
Borrowing Base as then in effect. Each such borrowing of an Advance on any
single day is referred to herein as a “Borrowing”.

 

Within such limits and subject to the other terms and conditions of this
Agreement, the Borrower may borrow (and re-borrow) Advances under this Section
2.01 and prepay Advances under Section 2.05.

 

Section 2.02. Making of the Advances

 

(a) If the Borrower desires to make a Borrowing under this Agreement it shall
give the Collateral Agent and the Administrative Agent a written notice (each, a
“Notice of Borrowing”) for such Borrowing (which notice shall be irrevocable and
effective upon receipt) not later than 12:00 noon at least three (3) Business
Days prior to the day of the requested Borrowing.

 

Each Notice of Borrowing shall be substantially in the form of Exhibit B hereto,
dated the date the request for the related Borrowing is being made, signed by a
Responsible Officer of the Borrower, shall attach a Borrowing Base Calculation
Statement, and shall otherwise be appropriately completed. The proposed
Borrowing Date specified in each Notice of Borrowing shall be a Business Day
falling on or prior to the Commitment Termination Date, and the amount of the
Borrowing requested in such Notice of Borrowing (the “Requested Amount”) shall
be equal to at least $1,000,000 or an integral multiple of $10,000 in excess
thereof (or, if less, the remaining unfunded Commitments hereunder or, in the
case of Delayed Drawdown Collateral Loans or Revolving Collateral Loans, such
lesser amount required to be funded by the Borrower in respect thereof).

 

The Administrative Agent shall notify each Lender of its receipt of such Notice
of Borrowing by 4:30 p.m. on the day of receipt thereof (or, if such day is not
a Business Day, by 4:30 p.m. on the next succeeding Business Day).

 

(b) Each Lender shall, not later than 12:00 noon on each Borrowing Date in
respect of Advances, make its Percentage of the applicable Requested Amount
available to the Administrative Agent in immediately available funds by
disbursing such funds in Dollars to the account of the Administrative Agent in
accordance with the wiring instruction set forth in the notification of Notice
of Borrowing delivered by the Administrative Agent to the Lenders pursuant to
Section 2.02(a). Once each Lender has funded its Percentage of the applicable
Requested Amount, the Administrative Agent shall make the Requested Amount
available to the Borrower by disbursing such funds in Dollars to the Principal
Collection Subaccount.

 

Section 2.03. Evidence of Indebtedness; Notes

 

(a) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrower to it and resulting from
the Advances made by such Lender to the Borrower, from time to time, including
the amounts of principal and interest thereon and paid to it, from time to time
hereunder; provided that the failure of any Lender to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Advances in accordance with the terms of this Agreement.

 

(b) Any Lender may request that its Advances to the Borrower be evidenced by a
Note. In such event, the Borrower shall promptly prepare, execute and deliver to
such Lender a Note payable to such Lender and otherwise appropriately completed.
Thereafter, the Advances of such Lender evidenced by such Note and interest
thereon shall at all times (including after any assignment pursuant to Section
12.06(a)) be represented by a Note payable to such Lender (or registered assigns
pursuant to Section 12.06(a)), except to the extent that such Lender
(or assignee) subsequently returns any such Note for cancellation and requests
that such Advances once again be evidenced as described in clause (a) of this
Section 2.03.

 

45

 

 

Section 2.04. Payment of Principal and Interest

 

The Borrower shall pay principal and Interest on the Advances to the account of
the Administrative Agent for disbursement to the Lenders as follows:

 

(a) 100% of the outstanding principal amount of each Advance, together with all
accrued and unpaid Interest thereon, shall be payable on the Final Maturity
Date.

 

(b) Interest shall accrue on the unpaid principal amount of each Advance from
the date of such Advance until such principal amount is paid in full. The
Administrative Agent shall determine the unpaid Interest and Commitment Fees
payable thereto prior to each Payment Date using the applicable Interest Rate
for the related Interest Accrual Period to be paid by the Borrower with respect
to each Advance on each Payment Date for the related Interest Accrual Period and
shall advise each Lender and the Collateral Manager thereof and shall send a
consolidated invoice of all such Interest and Commitment Fees to the Borrower on
the third (3rd) Business Day prior to such Payment Date.

 

(c) Accrued Interest on each Advance shall be payable in arrears (i) on each
Payment Date, and (ii) in connection with any prepayment in full of the Advances
pursuant to Section 2.05(a); provided that (x) with respect to any prepayment in
full of the Advances outstanding, accrued Interest on such amount through the
date of prepayment may be payable on such date or as otherwise agreed to between
the Lenders and the Borrower and (y) with respect to any partial prepayment of
the Advances outstanding, accrued Interest on such amount through the date of
prepayment shall be payable on the Payment Date following such prepayment.

 

(d) Subject in all cases to Section 2.04(e), the obligation of the Borrower to
pay the Obligations, including the obligation of the Borrower to pay the Lenders
the outstanding principal amount of the Advances and accrued interest thereon,
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms hereof (including Section 2.15), under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower or any other Person may have or have had against any Secured
Party or any other Person.

 

(e) Notwithstanding any other provision of this Agreement, the obligations of
the Borrower under this Agreement are limited recourse obligations of the
Borrower payable solely from the Collateral in accordance with the Priority of
Payments and, following realization of the Collateral, and application of the
proceeds thereof in accordance with the Priority of Payments and, subject to
Section 2.13, all obligations of and any claims against the Borrower hereunder
or in connection herewith after such realization shall be extinguished and shall
not thereafter revive. No recourse shall be had against any officer, director,
employee, shareholder, Affiliate, member, manager, agent, partner, principal or
incorporator of the Borrower or their respective successors or assigns for any
amounts payable under this Agreement. It is understood that the foregoing
provisions of this clause (e) shall not (i) prevent recourse to the Collateral
for the sums due or to become due under any security, instrument or agreement
which is part of the Collateral or (ii) constitute a waiver, release or
discharge of any indebtedness or obligation evidenced by this Agreement until
such Collateral has been realized. It is further understood that the foregoing
provisions of this clause (e) shall not limit the right of any Person to name
the Borrower as a party defendant in any proceeding or in the exercise of any
other remedy under this Agreement, so long as no judgment in the nature of a
deficiency judgment or seeking personal liability shall be asked for or (if
obtained) enforced against the Borrower.

 

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Section 2.05. Prepayment of Advances

 

(a) Optional Prepayments. The Borrower may, from time to time on any Business
Day, voluntarily prepay Advances in whole or in part, without penalty or
premium, subject to Section 2.10; provided that the Borrower shall have
delivered to the Collateral Agent and the Administrative Agent written notice of
such prepayment (such notice, a “Notice of Prepayment”) in the form of Exhibit C
hereto not later than 12:00 noon one (1) Business Day prior to the date of such
prepayment (provided that same day notice may be given to cure any
non-compliance with the Coverage Tests). The Collateral Agent shall promptly
notify the Lenders of such Notice of Prepayment. Each such Notice of Prepayment
shall be irrevocable and effective upon receipt and shall be dated the date such
notice is being given, signed by a Responsible Officer of the Borrower and
otherwise appropriately completed. Each prepayment of any Advance by the
Borrower pursuant to this Section 2.05(a) (other than a prepayment made in order
to cure any non-compliance with the Coverage Tests) shall in each case be in a
principal amount of at least $500,000. If a Notice of Prepayment is given by the
Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.

 

(b) Mandatory Prepayments. The Borrower shall prepay the Advances on each
Payment Date in the manner and to the extent provided in the Priority of
Payments. The Borrower shall provide, in each Payment Date Report, notice of the
aggregate amounts of Advances that are to be prepaid on the related Payment Date
in accordance with the Priority of Payments.

 

(c) Additional Prepayment Provisions. Each prepayment pursuant to this
Section 2.05 shall be subject to Sections 2.04(c) and 2.10 and applied to the
Advances in accordance with the Lenders’ respective Percentages.

 

Section 2.06. Changes of Commitments

 

(a) Automatic Reduction and Termination. The Commitments of all Lenders shall be
automatically reduced to zero at 5:00 p.m. on the Commitment Termination Date;
provided that if the Reinvestment Period is terminated upon the occurrence of a
Specified Key Individual Event, the Reinvestment Period shall be reinstated
automatically upon the date on which such individual specified in the definition
of “Specified Key Individual Event” is replaced with a successor individual
reasonably acceptable to the Administrative Agent, without any further action by
any party hereto.

 

(b) Optional Reductions. Prior to the Commitment Termination Date, the Borrower
shall have the right to terminate or reduce the unused amount of the Facility
Amount at any time or from time to time without any fee or penalty, except as
specified in Section 2.12(b), upon not less than five (5) Business Days’ prior
notice to the Collateral Agent, the Lenders and the Administrative Agent of each
such termination or reduction, which notice shall specify the effective date of
such termination or reduction and the amount of any such reduction; provided
that (i) the amount of any such reduction of the Facility Amount shall be equal
to at least $500,000 or an integral multiple of $100,000 in excess thereof or,
if less, the remaining unused portion thereof, and (ii) no such reduction will
reduce the Facility Amount below the sum of (x) the aggregate principal amount
of Advances outstanding at such time and (y) the aggregate unfunded commitments
under all of the Borrower’s Delayed Drawdown Collateral Loans and Revolving
Collateral Loans (less amounts on deposit in the Unfunded Reserve Account). Such
notice of termination or reduction shall be irrevocable and effective only upon
receipt and shall be applied pro rata to reduce the respective Commitments of
each Lender.

 

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(c) Effect of Termination or Reduction. The Commitments of the Lenders once
terminated or reduced may not be reinstated (other than in connection with a
termination of the Reinvestment Period solely in connection with a Specified Key
Individual Event). Each reduction of the Facility Amount pursuant to this
Section 2.06 shall be applied ratably among the Lenders in accordance with their
respective Commitments.

 

Section 2.07. Maximum Lawful Rate

 

It is the intention of the parties hereto that the interest on the Advances
shall not exceed the maximum rate permissible under Applicable Law. Accordingly,
anything herein or in any Note to the contrary notwithstanding, in the event any
interest is charged to, collected from or received from or on behalf of the
Borrower by the Lenders pursuant hereto or thereto in excess of such maximum
lawful rate, then the excess of such payment over that maximum shall be applied
first to the payment of amounts then due and owing by the Borrower to the
Secured Parties under this Agreement (other than in respect of principal of and
interest on the Advances) and then to the reduction of the outstanding principal
amount of the Advances of the Borrower.

 

Section 2.08. Several Obligations

 

The failure of any Lender to make any Advance to be made by it on the date
specified therefor shall not relieve any other Lender of its obligation to make
its Advance on such date. Neither Agent shall be responsible for the failure of
any Lender to make any Advance, and no Lender shall be responsible for the
failure of any other Lender to make an Advance required to be made by such other
Lender.

 

Section 2.09. Increased Costs

 

(a) Increased Costs Generally. If any Change in Law shall:

 

(i) impose, modify or deem applicable any reserve, compulsory loan, insurance
charge, special deposit or similar requirement against assets of, deposits with
or for account of, or credit extended by, any Affected Person (except any such
reserve requirement reflected in the Adjusted Eurodollar Rate);

 

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

 

(iii) impose on any Affected Person or the London interbank market any other
condition, cost or expense, affecting this Agreement or Advances made by such
Affected Person by reference to the LIBOR Rate or any participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such
Affected Person of making, continuing, converting into or maintaining any
Advance made by reference to the LIBOR Rate (or of maintaining its obligation to
make any such Advance) or to increase the cost to such Affected Person or to
reduce the amount of any sum received or receivable by such Affected Person
hereunder (whether of principal, interest or otherwise), then the Borrower will
pay to such Lender in Dollars, such additional amount or amounts as will
compensate such Affected Person for such additional costs incurred or reduction
suffered.

 

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(b) Capital Requirements. If any Affected Person determines that any Change in
Law regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Affected Person’s capital or on the capital
of such Affected Person’s holding company, if any, as a consequence of this
Agreement or the Advances made by such Affected Person to a level below that
which such Affected Person or such Affected Person’s holding company could have
achieved but for such Change in Law (taking into consideration such Affected
Person’s policies and the policies of such Affected Person’s holding company
with respect to capital adequacy), by an amount deemed to be material by such
Affected Person, then from time to time the Borrower will pay to such Affected
Person in Dollars, such additional amount or amounts as will compensate such
Affected Person or such Affected Person’s holding company for any such reduction
suffered.

 

(c) Certificates from Lenders. A certificate of an Affected Person setting forth
the amount or amounts, in Dollars, necessary to compensate such Affected Person
or its holding company as specified in clause (a) or (b) of this Section shall
be promptly delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such amount shown as due on any such certificate
on the next Payment Date after receipt thereof.

 

(d) Delay in Requests. Failure or delay on the part of any Affected Person to
demand compensation pursuant to this Section shall not constitute a waiver of
such Affected Person right to demand such compensation; provided that the
Borrower shall not be required to compensate an Affected Person pursuant to this
Section for any increased costs or reductions incurred more than six months
prior to the date that such Affected Person notifies the Borrower of the Change
in Law giving rise to such increased costs or reductions and of such Affected
Person’s intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the six-month period referred to above shall be extended to include the
period of retroactive effect thereof.

 

Section 2.10. Compensation; Breakage Payments

 

The Borrower agrees to compensate each Affected Person from time to time, on the
Payment Dates following such Affected Person’s written request (which request
shall set forth the basis for requesting such amounts) in accordance with the
Priority of Payments, for all reasonable losses, expenses and liabilities
(including any interest paid by such Affected Person to lenders of funds
borrowed to make or carry an Advance bearing interest that was computed by
reference to the LIBOR Rate and any loss sustained by such Affected Person in
connection with the re-employment of such funds but excluding loss of
anticipated profits), which such Affected Person may sustain: (i) if for any
reason (including any failure of a condition precedent set forth in Article III
but excluding a default by the applicable Lender) a Borrowing of any Advance
bearing interest that was computed by reference to the LIBOR Rate by the
Borrower does not occur on the Borrowing Date specified therefor in the
applicable Notice of Borrowing delivered by the Borrower, (ii) if any payment,
prepayment or conversion of any of the Borrower’s Advances bearing interest that
was computed by reference to the LIBOR Rate occurs on a date that is not the
last day of the relevant Interest Accrual Period, and (iii) if any payment or
prepayment of any Advance bearing interest that was computed by reference to the
LIBOR Rate is not made on a Payment Date or pursuant to a Notice of Prepayment
given by the Borrower. A certificate as to any amounts payable pursuant to this
Section 2.10 submitted to the Borrower by any Lender (with a copy to the Agents,
and accompanied by a reasonably detailed calculation of such amounts and a
description of the basis for requesting such amounts) shall be conclusive in the
absence of manifest error.

 

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Section 2.11. Illegality; Inability to Determine Rates

 

(a) Notwithstanding any other provision in this Agreement, in the event of a
Eurodollar Disruption Event, then the affected Lender shall promptly notify the
Agents and the Borrower thereof, and such Lender’s obligation to make or
maintain Advances hereunder based on the Adjusted Eurodollar Rate shall be
suspended until such time as such Lender may again make and maintain Advances
based on the Adjusted Eurodollar Rate.

 

(b) Upon the occurrence of any event giving rise to a Lender’s suspending its
obligation to make or maintain Advances based on the Adjusted Eurodollar Rate
pursuant to Section 2.11(a), such Lender will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate a different lending office if such designation would enable such
Lender to again make and maintain Advances based on the Adjusted Eurodollar
Rate; provided that such designation is made on such terms that such Lender and
its lending office suffer no unreimbursed cost or material legal or regulatory
disadvantage (as reasonably determined by such Lender), with the object of
avoiding future consequence of the event giving rise to the operation of any
such provision.

 

(c) If, prior to the first day of any Interest Accrual Period or prior to the
date of any Advance, as applicable, either (i) the Collateral Agent determines
that for any reason adequate and reasonable means do not exist for determining
the LIBOR Rate for the applicable Advances, or (ii) the Required Lenders
determine and notify the Administrative Agent that the Adjusted Eurodollar Rate
with respect to such Advances does not adequately and fairly reflect the cost to
such Lenders of funding such Advances, the Administrative Agent will promptly so
notify the Borrower, the Collateral Agent and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Advances based on the Adjusted
Eurodollar Rate shall be suspended until the Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice.

 

Section 2.12. Fees

 

(a) Commitment Fee. On each Payment Date, the Borrower shall pay to the
Collateral Agent (for the account of the Lenders on a pro rata basis) a
commitment fee (a “Commitment Fee”) in an amount equal to the sum, for each day
during the related Interest Accrual Period from and including the Closing Date
to and excluding the last day of the Reinvestment Period, of the product of (i)
0.75% per annum, divided by 360 and (ii) the Unused Amount, in each case for
each such day during the related Interest Accrual Period.

 

(b) Prepayment Fee. If, prior to October 27, 2016, the Facility Amount is
reduced in whole or in part at the option or election of the Borrower, the
Borrower shall pay to the Collateral Agent (for the account of the Lenders on a
pro rata basis), a prepayment fee (a “Prepayment Fee”) equal to the product of
0.375% times the Facility Amount (in the event the Commitments are terminated or
the Facility Amount is reduced in whole) or the amount of such reduction of the
Facility Amount (in the event the Facility Amount is reduced in part); provided
that no Prepayment Fee shall be payable (i) in connection with a termination of
the Commitments following a Specified Key Individual Event or (ii) upon waiver
of such Prepayment Fee by the Administrative Agent in its sole discretion. Such
Prepayment Fee shall be payable on the date of the termination of this Agreement
(in the event this Agreement is terminated in whole) or on the first Payment
Date immediately succeeding the reduction of the Facility Amount (in the event
the Facility Amount is reduced in part).

 

(c) Administrative Agent Fees. The Borrower agrees to pay to the Administrative
Agent such fees as are mutually agreed to in writing from time to time by the
Borrower and the Administrative Agent, including the fees set forth in the
Administrative Agent Fee Letter.

 

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Section 2.13. Rescission or Return of Payment

 

The Borrower agrees that, if at any time (including after the occurrence of the
Final Maturity Date) all or any part of any payment theretofore made by it to
any Secured Party or any designee of a Secured Party is or must be rescinded or
returned for any reason whatsoever (including the insolvency, bankruptcy or
reorganization of the Borrower or any of its Affiliates), the obligation of the
Borrower to make such payment to such Secured Party shall, for the purposes of
this Agreement, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence and this Agreement and any
other applicable Facility Document shall continue to be effective or be
reinstated, as the case may be, as to such obligations, all as though such
payment had not been made.

 

Section 2.14. Post-Default Interest

 

During the existence of an Event of Default, all Obligations shall bear interest
at the Post-Default Rate. Interest payable at the Post-Default Rate shall be
payable on each Payment Date in accordance with the Priority of Payments.

 

Section 2.15. Payments Generally

 

(a) All amounts owing and payable to any Secured Party, any Affected Person or
any Indemnified Party, in respect of the Advances and other Obligations,
including the principal thereof, interest, fees, indemnities, expenses or other
amounts payable under this Agreement or any other Facility Document, shall be
paid by the Borrower to the applicable recipient in Dollars, in immediately
available funds, in accordance with the Priority of Payments, and all without
counterclaim, setoff, deduction, defense, abatement, suspension or deferment.
Each Lender shall provide wire instructions to the Borrower and the Collateral
Agent. Payments must be received by the Collateral Agent on or prior to 3:00
p.m. on a Business Day (the Collateral Agent shall then wire such funds to the
Lenders prior to 4:00 p.m. on such Business Day); provided that, payments
received by the Collateral Agent after 3:00 p.m. or payments received by the
Lenders after 4:00 p.m. on a Business Day will be deemed to have been paid on
the next following Business Day. At no time will the Collateral Agent have any
duty (express or implied) to fund (or front or advance) any amount owing by the
Borrower hereunder.

 

(b) Except as otherwise expressly provided herein, all computations of interest,
fees and other Obligations shall be made on the basis of a year of 360 days for
the actual number of days elapsed in computing interest on any Advance, the date
of the making of the Advance shall be included and the date of payment shall be
excluded; provided that, if an Advance is repaid on the same day on which it is
made, one day’s Interest shall be paid on such Advance. All computations made by
the Collateral Agent or the Administrative Agent under this Agreement or any
other Facility Document shall be conclusive absent manifest error.

 

Section 2.16. Replacement of Lenders

 

(a) Notwithstanding anything to the contrary contained herein, in the event that
(i) any Affected Person shall request reimbursement for amounts owing pursuant
to Section 2.09 (each such Affected Person, a “Potential Terminated Lender”),
(ii) the Borrower shall be required to reimburse any Affected Person for any
Non-Excluded Taxes or pay any additional amounts to any Affected Person or any
Governmental Authority for the account of any Affected Person pursuant to
Section 12.03 (each such Affected Person, also a “Potential Terminated Lender”),
(iii) any Lender is a Defaulting Lender (such Defaulting Lender, also,
a “Potential Terminated Lender”) or (iv) any Lender does not give or approve any
consent, waiver or amendment that requires the approval of all Lenders or all
affected Lenders in accordance with the terms hereof and has been approved by
the Required Lenders (such non-consenting Lender, also, a “Potential Terminated
Lender”), the Borrower, at its sole expense and effort, shall be permitted, upon
no less than ten (10) days written notice to the Administrative Agent and such
Potential Terminated Lender, to require such Potential Terminated Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 12.06), all of its
interests, rights (other than its existing rights to payments pursuant to
Sections 2.09 and 12.03) and obligations under this Agreement and the related
Facility Documents to an assignee permitted pursuant to Section 12.06 (a
“Replacement Lender”) that shall assume such obligations (which assignee may be
another Lender, if such Lender accepts such assignment); provided that:

 

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(A) such Potential Terminated Lender shall have received payment of an amount
equal to the outstanding principal of its Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Facility Documents (including any amounts under Section 2.10 but subject to
Section 2.17) from the Replacement Lender (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts);

 

(B) in the case of any such assignment resulting from a claim for compensation
under Sections 2.09 or 12.03, such assignment will result in a reduction in such
compensation or payments thereafter;

 

(C) such assignment does not conflict with applicable Laws; and

 

(D) in the case of an assignment based on clause (iv) above, the Replacement
Lender shall have consented to the applicable amendment, waiver or consent.

 

(b) Each Potential Terminated Lender hereby agrees to take all actions
reasonably necessary, at the sole expense of the Borrower, to permit a
Replacement Lender to succeed to its rights and obligations hereunder. Upon the
effectiveness of any such assignment to a Replacement Lender, (i) such
Replacement Lender shall become a “Lender” hereunder for all purposes of this
Agreement and the other Facility Documents, (ii) such Replacement Lender shall
have a Commitment in the amount not less than the Terminated Lender’s Commitment
assumed by it and (iii) the Commitment of the Terminated Lender shall be
terminated in all respects.

 

(c) No Lender shall be required to make any assignment or delegation pursuant to
Section 2.16(a) if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

 

Section 2.17. Defaulting Lenders.

 

(a) Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
Applicable Law:

 

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of “Required Lenders” and Section
12.01.

 

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article IX or otherwise) shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment of any
amounts owing by such Defaulting Lender to the Administrative Agent hereunder;
second, as the Borrower may request (so long as no Event of Default exists and
is continuing), to the funding of any Advance in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this
Agreement, as determined by the Administrative Agent; third, if so determined by
the Administrative Agent and the Borrower, to be held in a deposit account and
released pro rata in order to satisfy such Defaulting Lender’s potential future
funding obligations with respect to Advances under this Agreement; fourth, to
the payment of any amounts owing to the Lenders as a result of any judgment of a
court of competent jurisdiction obtained by any Lender against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under
this Agreement; fifth, so long as no Event of Default exists or is continuing,
to the payment of any amounts owing to the Borrower as a result of any judgment
of a court of competent jurisdiction obtained by the Borrower against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; and sixth, to such Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that if such
payment is a payment of the principal amount of any Advances in respect of which
such Defaulting Lender has not fully funded its appropriate share, such payment
shall be applied solely to pay the Advances of all non-Defaulting Lenders on a
pro rata basis prior to being applied to the payment of any Advances of such
Defaulting Lender until such time as all Advances are held by the Lenders pro
rata in accordance with the Commitments hereunder. Any payments, prepayments or
other amounts paid or payable to a Defaulting Lender that are applied (or held)
to pay amounts owed by a Defaulting Lender shall be deemed paid to and
redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.

 

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(iii) Certain Fees. No Defaulting Lender shall be entitled to receive any fee
payable under Section 2.12(a) for any period during which that Lender is a
Defaulting Lender and the Borrower shall not be required to pay any such fee
that otherwise would have been required to have been paid to such Defaulting
Lender.

 

(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree
in writing that a Lender is no longer a Defaulting Lender, the Administrative
Agent will so notify the parties hereto, whereupon as of the effective date
specified in such notice and subject to any conditions set forth therein, that
Lender will, to the extent applicable, purchase at par that portion of
outstanding Advances of the other Lenders or take such other actions as the
Administrative Agent may determine to be necessary to cause the Advances
Outstanding to be held on a pro rata basis by the Lenders in accordance with
their Percentages, whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrower while that Lender was a
Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.

 

ARTICLE III
CONDITIONS PRECEDENT

 

Section 3.01. Conditions Precedent to Initial Advances

 

The obligation of each Lender to make its initial Advance hereunder shall be
subject to the conditions precedent that the Administrative Agent shall have
received on or before the Closing Date the following, each in form and substance
reasonably satisfactory to the Administrative Agent:

 

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(a) each of the Facility Documents duly executed and delivered by the parties
thereto, which shall each be in full force and effect;

 

(b) a certificate of a Responsible Officer of the Borrower certifying (i) as to
its Constituent Documents, (ii) as to its resolutions or other action of its
board of directors or board of managers or members approving this Agreement and
the other Facility Documents to which it is a party and the transactions
contemplated hereby and thereby, (iii) that its representations and warranties
set forth in the Facility Documents to which it is a party are true and correct
in all material respects as of the Closing Date (except to the extent such
representations and warranties expressly relate to any earlier date, in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date), (iv) to its knowledge, that no
Default or Event of Default has occurred and is continuing, and (v) as to the
incumbency and specimen signature of each of its Responsible Officers authorized
to execute the Facility Documents to which it is a party;

 

(c) true and complete copies certified by a Responsible Officer of the Borrower
of all Governmental Authorizations, Private Authorizations and Governmental
Filings, if any, required in connection with the transactions contemplated by
this Agreement;

 

(d) a certificate of a Responsible Officer of the Collateral Manager certifying
(i) as to its Constituent Documents, (ii) as to its resolutions or other action
of its board of directors approving this Agreement and the other Facility
Documents to which it is a party and the transactions contemplated hereby and
thereby, (iii) that its representations and warranties set forth in the Facility
Documents to which it is a party are true and correct in all material respects
as of the Closing Date (except to the extent such representations and warranties
expressly relate to any earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date), (iv) that no Default or Event of Default has occurred and is continuing,
and (v) as to the incumbency and specimen signature of each of its Responsible
Officers authorized to execute the Facility Documents to which it is a party;

 

(e) proper financing statements (or the equivalent thereof in any applicable
foreign jurisdiction), duly filed on or before the Closing Date, under the UCC
with the Delaware Secretary of State, Division of Corporations and any other
applicable filing office in any applicable jurisdiction that the Administrative
Agent deems necessary or desirable in order to perfect the interests in the
Collateral contemplated by this Agreement;

 

(f) copies of proper financing statement amendments (or the equivalent thereof
in any applicable foreign jurisdiction), if any, necessary to release all
security interests and other rights of any Person in the Collateral previously
granted by the Borrower or any transferor;

 

(g) legal opinions (addressed to each of the Secured Parties) of (i) counsel to
the Borrower and the Equityholder, covering customary corporate matters,
substantive nonconsolidation of the Borrower with the Equityholder or the
Collateral Manager, the true sale nature of any transfers to the Borrower of
Collateral Loans from the Equityholder, and such other matters as the
Administrative Agent and its counsel shall reasonably request, (ii) U.S. counsel
to the Collateral Manager, covering corporate matters and such other matters as
the Administrative Agent and its counsel shall reasonably request, and (iii)
U.S. counsel to the Collateral Agent, the Collateral Administrator and the
Custodian, covering corporate matters and such other matters as the
Administrative Agent and its counsel shall reasonably request;

 

(h) evidence reasonably satisfactory to it that all of the Covered Accounts
shall have been established;

 

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(i) evidence that (i) all fees due and owing to the Administrative Agent and
each Lender on or prior to the Closing Date have been received or will be
received contemporaneously with the Closing Date; and (ii) the reasonable and
documented fees and expenses of Winston & Strawn LLP, counsel to the
Administrative Agent, in connection with the transactions contemplated hereby
(to the extent invoiced prior the Closing Date), shall have been paid by the
Borrower;

 

(j) delivery of such Collateral (including any promissory note, executed
assignment agreements and word or pdf copies of the principal credit agreement
for each initial Collateral Loan, to the extent received by the Borrower) as
required under this Agreement shall have been effected;

 

(k) a certificate of a Responsible Officer of the Borrower, dated as of the
Closing Date, certifying to the effect that, in the case of each item of
Collateral pledged to the Collateral Agent, on the Closing Date and, in the case
of clause (i) through (iv) below, after giving effect to the transactions
contemplated on the Closing Date, immediately prior to the delivery thereof on
the Closing Date:

 

(i) the Borrower is the owner of such Collateral free and clear of any Liens or
claims of any nature whatsoever except for (A) those which are being released on
the Closing Date and (B) Permitted Liens;

 

(ii) the Borrower has acquired its ownership in such Collateral in good faith
without notice of any adverse claim, except as described in clause (i) above;

 

(iii) the Borrower has not assigned, pledged or otherwise encumbered any
interest in such Collateral (or, if any such interest has been assigned, pledged
or otherwise encumbered, it has been released) other than Permitted Liens;

 

(iv) the Borrower has full right to grant a security interest in and assign and
pledge such Collateral to the Collateral Agent; and

 

(v) upon grant by the Borrower, the Collateral Agent has a first priority
perfected security interest in the Collateral, except as permitted by this
Agreement;

 

(l) the information required to be set forth in the Borrowing Base Calculation
Statement and the Monthly Report in hard copy and in EXCEL or a comparable
format; and

 

(m) such other opinions, instruments, certificates and documents from the
Borrower as the Agents or any Lender shall have reasonably requested.

 

Section 3.02. Conditions Precedent to Each Borrowing

 

The obligation of each Lender to make each Advance to be made by it (including
the initial Advance) on each Borrowing Date shall be subject to the fulfillment
of the following conditions; provided that the conditions described in clauses
(c) and (d) (other than a Default or Event of Default described in Section
6.01(f)) below need not be satisfied if the proceeds of the Borrowing are used
to fund Delayed Drawdown Collateral Loans or Revolving Collateral Loans then
owned by the Borrower or to fund the Unfunded Reserve Account to the extent
required under Section 8.04:

 

(a) the Lenders and the Administrative Agent shall have received a Notice of
Borrowing with respect to such Advance (including the Borrowing Base Calculation
Statement attached thereto, all duly completed) delivered in accordance with
Section 2.02;

 

55

 

 

(b) immediately after the making of such Advance on the applicable Borrowing
Date, each Coverage Test and Collateral Quality Test shall be satisfied (as
demonstrated on the Borrowing Base Calculation Statement attached to such Notice
of Borrowing and certified by a Responsible Officer of the Borrower (or the
Collateral Manager on behalf of the Borrower));

 

(c) each of the representations and warranties of the Borrower contained in the
Facility Documents shall be true and correct in all material respects as of such
Borrowing Date (except to the extent such representations and warranties
expressly relate to any earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date as if made on such date);

 

(d) no Default or Event of Default shall have occurred and be continuing at the
time of the making of such Advance or shall result upon the making of such
Advance;

 

(e) the Borrower and the Collateral Manager shall have received written notice
from the Administrative Agent, evidencing the approval of the Administrative
Agent in its sole discretion, in accordance with clause (A) of the definition of
“Eligible Loan”, of the loans to be added to the Collateral (if any loans are to
be added to the Collateral in connection with such Advance); and

 

(f) after the making of such Advances and the deposit of any portion thereof
into the Unfunded Reserve Account, the amount on deposit thereon is at least
equal to the Unfunded Reserve Required Amount.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

 

Section 4.01. Representations and Warranties of the Borrower

 

The Borrower represents and warrants to each of the Secured Parties on and as of
each Measurement Date, as follows:

 

(a) Due Organization. The Borrower is a Delaware limited liability company, with
full power and authority to own and operate its assets and properties, conduct
the business in which it is now engaged and to execute and deliver and perform
its obligations under this Agreement and the other Facility Documents to which
it is a party.

 

(b) Due Qualification and Good Standing. The Borrower is validly existing and in
good standing under the laws of its jurisdiction of organization. The Borrower
is duly qualified to do business and, to the extent applicable, is in good
standing in each other jurisdiction in which the nature of its business, assets
and properties, including the performance of its obligations under this
Agreement, the other Facility Documents to which it is a party and its
Constituent Documents, requires such qualification, except where the failure to
be so qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect.

 

(c) Due Authorization; Execution and Delivery; Legal, Valid and Binding;
Enforceability. The execution and delivery by the Borrower of, and the
performance of its obligations under the Facility Documents to which it is a
party and the other instruments, certificates and agreements contemplated
thereby are within its powers and have been duly authorized by all requisite
action by it and have been duly executed and delivered by it and constitute its
legal, valid and binding obligations enforceable against it in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally or general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

 

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(d) Non-Contravention. None of the execution and delivery by the Borrower of
this Agreement or the other Facility Documents to which it is a party, the
Borrowings or the pledge of the Collateral hereunder, the consummation of the
transactions herein or therein contemplated, or compliance by it with the terms,
conditions and provisions hereof or thereof, will (i) conflict with, or result
in a breach or violation of, or constitute a default under its Constituent
Documents, (ii) conflict with or contravene (A) any Applicable Law, (B) any
indenture, agreement or other contractual restriction binding on or affecting it
or any of its assets, including any Related Document, or (C) any order, writ,
judgment, award, injunction or decree binding on or affecting it or any of its
assets or properties or (iii) result in a breach or violation of, constitute a
default under, or permit the acceleration of any obligation or liability in, any
contractual obligation or any agreement or document to which it is a party or by
which it or any of its assets are bound (or to which any such obligation,
agreement or document relates).

 

(e) Governmental Authorizations; Private Authorizations; Governmental Filings.
The Borrower has obtained, maintained and kept in full force and effect all
Governmental Authorizations and Private Authorizations which are necessary for
it to properly carry out its business, except where the failure to do so would
not reasonably be expected to have a Material Adverse Effect, and made all
material Governmental Filings necessary for the execution and delivery by it of
the Facility Documents to which it is a party, the Borrowings by the Borrower
under this Agreement, the pledge of the Collateral by the Borrower under this
Agreement and the performance by the Borrower of its obligations under this
Agreement and the other Facility Documents to which it is a party, and no
material Governmental Authorization, Private Authorization or Governmental
Filing which has not been obtained or made is required to be obtained or made by
it in connection with the execution and delivery by it of any Facility Document
to which it is a party, the Borrowings by the Borrower under this Agreement, the
pledge of the Collateral by the Borrower under this Agreement or the performance
of its obligations under this Agreement and the other Facility Documents to
which it is a party.

 

(f) Compliance with Agreements, Laws, Etc. The Borrower has duly observed and
complied with all Applicable Laws relating to the conduct of its business and
its assets, except where the failure to so observe or comply would not
reasonably be expected to have a Material Adverse Effect. The Borrower has
preserved and kept in full force and effect its legal existence. The Borrower
has preserved and kept in full force and effect its rights, privileges,
qualifications and franchises, except where the failure to do so would not
reasonably be expected to result in a Material Adverse Effect. Without limiting
the foregoing, neither the Borrower nor, to the knowledge of the Borrower, any
Affiliate of the Borrower is (i) a country, territory, organization, person or
entity named on an Office of Foreign Asset Control (“OFAC”) list; (ii) a Person
that resides or has a place of business in a country or territory named on such
lists or which is designated as a “NonCooperative Jurisdiction” by the Financial
Action Task Force on Money Laundering, or whose subscription funds are
transferred from or through such a jurisdiction; (iii) a “Foreign Shell Bank”
within the meaning of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law on October 26, 2001)) (the “PATRIOT Act”), i.e., a foreign bank that
does not have a physical presence in any country and that is not affiliated with
a bank that has a physical presence and an acceptable level of regulation and
supervision; or (iv) a person or entity that resides in or is organized under
the laws of a jurisdiction designated by the United States Secretary of the
Treasury under Sections 311 or 312 of the PATRIOT Act as warranting special
measures due to money laundering concerns. The Borrower is in compliance with
all applicable OFAC rules and regulations and also in compliance with all
applicable provisions of the PATRIOT Act.

 

(g) Location. The Borrower’s office in which the Borrower maintains its
corporate books and records is located at the address for notices to the
Borrower as set forth on Schedule 6 (as such location may change from time to
time as notified to the Administrative Agent in accordance with Section 12.02).
The Borrower’s jurisdiction of organization of the Borrower is the jurisdiction
referred to in Section 4.01(a).

 

57

 

 

(h) Investment Company Act. Assuming compliance by each of the Lenders and any
participant with Section 12.06, neither the Borrower nor the pool of Collateral
is required to register as an “investment company” under the Investment Company
Act.

 

(i) Taxes. The Borrower has filed all U.S. federal income tax returns and all
other material tax returns which are required to be filed by it, if any, and has
paid all U.S. federal income taxes and all other material taxes shown to be due
and payable on such returns, if any, or pursuant to any assessment received by
any such Person other than any such taxes, assessments or charges that are being
contested in good faith by appropriate proceedings and for which appropriate
reserves in accordance with GAAP have been established.

 

(j) Tax Status. For U.S. federal income tax purposes, the Borrower is treated as
a disregarded entity.

 

(k) Plan Assets. The assets of the Borrower are not treated as “plan assets”
for purposes of Section 3(42) of ERISA and the Collateral is not deemed to be
“plan assets” for purposes of Section 3(42) of ERISA. The Borrower has not
taken, or omitted to take, any action which could result in any of the
Collateral being treated as “plan assets” for purposes of Section 3(42) of ERISA
or, assuming that the assets of the Lenders, the Administrative Agent and the
Collateral Agent are not deemed to be “plan assets” for purposes of Section
3(42) of ERISA, the occurrence of any Prohibited Transaction in connection with
the transactions contemplated hereunder.

 

(l) Solvency. After giving effect to each Advance hereunder, and the
disbursement of the proceeds of such Advance, the Borrower is and will be
Solvent.

 

(m) Representations Relating to the Collateral.

 

(i) The Borrower owns and has legal and beneficial title to all Collateral Loans
(other than with respect to the Closing Date Participation Interests) and other
Collateral free and clear of any Lien or claim of any Person, other than
Permitted Liens;

 

(ii) other than Permitted Liens, the Borrower has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Collateral. The
Borrower has not authorized the filing of and is not aware of any financing
statements or any equivalent filing in any applicable jurisdiction against the
Borrower that include a description of collateral covering the Collateral other
than any financing statement or any equivalent filing in any applicable
jurisdiction relating to the security interest granted to the Collateral Agent
hereunder or that has been terminated; and the Borrower is not aware of any
judgment, PBGC liens or tax lien filings against the Borrower or any of its
assets;

 

(iii) the Collateral constitutes Money, Cash, accounts (as defined in Section
9-102(a)(2) of the UCC), Instruments, general intangibles (as defined in Section
9-102(a)(42) of the UCC), Uncertificated Securities, Certificated Securities or
security entitlements to financial assets resulting from the crediting of
financial assets to a “securities account” (as defined in Section 8-501(a) of
the UCC);

 

58

 

 

(iv) all Covered Accounts constitute “securities accounts” under Section
8-501(a) of the UCC or “deposit accounts” as defined in Section 9-102 of the
UCC;

 

(v) this Agreement creates a valid, continuing and, upon Delivery of Collateral,
execution of the Account Control Agreement and filing of the financing
statements referenced in clause (viii) below, perfected security interest (as
defined in Section 1-201(37) of the UCC) in the Collateral in favor of the
Collateral Agent, for the benefit and security of the Secured Parties, which
security interest is prior to all other Liens and claims and is enforceable as
such against creditors of and purchasers from the Borrower, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally or general principles of equity, regardless of whether considered in a
proceeding in equity or at law;

 

(vi) the Borrower has received all consents and approvals required by the terms
of the Related Documents in respect of such Collateral to the pledge hereunder
to the Collateral Agent of its interest and rights in such Collateral;

 

(vii) with respect to the Collateral that constitutes Security Entitlements,
all such Collateral has been and will have been credited to the applicable
Covered Account; and

 

(viii) with respect to Collateral that constitutes accounts or general
intangibles, the Borrower has caused or will have caused, on or prior to the
Closing Date, the filing of all appropriate financing statements in the proper
filing office in the appropriate jurisdictions under Applicable Law in order to
perfect the security interest in the Collateral granted to the Collateral Agent,
for the benefit and security of the Secured Parties, hereunder (which the
Borrower hereby agrees may be an “all asset” filing).

 

Section 4.02. Representations and Warranties of the Collateral Manager

 

The Collateral Manager represents and warrants to each of the Secured Parties on
and as of each Measurement Date, as follows:

 

(a) Due Organization. The Collateral Manager is a corporation duly organized and
validly existing under the laws of the State of Maryland, with full power and
authority to own and operate its assets and properties, conduct the business in
which it is now engaged and to execute and deliver and perform its obligations
under this Agreement and the other Facility Documents to which it is a party.

 

(b) Due Qualification and Good Standing. The Collateral Manager is in good
standing in the State of Maryland. The Collateral Manager is duly qualified to
do business and, to the extent applicable, is in good standing in each other
jurisdiction in which the nature of its business, assets and properties,
including the performance of its obligations under this Agreement, the other
Facility Documents to which it is a party and its Constituent Documents,
requires such qualification, except where the failure to be so qualified or in
good standing would not reasonably be expected to have a Material Adverse
Effect.

 

(c) Due Authorization; Execution and Delivery; Legal, Valid and Binding;
Enforceability. The execution and delivery by the Collateral Manager of, and the
performance of its obligations under the Facility Documents to which it is a
party and the other instruments, certificates and agreements contemplated
thereby are within its powers and have been duly authorized by all requisite
action by it and have been duly executed and delivered by it and constitute its
legal, valid and binding obligations enforceable against it in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally or general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

 

59

 

 

(d) Non-Contravention. None of the execution and delivery by the Collateral
Manager of this Agreement or the other Facility Documents to which it is a
party, the consummation of the transactions herein or therein contemplated, or
compliance by it with the terms, conditions and provisions hereof or thereof,
will (i) conflict with, or result in a breach or violation of, or constitute a
default under its Constituent Documents, (ii) conflict with or contravene (A)
any Applicable Law, (B) any indenture, agreement or other contractual
restriction binding on or affecting it or any of its assets, including any
Related Document, or (C) any order, writ, judgment, award, injunction or decree
binding on or affecting it or any of its assets or properties or (iii) result in
a breach or violation of, or constitute a default under, or permit the
acceleration of any obligation or liability in any contractual obligation or any
agreement or document to which it is a party or by which it or any of its assets
are bound (or to which any such obligation, agreement or document relates),
except in the case of clause (i) above, where such conflicts, breaches,
violations or defaults would not reasonably be expected to have a Material
Adverse Effect.

 

(e) Governmental Authorizations; Private Authorizations; Governmental Filings.
The Collateral Manager has obtained, maintained and kept in full force and
effect all Governmental Authorizations and Private Authorizations which are
necessary for it to properly carry out its business, except where the failure to
do so would not reasonably be expected to have a Material Adverse Effect, and
made all material Governmental Filings necessary for the execution and delivery
by it of the Facility Documents to which it is a party, and the performance by
the Collateral Manager of its obligations under this Agreement and the other
Facility Documents to which it is a party, and no material Governmental
Authorization, Private Authorization or Governmental Filing which has not been
obtained or made is required to be obtained or made by it in connection with the
execution and delivery by it of any Facility Document to which it is a party or
the performance of its obligations under this Agreement and the other Facility
Documents to which it is a party.

 

(f) Compliance with Agreements, Laws, Etc. The Collateral Manager has duly
observed and complied with all Applicable Laws relating to the conduct of its
business and its assets, except where the failure to so observe or comply would
not reasonably be expected to have a Material Adverse Effect. The Collateral
Manager has preserved and kept in full force and effect its legal existence. The
Collateral Manager has preserved and kept in full force and effect its rights,
privileges, qualifications and franchises, except where the failure to do so
would not reasonably be expected to result in a Material Adverse Effect. Without
limiting the foregoing, neither the Collateral Manager nor, to the knowledge of
the Collateral Manager, any Affiliate of the Collateral Manager is (i) a
country, territory, organization, person or entity named on an OFAC list; (ii) a
Person that resides or has a place of business in a country or territory named
on such lists or which is designated as a “NonCooperative Jurisdiction” by the
Financial Action Task Force on Money Laundering, or whose subscription funds are
transferred from or through such a jurisdiction; (iii) a “Foreign Shell Bank”
within the meaning of the PATRIOT Act, i.e., a foreign bank that does not have a
physical presence in any country and that is not affiliated with a bank that has
a physical presence and an acceptable level of regulation and supervision; or
(iv) a person or entity that resides in or is organized under the laws of a
jurisdiction designated by the United States Secretary of the Treasury under
Sections 311 or 312 of the PATRIOT Act as warranting special measures due to
money laundering concerns. The Collateral Manager is in compliance with all
applicable OFAC rules and regulations and also in compliance with all applicable
provisions of the PATRIOT Act.

 

(g) Investment Company Act; Investment Advisers Act of 1940; BDC Election. The
Collateral Manager has elected to be treated as a business development company
under the Investment Company Act. The Collateral Manager is managed by TICC
Adviser, an investment adviser registered under the Investment Advisers Act of
1940, as amended.

 

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ARTICLE V
COVENANTS

 

Section 5.01. Affirmative Covenants of the Borrower

 

The Borrower covenants and agrees that, until the Final Maturity Date (and
thereafter until the date that all Obligations, other than contingent
indemnification obligations as to which no claim giving rise thereto has been
asserted, have been paid in full):

 

(a) Compliance with Agreements, Laws, Etc. It shall (i) duly observe and comply
in all material respects with all Applicable Laws relative to the conduct of its
business or to its assets, (ii) preserve and keep in full force and effect its
legal existence, (iii) preserve and keep in full force and effect its rights,
privileges, qualifications and franchises, except where the failure to do so
would not reasonably be expected to result in a Material Adverse Effect, (iv)
comply with the terms and conditions of each Facility Document to which it is a
party, its Constituent Documents and each Related Document to which it is a
party and (v) obtain, maintain and keep in full force and effect all
Governmental Authorizations, Private Authorizations and Governmental Filings
which are necessary or appropriate to properly carry out its business and the
transactions contemplated to be performed by it under the Facility Documents to
which it is a party, its Constituent Documents and the Related Documents to
which it is a party.

 

(b) Further Assurances.

 

(i) It shall promptly upon the reasonable request of either Agent or the
Required Lenders (through the Administrative Agent), at the Borrower’s expense,
execute and deliver such further instruments and take such further action in
order to maintain and protect the Collateral Agent’s first-priority perfected
security interest in the Collateral pledged by the Borrower for the benefit of
the Secured Parties free and clear of any Liens (other than Permitted Liens). At
the reasonable request of either Agent or the Required Lenders (through the
Administrative Agent), the Borrower shall promptly take, at the Borrower’s
expense, such further action in order to establish and protect the rights,
interests and remedies created or intended to be created under this Agreement in
favor of the Secured Parties in the Collateral, including all actions which are
necessary to (x) enable the Secured Parties to enforce their rights and remedies
under this Agreement and the other Facility Documents, and (y) effectuate the
intent and purpose of, and to carry out the terms of, the Facility Documents.

 

(ii) It shall ensure that each Permitted Subsidiary (A) is a wholly owned
subsidiary of the Borrower, (B) will not sell, transfer, exchange or otherwise
dispose of, or pledge, mortgage, hypothecate or otherwise encumber (or permit
such to occur or suffer such to exist) any part of its assets, except in
compliance with the Borrower’s rights and obligations under this Agreement and
with such Permitted Subsidiary’s Constituent Documents, (C) will not have any
subsidiaries, (D) will not incur or guarantee any indebtedness, except
indebtedness with respect to which the Borrower is the sole creditor, (E) will
include in its Constituent Documents a limitation on its business such that it
may only engage in the acquisition of assets permitted under this Agreement and
the disposition of such assets and the proceeds thereof to the Borrower (and
activities ancillary thereto) and (F) will distribute (including by way of
interest payments) 100% of the proceeds of the assets acquired by such Permitted
Subsidiary (net of applicable taxes and expenses payable by such Permitted
Subsidiary) to the Borrower.

 

(c) Financial Statements; Other Information. It shall provide to the
Administrative Agent or cause to be provided to the Administrative Agent:

 

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(i) within 120 days after the end of each fiscal year of the Equityholder, an
annual report containing an audited consolidated statement of assets and
liabilities as of the end of such fiscal year, and audited consolidated
statements of operations, changes in net assets, and cash flows, for the year
then ended, prepared in accordance with GAAP, each reported on by independent
public accountants of recognized national standing, which may or may not be the
independent public accountants appointed by the Collateral Manager pursuant to
Section 8.09 (without a “going concern” or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Equityholder and its consolidated subsidiaries on a consolidated basis;

 

(ii) within 60 days after the end of each of the first three quarters of each
fiscal year of the Equityholder, an unaudited financial report containing a
consolidated statement of assets and liabilities, consolidated statements of
operations, changes in net assets, and cash flows, and a market value report
regarding the Equityholder’s investments, in each case for the period then
ended, all certified by one of its senior financial officers as presenting
fairly in all material respects the financial condition and results of
operations of the Equityholder and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;

 

(iii) within three Business Days after a Responsible Officer of the Borrower
obtains actual knowledge of the occurrence and continuance of any (A) Default or
(B) Event of Default, a certificate of a Responsible Officer of the Borrower
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto; provided that the Borrower shall not be
obligated to deliver such certificate to the extent that a Responsible Officer
of the Collateral Manager delivers a certificate with respect to such Default or
Event of Default pursuant to Section 5.03(c);

 

(iv) to the extent available to the Collateral Manager (on behalf of the
Borrower) pursuant to the Related Documents, on or prior to date the Borrower
commits to acquire a Collateral Loan, audited financial statements of the
related Obligor for the two year period most recently ended with respect to the
related Obligor;

 

(v) to the extent available to the Collateral Manager (on behalf of the
Borrower) pursuant to the Related Documents, the annual audited financial
statements with respect to each Obligor, which delivery shall be made within ten
(10) Business Days after receipt by the Borrower or the Collateral Manager (on
behalf of the Borrower) as specified in the Related Documents;

 

(vi) the portfolio monitoring report prepared by the Collateral Manager with
respect to each Obligor on a monthly basis (including covenant testing), which
delivery shall be made no later than 30 days after the end of each month;

 

(vii) copies of any material amendment, restatement, supplement, waiver or other
modification to the Related Documents of any Collateral Loan within ten (10)
Business Days of the effectiveness of such amendment, restatement, supplement,
waiver or other modification;

 

(viii) together with the financial statements delivered under clauses (i) and
(ii) above, a certificate of a Responsible Officer of the Borrower setting forth
a calculation of the Tangible Net Worth of the Equityholder and its Subsidiaries
as of the end of the most recently ended fiscal quarter related to such
financial statements; and

 

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(ix) from time to time such additional information regarding the Borrower’s
financial position or business and the Collateral (including reasonably detailed
calculations of each Coverage Test and Collateral Quality Test) as the
Administrative Agent or the Required Lenders (through the Administrative Agent)
may reasonably request.

 

Notwithstanding the foregoing, the requirement to deliver financial statements
set forth in Section 5.01(c)(i)-(ii) will be satisfied at any such time as such
financial statements are publicly posted on the official web site of TICC
Capital, appropriately filed with the SEC, and notice of such posting is
provided to the Administrative Agent through e-mail or upon receipt of such
information through e-mail (with confirmation of receipt) or another delivery
method acceptable to the Administrative Agent.

 

(d) Access to Records and Documents. It shall permit the Administrative Agent
(or any Person designated by the Administrative Agent, subject to delivery of
standard confidentiality agreements) to, upon reasonable advance notice and
during normal business hours, visit and inspect and make copies thereof at
reasonable intervals (i) its books, records and accounts relating to its
business, financial condition, operations, assets and its performance under the
Facility Documents and the Related Documents and to discuss the foregoing with
its and such Person’s officers, partners, employees and accountants, and (ii)
all of its Related Documents, in each case as often as the Administrative Agent
may reasonably request; provided that so long as no Event of Default has
occurred, the Borrower shall be responsible for all costs and expenses for only
one such visit per fiscal year by the Administrative Agent or its designees. The
Administrative Agent shall provide 10 days’ prior notice to the Lenders of any
such visit and any Lender shall be permitted to accompany the Administrative
Agent in such visit.

 

(e) Use of Proceeds. It shall use the proceeds of each Advance made hereunder
solely:

 

(i) to fund or pay the purchase price of Eligible Loans or Eligible Investments
owned or acquired by the Borrower in accordance with the terms and conditions
set forth herein;

 

(ii) to fund additional extensions of credit under Delayed Drawdown Collateral
Loans and Revolving Collateral Loans held by the Borrower in accordance with the
terms of this Agreement; and

 

(iii) to fund the Unfunded Reserve Account on or prior to the Commitment
Termination Date to the extent the Unfunded Reserve Account is required to be
funded pursuant to Section 8.04 (and the Borrower shall submit a Notice of
Borrowing requesting a Borrowing of Advances for a Borrowing Date falling no
more than five and no less than one Business Day prior to the Commitment
Termination Date with a Requested Amount sufficient to fully fund the Unfunded
Reserve Account under Section 8.04).

 

Without limiting the foregoing, it shall use the proceeds of each Advance in a
manner that does not, directly or indirectly, violate any provision of its
Constituent Documents or any Applicable Law, including Regulation T, Regulation
U, Regulation W and Regulation X.

 

(f) Information and Reports. Each Notice of Borrowing, each Monthly Report, each
Payment Date Report and all other written information, reports, certificates and
statements furnished by or on behalf of the Borrower to any Secured Party for
purposes of or in connection with this Agreement, the other Facility Documents
or the transactions contemplated hereby or thereby shall be true, complete and
correct in all material respects as of the date such information is stated or
certified.

 

(g) No Other Business. The Borrower shall not engage in any business or activity
other than borrowing Advances pursuant to this Agreement, funding, acquiring,
owning, holding, administering, selling, enforcing, lending, exchanging,
redeeming, pledging, contracting for the management of and otherwise dealing
with Collateral Loans, Eligible Investments and the Collateral in connection
therewith and entering into the Facility Documents, any applicable Related
Documents and any other agreement contemplated by this Agreement.

 

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(h) Tax Matters. The Borrower shall (and each Lender hereby agrees to) treat the
Advances and the Notes as debt for U.S. federal income tax purposes and will
take no contrary position, unless otherwise required pursuant to a closing
agreement with the U.S. Internal Revenue Service or a non-appealable judgment of
a court of competent jurisdiction. Notwithstanding any contrary agreement or
understanding, the Collateral Manager, the Borrower, the Agents and the Lenders
(and each of their respective employees, representatives or other agents) may
disclose to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated by this Agreement
and all materials of any kind (including opinions or other tax analyses) that
are provided to them relating to such tax treatment and tax structure.
The foregoing provision shall apply from the beginning of discussions between
the parties. For this purpose, the tax treatment of a transaction is the
purported or claimed U.S. tax treatment of the transaction under applicable U.S.
federal, state or local law, and the tax structure of a transaction is any fact
that may be relevant to understanding the purported or claimed U.S. tax
treatment of the transaction under applicable U.S. federal, state or local law.

 

(i) Collections. The Borrower shall direct all Obligors (and related paying
agents) to pay all Collections directly to the Collection Account.

 

(j) Priority of Payments. The Borrower shall instruct (or cause the Collateral
Manager to instruct) the Collateral Agent to apply all Interest Proceeds and
Principal Proceeds solely in accordance with the Priority of Payments and the
other provisions of this Agreement.

 

(k) Acquisition of Collateral Loans from the Equityholder. Any acquisition of
Collateral Loans by the Borrower from the Equityholder shall be effected
pursuant to the Sale Agreement and subject in all respects to the terms and
conditions set forth therein.

 

(l) Certificate of Assignment for Closing Date Participation Interests. As soon
as practicable, but in no event later than the date that is sixty (60) days
after the Closing Date (or such longer period to which the Administrative Agent
may agree), the Borrower shall deliver to the Custodian and the Administrative
Agent a copy of the fully executed assignment agreement assigning the Collateral
Loans related to the Closing Date Participation Interests directly to the
Borrower, certified by an officer of the Borrower (or the Collateral Manager on
behalf of the Borrower) and written evidence satisfactory to the Administrative
Agent that the Borrower is recognized as the owner of record by the related
administrative agent in respect of the Related Documents.

 

Section 5.02. Negative Covenants of the Borrower

 

The Borrower covenants and agrees that, until the Final Maturity Date (and
thereafter until the date that all Obligations, other than contingent
indemnification obligations as to which no claim giving rise thereto has been
asserted, have been paid in full):

 

(a) Restrictive Agreements. It shall not enter into or suffer to exist or permit
to become effective any agreement that prohibits, limits or imposes any
condition upon its ability to create, incur, assume or suffer to exist any Lien
(other than Permitted Liens) upon any of its property or revenues constituting
Collateral, whether now owned or hereafter acquired, to secure its obligations
under the Facility Documents other than this Agreement and the other Facility
Documents or to perform its obligations under the Facility Documents to which it
is a party.

 

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(b) Liquidation; Merger; Sale of Collateral. It shall not consummate any plan of
liquidation, dissolution, partial liquidation, merger or consolidation (or
suffer any liquidation, dissolution or partial liquidation) nor sell, transfer,
exchange or otherwise dispose of any of its assets (other than dispositions
permitted under this Agreement), or enter into an agreement or commitment to do
so or enter into or engage in any business with respect to any part of its
assets, except as expressly permitted by this Agreement and the other Facility
Documents (including in connection with the repayment in full of the
Obligations).

 

(c) Amendments to Constituent Documents, Etc. Without the consent of the
Administrative Agent (such consent not to be unreasonably withheld or delayed),
(i) it shall not amend, modify or take any action inconsistent with its
Constituent Documents and (ii) it will not amend, modify or waive in any
material respect any term or provision in any Facility Document (other than in
accordance with any provision thereof requiring the consent of the
Administrative Agent or all or a specified percentage of the Lenders).

 

(d) Liens. It shall not create, assume or suffer to exist any Lien on any of its
assets now owned or hereafter acquired by it at any time, except for Permitted
Liens or as otherwise expressly permitted by this Agreement and the other
Facility Documents.

 

(e) Margin Requirements; Covered Transactions. It shall not (i) extend credit to
others for the purpose of buying or carrying any Margin Stock in such a manner
as to violate Regulation T or Regulation U or (ii) use all or any part of the
proceeds of any Advance, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that (A) violates the
provisions of the Regulations of the Board of Governors, including, to the
extent applicable, Regulation U and Regulation X or (B) would cause such credit
extension to become a “covered transaction” as defined in Section 23A of the
Federal Reserve Act (12 U.S.C. § 371c) and the Federal Reserve Board’s
Regulation W (12 C.F.R. Part 223), including any transaction where the proceeds
of an Advance are used for the benefit of, or transferred to, an affiliate of a
Lender.

 

(f) Changes to Filing Information. It shall not change its name or its
jurisdiction of organization from that referred to in Section 4.01(a), unless it
gives ten (10) days’ prior written notice to the Agents and takes all actions
that the Administrative Agent or the Required Lenders (through the
Administrative Agent) reasonably request and determine to be necessary to
protect and perfect the Collateral Agent’s perfected security interest in the
Collateral.

 

(g) Transactions with Affiliates. It shall not sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates (including sales of Defaulted Collateral Loans and other Collateral
Loans), unless such transaction is upon terms no less favorable to the Borrower
than it would obtain in a comparable arm’s length transaction with a Person that
is not an Affiliate (it being agreed that any purchase or sale at par shall be
deemed to comply with this provision). The foregoing covenant shall not apply to
the execution, delivery and performance of the Facility Documents or the
Borrower’s Constituent Documents and shall not prohibit the Equityholder from
transferring Collateral Loans, Cash or other assets to the Borrower in whole or
in part as a capital contribution to the Borrower.

 

(h) Subject Laws. It shall not utilize directly or indirectly the proceeds of
any Advance for the benefit of any Person controlling, controlled by, or under
common control with any other Person, whose name appears on the List of
Specially Designated Nationals and Blocked Persons maintained by OFAC or
otherwise in violation of any Subject Laws.

 

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(i) No Claims Against Advances. Subject to Applicable Law, it shall not claim
any credit on, make any deduction from, or dispute the enforceability of payment
of the principal or interest payable (or any other amount) in respect of the
Advances or assert any claim against any present or future Lender, by reason of
the payment of any taxes levied or assessed upon any part of the Collateral.

 

(j) Indebtedness; Guarantees; Securities; Other Assets. It shall not incur or
assume or guarantee any indebtedness, obligations (including contingent
obligations) or other liabilities, or issue any additional securities, whether
debt or equity, in each case other than (i) pursuant to or as expressly
permitted by this Agreement and the other Facility Documents or (ii) pursuant to
customary indemnification, expense reimbursement, funding obligations and
similar provisions under the Related Documents. The Borrower shall not acquire
any Collateral Loan or other property other than as expressly permitted
hereunder.

 

(k) Validity of this Agreement. It shall not (i) permit the validity or
effectiveness of this Agreement or any grant of Collateral hereunder to be
impaired, or permit the Lien of this Agreement to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenant or obligation with respect to this Agreement and (ii) except as
permitted by this Agreement, take any action that would permit the Lien of this
Agreement not to constitute a valid first priority perfected security interest
in the Collateral.

 

(l) Subsidiaries.

 

(i) It shall not have or permit the formation of any subsidiaries, other than
Permitted Subsidiaries; provided, that to the extent any such subsidiary is
formed, the Borrower shall (A) cause such Permitted Subsidiary to provide the
Administrative Agent with such security documents (including security documents
with respect to any real property of such new subsidiary), appropriate financing
statements and, with respect to all property subject to a mortgage or deed of
trust, fixture filings, all in form and substance satisfactory to the
Administrative Agent (including being sufficient to grant the Administrative
Agent a first priority perfected Lien (subject to Permitted Liens) in and to the
assets of such newly formed or acquired subsidiary) and (B) provide to the
Administrative Agent appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such Permitted Subsidiary, in form and substance satisfactory to the
Administrative Agent and all other documentation, including one or more opinions
of counsel satisfactory in form and substance to the Administrative Agent, if
requested by the Administrative Agent, which in its opinion is appropriate with
respect to the execution and delivery of the applicable documentation referred
to above (including policies of title insurance or other documentation with
respect to all property subject to a Lien).

 

(ii) Any document, agreement, or instrument executed or issued pursuant to this
Section shall be a Facility Document.

 

(iii) Nothing in clause (i)(A) above shall apply to any Obligor that becomes a
subsidiary of the Borrower in connection with a work-out or restructuring of a
Collateral Loan or a bankruptcy of the related Obligor.

 

(m) Name. It shall not conduct business under any name other than its own.

 

(n) Employees. It shall not have any employees (other than officers and
directors to the extent they are employees).

 

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(o) Non-Petition. The Borrower shall not be party to any agreements under which
it has any material obligation or liability (direct or contingent) without using
commercially reasonable efforts to include customary “non-petition” and “limited
recourse” provisions therein (and shall not amend or eliminate such provisions
in any agreement to which it is party), except for loan agreements, related loan
documents, bond indentures and related bond documents, any agreements related to
the purchase and sale of any Collateral Loan which contain customary
(as determined by the Collateral Manager) purchase or sale terms or which are
documented using customary (as determined by the Collateral Manager) loan
trading documentation, customary service contracts and engagement letters
entered into in connection with the Collateral Loans and any agreement that does
not impose a material obligation on the Borrower and that is of a type that
customarily does not include “non-petition” or “limited recourse” provisions.

 

(p) Certificated Securities. The Borrower shall not acquire or hold any
Certificated Securities in bearer form (other than securities not required to be
in registered form under Section 163(f)(2)(A) of the Code) in a manner that does
not satisfy the requirements of United States Treasury Regulations section
1.165-12(c) (as determined by the Collateral Manager).

 

(q) Enforcement.

 

(i) The Borrower shall not take any action that would release any Obligor from
any of such Obligor’s covenants or obligations under any instrument or agreement
included in the Collateral, except in the case of (A) repayment of Collateral
Loans, (B) subject to the terms of this Agreement, (1) amendments to Collateral
Loans in accordance with the Collateral Management Standard and (2) actions
taken in connection with the work out or restructuring of any Collateral Loan in
accordance with the provisions hereof, and (C) other actions by the Collateral
Manager required hereby or otherwise to the extent not prohibited by, or in
conflict with, this Agreement.

 

(ii) The Borrower shall not, without the prior written consent of the
Administrative Agent and the Required Lenders, contract with other Persons
(other than the Collateral Manager and the Collateral Administrator) for the
performance of actions and obligations to be performed by the Borrower or the
Collateral Manager hereunder. Notwithstanding any such arrangement, the Borrower
shall remain primarily liable with respect thereto. The Borrower shall
punctually perform, and use commercially reasonable efforts to cause the
Collateral Manager and the Collateral Administrator to perform, all of their
obligations and agreements contained in this Agreement or any other Facility
Document to which such Person is a party.

 

Section 5.03. Affirmative Covenants of the Collateral Manager

 

The Collateral Manager covenants and agrees that, until the Final Maturity Date
(and thereafter until the date that all Obligations, other than contingent
indemnification obligations as to which no claim giving rise thereto has been
asserted, have been paid in full):

 

(a) Compliance with Agreements, Laws, Etc. It shall (i) duly observe and comply
in all material respects with all Applicable Laws relative to the conduct of its
business or to its assets, (ii) preserve and keep in full force and effect its
legal existence, (iii) preserve and keep in full force and effect its rights,
privileges, qualifications and franchises, except where the failure to do so
would not reasonably be expected to result in a Material Adverse Effect, (iv)
comply with the terms and conditions of each Facility Document to which it is a
party, its Constituent Documents and each Related Document to which it is a
party and (v) obtain, maintain and keep in full force and effect all
Governmental Authorizations, Private Authorizations and Governmental Filings
which are necessary or appropriate to properly carry out its business and the
transactions contemplated to be performed by it under the Facility Documents to
which it is a party, its Constituent Documents and the Related Documents to
which it is a party.

 

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(b) Information and Reports. Each Notice of Borrowing, each Monthly Report, each
Payment Date Report and all other written information, reports, certificates and
statements furnished by the Collateral Manager to any Secured Party for purposes
of or in connection with this Agreement, the other Facility Documents or the
transactions contemplated hereby or thereby shall be true, complete and correct
in all material respects as of the date such information is stated or certified.

 

(c) Notice of Default. Within three Business Days after a Responsible Officer of
the Collateral Manager obtains actual knowledge of the occurrence and
continuance of any (A) Default or (B) Event of Default, a certificate of a
Responsible Officer of the Collateral Manager setting forth the details thereof
and the action which the Collateral Manager is taking or proposes to take with
respect thereto; provided that the Collateral Manager shall not be obligated to
deliver such certificate to the extent that a Responsible Officer of the
Borrower delivers a certificate with respect to such Default or Event of Default
pursuant to Section 5.01(c).

 

(d) Access to Records and Documents. It shall permit the Administrative Agent
(or any Person designated by the Administrative Agent, subject to delivery of
standard confidentiality agreements) to, upon reasonable advance notice and
during normal business hours, visit and inspect and make copies thereof at
reasonable intervals (i) its books, records and accounts relating to its
business, financial condition, operations, assets and its performance under the
Facility Documents and the Related Documents and to discuss the foregoing with
its and such Person’s officers, partners, employees and accountants, and (ii)
all of its Related Documents, in each case as often as the Administrative Agent
may reasonably request; provided that so long as no Event of Default or
Collateral Manager Default has occurred, the Borrower shall be responsible for
all costs and expenses for only one such visit per fiscal year by the
Administrative Agent or its designees. The Administrative Agent shall provide 10
days’ prior notice to the Lenders of any such visit and any Lender shall be
permitted to accompany the Administrative Agent in such visit. Any such visit
and inspection shall be made simultaneously with any visit and inspection
pursuant to Section 5.01(e).

 

Section 5.04. Negative Covenant of the Collateral Manager

 

The Collateral Manager covenants and agrees that, until the Final Maturity Date
(and thereafter until the date that all Obligations, other than contingent
indemnification obligations as to which no claim giving rise thereto has been
asserted, have been paid in full), it shall not enter into or suffer to exist or
permit to become effective any agreement that prohibits, limits or imposes any
condition upon its ability to perform its obligations under the Facility
Documents to which it is a party.

 

Section 5.05. Certain Undertakings Relating to Separateness

 

Without limiting any, and subject to all, other covenants of the Borrower
contained in this Agreement:

 

(a) The Borrower shall maintain its accounts, books, accounting and other
records separate from those of any other Person, except that the accounts of the
Borrower may be included in the consolidated financial statements of its
equityholders or the Collateral Manager as required by GAAP or applicable law.

 

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(b) The Borrower shall not commingle or pool any of its funds or assets with
those of any Affiliate or any other Person, and it shall hold all of its assets
in its own name, except as otherwise permitted or required under the Facility
Documents.

 

(c) The Borrower shall pay its own debts, liabilities and expenses (including
overhead expenses, if any) only out of its own assets as the same shall become
due.

 

(d) The Borrower has observed, and shall observe in all material respects all
(A) limited liability company formalities and (B) other organizational
formalities, in each case to the extent necessary or advisable to preserve its
separate existence, and shall preserve its existence, and it shall not, nor
shall it permit any Affiliate or any other Person to, amend, modify or otherwise
change its Constituent Documents in a manner that would adversely affect the
existence of the Borrower as a bankruptcy-remote special purpose entity.

 

(e) The Borrower shall have at least one Independent Manager at all times.

 

(f) The Borrower shall not (A) guarantee, become obligated for, or hold itself
or its credit out to be responsible for or available to satisfy, the debts or
obligations of any other Person or (B) control the decisions or actions
respecting the daily business or affairs of any other Person, except as
permitted by or pursuant to the Facility Documents.

 

(g) The Borrower shall, at all times, hold itself out to the public as a legal
entity separate and distinct from any other Person, shall not identify itself as
a division of any other Person and shall correct any known misunderstanding
regarding its separate identity; provided that the assets, liabilities and
operating results of the Borrower may be consolidated for accounting purposes
and included in consolidated financial statements of its equityholders or the
Collateral Manager as required by GAAP or applicable law.

 

(h) The Borrower shall maintain its assets in such a manner that it will not be
costly or difficult to segregate, ascertain or identify its individual assets
from those of any Affiliate or any other Person.

 

(i) Any transaction between the Borrower and its Affiliates shall be on
arm’s-length terms.

 

(j) Except as provided in the Facility Documents, the Borrower shall not grant a
security interest or otherwise pledge its assets for the benefit of any other
Person.

 

(k) Except as provided in the Facility Documents, the Borrower shall not acquire
any securities or debt instruments of the Collateral Manager, its Affiliates or
any other Person (except for equity interests in Obligors in connection with the
exercise of any remedies with respect to a Collateral Loan or any exchange
offer, work-out or restructuring of a Collateral Loan).

 

(l) The Borrower shall not make loans or advances to any Person, except for the
Collateral Loans and as permitted by or pursuant to the Facility Documents.

 

(m) The Borrower shall make no transfer of its Collateral Loans, except as
permitted by or pursuant to the Facility Documents.

 

(n) The Borrower shall file its own tax returns separate from those of any other
Person or entity, except to the extent that the Borrower is not required to file
tax returns under Applicable Law or is not permitted to file its own tax returns
separate from those of any other Person.

 

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(o) The Borrower shall, to the extent used in its business, use separate
stationery, invoices and checks.

 

(p) The Borrower shall maintain adequate capital in light of its contemplated
business operations; provided, however, that the foregoing shall not require the
Equityholder to make additional capital contributions.

 

(q) The Borrower shall at all times be organized as a single-purpose entity with
Constituent Documents substantially similar to those in effect on the Closing
Date.

 

(r) The Borrower shall at all times conduct its business so that any assumptions
made with respect to the Borrower in any “substantive non-consolidation” opinion
letter delivered in connection with the Facility Documents will continue to be
true and correct in all respects.

 

ARTICLE VI
EVENTS OF DEFAULT

 

Section 6.01. Events of Default

 

“Event of Default”, wherever used herein, means any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

 

(a) a default in the payment, when due and payable, of any interest on or
Commitment Fee in respect of the Advances and such default has not been cured
within two (2) Business Days after the due date of such payment; or

 

(b) (i) the Borrower fails to repay the Obligations (other than contingent
indemnification and reimbursement obligations for which no claim giving rise
thereto has been asserted) in full on the Final Maturity Date or (ii) the
failure to make payment of the Mandatory Amortization Amount on the applicable
Payment Date and such default has not been cured within fifteen (15) Business
Days after the due date of such payment; or

 

(c) the Borrower or the pool of Collateral becomes, or becomes subject to
regulation as, (i) an “investment company” under the Investment Company Act or
(ii) a “covered fund” under the Volcker Rule; or

 

(d) except as otherwise provided in this Section 6.01, a default in any material
respect in the performance, or breach in any material respect, of any material
covenant or agreement of the Borrower under this Agreement or the other Facility
Documents to which it is a party, or the failure of any representation or
warranty of the Borrower made in this Agreement or in any other Facility
Document to be correct, in each case, in all material respects when the same
shall have been made, and the continuation of such default, breach or failure
for a period of thirty Business Days (provided that breaches of Sections
5.01(a)(ii), 5.01(c), 5.01(d), 5.01(e), 5.02 and 5.05 shall not have any cure
period) after the earlier of (i) written notice to the Borrower and the
Collateral Manager (which may be by e-mail) by either Agent, and (ii) actual
knowledge of the Borrower or the Collateral Manager, as applicable; or

 

(e) the rendering of one or more final judgments, decrees or orders by a court
or arbitrator of competent jurisdiction for the payment of money in excess
individually or in the aggregate of $500,000 against the Borrower (exclusive of
judgment amounts fully covered by insurance), and the Borrower shall not have
either (x) discharged or provided for the discharge of any such judgment, decree
or order in accordance with its terms or (y) perfected a timely appeal of such
judgment, decree or order and caused the execution of same to be stayed during
the pendency of the appeal, in each case, within thirty (30) days from the date
of entry thereof; or

 

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(f) the Borrower shall have made payments of amounts in excess of $500,000 in
settlement of any litigation, claim or dispute (exclusive of settlement amounts
fully covered by insurance); or

 

(g) an Insolvency Event relating to the Borrower occurs; or

 

(h) (i) any Facility Document shall (except in accordance with its terms)
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of the Borrower or the Collateral Manager, (ii) the
Borrower or the Collateral Manager shall, directly or indirectly, contest in any
manner the effectiveness, validity, binding nature or enforceability of any
Facility Document or any Lien purported to be created thereunder, or (iii) any
Lien securing any obligation under any Facility Document shall, in whole or in
part, cease to be a first priority perfected security interest of the Collateral
Agent, except as otherwise expressly permitted in accordance with the applicable
Facility Document (including, for the avoidance of doubt, as provided in Section
5.02(k)(ii)); or

 

(i) (i) the Internal Revenue Service shall file notice of a Lien pursuant to
Section 6323 of the Code with regard to any asset of the Borrower and such Lien
shall not have been released within five Business Days or (ii) the PBGC shall
file notice of a Lien pursuant to Section 4068 of ERISA with regard to any asset
of the Borrower and such Lien shall not have been released within five (5)
Business Days; or

 

(j) a Change of Control occurs; or

 

(k) (i) failure of the Borrower to maintain at least one Independent Manager,
(ii) the removal of any Independent Manager of the Borrower without “cause” (as
such term is defined in the organizational document of the Borrower) or without
giving prior written notice to the Administrative Agent, each as required in the
organizational documents of the Borrower, (iii) an Independent Manager of the
Borrower which is not provided by a nationally recognized service identified in
clause (b) of the definition of “Independent Manager” or such other service
reasonably acceptable to the Administrative Agent shall be appointed without the
consent of the Administrative Agent or (iv) the Borrower shall fail to qualify
as a bankruptcy-remote entity based upon the criteria set forth in this
Agreement, such that reputable counsel of national standing could no longer
render a substantive nonconsolidation opinion with respect thereto; or

 

(l) any Monthly Report or Payment Date Report shall fail to be delivered when
due and such failure shall continue for three (3) Business Days; or

 

(m) on any Monthly Report Determination Date, the Aggregate Principal Balance of
all Defaulted Collateral Loans owned by the Borrower as of such date, calculated
as a percentage of the sum of the Aggregate Principal Balance of all Collateral
Loans owned by the Borrower as of such date, and in each case in accordance with
the procedures set forth in Section 1.04, shall be greater than or equal to
40.0%; or

 

(n) the Borrowing Base Test shall not be satisfied and such failure shall
continue for one (1) Business Day after the earlier of (i) written notice to the
Borrower and the Collateral Manager (which may be by e-mail) by either Agent or
(ii) actual knowledge of the Borrower or the Collateral Manager; or

 

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(o) an Equity Coverage Deficiency shall exist and such deficiency shall continue
for one (1) Business Day after the earlier of (i) written notice to the Borrower
and the Collateral Manager (which may be by e-mail) by either Agent or (ii)
actual knowledge of the Borrower or the Collateral Manager; or

 

(p) a Collateral Manager Default occurs; or

 

(q) the Equityholder shall fail to maintain a Tangible Net Worth of at least the
sum of (i) $415,000,000 plus (ii) 80% of the net proceeds of any equity issuance
by the Equityholder after the Closing Date and such failure shall continue for
thirty (30) calendar days; or

 

(r) the Equityholder shall fail to maintain unencumbered liquidity (calculated
as the sum of (i) unrestricted cash or cash equivalents and (ii) undrawn
available liquidity under committed credit facilities of the Equityholder and
its Subsidiaries (other than the Borrower)) in an amount at least equal to the
greater of (x) $5,000,000 and (y) the cumulative amount of principal payments in
respect of indebtedness of the Equityholder and its Subsidiaries due or to
become due in the subsequent ninety day period (other than in connection with an
optional redemption thereof) and such failure shall continue for one (1)
Business Day.

 

Section 6.02. Remedies.

 

(a) Upon the occurrence and during the continuance of any Event of Default, in
addition to all rights and remedies specified in this Agreement and the other
Facility Documents, including Article VII, and the rights and remedies of a
secured party under Applicable Law, including the UCC, the Administrative Agent
shall, at the request of, or may with the consent of, the Required Lenders, by
notice to the Borrower (with a copy to the Collateral Agent), do any one or more
of the following: (1) declare the Commitments to be terminated forthwith,
whereupon the Commitments shall forthwith terminate, and (2) declare the
principal of and the accrued Interest on the Advances and all other amounts
whatsoever payable by the Borrower hereunder to be forthwith due and payable,
whereupon such amounts shall be immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby waived
by the Borrower; provided that, upon the occurrence of any Event of Default
described in clause (g) of Section 6.01 with respect to the Borrower, the
Commitments shall automatically terminate and the Advances and all such other
amounts shall automatically become due and payable, without any further action
by any party.

 

(b) Upon the occurrence and during the continuation of an Event of Default or a
Collateral Manager Default, following written notice by the Administrative Agent
(provided in its sole discretion or at the direction of the Required Lenders) to
the Collateral Manager of the exercise of control rights with respect to the
Collateral, the Administrative Agent may exercise such rights, including: (u)
the exercise of the Collateral Manager’s rights and obligations under the
Facility Documents, including its unilateral power to (A) consent to
modifications to Collateral Loans, (B) take any discretionary action with
respect to Collateral Loans and (C) direct the acquisition, sales and other
dispositions of Collateral Loans; (v) the termination of the Collateral
Manager’s rights to exercise any rights or take any action with respect to the
Collateral; (w) the transfer of the Collateral Manager’s rights and obligations
under the Facility Documents to a successor Collateral Manager; (x) if the
Collateral Manager is not terminated or otherwise replaced in accordance with
this Agreement, to require the Collateral Manager to obtain the consent of the
Administrative Agent before agreeing to any modification of any Collateral Loan,
taking any discretionary action with respect to any Collateral Loan or causing
the Borrower to sell or otherwise dispose of any Collateral Loan; (y) if the
Collateral Manager is not terminated or otherwise replaced in accordance with
this Agreement, to require the Collateral Manager to cause the Borrower to sell
or otherwise dispose of any Collateral Loan as directed by the Administrative
Agent pursuant to Section 7.03, and (z) with respect to any specific Collateral
Loan, to require the Collateral Manager to take such discretionary action with
respect to such Collateral Loan as directed by the Administrative Agent.

 

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(c) In connection with any sale or proposed sale of the Collateral during the
continuance of an Event of Default (whether pursuant to the Facility Documents
or applicable law), the Equityholder (or any Affiliate or designee thereof)
shall have the exclusive right to purchase all Collateral Loans (but not in
part) so long as (1) the Equityholder provides notice to the Administrative
Agent of its intent to acquire and/or refinance the entire Collateral portfolio
within three (3) Business Days of receipt of notice by the Collateral Manager
from the Collateral Agent of the Collateral Agent’s intent to liquidate the
Collateral, (2) the Proceeds of such acquisition and/or refinancing are
sufficient to extinguish all Obligations under the Facility Documents (other
than unasserted contingent obligations) and (3) such acquisition and/or
refinancing is completed within ten (10) Business Days of the date of the
Administrative Agent’s notice of intent to liquidate the Collateral.

 

ARTICLE VII
PLEDGE OF COLLATERAL;
RIGHTS OF THE COLLATERAL AGENT

 

Section 7.01. Grant of Security

 

(a) The Borrower hereby grants, pledges, transfers and collaterally assigns to
the Collateral Agent, for the benefit of the Secured Parties, as collateral
security for all Obligations, a continuing security interest in, and a Lien
upon, all of the Borrower’s right, title and interest in, to and under, the
following property, in each case whether tangible or intangible, wheresoever
located, and whether now owned by the Borrower or hereafter acquired and whether
now existing or hereafter coming into existence (all of the property described
in this Section 7.01(a) being collectively referred to herein as the
“Collateral”):

 

(i) all Collateral Loans and Related Documents (including those listed, as of
the Closing Date, in Schedule 4 hereto), both now and hereafter owned, including
all Collections and other Proceeds thereon or with respect thereto;

 

(ii) each Covered Account and all Money and all investment property (including
all securities, all security entitlements with respect to such Covered Account
and all financial assets carried in such Covered Account) from time to time on
deposit in or credited to each Covered Account;

 

(iii) all interest, dividends, stock dividends, stock splits, distributions and
other Money or property of any kind distributed in respect of the Collateral
Loans of the Borrower, which the Borrower is entitled to receive, including all
Collections in respect of its Collateral Loans;

 

(iv) each Facility Document and all rights, remedies, powers, privileges and
claims under or in respect thereto (whether arising pursuant to the terms
thereof or otherwise available to the Borrower at law or equity), including the
right to enforce each such Facility Document and to give or withhold any and all
consents, requests, notices, directions, approvals, extensions or waivers under
or with respect thereto, to the same extent as the Borrower could but for the
assignment and security interest granted to the Collateral Agent under this
Agreement;

 

(v) all Cash or Money in possession of the Borrower or delivered to the
Collateral Agent (or its bailee);

 

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(vi) all accounts, chattel paper, deposit accounts, financial assets, general
intangibles, instruments, investment property, letter-of-credit rights and other
supporting obligations relating to the foregoing (in each case as defined in the
UCC);

 

(vii) all securities, loans and investments and, in each case as defined in the
UCC, accounts, chattel paper, deposit accounts, instruments, financial assets,
investment property, general intangibles, letter-of-credit rights, and
supporting obligations with respect thereto, and all other property of any type
or nature in which the Borrower has an interest (including the equity interests
of each subsidiary of the Borrower), and all property of the Borrower which is
delivered to the Collateral Agent by or on behalf of the Borrower (whether or
not constituting Collateral Loans or Eligible Investments);

 

(viii) all Liens, property, guaranties, supporting obligations, insurance and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of the assets, investments and properties
described above; and

 

(ix) all Proceeds of any and all of the foregoing.

 

(b) All terms used in this Section 7.01 but not defined in Section 1.01 shall
have the respective meanings assigned to such terms in the UCC as applicable.

 

Section 7.02. Release of Security Interest

 

If and only if all Obligations (other than unasserted contingent obligations)
have been paid in full and all Commitments have been terminated, the Collateral
Agent, on behalf of the Secured Parties, shall, at the expense of the Borrower,
promptly execute, deliver and file or authorize for filing such instruments as
the Borrower shall reasonably request in order to reassign, release or terminate
the Secured Parties’ security interest in the Collateral. The Secured Parties
acknowledge and agree that upon the sale or disposition of any Collateral by the
Borrower in compliance with the terms and conditions of this Agreement, the
security interest of the Secured Parties in such Collateral shall immediately
terminate and the Collateral Agent, on behalf of the Secured Parties, shall, at
the expense of the Borrower, execute, deliver and file or authorize for filing
such instrument as the Borrower shall reasonably request to reflect or evidence
such termination. Any and all actions under this Article VII in respect of the
Collateral shall be without any recourse to, or representation or warranty by
any Secured Party and shall be at the sole cost and expense of the Borrower.

 

Section 7.03. Rights and Remedies

 

The Collateral Agent (for itself and on behalf of the other Secured Parties)
shall have all of the rights and remedies of a secured party under the UCC and
other Applicable Law. Upon the occurrence and during the continuance of an Event
of Default, the Collateral Agent or its designees shall, at the written
direction of the Administrative Agent or the Required Lenders acting through the
Administrative Agent, (a) instruct the Borrower to deliver any or all of the
Collateral, the Related Documents and any other document relating to the
Collateral to the Collateral Agent or its designees and otherwise give all
instructions for the Borrower regarding the Collateral; (b) sell or otherwise
dispose of the Collateral, all without judicial process or proceedings, it being
understood that any such sale or disposition of the Collateral shall be subject
to the provisions of Section 6.02(c); (c) take control of the Proceeds of any
such Collateral; (d) subject to the provisions of the applicable Related
Documents, exercise any consensual or voting rights in respect of the
Collateral; (e) release, make extensions, discharges, exchanges or substitutions
for, or surrender all or any part of the Collateral; (f) enforce the Borrower’s
rights and remedies with respect to the Collateral; (g) institute and prosecute
legal and equitable proceedings to enforce collection of, or realize upon, any
of the Collateral; (h) require that the Borrower immediately take all actions
necessary to cause the liquidation of the Collateral in order to pay all amounts
due and payable in respect of the Obligations, in accordance with the terms of
the Related Documents; (i) redeem or withdraw or cause the Borrower to redeem or
withdraw any asset of the Borrower to pay amounts due and payable in respect of
the Obligations; (j) make copies of all books, records and documents relating to
the Collateral; and (k) endorse the name of the Borrower upon any items of
payment relating to the Collateral or upon any proof of claim in bankruptcy
against an account debtor.

 

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The Borrower hereby agrees that, upon the occurrence and during the continuance
of an Event of Default, at the request of either Agent or the Required Lenders
(acting through the Administrative Agent), it shall execute all documents and
agreements which are necessary or appropriate to have the Collateral to be
assigned to the Collateral Agent or its designee. For purposes of taking the
actions described in clauses (a) through (k) of this Section 7.03 the Borrower
hereby irrevocably appoints the Collateral Agent as its attorney-in-fact (which
appointment being coupled with an interest and is irrevocable while any of the
Obligations remain unpaid), with power of substitution, in the name of the
Collateral Agent or in the name of the Borrower or otherwise, for the use and
benefit of the Collateral Agent for the benefit of the Secured Parties, but at
the cost and expense of the Borrower and, except as expressly required by
Applicable Law, without notice to the Borrower.

 

Section 7.04. Remedies Cumulative

 

Each right, power, and remedy of the Agents and the other Secured Parties, or
any of them, as provided for in this Agreement or in the other Facility
Documents or now or hereafter existing at law or in equity or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power, or remedy provided for in this Agreement or in the other
Facility Documents or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by the
Agents or any other Secured Party of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by such Persons
of any or all such other rights, powers, or remedies.

 

Section 7.05. Related Documents

 

(a) Each of the Borrower and the Collateral Manager hereby agrees that, to the
extent not expressly prohibited by the terms of the Related Documents, after the
occurrence and during the continuance of an Event of Default, it shall (i) upon
the written request of either Agent, promptly forward to such Agent all material
information and notices which it receives under or in connection with the
Related Documents relating to the Collateral, and (ii) upon the written request
of either Agent, act and refrain from acting in respect of any request, act,
decision or vote under or in connection with the Related Documents relating to
the Collateral only in accordance with the direction of the Administrative Agent
(in its reasonable discretion).

 

(b) The Borrower agrees that, to the extent the same shall be in the Borrower’s
possession, it will hold all Related Documents relating to the Collateral in
trust for the Collateral Agent on behalf of the Secured Parties, and upon
request of either Agent following the occurrence and during the continuance of
an Event of Default or as otherwise provided herein, promptly deliver the same
to the Collateral Agent or its designee. In addition, in accordance with this
Agreement, promptly following its acquisition of any Collateral Loan,
the Borrower shall deliver to the Custodian the Required Loan Documents.

 

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Section 7.06. Borrower Remains Liable

 

(a) Notwithstanding anything herein to the contrary, (i) the Borrower shall
remain liable under the contracts and agreements included in and relating to the
Collateral (including the Related Documents) to the extent set forth therein,
and shall perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Agreement had not been executed, and
(ii) the exercise by any Secured Party of any of its rights hereunder shall not
release the Borrower from any of its duties or obligations under any such
contracts or agreements included in the Collateral.

 

(b) No obligation or liability of the Borrower is intended to be assumed by the
Administrative Agent or any other Secured Party under or as a result of this
Agreement or the other Facility Documents, or the transactions contemplated
hereby or thereby, including under any Related Document or any other agreement
or document that relates to Collateral and, to the maximum extent permitted
under provisions of Law, the Administrative Agent and the other Secured Parties
expressly disclaim any such assumption.

 

Section 7.07. Protection of Collateral

 

The Borrower shall from time to time execute and deliver all such supplements
and amendments hereto and file or authorize the filing of all such UCC-1
financing statements and continuation statements, instruments of further
assurance and other instruments, and shall take such other action as may be
necessary or advisable or desirable to secure the rights and remedies of the
Secured Parties hereunder and to:

 

(a) grant security more effectively on all or any portion of the Collateral;

 

(b) maintain, preserve and perfect any grant of security made or to be made by
this Agreement including the first priority nature of the Lien or carry out more
effectively the purposes hereof;

 

(c) perfect, publish notice of or protect the validity of any grant made or to
be made by this Agreement (including any and all actions necessary or desirable
as a result of changes in Law);

 

(d) enforce any of the Collateral or other instruments or property included in
the Collateral;

 

(e) preserve and defend title to the Collateral and the rights therein of the
Collateral Agent and the Secured Parties in the Collateral against the claims of
all third parties; and

 

(f) pay or cause to be paid any and all taxes levied or assessed upon all or any
part of the Collateral.

 

The Borrower hereby designates the Collateral Agent as its agent and attorney in
fact to prepare and file any UCC-1 financing statement and continuation
statement, and all other instruments, and take all other actions, required
pursuant to this Section 7.07 if the Borrower fails to take any such action
within ten (10) Business Days after either Agent’s request therefor. Such
designation shall not impose upon the Collateral Agent or the Administrative
Agent or any other Secured Party, or release or diminish, the Borrower’s
obligations under this Section 7.07. The Borrower further authorizes the
Collateral Agent to file UCC-1 financing statements, that name the Borrower as
debtor and the Collateral Agent as secured party and that describes “all assets
in which the debtor now or hereafter has rights” as the Collateral in which the
Collateral Agent has a grant of security hereunder.

 

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ARTICLE VIII
ACCOUNTS, ACCOUNTINGS AND RELEASES

 

Section 8.01. Collection of Money

 

Except as otherwise expressly provided herein, the Collateral Agent may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all Money
and other property payable to or receivable by the Collateral Agent pursuant to
this Agreement, including all payments due on the Collateral, in accordance with
the terms and conditions of such Collateral. The Collateral Agent shall
segregate and hold all such Money and property received by it in trust for the
Secured Parties and shall apply it as provided in this Agreement. Each Covered
Account shall be established and maintained under the Account Control Agreement
with a Qualified Institution. Any Covered Account may contain any number of
subaccounts for the convenience of the Collateral Agent or as required by the
Collateral Manager for convenience in administering the Covered Account or the
Collateral.

 

Section 8.02. Collection Account

 

(a) In accordance with this Agreement and the Account Control Agreement,
the Collateral Agent shall, on or prior to the Closing Date, establish at the
Custodian a single, segregated trust account which shall be designated as the
“Collection Account”, which shall be maintained with the Custodian in accordance
with the Account Control Agreement and which shall be subject to the Lien of the
Collateral Agent. In addition, the Collateral Agent shall establish two
segregated subaccounts within the Collection Account, one of which will be
designated the “Interest Collection Subaccount” and one of which will be
designated the “Principal Collection Subaccount”. The Collateral Agent shall
from time to time deposit into the Interest Collection Subaccount all Interest
Proceeds received by the Collateral Agent. The Collateral Agent shall deposit
promptly upon receipt thereof all Principal Proceeds (unless simultaneously
reinvested in additional Collateral Loans in accordance with Article X or in
Eligible Investments in accordance with Section 8.06 or required to be deposited
in the Unfunded Reserve Account pursuant to Section 8.04 or the Cash Diversion
Reserve Account pursuant to Section 8.05) received by the Collateral Agent. All
funds deposited from time to time in the Collection Account pursuant to this
Agreement shall be held by the Collateral Agent as part of the Collateral and
shall be applied to the purposes herein provided. Subject to Section 8.02(c),
amounts in the Collection Account shall be reinvested pursuant to
Section 8.06(a).

 

(b) At any time when reinvestment is permitted pursuant to Article X, the
Collateral Manager on behalf of the Borrower (subject to compliance with Article
X) may, by delivery of a certificate of a Responsible Officer of the Collateral
Manager, direct the Collateral Agent to, and upon receipt of such certificate
the Collateral Agent shall, withdraw funds on deposit in the Principal
Collection Subaccount representing Principal Proceeds (together with accrued
interest received with regard to any Collateral Loan and Interest Proceeds but
only to the extent used to pay for accrued interest on an additional Collateral
Loan) and reinvest such funds in additional Collateral Loans in accordance with
such certificate. If at any time the amount on deposit in the Unfunded Reserve
Account is less than the Unfunded Reserve Required Amount, the Collateral
Manager (on behalf of the Borrower) may, by delivery of a certificate of a
Responsible Officer of the Collateral Manager, direct the Collateral Agent to,
and upon receipt of such certificate the Collateral Agent shall, withdraw funds
on deposit in the Principal Collection Subaccount representing Principal
Proceeds and remit such funds as so directed by the Collateral Manager to meet
the Borrower’s funding obligations in respect of Delayed Drawdown Collateral
Loans or Revolving Collateral Loans.

 

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(c) The Collateral Agent shall transfer to the Payment Account, from the
Collection Account for application pursuant to Section 9.01(a), on each Payment
Date, the amount set forth to be so transferred in the Payment Date Report for
such Payment Date.

 

(d) The Collateral Manager may withdraw from the Collection Account any deposits
thereto constituting Excluded Amounts if the Collateral Manager has, prior to
such withdrawal, delivered to each Agent a report setting forth in reasonable
detail the calculation of such Excluded Amounts.

 

Section 8.03. Payment Account

 

In accordance with this Agreement and the Account Control Agreement, the
Collateral Agent shall, on or prior to the Closing Date, establish at the
Custodian a single, segregated trust account, which shall be designated as the
“Payment Account”, which shall be maintained by the Borrower with the Custodian
in accordance with the Account Control Agreement and which shall be subject to
the Lien of the Collateral Agent. Except as provided in Section 9.01, the only
permitted withdrawal from or application of funds on deposit in, or otherwise to
the credit of, the Payment Account shall be to pay amounts due and payable under
the Priority of Payments on the Payment Dates in accordance with their terms and
the provisions of this Agreement. The Borrower shall not have any legal,
equitable or beneficial interest in the Payment Account other than in accordance
with this Agreement and the Priority of Payments.

 

Section 8.04. The Unfunded Reserve Account; Fundings

 

In accordance with this Agreement and the Account Control Agreement, the
Collateral Agent shall, on or prior to the Closing Date, establish at the
Custodian a single, segregated trust account, which shall be designated as the
“Unfunded Reserve Account”, which shall be maintained by the Borrower with the
Custodian in accordance with the Account Control Agreement and which shall be
subject to the Lien of the Collateral Agent. The only permitted deposits to or
withdrawals from the Unfunded Reserve Account shall be in accordance with the
provisions of this Agreement.

 

On the date of acquisition by the Borrower of any Delayed Drawdown Collateral
Loan or Revolving Collateral Loan and any Payment Date, funds shall be withdrawn
from the Principal Collection Subaccount and deposited by the Collateral Agent
in the Unfunded Reserve Account, such that the sum of the amount of funds on
deposit in the Unfunded Reserve Account shall be equal to or greater than an
amount (the “Unfunded Reserve Required Amount”) equal to:

 

(a) at all times during the Reinvestment Period:

 

(i) the aggregate unfunded amount of all such Delayed Drawdown Collateral Loans
and Revolving Collateral Loans, multiplied by

 

(ii) 100% minus the Advance Rate then in effect; and

 

(b) on the Commitment Termination Date and at all times thereafter, the sum of:

 

(i) the aggregate unfunded commitments in respect of all Delayed Drawdown
Collateral Loans and Revolving Collateral Loans, plus

 

(ii) the aggregate amount of funds needed to settle purchases of Collateral
Loans committed to be acquired by the Borrower prior to the end of the
Reinvestment Period that have not yet settled.

 

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Fundings of Delayed Drawdown Collateral Loans and Revolving Collateral Loans
shall be made using, first, amounts on deposit in the Unfunded Reserve Account,
then available Principal Proceeds and finally, prior to the Commitment
Termination Date, available Borrowings. Prior to or immediately after the
occurrence of the Commitment Termination Date (other than a Commitment
Termination Date following the occurrence of an Insolvency Event with respect to
the Borrower), the Borrower may request a final Borrowing in an amount
sufficient to fund the Unfunded Reserve Required Amount; provided that after
giving effect to such Borrowing, the Borrowing Base Test shall be satisfied.

 

Amounts on deposit in the Unfunded Reserve Account will be invested in overnight
funds that are Eligible Investments selected by the Collateral Manager pursuant
to Section 8.06(a) and earnings from all such investments will be deposited in
the Interest Collection Subaccount as Interest Proceeds. Funds in the Unfunded
Reserve Account (other than earnings from Eligible Investments therein) will be
available solely to cover drawdowns on the Delayed Drawdown Collateral Loans and
Revolving Collateral Loans and settle purchases of Collateral Loans committed to
be acquired by the Borrower prior to the end of the Reinvestment Period;
provided that, to the extent that the aggregate amount of funds on deposit
therein at any time exceeds the Unfunded Reserve Required Amount, the Collateral
Agent shall remit such excess to the Principal Collection Subaccount. In
addition, following the occurrence of an Event of Default, funds in the Unfunded
Reserve Account may be withdrawn by the Collateral Agent and deposited into the
Principal Collection Subaccount at the direction of the Administrative Agent.

 

Section 8.05. The Cash Diversion Reserve Account

 

In accordance with this Agreement and the Account Control Agreement, the
Collateral Agent shall, on or prior to the Closing Date, establish at the
Custodian a single, segregated trust account, subject to the Lien of the
Collateral Agent”, which shall be designated as the “Cash Diversion Reserve
Account”, which shall be maintained by the Borrower with the Custodian in
accordance with the Account Control Agreement and which shall be subject to the
Lien of the Collateral Agent. The only permitted deposits to or withdrawals from
the Cash Diversion Reserve Account shall be in accordance with the provisions of
this Agreement. The Borrower shall not have any legal, equitable or beneficial
interest in the Cash Diversion Reserve Account other than in accordance with
this Agreement and the Priority of Payments.

 

If the Cash Diversion Test is not satisfied as of any Determination Date, funds
shall be withdrawn from the Interest Collection Subaccount and Principal
Collection Subaccount on each Payment Date in accordance with the Priority of
Payments and deposited by the Collateral Agent in the Cash Diversion Reserve
Account, such that the sum of the amount of funds on deposit in the Cash
Diversion Reserve Account shall be equal to an amount (the “Cash Diversion
Required Amount”) that causes the Cash Diversion Test to be satisfied. If the
Cash Diversion Test is satisfied on any Determination Date, the Collateral
Manager on behalf of the Borrower (subject to compliance with Article X) may, by
delivery of a certificate of a Responsible Officer of the Collateral Manager,
direct the Collateral Agent to, and upon receipt of such certificate the
Collateral Agent shall, withdraw funds in the Cash Diversion Reserve Account and
deposit such funds into the Principal Collection Subaccount.

 

Amounts on deposit in the Cash Diversion Reserve Account will be invested in
overnight funds that are Eligible Investments selected by the Collateral Manager
pursuant to Section 8.06 and earnings from all such investments will be
deposited in the Interest Collection Subaccount as Interest Proceeds. To the
extent that the aggregate amount of funds on deposit therein at any time exceeds
the Cash Diversion Required Amount, the Collateral Agent shall remit such excess
to the Principal Collection Subaccount. In addition, (i) following the
occurrence of an Event of Default, funds in the Cash Diversion Reserve Account
may be withdrawn by the Collateral Agent and deposited into the Principal
Collection Subaccount at the direction of the Administrative Agent and (ii) on
the Final Maturity Date, funds in the Cash Diversion Reserve Account shall be
withdrawn by the Collateral Agent and deposited into the Principal Collection
Subaccount and applied in accordance with Section 9.01.

 

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Section 8.06. Reinvestment of Funds in Covered Accounts; Reports by Collateral
Agent

 

(a) By delivery of a certificate of a Responsible Officer (which may be in the
form of standing instructions), the Borrower (or the Collateral Manager on
behalf of the Borrower) shall at all times direct the Collateral Agent to, and,
upon receipt of such certificate, the Collateral Agent shall, invest all funds
on deposit in the Collection Account, the Unfunded Reserve Account and the Cash
Diversion Reserve Account in Eligible Investments having stated maturities no
later than the Business Day preceding the next Payment Date (or such shorter
maturities expressly provided herein). If, prior to the occurrence of an Event
of Default, the Borrower shall not have given any such investment directions,
the Collateral Agent shall seek instructions from the Collateral Manager within
three (3) Business Days after transfer of any funds to such accounts and shall
invest in Specified Eligible Investments that mature overnight until it shall
receive written instructions from the Collateral Manager. After the occurrence
and during the continuance of an Event of Default, the Collateral Agent shall
invest and reinvest such funds as fully as practicable in Specified Eligible
Investments maturing not later than the earlier of (i) thirty (30) days after
the date of such investment (unless putable at par to the issuer thereof)
or (ii) the Business Day immediately preceding the next Payment Date (or such
shorter maturities expressly provided herein). Except to the extent expressly
provided otherwise herein, all interest, gain, loss and other income from such
investments shall be deposited, credited or charged (as applicable) in and to
the Interest Collection Subaccount. Absent its timely receipt of such
instruction from the Collateral Manager or Administrative Agent, as applicable,
in accordance with the foregoing, the Collateral Agent shall not be under an
obligation to invest (or pay interest on) funds held hereunder. The Collateral
Agent shall in no way be liable for any insufficiency in a Covered Account
resulting from any loss relating to any such investment.

 

(b) The Collateral Agent agrees to give the Borrower prompt notice if any
Covered Account or any funds on deposit in any Covered Account, or otherwise to
the credit of a Covered Account, shall become subject to any writ, order,
judgment, warrant of attachment, execution or similar process. All Covered
Accounts shall remain at all times with the Custodian.

 

(c) The Collateral Agent shall supply, in a timely fashion, to the Borrower and
the Collateral Manager any information regularly maintained by the Collateral
Agent that the Borrower or the Collateral Manager may from time to time
reasonably request with respect to the Collateral, the Covered Accounts and the
other Collateral and provide any other requested information reasonably
available to the Collateral Agent and required to be provided by Section 8.07 or
to permit the Collateral Manager to perform its obligations hereunder or the
Borrower’s obligations hereunder that have been delegated to the Collateral
Manager. The Collateral Agent shall promptly forward to the Collateral Manager
copies of notices, periodic financial reports and other writings received by it
from the Obligor of any Collateral Loan or from any Clearing Agency with respect
to any Collateral Loan.

 

Section 8.07. Accountings

 

(a) Monthly. Not later than two (2) Business Days prior to the 18th calendar day
of each calendar month (other than January, April, July, and October in each
year) (the “Monthly Reporting Date”), the Borrower shall compile and provide (or
cause to be compiled and provided) to the Administrative Agent and the
Collateral Manager a monthly report (which includes a Borrowing Base Calculation
Statement prepared by the Collateral Manager and provided to the Collateral
Agent for inclusion in the Monthly Report) (each, a “Monthly Report”) in
accordance with this Section 8.07. The Borrower shall compile and provide (or
cause to be compiled and provided) to the Administrative Agent a loan data file
(the “Data File”) for the previous monthly period ending on the Monthly Report
Determination Date (containing such information agreed upon by the Borrower (or
the Collateral Manager on its behalf), and the Administrative Agent). The
Borrower shall provide (or cause to be provided) the Data File at least two (2)
Business Days prior to the Monthly Reporting Date. As used herein, the “Monthly
Report Determination Date” with respect to any calendar month will be the last
day of the prior calendar month. For the avoidance of doubt, the first Monthly
Report shall be delivered on November 20, 2014 and shall be determined with
respect to the Monthly Report Determination Date that is November 14, 2014. The
Monthly Report for a calendar month shall be in a form reasonably acceptable to
the Borrower, the Collateral Agent, the Collateral Manager and the
Administrative Agent and shall contain the information with respect to the
Collateral Loans and Eligible Investments included in the Collateral set forth
in Schedule 2 hereto, and shall be determined as of the Monthly Report
Determination Date for such calendar month.

 

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(b) Payment Date Accounting. The Borrower shall render (or cause to be rendered)
an accounting (each, a “Payment Date Report”), determined as of the close of
business on each Determination Date preceding a Payment Date, and shall deliver
such Payment Date Report to the Agents and the Collateral Manager not later than
the second Business Day preceding the related Payment Date. The Payment Date
Report shall be in a form reasonably acceptable to the Borrower, the Collateral
Agent, the Collateral Manager and the Administrative Agent and shall contain the
information set forth in Schedule 3 hereto.

 

In addition, the Borrower shall provide (or cause to be provided) in each
Payment Date Report a statement setting forth in reasonable detail each
amendment, modification or waiver under any Related Document for each Collateral
Loan that constitutes a Material Modification that became effective since the
immediately preceding Payment Date Report (or, in respect of the first Payment
Date Report, from the Closing Date).

 

(c) Failure to Provide Accounting. If the Collateral Agent shall not have
received any accounting provided for in this Section 8.07 on the first Business
Day after the date on which such accounting is due to the Collateral Agent, the
Collateral Agent shall notify the Collateral Manager who shall use reasonable
efforts to obtain such accounting by the applicable Payment Date.

 

For the avoidance of doubt, the Borrower has engaged the Collateral
Administrator pursuant to the Collateral Administration Agreement to compile and
provide the information and reports to be provided in this Section 8.07.

 

Section 8.08. Release of Collateral

 

(a) If no Event of Default has occurred and is continuing, the Borrower may, by
delivery of a certificate of a Responsible Officer of the Collateral Manager
delivered to the Collateral Agent at least one (1) Business Day prior to the
settlement date for any sale of any item of Collateral certifying that the sale
of such security is being made in accordance with Section 10.01 and such sale
complies with all applicable requirements of Section 10.01, direct the
Collateral Agent to release or cause to be released such item from the Lien of
this Agreement and, upon receipt of such certificate, the Collateral Agent (or
Custodian, as applicable) shall deliver any such item, if in physical form, duly
endorsed to the broker or purchaser designated in such certificate or, if such
item is a security is a Clearing Corporation Security, cause an appropriate
transfer thereof to be made, in each case against receipt of the sales price
therefor as specified by the Collateral Manager in such certificate; provided
that the Collateral Agent may deliver any such item in physical form for
examination in accordance with street delivery custom.

 

(b) Subject to the terms of this Agreement, the Collateral Agent (or Custodian,
as applicable) shall, upon the receipt of a certificate of the Borrower, by
delivery of a certificate of a Responsible Officer of the Collateral Manager,
deliver any Collateral in accordance with such certificate, and execute such
documents or instruments as are delivered by or on behalf of the Borrower and
reasonably necessary to release or cause to be released such security from the
Lien of this Agreement, which is set for any mandatory call or redemption or
payment in full to the appropriate paying agent on or before the date set for
such call, redemption or payment, in each case against receipt of the call or
redemption price or payment in full thereof.

 

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(c) As provided in Section 8.02(a), the Collateral Agent shall deposit any
proceeds received by it from the disposition of a Collateral in the applicable
subaccount of the Collection Account, unless simultaneously applied to the
purchase of additional Collateral Loans or Eligible Investments as permitted
under and in accordance with the requirements of this Article VIII and Article
X.

 

(d) The Collateral Agent shall, upon receipt of a certificate of a Responsible
Officer of the Borrower certifying that there are no Commitments outstanding and
all Obligations of the Borrower hereunder and under the other Facility Documents
have been satisfied, execute such documents or instruments as are delivered by
or on behalf of the Borrower and reasonably necessary to release any remaining
Collateral from the Lien of this Agreement.

 

(e) Any security, Collateral Loan or amounts that are released pursuant to
Section 8.08(a) or (b) shall be automatically released from the Lien of this
Agreement.

 

Section 8.09. Reports by Independent Accountants

 

(a) As of the Closing Date, the Collateral Manager has appointed a firm of
independent certified public accountants, independent auditors or independent
consultants (together with its successors, the “Independent Accountants”), in
each case reasonably acceptable to the Administrative Agent, for purposes of
reviewing and delivering the reports of such accountants required by this
Agreement, which may be the firm of independent certified public accountants,
independent auditors or independent consultants that performs accounting
services for the Collateral Manager. The Collateral Manager may remove any firm
of Independent Accountants at any time upon notice to, but without the consent
of, the Administrative Agent. Upon any resignation by such firm or removal of
such firm by the Collateral Manager, the Collateral Manager shall promptly
appoint, by a certificate of a Responsible Officer of the Collateral Manager
delivered to the Agents, a successor thereto that shall also be a firm of
independent certified public accountants, independent auditors or independent
consultants of recognized standing, which may be a firm of independent certified
public accountants, independent auditors or independent consultants that
performs accounting services for the Collateral Manager. The fees of such
Independent Accountants and any successor shall be payable by the Borrower.

 

(b) The Collateral Manager will cause the Independent Accountants to furnish to
the Administrative Agent (with a copy to the Collateral Agent), within 120 days
of the each of each fiscal year of the Borrower, to the effect that such firm
has applied certain agreed-upon procedures approved by the Administrative Agent
(as such agreed-upon procedures may be updated from time to time in response to
requests of the Administrative Agent) with respect to a selection of Monthly
Reports and/or Payment Date Reports from the related fiscal year and, with
respect to the Collateral Manager’s performance hereunder, to assist the
Administrative Agent in determining that the Monthly Reports and Payment Date
Reports for the related fiscal 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 (including, with
respect to any such exceptions, an explanation of how each such exception arose
and reflecting the input/explanation of the Collateral Manager thereto). Such
reports pursuant to this clause (b) shall be at the expense of the Borrower.

 

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(c) In the event the Independent Accountants appointed pursuant to clause (b)
above require the Collateral Agent, as applicable, to agree to the procedures
performed by such Independent Accountants with respect to any of the reports,
statements of such Independent Accountants, or sign any agreement in connection
therewith, the Collateral Agent, as applicable, shall, upon direction from the
Borrower (or the Collateral Manager on behalf of the Borrower), so agree to the
terms and conditions requested by such Independent Accountants as a condition to
receiving documentation required by this Agreement; it being understood and
agreed that the Collateral Agent shall deliver such agreement in conclusive
reliance on such direction and shall make no inquiry or investigation as to, and
shall have no obligation or responsibility in respect of, the terms of the
engagement of such Independent Accountants by the Borrower or the sufficiency,
validity or correctness of the agreed upon procedures in respect of such
engagement. The Collateral Agent may require the delivery of a written direction
to the execution of any such agreement required for the delivery of any report
or statement of such Independent Accountants to the Collateral Agent under this
Agreement. Upon direction from the Borrower (or the Collateral Manager on behalf
of the Borrower), the Collateral Agent shall be authorized, without liability on
its part, to execute and deliver any such agreement with such Independent
Accountants, which agreement, to the extent so directed by the Borrower (or the
Collateral Manager on behalf of the Borrower), may include, amongst other
things, (i) an acknowledgement that the Borrower has agreed that the procedures
by such Independent Accountants are sufficient for the relevant purposes, (ii)
releases by the Collateral Agent any claims, liabilities and expenses arising
out of or relating to such Independent Accountant’s engagement, agreed-upon
procedures or any report or statement issued by such Independent Accountants
under any such engagement and acknowledgement of other limitations of liability
in favor of such Independent Accountants and (iii) restrictions or prohibitions
on the disclosure of any such reports, statements or other information or
documents provided to it by such Independent Accountants.

 

ARTICLE IX
APPLICATION OF FUNDS

 

Section 9.01. Disbursements of Funds from Payment Account

 

(a) Notwithstanding any other provision in this Agreement, but subject to the
other subsections of this Section 9.01, on each Payment Date, the Collateral
Agent shall disburse amounts transferred from the Collection Account to the
Payment Account pursuant to Section 8.02 in accordance with the following
priorities (the “Priority of Payments”):

 

(i) On each Payment Date, Interest Proceeds on deposit in the Interest
Collection Subaccount, to the extent received on or before the related
Determination Date (or, if such Determination Date is not a Business Day, the
next succeeding Business Day) will be transferred into the Payment Account, to
be applied in the following order of priority:

 

(A) to pay taxes, registration, registered office and filing fees, if any,
of the Borrower or any subsidiary of the Borrower;

 

(B) (1) first, to pay all out-of-pocket costs and expenses of the Collateral
Agent incurred in connection with any sale of Collateral or exercise of other
remedial rights pursuant to Section 7.03; (2) second, to pay other
Administrative Expenses in accordance with the priorities specified in the
definition thereof; provided that the amount in clause (2) shall not exceed the
Administrative Expense Cap for such Payment Date;

 

(C) prior to the occurrence of a Default or an Event of Default, to the
Collateral Manager to pay the Collateral Management Fee, plus any Collateral
Management Fee that remains due and unpaid in respect of any prior Payment Dates
as a result of insufficient funds, except, in each case, to the extent that the
Collateral Manager elects to defer such current or previously due Collateral
Management Fee pursuant to this Agreement

 

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(D) to each Lender, to pay accrued and unpaid Interest on the Advances,
Commitment Fees and Prepayment Fees due to each such Lender and amounts payable
to each such Lender under Section 2.10;

 

(E) (1) during the Reinvestment Period, prior to the occurrence of a Default or
an Event of Default, (x) if the Borrowing Base Test or the Net Equity Test is
not satisfied as of the relevant Determination Date, to pay principal of the
Advances of each Lender (pro rata, based on each Lender’s Percentage) until each
of the Borrowing Base Test and the Net Equity Test is satisfied (on a pro forma
basis as at such Determination Date) and (y) if the Cash Diversion Test is not
satisfied as of the relevant Determination Date, the remainder (A) to the Cash
Diversion Reserve Account in an amount not to exceed the Cash Diversion Required
Amount or (B) in the case of an Equity Coverage Deficiency, to prepay the
Advances in an amount sufficient to cure such Equity Coverage Deficiency, and
(2) after the occurrence and during the continuance of a Default or an Event of
Default, to pay the principal of the Advances of each Lender (pro rata, based on
each Lender’s Percentage) until paid in full;

 

(F) during the Amortization Period, an amount equal to the Mandatory
Amortization Amount;

 

(G) to the payment or application of amounts referred to in clause (B) above (in
the same order of priority specified therein), to the extent not paid in full
pursuant to applications under such clauses;

 

(H) to pay all other Obligations then due and owing (other than Advances
Outstanding), including accrued and unpaid amounts owing to Affected Persons
(if any) under Sections 2.09 and 12.03;

 

(I) to the payment or application of amounts referred to in clause (C) above, to
the extent not paid in full pursuant to the application under such clause;

 

(J) during the Reinvestment Period, the remainder to be allocated at the
discretion of the Collateral Manager (in written notice to the Agents delivered
on or prior to the related Determination Date) to any one or more of the
following payments: (1) to the Principal Collection Subaccount for the purchase
of additional Collateral Loans and the funding of Delayed Drawdown Collateral
Loans and Revolving Collateral Loans, (2) to prepay the Advances, (3) for
deposit into the Unfunded Reserve Account or (4) to the Borrower or its
designee, which amounts may be distributed to the Equityholder;

 

(K) after the Reinvestment Period, to be allocated at the discretion of the
Collateral Manager (in written notice to the Agents delivered on or prior to the
related Determination Date) to any one or more of the following payments: (1) to
prepay the Advances or (2) for deposit into the Unfunded Reserve Account until
the amounts on deposit therein are equal to the Unfunded Reserve Required
Amount; and

 

(L) to the Borrower or its designee, which amounts may be distributed to the
Equityholder.

 

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(ii) On each Payment Date, except for any Principal Proceeds that will be used
to settle binding commitments entered into prior to the related Determination
Date for the purchase of Collateral Loans, Principal Proceeds on deposit in the
Principal Collection Subaccount to the extent received on or before the related
Determination Date (or, if such Determination Date is not a Business Day, the
next succeeding Business Day) and that are not designated for reinvestment by
the Collateral Manager and amounts on deposit in the Cash Diversion Reserve
Account designated for deposit into the Principal Collection Subaccount pursuant
to Section 8.05 will be transferred to the Payment Account to be applied in the
following order of priority:

 

(A) to the payment of unpaid amounts under clauses (A) through (I) in clause (i)
above (in the same order of priority specified therein), to the extent not paid
in full thereunder;

 

(B) during the Reinvestment Period, at the discretion of the Collateral Manager,
all remaining amounts shall be allocated to any one or more of the following
payments: (1) to the Principal Collection Subaccount for the purchase of
additional Collateral Loans and the funding of Delayed Drawdown Collateral Loans
and Revolving Collateral Loans or (2) for deposit into the Unfunded Reserve
Account until the amounts on deposit therein are equal to the Unfunded Reserve
Required Amount;

 

(C) for deposit into the Unfunded Reserve Account until the amounts on deposit
therein are equal to the Unfunded Reserve Required Amount;

 

(D) after the Reinvestment Period, to pay the Advances of each Lender (pro rata,
based on each Lender’s Percentage) until the Advances are paid in full; provided
that if the amount on deposit in the Unfunded Reserve Account equals or exceeds
the amount of outstanding Advances, the Borrower (or the Collateral Manager on
its behalf) may elect to withdraw such amounts from the Unfunded Reserve Account
and repay the Advances in full; and

 

(E) to the Borrower or its designee, which amounts may be distributed to the
Equityholder.

 

(b) If on any Payment Date the amount available in the Payment Account is
insufficient to make the full amount of the disbursements required by the
Payment Date Report, the Collateral Agent shall make the disbursements called
for in the order and according to the priority set forth under Section 9.01(a)
to the extent funds are available therefor.

 

ARTICLE X
SALE OF COLLATERAL LOANS;
PURCHASE OF ADDITIONAL COLLATERAL LOANS

 

Section 10.01. Sales of Collateral Loans

 

(a) Sales of Collateral Loans. Subject to the satisfaction of the conditions
specified in Section 10.03, the Collateral Manager on behalf of the Borrower
may, but will not be required to, direct the Collateral Agent to sell, and the
Collateral Agent shall sell in the manner directed by the Collateral Manager,
any Collateral Loan if such sale meets each of the requirements set forth below:

 

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(i) no Default or Event of Default is continuing or would result upon giving
effect thereto (unless, in the case of such a Default, such Default will be
cured upon giving effect to such sale and the application of the proceeds
thereof);

 

(ii) upon giving effect thereto and the application of the proceeds thereof,
each Coverage Test is satisfied or, if it is not satisfied, it is improved;

 

(iii) upon giving effect thereto and the application of the proceeds thereof,
each Collateral Quality Test is satisfied and each Concentration Limitation is
satisfied or, if it is not satisfied, it is improved; and

 

(iv) such sale is made for Cash.

 

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

 

(b) Final Maturity Date Sale. Not later than 10 days prior to the Final Maturity
Date, the Collateral Manager shall solicit bids for the sale of each remaining
Collateral Loan to one or more buyers for a purchase price in cash payable on or
prior to the Final Maturity Date. The Collateral Loans shall be sold to the
highest bidder(s) therefor at a price at least equal to the greater of (i) (x)
the sum of the Facility Amount plus (y) the aggregate of all other amounts owing
by the Borrower on the Final Maturity Date minus (z) the aggregate amount of
cash and other Eligible Investments available for application as Principal
Proceeds in accordance with the Priority of Payments as of the Final Maturity
Date and (ii) the aggregate Market Value of such Collateral Loans being sold.
The Collateral Manager shall furnish a certification to the Administrative
Agent, the Custodian, the Collateral Agent, and the Collateral Administrator
prior to such sale that the purchase price satisfies the foregoing requirements.
If the Administrative Agent has not received such certification within ten (10)
days of the Final Maturity Date, the Administrative Agent in its sole discretion
may arrange for the sale and liquidation of such remaining Collateral Loans
during the final ten (10) days before the Final Maturity Date.

 

(c) Sales of Equity Securities. The Borrower may sell any Equity Security at any
time without restriction, and shall use its commercially reasonable efforts to
effect the sale of any Equity Security, regardless of price, within forty-five
(45) days of receipt if such Equity Security constitutes Margin Stock, unless
such sale is prohibited by Applicable Law or contract, in which case such Equity
Security should be sold as soon as such sale is permitted by Applicable Law or
contract.

 

(d) Certain Restrictions.

 

(i) No Collateral Loan may be sold to an Affiliate of the Borrower without the
prior written consent of the Administrative Agent and, in the case of a sale at
a price less than the original percentage of par paid by the Borrower, the
purchase price shall not be less than the Market Value of such Collateral Loan.

 

(ii) The Principal Balance of all Equityholder Collateral Loans (other than
Warranty Collateral Loans) sold pursuant to Section 10.01(a) to the Equityholder
or an Affiliate thereof or released to the Equityholder pursuant to a dividend
by the Borrower shall not in any twelve-month period exceed 20% of the
Equityholder Purchased Loan Balance measured as of the first day of such
twelve-month period.

 

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(iii) The Principal Balance of all Defaulted Collateral Loans (other than
Warranty Collateral Loans) that are Equityholder Collateral Loans sold pursuant
to Section 10.01(a) to the Equityholder or an Affiliate thereof or released to
the Equityholder pursuant to a dividend by the Borrower shall not in any
twelve-month period exceed 10% of the Equityholder Purchased Loan Balance
measured as of the first day of such twelve-month period.

 

(e) Application of Proceeds of Sales. The Collateral Manager on behalf of the
Borrower shall deposit the proceeds of any sale effected pursuant to this
Section 10.01 into the Principal Collection Account for disbursement in
accordance with Section 9.01(a)(ii).

 

Section 10.02. Purchase of Additional Collateral Loans

 

On any date during the Reinvestment Period, if no Event of Default has occurred
and is continuing, the Collateral Manager on behalf of the Borrower may, if each
of the conditions specified in this Section 10.02 and Section 10.03 are met,
invest Principal Proceeds (and accrued interest received with respect to any
Collateral Loan to the extent used to pay for accrued interest on additional
Collateral Loans) in additional Collateral Loans; provided that no Collateral
Loan may be purchased unless each of the following conditions are satisfied as
of the date the Collateral Manager commits on behalf of the Borrower to make
such purchase and after giving effect to such purchase and all other sales or
purchases previously or simultaneously committed to:

 

(i) such obligation is a Collateral Loan and, if such Collateral Loan is
intended to be treated as an Eligible Loan, the Borrower and the Collateral
Manager shall have received written notice from the Administrative Agent
evidencing the approval of the Administrative Agent in its sole discretion, in
accordance with clause (A) of the definition of “Eligible Loan”;

 

(ii) each Collateral Quality Test and each Concentration Limitation is
satisfied; and

 

(iii) each Coverage Test is satisfied.

 

Section 10.03. Conditions Applicable to All Sale and Purchase Transactions

 

(a) Any transaction effected under this Article X or in connection with the
acquisition of additional Collateral Loans shall be for fair market value and,
if effected with a Person that is an Affiliate of the Collateral Manager (or
with an account or portfolio for which the Collateral Manager or any of its
Affiliates serves as investment adviser), shall be (i) on terms no less
favorable to the Borrower than would be the case if such Person were not an
Affiliate or as otherwise expressly permitted in this Agreement and (ii)
effected in accordance with all Applicable Laws.

 

(b) Upon each acquisition by the Borrower of a Collateral Loan (i) all of the
Borrower’s right, title and interest to such Collateral Loan shall be subject to
the Lien granted to the Collateral Agent pursuant to this Agreement and (ii)
such Collateral Loan shall be Delivered to the Collateral Agent.

 

Section 10.04. Additional Equity Contributions

 

The Equityholder may, but shall have no obligation to, at any time or from time
to time make a capital contribution to the Borrower for any purpose, including
for the purpose of curing any Default, satisfying any Coverage Test, enabling
the acquisition or sale of any Collateral Loan or satisfying any conditions
under Section 3.02. Each contribution shall either be made (a) in Cash, (b) by
assignment and contribution of an Eligible Investment and/or (c) by assignment
of an Eligible Loan. All Cash contributed or loaned to the Borrower shall be
treated as Principal Proceeds, except to the extent that the Collateral Manager
specifies that such Cash shall constitute Interest Proceeds and shall be
deposited into a Collection Account in accordance with Section 8.02 as
designated by the Collateral Manager.

 

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Section 10.05. Transfer of Warranty Collateral Loans.

 

The Borrower may transfer any Warranty Collateral Loan to the Equityholder, or
to any third party at the Equityholder’s direction, to consummate the sale or
substitution of such Warranty Collateral Loan pursuant to, and in accordance
with the terms of, Article VI of the Sale Agreement.

 

ARTICLE XI
THE AGENTS

 

Section 11.01. Authorization and Action

 

(a) Each Lender hereby irrevocably appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and, to the extent applicable, the
other Facility Documents as are delegated to such Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto, subject
to the terms hereof. No Agent shall have any duties or responsibilities, except
those expressly set forth herein or in the other Facility Documents to which it
is a party or any fiduciary relationship with any Secured Party and no implied
covenants, functions, responsibilities, duties or obligations or liabilities on
the part of such Agent shall be read into this Agreement or any other Facility
Document to which such Agent is a party (if any) as duties on its part to be
performed or observed. No Agent shall have or be construed to have any other
duties or responsibilities in respect of this Agreement or any other Facility
Document and the transactions contemplated hereby or thereby. As to any matters
not expressly provided for by this Agreement or the other Facility Documents, no
Agent shall be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the written instructions of the Required
Lenders (or, with respect to the Collateral Agent, the Administrative Agent);
provided that such Agent shall not be required to take any action which exposes
such Agent, in its judgment, to personal liability, cost or expense or which is
contrary to this Agreement, the other Facility Documents or Applicable Law, or
would be, in its judgment, contrary to its duties hereunder, under any other
Facility Document or under Applicable Law. Each Lender agrees that in any
instance in which the Facility Documents provide that an Agent’s consent may not
be unreasonably withheld, provide for the exercise of such Agent’s reasonable
discretion, or provide to a similar effect, it shall not in its instructions (or
by refusing to provide instruction) to such Agent withhold its consent or
exercise its discretion in an unreasonable manner.

 

(b) If the Collateral Agent has been requested or directed by the Required
Lenders to take any action pursuant to any provision of this Agreement or any
other Facility Document, the Collateral Agent shall not be under any obligation
to exercise any of the rights or powers vested in it by this Agreement or such
Facility Document in the manner so requested unless it shall have been provided
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred by it in compliance with or in performing such
request or direction. No provision of this Agreement or any other Facility
Document shall otherwise be construed to require the Collateral Agent to expend
or risk its own funds or to take any action that could in its judgment cause it
to incur any cost, expenses or liability, unless it is provided indemnity
acceptable to it against any such expenditure, risk, costs, expense or
liability. For the avoidance of doubt, the Collateral Agent shall not have any
duty or obligation to take any action to exercise or enforce any power, right or
remedy available to it under this Agreement or any other Facility Document or
any Related Document unless and until directed by the Required Lenders (or the
Administrative Agent on their behalf).

 

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(c) Neither the Collateral Agent nor any officer, agent or representative
thereof shall be personally liable for any action taken by any such Person in
accordance with any notice given by the Required Lenders pursuant to the terms
of this Agreement or any other Facility Document even if, at the time such
action is taken by any such Person, the Required Lenders or Persons purporting
to be the Required Lenders are not entitled to give such notice, except where
the Responsible Officer of the Collateral Agent has actual knowledge (without
any duty of inquiry or investigation on its part) that the Required Lenders or
Persons purporting to be the Required Lenders are not entitled to give such
notice. If any dispute or disagreement shall arise as to the allocation of any
sum of money received by the Collateral Agent hereunder or under any Facility
Document, the Collateral Agent shall have the right to deliver such sum to a
court of competent jurisdiction and therein commence an action for interpleader.

 

(d) If in performing its duties under this Agreement, the Collateral Agent is
required to decide between alternative courses of action, it may request written
instructions from the Administrative Agent as to the course of action desired by
it. If the Collateral Agent does not receive such instructions within five (5)
Business Days after it has requested them, the Collateral Agent may, but shall
be under no duty to, take or refrain from taking any such courses of action. The
Collateral Agent shall act in accordance with instructions received after such
five (5) Business Day period except to the extent it has already, in good faith,
taken or committed itself to take, action inconsistent with such instructions.

 

Section 11.02. Delegation of Duties

 

Each Agent may execute any of its duties under this Agreement and each other
Facility Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
No Agent shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

 

Section 11.03. Agents’ Reliance, Etc.

 

(a) Neither Agent nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement or any of the other Facility
Documents, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, each Agent: (i) may consult
with legal counsel (including counsel for the Borrower or the Collateral Manager
or any of their Affiliates) and 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 to any Secured
Party or any other Person and shall not be responsible to any Secured Party or
any Person for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement or the other Facility
Documents; (iii) shall not have any duty to monitor, ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement, the other Facility Documents or any Related Document on the part
of the Borrower, the Collateral Manager or any other Person or to inspect the
property (including the books and records) of the Borrower or the Collateral
Manager; (iv) shall not be responsible to any Secured Party or any other Person
for the due execution, legality, validity, enforceability, perfection,
genuineness, sufficiency or value of any Collateral (or the validity,
perfection, priority or enforceability of the Liens on the Collateral), this
Agreement, the other Facility Documents, any Related Document 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 other Facility
Document by relying on, acting upon (or by refraining from action in reliance
on) any notice, consent, certificate (including, for the avoidance of doubt, the
Borrowing Base Calculation Statement), instruction or waiver, report, statement,
opinion, direction or other instrument or writing (which may be delivered by
telecopier, email, cable or telex, if acceptable to it) believed by it to be
genuine and believe by it to be signed or sent by the proper party or parties.
No Agent shall have any liability to the Borrower or any Lender or any other
Person for the Borrower’s, the Collateral Manager’s, any Lender’s or any other
Person’s, as the case may be, performance of, or failure to perform, any of
their respective obligations and duties under this Agreement or any other
Facility Document.

 

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(b) No Agent shall be liable for the actions of omissions of any other Agent
(including concerning the application of funds), or under any duty to monitor or
investigate compliance on the part of any other Agent with the terms or
requirements of this Agreement, any Facility Document or any Related Document,
or their duties hereunder or thereunder. Each Agent shall be entitled to assume
the due authority of any signatory and genuineness of any signature appearing on
any instrument or document it may receive (including each Notice of Borrowing
received hereunder). No Agent shall be liable for any action taken in good faith
and reasonably believed by it to be within the powers conferred upon it, or
taken by it pursuant to any direction or instruction by which it is governed, or
omitted to be taken by it by reason of the lack of direction or instruction
required hereby for such action (including for refusing to exercise discretion
or for withholding its consent in the absence of its receipt of, or resulting
from a failure, delay or refusal on the part of the Required Lenders to provide,
written instruction to exercise such discretion or grant such consent from the
Required Lenders, as applicable). No Agent shall be liable for any error of
judgment made in good faith unless it shall be proven by a court of competent
jurisdiction that such Agent was grossly negligent in ascertaining the relevant
facts. Nothing herein or in any Facility Document or Related Document shall
obligate any Agent to advance, expend or risk its own funds, or to take any
action which in its reasonable judgment may cause it to incur any expense or
financial or other liability for which it is not adequately indemnified. No
Agent shall be liable for any indirect, special, punitive or consequential
damages (including lost profits) whatsoever, even if it has been informed of the
likelihood thereof and regardless of the form of action. No Agent shall be
charged with knowledge or notice of any matter unless actually known to a
Responsible Officer of such Agent, or unless and to the extent written notice of
such matter is received by such Agent at its address in accordance with Section
12.02. Any permissive grant of power to an Agent hereunder shall not be
construed to be a duty to act. Neither Agent shall be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, entitlement
order, approval or other paper or document. Neither Agent shall 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 or grossly negligent performance or omission of its duties.

 

(c) No Agent shall be responsible or liable for delays or failures in
performance resulting from acts beyond its control. Such acts shall include acts
of God, strikes, lockouts, riots, acts of war, epidemics, governmental
regulations imposed after the fact, fire, communication line failures, computer
viruses, power failures, earthquakes or other disasters.

 

(d) The delivery of reports and other documents and information to the
Collateral Agent hereunder or under any other Facility Document is for
informational purposes only and the Collateral Agent’s receipt of such documents
and information shall not constitute constructive notice of any information
contained therein or determinable from information contained therein. The
Collateral Agent is hereby authorized and directed to execute and deliver the
other Facility Documents to which it is a party. Whether or not expressly stated
in such Facility Documents, in performing (or refraining from acting)
thereunder, the Collateral Agent shall have all of the rights, benefits,
protections and indemnities which are afforded to it in this Agreement.

 

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(e) Each Lender acknowledges that, except as expressly set forth in this
Agreement, neither Agent has made any representation or warranty to it, and that
no act by either Agent hereafter taken, including any consent and acceptance of
any assignment or review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by such Agent to any Secured Party as
to any matter. Each Lender represents to each Agent that it has, independently
and without reliance upon such Agent and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the Collateral Manager, and made its own
decision to enter into this Agreement and the other Facility Documents to which
it is a party. Each Lender also represents that it will, independently and
without reliance upon either Agent or any other Secured Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the Facility Documents, and to make such investigations as it
deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower and
the Collateral Manager. Neither Agent shall have any duty or responsibility to
provide any Secured Party with any credit or other information concerning the
business, prospects, operations, property, financial or other condition or
creditworthiness of the Borrower or Collateral Manager which may come into the
possession of such Agent.

 

Section 11.04. Indemnification

 

Each of the Lenders agrees to indemnify and hold the Agents harmless (to the
extent not reimbursed by or on behalf of the Borrower pursuant to Section 12.04
or otherwise) from and against any and all Liabilities which may be imposed on,
incurred by, or asserted against the Agents in any way relating to or arising
out of this Agreement or any other Facility Document or any Related Document or
any action taken or omitted by the Agents under this Agreement or any other
Facility Document or any Related Document; provided that no Lender shall be
liable to any Agent for any portion of such Liabilities resulting from such
Agent’s gross negligence or willful misconduct; and provided, further, that no
Lender shall be liable to the Collateral Agent for any portion of such
Liabilities unless such Liabilities are imposed on, incurred by, or asserted
against the Collateral Agent as a result of any action taken, or not taken, by
the Collateral Agent at the direction of the Administrative Agent or such Lender
or Lenders, as the case may be, in accordance with the terms and conditions set
forth in this Agreement (it being understood and agreed that the Collateral
Agent shall be under no obligation to exercise or to honor any of the rights or
powers vested in it by this Agreement at the request or direction of the
Administrative Agent or any of the Lenders (or other Persons authorized or
permitted under the terms hereof to make such request or give such direction)
pursuant to this Agreement or any of the other Facility Document, unless the
Administrative Agent or such Lenders shall have provided to the Collateral Agent
security or indemnity reasonably satisfactory to it against the costs, expenses
(including reasonable and documented attorney’s fees and expenses) and
Liabilities which might reasonably be incurred by it in compliance with such
request or direction, whether such indemnity is provided under this Section
11.04 or otherwise). The rights of the Agents and obligations of the Lenders
under or pursuant to this Section 11.04 shall survive the termination of this
Agreement, and the earlier removal or resignation of the any Agent hereunder.

 

Section 11.05. Successor Agents

 

(a) Subject to the terms of this Section 11.05, each Agent may, upon thirty (30)
days’ notice to the Lenders and the Borrower, resign as Administrative Agent or
Collateral Agent, as applicable. If an Agent shall resign, then the Required
Lenders shall appoint a successor agent. If for any reason a successor agent is
not so appointed and does not accept such appointment within thirty (30) days of
notice of resignation, such Agent may appoint a successor agent. The appointment
of any successor Agent shall be subject to the prior written consent of the
Borrower (which consent shall not be unreasonably withheld or delayed); provided
that the consent of the Borrower to any such appointment shall not be required
if (i) an Event of Default shall have occurred and is continuing or (ii) if such
successor agent is a Lender or an Affiliate of such Agent or any Lender.
Any resignation of an Agent shall be effective upon the appointment of a
successor agent pursuant to this Section 11.05. After the effectiveness of any
retiring Agent’s resignation hereunder as Agent, the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other
Facility Documents and the provisions of this Article XI shall continue in
effect for its benefit with respect to any actions taken or omitted to be taken
by it while it was Agent under this Agreement and under the other Facility
Documents.

 

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(b) Any Person (i) into which the Collateral Agent may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Collateral Agent shall be a party, or (iii) that may succeed to the corporate
trust properties and assets of the Collateral Agent substantially as a whole,
shall be the successor to the Collateral Agent under this Agreement without
further act of any of the parties to this Agreement.

 

(c) Subject to the terms of this Section 11.05(c) the Administrative Agent may,
upon thirty (30) days’ notice to the Collateral Manager, Collateral Agent, the
Lenders and the Borrower, remove and discharge the Collateral Agent from the
performance of its obligations under this Agreement and under the other Facility
Documents without cause at any time. If the Collateral Agent shall be removed
pursuant to this Section 11.05(c), then the Administrative Agent during such
thirty (30) day period shall appoint a successor Collateral Agent. The
appointment of any successor Collateral Agent pursuant to this Section 11.05(c)
shall be subject to the prior written consent of the Borrower (provided that no
Event of Default has occurred and is continuing) and the Required Lenders. If
the Collateral Agent is removed pursuant to this Section 11.05(c), the
Collateral Agent shall be removed in all other capacities in which it serves
under this Agreement and under any of the other Facility Documents (including in
its capacity as Custodian). Any removal of the Collateral Agent pursuant to this
Section 11.05(c) shall be effective upon the appointment of a successor
Collateral Agent pursuant to this Section 11.05(c) and the acceptance of such
appointment by such successor. After the effectiveness of any removal of the
Collateral Agent pursuant to this Section 11.05(c), the Collateral Agent shall
be discharged from its duties and obligations hereunder and under the other
Facility Documents (but not in its capacity as Lender, if applicable) and the
provisions of this Article XII and Section 11.05(c) shall continue in effect for
its benefit with respect to any actions taken or omitted to be taken by it while
it was the Collateral Agent under this Agreement and under the other Facility
Documents. In the event a successor Collateral Agent shall not be appointed
within such thirty (30) day period, the Collateral Agent may petition a court of
competent jurisdiction for the appointment of a successor Collateral Agent.

 

ARTICLE XII
MISCELLANEOUS

 

Section 12.01. No Waiver; Modifications in Writing

 

(a) No failure or delay on the part of any Secured Party exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver of any provision of this Agreement or any other Facility Document,
and any consent to any departure by any party to this Agreement or any other
Facility Document from the terms of any provision of this Agreement or such
other Facility Document, shall be effective only in the specific instance and
for the specific purpose for which given. No notice to or demand on the Borrower
or the Collateral Manager in any case shall entitle the Borrower or the
Collateral Manager to any other or further notice or demand in similar or other
circumstances.

 

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(b) No amendment, modification, supplement or waiver of this Agreement shall be
effective unless signed by the Borrower, the Collateral Manager, the
Administrative Agent and the Required Lenders; provided that:

 

(i) any Fundamental Amendment shall require the written consent of all Lenders;
and

 

(ii) no such amendment, modification, supplement or waiver shall amend, modify
or otherwise affect the rights or duties of any Agent hereunder without the
prior written consent of such Agent.

 

Section 12.02. Notices, Etc.

 

(a) Except where telephonic instructions are authorized herein to be given, all
notices, demands, instructions and other communications required or permitted to
be given to or made upon any party hereto shall be in writing and shall be
personally delivered or sent by registered, certified or express mail, postage
prepaid, or by facsimile transmission, or by prepaid courier service, or by
electronic mail (if the recipient has provided an email address in Schedule 6),
and shall be deemed to be given for purposes of this Agreement on the day that
such writing is received by the intended recipient thereof in accordance with
the provisions of this Section 12.02. Unless otherwise specified in a notice
sent or delivered in accordance with the foregoing provisions of this Section
12.02, notices, demands, instructions and other communications in writing shall
be given to or made upon the respective parties hereto at their respective
addresses (or to their respective facsimile numbers or email addresses)
indicated in Schedule 6, and, in the case of telephonic instructions or notices,
by calling the telephone number or numbers indicated for such party in Schedule
6.

 

(b) BNYM (in any of its capacities hereunder) agrees to accept and act upon
instructions or directions pursuant to this Agreement sent by unsecured e-mail,
facsimile transmission or other similar unsecured electronic methods, provided
that any person providing such instructions or directions shall provide to BNYM
an incumbency certificate listing such designated persons, which such incumbency
certificate shall be amended and replaced whenever a person is to be added or
deleted from the listing. If any party hereto elects to give BNYM e-mail or
facsimile instructions (or instructions by a similar electronic method), BNYM’s
understanding of such instructions shall be deemed controlling. BNYM shall not
be liable for any losses, costs or expenses arising directly or indirectly from
BNYM's reasonable, good faith reliance upon and compliance with such
instructions. Each of the parties hereto agrees to assume all risks arising out
of its respective use of such electronic methods to submit instructions and
directions to BNYM, including without limitation the risk of BNYM acting on
unauthorized instructions, and the risk of interception and misuse by third
parties.

 

Section 12.03. Taxes

 

(a) Any and all payments by, or on account of any obligation of, the Borrower to
or for the account of any Secured Party under any Facility Document shall be
made free and clear of and without deduction for any and all present or future
Taxes with respect thereto, unless required by Law. If the Borrower or the
Administrative Agent shall be required by Law (or by the interpretation or
administration thereof) to deduct or withhold any Taxes from or in respect of
any sum payable by it hereunder, under any Note or under any other Facility
Document to any Secured Party, (i) the sum payable by the Borrower shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
12.03) such Secured Party receives an amount equal to the sum it would have
received had no deductions of Non-Excluded Taxes or Other Taxes been made, (ii)
the Borrower shall make such deductions, and (iii) the Borrower shall timely pay
the full amount deducted to the relevant taxing Governmental Authority in
accordance with Applicable Law.

 

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(b) In addition, the Borrower agrees to timely pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies (other than Other Connection Taxes imposed with respect to an assignment
except for an assignment made pursuant to Sections 2.16 or 12.03(g)) which arise
from any payment made by the Borrower hereunder, under the Notes or under any
other Facility Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement, the Notes or under any other Facility
Document (collectively, the “Other Taxes”).

 

(c) The Borrower agrees to indemnify each of the Secured Parties for (i) the
full amount of Non-Excluded Taxes or Other Taxes (including any Non-Excluded
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 12.03) paid by any Secured Party (or required to be deducted
from payments to a Secured Party) and (ii) any reasonable expenses arising from
Non-Excluded Taxes or Other Taxes or with respect thereto, in each case whether
or not such Non-Excluded Taxes or Other Taxes were correctly or legally imposed
or asserted by the relevant taxing Governmental Authority. Payments by Borrower
pursuant to this indemnification shall be made promptly following the date the
Secured Party makes written demand therefor, which demand shall be accompanied
by a certificate describing in reasonable detail the basis thereof. Such
certificate shall be presumed to be correct absent manifest error.

 

(d) Promptly after the date of any payment of Taxes pursuant to this Section
12.03 or Other Taxes, the Borrower will furnish to each Agent the original or a
certified copy of a receipt issued by the relevant taxing Governmental Authority
evidencing payment thereof (or other evidence of payment as may be reasonably
satisfactory to such Agent).

 

(e) If any payment is made by the Borrower (or the Collateral Manager on its
behalf) to or for the account of any Secured Party after deduction for or on
account of any Non-Excluded Taxes or Other Taxes, and an indemnity payment or
additional amounts are paid by the Borrower pursuant to this Section 12.03,
then, if such Secured Party in its sole discretion, but acting in good faith,
determines that it is entitled to a refund of such Non-Excluded Taxes or Other
Taxes, such Secured Party shall, to the extent that it can do so without
prejudice apply for such refund and reimburse the Borrower (or the Collateral
Manager, as applicable) such amount of any refund received (net of reasonable
out-of-pocket expenses incurred) as such Secured Party shall determine in its
sole discretion, but acting in good faith, to be attributable to the relevant
Non-Excluded Taxes or Other Taxes; provided that in the event that such Secured
Party is required to repay such refund to the relevant taxing authority, the
Borrower agrees to return the refund to such Secured Party. Notwithstanding
anything to the contrary in this paragraph (e), in no event will the Secured
Party be required to pay any amount to an indemnifying party pursuant to this
paragraph (e) the payment of which would place the Secured Party in a less
favorable net after-Tax position than the Secured Party would have been in if
the Tax subject to indemnification and giving rise to such refund had not been
deducted, withheld or otherwise imposed and the indemnification payments or
additional amounts with respect to such Tax had never been paid.

 

(f) Each Secured Party and each Participant that is entitled to an exemption
from or reduction of withholding Tax with respect to payments made under this
Agreement or any Facility Document shall deliver to the Borrower and each Agent,
at the time or times reasonably requested by the Borrower or such Agent, such
properly completed and executed documentation reasonably requested by the
Borrower or such Agent as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, each Secured
Party and each Participant, if reasonably requested by the Borrower or any
Agent, shall deliver such other documentation prescribed by applicable Law or
reasonably requested by the Borrower or such Agent as will enable the Borrower
or such Agent to determine whether or not such Secured Party or Participant is
subject to backup withholding or information reporting requirements. 
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in subclauses (i) through (iv) of this Section 12.03(f)
and Section 12.03(h)) shall not be required if in the Secured Party’s reasonable
judgment such completion, execution or submission would subject such Secured
Party to any material unreimbursed cost or expense or would materially prejudice
the legal or commercial position of such Secured Party. Without limiting the
generality of the foregoing:

 

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(i) Each Secured Party and each Participant that is a U.S. person as that term
is defined in Section 7701(a)(30) of the Code hereby agrees that it shall, no
later than the Closing Date or, in the case of a Secured Party or a Participant
which becomes a party hereto pursuant to Section 12.06, the date upon which such
Secured Party becomes a party hereto or Participant herein, deliver to the
Borrower and each Agent, if applicable, two accurate, complete and signed copies
of U.S. Internal Revenue Service Form W-9 or any successor form, certifying that
such Secured Party or Participant is on the date of delivery thereof entitled to
an exemption from U.S. backup withholding Tax.

 

(ii) Each Secured Party or Participant that is organized under the laws of a
jurisdiction outside than the United States (a “Non-U.S. Lender”) shall, no
later than the date on which such Secured Party becomes a party hereto or a
Participant herein pursuant to Section 12.06, deliver to the Borrower and each
Agent two properly completed and duly executed copies of either U.S. Internal
Revenue Service Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY or any subsequent
versions thereof or successors thereto, in each case (a) claiming a complete
exemption from U.S. federal withholding Tax, or (b) if, due to a change in law
occurring after the date of this Agreement, such Non-U.S. Lender is not entitled
to a complete exemption from U.S. federal withholding Tax, to the extent that
such Non-U.S. Lender is legally entitled to do so, claiming a reduced rate of
U.S. federal withholding Tax, in each case, with respect to payments of interest
hereunder.

 

(iii) In addition, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding Tax under Section 871(h) or 881(c) of the Code, such
Non-U.S. Lender hereby represents that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code), and such Non-U.S. Lender agrees that it shall
promptly notify the Borrower and each Agent in the event any such representation
is no longer accurate.

 

(iv) The forms listed under this Section 12.03(f) shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement or
Participant herein and on or before the date, if any, such Non-U.S. Lender
designates a New Lending Office. In addition, each Non-U.S. Lender agrees that,
from time to time after the Closing Date, such Non-U.S. Lender shall deliver the
forms described above, as applicable, as promptly as practicable after (i)
receipt of a reasonable written request therefor from the Borrower or an Agent
or (ii) when a lapse in time or change in circumstance renders a previously
provided form or certificate obsolete or inaccurate. Notwithstanding any other
provision of this Section 12.03, a Non-U.S. Lender shall not be required to
deliver any form after the Closing Date pursuant to this Section 12.03(f) that
such Non-U.S. Lender is not legally able to deliver.

 

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(g) If any Secured Party requires the Borrower to pay any additional amount to
such Secured Party or any Governmental Authority for the account of such Secured
Party or to indemnify such Secured Party pursuant to this Section 12.03, then
such Secured Party shall use reasonable efforts to designate a different lending
office for funding or booking its Advances hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if such
Secured Party determines, in its sole discretion that such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to this
Section 12.03 in the future and (ii) would not subject such Secured Party to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Secured Party. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Secured Party in connection with any such designation
or assignment.

 

(h) If a payment made to a Secured Party under this Agreement or any Facility
Document would be subject to U.S. federal withholding Tax imposed by FATCA if
such Secured Party were to fail to comply with the applicable reporting
requirements of FATCA, such Secured Party shall deliver to the Borrower and each
Agent such documentation prescribed by Law or as is reasonably requested by the
Borrower and the Agent sufficient for the Borrower and the Agent to comply with
their obligations under FATCA and to determine that such Secured Party has
complied with such applicable reporting requirements or to determine the amount
to deduct and withhold from such payment. Solely for purposes of this paragraph
(i), “FATCA” shall include any amendments made to FATCA after the date of this
Agreement.

 

(i) Nothing in this Section 12.03 shall be construed to require any Secured
Party to make available its Tax returns (or any other information relating to
its Taxes that it deems confidential) to the Borrower or any other Person.

 

(j) Each Lender shall severally indemnify each Agent, within 10 days after
demand therefor, for (i) any Non-Excluded Taxes attributable to such Lender (but
only to the extent that the Borrower has not already indemnified such Agent for
such Non-Excluded Taxes and without limiting the obligation of the Borrower to
do so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 12.06(c) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by such Agent in connection with any Facility Document,
and any reasonable expenses arising therefrom or with respect thereto, whether
or not such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to any Lender by the applicable Agent shall be conclusive
absent manifest error. Each Lender hereby authorizes each Agent to set off and
apply any and all amounts at any time owing to such Lender under any Facility
Document or otherwise payable by such Agent to the Lender from any other source
against any amount due to such Agent under this paragraph (j).

 

Section 12.04. Costs and Expenses; Indemnification

 

(a) The Borrower agrees to promptly pay on demand all reasonable and documented
out-of-pocket costs and expenses of the Agents in connection with the
preparation, review, negotiation, reproduction, execution and delivery of this
Agreement and the other Facility Documents, including the reasonable and
documented fees and disbursements of one outside counsel for the Administrative
Agent and one outside counsel for the Collateral Agent, costs and expenses of
creating, perfecting, releasing or enforcing the Collateral Agent’s security
interests in the Collateral, including filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, UCC filing fees and the
equivalent thereof in any foreign jurisdiction, if applicable, and all other
related fees and expenses in connection therewith; and in connection with the
administration and any modification or amendment of this Agreement, the Notes or
any other Facility Document and advising the Agents as to their respective
rights, remedies and responsibilities. The Borrower agrees to promptly pay on
demand all reasonable and documented costs and expenses of each of the Secured
Parties in connection with the enforcement of this Agreement, the Notes or any
other Facility Document, including all reasonable and documented costs and
expenses incurred by the Collateral Agent in connection with the preservation,
collection, foreclosure or enforcement of the Collateral subject to the Facility
Documents or any interest, right, power or remedy of the Collateral Agent or in
connection with the collection or enforcement of any of the Obligations or the
proof, protection, administration or resolution of any claim based upon the
Obligations in any insolvency proceeding, including all reasonable fees and
disbursements of attorneys, accountants, auditors, consultants, appraisers and
other professionals engaged by the Collateral Agent. Without prejudice to its
rights hereunder, the expenses and the compensation for the services of the
Secured Parties are intended to constitute expenses of administration under any
applicable bankruptcy law.

 

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(b) The Borrower agrees to indemnify and hold harmless each Secured Party and
each of their Affiliates and the respective officers, directors, employees,
agents, managers of, and any Person controlling any of, the foregoing (each, an
“Indemnified Party”) from and against any and all Liabilities that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of the execution, delivery,
enforcement, performance, administration of or otherwise arising out of or
incurred in connection with this Agreement, any other Facility Document, any
Related Document or any transaction contemplated hereby or thereby (and
regardless of whether or not any such transactions are consummated), including
any such Liability that is incurred or arises out of or in connection with, or
by reason of any one or more of the following: (i) preparation for a defense of
any investigation, litigation or proceeding arising out of, related to or in
connection with this Agreement, any other Facility Document, any Related
Document or any of the transactions contemplated hereby or thereby; (ii) any
breach or alleged breach of any covenant by the Borrower contained in any
Facility Document; (iii) any representation or warranty made or deemed made by
the Borrower contained in any Facility Document or in any certificate, statement
or report delivered in connection therewith is, or is alleged to be, false or
misleading; (iv) any failure by the Borrower to comply with any Applicable Law
or contractual obligation binding upon it; (v) any failure to vest, or delay in
vesting, in the Collateral Agent (for the benefit of the Secured Parties) a
perfected security interest in all of the Collateral free and clear of all Liens
(other than Permitted Liens); (vi) any action or omission, not expressly
authorized by the Facility Documents, by the Borrower or any Affiliate of the
Borrower which has the effect of impairing the validity or enforceability of the
Collateral or the rights of the Agents or the other Secured Parties with respect
thereto; (vii) the failure to file, or any delay in filing, financing
statements, continuation statements or the equivalent thereof in any foreign
jurisdiction or other similar instruments or documents under the UCC of any
applicable jurisdiction or other Applicable Law with respect to any Collateral,
whether at the time of any Advance or at any subsequent time; (viii) any
dispute, claim, offset or defense (other than the discharge in bankruptcy of an
Obligor) of an Obligor to the payment with respect to any Collateral (including
a defense based on any Collateral Loan (or the Related Documents evidencing such
Collateral Loan) not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms, except to the extent such
unenforceability due to the bankruptcy of such Obligor), or any other claim
resulting from any related property securing such Collateral Loan; (ix) the
commingling of Collections on the Collateral at any time with other funds; (x)
any failure by the Borrower to give reasonably equivalent value to the
applicable seller, in consideration for the transfer by such seller to the
Borrower of any item of Collateral or any attempt by any Person to void or
otherwise avoid any such transfer under any statutory provision or common law or
equitable action, including any provision of the Bankruptcy Code; (xi) the
failure of the Borrower, the Collateral Manager or any of their respective
agents or representatives to remit to the Collection Account, within one (1)
Business Day of receipt, Collections on the Collateral Loans remitted to the
Borrower, the Collateral Manager or any such agent or representative as provided
in this Agreement; and (xii) any Default or Event of Default; except to the
extent any such Liability is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted solely from such Indemnified
Party’s gross negligence or willful misconduct. In the case of an investigation,
litigation or proceeding to which the indemnity in this paragraph applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, any of the Borrower’s equityholders or
creditors, an Indemnified Party or any other Person, whether or not an
Indemnified Party is otherwise a party hereto. The Borrower shall not have any
liability hereunder to any Indemnified Party to the extent an Indemnified Party
affects any settlement of a matter that is (or could be) subject to
indemnification hereunder without the prior written consent of the Borrower. In
no case shall the Borrower be responsible for any Indemnified Party’s lost
revenues or lost profits or for any indirect, special, punitive or consequential
damages. This Section 12.04(b) shall not apply with respect to Taxes other than
any Taxes that represent losses, claims, damages, etc. arising from any non-Tax
claim.

 

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Section 12.05. Execution in Counterparts

 

This Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.
Delivery of an executed signature page of this Agreement by facsimile or other
electronic transmission shall be effective as delivery of a manually executed
counterpart hereof.

 

Section 12.06. Assignability

 

(a) Subject to the conditions set forth in this Section 12.06, each Lender may,
with the consent of the Administrative Agent and the Borrower, assign to an
assignee all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Advances Outstanding or interests therein
owned by it, together with ratable portions of its Commitment); provided that
such consent shall be deemed to have been granted by the Borrower if the
Borrower shall not have objected in writing within five (5) Business Days of
receipt of any such request for consent; and provided, further, that:

 

(i) each of the Borrower’s and the Administrative Agent’s consent to any such
assignment (A) shall not be unreasonably withheld or delayed and (B) shall not
be required if the assignee is a Permitted Assignee with respect to such
assignor; and

 

(ii) the Borrower’s consent to any such assignment pursuant to this Section
12.06(a) shall not be required if an Event of Default shall have occurred (and
not been waived by the Lenders in accordance with Section 12.01).

 

The parties to each such assignment shall execute and deliver to the
Administrative Agent (with a copy to the Collateral Agent) an Assignment and
Acceptance and the applicable tax forms required by Sections 12.03(f) and
12.03(h), together with administrative details for the applicable assignee (if
such assignee is not a current Lender). Notwithstanding any other provision of
this Section 12.06, (x) no assignment by any Lender to the Borrower or any of
its Affiliates shall be permitted unless each Lender has been offered the
opportunity to participate in any such assignment on a pro rata basis on the
same terms, and (y) no assignment shall be made to any Defaulting Lender, or any
Person who, upon becoming a Lender hereunder, would constitute any of the
foregoing Persons described in this clause (y).

 

(b) The Borrower may not assign its rights or obligations hereunder or any
interest herein without the prior written consent of the Administrative Agent
and the Lenders.

 

(c) i) Any Lender may, without the consent of the Borrower, sell participations
to Participants in all or a portion of such Lender’s rights and obligations
under this Agreement; provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(C) such Borrower, the Agents and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and (D) each Participant shall have agreed to
be bound by this Section 12.06(c), Section 12.06(e), Section 12.09 and Section
12.16. Any agreement pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement
and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that such Lender will not,
without the consent of the Participant, agree to any Fundamental Amendment.
Sections 2.09, 2.10, and 12.03 shall apply to each Participant as if it were a
Lender and had acquired its interest by assignment pursuant to clause (a) of
this Section; provided that (x) such Participant agrees to be subject to the
provisions of Sections 2.16, 12.03(f) and 12.03(h) as if it were an assignee
under clause (a) of this Section and (y) no Participant shall be entitled to any
amount under Section 2.09, 2.10, or 12.03 which is greater than the amount the
related Lender would have been entitled to under any such Sections or provisions
if the applicable participation had not occurred.

 

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(ii) In the event that any Lender sells participations in any portion of its
rights and obligations hereunder, such Lender as nonfiduciary agent for the
Borrower shall maintain a register on which it enters the name of all
participants in the Advances held by it and the principal amount (and stated
interest thereon) of the portion of the Advance which is the subject of the
participation (the “Participant Register”). An Advance may be participated in
whole or in part only by registration of such participation on the Participant
Register (and each Note, if any, shall expressly so provide). The Participant
Register shall be available for inspection by the Borrower to the extent
necessary for the Borrower to establish that such commitment, loan or other
obligation is in registered form under Section 5f.103-1 of the United States
Treasury Regulations or for the Borrower or any Agent to satisfy any information
reporting requirement with respect to payments made to such Participant. The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.

 

(d) The Collateral Agent, on behalf of and acting solely for this purpose as the
nonfiduciary agent of the Borrower, shall maintain at its address specified in
Section 12.02 or such other address as the Collateral Agent shall designate in
writing to the Lenders, a copy of this Agreement and each signature page hereto
and each Assignment and Acceptance delivered to and accepted by it and a
register (the “Register”) for the recordation of the names and addresses of the
Lenders and the aggregate outstanding principal amount of the Advances
Outstanding maintained by each Lender under this Agreement (and any stated
interest thereon). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrower, the Agents and the
Lenders shall treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice. An Advance (and a Note, if
any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Note, if any,
shall expressly so provide) and compliance with this Section 12.06.

 

(e) Notwithstanding anything to the contrary set forth herein or in any other
Facility Document, each Lender hereunder, and each Participant, must at all
times be a “qualified purchaser” as defined in the Investment Company Act (a
“Qualified Purchaser”) and a “qualified institutional buyer” as defined in Rule
144A under the Securities Act (a “QIB”). Each Lender represents to the Borrower,
(i) on the date that it becomes a party to this Agreement (whether by being a
signatory hereto or by entering into an Assignment and Acceptance) and (ii) on
each date on which it makes an Advance hereunder, that it is a Qualified
Purchaser and a QIB. Each Lender further agrees that it shall not assign, or
grant any participations in, any of its Advances or its Commitment to any Person
unless such Person is a Qualified Purchaser and a QIB.

 

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(f) Notwithstanding any other provision of this Section 12.06, any Lender may at
any time pledge or grant a security interest in all or any portion of its rights
(including rights to payment of principal and interest) under this Agreement to
secure obligations of such Lender, including any pledge or security interest
granted to a Federal Reserve Bank, without notice to or consent of the Borrower
or the Administrative Agent; provided that no such pledge or grant of a security
interest shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or grantee for such Lender as a party hereto.

 

Section 12.07. Governing Law

 

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN
CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER FACILITY DOCUMENT (EXCEPT, AS TO ANY OTHER FACILITY
DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK.

 

Section 12.08. Severability of Provisions

 

Any provision of this Agreement or any other Facility Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

Section 12.09. Confidentiality

 

Each Secured Party agrees to keep confidential, in accordance with procedures
adopted by such Secured Party that are reasonably designed to assure the
protection of confidential information delivered or disclosed to such Secured
Party, all information provided to it by the Borrower or the Collateral Manager
with respect to the Borrower, its Affiliates, the Collateral, the Related
Documents, the Obligors, the Collateral Manager or any other information
furnished to such Secured Party under or in connection with this Agreement
(collectively, the “Borrower Information”); provided that nothing herein shall
prevent any Secured Party from disclosing any Borrower Information (a) in
connection with this Agreement and the other Facility Documents and not for any
other purpose, (i) to any Secured Party or any Affiliate of a Secured Party, or
(ii) any of their respective Affiliates, employees, directors, auditors, agents,
attorneys, accountants and other professional advisors (collectively, the
“Secured Party Representatives”), it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Borrower Information and instructed to keep such Borrower Information
confidential, (b) subject to an agreement to comply with the provisions of this
Section and to use the Borrower Information only in connection with this
Agreement and the other Facility Documents and not for any other purpose, to any
actual or bone fide prospective permitted assignees and Participants in any of
the Secured Parties’ interests under or in connection with this Agreement or any
actual or prospective party (or its Secured Party Representatives) to any swap,
derivative or other transaction under which payments are to be made by reference
to the Borrower and its obligations, this Agreement or payments hereunder, (c)
to any Governmental Authority with jurisdiction over any Secured Party or any of
its Affiliates or any Secured Party Representative, (d) in response to any order
of any court or other Governmental Authority or as may otherwise be required to
be disclosed pursuant to any Applicable Law (provided that such Secured Party
will, to the extent permitted by law, endeavor to promptly notify the Borrower
and the Collateral Manager in advance of such pending disclosure), (e) that is a
matter of general public knowledge or that has heretofore been made available to
the public by any Person other than any Secured Party or any Secured Party
Representative, (f) in connection with the exercise of any remedy hereunder or
under any other Facility Document or any action or proceeding relating to this
Agreement or any other Facility Document or the enforcement of rights hereunder
or thereunder, (g) to the extent required or requested by any regulatory
authority purporting to have jurisdiction over such Person or its Secured Party
Representatives (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (h) on a confidential basis to (i) any
rating agency in connection with rating the Borrower or the credit facilities
provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in
connection with the issuance and monitoring of CUSIP numbers or other market
identifiers with respect to the credit facilities provided hereunder,
or (i) with the consent of the Borrower.

 

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Section 12.10. Merger

 

This Agreement and the other Facility Documents executed by the Administrative
Agent or the Lenders taken as a whole incorporate the entire agreement between
the parties hereto and thereto concerning the subject matter hereof and thereof
and this Agreement and such other Facility Documents supersede any prior
agreements among the parties relating to the subject matter thereof.

 

Section 12.11. Survival

 

All representations and warranties made hereunder, in the other Facility
Documents and in any certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery of
this Agreement and the making of the Advances hereunder. The agreements in
Sections 2.04(e), 2.09, 2.10, 2.12, 12.03, 12.04, 12.09, 12.16 and 12.17
and this Section 12.11 shall survive the termination of this Agreement in whole
or in part, the payment in full of the principal of and interest on the
Advances, any foreclosure under, or modification, release or discharge of, any
or all of the Related Documents and the resignation or replacement of any Agent.

 

Section 12.12. Submission to Jurisdiction; Waivers; Etc.

 

Each party hereto hereby irrevocably and unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement or the other Facility Documents to which it is a
party, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the courts of the State of New York in
the Borough of Manhattan, the courts of the United States of America for the
Southern District of New York, and the appellate courts of any of them;

 

(b) consents that any such action or proceeding may be brought in any court
described in Section 12.12(a) and waives to the fullest extent permitted by
Applicable Law any objection that it may now or hereafter have to the venue of
any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

 

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address set forth in Section 12.02 or at such other address as may be permitted
thereunder;

 

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(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law; and

 

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding against any Secured Party
arising out of or relating to this Agreement or any other Facility Document any
special, exemplary, punitive or consequential damages.

 

Section 12.13. IMPORTANT WAIVERS

 

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
FACILITY DOCUMENT OR FOR ANY COUNTERCLAIM HEREIN OR THEREIN OR RELATING HERETO
OR THERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE EQUITYHOLDER, THE BORROWER, THE COLLATERAL
MANAGER, THE AGENTS OR ANY OTHER AFFECTED PERSON. EACH PARTY HERETO ACKNOWLEDGES
AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER FACILITY DOCUMENT TO WHICH IT
IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR ITS ENTERING
INTO THIS AGREEMENT AND EACH SUCH OTHER FACILITY DOCUMENT.TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES ANY RIGHT TO CLAIM OR
RECOVER IN ANY LITIGATION WHATSOEVER INVOLVING ANY INDEMNIFIED PARTY, ANY
SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND OR NATURE WHATSOEVER OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES, WHETHER SUCH WAIVED DAMAGES ARE BASED ON STATUTE, CONTRACT,
TORT, COMMON LAW OR ANY OTHER LEGAL THEORY, WHETHER THE LIKELIHOOD OF SUCH
DAMAGES WAS KNOWN AND REGARDLESS OF THE FORM OF THE CLAIM OF ACTION; PROVIDED
THAT THE FOREGOING SHALL NOT LIMIT THE INDEMNIFICATION OBLIGATIONS OF THE
BORROWER OR THE COLLATERAL MANAGER PURSUANT TO SECTION 12.04(B) AND SECTION
14.06(B), RESPECTIVELY. NO PARTY OR INDEMNIFIED PARTY SHALL BE LIABLE FOR ANY
DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR
OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR
OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH ANY FACILITY DOCUMENT
OR THE TRANSACTIONS.EACH PARTY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE OTHER PARTY OR AN INDEMNIFIED PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY OR AN INDEMNIFIED PARTY WOULD NOT SEEK TO
ENFORCE ANY OF THE WAIVERS IN THIS SECTION 12.13 IN THE EVENT OF LITIGATION OR
OTHER CIRCUMSTANCES. THE SCOPE OF SUCH WAIVERS IS INTENDED TO BE
ALL–ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THE FACILITY DOCUMENTS, REGARDLESS OF THEIR
LEGAL THEORY.EACH PARTY ACKNOWLEDGES THAT THE WAIVERS IN THIS SECTION 12.13 ARE
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SUCH PARTY HAS
ALREADY RELIED ON SUCH WAIVERS IN ENTERING INTO THE FACILITY DOCUMENTS, AND THAT
SUCH PARTY WILL CONTINUE TO RELY ON SUCH WAIVERS IN THEIR RELATED FUTURE
DEALINGS UNDER THE FACILITY DOCUMENTS. EACH PARTY FURTHER REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED SUCH WAIVERS WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHT TO A JURY TRIAL AND OTHER RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.THE WAIVERS IN THIS SECTION 12.13 ARE
IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND SHALL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY
OF THE FACILITY DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.(f) THE PROVISIONS OF THIS
SECTION 12.13 SHALL SURVIVE TERMINATION OF THE FACILITY DOCUMENTS AND THE
INDEFEASIBLE PAYMENT IN FULL OF THE OBLIGATIONS.

 

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Section 12.14. PATRIOT Act Notice

 

Each Agent and Lender hereby notifies the Borrower that, pursuant to the
requirements of the PATRIOT Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Agent or
Lender to identify the Borrower in accordance with the PATRIOT Act. The Borrower
shall provide, to the extent commercially reasonable, such information and take
such actions as are reasonably requested by any Lender or Agent in order to
assist such Lender or Agent, as applicable, in maintaining compliance with the
PATRIOT Act.

 

Section 12.15. Legal Holidays

 

In the event that the date of prepayment of Advances or the Final Maturity Date
shall not be a Business Day, then notwithstanding any other provision of this
Agreement or any other Facility Document, payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the nominal date of any such date of prepayment or Final
Maturity Date, as the case may be, and interest shall accrue on such payment for
the period from and after any such nominal date to but excluding such next
succeeding Business Day.

 

Section 12.16. Non-Petition

 

Each of the Collateral Manager and each Secured Party hereby agrees not to
institute against, or join, cooperate with or encourage any other Person in
instituting against, the Borrower any bankruptcy, reorganization, receivership,
arrangement, insolvency, moratorium or liquidation proceeding or other
proceeding under federal or state bankruptcy or similar laws until at least one
year and one day, or, if longer, the applicable preference period then in effect
plus one day, after the payment in full of all outstanding Obligations and the
termination of all Commitments; provided that nothing in this Section 12.16
shall preclude, or be deemed to prevent, any Secured Party (a) from taking any
action prior to the expiration of the aforementioned one year and one day
period, or, if longer, the applicable preference period then in effect, in (i)
any case or proceeding voluntarily filed or commenced by the Borrower or
(ii) any involuntary insolvency proceeding filed or commenced against the
Borrower by a Person other than any such Secured Party, or (b) from commencing
against the Borrower or any properties of the Borrower any legal action which is
not a bankruptcy, reorganization, receivership, arrangement, insolvency,
moratorium or liquidation proceeding or other proceeding under federal or state
bankruptcy or similar laws.

 

Section 12.17. Waiver of Setoff

 

Each of the Borrower and the Collateral Manager hereby waives any right of
setoff it may have or to which it may be entitled under this Agreement or any
Applicable Law from time to time against the Administrative Agent, any Lender or
its respective assets.

 

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Section 12.18. Option to Acquire Rating

 

Each party hereto hereby acknowledges and agrees that the Administrative Agent
(at the expense of the Lender or Lenders requesting such rating) may, at any
time and in its sole discretion, obtain a public rating for the loan facility
evidenced by this Agreement. The Borrower and the Collateral Manager hereby
agree to use commercially reasonable efforts, at the request of the
Administrative Agent, to cooperate with the acquisition and maintenance of any
such rating.

 

ARTICLE XIII

 

CUSTODIAN

 

Section 13.01. Appointment of Custodian

 

(a) Appointment and Acceptance. The Borrower and the Agents each hereby appoints
the Custodian as document custodian of the Loan Files delivered to it for all
Collateral Loans owned by the Borrower at any time during the term of this
Agreement, on the terms and conditions set forth in this Agreement (which shall
include any addendum hereto which is hereby incorporated herein and made a part
of this Agreement), and the Custodian hereby accepts such appointment and agrees
to perform the services and duties set forth in this Agreement with respect to
it, subject to and in accordance with the provisions hereof.

 

(b) Instructions. The Borrower agrees that it shall from time to time provide,
or cause to be provided, to the Custodian all necessary instructions and
information, and shall respond promptly to all inquiries and requests of the
Custodian as may reasonably be necessary to enable the Custodian to perform its
duties hereunder.

 

(c) Collateral Agent. The Custodian shall take and retain custody of the Loan
Files delivered by the Borrower hereunder in accordance with the terms and
conditions of this Agreement, all for the benefit of the Collateral Agent and
the other Secured Parties, in order to perfect under the UCC the Collateral
Agent’s security interest therein for the benefit of the Secured Parties. In
taking and retaining custody of the Loan Files, the Custodian shall be deemed to
be acting as the agent of Collateral Agent for the benefit of the Secured
Parties; provided that the Custodian makes (a) no warranty or representation and
shall have no responsibility for the enforceability, completeness, validity,
sufficiency, value, genuineness, ownership or transferability of the Collateral
Loans and (b) no representation as to the existence, perfection or priority of
any lien on the Collateral Loans or the Required Loan Documents. It is expressly
agreed and acknowledged that the Custodian is not guaranteeing performance of or
assuming any liability for the obligations of the other parties hereto or any
parties to the Collateral Loans.

 

Section 13.02. Duties of Custodian

 

(a) Segregation. All Loan Files held by the Custodian for the account of the
Borrower hereunder shall be (a) subject to the lien of the Collateral Agent on
behalf of the Secured Parties, (b) physically segregated from other loans and
non-cash property in the possession of the Custodian and (c) identified by the
Custodian as subject to this Agreement.

 

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(b) Register. The Custodian shall maintain a register (in book-entry form or in
such other form as it shall deem necessary or desirable) of the Collateral Loans
for which it holds Loan Files under this Agreement containing such information
as the Borrower and the Custodian may reasonably agree; provided that, with
respect to such Collateral Loans, all Loan Files shall be held in safekeeping by
the Custodian, individually segregated from the securities and investments of
any other Person and marked so as to clearly identify such Loan Files as the
property of the Borrower as set forth in this Agreement.

 

Section 13.03. Delivery of Collateral Loans to Custodian.

 

(a) The Collateral Manager (on behalf of the Borrower) shall deliver, or cause
to be delivered (which may be via email) on or before the applicable Borrowing
Date to the Custodian all of the Loan Files for each Collateral Loan owned by
the Borrower at any time during the term of this Agreement at the address
identified herein. The Custodian shall not be responsible for any Collateral
Loan or related Loan File until actually received by it. In connection with each
delivery of a Loan File to the Custodian, the Collateral Manager shall represent
and warrant that the Loan Files delivered to the Custodian include all of the
documents listed in the related Document Checklist and all of such documents and
the information contained in the Trade Confirmation are complete in all material
respects.

 

(b) (1) Promptly after the acquisition of any Collateral Loan, the Collateral
Manager (on behalf of the Borrower) shall deliver or cause to be delivered
(which may be via email) to the Collateral Agent with a copy to the Custodian
and the Administrative Agent a properly completed Trade Confirmation, if any, on
which the Custodian may conclusively rely without further inquiry or
investigation, and shall deliver to the Custodian the Loan Files for all
Collateral Loans.

 

(ii) Notwithstanding anything herein to the contrary, delivery of the Collateral
Loans acquired by the Borrower which constitute Noteless Loans or which are
otherwise not evidenced by a “security” or “instrument” as defined in Section
8-102 and Section 9-102(a)(47) of the UCC, respectively, shall be made by
delivery to the Custodian of a copy of the loan register with respect to such
Noteless Loan evidencing registration of such Collateral Loan on the books and
records of the applicable Obligor or bank agent to the name of the Borrower (or
its nominee) or a copy (which may be a facsimile copy) of an assignment
agreement in favor of the Borrower as assignee. Any duty on the part of the
Custodian with respect to the custody of such Collateral Loans shall be limited
to the exercise of reasonable care by the Custodian in the physical custody of
the related Loan Files delivered to it.

 

(iii) The Custodian may assume the genuineness of any document in a Loan File it
may receive and the genuineness and due authority of any signatures appearing
thereon, and shall be entitled to assume that each document it may receive is
what it purports to be. If an original “security” or “instrument” as defined in
Section 8-102 and Section 9-102(a)(47) of the UCC, respectively, is or shall be
or become available with respect to any Collateral Loan to be held by the
Custodian under this Agreement, it shall be the sole responsibility of the
Borrower to make or cause delivery thereof to the Custodian, and the Custodian
shall not be under any obligation at any time to determine whether any such
original “security” or “instrument” has been or is required to be issued or made
available in respect of any Collateral Loan or to compel or cause delivery
thereof to the Custodian.

 

Section 13.04. Release of Documents/Control By Agents.

 

(a) The Custodian shall release and ship for delivery, or direct its agents or
sub-custodians to release and ship for delivery, as the case may be, Loan Files
of the Borrower held by the Custodian, its agents or its sub-custodians from
time to time upon receipt of Proper Instructions (specifying, among other
things, the Collateral Loans and Loan Files to be released and delivery
instructions and other information as may be necessary to enable the Custodian
to release and ship such Loan Files), which may be standing instructions (in a
form acceptable to the Custodian) in accordance with this Agreement.

 

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(b) Upon receipt by the Custodian from the Administrative Agent or the
Collateral Agent, of written notice of the occurrence of an Event of Default
indicating the Administrative Agent’s intent to prohibit the Custodian from
accepting instructions from or on behalf of the Borrower (each such notice, a
“Block Notice”), the Custodian shall no longer accept or act upon Proper
Instructions or other instructions from the Borrower (or the Collateral Manager
on its behalf) hereunder with respect to the Collateral Loans or the Loan Files.
From and after its receipt of a Block Notice, the Custodian shall only comply
with Proper Instructions from the Collateral Agent or Administrative Agent.

 

Section 13.05. Records.

 

The Custodian shall create and maintain complete and accurate records relating
to its activities under this Agreement with respect to the Collateral Loans or
other property of the Borrower held for the benefit of the Collateral Agent and
the other Secured Parties under this Agreement. All such records shall be the
property of the Borrower and, upon reasonable advance notice, shall at all times
during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Borrower, the Collateral
Agent and the Administrative Agent.

 

Section 13.06. Reporting

 

(a) If requested by the Borrower, the Collateral Agent or the Administrative
Agent, the Custodian shall render an itemized report of the Loan Files held
pursuant to this Agreement as of the end of each month and such other matters as
the parties may agree from time to time in form and substance reasonably
satisfactory to the Collateral Agent and the Administrative Agent.

 

(b) The Custodian shall have no duty or obligation to undertake any market
valuation of the Collateral Loans under any circumstance.

 

Section 13.07. Certain General Terms

 

(a) No Duty to Examine Underlying Instruments. Nothing herein shall obligate the
Custodian to review or examine the terms of any underlying instrument,
certificate, credit agreement, indenture, loan agreement, promissory note or any
other document contained in the Loan Files evidencing or governing any
Collateral Loan to determine the validity, sufficiency, marketability or
enforceability of any Collateral Loan (and shall have no responsibility for the
genuineness or completeness thereof) or otherwise.

 

(b) Resolution of Discrepancies. In the event of any discrepancy between the
information set forth in any report provided by the Custodian to the Borrower
and any information contained in the books or records of the Borrower, the
Borrower (or the Collateral Manager, on behalf of the Borrower) shall promptly
notify the Custodian thereof and the parties shall cooperate to diligently
resolve the discrepancy.

 

(c) Improper Instructions. Notwithstanding anything herein to the contrary, the
Custodian shall not be obligated to take any action (or forebear from taking any
action), which it reasonably determines to be contrary to the terms of this
Agreement or Applicable Law. In no instance shall the Custodian be obligated to
provide services on any day that is not a Business Day.

 

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(d) Proper Instructions.

 

(i) Each of the Collateral Agent, Administrative Agent, the Collateral Manager
and the Borrower will give a notice to the Custodian, in a form acceptable to
the Custodian, specifying the names and specimen signatures of Persons
authorized to give Proper Instructions (collectively, “Authorized Persons” and
each, an “Authorized Person”) which notice shall be signed by an Authorized
Person set forth on Schedule 7 or otherwise previously certified to the
Custodian. The Custodian shall be entitled to rely upon the identity and
authority of such Persons until it receives written notice from an Authorized
Person of the Borrower, the Administrative Agent, the Collateral Manager or the
Collateral Agent, as applicable, to the contrary. The initial Authorized Persons
are set forth on Schedule 7 attached hereto and made a part hereof (as such
Schedule 7 may be modified from time to time by written notice from the
Borrower, the Administrative Agent, the Collateral Manager or the Collateral
Agent, as applicable, to the Custodian); and

 

(ii) The Custodian shall have no responsibility or liability to the Borrower (or
any other Person) and shall be indemnified and held harmless by the Borrower in
the event that a subsequent written confirmation of an oral instruction fails to
conform to the oral instructions received by the Custodian. The Custodian shall
not have an obligation to act in accordance with purported instructions to the
extent that they conflict with Applicable Law or regulations. The Custodian
shall not be liable for any loss resulting from a delay while it obtains
clarification of any Proper Instruction.

 

(e) Actions Permitted Without Express Authority. The Custodian may, at its
discretion, without express authority from the Borrower, the Collateral Agent or
any other Person, attend to all nondiscretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with the
Collateral Loans.

 

(f) Evidence of Authority. The Custodian shall be protected in acting upon any
instruction, notice, request, consent, certificate instrument or paper
reasonably believed by it to be genuine and to have been properly executed or
otherwise given by or on behalf of the Borrower, the Collateral Agent or
Administrative Agent, as applicable, by an Authorized Person thereof. The
Custodian may receive and accept a certificate signed by any Authorized Person
as conclusive evidence of:

 

(i) the authority of any Person to act in accordance with such certificate; or

 

(ii) any determination or of any action by such Person as described in such
certificate,

 

and such certificate may be considered as in full force and effect until receipt
by the Custodian of written notice to the contrary from an Authorized Person of
the Borrower, the Collateral Agent or Administrative Agent, as applicable.

 

(g) Receipt of Communications. Any communication received by the Custodian on a
day which is not a Business Day or after 3:30 p.m. (Eastern time) (or such other
time as is agreed by the Borrower and the Custodian from time to time) on a
Business Day will be deemed to have been received on the next Business Day;
provided that in the case of communications so received after 3:30 p.m. (Eastern
time) on a Business Day the Custodian will use its commercially reasonable
efforts to process such communications as soon as possible after receipt.

 

(h) In the event that (i) the Borrower, the Administrative Agent, the Collateral
Manager, the Custodian or the Collateral Agent shall be served by a third party
with any type of levy, attachment, writ or court order with respect to any Loan
File or a document included within a Loan File or (ii) a third party shall
institute any court proceeding by which any Loan File or a document included
within a Loan File shall be required to be delivered other than in accordance
with the provisions of this Agreement, the party receiving such service shall
promptly deliver or cause to be delivered to the other parties to this Agreement
(to the extent not prohibited by Applicable Law) copies of all court papers,
orders, documents and other materials concerning such proceedings. The Custodian
shall, to the extent permitted by law, continue to hold and maintain all the
Loan Files that are the subject of such proceedings pending a final,
nonappealable order of a court of competent jurisdiction permitting or directing
disposition thereof. Upon final determination of such court, the Custodian shall
dispose of such Loan File or a document included within such Loan File as
directed by the Administrative Agent, which shall give a direction consistent
with such determination. Expenses of the Custodian incurred as a result of such
proceedings shall be borne by the Borrower.

 

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Section 13.08. Compensation of Custodian

 

(a) Fees. The Custodian shall be entitled to compensation for its services in
accordance with the terms of the Collateral Agent Fee Letter.

 

(b) Expenses. The Borrower agrees to pay or reimburse to the Custodian upon its
request from time to time all reasonable and documented costs, disbursements,
advances, and expenses (including reasonable fees and expenses of legal counsel)
incurred in connection with the preparation or execution of this Agreement, or
in connection with the transactions contemplated hereby or the administration of
this Agreement or performance by the Custodian of its duties and services under
this Agreement (including costs and expenses of any action deemed necessary by
the Custodian to collect any amounts owing to it under this Agreement).

 

(c) Priority of Payments. Amounts owing to the Custodian hereunder shall be
payable in accordance with the Priority of Payments.

 

Section 13.09. Responsibility of Custodian

 

(a) General Duties. The Custodian shall have no duties, obligations or
responsibilities under this Agreement or with respect to the Collateral Loans,
except for such duties as are expressly and specifically set forth in this
Agreement, and the duties and obligations of the Custodian shall be determined
solely by the express provisions of this Agreement. No implied duties,
obligations or responsibilities shall be read into this Agreement against, or on
the part of, the Custodian.

 

(b) Instructions.

 

(i) The Custodian shall be entitled to refrain from taking any action unless it
has such instruction (in the form of Proper Instructions) from the Borrower (or
the Collateral Manager on the Borrower’s behalf), the Administrative Agent or
the Collateral Agent, as applicable, as it reasonably deems necessary, and shall
be entitled to require, upon notice to the Borrower, the Administrative Agent or
the Collateral Agent, as applicable, that Proper Instructions to it be in
writing. The Custodian shall have no liability for any action (or forbearance
from action) taken pursuant to any Proper Instruction of the Borrower, the
Administrative Agent or the Collateral Agent, as applicable.

 

(ii) Whenever the Custodian is entitled or required to receive or obtain any
communications or information pursuant to or as contemplated by this Agreement,
it shall be entitled to receive the same in writing, in form, content and medium
reasonably acceptable to it and otherwise in accordance with any applicable term
of this Agreement; and whenever any report or other information is required to
be produced or distributed by the Custodian it shall be in form, content and
medium reasonably acceptable to it and the Borrower, and otherwise in accordance
with any applicable term of this Agreement.

 

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

 

(c) General Standards of Care. Notwithstanding any terms herein contained to the
contrary, the acceptance by the Custodian of its appointment hereunder is
expressly subject to the following terms, which shall govern and apply to each
of the terms and provisions of this Agreement (whether or not so stated
therein):

 

(i) The Custodian may rely on and shall be protected in acting or refraining
from acting upon any written notice, instruction, statement, certificate,
request, waiver, consent, opinion, report, receipt or other paper or document
furnished to it (including any of the foregoing provided to it by telecopier or
electronic means), not only as to its due execution and validity, but also as to
the truth and accuracy of any information therein contained, which it in good
faith believes to be genuine and signed or presented by the proper person (which
in the case of any instruction from or on behalf of the Borrower shall be an
Authorized Person); and the Custodian shall be entitled to presume the
genuineness and due authority of any signature appearing thereon. The Custodian
shall not be bound to make any independent investigation into the facts or
matters stated in any such notice, instruction, statement, certificate, request,
waiver, consent, opinion, report, receipt or other paper or document; provided
that if the form thereof is specifically prescribed by the terms of this
Agreement, the Custodian shall examine the same to determine whether it
substantially conforms on its face to such requirements hereof.

 

(ii) Neither the Custodian nor any of its directors, officers or employees shall
be liable to anyone for any error of judgment, or for any act done or step taken
or omitted to be taken by it (or any of its directors, officers of employees),
or for any mistake of fact or law, or for anything which it may do or refrain
from doing in connection herewith, unless such action constitutes gross
negligence or willful misconduct on its part and in breach of the terms of this
Agreement. The Custodian shall not be liable for any action taken by it in good
faith and reasonably believed by it to be within powers conferred upon it, or
taken by it pursuant to any direction or instruction by which it is governed
hereunder, or omitted to be taken by it by reason of the lack of direction or
instruction required hereby for such action.

 

(iii) In no event shall the Custodian be liable for any indirect, special,
punitive or consequential damages (including lost profits) whether or not it has
been advised of the likelihood of such damages.

 

(iv) The Custodian may consult with, and obtain advice from, legal counsel
selected in good faith with respect to any question as to any of the provisions
hereof or its duties hereunder, or any matter relating hereto, and the written
opinion or advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by the Custodian
in good faith in accordance with the opinion and directions of such counsel; the
reasonable cost of such services shall be reimbursed pursuant to Section
13.08(b) and (c) above.

 

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(v) The Custodian shall not be deemed to have notice of any fact, claim or
demand with respect hereto unless actually known by an officer charged with
responsibility for administering this Agreement or unless (and then only to the
extent) received in writing by the Custodian and specifically referencing this
Agreement.

 

(vi) No provision of this Agreement shall require the Custodian to expend or
risk its own funds, or to take any action (or forbear from action) hereunder
which might in its judgment involve any expense or any financial or other
liability unless it shall be furnished with acceptable indemnification. Nothing
herein shall obligate the Custodian to commence, prosecute or defend legal
proceedings in any instance, whether on behalf of the Borrower or on its own
behalf or otherwise, with respect to any matter arising hereunder, or relating
to this Agreement or the services contemplated hereby.

 

(vii) The permissive right of the Custodian to take any action hereunder shall
not be construed as a duty.

 

(viii) The Custodian may act or exercise its duties or powers hereunder through
agents or attorneys, and the Custodian shall not be liable or responsible for
the actions or omissions of any such agent or attorney appointed and maintained
with reasonable due care.

 

(ix) The Custodian shall not be responsible or liable for delays or failures in
performance resulting from acts beyond its control. Such acts shall include acts
of God, strikes, lockouts, riots, acts of war, epidemics, governmental
regulations imposed after the fact, fire, communication line failures, computer
viruses, power failures, earthquakes or other disasters.

 

(x) All indemnifications contained in this Agreement in favor of the Custodian
shall survive the termination of this Agreement.

 

(xi) Each of the protections, reliances, indemnities and immunities offered to
the Collateral Agent in Article XI shall be afforded to the Custodian.

 

(d) Indemnification; Collateral Agent’s Lien.

 

(i) The Borrower shall and does hereby indemnify and hold harmless the Custodian
for and from any and all costs and expenses (including reasonable attorney’s
fees and expenses), and any and all losses, damages, claims and liabilities
(collectively, “Losses”), that may arise, be brought against or incurred by the
Custodian, as a result of, relating to, or arising out of this Agreement, or the
administration or performance of the Custodian’s duties hereunder, or the
relationship between the Borrower and the Custodian created hereby, other than
such liabilities, losses, damages, claims, costs and expenses as are directly
caused by the Custodian’s own actions constituting gross negligence or willful
misconduct. Without limiting the foregoing, after the receipt of a Block Notice,
the parties hereto agree that the Lenders shall indemnify and hold harmless the
Custodian and its directors, officers, employees and agents from and against any
and all Losses incurred as a result of the Custodian’s compliance with the
Collateral Agent’s or Administrative Agent’s (each acting at the direction of
the Lenders) direction or instruction in connection with this Agreement (except
to the extent due to the Custodian’s willful misconduct or gross negligence)
solely to the extent that such Losses shall not have been reimbursed by the
Borrower.

 

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(ii) Each of the Borrower, the Collateral Agent and the Custodian hereby agrees
that the Loan Files in respect of the Collateral Loans are being held by the
Custodian hereunder to perfect the lien of the Collateral Agent, on behalf of
the Secured Parties, in the Collateral Loans in accordance with this Agreement.

 

(e) In the event that (a) the Borrower, the Collateral Agent, the Collateral
Manager, the Administrative Agent, the Lenders or the Custodian shall be served
by a third party with any type of levy, attachment, writ or court order with
respect to any Loan File or a document included within a Loan File or (b) a
third party shall institute any court proceeding by which any Loan File or a
document included within a Loan File shall be required to be delivered otherwise
than in accordance with the provisions of this Agreement, the party receiving
such service shall promptly deliver, or cause to be delivered, to the other
parties to this Agreement and the Administrative Agent copies of all court
papers, orders, documents and other materials concerning such proceedings. The
Custodian shall, to the extent permitted by Law, continue to hold and maintain
all the Loan Files that are the subject of such proceedings pending a final,
nonappealable order of a court of competent jurisdiction permitting or directing
disposition thereof. Upon final determination of such court, the Custodian shall
dispose of such Loan File or any document included within such Loan File as
directed by the Collateral Agent or the Administrative Agent, which shall give a
direction consistent with such determination. Expenses of the Custodian incurred
as a result of such proceedings shall be borne by the Borrower and paid as an
Administrative Expense.

 

(f) Miscellaneous.

 

(i) Resignation. The Custodian may, at any time, resign under this Agreement by
giving not less than thirty (30) days advance written notice thereof to the
Borrower, the Collateral Manager, the Collateral Agent and the Administrative
Agent.

 

(ii) Payment of Fees, Etc. Upon termination of this Agreement or resignation of
the Custodian, the Borrower shall pay to the Custodian such compensation, and
shall likewise reimburse the Custodian for its reasonable and documented costs,
expenses and disbursements, as may be due as of the date of such termination or
resignation (or removal, as the case may be) all in accordance with the Priority
of Payments. All indemnifications in favor of the Custodian under this Agreement
shall survive the termination of this Agreement, or any resignation or removal
of the Custodian.

 

(iii) Final Report. In the event of any resignation or removal of the Custodian,
the Custodian shall provide to the Borrower a complete final report or data file
transfer of any Confidential Information as of the date of such resignation or
removal.

 

(g) Representations of the Custodian. The Custodian hereby represents and
warrants to the Borrower that:

 

(i) it is qualified to act as a custodian pursuant to Section 26(a)(1) of the
Investment Company Act;

 

(ii) it has the power and authority to enter into and perform its obligations
under this Agreement; and

 

(iii) it has duly authorized and executed this Agreement so as to constitute its
valid and binding obligations.

 

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ARTICLE XIV

 

COLLATERAL MANAGEMENT

 

Section 14.01. Designation of the Collateral Manager

 

(a) Initial Collateral Manager. The servicing, administering and collection of
the Collateral shall be conducted by the Person designated as the Collateral
Manager hereunder in accordance with this Section 14.01. TICC Capital is hereby
appointed as, and hereby accepts such appointment and agrees to perform the
duties and responsibilities, of Collateral Manager pursuant to the terms hereof.

 

(b) Subcontracts. The Collateral Manager may, with the prior written consent of
the Administrative Agent, subcontract with any other Person for servicing,
administering or collecting the Collateral; provided that (i) the Collateral
Manager shall select any such Person with reasonable care and shall be solely
responsible for the fees and expenses payable to such Person, (ii) the
Collateral Manager shall not be relieved of, and shall remain liable for, the
performance of the duties and obligations of the Collateral Manager pursuant to
the terms hereof without regard to any subcontracting arrangement and (iii) any
such subcontract shall be subject to the provisions hereof.

 

Section 14.02. Duties of the Collateral Manager

 

(a) Duties. The Collateral Manager shall take or cause to be taken all such
actions as may be necessary or advisable to service, administer and collect on
the Collateral from time to time, all in accordance with Applicable Law and the
Collateral Management Standard, in good faith and with reasonable care using a
degree of skill and care no less than that exercised by institutional managers
of national standing relating to assets of the nature and character of the
Collateral Loans. Without limiting the foregoing, the duties of the Collateral
Manager shall include the following:

 

(i) directing the acquisition, sale or substitution of Collateral in accordance
with Article X;

 

(ii) supervising the Collateral, including communicating with Obligors,
executing amendments, providing consents and waivers, exercising voting rights,
enforcing and collecting on the Collateral and otherwise managing the Collateral
on behalf of the Borrower;

 

(iii) preparing and submitting claims to Obligors on each Collateral Loan;

 

(iv) maintaining appropriate books of account and servicing records with respect
to the Collateral (including copies of the Related Documents) reasonably
necessary or advisable for the services to be performed hereunder;

 

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

 

(vi) notifying the Administrative Agent of any material action, suit,
proceeding, dispute, offset, deduction, defense or counterclaim (A) that is or
is threatened to be asserted by an Obligor with respect to any Collateral Loan
(or portion thereof) of which it has actual knowledge or has received notice; or
(B) that could reasonably be expected to have a Material Adverse Effect;

 

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

 

(viii) instructing the Obligors or, if applicable, the administrative agents on
the Collateral Loans to make payments directly into the Collection Account; and

 

(ix) complying with such other duties and responsibilities as required of the
Collateral Manager by this Agreement.

 

It is acknowledged and agreed that the Borrower possesses only such rights with
respect to the enforcement of rights and remedies with respect to the Collateral
Loans and the underlying assets securing such Collateral Loans under the Related
Documents as have been transferred to the Borrower with respect to the related
Collateral Loan, and therefore, for all purposes under this Agreement, the
Collateral Manager shall perform its administrative and management duties
hereunder only to the extent that, as a lender under the Related Documents, the
Borrower has the right to do so.

 

(b) The Administrative Agent, each Lender, the Collateral Agent and the other
Secured Parties shall not have any obligation or liability with respect to any
Collateral, nor shall any of them be obligated to perform any of the obligations
of the Collateral Manager hereunder.

 

Section 14.03. Authorization of the Collateral Manager

 

The Borrower hereby authorizes the Collateral Manager to take any and all
reasonable steps in its name and on its behalf necessary or desirable in the
determination of the Collateral Manager and not inconsistent with the pledge of
the Collateral by the Borrower to the Collateral Agent, on behalf of the Secured
Parties hereunder, to collect all amounts due under any and all Collateral,
including endorsing its name on checks and other instruments representing
Collections, executing and delivering any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Collateral and, after the
delinquency of any Collateral and to the extent permitted under and in
compliance with Applicable Law, to commence proceedings with respect to
enforcing payment thereof, to the same extent as the Collateral Manager could
have done if it owned such Collateral. The Borrower shall furnish the Collateral
Manager (and any successors thereto) with any powers of attorney and other
documents necessary or appropriate to enable the Collateral Manager to carry out
its collateral management duties hereunder, and shall cooperate with the
Collateral Manager to the fullest extent in order to ensure the collectability
of the Collateral. In no event shall the Collateral Manager be entitled to make
the Collateral Agent, the Administrative Agent, any Lender 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
foreclosure or similar collection procedure) without the Administrative Agent’s
consent. Following the occurrence of an Event of Default (unless otherwise
waived by the Lenders in accordance with Section 12.01), the Administrative
Agent (acting in its sole discretion or at the direction of the Required
Lenders) may provide notice to the Collateral Manager (with a copy to the
Collateral Agent) that the Secured Parties are exercising their control rights
with respect to the Collateral in accordance with Section 6.02(b).

 

Section 14.04. Realization Upon Defaulted Collateral Loans

 

The Collateral Manager will use reasonable efforts consistent with the
Collateral Management Standard, this Agreement and the Related Documents to
exercise (on behalf of the Borrower) available remedies (which may include
liquidating, foreclosing upon or repossessing, as applicable, or otherwise
comparably converting the ownership of any related property) with respect to any
Defaulted Collateral Loan. The Collateral Manager will comply with the
Collateral Management Standard, this Agreement, the Related Documents and
Applicable Law in realizing upon such related property, and employ practices and
procedures, including reasonable efforts, consistent with the Collateral
Management Standard, this Agreement and the Related Documents, to enforce all
obligations of Obligors. The Collateral Manager will remit to the Collection
Account the recoveries received in connection with the sale or disposition of
related property relating to any Defaulted Collateral Loan hereunder.

 

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Section 14.05. Compensation

 

As compensation for its administrative and management activities hereunder, the
Collateral Manager or its designee shall be entitled to receive the Collateral
Management Fee pursuant to the Priority of Payments.

 

The Collateral Manager may, in its sole discretion, elect to irrevocably waive
payment of any or all of any Collateral Management Fee otherwise due on any
Payment Date by notice to the Borrower, the Collateral Administrator and the
Collateral Agent no later than the Determination Date immediately prior to such
Payment Date. Any such Collateral Management Fee, once waived, shall not
thereafter become due and payable and any claim of the Collateral Manager
therein shall be extinguished.

 

The Collateral Manager may, in its sole discretion, elect to defer payment of
all or a portion of the Collateral Management Fee on any Payment Date by
providing written notice to the Collateral Agent of such election no later than
the Determination Date immediately prior to such Payment Date. The Collateral
Manager may elect to receive payment of all or any portion of the deferred
Collateral Management Fee on any Payment Date to the extent of funds available
to pay such amounts in accordance with the Priority of Payments by providing
notice to the Collateral Agent and the Administrative Agent of such election and
the amount of such fees to be paid on or before three (3) Business Days
preceding such Payment Date.

 

If and to the extent that there are insufficient funds to pay any Collateral
Management Fee in full on any Payment Date or if any Collateral Management Fee
has accrued but is not yet due and payable, the amount due or accrued and unpaid
will be deferred and will be payable on such later Payment Date on which funds
are available in accordance with the Priority of Payments.

 

Section 14.06. Expense Reimbursement; Indemnification

 

(a) The Collateral Manager shall be responsible for the ordinary expenses
incurred by it in the performance of its obligations under this Agreement;
provided, however, that any extraordinary expenses incurred by the Collateral
Manager in the performance of such obligations (including, but not limited to,
(i) any reasonable expenses incurred by it (whether for its own account or
advanced by the Collateral Manager on behalf of the Borrower) to employ outside
lawyers, consultants or other advisors reasonably necessary in connection with
the evaluation, transfer, acquisition, disposition, retention, workout or
restructuring of any Collateral Loan (or other asset held by the Borrower) or
any reasonable expenses incurred by it in connection with obtaining advice from
counsel with respect to its obligations under this Agreement and (ii) any other
reasonable out-of-pocket fees and expenses incurred in connection with the
evaluation, transfer, acquisition, disposition, retention, workout or
restructuring of any Collateral Loan (or other asset held by the Borrower)
(including, without limitation, travel and due diligence expenses and the
Borrower’s pro rata share of software and services costs for record keeping and
fund administration)) shall be reimbursed by the Borrower. To the extent that
such expenses are incurred in connection with obligations that are also held by
any Affiliate of the Borrower or any other account managed by the Collateral
Manager, the Collateral Manager shall allocate the expenses among the accounts
in a fair and equitable manner. Any amounts payable pursuant to this Section
14.06 shall constitute “Administrative Expenses” hereunder and shall be
reimbursed by the Borrower to the extent funds are available therefor in
accordance with the Priority of Payments. Other than as stated above, the
Borrower shall bear, and shall pay directly in accordance with this Agreement,
all costs and expenses incurred by it in connection with its organization,
operation or liquidation.

 

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(b) The Collateral Manager agrees to indemnify and hold harmless each
Indemnified Party from and against any and all Liabilities that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with any acts or omissions of the Collateral Manager in
connection with this Agreement, any other Facility Document, any Related
Document or any transaction contemplated hereby or thereby (and regardless of
whether or not any such transactions are consummated), including any such
Liability that is incurred or arises out of or in connection with, or by reason
of any one or more of the following: (i) any breach of any covenant by the
Collateral Manager contained in any Facility Document; (ii) any representation
or warranty made or deemed made by the Collateral Manager contained in any
Facility Document or in any certificate, statement or report delivered in
connection therewith is, or is alleged to be, false or misleading in any
material respect; (iii) any failure by the Collateral Manager to comply with any
Applicable Law or contractual obligation binding upon it; (iv) any action or
omission, not expressly authorized by the Facility Documents, by the Collateral
Manager which has the effect of impairing the validity or enforceability of the
Collateral or the rights of the Agents or the other Secured Parties with respect
thereto; (v) the commingling by the Collateral Manager of Collections on the
Collateral at any time with other funds; (vi) the failure of the Collateral
Manager or any of its agents or representatives to remit to the Collection
Account, within two (2) Business Days of receipt, Collections on the Collateral
Loans remitted to the Collateral Manager or any such agent or representative as
provided in this Agreement; and (vii) the treatment or representation, in any
computations made by it in connection with any Monthly Report, Payment Date
Report, Borrowing Base Calculation Statement or other report prepared by it
hereunder of any commercial loans as Eligible Loans, which were Ineligible
Collateral Loans as of the date of any such computation; except to the extent
any such Liability is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted solely from such Indemnified Party’s
gross negligence or willful misconduct. In the case of an investigation,
litigation or proceeding to which the indemnity in this paragraph applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Collateral Manager, any of the Collateral Manager’s
equityholders or creditors, an Indemnified Party or any other Person, whether or
not an Indemnified Party is otherwise a party hereto. The Collateral Manager
shall not have any liability hereunder to any Indemnified Party to the extent an
Indemnified Party affects any settlement of a matter that is (or could be)
subject to indemnification hereunder without the prior written consent of the
Collateral Manager. In no case shall the Collateral Manager be responsible for
any Indemnified Party’s lost revenues or lost profits or for any indirect,
special, punitive or consequential damages. This Section 14.06(b) shall not
apply with respect to Taxes other than any Taxes that represent losses, claims,
damages, etc. arising from any non-Tax claim.

 

Section 14.07. The Collateral Manager Not to Resign; Assignment; Collateral
Manager Default

 

(a) The Collateral Manager shall not resign from the obligations and duties
hereby imposed on it except upon the Collateral Manager’s determination that the
performance of its duties hereunder is or becomes impermissible under Applicable
Law. Any such determination permitting the resignation of the Collateral Manager
shall be evidenced by an opinion of counsel to such effect delivered to the
Administrative Agent and each Lender. No such resignation shall become effective
until a Successor Collateral Manager shall have assumed the responsibilities and
obligations of the Collateral Manager in accordance with Section 14.08.

 

(b) The Collateral Manager may not assign its rights or obligations hereunder or
any interest herein without the prior written consent of the Administrative
Agent other than (i) to an Affiliate thereof that is reasonably acceptable to
the Administrative Agent, (ii) to a Person that becomes a successor or assignee
Collateral Manager hereunder in accordance with the terms hereof or (iii) in
accordance with Section 14.01(b)).

 

115

 

 

(c) Upon the occurrence of a Collateral Manager Default or an Event of Default,
notwithstanding anything herein to the contrary, the Administrative Agent, with
the prior written consent (not to be unreasonably withheld, delayed or
conditioned) of the Borrower, the Equityholder, and the Required Lenders, may
terminate all of the rights and obligations of the Collateral Manager as
“Collateral Manager” under this Agreement. The Administrative Agent, with the
prior written consent (not to be unreasonably withheld) of the Borrower, the
Equityholder, and the Required Lenders, shall appoint a successor Collateral
Manager (the “Successor Collateral Manager”), which, for the avoidance of doubt
may be the Administrative Agent or any Lender, and such Successor Collateral
Manager shall accept its appointment by a written assumption in a form
acceptable to the Administrative Agent in its sole discretion. Until a successor
Collateral Manager is appointed as set forth above, the Collateral Manager shall
(i) unless otherwise notified by the Administrative Agent, continue to act in
such capacity in accordance with Section 14.02 and (ii) as requested by the
Administrative Agent in its sole discretion (A) terminate some or all of its
activities as Collateral Manager hereunder by the Administrative Agent in its
sole discretion as necessary or desirable, (B) provide such information as may
be requested by the Administrative Agent to facilitate the transition of the
performance of such activities to the Administrative Agent or any agent thereof
and (C) take all other actions requested by the Administrative Agent, in each
case to facilitate the transition of the performance of such activities to the
Administrative Agent or any agent thereof.

 

Section 14.08. Appointment of Successor Collateral Manager

 

(a) Upon resignation of the Collateral Manager pursuant to Section 14.07, the
Administrative Agent may (with the consent (not to be unreasonably withheld,
delayed or conditioned) of the Equityholder and the Required Lenders) at any
time appoint a Successor Collateral Manager, which, for the avoidance of doubt
may be the Administrative Agent or any Lender, and such Successor Collateral
Manager shall accept its appointment by a written assumption in a form
acceptable to the Administrative Agent. Until a successor Collateral Manager is
appointed as set forth above, the Collateral Manager shall (i) unless otherwise
notified by the Administrative Agent, continue to act in such capacity in
accordance with Section 14.02 and (ii) as requested by the Administrative Agent
in its sole discretion (A) terminate some or all of its activities as Collateral
Manager hereunder by the Administrative Agent in its sole discretion as
necessary or desirable, (B) provide such information as may be requested by the
Administrative Agent to facilitate the transition of the performance of such
activities to the Administrative Agent or any agent thereof and (C) take all
other actions requested by the Administrative Agent, in each case to facilitate
the transition of the performance of such activities to the Administrative Agent
or any agent thereof.

 

(b) Upon its appointment, the Successor Collateral Manager shall be the
successor in all respects to the Collateral Manager with respect to collateral
management functions under this Agreement and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Collateral Manager by the terms and provisions hereof, and all references in
this Agreement to the Collateral Manager shall be deemed to refer to the
Successor Collateral Manager; provided that the Successor Collateral Manager
shall have (i) no liability with respect to any action performed by the
terminated Collateral Manager prior to the date that the Successor Collateral
Manager becomes the successor to the Collateral Manager or any claim of a third
party based on any alleged action or inaction of the terminated Collateral
Manager, (ii) no obligation to pay any taxes required to be paid by the
Collateral Manager; provided that the Successor Collateral Manager shall pay any
income taxes for which it is liable, (iii) no obligation to pay any of the fees
and expenses of any other party to the transactions contemplated hereby, and
(iv) no liability or obligation with respect to any Collateral Manager
indemnification obligations of any prior Collateral Manager, including the
original Collateral Manager.

 

116

 

 

(c) Notwithstanding anything contained in this Agreement to the contrary, a
Successor Collateral Manager is authorized to accept and rely on all of the
accounting, records (including computer records) and work of the prior
Collateral Manager relating to the Collateral Loans (collectively, the
“Predecessor Collateral Manager Work Product”) without any audit or other
examination thereof, and such Successor Collateral Manager shall have no duty,
responsibility, obligation or liability for the acts and omissions of the prior
Collateral Manager. If any error, inaccuracy, omission or incorrect or
non-standard practice or procedure (collectively, “Errors”) exist in any
Predecessor Collateral Manager Work Product and such Errors make it materially
more difficult to service or should cause or materially contribute to the
Successor Collateral Manager making or continuing any Errors (collectively,
“Continued Errors”), such Successor Collateral Manager shall have no duty,
responsibility, obligation or liability for such Continued Errors; provided that
such Successor Collateral Manager agrees to use its best efforts to prevent
further Continued Errors. In the event that the Successor Collateral Manager
becomes aware of Errors or Continued Errors, it shall, with the prior consent of
the Administrative Agent, use its best efforts to reconstruct and reconcile such
data as is commercially reasonable to correct such Errors and Continued Errors
and to prevent future Continued Errors.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

117

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

TICC FUNDING, LLC,

as Borrower

 

 

By:_______________________________________

Name:
Title:

TICC CAPITAL CORP.,
as Collateral Manager

 

 

By:_______________________________________

Name:
Title:

 

[Signature Page to Credit and Security Agreement]

 

 

CITIBANK, N.A., as Administrative Agent and a Lender

 

 

By:_______________________________________

Name:
Title:

 

[Signature Page to Credit and Security Agreement]

 

 

THE BANK OF NEW YORK MELLON TRUST
COMPANY, NATIONAL ASSOCIATION,
as Collateral Agent and Custodian

 

 

By:_______________________________________

Name:
Title:

 

[Signature Page to Credit and Security Agreement]