EXECUTION COPY

 

 

 

LOAN AND SECURITY AGREEMENT

 

by and among

 

HORIZON CREDIT III LLC

 

as Borrower,

 

THE LENDERS THAT ARE SIGNATORIES HERETO

 

as the Lenders,

 

and

 

FORTRESS CREDIT CO LLC

 

as Administrative Agent,

 

Dated as of August 23, 2012

 

 

 

 

 

 

TABLE OF CONTENTS

 

1. DEFINITIONS AND CONSTRUCTION. 1         1.1 Definitions 1   1.2 Accounting
Terms 34   1.3 Code 34   1.4 Construction 35   1.5 Schedules and Exhibits 35    
    2. LOAN AND TERMS OF PAYMENT. 35         2.1 Term Loans 35   2.2 Borrowing
Procedures 35   2.3 Prepayments and Scheduled Payments of Loans 36   2.4
Payments Generally 42   2.5 Interest Rates: Rates, Payments, and Calculations 43
  2.6 Reserved 44   2.7 Crediting Payments 45   2.8 Designated Account 45   2.9
Reserved. 45   2.10 Fees 45   2.11 Taxes; Yield Protection; Illegality 46      
  3. CONDITIONS; TERM OF AGREEMENT. 52         3.1 Conditions Precedent to the
Initial Extension of Credit 52   3.2 Conditions Precedent to all Extensions of
Credit 56   3.3 Term 57   3.4 Effect of Termination 57   3.5 Termination of
Commitments 57         4. CREATION OF SECURITY INTEREST. 57         4.1 Grant of
Security Interest 57   4.2 Negotiable Collateral 57   4.3 Collection of
Accounts, General Intangibles, and Negotiable Collateral 58   4.4 Filing of
Financing Statements; Commercial Tort Claims; Delivery of Additional
Documentation Required 58   4.5 Power of Attorney 60   4.6 Right to Inspect and
Verify 60   4.7 Control Agreements 60   4.8 Servicing of Notes Receivable 61  
4.9 Borrower’s Perfection 61   4.10 Note Receivable Documents 61   4.11 Release
of Notes Receivable 61   4.12 Electronic Chattel Paper and Transferable Records
62   4.13 Continuing Liability Under Collateral 63         5. REPRESENTATIONS
AND WARRANTIES. 63

 

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  5.1 No Encumbrances 63   5.2 Eligible Notes Receivables 63   5.3 Equipment 64
  5.4 Collateral 64   5.5 Records 64   5.6 State of Incorporation; Location of
Chief Executive Office; Organizational Identification Number; Commercial Tort
Claims 64   5.7 Due Organization and Qualification; Subsidiaries 65   5.8 Due
Authorization; No Conflict 66   5.9 Litigation 67   5.10 Financial Statements;
No Material Adverse Change 67   5.11 Fraudulent Transfer 67   5.12 Employee
Benefits 67   5.13 Environmental Condition 68   5.14 Brokerage Fees 68   5.15
Intellectual Property 68   5.16 Leases 68   5.17 Deposit Accounts and Securities
Accounts 68   5.18 Complete Disclosure 68   5.19 Indebtedness 69   5.20
Compliance 69   5.21 Servicing 69   5.22 Permits, Licenses, Etc. 69   5.23
Margin Stock 70   5.24 Government Regulation 70   5.25 OFAC 70   5.26 Patriot
Act 70   5.27 No Default 70   5.28 Tax Returns; Taxes 70         6. AFFIRMATIVE
COVENANTS 71         6.1 Accounting System 71   6.2 Collateral Reporting 71  
6.3 Financial Statements, Reports, Certificates 72   6.4 Notices Regarding
Authorized Persons or Servicing and Accounting Staff 75   6.5 Collection of
Notes Receivable 75   6.6 Maintenance of Properties 76   6.7 Taxes 76   6.8
Insurance 76   6.9 Location of Collateral 77   6.10 Compliance with Laws 77  
6.11 Leases 77   6.12 Existence 77   6.13 Environmental 79   6.14 Disclosure
Updates 79   6.15 Formation of Subsidiaries 79   6.16 Required Asset Documents
79

 

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  6.17 Sale and Servicing Agreement 79   6.18 Escrow Deposits; Lockbox;
Collection Account. 79   6.19 Minimum Amount in Collection Account 80   6.20
Servicing 80         7. NEGATIVE COVENANTS. 81         7.1 Indebtedness 81   7.2
Liens 81   7.3 Restrictions on Fundamental Changes 81   7.4 Disposal of Assets
82   7.5 Change Name 82   7.6 Nature of Business 82   7.7 Prepayments and
Amendments 82   7.8 Burdensome Agreements 82   7.9 Required Procedures 82   7.10
Restricted Payments 83   7.11 Accounting Methods 83   7.12 Investments 83   7.13
Transactions with Affiliates 83   7.14 Use of Proceeds 83   7.15 Collateral with
Bailees 83   7.16 Financial Covenants of Borrower, Horizon and Horizon
Management 84   7.17 Sale and Servicing Agreement. 84         8. EVENTS OF
DEFAULT. 85         8.1 Non-Payment 85   8.2 Non-Compliance 85   8.3 Attachment
85   8.4 Insolvency-Voluntary 85   8.5 Insolvency-Involuntary 85   8.6
Enjoinment 86   8.7 Lien 86   8.8 Judgment 86   8.9 Default in Other Agreements
86   8.10 ERISA Event 86   8.11 Non-Permitted Payments 87   8.12 Breach of
Warranty 87   8.13 Reserved 87   8.14 Invalidity of Liens 87   8.15 Management
87   8.16 Servicer Default 87   8.17 Change of Control 87   8.18 Invalidity of
Loan Documents 87         9. THE LENDER GROUP’S RIGHTS AND REMEDIES. 88        
9.1 Rights and Remedies 88

 

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  9.2 Special Rights of the Lender Group in Respect of Notes Receivable and
Purchased Participations 90   9.3 Remedies Cumulative 91         10. TAXES AND
EXPENSES. 91       11. WAIVERS; INDEMNIFICATION. 91         11.1 Demand;
Protest; etc. 91   11.2 The Lender Group’s Liability for Borrower Collateral 92
  11.3 Indemnification 92         12. NOTICES. 93       13. CHOICE OF LAW AND
VENUE; JURY TRIAL WAIVER. 95       14. ASSIGNMENTS AND PARTICIPATIONS;
SUCCESSORS. 96         14.1 Assignments and Participations 96   14.2 Successors
100         15. AMENDMENTS; WAIVERS. 100         15.1 Amendments and Waivers 100
  15.2 Replacement of Certain Lenders 102   15.3 No Waivers; Cumulative Remedies
103         16. AGENT; THE LENDER GROUP. 103         16.1 Appointment and
Authorization of Agent 103   16.2 Delegation of Duties 104   16.3 Liability of
Agent 104   16.4 Reliance by Agent 104   16.5 Notice of Default or Event of
Default 105   16.6 Credit Decision 105   16.7 Costs and Expenses;
Indemnification 106   16.8 Agent in Individual Capacity 106   16.9 Successor
Agent 107   16.10 Lender in Individual Capacity 107   16.11 Withholding Taxes
107   16.12 Collateral Matters 108   16.13 Restrictions on Actions by Lenders;
Sharing of Payments 109   16.14 Agency for Perfection 110   16.15 Payments by
Agent to the Lenders 110   16.16 Concerning the Collateral and Related Loan
Documents 110   16.17 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information 110   16.18 Several
Obligations; No Liability 111         17. GENERAL PROVISIONS. 111         17.1
Effectiveness. 111   17.2 Section Headings 112

 

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  17.3 Interpretation 112   17.4 Severability of Provisions 112   17.5
[Reserved] 112   17.6 Debtor-Creditor Relationship 112   17.7 Counterparts;
Electronic Execution 112   17.8 Revival and Reinstatement of Obligations 112  
17.9 Confidentiality 113   17.10 Lender Group Expenses 114   17.11 Survival 114
  17.12 Patriot Act 114   17.13 Integration 115

 

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EXHIBITS AND SCHEDULES

 

Exhibit A   Form of Assignment and Acceptance Exhibit B   Form of
Overcollateralization Ratio Certificate Exhibit C   Form of Compliance
Certificate Exhibit D   Form of Borrowing Notice Exhibit E   Form of Note
Exhibit F   Form of Principal Withdrawal Request Schedule A-1   Approved
Third-Party Lenders Schedule A-2   Approved Third-Party Originators Schedule C  
Commitments Schedule R-1   Required Asset Documents Schedule 5.4   Locations of
Collateral Schedule 5.6(a)   Jurisdictions of Organization Schedule 5.6(b)  
Chief Executive Offices Schedule 5.6(c)   Organizational ID Numbers Schedule
5.6(d)   Commercial Tort Claims Schedule 5.7(b)   Capitalization of Borrower and
Horizon Schedule 5.7(c)   Capitalization of Horizon’s Subsidiaries Schedule 5.9
  Litigation Schedule 5.13   Environmental Matters Schedule 5.15   Intellectual
Property Schedule 5.17   Deposit Accounts and Securities Accounts Schedule 5.22
  Licenses, Franchises, Consents and Approvals

 

vi

 

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”), is entered into as of
August 23, 2012, between and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), FORTRESS CREDIT CO LLC, as
administrative agent for the Lenders (in such capacity, “Agent”) and as
arranger, and, on the other hand, HORIZON CREDIT III LLC, a Delaware limited
liability company (“Borrower”) and joined by HORIZON TECHNOLOGY FINANCE
CORPORATION, a Delaware corporation (“Horizon”), and HORIZON TECHNOLOGY FINANCE
MANAGEMENT LLC, a Delaware limited liability company (“Horizon Management”)
solely for the limited purpose of agreeing to and being bound by Section 11.3(b)
and making the representations specifically applicable to them in Section 5 and
the negative covenants specifically applicable to them in Section 7.

 

The parties agree as follows:

 

1.            DEFINITIONS AND CONSTRUCTION.

 

1.1           Definitions. As used in this Agreement, the following terms shall
have the following definitions:

 

“30/360 Basis” means on the basis of a 360-day year consisting of 12 months of
30 days each.

 

“Account” means an account (as that term is defined in the Code).

 

“Account Debtor” means any Person who is obligated under, with respect to, or on
account of, an Account, chattel paper or a General Intangible, or is a debtor
under, or a maker of, a Note Receivable.

 

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

 

“Additional Documents” has the meaning set forth in Section 4.4(c).

 

“Affected Lender” has the meaning set forth in Section 2.11(h).

 

1

 

 

“Affiliate” means, as applied to any Person, any other Person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person. For purposes of this definition,
“control” means the possession, directly or indirectly through one or more
intermediaries, of the power to direct the management and policies of a Person,
whether through the ownership of Stock, by contract, or otherwise; provided,
however, that, in any event: (a) any Person which owns directly or indirectly
20% or more of the Stock having ordinary voting power for the election of
directors or other members of the governing body of a Person or 20% or more of
the partnership, membership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person, (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.

 

“Agent” means Fortress Credit Co LLC, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.

 

“Agent-Related Persons” means Agent together with its Affiliates, officers,
directors, employees, and agents.

 

“Agent’s Account” means an account at a bank designated by Agent from time to
time as the account into which Borrower shall make all payments to Agent for the
benefit of the Lender Group and into which the Lender Group shall make all
payments to Agent under this Agreement and the other Loan Documents; unless and
until Agent notifies Borrower and the Lender Group to the contrary, Agent’s
Account shall be that certain deposit account bearing account number xxxxxx
established at Bank of America, N.A. and maintained by Fortress Credit Co LLC,
and all payments by Borrower or any member of the Lender Group to such deposit
account shall be designated: “Further Credit: Fortress Credit Co LLC, Further
Credit Account 725194.2, Re: Horizon Credit III LLC.”

 

“Agent’s Liens” means the Liens granted by Borrower and its Subsidiaries to
Agent for the benefit of the Lender Group under this Agreement or the other Loan
Documents.

 

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

 

“Application Event” means the occurrence of (a) a failure by Borrower to repay
all of the Obligations in full on the Maturity Date, (b) an Event of Default
described in Sections 8.4 or 8.5, (c) any other Event of Default and the
election of Agent or the Required Lenders to require that payments and, in the
case of this clause (c), proceeds of Collateral be applied pursuant to Section
2.3(f)(iii) or (d) both Robert D. Pomeroy, Jr. and Gerald A. Michaud for any
reason cease to be Chief Executive Officer and President, respectively, of
Horizon and Borrower, or perform the roles customarily performed by each of them
in their respective capacities as Chief Executive Officer and President, and
both such individuals have not been replaced within ninety (90) days by
individuals of like qualifications and experience and acceptable to Agent in its
Permitted Discretion.

 

2

 

 

“Approved Forms” means the standard forms of Note Receivable Documents,
including any loan application, promissory note, loan agreement, lien
instrument, security agreement, guaranty, and related documents used by Horizon
in the conduct of its business with its borrowers, and substantially similar in
scope and content as the forms attached as an exhibit to the Closing
Certificate, which forms shall be in form and substance satisfactory to Agent
(or in the case of control agreements, such standard forms as provided to
Horizon by a bank or financial institution that comply with the Code), together
with such changes and modifications or additions thereto from time to time as
Horizon may approve from time to time in accordance with the Required
Procedures.

 

“Approved Third-Party Lender” means a bank, commercial finance company or other
institutional lender listed on Schedule A-1, any bank, commercial finance
company or other institutional lender that is a Subsidiary of, or a fund
controlled by, a Person listed on Schedule A-1 and that targets the same market
segment of the lending business as Borrower (i.e. in one of the Target
Industries), or any other bank, commercial finance company or other
institutional lender approved by Agent from time to time in its Permitted
Discretion.

 

“Approved Third-Party Originator” means a bank, commercial finance company or
other institutional lender listed on Schedule A-2, any bank, commercial finance
company or other institutional lender that is a Subsidiary of, or a fund
controlled by, a Person listed on Schedule A-2 and that targets the same market
segment of the lending business as such Borrower (i.e. in one of the Target
Industries), or any other bank, commercial finance company or other
institutional lender approved by Agent from time to time in its Permitted
Discretion.

 

“Assignee” has the meaning set forth in Section 14.1(a).

 

“Assignment and Acceptance” means an Assignment and Acceptance substantially in
the form of Exhibit A.

 

“Authorized Person” means (a) with respect to Borrower, any of Robert D.
Pomeroy, Jr., Chief Executive Officer, Gerald A. Michaud, President, or
Christopher M. Mathieu, Chief Financial Officer, or any other individual then
serving as the Chief Executive Officer, President, or Chief Financial Officer of
Borrower and (b) with respect to Horizon, any of Robert D. Pomeroy, Jr., Chief
Executive Officer, Gerald A. Michaud, President, or Christopher M. Mathieu,
Chief Financial Officer, or any other individual then serving as the Chief
Executive Officer, President, or Chief Financial Officer of Horizon, and with
respect to Servicer, any of Robert D. Pomeroy, Jr., Chief Executive Officer,
Gerald A. Michaud, President, or Christopher M. Mathieu, Chief Financial
Officer, or any other individual then serving as the Chief Executive Officer,
President, or Chief Financial Officer of Servicer; provided, that for purposes
of this Agreement, no individual who is an Authorized Person shall cease to be
an Authorized Person, and no individual who is not then an Authorized Person
shall become an Authorized Person, unless and until Agent has received written
notice of such change from Borrower, Horizon or Servicer, as applicable, and in
the case of an individual becoming an Authorized Person such individual has
qualifications and experience substantially similar to the Authorized Person
being replaced and Agent has completed a background check on such proposed new
Authorized Person with the results of such background check being acceptable to
Agent in its Permitted Discretion.

 

3

 

 

“Availability Period” means the period commencing on the Closing Date and ending
on the earliest of (a) the third anniversary of the Closing Date; provided such
date shall automatically be extended to the fourth anniversary of the Closing
Date, so long as on the date of the third anniversary of the Closing Date, no
Default or Event of Default shall have occurred and be continuing, and (b) the
termination of the Commitments pursuant to Section 9.1.

 

“Back-up Servicer” means U.S. Bank, acting in its capacity as successor
Servicer, as set forth in that certain Back-up Servicer Engagement Letter.

 

“Back-up Servicer Engagement Letter” means the letter agreement dated as of
August 6, 2012, between U.S. Bank and Horizon Management.

 

“Back-up Servicer Fees” means the fee payable to the Back-up Servicer in
accordance with the Back-up Servicer Engagement Letter.

 

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

 

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of Borrower has
been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

 

“Board of Directors” means the board of directors (or comparable managers or
managing members) of a Person or any committee thereof duly authorized to act on
behalf of the board of directors (or comparable managers or managing members).

 

“Books” means all of Borrower’s and its Subsidiaries’ now owned or hereafter
acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of Borrower’s and its Subsidiaries’ Records relating to their
business operations or financial condition, and all of their goods or General
Intangibles related to such information).

 

4

 

 

“Borrower” has the meaning set forth in the preamble to this Agreement.

 

“Borrower Collateral” means all of Borrower’s now owned or hereafter acquired
right, title, and interest in and to all property, including, without
limitation, each of the following:

 

(a)          all of its Accounts,

 

(b)          all of its Books,

 

(c)          all of its commercial tort claims, including, without limitation,
the commercial tort claims described on Schedule 5.6(d),

 

(d)          all of its Deposit Accounts, including, without limitation, the
Collection Account and the Lockbox Account,

 

(e)          all of its Equipment,

 

(f)          all of its General Intangibles,

 

(g)          all of its Inventory,

 

(h)          all of its Investment Property (including all of its securities and
Securities Accounts),

 

(i)          all of its Negotiable Collateral, including all of its Notes
Receivable,

 

(j)          all of its Supporting Obligations,

 

(k)          money or other assets of Borrower that now or hereafter come into
the possession, custody, or control of Agent or any Lender, and

 

(l)          the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.

 

5

 

 

“Borrowing” means a borrowing consisting of Loans made on the same day by the
Lenders.

 

“Borrowing Notice” means a notice in the form of Exhibit D.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the State of New York, State
of Minnesota, the State of Illinois or the State of Connecticut, except that if
a determination of a Business Day shall relate to a LIBOR Rate Loan, the term
“Business Day” also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.

 

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

 

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

 

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than two hundred seventy
(270) days from the date of creation thereof and, at the time of acquisition,
having a rating of at least A 1 from S&P or at least P-1 from Moody’s, (d)
certificates of deposit, time deposits, overnight bank deposits or bankers’
acceptances maturing within 1 year from the date of acquisition thereof issued
by any bank organized under the laws of the United States or any state thereof
or the District of Columbia or any United States branch of a foreign bank having
at the date of acquisition thereof combined capital and surplus of not less than
$1,000,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies
the criteria described in clause (d) above, or (ii) any other bank organized
under the laws of the United States or any state thereof so long as the full
amount maintained with any such other bank is insured by the Federal Deposit
Insurance Corporation, (f) repurchase obligations of any commercial bank
satisfying the requirements of clause (d) of this definition or recognized
securities dealer having combined capital and surplus of not less than
$1,000,000,000, having a term of not more than seven (7) days, with respect to
securities satisfying the criteria in clauses (a) or (d) above, (g) debt
securities with maturities of six months or less from the date of acquisition
fully and unconditionally backed by standby letters of credit issued by any
commercial bank satisfying the criteria described in clause (d) above, and (h)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (g) above.

 

6

 

 

“Cash Runway Analysis” means such analytical spreadsheet prepared by the Chief
Credit Officer of Horizon or Horizon Management, reflecting the most recent
qualitative and quantitative analysis of each Account Debtor’s remaining cash
runway, loan to value and compliance with the terms of its loan agreement with
the Borrower.

 

“Change of Control” means any of the following: (a) Horizon ceases to directly
own and control 100% of the outstanding capital Stock of Borrower; (b) Borrower
ceases to directly own and control 100% of the outstanding capital Stock of each
of its Subsidiaries; (c) Horizon or parties designated or appointed by Horizon
cease to be the only Manager(s) of Borrower; (d) any person or group of persons
(within the meaning of the Securities Exchange Act of 1934) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
twenty percent (20%) or more of the issued and outstanding shares of capital
Stock of Horizon having the right to vote for the election of directors of
Horizon under ordinary circumstances; or (e) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Horizon (together with any new directors
whose election by the board of directors of Horizon or whose nomination for
election by the Stockholders of Horizon was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office.

 

“Closing Certificates” means certificates from

 

(a)          an Authorized Person of Borrower, dated as of the Closing Date, in
form and substance satisfactory to Agent, certifying the following: (i) each of
the representations and warranties of Borrower contained in Section 5 of this
Agreement is true and correct in all respects on and as of the Closing Date
(except to the extent any such representation or warranty was expressly made
only as of a specified date, in which case such representation or warranty was
true and correct as of such date); (ii) no event has occurred and is continuing
as of the Closing Date that constitutes a Default or an Event of Default; (iii)
after giving effect to the incurrence of Indebtedness under this Agreement and
the other transactions contemplated by this Agreement, Borrower will be Solvent;
(iv) all tax returns required to be filed by Borrower have been timely filed and
all taxes upon Borrower or its properties, assets, income, and franchises
(including Real Property taxes, sales taxes, and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of a Permitted
Protest or the nonpayment of which could not reasonably be expected to result in
a Material Adverse Change; (v) attached thereto are true, correct and complete
copies of the Required Procedures and the Approved Forms; (vi) attached thereto
are true, correct and complete copies of Borrower’s opening Closing Date balance
sheet; and (vii) as of the Closing Date and after giving effect to the initial
Loan, Borrower has a Tangible Net Worth (based upon the capital contribution by
Horizon of cash or the unfinanced portion of Eligible Notes Receivable) of not
less than $5,000,000;

 

7

 

 

(b)          an Authorized Person of Horizon, dated as of the Closing Date, in
form and substance satisfactory to Agent, certifying the following: (i) all tax
returns required to be filed by Horizon have been timely filed and all taxes
upon Horizon or its properties, assets, income, and franchises (including Real
Property taxes, sales taxes, and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest or
the nonpayment of which could not reasonably be expected to result in a Material
Adverse Change; (ii) as of the Closing Date and after giving effect to the
initial Loan, Horizon has a Tangible Net Worth of not less than $100,000,000;
and (iii) attached thereto are true, correct and complete copies of Horizon’s
unaudited consolidated balance sheet, income statement and statement of cash
flows covering Horizon’s and its Subsidiaries’ operations for its fiscal quarter
ended June 30, 2012 and the fiscal year-to date period ending thereon; and

 

(c)          an Authorized Person of Horizon Management, dated as of the Closing
Date, in form and substance satisfactory to Agent, certifying the following: (i)
as of the Closing Date and after giving effect to the initial Loan, Horizon
Management has a Tangible Net Worth of not less than $500,000, and (ii) attached
thereto are true, correct and complete copies of Horizon Management’s unaudited
consolidated balance sheet, income statement and statement of cash flows
covering Horizon Management’s operations for its fiscal quarter ended June 30,
2012 and the fiscal year-to date period ending thereon.

 

“Closing Date” means the date of this Agreement.

 

“Closing Date Business Plan” means the set of Projections of Borrower and
Horizon for the period from the Closing Date through December 31, 2017, on a
monthly basis for the remainder of 2012 and 2013 and on an annual basis
thereafter, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.

 

“Closing Date Commitment” means $75,000,000.

 

“Code” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided, however, that in the event that, by reason of
mandatory provisions of law, any or all of the perfection, priority, or remedies
with respect to Agent’s Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of New York, the term “Code” shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such perfection, priority, or remedies.

 

“Collateral” means the Borrower Collateral and all other assets and interests in
assets and proceeds thereof now owned or hereafter acquired by Borrower or its
Subsidiaries in or upon which a Lien is granted under any of the Loan Documents.

 

8

 

 

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in any Collateral, in each case, in form and substance satisfactory to Agent.

 

“Collateral Custodian” means U.S. Bank National Association, solely its capacity
as the Person appointed as the collateral custodian for Agent pursuant to the
Sale and Servicing Agreement to hold the original Notes Receivable and certain
other documents to be delivered under this Agreement or the Sale and Servicing
Agreement for Agent’s benefit, or any replacement for such Person acceptable to
Agent and, if there is no Event of Default that has occurred and is continuing,
Borrower, or otherwise appointed pursuant to the terms of the Sale and Servicing
Agreement.

 

“Collateral Custodian Fee Letter” has the meaning set forth in the Sale and
Servicing Agreement.

 

“Collateral Custodian Fees” means any fees payable to the Collateral Custodian
in accordance with the Sale and Servicing Agreement and the Collateral Custodian
Fee Letter.

 

“Collection Account” means account number xxxxx in the name of Borrower,
established at the Collection Account Bank, pledged to, and subject to a Control
Agreement in favor of Agent, to which all Collections payable to Borrower in
connection with Notes Receivable owed by an Account Debtor shall be deposited
from the Lockbox Account and which is restricted so that no funds may be
transferred or otherwise withdrawn from such Account without consent of Agent or
as otherwise permitted in the Loan Documents.

 

“Collection Account Agreement” means the Control Agreement by and among
Borrower, Agent and the Collection Account Bank with respect to the Collection
Account, in form and substance reasonably satisfactory to Agent, as modified,
amended supplemented or restated, from time to time.

 

“Collection Account Bank” means U.S. Bank or such other commercial bank
acceptable to Agent in its Permitted Discretion.

 

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including proceeds of cash sales, rental proceeds, and tax refund
payments and prepayments of principal, interest, fees, penalties, payments under
policies of title, hazard or other insurance, payments under supporting
obligations and other payments paid with respect to or in connection with Notes
Receivable or Note Receivable Documents).

 

“Commercial Tort Claim Assignment” has the meaning set forth in Section 4.4(b).

 

9

 

 

“Commitment” means, with respect to each Lender, the aggregate commitment of
such Lender to make Loans and, with respect to all Lenders, the aggregate
commitments of all Lenders to make Loans, in each case as such Dollar amounts
are set forth beside such Lender’s name under the applicable heading on Schedule
C, as permanently reduced on a dollar for dollar basis by the amount of the
Loans made from time to time, or in the Assignment and Acceptance pursuant to
which such Lender became a Lender hereunder, as such amounts may be reduced or
increased from time to time pursuant to assignments made in accordance with the
provisions of Section 14.1. The aggregate original maximum amount of the
Commitments is equal to the Closing Date Commitment.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C executed and delivered to Agent by an Authorized Person of Borrower or
an Authorized Person of Horizon, as applicable.

 

“Confidential Information” has the meaning set forth in Section 17.9(a).

 

“Control Agreement” means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrower or one of its
Subsidiaries, as applicable, Agent, and the applicable securities intermediary
(with respect to a Securities Account) or bank (with respect to a Deposit
Account).

 

“Credit Protection Laws” means all federal, state and local laws in respect of
the business of extending credit to borrowers, including without limitation, the
Truth in Lending Act (and Regulation Z promulgated thereunder), Equal Credit
Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act,
Gramm-Leach-Bliley Financial Privacy Act, Real Estate Settlement Procedures Act,
Home Mortgage Disclosure Act, Fair Housing Act, antidiscrimination and fair
lending laws, laws relating to servicing procedures or maximum charges and rates
of interest, and other similar laws, each to the extent applicable, and all
applicable regulations in respect of any of the foregoing.

 

“Data Tape” means a tape or other electronic file on each Note Receivable and
the collateral therefor as of the most recent month end in a sortable format
(which tape may be a roll forward of the Data Tape provided as of the previous
month end indicating what data has been added, deleted or otherwise changed),
which shall include, but not be limited to, the Account Debtor(s), each Account
Debtor’s address (street, city, state and zip code), contact name and telephone
number, related Account Debtors, industry sector, guarantors (if any), equity
sponsors (if any), credit rating, commitment amount, outstanding amount
(advances and other usage), commencement date, maturity date, participation
status, contractual interest rate basis and margin (and any applicable floor),
current interest rate, payment type (interest only, principal plus interest,
principal and interest, interest-only period, step-up amortization, etc),
payment method if other than charge to loan, payment frequency, last payment
date, next payment date, days past due, collection status (delinquent,
defaulted, bankrupt, legal, etc.), current payment amount (interest and
principal components if term loan), collections received for the period,
advances made for the period, each applicable financial covenant and compliance
therewith, modification history (number, type, date, result, etc.), and whether
such Note Receivable is not approved, documented, managed and otherwise in
conformance with the Required Procedures.

 

10

 

 

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

 

“Default Rate” means a rate per annum equal to the LIBOR Rate plus 9.0%.

 

“Defaulted Note Receivable” means any Note Receivable (a) with respect to which
any payment thereunder remains outstanding and unpaid, in whole or in part, for
more than ninety (90) days past the date it became due and payable according to
the original face and tenor of such Note Receivable, (b) that is secured by
Collateral that is subject to judicial or non-judicial proceedings for the
foreclosure of Borrower’s lien therein, or has been foreclosed or conveyed or
transferred by deed-in-lieu-of-foreclosure or assignment-in-lieu-of-foreclosure,
(c) with respect to which the Account Debtor is subject to an Insolvency
Proceeding or is not Solvent, (d) that has been charged-off or deemed
non-collectible by Borrower or (e) that has been extended, amended, modified or
supplemented in any manner not in accordance with the Required Procedures or
which a provision therein has been waived in any manner not in accordance the
Required Procedures.

 

“Delinquent Note Receivable” means any Note Receivable with respect to which any
payment thereunder remains outstanding and unpaid, in whole or in part, for more
than sixty (60) days, but not more than ninety (90) days, past the date it
became due and payable according to the original face and tenor of such Note
Receivable or as extended in accordance with the Required Procedures.

 

“Deposit Account” means any deposit account (as that term is defined in the
Code).

 

“Designated Account” means account number xxxxxx of Horizon maintained with the
Designated Account Bank, or such other deposit account of Horizon (located
within the United States) that has been designated as such, in writing, by
Borrower to Agent.

 

“Designated Account Bank” means Bank of America, N.A., a national banking
association, or such other commercial bank (located within the United States),
acceptable to Agent in its Permitted Discretion, that has been designated as
such, in writing, by Borrower to Agent.

 

“Dollars” or “$” means United States dollars.

 

11

 

 

“Eligible Asset Balance” means, the sum of (a) Unrestricted Cash in the
Collection Account, plus (b) 100% of the outstanding principal balance of the
Eligible Notes Receivable; provided, however, that for purposes of this
definition the adjustments and limitations set forth in clauses (1) through (7)
of the definition of Eligible Notes Receivable shall not apply during the twelve
(12) months immediately following the Closing Date and any time after the fourth
anniversary of the Closing Date.

 

“Eligible Notes Receivable” means those Notes Receivable that comply with each
of the representations and warranties respecting Eligible Notes Receivable made
in the Loan Documents, and that are not excluded as wholly or partially
ineligible by virtue of one or more of the excluding criteria set forth below;
provided, however, that such criteria may be modified from time to time by Agent
in Agent’s Permitted Discretion; provided, further, that so long as no Event of
Default has occurred and is continuing, Agent shall first notify and attempt to
discuss with Borrower any such modification that Agent proposes to make to such
criteria unless Agent, in its Permitted Discretion, believes that exigent
circumstances justify the immediate modification of such criteria. Eligible
Notes Receivable shall not include all or any portion of a Note Receivable
(unless specifically determined to be eligible by Agent following a review
thereof on a case-by-case basis) if:

 

(a)          such Note Receivable is not approved, documented, managed and
otherwise in conformance with the Required Procedures;

 

(b)          such Note Receivable has been extended or otherwise modified, or
any payment or other material requirements relating thereto have been waived,
without the prior written consent of Agent; provided, however, that such Note
Receivable may have been extended or otherwise modified, or a material
requirement relating thereto waived, in accordance with the Required Procedures
not more than one time during any 12-month period;

 

(c)          if, at the time of its initial funding, such Note Receivable
represents a loan made to an Account Debtor in which venture capital firms,
private equity groups or other institutional investors meeting Borrower’s
underwriting requirements under the Required Procedures in effect upon
Borrower’s acquisition thereof did not have an aggregate equity ownership of at
least ten percent (10%) on a fully-diluted basis; provided, however, that such
threshold shall not apply if the Account Debtor’s Stock is traded on a major
United States stock exchange;

 

(d)          such Note Receivable has a stated coupon interest rate of less than
8.25% per annum payable in cash and/or an “all-in interest rate” including,
without limitation, the stated coupon interest rate, commitment fees and final
payments, of less than 10.0% per annum;

 

(e)          such Note Receivable has a remaining term of more than forty-eight
(48) months;

 

12

 

 

(f)          such Note Receivable is a “debtor-in-possession” loan or other loan
to an Account Debtor that is subject to an Insolvency Proceeding, is not
Solvent, or has gone out of business;

 

(g)          such Note Receivable is not evidenced by the Approved Forms, or
other documentation acceptable to Agent in its Permitted Discretion;

 

(h)          such Note Receivable does not represent a valid and binding
obligation owed to Borrower and enforceable in accordance with its terms for the
amount outstanding thereof;

 

(i)          such Note Receivable was originated by a lender other than
Borrower, Horizon or an Approved Third-Party Originator;

 

(j)          Borrower does not own the full and undivided interest in such Note
Receivable;

 

(k)          such Note Receivable represents a loan made as part of a syndicated
or other co-lending arrangement with one or more third-party lenders, unless (i)
such syndicated or co-lending arrangement is subject to intercreditor or other
agreements consistent with the Required Procedures and (ii) each other lender is
an Approved Third-Party Lender (a syndicated or other co-lending arrangement
meeting each of such tests being an “Eligible Co-Lending Arrangement”);

 

(l)          such Note Receivable has not been originated in accordance with, or
does not comply in all respects with, all applicable federal, state and local
laws and regulations, including applicable usury and Credit Protection Laws;

 

(m)          such Note Receivable does not require current cash payments of
interest on at least a quarterly basis;

 

(n)          such Note Receivable is a term loan that has scheduled principal
payments beginning later than twenty-four (24) months after its origination;

 

(o)          such Note Receivable is a Delinquent Note Receivable or a Defaulted
Note Receivable;

 

13

 

 

(p)          the primary Account Debtor, or the owner of the majority of the
collateral or the producer of the majority of the cash flow that is the primary
basis for the credit decision to make the loan evidenced by such Note Receivable
(i) does not maintain its chief executive office or principal place of business
in the United States or Canada, or (ii) is not organized under the laws of the
United States or any state, or Canada or any province thereof;

 

(q)          such Note Receivable is not payable in Dollars;

 

(r)          the Account Debtor with respect to such Note Receivable is (i) an
Affiliate of Horizon, Horizon Management, or Borrower, (ii) a holder of five
percent (5%) or more of the Stock of Horizon, Horizon Management, or Borrower,
(iii) an employee or agent of Horizon, Horizon Management, or Borrower, (iv) a
member, employee or agent of any Affiliate of Horizon, Horizon Management, or
Borrower, or (v) a member of the family of any of the foregoing;

 

(s)          such Note Receivable is owed by an Account Debtor that (i) was
rated lower than a “3” in accordance with the Required Procedures when acquired
by Borrower, or (ii) is rated a “1” in accordance with the Required Procedures;

 

(t)          such Note Receivable represents a Real Estate Loan;

 

(u)          the Account Debtor is not in a Target Industry, unless approved by
Agent in its sole discretion;

 

(v)         the Account Debtor with respect to such Note Receivable is either
(i) the United States or any department, agency, or instrumentality of the
United States, (ii) any state of the United States, or (iii) the government of
any foreign country or sovereign state, or of any state, province, municipality,
or other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof;

 

(w)          the Account Debtor with respect to such Note Receivable is also a
creditor of Borrower, or has made a refundable deposit (not held in a separate
escrow account), or has or has asserted a right of setoff, or has disputed its
obligation to pay all or any portion of the Note Receivable, but only to the
extent of such deposit, claim, right of setoff, or dispute from time to time in
effect;

 

(x)          the Collateral Custodian is not then in possession of each of the
Required Asset Documents, except as otherwise permitted under the Sale and
Servicing Agreement; provided that if Borrower is funding the acquisition of
such Note Receivable with the proceeds of Loans being requested with respect to
such Note Receivable, then such Note Receivable would not be ineligible solely
by reason of this clause (x) if the Collateral Custodian and Agent are in
possession of PDF copies of each of the Required Asset Documents and the
originals are delivered to the Collateral Custodian no later than five (5)
Business Days thereafter;

 

14

 

 

(y)          such Note Receivable is not subject to a valid and perfected
first-priority Lien of Agent.

 

(z)          such Note Receivable is, includes or is convertible into stock,
warrants or interests treated as equity for United States federal income tax
purposes; or

 

(aa)         such Note Receivable provides for payments that are subject to
withholding tax, unless the Account Debtor is required to make “gross-up”
payments that cover the full amount of such withholding tax on an after-tax
basis.

 

On each date of determination of the amount of Eligible Notes Receivable, after
determining a preliminary amount of Eligible Notes Receivable by applying the
foregoing exclusions (the “Preliminary Eligible Notes Receivable”), each of the
concentration limits in the following clauses (1) through (7) below shall be
applied, using the aggregate amount of Preliminary Eligible Notes Receivable to
determine ineligible portions, if any, and thus determine the final aggregate
amount of Eligible Notes Receivable on the date of determination. Eligible Notes
Receivable shall not include the following (unless specifically determined to be
an Eligible Note Receivable by Agent following a review thereof on a
case-by-case basis):

 

(1)         that portion of Preliminary Eligible Notes Receivable that would
cause the aggregate outstanding principal amount of Preliminary Eligible Notes
Receivable that require cash payments of interest less frequently than on a
monthly basis, to exceed twenty-five percent (25%) of the aggregate outstanding
principal amount of all Preliminary Eligible Notes Receivable at such time;

 

(2)         that portion of Preliminary Eligible Notes Receivable that would
cause the aggregate outstanding principal amount of Preliminary Eligible Notes
Receivable that are revolving loans to exceed twenty-five percent (25%) of the
aggregate outstanding principal amount of all Preliminary Eligible Notes
Receivable at such time;

 

(3)         that portion of Preliminary Eligible Notes Receivable that would
cause the aggregate outstanding principal amount of Eligible Notes Receivable to
Account Debtors in the same Target Industry to exceed the following percentages
of the aggregate outstanding principal amount of all Preliminary Eligible Notes
Receivable at such time: (i) with respect to the Target Industry of Technology,
seventy-five percent (75%); (ii) with respect to the Target Industry of Life
Science, seventy-five percent (75%); (iii) with respect to the Target Industry
of Healthcare Information and Services, fifty percent (50%); and (iv) with
respect to the Target Industry of Cleantech, fifty percent (50%);

 

15

 

 

(4)         that portion of Preliminary Eligible Notes Receivable that would
cause the aggregate outstanding principal amount of Preliminary Eligible Notes
Receivable owed by the same Account Debtor and any of its Affiliates (other than
Persons that would be Affiliates solely because of a common Lead Investor), to
exceed fifteen percent (15%) of the aggregate outstanding principal amount of
all Preliminary Eligible Notes Receivable at such time;

 

(5)         that portion of Preliminary Eligible Notes Receivable that would
cause the aggregate outstanding principal amount of Preliminary Eligible Notes
Receivable that are Eligible Subordinated Notes Receivable, to exceed
seventy-five percent (75%) of the aggregate outstanding principal amount of all
Preliminary Eligible Notes Receivable at such time;

 

(6)         that portion of Preliminary Eligible Notes Receivable permitted
under clause (b) above that would cause the aggregate outstanding principal
amount of Preliminary Eligible Notes Receivable that have been extended or
otherwise modified, or have had any requirements relating thereto waived as a
result of the Account Debtor’s material financial underperformance, distress or
material default, in each case in accordance with the Required Procedures, to
exceed ten percent (10%) of the aggregate outstanding principal amount of all
Preliminary Eligible Notes Receivable at such time; provided that the foregoing
limitation shall not apply to any Rehabilitated Note Receivable;

 

(7)         that portion of Preliminary Eligible Notes Receivable that would
cause the aggregate outstanding principal amount of Preliminary Eligible Notes
Receivable consisting of (i) Eligible Co-Lending Arrangements under clause (k)
above, where in either case Borrower does not retain the right at all times to
effectively control actions with respect to such Note Receivable through
majority ownership, contractual agency rights or other contractually conveyed
powers, to exceed twenty-five percent (25%) of the aggregate outstanding
principal amount of all Preliminary Eligible Notes Receivable at such time.

 

“Eligible Subordinated Note Receivable” means any Eligible Note Receivable where
Borrower’s Liens to secure payment of such Note Receivable are (i) not first
priority Liens on property of the Account Debtor and (ii) subject to only
customary permitted liens and the lien of the senior lender securing the senior
credit facility, so long as Borrower and senior lender have entered into an
intercreditor agreement providing for first priority liens in favor of the
senior lender or its trustee, agent or representative and second priority liens
in favor of Borrower.

 

“Eligible Transferee” means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having total assets in excess of
$500,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $500,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$500,000,000, (d) any Affiliate (other than individuals) of a pre-existing
Lender, (e) so long as no Default or Event of Default has occurred and is
continuing, any other Person approved by Agent and Borrower (which approval of
Borrower shall not be unreasonably withheld, delayed, or conditioned and, if not
granted or rejected within five (5) Business Days of notice to Borrower will be
deemed to have been granted), and (f) during the continuation of a Default or an
Event of Default, any other Person approved by Agent.

 

16

 

 

“Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of Borrower, its Subsidiaries, or any of their predecessors in interest, (b)
from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by Borrower, its Subsidiaries, or
any of their predecessors in interest.

 

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Borrower or its Subsidiaries, relating to the environment, the effect of the
environment on employee health or safety, or Hazardous Materials, in each case
as amended from time to time.

 

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel,
experts, or consultants, and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, or Remedial Actions required, by any Governmental Authority or any third
party, and which relate to any Environmental Action.

 

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

 

“Equipment” means all equipment (as that term is defined in the Code), including
machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), computer hardware, tools, parts and goods (other
than consumer goods, farm products, or Inventory), wherever located, including
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

 

17

 

 

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Borrower or its
Subsidiaries under IRC section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower or its Subsidiaries under IRC section 414(c), (c) solely
for purposes of section 302 of ERISA and section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries are a member under IRC section 414(m),
or (d) solely for purposes of section 302 of ERISA and section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or its Subsidiaries under IRC section 414(o).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, upon Borrower or any ERISA Affiliate.

 

“Event of Default” has the meaning set forth in Section 8.

 

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

 

“Excluded Taxes” means, with respect to Agent, any Lender or any other recipient
of any payment to be made by or on account of any obligation of Borrower
hereunder or under any other Loan Document, (a) any taxes imposed on or measured
by its net income, branch profits taxes and franchise taxes imposed on it in
lieu of net income taxes by the jurisdiction (or any political subdivision
thereof) in each case (i) under the Laws of which such recipient is organized or
in which such recipient has its principal office or, in the case of a Lender, in
which its applicable lending office is located or (ii) that are Other Connection
Taxes; (b) any tax imposed pursuant to FATCA, to the extent that such taxes
would not have been imposed but for the failure of Agent or such Lender, as the
case may be, (i) to comply with the reporting and other requirements under FATCA
or (ii) to provide, upon reasonable demand from Borrower or Agent, as the case
may be, and at the time or times prescribed by applicable Law, any form,
document or certification required under FATCA which, if provided, would
establish that such payment is exempt from withholding under FATCA; and (c) in
the case of a Lender (other than an assignee pursuant to a request of Borrower
under Section 2.11(h)) any United States withholding taxes imposed on amounts
payable to such Lender under any Loan Document (i) pursuant to a Law in effect
at the time such Lender becomes a party to this Agreement or changes its place
of organization (or designates a new lending office) or (ii) that are
attributable to such Lender’s failure to comply with Section 2.11(a)(v), except
to the extent that such Lender (or its assignor, if any) was entitled, at the
time of an assignment, a change in such Lender’s place of organization, or the
designation of a new lending office, to receive additional amounts from Borrower
with such respect to such withholding taxes under Section 2.11(a)(i).

 

18

 

 

“FATCA” means sections 1471 through 1474 of the IRC, as of the date of this
Agreement, any amended or successor version that is substantively comparable and
not materially more onerous to comply with and any regulations promulgated
thereunder or official interpretations thereof.

 

“Fee Letter” means that certain Fee Letter, dated as of even date herewith,
between Borrower and Agent, in form and substance satisfactory to Agent.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, 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 on the next
succeeding 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 Agent from three
Federal funds brokers of recognized standing selected by it.

 

“FEIN” means Federal Employer Identification Number.

 

“Funding Date” means the date on which a Borrowing occurs.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied; provided, however, that solely
for purposes of calculating Tangible Net Worth as required hereunder or pursuant
to the Sale and Servicing Agreement, such calculations relative to liabilities
shall be made without giving effect to Statement of Financial Accounting
Standards No. 159.

 

“General Intangibles” means all general intangibles (as that term is defined in
the Code), including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trade secrets, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims.

 

19

 

 

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, formation or organization, bylaws, partnership
agreement, operating or limited liability company agreement, or other
organizational documents of such Person.

 

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.

 

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable Laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

 

“Hedge Agreement” means a “swap agreement” as that term is defined in Section
101(53B)(A) of the Bankruptcy Code.

 

“Hedge Provider” means the provider of a Hedge Agreement to Borrower.

 

“Holdout Lender” has the meaning set forth in Section 15.2(a).

 

“Horizon” has the meaning set forth in the preamble to this Agreement.

 

“Horizon Management” has the meaning set forth in the preamble to this
Agreement.

 

“Horizon-Related Persons” means Horizon and Horizon Management together with
their Affiliates, officers, directors, employees, and agents.

 

20

 

 

“Indebtedness” as to any Person means (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other
financial products, (c) all obligations of such Person as a lessee under Capital
Leases, (d) all obligations or liabilities of others secured by a Lien on any
asset of such Person, irrespective of whether such obligation or liability is
assumed, (e) all obligations of such Person to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices), (f) all obligations
of such Person owing under Hedge Agreements (which amount shall be calculated
based on the amount that would be payable by such Person if the Hedge Agreement
were terminated on the date of determination), and (g) any obligation of such
Person guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation
of any other Person that constitutes Indebtedness under any of clauses (a)
through (f) above. For purposes of this definition, (i) the amount of any
Indebtedness represented by a guaranty or other similar instrument shall be the
lesser of the principal amount of the obligations guaranteed and still
outstanding and the maximum amount for which the guaranteeing Person may be
liable pursuant to the terms of the instrument embodying such Indebtedness, and
(ii) the amount of any Indebtedness described in clause (d) above shall be the
lower of the amount of the obligation and the fair market value of the assets of
such Person securing such obligation.

 

“Indemnified Liabilities” has the meaning set forth in Section 11.3.

 

“Indemnified Person” has the meaning set forth in Section 11.3.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other, state, federal or
foreign bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with creditors,
or proceedings seeking reorganization, arrangement, or other similar relief.

 

“Intangible Assets” means, with respect to any Person, that portion of the book
value of all of such Person’s assets that would be treated as intangibles under
GAAP.

 

“Interest Collections” means payments of accrued interest, fees and any other
amounts received in respect of the Notes Receivable (including, without
limitation, gains and proceeds of any Warrant Asset (as defined in the Sale and
Servicing Agreement)), other than principal payments.

 

21

 

 

“Interest Period” means, with respect to any Loan, (i) in the case of the
initial Interest Period with respect to such Loan, the period commencing on the
date of the making of such Loan and ending on the last Business Day of the
then-current month, and (ii) in the case of any subsequent Interest Period with
respect to such Loan, the one-month period commencing on the last day of the
immediately preceding Interest Period for such Loan and ending on the last
Business Day of the next succeeding calendar month ending thereafter.

 

“Inventory” means inventory (as that term is defined in the Code).

 

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, or capital contributions (excluding (a) commission, travel, and
similar advances to officers and employees of such Person made in the ordinary
course of business, and (b) bona fide Accounts arising in the ordinary course of
business consistent with past practice), purchases or other acquisitions of
Indebtedness, Stock or all or substantially all of the assets of such Person (or
of any division or business line of such other Person), and any other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.

 

“Investment Property” means investment property (as that term is defined in the
Code).

 

“IRC” means the Internal Revenue Code of 1986, as amended.

 

“IRS” means the United States Internal Revenue Service.

 

“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority.

 

“Lead Investor” means, with respect to any Account Debtor, the venture capital
firm or other institutional investor that purchased the most Stock of such
Account Debtor in the Account Debtor’s most recently completed round of equity
financing.

 

“Lender” has the meaning set forth in the preamble to the Agreement and shall
also include any other Person made a party to this Agreement pursuant to the
provisions of Section 14.1, and “Lenders” means each of the Lenders or any one
or more of them.

 

“Lender Group” means each of the Lenders and Agent, or any one or more of them.

 

22

 

 

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by Horizon, Borrower or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by the
Lender Group, (b) out-of-pocket fees or charges paid or incurred by Agent in
connection with the Lender Group’s transactions with Horizon, Borrower or its
Subsidiaries under any of the Loan Documents, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement or the Fee Letter), real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) Agent’s customary fees
and charges (as adjusted from time to time) with respect to the disbursement of
funds (or the receipt of funds) to or for the account of Borrower (whether by
wire transfer or otherwise), together with any out-of-pocket costs and expenses
incurred in connection therewith, (d) out-of-pocket charges paid or incurred by
Agent resulting from the dishonor of checks payable by or to Borrower or any of
its Affiliates, (e) reasonable out-of-pocket costs and expenses paid or incurred
by the Lender Group to correct any default or enforce any provision of the Loan
Documents, or during the continuance of an Event of Default, in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated, (f) reasonable
out-of-pocket audit fees and expenses (including travel, meals, and lodging) of
Agent related to any inspections or audits to the extent of the fees and charges
(and up to the amount of any limitation) contained in this Agreement or the Fee
Letter, (g) reasonable out-of-pocket costs and expenses of third party claims or
any other suit paid or incurred by the Lender Group in enforcing or defending
the Loan Documents or in connection with the transactions contemplated by the
Loan Documents or the Lender Group’s relationship with Horizon, Borrower or any
of its Subsidiaries, (h) Agent’s reasonable costs and expenses (including
reasonable attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering (including travel, meals, and lodging), amending the
Loan Documents, and (i) Agent’s and each Lender’s reasonable costs and expenses
(including reasonable attorneys, accountants, consultants, and other advisors
fees and expenses) incurred in terminating, enforcing (including attorneys,
accountants, consultants, and other advisors fees and expenses incurred in
connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning Horizon, Borrower or any of its Subsidiaries or in exercising rights
or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.

 

“Lender Group Representatives” has the meaning set forth in Section 17.9(a).

 

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, and the officers, directors, employees, and
agents of such Lender.

 

“Liabilities” has the meaning set forth in Section 14.1(j).

 

23

 

 

“LIBOR Rate” means for any Interest Period with respect to any Loan, the greater
of (a) one percent (1.00%) per annum, and (b) the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) equal to the rate published by
Bloomberg (or, if such rate is not available as published by Reuters) as
one-month LIBOR on the date which is two Business Days prior to the first day of
such Interest Period. In the event that such rate does not appear as provided
above, the LIBOR Rate for the purposes of this definition shall be determined by
reference to such other comparable publicly available service for displaying
one-month LIBOR as selected by an agreement between Borrower and Agent. The
LIBOR Rate for any Loan with an initial Interest Period that is less than a full
calendar month in duration shall be calculated on the basis of the one-month
LIBOR in effect on the date which is two Business Days prior to the requested
date for the making of such Loan and shall be recalculated based on the
one-month LIBOR on the date which is two Business Days prior to the first day of
the immediately succeeding calendar month.

 

“LIBOR Rate Loan” means each portion of a Loan that bears interest at a rate
determined by reference to the LIBOR Rate.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

 

“Loan Documents” means this Agreement, the Notes, the Closing Certificates, the
Control Agreements, the Sale and Servicing Agreement, the Fee Letter, the
Collateral Custodian Fee Letter, the Back-up Servicer Engagement Letter, the
Officers’ Certificates, any note or notes executed by Borrower in connection
with this Agreement and payable to a member of the Lender Group, and any other
agreement entered into, now or in the future, by Horizon, Borrower or any of its
Subsidiaries and the Lender Group in connection with this Agreement (excluding
Hedge Agreements).

 

“Loans” has the meaning set forth in Section 2.1(a).

 

“Lockbox Account” means deposit account XXXXXXXXXXXX with lockbox service
(lockbox number XXXXXX) in the name of Borrower established at the Lockbox Bank,
pledged to, and subject to a Control Agreement in favor of Agent, which causes
the depositary bank to acknowledge the Lien of Agent granted hereunder and
irrevocably instructs the depositary bank to wire all amounts collected therein
in accordance with Section 5.01(c) of the Sale and Servicing Agreement.

 

“Lockbox Bank” has the meaning set forth in the Sale and Servicing Agreement.

 

24

 

 

“Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of Borrower and its Subsidiaries, taken as a whole, or Horizon and
its Subsidiaries, taken as a whole, or Horizon Management, (b) a material
impairment of the ability of Horizon, Horizon Management, Borrower or their
respective Subsidiaries to perform their obligations under the Loan Documents to
which they are parties or of the Lender Group’s ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
validity, enforceability or priority of the Agent’s Liens with respect to the
Collateral other than as a result of an action or failure to act on the part of
Agent.

 

“Maturity Date” means the third anniversary of this agreement; provided such
date shall automatically be extended up to two times, in each case for one year,
so long as on the date of such extension, no Default or Event of Default shall
have occurred and be continuing.

 

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

 

“Negotiable Collateral” means letters-of-credit, letter of credit rights,
instruments, promissory notes, drafts, documents, and chattel paper (including
electronic chattel paper and tangible chattel paper).

 

“Note” means a promissory note made by Borrower in favor of a Lender evidencing
Loans made by such Lender, substantially in the form of Exhibit E hereto.

 

“Note Receivable” means a promissory note evidencing a commercial loan made or
purchased by Borrower in accordance with the Required Procedures and secured by
a Lien on property owned by the maker of such note; provided however, that on
any date of determination, in the case of a revolving loan, only the outstanding
principal amount at such time shall be a “Note Receivable”.

 

“Note Receivable Documents” means, with respect to any Note Receivable, the Note
Receivable, any loan agreement, note purchase agreement, indenture or similar
agreement relating to the Note Receivable, any material collateral documents
(including without limitation, any security agreements, pledge agreements,
control agreements, mortgages, assignment agreements, pledged stock and pledge
notes, any other agreement granting a lien or necessary to grant a lien, or any
other material instruments governing or relating to collateral) and all other
material loan or collateral documentation executed or delivered in connection
therewith.

 

25

 

 

“Obligations” means all loans (including the Loans), debts, principal, interest
(including any interest that accrues after the commencement of an Insolvency
Proceeding or would have accrued but for the commencement of such Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such Insolvency Proceeding), premiums, liabilities, obligations
(including indemnification obligations), fees (including the fees provided for
in the Fee Letter), Lender Group Expenses (including any fees or expenses that
accrue after the commencement of an Insolvency Proceeding or would have accrued
but for the commencement of such Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), guaranties, and all covenants and duties of any other kind and
description owing by Borrower to the Lender Group pursuant to or evidenced by
this Agreement or any of the other Loan Documents and irrespective of whether
for the payment of money, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, and including all
interest not paid when due and all other expenses or other amounts that Borrower
is required to pay or reimburse by the Loan Documents or by law or otherwise in
connection with the Loan Documents. Any reference in the Agreement or in the
Loan Documents to the Obligations shall include all or any portion thereof and
any extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.

 

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

 

“Originating Lender” has the meaning set forth in Section 14.1(e).

 

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

 

“Other Taxes” has the meaning set forth in Section 2.11(a).

 

“Overcollateralization Ratio” means, as of any date of determination, the amount
(expressed as a percentage) calculated by dividing (a) the Eligible Asset
Balance at such time by (b) the outstanding principal amount of the Loans at
such time.

 

“Overcollateralization Ratio Certificate” means a certificate in the form of
Exhibit B.

 

“Participant” has the meaning set forth in Section 14.1(e).

 

26

 

 

“Participant Register” has the meaning set forth in Section 14.1(i).

 

“Patriot Act” has the meaning set forth in Section 5.26.

 

“Payment Date”: The fifteenth day of each calendar month, or if any such day is
not a Business Day, the first Business Day following such day, commencing on
September 15, 2012.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Borrower or any
ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.

 

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

 

“Permitted Dispositions” means (a) sales or other dispositions of Equipment that
is substantially worn, damaged, or obsolete in the ordinary course of business,
(b) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, (c) the
licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business, (d) sales
of Notes Receivable to Horizon permitted under the Sale and Servicing Agreement,
(e) sales of collateral securing a Note Receivable, without recourse to
Borrower, in connection with a foreclosure or similar proceeding following a
default under the Note Receivable secured by such collateral, for a cash
purchase price of not less than the fair market value of such collateral to a
person that is not an Affiliate of Borrower or sales of secured property to
Servicer or its Affiliates to the extent permitted by Section 4.05 of the Sale
and Servicing Agreement and (f) sales of Real Estate Owned without recourse to
Borrower, for a cash purchase price of not less than the fair market value of
such Real Estate Owned, to a person that is not an Affiliate of Borrower.

 

“Permitted Investments” means (a) Investments in cash and Cash Equivalents, (b)
Investments in negotiable instruments for collection, (c) commercial loans
evidenced by a Note Receivable made in the ordinary course of business and
related equity investments received or made in accordance with the Required
Procedures, (d) Investments received in settlement of amounts due to Borrower or
any of its Subsidiaries effected in the ordinary course of business or owing to
Borrower or any of its Subsidiaries as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of Borrower or its Subsidiaries, and (e) Real Estate Owned.

 

27

 

 

“Permitted Liens” means (a) Liens granted to, or for the benefit of, Agent, to
secure the Obligations, (b) Liens for unpaid taxes or assessments that either
(i) are not yet delinquent, (ii) are being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP, or (iii) do not constitute an Event of Default hereunder
and are the subject of Permitted Protests, (c) the interests of lessors under
operating leases, (d) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests, (e) Liens on amounts
deposited in connection with obtaining worker’s compensation or other
unemployment insurance, (f) Liens on amounts deposited in connection with the
making or entering into of bids, tenders, or leases in the ordinary course of
business and not in connection with the borrowing of money, (g) Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business, (h) Liens resulting from any
judgment or award that is not an Event of Default hereunder, (i) with respect to
any Real Property, easements, covenants, restrictions, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof, and (j) rights of setoff imposed by law upon deposit of cash
and cash equivalents in favor of banks or other depository institutions incurred
in the ordinary course of business in deposit accounts maintained with such bank
or depository institution to the extent permitted under this Agreement.

 

“Permitted Protest” means the right of Borrower or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), taxes, or
rental payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by Borrower or any of
its Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent’s Liens.

 

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

 

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

 

“Principal Collections” means payments of principal received in respect of the
Notes Receivable that result in a reduction of the outstanding balance of such
Notes Receivable.

 

28

 

 

“Principal Withdrawal Request” means a request in the form of Exhibit F.

 

“Projections” means, with respect to any Person, such Person’s forecasted (a)
balance sheets, (b) profit and loss statements, and (c) cash flow statements (if
applicable), all prepared on a basis consistent with such Person’s historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.

 

“Pro Rata Share” means, as of any date of determination, with respect to all
matters as to a particular Lender (including the indemnification obligations
arising under Section 16.7), the percentage obtained by dividing (a) such
Lender’s Commitment then in effect plus the aggregate outstanding principal
amount of such Lender’s Loans by (ii) the aggregate amount of all of the
Lenders’ Commitments then in effect and all of the outstanding principal amount
of Loans of the Lenders.

 

“Real Estate Loan” means a Note Receivable that is secured by a Lien on Real
Property where material value is attributed to such Real Property and relied
upon in the underwriting of such Note Receivable.

 

“Real Estate Owned” means Real Property that secured a Note Receivable and was
acquired by Borrower in connection with a foreclosure, deed-in-lieu of
foreclosure or other similar process in which Borrower took legal title to such
Real Property following a default under such Note Receivable.

 

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by any Person, and the improvements thereto.

 

“Record” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.

 

“Register” has the meaning set forth in Section 14.1(h).

 

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

 

“Rehabilitated Note Receivable” means any Eligible Note Receivable (a) that was
previously extended or otherwise modified, or has had any requirements relating
thereto waived as a result of the Account Debtor’s material financial
underperformance, distress or material default, in each case in accordance with
the Required Procedures, (b) for which the Account Debtor is (i) making
amortization payments to fully amortize such Eligible Note Receivable and (ii)
no longer experiencing a material financial underperformance, distress or
material default, in each case in accordance with the Required Procedures.

 

29

 

 

“Related Property” has the meaning set forth in the Sale and Servicing
Agreement.

 

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.

 

“Replacement Lender” has the meaning set forth in Section 15.2(a).

 

“Report” has the meaning set forth in Section 16.17(a).

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

 

“Required Asset Documents” means the documents set forth on Schedule R-1 hereto.

 

“Required Lenders” means, at any time, the Lenders whose aggregate Pro Rata
Shares exceed fifty percent (50%).

 

“Required Procedures” means the written policies, procedures and guidelines that
Horizon utilizes in the origination (and Horizon Management utilizes in the
servicing) of Notes Receivable Horizon owns, or sells to its subsidiaries,
specifically including underwriting, documentation, portfolio management and
financial policies, procedures and guidelines over collateral and financial
analysis, business and asset valuation (including appraisal), auditing,
collection activities, renewal, extension, modification, recognition, accrual,
non-accrual and charge-off policies, and the use of the Approved Forms with
respect to the origination, funding and servicing of Notes Receivable, all in
the form delivered to Agent and approved by Agent on or prior to the Closing
Date and attached to the Closing Certificate, as amended from time to time in
accordance with the Sale and Servicing Agreement; provided, however, that no
material change to the Approved Forms or the policies and procedures as in
effect on the Closing Date shall be effective unless (a) Agent and Borrower have
each received at least ten (10) Business Days prior written notice of such
change and, (b) if either Agent in the exercise of its Permitted Discretion, or
Borrower in its reasonable discretion, believes that such change could
reasonably be expected to have a material adverse effect upon the quality or
value of the Eligible Notes Receivable or the collectability of any Note
Receivable or the Loans thereon, such change has the prior written approval of
both Agent and Borrower; provided further, that (i) each of Agent and Borrower
shall use reasonable efforts to notify Horizon of any objection it has to any
such proposed change within ten (10) Business Days following its receipt of
notice thereof from Horizon, but failure by Agent or Borrower to do so shall not
be deemed to be a consent to or approval of such change, and (ii) if, after the
expiration of such ten (10) Business Day period, Horizon has provided to each of
Agent and Borrower a second written notice of such proposed change and received
acknowledgment of Agent’s and Borrower’s receipt thereof, then each of Agent and
Borrower shall be deemed to have consented to such proposed change unless either
Agent or Borrower has notified Horizon of its objection thereto within twenty
(20) days following its receipt of such second notice from Horizon.

 

30

 

 

“Restricted Payments” means (a) any dividend or other distribution, in cash or
other property, direct or indirect, on account of any class of Stock in
Borrower, now or hereafter outstanding, (b) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any class of Stock in Borrower, now or hereafter outstanding, (c)
any payment made to retire, or obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Stock in
Borrower, now or hereafter outstanding, (d) any payment or prepayment of
principal, or redemption, purchase, retirement, defeasance, sinking fund or
similar payment with respect to, any Indebtedness (other than any Indebtedness
permitted under Section 7.1), or (e) any payment (other than compensation to an
officer or director of Borrower, as such, in the ordinary course of business, or
Servicing Fees or other amount permitted to be paid to Servicer under the Sale
and Servicing Agreement) to a holder of Stock in Borrower or to an Affiliate of
Borrower or an Affiliate of any holder of Stock in Borrower not expressly
authorized herein.

 

“Sale and Servicing Agreement” means the Sale and Servicing Agreement among
Borrower, Horizon (as Originator), Horizon Management (as initial Servicer),
U.S. Bank (as Collateral Custodian), and Agent, in form and substance
satisfactory to Agent.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

 

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

 

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“Securities Account” means a “securities account,” as that term is defined in
the Code.

 

“Securitization” has the meaning set forth in Section 14.1(j).

 

“Securitization Parties” has the meaning set forth in Section 14.1(j).

 

“Servicer” means Horizon Management, or once appointed pursuant to Section 6.20,
the Back-up Servicer, or any other Person that assumes the functions of
servicing the Notes Receivables with the prior written consent of Agent and
pursuant to the terms of the Sale and Servicing Agreement.

 

“Servicer Default” has the meaning set forth in the Sale and Servicing
Agreement.

 

“Servicing Fees” means the “Servicing Fee” payable to Servicer in accordance
with the Sale and Servicing Agreement, which shall in no case exceed for any
measurement period (as determined pursuant to the Sale and Servicing Agreement)
one percent (1.00%) per annum on the average Notes Receivable balance (as
determined pursuant to the Sale and Servicing Agreement) for such measurement
period.

 

“Solvent” means, (a) with respect to any Person other than the Borrower, Horizon
or Horizon Management, on a particular date, that, at fair valuations, the sum
of such Person’s assets is greater than all of such Person’s debts, and, (b)
with respect to the Borrower, Horizon or Horizon Management, on a particular
date, both (i) (A) the then fair saleable value of the property of such Person
is (1) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (2) not less than the amount that will be
required to pay the probable liabilities on such Person’s then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (B) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (C) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (ii) such Person is
“solvent” within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

 

“Stock” means all shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity ownership interests in a Person, and any warrants, options or other
rights entitling the holder thereof to purchase or acquire any such equity
interest (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

 

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“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the Board of Directors of such corporation, partnership, limited liability
company, or other entity.

 

“Supporting Obligation” means a letter-of-credit right or secondary obligation
that supports the payment or performance of an Account, chattel paper, document,
General Intangible, Note Receivable, instrument, or Investment Property.

 

“Tangible Net Worth” means, with respect to any Person as of any date of
determination, determined on a consolidated basis and in accordance with GAAP,
the result of (a) such Person’s total members’ or shareholder’s equity, plus (b)
all Indebtedness expressly subordinated to all other borrowed Indebtedness of
such Person, minus (c) all Intangible Assets of such Person, minus (d) all of
such Person’s prepaid expenses, minus (e) all amounts due to such Person from
Affiliates of such Person.

 

“Target Industry” means each of the following business areas as classified in
accordance with the Required Procedures: (a) Technology, (b) Life Science, (c)
Healthcare Information and Services, and (d) Cleantech.

 

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of a similar nature imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (whether imposed directly or
through withholding) and all interest, penalties, additions to tax or similar
liabilities with respect thereto.

 

“Transferred Notes Receivable” has the meaning set forth in the Sale and
Servicing Agreement.

 

“Treasury Regulations” means the United States Treasury Department regulations
promulgated under the IRC.

 

“UCC Filing Authorization Letter” means a letter duly executed by Borrower
authorizing Agent to file appropriate financing statements in such office or
offices as may be necessary or, in the opinion of Agent, desirable to perfect
the security interests purported to be created by the Loan Documents.

 

“United States” means the United States of America.

 

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“Unrestricted Cash” means cash of the Borrower in the Collection Account that is
(a) not subject to any Lien (other than Liens securing the Obligations), (b) not
reserved, set aside, designated or required for the payment on any account,
liability or obligations (including, without limitation, any ordinary course
business expenses, payroll, Restricted Payment or the amounts required to be in
the Collection Account pursuant to Section 6.19) and (c) available for use by
Borrower in its discretion.

 

“Unused Fee” has the meaning set forth in Section 2.10(a).

 

“Usage” means, as of any date of determination, the amount of outstanding Loans.

 

“U.S. Bank” means U.S. Bank National Association, a national banking
association.

 

“Voidable Transfer” has the meaning set forth in Section 17.8.

 

1.2          Accounting Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with GAAP; provided, however, that if
Borrower notifies Agent that Borrower requests an amendment to any provision
hereof to eliminate the effect of any Accounting Change occurring after the
Closing Date or in the application thereof on the operation of such provision
(or if Agent notifies Borrower that the Required Lenders request an amendment to
any provision hereof for such purpose), regardless of whether any such notice is
given before or after such Accounting Change or in the application thereof, then
Agent and Borrower agree that they will negotiate in good faith amendments to
the provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lenders and
Borrower after such Accounting Change conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon and agreed to by the Required Lenders, the
provisions in this Agreement shall be calculated as if no such Accounting Change
had occurred. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Horizon” or “Borrower” is
used in respect of a financial covenant or a related definition, it shall be
understood to mean Horizon and its Subsidiaries, or Borrower and its
Subsidiaries, as the case may be, on a consolidated basis, unless the context
clearly requires otherwise.

 

1.3          Code.  Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein; provided however, that to the extent that the Code is used to
define any term herein and such term is defined differently in different
Articles of the Code, the definition of such term contained in Article 9 shall
govern.

 

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1.4          Construction. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). The words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties. Any reference herein or in
any other Loan Document to the satisfaction, repayment, or payment in full of
the Obligations shall mean the repayment in full in cash or immediately
available funds of all of the Obligations (including the payment of any Lender
Group Expenses that have accrued irrespective of whether demand has been made
therefor) other than unasserted contingent indemnification Obligations. Any
reference herein to any Person shall be construed to include such Person’s
successors and assigns. Any requirement of a writing contained herein or in any
other Loan Document shall be satisfied by the transmission of a Record.

 

1.5          Schedules and Exhibits. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.

 

2.           LOAN AND TERMS OF PAYMENT.

 

2.1          Term Loans. During the Availability Period and subject to the terms
and conditions of this Agreement each Lender agrees (severally, not jointly) to
make term loans (the “Loans”), to Borrower from time to time in Dollars in an
amount not to exceed its Commitment as set forth in Schedule C (or in the
applicable Assignment and Acceptance) as reduced in accordance with the
definition of Commitment or other provisions hereof; provided, however, (i) the
aggregate original principal amount of all Loans of all Lenders during the term
hereof shall not exceed the Closing Date Commitment, and (ii) in no event shall
Loans be required to made hereunder if immediately before and after giving
effect to such Loan the Overcollateralization Ratio is less than 150%. Upon any
Lender funding its entire Commitment in accordance with the provisions hereof,
such Lender will have no further commitment to fund Loans hereunder. Upon any
payment or prepayment of a Loan in whole or in part, Borrower shall have no
right to reborrow the amount so paid or prepaid.

 

2.2          Borrowing Procedures.

 

(a)          Procedure for Borrowing. To request the funding of any Loan
hereunder, an Authorized Person of Borrower shall deliver to Agent not later
than 12:00 Noon, New York time, on the Business Day at least three (3) Business
Days prior to the requested date of such proposed Loan, by facsimile or
electronic mail transmission, an Overcollateralization Ratio Certificate and a
Borrowing Notice, and setting forth all of the information required to be set
forth therein, including without limitation, requested date of such Loan (which
shall be a Business Day during the Availability Period), the amount of the Loan
requested (which, on the Closing Date shall be in a minimum principal amount of
$10,000,000 and on any date thereafter shall be in a minimum principal amount of
$2,000,000 or, in each case, a whole multiple of $100,000 in excess thereof).
Borrower may not request, and the Lenders shall not be required to fund, more
than two (2) Loans during any calendar month.

 

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(b)          Funding of Borrowings. Each Lender shall make the proceeds of its
Pro Rata Share of each Loan required to be made hereunder on the proposed date
thereof by wire transfer of immediately available funds by 12:00 Noon, New York
time, to the account of Agent most recently designated by it for such purpose by
notice to the Lenders. Agent will make such Loans available to Borrower by wire
transfer of the proceeds of such Loans to the Designated Account at the
direction of the Borrower or to such other account as Agent and Borrower agree.
The failure of any Lender to make the proceeds of its Pro Rata Share of any Loan
required to be made hereunder shall not relieve any other Lender of its
obligation to make the proceeds of its Pro Rata Share of any Loan required to be
made hereunder. No Lender shall be obligated to fund any Loan after Availability
Period.

 

(c)          Independent Obligations. All Loans shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Loan (or other extension of credit)
hereunder, nor shall any Commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its obligations hereunder,
and (ii) no failure by any Lender to perform its obligations hereunder shall
excuse any other Lender from its obligations hereunder.

 

(d)          Notes. Any Lender may request that Loans made by it be evidenced by
a Note. In such event, Borrower shall prepare, execute and deliver to such
Lender a Note payable to such Lender (or, if requested by such Lender, to such
Lender and its registered assigns). Thereafter, the Loans evidenced by such Note
and interest thereon shall at all times (including after assignment pursuant to
Section 14.1) be represented by one or more Notes in such form payable to such
Lender and its registered assigns.

 

2.3          Prepayments and Scheduled Payments of Loans.

 

(a)          Optional Prepayments. Borrower shall have the right at any time and
from time to time to prepay Loans in each case in whole or in part, subject to
prior written notice in accordance with Section 2.3(d); provided that all
optional prepayments shall be accompanied by any amounts due under Section
2.3(g)(i) and payment in full of any other interest, fees, costs and expenses.

 

36

 

 

(b)          Mandatory Prepayments; Additional Collateral.

 

(i)          If, at any time, the Overcollateralization Ratio is less than or
equal to 140% (the “Overcollateralization Deficiency”), the Borrower shall
immediately prepay the principal of the Loans in an aggregate amount equal to
the amount necessary for the Overcollateralization Ratio to be at least 150% by
depositing such amount in the Agent’s Account for the account of the Lenders,
and Agent shall distribute such amounts to each Lender in accordance with its
Pro Rata Share. Notwithstanding any provision to the contrary set forth in this
Section 2.3(b), in the event of an Overcollateralization Deficiency, at
Borrower’s option, Borrower may, in lieu of making a prepayment required in the
first sentence of this Section 2.3(b)(i), either (A) pledge to Agent in
accordance with the terms hereof within ten (10) Business Days after the date of
such Overcollateralization Deficiency such additional Eligible Notes Receivable
or (B) deposit Unrestricted Cash in the Collection Account, in each case, in an
amount sufficient to cause the Overcollateralization Ratio at such time to be at
least 150%.

 

(ii)         After the termination of the Availability Period, if Borrower
receives any payment of principal on any Note Receivable, Borrower shall, on the
applicable Payment Date, prepay the principal of the Loans in an amount equal to
the amount of such principal payment received on such Note Receivable by
depositing such amount in the Agent’s Account for the account of the Lenders,
and Agent shall distribute such amounts to each Lender in accordance with its
Pro Rata Share.

 

(c)          Repayments from Collection Account. On each Payment Date, or at
more frequent intervals at the discretion of Agent upon the occurrence and
during the continuance of an Event of Default, all amounts in the Collection
Account shall be applied in accordance with Section 2.3(f).

 

(d)          Notices. Borrower shall notify Agent by telephone (confirmed by
facsimile or email transmission) of any optional prepayment of the Loans under
Section 2.3(a) not later than 12:00 Noon, New York time, three (3) Business Day
before the date of such prepayment. Borrower shall notify Agent of any mandatory
prepayment of the Loans pursuant to Section 2.3(b) as soon as practicable. Each
such notice shall be irrevocable (provided that a notice of prepayment delivered
by Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by Borrower
(by notice to the Administrative Agent on or prior to the specified effective
date) if such condition is not satisfied) and shall specify the prepayment date,
the principal amount of each Loan or portion thereof to be prepaid, and the
section of this Agreement pursuant to which such prepayment is to be made.
Promptly following receipt of any such notice, Agent shall advise each Lender of
the contents thereof, and of the amount of such Lender’s Pro Rata Share of such
prepayment. Each such prepayment shall be applied to the Loans of Lenders in
accordance with their respective Pro Rata Shares. Borrower shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein.

 

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(e)          Prepayments Accompanied by Interest. All prepayments of the Loans
pursuant to this Section 2.3 shall be accompanied by accrued interest through
the date of prepayment, together with any amounts payable pursuant to Section
2.11(e).

 

(f)          Apportionment and Application of Payments.

 

(i)          So long as no Application Event has occurred and is continuing, any
amounts in the Collection Account constituting Principal Collections shall be
applied to prepay the principal of the Loans on the applicable Payment Date, to
each Lender in accordance with its Pro Rata Share; provided that, solely during
the Availability Period, if the Overcollateralization Ratio is equal to or
greater than 150% and no Default or Event of Default shall have occurred and be
continuing, such amounts shall not be applied in such manner and shall be made
available for reinvestment by Borrower in accordance with Section 6.18(c).

 

(ii)         So long as no Application Event has occurred and is continuing, all
amounts in the Collection Account constituting Interest Collections of Borrower
shall be applied on the applicable Payment Date as follows:

 

(A)         first, to pay ratably in accordance with the amounts of Collateral
Custodian Fees owed to the Collateral Custodian, to pay fees payable to the
Collection Account Bank in accordance with Section 10 of the Collection Account
Agreement and all other out-of-pocket costs, expenses, indemnities and
reimbursements (including without limitation, attorneys’ fees and expenses) then
due and owing to the Collateral Custodian or Collection Account Bank pursuant to
this Agreement or any other Loan Document, until paid in full,

 

(B)         second, to pay the Back-Up Servicer, the Back-up Servicer Fees
(including the one-time successor servicer engagement fee described in the
Back-Up Servicer Engagement Letter) and all other out-of-pocket costs, expenses,
indemnities and reimbursements (including without limitation, attorneys’ fees
and expenses) then due and owing, until paid in full,

 

(C)         third, to pay the Servicer, the Servicing Fees and any reimbursable
out-of-pocket expenses, indemnities and reimbursements owed to any successor
Servicer (including, without limitation, attorneys’ fees and expenses) then due
and owing, until paid in full,

 

(D)         fourth, ratably to pay each Hedge Provider (if any), the amounts due
under any interest rate Hedge Agreement (excluding breakage fees) then due and
owing, until paid in full,

 

38

 

 

(E)         fifth, to pay any Lender Group Expenses (including cost or expense
reimbursements and any amounts due under Section 2.10(c)) or indemnities then
due and owing to Agent under the Loan Documents, until paid in full,

 

(F)         sixth, ratably in accordance with the amounts of Lender Group
Expenses or indemnities owed to each Person in the Lender Group, to pay any
Lender Group Expenses (including cost or expense reimbursements) or indemnities
then due and owing to any of the Lenders under the Loan Documents, until paid in
full,

 

(G)        seventh, to pay any fees then due and owing to Agent under the Loan
Documents (including any amounts due under Section 2.10(b)), until paid in full,

 

(H)        eighth, ratably in accordance with the fees owed to each Person in
the Lender Group, to pay any fees then due and owing to any or all of the
Lenders under the Loan Documents (including any amounts due under Section
2.10(a)), until paid in full,

 

(I)          ninth, to pay the Servicer, all out-of-pocket costs, expenses,
indemnities and reimbursements (including without limitation, attorneys’ fees)
then due and owing to Servicer pursuant to this Agreement or any other Loan
Document, until paid in full,

 

(J)         tenth, ratably in accordance with the interest payments due to each
Lender, to pay interest due in respect of the Loans, until paid in full,

 

(K)        eleventh, ratably to each Hedge Provider, unpaid breakage fees due
under any interest rate Hedge Agreement,

 

(L)         twelfth, to pay any other Obligations (other than the principal
amount of the Loans), until paid in full, and

 

(M)       thirteenth, to remain in the Collection Account or otherwise upon
request of Borrower, to be wired to the Designated Account for the purposes
permitted under, and in accordance with, Sections 6.18(c) and 7.10 so long as
the Borrower is in compliance with Section 6.19, after giving effect to the
transfer of such amounts to the Designated Account and the application of
proceeds thereof.

 

39

 

 

(iii)        At any time that an Application Event has occurred and is
continuing, all payments remitted to Agent and all proceeds of Collateral
(including all amounts in the Collection Account, whether constituting Principal
Collections, Interest Collections or otherwise) received by Agent shall be
applied as follows:

 

(A)         first, to pay ratably in accordance with the amounts of Collateral
Custodian Fees owed to the Collateral Custodian, fees payable to the Collection
Account Bank in accordance with Section 10 of the Collection Account Agreement
and all other out-of-pocket costs, expenses, indemnities and reimbursements
(including without limitation, attorneys’ fees and expenses) then due and owing
to the Collateral Custodian or Collection Account Bank pursuant to this
Agreement or any other Loan Document, until paid in full,

 

(B)         second, to pay the Back-Up Servicer, the Back-up Servicer Fees
(including the one-time successor servicer engagement fee described in the
Back-Up Servicer Engagement Letter) and all other out-of-pocket costs, expenses,
indemnities and reimbursements (including without limitation, attorneys’ fees
and expenses) then due and owing, until paid in full,

 

(C)         third, to pay the Servicer, the Servicing Fees and any reimbursable
out-of-pocket expenses, indemnities and reimbursements owed to any successor
Servicer (including, without limitation, attorneys’ fees and expenses) then due
and owing, until paid in full,

 

(D)         fourth, ratably to pay each Hedge Provider (if any), the amounts due
under any interest rate Hedge Agreement (excluding breakage fees) then due,
until paid in full,

 

(E)         fifth, to pay any Lender Group Expenses (including cost or expense
reimbursements and any amounts due under Section 2.10(c)) or indemnities then
due and owing to Agent under the Loan Documents, until paid in full,

 

(F)         sixth, ratably in accordance with the amounts of Lender Group
Expenses or indemnities owed to each Person in the Lender Group, to pay any
Lender Group Expenses (including cost or expense reimbursements) or indemnities
then and owing due to any of the Lenders under the Loan Documents, until paid in
full,

 

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(G)        seventh, to pay any fees then due and owing to Agent under the Loan
Documents (including any amounts due under Section 2.10(b)), until paid in full,

 

(H)        eighth, ratably in accordance with the fees owed to each Person in
the Lender Group, to pay any fees then due and owing to any or all of the
Lenders under the Loan Documents (including any amounts due under Section
2.10(a)), until paid in full,

 

(I)          ninth, to pay the Servicer, all out-of-pocket costs, expenses,
indemnities and reimbursements (including without limitation, attorneys’ fees)
then due and owing to Servicer pursuant to this Agreement or any other Loan
Document, until paid in full,

 

(J)         tenth, ratably in accordance with the interest payments due to each
Lender, to pay interest due in respect of the Loans, until paid in full,

 

(K)        eleventh, ratably in accordance with the principal payments due to
each Lender, to pay the principal of all Loans until paid in full,

 

(L)         twelfth, the amount set forth in Section 2.3(g)(ii), ratably to each
Lender in accordance with its Pro Rata Share, until paid in full,

 

(M)       thirteenth, ratably to each Hedge Provider, unpaid breakage fees due
under any interest rate Hedge Agreement,

 

(N)        fourteenth, to pay any other Obligations, until paid in full, and

 

(O)        fifteenth, to be wired to the Designated Account or such other Person
entitled thereto under applicable Law.

 

(iv)        Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such funds as
it may be entitled to receive.

 

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(v)         For purposes of this Section 2.3(f), “paid in full” of a type of
Obligation means payment in cash or immediately available funds of all amounts
owing on account of such type of Obligation, including interest accrued after
the commencement of any Insolvency Proceeding, default interest, interest on
interest, and expense reimbursements, irrespective of whether any of the
foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.

 

(g)          Prepayment Premium. Borrower hereby agrees that in addition to any
other amounts due under this Agreement or any other Loan Document:

 

(i)          Optional Prepayments. If Borrower prepays or pays any portion of
the outstanding principal amount of the Loans pursuant to Section 2.3(a),
Borrower shall pay an amount equal to (A) in the case of any such prepayment or
payment made prior to the first anniversary of the Closing Date, 3% of the
Closing Date Commitment, (B) in the case of any such prepayment or payment made
during the period commencing on the first anniversary of the Closing Date and
ending on the day immediately preceding the second anniversary of the Closing
Date, 2% of the Closing Date Commitment and (C) in the case of any such
prepayment or payment made during the period commencing on the second
anniversary of the Closing Date and ending on the day immediately preceding the
third anniversary of the Closing Date, 1% of the Closing Date Commitment; or

 

(ii)         Application Event or Event of Default. If Borrower is otherwise
required to pay any principal amount of the Loans pursuant to Section
2.3(f)(iii) (except with respect to any Application Event pursuant solely to
clause (d) of the definition of “Application Event’) or 9.1, Borrower shall pay
an amount equal to the product of (A) the principal amount of the Loans so
prepaid and (B) (1) in the case of any such prepayment or payment made prior to
the first anniversary of the Closing Date, 3%, (2) in the case of any such
prepayment or payment made during the period commencing on the first anniversary
of the Closing Date and ending on the day immediately preceding the second
anniversary of the Closing Date, 2% and (3) in the case of any such prepayment
or payment made during the period commencing on the second anniversary of the
Closing Date and ending on the day immediately preceding the third anniversary
of the Closing Date, 1%.

 

2.4          Payments Generally.

 

(a)          Borrower promises to pay the Obligations (including principal,
interest, fees, costs, and expenses) in full on the Maturity Date or, if
earlier, on the date on which the Obligations become due and payable pursuant to
the terms of this Agreement and the other Loan Documents.

 

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(b)          All payments to be made by Borrower in respect of the Obligations
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff. Except as otherwise expressly provided herein, all
payments by Borrower in respect of the Obligations shall be made to Agent, for
its own account or for the account of the respective Lenders to which such
payment is owed, as the case may be, via wire transfer of Dollars in immediately
available funds on the date such payment is due and payable by 1:00 p.m., New
York time. Agent will promptly distribute to each Lender its Pro Rata Share (or
other applicable share as provided herein) of such payment in like funds as
received by wire transfer to the account of such Lender notified to Agent from
time to time. All payments received by Agent after 1:00 p.m., New York time, on
the date such payments are due and payable shall be deemed to have been received
on the next succeeding Business Day, and any applicable interest or fees shall
continue to accrue thereon until such Business Day.

 

(c)          If any payment to be made by Borrower in respect of the Obligations
shall come due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day, and such extension of time shall be reflected
in computing any applicable interest or fees.

 

(d)          Unless Borrower shall have notified Agent, prior to the date any
payment is required to be made by it to Agent hereunder, that Borrower will not
make such payment, Agent may assume that Borrower will timely make such payment
and may (but shall not be so required to), in reliance thereon, make available a
corresponding amount to the Person entitled thereto. If and to the extent that
such payment is not in fact made to Agent in a timely manner in immediately
available funds, then each Lender shall forthwith on demand repay to Agent the
portion of such assumed payment that was made available to such Lender, in
immediately available funds, together with interest thereon in respect of each
day from the date such amount was made available by Agent to such Lender to the
date such amount is repaid to Agent at the Federal Funds Rate from time to time
in effect. A notice of Agent to Borrower with respect to any amount owing under
this Section 2.4(d) shall be conclusive, absent manifest error.

 

(e)          Nothing herein shall be deemed to obligate any Lender to obtain the
funds to make any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds to
make Loans in any particular place or manner.

 

(f)          All obligations of the Lenders pursuant to this Agreement
(including obligations to make Loans) are several and not joint. The failure of
any Lender to make any Loan on any date required hereunder shall not relieve any
other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan or to purchase its participation.

 

2.5          Interest Rates: Rates, Payments, and Calculations.

 

(a)          Subject to the provisions of Section 2.5(b), interest on the
outstanding principal balance of the Loans will accrue at a rate per annum equal
to the LIBOR Rate plus 6.0%. All calculations of interest shall be computed on a
30/360 Basis.

 

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(b)          Anything contained herein to the contrary notwithstanding,
automatically without notice upon the occurrence and during the continuation of
any Event of Default (i) interest (including post-petition interest accruing in,
or which would have accrued but for any Insolvency Proceeding), whether or not
allowed or allowable, on the Loans will accrue and be charged on the outstanding
principal balance thereof for each day at the Default Rate and (ii) to the
fullest extent permitted by applicable Laws, interest (including any interest
that accrues after the commencement of an Insolvency Proceeding or would have
accrued but for the commencement of such Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such
Insolvency Proceeding) will accrue and be charged for each day at the Default
Rate on any payments of interest that are not paid when due and any fees and
other amounts that are then due and payable hereunder. Accrued and unpaid
interest on past due amounts (including interest on past due interest) shall be
due and payable upon demand. Borrower acknowledges and agrees that payment or
acceptance of interest at the Default Rate is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent or any Lender.

 

(c)          Except as otherwise provided in Section 2.5(b), interest on the
Loans shall be due and payable in arrears on each Payment Date with respect to
the Interest Period most recently ended, on the date of any payment or
prepayment of all or any portion of the outstanding principal amount of such
Loans (on the outstanding principal amount so prepaid) and on the Maturity Date.
Interest hereunder and under the Notes shall be due and payable in accordance
with the terms hereof before and after judgment, and before and after the
commencement of any Insolvency Proceeding.

 

(d)          Interest shall accrue on each Loan for the day on which such Loan
is first made hereunder and for each day on which such Loan remains outstanding
thereunder, provided that any Loan that is repaid on the same day on which such
Loan is made shall, subject to Section 2.5(b), bear interest for one day.

 

(e)          In no event shall the interest rate or rates payable under this
Agreement, plus any other amounts paid in connection herewith, exceed the
highest rate permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable. Borrower and the Lender Group,
in executing and delivering this Agreement, intend legally to agree upon the
rate or rates of interest and manner of payment stated within it; provided,
however, that, anything contained herein to the contrary notwithstanding, if
said rate or rates of interest or manner of payment exceeds the maximum
allowable under applicable Law, then, ipso facto, as of the date of this
Agreement, Borrower is and shall be liable only for the payment of such maximum
as allowed by law, and payment received from Borrower in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
the Obligations to the extent of such excess.

 

2.6          Reserved.

 

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2.7          Crediting Payments. The receipt of any payment item by Agent shall
not be considered a payment on account unless such payment item is a wire
transfer of immediately available federal funds made to the Agent’s Account or
unless and until such payment item is honored when presented for payment. Should
any payment item not be honored when presented for payment, then Borrower shall
be deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the
Agent’s Account on a Business Day on or before 2:00 p.m. (New York time). If any
payment item is received into the Agent’s Account on a non-Business Day or after
2:00 p.m. (New York time) on a Business Day, it shall be deemed to have been
received by Agent as of the opening of business on the immediately following
Business Day.

 

2.8          Designated Account. Unless otherwise agreed by Agent and Borrower,
any Loan requested by Borrower and made by Agent or the Lenders hereunder shall
be made to the Designated Account at the direction of the Borrower.

 

2.9          Reserved.

 

2.10        Fees. Borrower shall pay the following fees and charges, which fees
and charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter):

 

(a)          Unused Fee. Borrower shall pay to Agent for the account of each
Lender in accordance with its Pro Rata Share, an unused fee equal to the 1.0%
per annum on the daily amount of the aggregate Commitments then in effect
(assuming for the purpose of calculation hereof that all Loans requested by
Borrower and which Borrower is entitled to receive in accordance with this
Agreement have been fully funded) (the “Unused Fee”). The Unused Fee shall
accrue at all times during the Availability Period, and shall be payable monthly
in arrears on the last Business Day of each calendar month, commencing on the
first such date to occur after the Closing Date and ending on the date on which
the Availability Period terminates. All Unused Fees shall be computed on a 30
/360 Basis, which fees shall be pro-rated for any portions of a month comprising
less than thirty (30) days.

 

(b)          Fees Under Fee Letter. As and when due and payable under the terms
of the Fee Letter, Borrower shall pay to Agent for the account of Agent the fees
set forth in the Fee Letter.

 

(c)          Audit, Appraisal, and Valuation Charges. For the separate account
of Agent, Borrower shall pay to Agent audit, appraisal, and valuation fees and
charges as follows (i) the reasonable out-of-pocket expenses for each financial
or collateral audit or appraisal of Borrower or the Collateral performed by
personnel employed by Agent, and (ii) the actual charges paid or incurred by
Agent if it elects to employ the services of one or more third Persons to
perform financial or collateral audits or appraisals of Borrower or its
Subsidiaries, or to appraise the Collateral or any portion thereof; provided
that (A) so long as no Default or Event of Default has occurred and is
continuing, Agent will not conduct more than one, and Borrower will not be
charged for more than one, financial or collateral inspections, audits or
appraisals during any calendar quarter and (B) so long as no Event of Default
has occurred and is continuing, none of Borrower, Horizon nor Horizon Management
will be charged for an aggregate amount in excess of $25,000 for fees and
charges pursuant to this Section 2.10(c) during any calendar year covering
financial or collateral inspections, audits or appraisals pursuant to this
Agreement or the Sale and Servicing Agreement.

 

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2.11        Taxes; Yield Protection; Illegality.

 

(a)          Taxes.

 

(i)          Unless otherwise required by applicable Law, any and all payments
by or on account of any obligation of Borrower under any Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. If
any Taxes are so required to be deducted or withheld, Borrower or Agent (as the
case may be) shall make the required deductions or withholdings and shall timely
pay the full amount of deducted or withheld Taxes to the relevant Governmental
Authority in accordance with applicable Law. If such Taxes are Indemnified Taxes
or Other Taxes, the sum payable shall be increased as necessary so that, after
all such required deductions or withholdings of Indemnified Taxes or Other Taxes
(including deductions or withholdings applicable to additional sums payable
under this Section 2.11(a)(i)) have been made, Agent or such Lender (as the case
may be) receives an amount equal to the sum that it would have received had no
such deductions or withholdings been made.

 

(ii)         In addition, Borrower agrees to pay to the relevant Governmental
Authority any and all present or future stamp, court or documentary taxes and
any other intangible, recording, filing or similar Taxes which arise from any
payment made under any Loan Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, any
Loan Document (hereinafter referred to as “Other Taxes”).

 

(iii)        Borrower agrees to indemnify Agent and each Lender for (A) the full
amount of Indemnified Taxes and Other Taxes (including any Indemnified Taxes or
Other Taxes imposed or asserted by any Governmental Authority on, or otherwise
attributable to, amounts payable under this Section 2.11(a)) paid by Agent and
such Lender and (B) any reasonable expenses arising therefrom or with respect
thereto, in each case whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
Payment under this Section 2.11(a)(iii) shall be made within ten (10) days after
the date the Lender or Agent makes a demand therefor.

 

(iv)        As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by Borrower to any Governmental Authority, Borrower shall deliver to
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to Agent.

 

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(v)         Each Lender that is entitled to an exemption from or reduction of
United States withholding tax with respect to any payments under this Agreement
or any other Loan Document shall deliver to Borrower and Agent, on or prior to
the date that such Lender becomes a party to this Agreement and from time to
time thereafter if any form or certification it provided becomes inaccurate or
obsolete or as prescribed by applicable Law or as reasonably requested by
Borrower or Agent, such properly completed and duly executed documentation as
prescribed by applicable Law and such other reasonably requested information as
will permit such payments to be made without withholding tax or at a reduced
rate of withholding tax. Without limiting the generality of the foregoing, each
Lender that is not a “United States person” (as such term is defined in section
7701(a)(30) of the IRC) shall deliver to Borrower and Agent, on or prior to the
date that such Lender becomes a party to this Agreement (and from time to time
thereafter upon the expiration or invalidity of the applicable form or other
documentation or upon the request of Borrower or Agent) whichever of the
following is applicable: (A) two duly completed copies of IRS Form W-8BEN
establishing eligibility for benefits of an income tax treaty to which the
United States is a party or an exemption provided under the IRC; (B) two duly
completed copies of IRS Form W-8ECI establishing that such Lender is not subject
to deduction or withholding of United States federal income tax with respect to
payments made hereunder or under any other Loan Document; (C) in the case of a
Lender claiming the benefits of the exemption for portfolio interest under
section 881(c) of the IRC, (1) a certificate to the effect that such Lender is
not a “bank” within the meaning of section 881(c)(3)(A) of the IRC, a “10
percent shareholder” of Borrower within the meaning of section 881(c)(3)(B) of
the IRC or a “controlled foreign corporation” described in section 881(c)(3)(C)
of the IRC and two duly completed copies of IRS Form W-8BEN; or (D) any other
form prescribed by applicable Law as a basis for claiming exemption from, or
reduction of, United States federal withholding tax, duly completed together
with such supplementary documentation prescribed by applicable Law as will
permit such payments to be made without withholding tax or at a reduced rate of
withholding tax. In addition, each Lender that is a United States person (as
such term is defined in section 7701(a)(30) of the IRC) shall deliver to the
Borrower, on or prior to the date on which such Lender becomes a party to this
Loan Agreement (and from time to time thereafter upon the expiration or
invalidity of the form described below or upon the request of Borrower or Agent)
two duly completed copies of IRS Form W-9 certifying or otherwise establishing
that such Lender is not subject to United States federal backup withholding.

 

(vi)        In the event the Agent or any Lender receives actual notice from a
Governmental Authority of its liability for any Indemnified Taxes or Other
Taxes, such Agent or Lender shall notify the Borrower of any related claim for
compensation under Section 2.11(a)(iii) within one hundred and eighty (180) days
of receiving such Governmental Authority notice, provided, however, that the
amount of compensation to which the Agent or any Lender is entitled shall not be
affected by the failure of such Agent or Lender to satisfy the requirements of
this Section 2.11(a)(vi), except to the extent that the Borrower is actually
prejudiced as a result thereof.

 

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(vii)       If Borrower is required to pay any Indemnified Taxes or additional
amounts to any Lender or to any Governmental Authority for the account of any
Lender pursuant to Section 2.11(a)(i) or Section 2.11(a)(ii), then such Lender
shall (at the request of Borrower) use commercially reasonable efforts (subject
to such Lender’s overall internal policies of general application and legal and
regulatory restrictions) to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the sole reasonable
judgment of such Lender, such designation or assignment (A) would eliminate or
reduce the amounts payable pursuant to Section 2.11(a)(i) or Section 2.11(a)(ii)
in the future and (B) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender; provided that
nothing in this Section 2.11(a)(vii) shall affect or postpone any of the
obligations of Borrower or the rights of such Lender pursuant to Section
2.11(a)(i) or Section 2.11(a)(ii). Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

(viii)      If Agent or a Lender determines, in its sole good faith discretion,
that it has received a refund of any Indemnified Taxes or Other Taxes as to
which it has been indemnified by Borrower or with respect to which Borrower has
paid additional amounts pursuant to this Section 2.11(a), so long as no Default
or Event of Default has occurred and is continuing, it shall pay over an amount
equal to such refund to Borrower (but only to the extent of payments made, or
additional amounts paid, by Borrower under this Section 2.11(a) with respect to
the Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of Agent or such Lender and without interest (other than
any interest paid by the relevant Governmental Authority) with respect to such
refund); provided that Borrower, upon the request of Agent or such Lender,
agrees to repay the amount paid over to Borrower (plus any penalties, interest
or other charges imposed by the relevant Governmental Authority other than such
penalties, interest or other charges imposed as a result of the willful
misconduct or gross negligence of Agent hereunder) to Agent or such Lender in
the event that Agent or such Lender is required to repay such refund to such
Governmental Authority. Notwithstanding anything to the contrary in this Section
2.11(a)(viii), in no event will Agent or any Lender be required to pay any
amount to an indemnifying party pursuant to this Section 2.11(a)(viii) to the
extent such payment would place Agent or such Lender in a less favorable net
after-Tax position than it would have been in if the indemnification payments or
additional amounts giving rise to such refund had never been paid.
Notwithstanding anything in this Agreement to the contrary, this Section
2.11(a)(viii) shall not be construed to require Agent or any Lender to make
available its tax returns (or any other information which it deems confidential)
to Borrower or any other Person.

 

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(ix)         Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.11(a) shall survive the termination of this Agreement and the other
Loan Documents.

 

(b)          Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for such Lender to continue to make Loans or to determine or charge interest
rates based upon the LIBOR Rate, such Lender shall give notice thereof to
Borrower through Agent. Upon receipt of such notice, Borrower shall, upon demand
from such Lender (with a copy to Agent), either (i) prepay in full all Loans,
either on the last day of the current Interest Period in respect of thereof, if
such Lender may lawfully continue to maintain Loans until such date, or
immediately, if such Lender may not lawfully continue to do so, or (ii) at the
option of Borrower, pay interest on such Lender’s Loans at a rate per annum, as
determined by such Lender, that will provide a corresponding yield to such
Lender compared to the yield that such Lender would have been realized if its
Loans had continued to accrue interest at a rate based upon the LIBOR Rate
(taking into account any increased cost to such Lender of continuing to maintain
Loans). Upon any such prepayment, Borrower shall also pay accrued interest on
the amount so prepaid. Each Lender agrees make Loans through a different office
of such Lender if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.

 

(c)          Inability to Determine Rates. If Agent determines that for any
reason adequate and reasonable means do not exist for determining the interest
rate as set forth in Section 2.5 based upon the LIBOR Rate for any period for
any Loans, or that such interest rate with respect to any period for any Loans
does not adequately and fairly reflect the cost to the Lenders of maintaining
such Loans, Agent will promptly so notify Borrower and each Lender. Thereafter,
Borrower shall pay to each Lender such additional amount or amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender shall determine) as may be necessary to compensate such
Lender for the cost of maintaining such Loans.

 

(d)          Increased Cost and Reduced Return; Capital Adequacy.

 

(i)          If any Lender determines that, as a result of the introduction of
or any change in or in the interpretation of any Law, or such Lender’s
compliance therewith, there shall be any increase in the cost to such Lender of
funding or maintaining Loans at the Interest Rate based upon the LIBOR Rate or a
reduction in the amount received or receivable by such Lender in connection with
any of the foregoing (excluding, for purposes of this Section 2.11(d)(i), any
such increased costs or reduction in amount resulting from (A) Indemnified Taxes
or Other Taxes (as to which Section 2.11(a) shall govern), or (B) changes in the
basis of taxation of overall net income or overall gross income (or franchise
taxes imposed (in lieu of net income taxes)) by the United States or any foreign
jurisdiction or any political subdivision of either thereof under the Laws of
which such Lender is organized or maintains its Loans), or any acquisition of
funds by such Lender (or its parent corporation), then from time to time upon
demand of such Lender (with a copy of such demand to Agent), Borrower shall pay
to such Lender such additional amounts as will compensate such Lender for such
increased cost or reduction.

 

49

 

 

(ii)         If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender therewith, has the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender
as a consequence of such Lender’s obligations hereunder or the making or
maintaining by such Lender of its Loans (taking into consideration its policies
with respect to capital adequacy and such Lender’s desired return on capital),
then from time to time upon demand of such Lender (with a copy of such demand to
Agent), Borrower shall pay to such Lender such additional amounts as will
compensate such Lender for such reduction.

 

(iii)        Notwithstanding anything herein to the contrary, (i) the Dodd-Frank
Wall Street Reform and Consumer Protection Act and all requests, rules,
guidelines or directives thereunder, issued in connection therewith or in
implementation thereof, and (ii) all requests, rules, guidelines and 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, shall in each case be deemed to be an
introduction of or change in Law under this Section 2.11(f) or any other
provision of any Loan Document, regardless of the date enacted, adopted, issued
or implemented.

 

(e)          Funding Losses. Upon demand of any Lender (with a copy to Agent)
from time to time, Borrower shall promptly compensate such Lender for, and hold
such Lender harmless from, any loss (other than any loss of anticipated profits)
and any cost or expense incurred by it as a result of:

 

(i)          any failure by Borrower to satisfy the conditions precedent to the
making of any Loan after having delivered a Borrowing Notice with respect
thereto; or

 

(ii)         any payment or prepayment of any Loan (whether by reason of
acceleration or otherwise) on a day other than on the last day of its Interest
Period, the Maturity Date, on the date specified in a notice of prepayment
issued in accordance with Section 2.03(c);

 

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(iii)        any loss or expense arising from the liquidation or reemployment of
funds obtained by it to purchase, hold or make Loans or from fees payable to
terminate the deposits from which such funds were obtained, but excluding any
loss of anticipated profits. For purposes of calculating amounts payable by
Borrower to any Lender under this Section 2.11(e), such Lender shall be deemed
to have funded Loans at the interest rate applicable thereto by a matching
deposit or other borrowing in the London interbank eurodollar market for a
comparable amount and for a comparable period, whether or not the Loans were in
fact so funded; in each case, provided that such Lender delivers to Borrower a
certificate showing in reasonable detail the calculations used in determining
the amounts payable by Borrower under this Section 2.11(e).

 

(f)          Matters Applicable to all Requests for Compensation.

 

(i)          Any Lender claiming any additional amounts payable pursuant to this
Section 2.11 shall use its reasonable efforts (consistent with its internal
policies and requirements of Law) to change the jurisdiction of its lending or
purchasing office if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts that would be payable or may
thereafter accrue and would not, in the reasonable determination of such Lender,
be otherwise disadvantageous to such Lender.

 

(ii)         Any Lender or Agent claiming additional amounts payable under this
Section 2.11 shall deliver a certificate to Borrower and setting forth the
additional amount or amounts to be paid to it hereunder and accompanied by a
reasonably detailed statement therefor setting forth the supporting calculations
which statement shall be conclusive in the absence of manifest error. In
determining such amount, Agent or such Lender may use any reasonable averaging
and attribution methods.

 

(g)          Survival. All of Borrower’s obligations under this Section 2.11
shall survive the termination of the Commitments and the repayment of all
Obligations hereunder.

 

(h)          Substitution of Lenders.

 

(i)          In the event that (1) any Lender makes a claim under Section
2.11(d), (2) it becomes illegal for any Lender to continue to make Loans or to
determine or charge interest rates based upon the LIBOR Rate and such Lender so
notifies Borrower pursuant to Section 2.11(b), or (3) Borrower is required to
pay any additional amount to any Lender or any Governmental Authority on account
of any Lender pursuant to Section 2.11(a) (any such Lender, an “Affected
Lender”), Borrower may substitute any Lender and, if reasonably acceptable to
Agent, any other Eligible Transferee (a “Substitute Institution”) for such
Affected Lender hereunder, after delivery of a written notice (a “Substitution
Notice”) by Borrower to Agent and the Affected Lender within a reasonable time
(in any case not to exceed ninety (90) days) following the occurrence of any of
the events described above that Borrower intends to make such substitution;
provided that, if more than one Lender claims increased costs, illegality or
right to payment arising from the same act or condition and such claims are
received by Borrower within thirty (30) days of each other, then Borrower may
substitute all, but not (except to the extent Borrower has already substituted
one of such Affected Lenders before Borrower’s receipt of the other Affected
Lenders’ claim) less than all, Lenders making such claims.

 

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(ii)         If the Substitution Notice was properly issued under this Section
2.11(h), the Affected Lender shall sell, and the Substitute Institution shall
purchase, all rights and claims of such Affected Lender under the Loan
Documents, and the Substitute Institution shall assume, and the Affected Lender
shall be relieved of all prior unperformed obligations of the Affected Lender
under the Loan Documents (other than in respect of any damages (other than
exemplary or punitive damages, to the extent permitted by applicable Law) in
respect of any such unperformed obligations). Such purchase and sale (and the
corresponding assignment of all rights and claims hereunder) shall be effective
on (and not earlier than) the later of (i) the receipt by the Affected Lender of
its Pro Rata Share of the outstanding principal amount of the Loans owed to it
pursuant to the Loan Documents, together with any other Obligations owing to it,
(ii) the receipt by Agent of an agreement in form and substance satisfactory to
it and Borrower whereby the Substitute Institution shall agree to be bound by
the terms hereof and (iii) the payment in full to the Affected Lender in cash of
all fees, unreimbursed costs and expenses and indemnities accrued and unpaid
through such effective date. Upon the effectiveness of such sale, purchase and
assumption, the Substitute Institution shall become a “Lender” hereunder for all
purposes of this Agreement.

 

(iii)        Each Lender agrees that, if it becomes an Affected Lender and its
rights and claims are assigned hereunder to a Substitute Institution pursuant to
this Section 2.11(h), it shall execute and deliver to Agent an Assignment and
Assumption to evidence such assignment, together with any Note held by it;
provided that the failure of any Affected Lender to execute an Assignment and
Acceptance or deliver such Notes shall not render such assignment invalid.

 

(iv)        Notwithstanding anything to the contrary set forth herein, this
Section 2.11(h) shall not apply to Fortress Credit Co LLC and any of its
Affiliates and no such person shall at any time be an “Affected Lender”
hereunder.

 

3.          CONDITIONS; TERM OF AGREEMENT.

 

3.1          Conditions Precedent to the Initial Extension of Credit. The
obligation of each Lender to make its initial extension of credit hereunder, is
subject to the fulfillment, to the satisfaction of Agent and each Lender, of
each of the following conditions precedent:

 

(a)          Agent shall have received a UCC Filing Authorization Letter, duly
executed by Borrower, together with appropriate financing statements duly filed
in such office or offices as may be necessary or, in the opinion of Agent,
desirable to perfect the Agent’s Liens in and to the Collateral, and Agent shall
have received searches reflecting the filing of all such financing statements;

 

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(b)          Agent shall have received each of the following documents, in form
and substance satisfactory to Agent, duly executed, and each such document shall
be in full force and effect:

 

(i)          the Notes,

 

(ii)         the Closing Certificates,

 

(iii)        the Control Agreements with respect to each Deposit Account and
Securities Account of the Borrower,

 

(iv)        the Fee Letter,

 

(v)         the Sale and Servicing Agreement,

 

(vi)        the Collateral Custodian Fee Letter,

 

(vii)       the Back-Up Servicer Engagement Letter,

 

(viii)      a Collateral Access Agreement with respect to the principal
location(s) where Horizon and Borrower maintain the Books relating to the Notes
Receivable and other Collateral, and

 

(ix)         a file-stamped copy of a UCC-1 financing statement naming Horizon
as seller and Borrower as buyer, filed with the Delaware Secretary of State to
perfect the transfer and sale of Notes Receivable to Borrower from time to time
pursuant to the Sale and Servicing Agreement.

 

(c)          Agent shall have received a perfection certificate with respect to
Horizon, Horizon Management and Borrower, duly executed by an Authorized Officer
of Horizon, Horizon Management and Borrower, and shall have received the results
of a recent lien search in each of the jurisdictions indicated on such
perfection certificate, and such search shall reveal no liens on any of the
assets of Borrower except for liens permitted by Section 7.2 or discharged on or
prior to the Closing Date pursuant to a pay-off letter or other documentation
satisfactory to Agent;

 

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(d)          Secretary’s Certificates from the Secretary (or equivalent) of each
of (a) Borrower, (b) Horizon, and (c) Horizon Management, dated as of the
Closing Date, in form and substance satisfactory to Agent, certifying that (i) a
copy of such Person’s Certificate of Formation and Operating Agreement or
Certificate or Articles of Incorporation (as applicable) and any other Governing
Documents, as well as all amendments thereto, are attached, (ii) other than as
reflected by the documents delivered pursuant to (i) above, no action or
proceeding for the amendment of such Person’s Governing Documents has been taken
or is presently contemplated, (iii) attached is a complete and correct copy of
an authorization by or resolution of such Person’s members, managers or board of
directors (as applicable) authorizing such Person’s execution, delivery and
performance of the Loan Agreement and the other Loan Documents to which it is a
party and the transactions contemplated thereby, and (iv) a specimen signature
of each manager, member or officer of such Person who is authorized to execute
the Loan Documents on behalf of such Person is included and that each of such
individuals is duly qualified as of the Closing Date;

 

(e)          Agent shall have received certificates of status with respect to
Borrower, Horizon, and Horizon Management, dated within ten (10) days of the
Closing Date, such certificate to be issued by the appropriate officer of the
jurisdiction of organization of such Person, which certificate shall indicate
that such Person is in good standing in such jurisdiction;

 

(f)          Agent shall have received certificates of status with respect to
Borrower, Horizon, and Horizon Management, each dated within thirty (30) days of
the Closing Date, such certificates to be issued by the appropriate officer of
the jurisdictions (other than the jurisdiction of organization of such Person)
in which its failure to be duly qualified could reasonably be expected to result
in a Material Adverse Change, which certificates shall indicate that such Person
is in good standing in such jurisdictions;

 

(g)          Agent shall have received a certificate of insurance, together with
the endorsements thereto, as are required by Section 6.8, the form and substance
of which shall be satisfactory to Agent;

 

(h)          Agent shall have received an opinion or opinions of Borrower’s,
Horizon’s, and Horizon Management’s counsel in form and substance satisfactory
to Agent;

 

(i)          Borrower shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;

 

(j)          with respect to each Eligible Note Receivable as of the making of
the initial Loan, Agent or the Collateral Custodian shall be in possession of
all of the Required Asset Documents;

 

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(k)          Agent shall have received and approved the Required Procedures,
which Required Procedures shall be consistent with those previously represented
to Agent and shall be acceptable to Agent in its Permitted Discretion;

 

(l)          Agent’s counsel shall have received and reviewed all standard
documentation evidencing, governing, securing and guaranteeing Notes Receivable,
and been satisfied such documentation provides Borrower and Agent with
appropriate rights and remedies to enforce any necessary collection actions with
respect to such Notes Receivable;

 

(m)          Borrower, Horizon and Horizon Management shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by Borrower, Horizon or
Horizon Management of the Loan Documents to which it is a party or with the
consummation of the transactions contemplated thereby;

 

(n)          Agent shall have received evidence satisfactory to Agent that as of
the Closing Date and after giving effect to the initial Loan, (i) Borrower has a
Tangible Net Worth (based upon the capital contribution by Horizon of cash or
the unfinanced portion of Eligible Notes Receivable) of not less than
$5,000,000, (ii) Horizon has a Tangible Net Worth of not less than $100,000,000,
and (iii) Horizon Management has a Tangible Net Worth of not less than $500,000;

 

(o)          The initial Loan shall be not less than $10,000,000, and Agent, in
its Permitted Discretion, shall be satisfied that the initial portfolio of Notes
Receivable supporting such Loan has not been selected in a manner adverse to
Borrower or the Lender Group;

 

(p)          Agent and each of the Lenders shall have received, at least ten
(10) Business Days in advance of the Closing Date, all documentation and others
information required by Governmental Authorities under applicable “know your
customers” and anti-money laundering rules and regulations, including, without
limitation, as required by the Patriot Act, and in each case, shall be satisfied
with the results thereof; and

 

(q)          All other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.

 

By funding its Loan on the Closing Date, each Lender is deemed to confirm that
all documents and the other deliverables that are required to be in form and
substance satisfactory to such Lender pursuant to Section 3.1 are in fact
satisfactory to such Lender.

 

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3.2          Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make any Loans hereunder at any time
(or to extend any other credit hereunder), including the Loan on the Closing
Date, shall be subject to the following conditions precedent:

 

(a)          the representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct on the Closing Date and, in
the case of any Loan made after the Closing Date, shall be true and correct in
all material respects (except with respect to any Loan made after the Closing
Date, to the extent such representation or warranty is qualified by materiality,
material adverse effect or by Material Adverse Change, then such representation
or warranty shall be true and correct in all respects) on and as of the date of
such Borrowing, as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date, in which
case they shall be true and correct as of such earlier date);

 

(b)          no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;

 

(c)          no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the extending of such
Loan shall have been issued and remain in force by any Governmental Authority
against Borrower, Agent, any Lender, or any of their respective Affiliates;

 

(d)          no Material Adverse Change shall have occurred,

 

(e)          on or before the day preceding the date of such Loan, Borrower
shall have delivered to the Collateral Custodian each of the Required Asset
Documents with respect to each Note Receivable to be acquired or funded with any
portion of such Loan; provided that if Borrower is funding the acquisition of
such Note Receivable with the proceeds of Loans being requested with respect to
such Note Receivable, then this condition shall be satisfied if the Collateral
Custodian and Agent are in possession of PDF copies of each of the Required
Asset Documents and the originals are delivered to the Collateral Custodian no
later than five (5) Business Days thereafter;

 

(f)          both before and after giving effect to such Borrowing, the
Overcollateralization Ratio shall be equal to or greater than 150%;

 

(g)          Agent shall have received an Overcollateralization Ratio
Certificate and a Borrowing Notice as set forth in Section 2.2(a); and

 

(h)          no Application Event shall have occurred and be continuing.

 

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3.3          Term. This Agreement shall continue in full force and effect for a
term commencing on the Closing Date and ending on Maturity Date; provided, that
Borrower’s obligations shall continue as set forth in Section 3.4. The foregoing
notwithstanding, the Lender Group, upon the election of Agent or the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.

 

3.4          Effect of Termination. On the Maturity Date or earlier termination
of this Agreement in accordance with its terms, all Obligations immediately
shall become due and payable without notice or demand and Borrower shall be
required to repay all of the Obligations in full. No termination of the
obligations of the Lender Group (other than payment in full of the Obligations
and termination of the Commitments) shall relieve or discharge Borrower or any
of its Affiliates of its duties, obligations, or covenants hereunder or under
any other Loan Document and Agent’s Liens in the Collateral shall continue to
secure the Obligations and shall remain in effect until all Obligations have
been paid in full and the Commitments have been terminated. When all of the
Obligations have been paid in full and the Lender Group’s obligations to provide
additional credit under the Loan Documents have been terminated irrevocably,
Agent will, at Borrower’s sole expense, execute and deliver any termination
statements, lien releases, discharges of security interests, and other similar
discharge or release documents (and, if applicable, in recordable form) as are
reasonably necessary to release, as of record, Agent’s Liens and all notices of
security interests and liens previously filed by Agent.

 

3.5          Termination of Commitments. Borrower may not, without the consent
of each Lender, reduce or terminate the Commitments or any portion thereof,
other than for automatic terminations of the Commitments that occur upon the
funding of Loans as provided in the definition of Commitments.

 

4.          CREATION OF SECURITY INTEREST.

 

4.1          Grant of Security Interest. Borrower hereby grants to Agent, for
the benefit of the Lender Group, a continuing security interest in all of
Borrower’s right, title, and interest in all currently existing and hereafter
acquired or arising Borrower Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Borrower of each
of its covenants and duties under the Loan Documents. The Agent’s Liens in and
to the Borrower Collateral shall attach to all Borrower Collateral without
further act on the part of Agent or Borrower. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, Borrower and its Subsidiaries have no authority, express
or implied, to dispose of any item or portion of the Collateral.

 

4.2          Negotiable Collateral. In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral other
than Notes Receivable previously delivered to and being held by the Agent or the
Collateral Custodian, and if and to the extent that Agent determines that
perfection or priority of Agent’s security interest is dependent on or enhanced
by possession, Borrower, promptly upon the request of Agent, shall endorse and
deliver physical possession of such Negotiable Collateral and all agreements and
documents related thereto to Agent or the Collateral Custodian. All Notes
Receivable shall be delivered to Agent or the Collateral Custodian pursuant to
this Agreement and the Sale and Servicing Agreement to hold for the benefit of
Agent and Lenders, duly endorsed in blank or as follows on the back of the
signature page thereof or on a separate allonge affixed thereto:

 

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“Pay to the Order of ________________________, without recourse

 

HORIZON CREDIT III LLC

 

By:   Name:

 

Its: [Authorized Person].”

 

4.3          Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent’s designee may (a) notify Account Debtors of
Borrower and makers of Notes Receivable that the Accounts, Notes Receivable,
chattel paper, or General Intangibles have been assigned to Agent or that Agent
has a security interest therein, (b) cause a replacement servicer to take
possession of, and collect, Borrower’s Accounts, or (c) collect Borrower’s
Accounts, Notes Receivable, chattel paper, or General Intangibles directly and
such collection costs and expenses shall be Obligations. Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group’s trustee, any of
its or its Subsidiaries’ Collections that it receives and immediately will
deliver such Collections to Servicer pursuant to the Sale and Servicing
Agreement or, at the request of Agent, to Agent, in each case in their original
form as received by Borrower or its Subsidiaries.

 

4.4          Filing of Financing Statements; Commercial Tort Claims; Delivery of
Additional Documentation Required.

 

(a)          Borrower authorizes Agent to file any financing statement necessary
or desirable to effectuate the transactions contemplated by the Loan Documents,
and any continuation statement or amendment with respect thereto, in any
appropriate filing office. Such financing statements may describe the Collateral
in the same manner as described herein or may contain an indication or
description of collateral that describes such property in any other manner as
the Agent may determine, in its sole discretion, is necessary or prudent to
ensure the perfection of the security interest in the Collateral granted to the
Agent in connection herewith, including, without limitation, describing such
property as “All assets whether now owned or hereafter acquired” or “All
personal property whether now owned or hereafter acquired” or words of similar
meaning. Borrower hereby ratifies the filing of any financing statement filed
prior to the date hereof.

 

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(b)          If Borrower or its Subsidiaries acquire any commercial tort claims
after the date hereof, Borrower shall promptly (but in any event within three
(3) Business Days after such acquisition) deliver to Agent a written description
of such commercial tort claim and shall deliver a written agreement, in form and
substance satisfactory to Agent, pursuant to which Borrower or its Subsidiary,
as applicable, shall grant a perfected security interest in all of its right,
title and interest in and to such commercial tort claim to Agent, as security
for the Obligations (a “Commercial Tort Claim Assignment”).

 

(c)          At any time upon the request of Agent, Borrower shall execute or
deliver to Agent, and shall cause its Subsidiaries to execute or deliver to
Agent, any and all fixture filings, security agreements, pledges, assignments,
Commercial Tort Claim Assignments, endorsements of certificates of title, and
all other documents (collectively, the “Additional Documents”) that Agent may
request in its Permitted Discretion, in form and substance satisfactory to
Agent, to create, perfect, and continue perfected or to better perfect the
Agent’s Liens in the assets of Borrower and its Subsidiaries (whether now owned
or hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Agent in any owned Real Property acquired
after the Closing Date, and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents. To the maximum extent
permitted by applicable Law, Borrower authorizes Agent to execute any such
Additional Documents in Borrower’s name and authorizes Agent to file such
executed Additional Documents in any appropriate filing office. In addition, on
such periodic basis as Agent shall require, Borrower shall (i) provide Agent
with a report of all new material patentable, copyrightable, or trademarkable
materials acquired or generated by Borrower or its Subsidiaries during the prior
period, (ii) cause all material patents, copyrights, and trademarks acquired or
generated by Borrower or its Subsidiaries that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrower’s or the applicable
Subsidiary’s ownership thereof, and (iii) cause to be prepared, executed, and
delivered to Agent supplemental schedules to the applicable Loan Documents to
identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder; provided, however, that neither Borrower
nor any of its Subsidiaries shall register with the U.S. Copyright Office any
unregistered copyrights (whether in existence on the Closing Date or thereafter
acquired, arising, or developed) unless (i) the Borrower provides Agent with
written notice of its intent to register such copyrights not less than thirty
(30) days prior to the date of the proposed registration, and (ii) prior to such
registration, the applicable Person executes and delivers to Agent a copyright
security agreement in form and substance satisfactory to Agent, supplemental
schedules to any existing copyright security agreement, or such other
documentation as Agent reasonably deems necessary in order to perfect and
continue perfected Agent’s Liens on such copyrights following such registration.

 

(d)          Borrower hereby assigns to Agent any and all rights of Borrower to
access any and all storage facilities where any Collateral or information
relating to Collateral may be stored and Borrower hereby authorizes Agent, at
any time after the occurrence and during the continuation of an Event of
Default, to enter upon any such storage facilities and remove any contents
thereof in connection with Agent’s exercise of its remedies hereunder.

 

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4.5          Power of Attorney. Borrower hereby irrevocably makes, constitutes,
and appoints Agent (and any of Agent’s officers, employees, or agents designated
by Agent) as Borrower’s true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower’s name on any invoice or bill of lading
relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests or make telephone inquiries for verification
of Borrower’s or its Subsidiaries’ Accounts or Notes Receivable, (d) endorse
Borrower’s name on any of its payment items (including all of its Collections)
that may come into the Lender Group’s possession, (e) at any time that an Event
of Default has occurred and is continuing, make, settle, and adjust all claims
under Borrower’s policies of insurance and make all determinations and decisions
with respect to such policies of insurance, and (f) at any time that an Event of
Default has occurred and is continuing, settle and adjust disputes and claims
respecting Borrower’s or its Subsidiaries’ Accounts, Notes Receivable, chattel
paper, or General Intangibles directly with Account Debtors or makers of Notes
Receivable, for amounts and upon terms that Agent determines to be reasonable,
in Agent’s Permitted Discretion, and Agent may cause to be executed and
delivered any documents and releases that Agent determines to be necessary. The
appointment of Agent as Borrower’s attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group’s obligations to extend credit hereunder are terminated.

 

4.6          Right to Inspect and Verify. Subject to the limitations set forth
in Section 2.10(c), Agent (through any of its officers, employees, or agents)
shall have the right, from time to time hereafter upon reasonable notice and
during normal business hours (provided that reasonable notice and requirements
to inspect during normal business hours shall not apply if a Default or an Event
of Default shall have occurred and be continuing) (i) to inspect the Books and
make copies or abstracts thereof, (ii) to communicate directly with any and all
Account Debtors and makers of Notes Receivable to verify the existence and terms
thereof, and (iii) to check, test, and appraise the Collateral, or any portion
thereof, in order to verify Borrower’s and its Subsidiaries’ financial condition
or the amount, quality, value, condition of, or any other matter relating to,
the Collateral; and Borrower shall permit any designated representative of Agent
to visit and inspect any of the properties of the Borrower to inspect and to
discuss its finances and properties and Collateral.

 

4.7          Control Agreements. Borrower agrees that it will and will cause its
Subsidiaries to give Agent control in accordance with Sections 8-106, 9-104,
9-105, 9-106, and 9-107 of the Code with respect to all of its or their
Securities Accounts, Deposit Accounts, electronic chattel paper, Investment
Property, and letter-of-credit rights. Upon the occurrence and during the
continuance of an Event of Default, Agent may notify any bank or securities
intermediary to liquidate or transfer the balances of the applicable Deposit
Account or Securities Account or any related Investment Property maintained or
held thereby and remit the proceeds thereof to Agent’s Account or the deposit
account of Agent designated in the relevant Control Agreement.

 

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4.8          Servicing of Notes Receivable. Until such time as Agent shall
notify the Borrower of the revocation of such right after the occurrence and
during the continuation of an Event of Default, Borrower (a) shall, at its own
expense (including through the application of available funds pursuant to
Section 2.3(b)), cause the Servicer to service all of the Notes Receivable,
including, without limitation, (i) the billing, posting and maintaining complete
records applicable thereto, and (ii) taking of such action with respect to the
Notes Receivable as the Borrower may deem advisable, and (b) may grant, in the
ordinary course of business, to any maker of a Note Receivable, any adjustment
to which such maker may be lawfully entitled, and may take such other actions
relating to the settling of any such maker’s claims as may be commercially
reasonable, but in each case in accordance with the Required Procedures. Agent
may, at its option, at any time or from time to time, after the occurrence and
during the continuation of an Event of Default hereunder, revoke the collection
and servicing rights given to Borrower herein by giving notice to Borrower in
accordance with the terms of the Sale and Servicing Agreement.

 

4.9          Borrower’s Perfection. Borrower represents to the Lender Group
that: (a) all necessary financing statements and (b) all related financing
statement amendments or assignments in order to cause Borrower to be properly
noted as secured party of record with respect thereto and to have a perfected
first priority security interest in all personal property securing Borrower’s
Notes Receivable, have been filed in all filing locations as may be required to
perfect and protect in favor of Borrower all security interests, liens and
rights evidenced by all Note Receivable Documents with respect to all personal
property securing Borrower’s Notes Receivable existing as of the Closing Date,
and that such filings remain effective as of the Closing Date. Unless otherwise
expressly agreed by Agent, Borrower covenants that it will take all action
necessary to maintain the effectiveness of such filings so long as Borrower has
any commitment to extend credit under such Note Receivable or any sum remains
owing under such Note Receivable. Borrower represents to the Lender Group that
all filings and recordations, and all related assignments, with respect to Notes
Receivable acquired by Borrower after the Closing Date will be filed or recorded
in all jurisdictions as may be required to perfect and protect in favor of
Borrower all of Borrower’s liens or interests evidenced by Note Receivable
Documents acquired by Borrower after the Closing Date, and that Borrower will
take all action necessary to maintain the effectiveness of such filings so long
as Borrower has any commitment to extend credit under such Note Receivable or
any sum remains owing under such Note Receivable. Agent is authorized to file
any UCC-3 statements of continuation, assignment or amendment as it may
determine in its Permitted Discretion to be necessary or desirable to enable it
to protect and maintain Agent’s Liens in Collateral.

 

4.10        Note Receivable Documents. Borrower or Servicer will maintain all
Note Receivable Documents (other than Notes Receivable which have been delivered
to Collateral Custodian pursuant to Section 4.2) in a secure manner in a
location with fire, casualty and theft protection satisfactory to Agent.
Borrower or Servicer will provide to Agent copies of any Note Receivable
Documents as Agent may request.

 

4.11        Release of Notes Receivable.

 

(a)          When a Note Receivable that is in the possession of Agent or the
Collateral Custodian is repaid in its entirety, Agent shall return or shall
authorize the Collateral Custodian to return such Note Receivable and any
related original Required Asset Documents to Borrower to facilitate its payment
and Agent shall release Agent’s Liens in such Note Receivable and any Related
Property promptly upon Agent’s receipt of the final payment relating to such
Note Receivable.

 

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(b)          When a Note Receivable is sold by Borrower in accordance with the
terms of this Agreement, Agent shall release Agent’s Liens (provided that all
proceeds received from Borrower from such Note Receivable prior to or
contemporaneously with such release shall be deposited in the Lockbox Account
and be subject to Agent’s Lien hereunder) in such Note Receivable and any
Related Property and if such Note Receivable or any related original Required
Asset Documents are in the possession of Agent or the Collateral Custodian,
Agent shall transfer or shall authorize the Collateral Custodian to transfer
such Note Receivable and such related original Required Asset Documents to the
purchaser thereof or as otherwise directed by such purchaser against payment of
the agreed amount therefor.

 

(c)          In the event Borrower’s collateral assignment to Agent of any
mortgage and loan documents relating to a Note Receivable has been recorded and
such Note Receivable is (i) repaid in its entirety or (ii) sold by Borrower in
accordance with the terms of this Agreement, then Agent shall, at Borrower’s
sole expense, execute a reassignment or release of such mortgage and loan
documents for the benefit of Borrower on forms prepared by Borrower and
acceptable to Agent in its Permitted Discretion; provided that all proceeds
received from Borrower from such Note Receivable prior to or contemporaneously
with such release shall be deposited in the Lockbox Account and be subject to
Agent’s Lien hereunder. In the event Borrower pursues any foreclosure action
against collateral securing any Note Receivable, upon the reasonable request of
Borrower and at Borrower's sole cost and expense, Agent shall deliver to
Borrower documentation that may be necessary or required in connection therewith
to the extent the same is reasonably available to Agent; provided, however, with
respect to any agreement or instrument to be executed by Agent, the form and
substance of such agreement or instrument shall be reasonably satisfactory to
Agent.

 

4.12        Electronic Chattel Paper and Transferable Records. As of the date
hereof, no amount under or in connection with any of the Collateral is evidenced
by any Electronic Chattel Paper or any “transferable record” (as that term is
defined in Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act, or in Section 16 of the Uniform Electronic Transactions
Act as in effect in any relevant jurisdiction). If any amount payable under or
in connection with any of the Collateral shall be evidenced by any Electronic
Chattel Paper or any transferable record, the Grantor acquiring such Electronic
Chattel Paper or transferable record shall promptly notify Agent thereof and
take such action as Agent may reasonably request to vest in Agent control of
such Electronic Chattel Paper under Section 9-105 of the UCC or control under
Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or, as the case may be, Section 16 of the Uniform Electronic Transactions
Act, as so in effect in such jurisdiction, of such transferable record.

 

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4.13        Continuing Liability Under Collateral. Notwithstanding anything
herein to the contrary, (i) Borrower shall remain liable for all obligations
under the Collateral and nothing contained herein is intended or shall be a
delegation of duties to Agent or any Person in the Lender Group, (ii) Borrower
shall remain liable under each of the agreements included in the Collateral,
including, without limitation, any agreements relating to any Investment
Property, to perform all of the obligations undertaken by it thereunder all in
accordance with and pursuant to the terms and provisions thereof and neither
Agent nor any Person in the Lender Group shall have any obligation or liability
under any of such agreements by reason of or arising out of this Agreement or
any other document related thereto nor shall the Agent nor any Person in the
Lender Group have any obligation to make any inquiry as to the nature or
sufficiency of any payment received by it or have any obligation to take any
action to collect or enforce any rights under any agreement included in the
Collateral, including, without limitation, any agreements relating to any
Investment Property, and (iii) the exercise by Agent of any of its rights
hereunder shall not release Borrower or any Subsidiary from any of its duties or
obligations under the contracts and agreements included in the Collateral.

 

5.          REPRESENTATIONS AND WARRANTIES.

 

In order to induce the Lender Group to enter into this Agreement and to make
Loans, Borrower makes the following representations and warranties to the Lender
Group as of the Closing Date and as of the date of the making of each Loan (or
any other extension of credit), Horizon makes the representations applicable to
it under Sections 5.6, 5.7(a), 5.7(b), 5.7(c), 5.8, 5.9, 5.10, 5.12, 5.18, 5.22,
5.25 and 5.26 as of the Closing Date and as of the date of the making of each
Loan (or any other extension of credit), and Horizon Management makes the
representations applicable to it under Sections 5.6, 5.7(a), 5.8, 5.9, 5.10,
5.18, 5.21, 5.22, 5.25 and 5.26 as of the Closing Date and as of the date of the
making of each Loan (or any other extension of credit), in each case, such
representations and warranties shall survive the execution and delivery of this
Agreement and the making of any Loan:

 

5.1          No Encumbrances. Borrower and its Subsidiaries have good and
indefeasible title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
Real Property, in each case, free and clear of Liens except for Permitted Liens.

 

5.2          Eligible Notes Receivables. As to each Note Receivable that is
identified by Borrower as an Eligible Note Receivable in the most recent
Overcollateralization Ratio Certificate submitted to Agent, as of the date of
such certificate: (a) such Note Receivable is a bona fide existing payment
obligation of the maker of such Note Receivable created in the ordinary course
of business by Borrower, Horizon or an Approved Third Party Originator, (b) such
Note Receivable has been transferred to Borrower by sale or contribution and is
now owed to Borrower without any known defenses, disputes, offsets,
counterclaims, or rights of cancellation, (c) such Note Receivable is not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth in the definition of Eligible Notes Receivable, (d) the original amount
of, the unpaid balance of, and the amount and dates of payments on such Note
Receivable shown on the Books of Borrower and in the schedules of same delivered
to Agent are true and correct, (e) Borrower has no knowledge of any fact (which
shall not include general economic conditions) which is reasonably likely to
impair the validity or collectability of such Note Receivable, (f) such Note
Receivable is subject to a first-priority security interest in favor of Agent,
(g) such Note Receivable complies with all applicable Laws in all material
respects, (h) since delivery to Agent, such Note Receivable has not been amended
nor any payment, interest, collateral or other material requirements relating
thereto waived without the prior written consent of Agent, other than an
extension, modification or waiver in accordance with the Required Procedures
then in effect, and (i) such Note Receivable is either (i) not a
“registered-required obligation” within the meaning of section 163(f)(2) of the
IRC or (ii) Registered. The portfolio of Notes Receivable held by Borrower, as
opposed to Horizon or any other Subsidiary or Affiliate of Horizon, has not been
selected in a manner adverse to Borrower or the Lender Group.

 

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5.3          Equipment. All of the Equipment of Borrower and its Subsidiaries is
used or held for use in their business and is fit for such purposes.

 

5.4          Collateral. Borrower owns and has rights and, as to Borrower
Collateral acquired by it from time to time after the date hereof, will own and
have rights in each item of Borrower Collateral pledged by it hereunder, free
and clear of any and all Liens or claims of others, except for the security
interests granted to Agent for the ratable benefit of the Lender Group pursuant
to this Agreement and Permitted Liens. The Borrower Collateral (other than the
Collateral in the possession of Agent or the Collateral Custodian) is not stored
with a bailee, warehouseman, or similar party and is located only at, or
in-transit between, the locations identified on Schedule 5.4 (as such Schedule
may be updated pursuant to Section 6.9); provided, that loan files that do not
include original promissory notes, Lien instruments, or assignments of Lien
instruments may be stored, from time to time, with Servicer or in a public
warehouse, access to which has been assigned by Borrower to Agent.

 

5.5          Records. Borrower keeps complete, correct and accurate records of
the Notes Receivable owned by Borrower and all payments thereon.

 

5.6          State of Incorporation; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.

 

(a)          The legal name, jurisdiction of organization of Horizon, Horizon
Management, Borrower and Borrower's Subsidiaries is set forth on Schedule 5.6(a)
(as such Schedule may be updated from time to time to reflect changes resulting
from transactions not prohibited by this Agreement).

 

(b)          The chief executive office of Horizon, Horizon Management, Borrower
and each of Borrower's Subsidiaries is located at the address indicated on
Schedule 5.6(b) (as such Schedule may be updated from time to time to reflect
changes resulting from transactions not prohibited by this Agreement).

 

(c)          The organizational identification numbers and federal employer
identification numbers, if any, of Horizon, Horizon Management, Borrower and
each of Borrower's Subsidiaries are identified on Schedule 5.6(c) (as such
Schedule may be updated from time to time to reflect changes resulting from
transactions not prohibited by this Agreement).

 

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(d)          Borrower and its Subsidiaries do not hold any commercial tort
claims, except as set forth on Schedule 5.6(d) (as such Schedule may be updated
from time to time).

 

5.7          Due Organization and Qualification; Subsidiaries.

  

(a)          Borrower is duly organized and existing and in good standing under
the laws of the jurisdiction of its organization and qualified to do business in
any state where the failure to be so qualified could reasonably be expected to
result in a Material Adverse Change. Each of Horizon and Horizon Management are
duly organized and existing and in good standing under the laws of the
jurisdiction of its organization and qualified to do business in any state where
the failure to be so qualified could reasonably be expected to result in a
Material Adverse Change.

 

(b)          Set forth on Schedule 5.7(b) (as such Schedule may be updated from
time to time to reflect changes resulting from transactions not prohibited by
this Agreement) is a complete and accurate description of (i) the authorized
capital Stock of Horizon, by class, and a description of the interests of each
such class that are issued and outstanding as of the Closing Date, and (ii) the
authorized capital Stock of Borrower, by class, and, a description of the
interests of each such class that are issued and outstanding as of the Closing
Date and at all times thereafter. Other than as described on Schedule 5.7(b),
there are no subscriptions, options, warrants, or calls relating to any capital
Stock of Borrower, including any right of conversion or exchange under any
outstanding security or other instrument. Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.

 

(c)          Set forth on Schedule 5.7(c) is a complete and accurate list of
Horizon’s direct and indirect Subsidiaries as of the Closing Date, showing: (i)
the jurisdiction of their organization, (ii) the number of shares of each class
of common and preferred Stock authorized for each of such Subsidiaries, and
(iii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Horizon. The Borrower does not have any direct
or indirect Subsidiaries.

 

(d)          There are no subscriptions, options, warrants, or calls relating to
any shares of capital Stock of a Subsidiary of Borrower, including any right of
conversion or exchange under any outstanding security or other instrument.
Neither Borrower nor any of its Subsidiaries is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of capital Stock of a Subsidiary of such Person or any security
convertible into or exchangeable for any such capital Stock.

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5.8          Due Authorization; No Conflict.

 

(a)          The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower. The execution,
delivery, and performance by each of Horizon and Horizon Management of this
Agreement and the other Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Horizon and Horizon
Management, as applicable.

 

(b)          The execution, delivery, and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party do not and will
not (i) violate any provision of any Law applicable to Borrower, the Governing
Documents of Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on Borrower, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Borrower, other than under this Agreement and the other
Loan Documents, or (iv) require any approval of the holders of Borrower’s Stock
or any approval or consent of any Person under any material contractual
obligation of Borrower, other than consents or approvals that have been obtained
and that are still in force and effect. The execution, delivery, and performance
by Horizon and Horizon Management of this Agreement and the other Loan Documents
to which it is a party do not and will not (i) violate any provision of any Law
applicable to Horizon or Horizon Management, as applicable, the Governing
Documents of Horizon or Horizon Management, as applicable, or any order,
judgment, or decree of any court or other Governmental Authority binding on
Horizon or Horizon Management, as applicable, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of Horizon or Horizon Management, as
applicable, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Horizon or Horizon
Management, as applicable, or (iv) require any approval of the holders of
Borrower’s Stock or any approval or consent of any Person under any material
contractual obligation of Horizon or Horizon Management, as applicable, other
than consents or approvals that have been obtained and that are still in force
and effect.

 

(c)          Other than the filing of financing statements, the execution,
delivery, and performance by Borrower of this Agreement and the other Loan
Documents to which Borrower is a party and the exercise by the Agent of any
rights or remedies in respect of any Collateral do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person, other than consents or
approvals that have been obtained and that are still in force and effect.

 

(d)          This Agreement and the other Loan Documents to which Borrower is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors’ rights generally. This Agreement and the other Loan
Documents to which Horizon or Horizon Management is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by
Horizon or Horizon Management, as applicable, will be the legally valid and
binding obligations of Borrower, enforceable against Horizon or Horizon
Management, as applicable, in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors’
rights generally.

 

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(e)          The Agent’s Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.

 

5.9          Litigation. As of the Closing Date, other than those matters
disclosed on Schedule 5.9, there are no actions, suits, or proceedings pending
or, to the knowledge of Borrower, threatened, against Borrower, any of its
Subsidiaries, or Horizon or Horizon Management. There are no actions, suits, or
proceedings pending or, to the knowledge of Borrower, threatened, against
Borrower, any of its Subsidiaries, or Horizon or Horizon Management, that either
individually or in the aggregate could reasonably be expected to result in a
Material Adverse Change.

 

5.10        Financial Statements; No Material Adverse Change. All financial
statements relating to Horizon, Horizon Management, or Borrower and Borrower's
Subsidiaries that have been delivered by Horizon, Horizon Management, or
Borrower to the Lender Group have been prepared in accordance with GAAP (except,
in the case of unaudited financial statements, for the lack of footnotes and
being subject to year-end audit adjustments) and present fairly in all material
respects, the financial condition of Horizon, Horizon Management, Borrower, and
Borrower's Subsidiaries as of the date thereof and results of operations for the
period then ended. There has not been a Material Adverse Change with respect to
Borrower, its Subsidiaries or Horizon or Horizon Management, since the date of
the latest financial statements submitted to the Lender Group on or before the
Closing Date.

 

5.11        Fraudulent Transfer.

 

(a)          Each of Borrower and each of its Subsidiaries is Solvent.

 

(b)          No transfer of property is being made by Borrower or its
Subsidiaries and no obligation is being incurred by Borrower or its Subsidiaries
in connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower or its Subsidiaries.

 

5.12         Employee Benefits. None of Borrower, any of its Subsidiaries, or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.

 

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5.13         Environmental Condition. Except as set forth on Schedule 5.13, (a)
none of Borrower’s or its Subsidiaries’ properties or assets has ever been used
by Borrower, its Subsidiaries or by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such use, production, storage, handling, treatment, release or
transport was in violation, in any material respect, of any applicable
Environmental Law, (b) none of Borrower’s or its Subsidiaries’ properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site, (c)
neither Borrower nor any of its Subsidiaries has received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Borrower or its Subsidiaries, and (d) neither
Borrower nor its Subsidiaries has received a summons, citation, notice, or
directive from the United States Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by
Borrower or its Subsidiaries resulting in the releasing or disposing of
Hazardous Materials into the environment.

 

5.14         Brokerage Fees. Neither Borrower nor any of its Affiliates has
utilized the services of any broker or finder in connection with Borrower’s
obtaining financing from the Lender Group under this Agreement, and any
brokerage commission or finders fee payable in connection herewith shall be the
sole responsibility of Borrower or its Affiliates.

 

5.15         Intellectual Property. Borrower and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of its business as currently
conducted, and attached hereto as Schedule 5.15 (as updated from time to time)
is a true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications, copyrights, and copyright
registrations as to which Borrower or one of its Subsidiaries is the owner or is
an exclusive licensee, other than shrink wrap and other similar licenses
generally available to the public.

 

5.16         Leases. Borrower and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating, and all of such leases are
valid and subsisting and no material default by Borrower or its Subsidiaries
exists under any of them.

 

5.17         Deposit Accounts and Securities Accounts. Set forth on Schedule
5.17 (as such Schedule may be updated from time to time to reflect changes
resulting from transactions not prohibited by this Agreement) is a listing of
all of Borrower’s and its Subsidiaries’ Deposit Accounts and Securities
Accounts, including, with respect to each bank or securities intermediary (a)
the name and address of such Person, and (b) the account numbers of the Deposit
Accounts or Securities Accounts maintained with such Person.

 

5.18         Complete Disclosure. Borrower has disclosed to Agent and Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Change. All factual information (taken as a whole) furnished by
or on behalf of Horizon, Horizon Management, Borrower or Borrower's Subsidiaries
in writing to Agent or any Lender (including all information contained in the
Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents, or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of Horizon, Horizon Management,
Borrower or Borrower's Subsidiaries in writing to Agent or any Lender does not
contain, at the time it is furnished, any untrue statement of a material fact or
omit to state any material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made. On the
Closing Date, the Closing Date Business Plan represents, and as of the date on
which any other Projections are delivered to Agent, such additional Projections
represent Borrower’s good faith estimate of its and its Subsidiaries’ future
performance for the periods covered thereby based upon reasonable assumptions
when made; provided, however, that the parties acknowledge that the Projections
are merely estimates and that there is no guarantee that Borrower will achieve
the results forecast in the Projections.

 

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5.19        Indebtedness. There is no Indebtedness of Borrower and its
Subsidiaries outstanding immediately prior to the Closing Date that is to remain
outstanding after the Closing Date.

 

5.20        Compliance. The Borrower is in compliance with all Laws and
contractual obligations except to the extent that failure to do so would not
reasonably be expected to have a Material Adverse Change. The standard forms and
documents evidencing and executed in connection with Notes Receivable and all
actions and transactions by Borrower in connection therewith comply in all
material respects with all applicable Laws. Such standard forms and documents
are commensurate with forms and documentation used by prudent lenders in the
same or similar circumstances as Borrower, and, without limiting the foregoing,
are sufficient to create valid, binding and enforceable obligations of each
Account Debtor named therein.

 

5.21        Servicing. Borrower has entered into the Sale and Servicing
Agreement, pursuant to which Borrower has engaged Horizon Management, as the
initial Servicer and as Borrower’s agent, to monitor, manage, enforce and
collect the Notes Receivables as provided by the Sale and Servicing Agreement,
subject to this Agreement. Horizon Management has, and any replacement Servicer
proposed by Borrower will have, the requisite knowledge, experience, expertise
and capacity to service the Notes Receivables.

 

5.22        Permits, Licenses, Etc.. Each of Borrower, Horizon, Horizon
Management, has, and is in compliance with, all permits, licenses,
authorizations, approvals, entitlements and accreditations required for such
Person lawfully to own, lease, manage or operate, or to acquire, each business
and the Real Property currently owned, leased, managed or operated, or to be
acquired, by such Person, except for such permits, licenses, authorizations,
approvals, entitlements and accreditations the absence of which could not
reasonably be expected to result in a Material Adverse Change. No condition
exists or event has occurred which, in itself or with the giving of notice or
lapse of time or both, would result in the suspension, revocation, impairment,
forfeiture or non-renewal of any such permit, license, authorization, approval,
entitlement or accreditation, the loss of which could reasonably be expected to
result in a Material Adverse Change, and there is no claim that any thereof is
not in full force and effect which claim could reasonably be expected to result
in a Material Adverse Change. Schedule 5.22 (as such Schedule may be updated
from time to time to reflect changes resulting from transactions not prohibited
by this Agreement) lists all of the licenses, franchises, approvals or consents
of any Governmental Authority or other Person that is required for Borrower to
conduct its business as currently conducted or proposed to be conducted except
for such licenses, franchises, approvals, or consents the absence of which could
not reasonably be expected to result in a Material Adverse Change.

 

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5.23        Margin Stock. Borrower is not and will not be engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T, U or X of the Board of Governors of
the Federal Reserve System), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.

 

5.24        Government Regulation. Neither Borrower nor any of its Subsidiaries
is required to register as an investment company under the Investment Company
Act of 1940 or is subject to regulation under any other federal or state statute
or regulation which may limit its ability to incur Indebtedness or which may
otherwise render all or any portion of the Obligations unenforceable. Neither
Borrower nor any of its Subsidiaries is a “registered investment company” or a
“principal underwriter” of a “registered investment company” as such terms are
defined in the Investment Company Act of 1940.

 

5.25        OFAC. Neither Borrower nor any of its Subsidiaries, nor Horizon,
Horizon Management nor any of their respective Affiliates is in violation of any
of the country or list based economic and trade sanctions administered and
enforced by OFAC. Neither Borrower nor any of its Subsidiaries (a) is a
Sanctioned Person or a Sanctioned Entity, (b) has its assets located in
Sanctioned Entities, or (c) derives revenues from investments in, or
transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any
loan made hereunder will be used to fund any operations in, finance any
investments or activities in, or make any payments to, a Sanctioned Person or a
Sanctioned Entity.

 

5.26        Patriot Act. To the extent applicable, Borrower and each of its
Subsidiaries, and Horizon, Horizon Management and each of its respective
Affiliates is in compliance with the (a) Trading with the Enemy Act, as amended,
and each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (b) Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of the
proceeds of the loans made hereunder will be used by Borrower or any of its
Affiliates, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

5.27        No Default. No Default or Event of Default has occurred and is
continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.

 

5.28        Tax Returns; Taxes. Borrower and each of its Subsidiaries have filed
or caused to be filed all federal and other material Tax returns required to be
filed by them, and all such Tax returns were true, correct and complete in all
material respects. Borrower and each of its Subsidiaries have timely paid or
caused to be timely paid all material Taxes due and payable by them. There is no
Tax assessment proposed in writing against Borrower or any of its Subsidiaries
that would, if made, result in a Material Adverse Change. Borrower and each of
its Subsidiaries are and, at all times since formation, have been treated as
disregarded entities for United States federal income tax purposes and have not
elected under section 301.7701-3(c) of the Treasury Regulations to be treated as
an association taxable as a corporation.

 

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6.          AFFIRMATIVE COVENANTS.

 

Borrower covenants and agrees that, until the payment in full of the Obligations
and the termination of the Commitments, Borrower shall and shall cause each of
its Subsidiaries to do all of the following and Horizon and Horizon Management
covenant and agree that, until the payment in full of the Obligations and the
termination of the Commitments, each of Horizon and Horizon Management, as
applicable, shall do all of the following applicable to it under Sections 6.3
and 6.4:

 

6.1          Accounting System. Maintain a system of accounting that enables
Servicer to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrower also shall keep a reporting
system that shows all additions, fees, payments, claims, and write-downs with
respect to the Notes Receivable.

 

6.2          Collateral Reporting. Provide or cause Servicer to provide Agent
(and if so requested by Agent, with copies for each Lender) with the following
documents at the following times in form satisfactory to Agent:

 

Promptly after occurrence   (a)   notice of all claims, offsets, or disputes
asserted by Account Debtors with respect to any of Borrower’s Notes Receivables;
Date of each Loan and at least monthly (not later than the 10th day of each
month)   (b)   a Overcollateralization Ratio Certificate which includes (i) a
detailed calculation of the Overcollateralization Ratio as of the date of the
requested Loan, (ii) detail regarding Notes Receivables that are not Eligible
Notes Receivables, and (iii) Borrower’s Risk Rating for each Note Receivable;
Monthly (not later than the tenth (10th) day of each month), calculated or
determined as of the last day of the preceding month  

(c)

 

(d)

  

(e)

  

(f)

 

 

the Data Tape;

 

a summary report of categories of non-Eligible Notes Receivable;

 

Borrower’s credit watch list;

 

a schedule listing all Notes Receivable that have been modified during the
preceding calendar three (3) months, including information regarding the exact
nature of any modifications sufficient for Agent to determine whether such
modifications affect the status of any Eligible Notes Receivable;

 

 

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Quarterly (not later than forty-five (45) days after the end of each calendar
quarter   (g)   a report, which includes (i) the Cash Runway Analysis and (ii)
for all Notes Receivable, forty-five (45) days after (A) Account Debtor status,
(B) current actual and effective cash out, net exposure, enterprise value,
method of determination and date of determination, and (C) the ratio of
enterprise value to debt; Promptly upon request by  

(h)

 

 

 

(i)

 

a summary aging, by vendor, of Borrower’s and its Subsidiaries’ accounts payable
and Agent any book overdraft; and

 

such other reports as to the Collateral, or the financial condition of Borrower
and its Subsidiaries, as Agent may reasonably request.

 

In connection with the foregoing reports, (i) Borrower shall maintain and
utilize accounting and reporting systems acceptable to Agent in its Permitted
Discretion and, in the case of the reporting systems, accessible by Agent and
(ii) to the extent required by Agent, an Authorized Person or other
representative acceptable to Agent will meet with Agent from time to time as
requested by Agent to review and discuss all Notes Receivable then owned by
Borrower.

 

6.3          Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender:

 

(a)          as soon as available, but in any event within thirty (30) days
after the end of each fiscal month of Borrower,

 

(i)          an unaudited consolidated balance sheet, income statement and
statement of cash flow covering Borrower’s and its Subsidiaries’ operations
during such period and the year-to-date period ending thereon, in each case
setting forth in comparative form the figures for the corresponding periods in
the prior year; and,

 

(ii)         a Compliance Certificate demonstrating in reasonable detail
Borrower’s compliance at the end of such period with the applicable financial
covenants contained in Section 7.16 that are measured as of the end of the month
then ended;

 

(b)          as soon as available, but in any event within forty-five (45) days
after the end of each fiscal quarter of Horizon and Horizon Management,

 

(i)          an unaudited consolidated balance sheet, income statement and
statement of cash flow covering such Person’s and its Subsidiaries’ operations
during such period and the year-to-date period ending thereon, in each case
setting forth in comparative form the figures for the corresponding periods in
the prior year; and,

 

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(ii)         a Compliance Certificate demonstrating in reasonable detail such
Person’s compliance at the end of such period with the applicable financial
covenants contained in Section 7.16 that are measured as of the end of the
quarter then ended;

 

(c)          as soon as available, but in any event within ninety (90) days
after the end of each fiscal year of Borrower and Horizon,

 

(i)          consolidated annual financial statements of Horizon and its
Subsidiaries for such fiscal year, audited by McGladrey LLP or other independent
certified public accountants reasonably acceptable to Agent and certified by
such accountants to have been prepared in accordance with GAAP, together with
any accountants’ letter to management in connection therewith;

 

(ii)         consolidating financial statements of Horizon and its Subsidiaries
for such fiscal year, prepared by Horizon based on its audited consolidated
financial statements for such year, in form acceptable to Agent in its Permitted
Discretion; and

 

(iii)        a Compliance Certificate demonstrating in reasonable detail
Borrower’s and Horizon’s compliance at the end of such period with the
applicable financial covenants contained in Section 7.16;

 

(d)          as soon as available, but in any event within one hundred fifty
(150) days after the end of each fiscal year of Horizon Management,

 

(i)          consolidated annual financial statements of Horizon Management and
its Subsidiaries for such fiscal year, audited by McGladrey LLP or other
independent certified public accountants reasonably acceptable to Agent and
certified by such accountants to have been prepared in accordance with GAAP,
together with any accountants’ letter to management in connection therewith; and

 

(ii)         a Compliance Certificate demonstrating in reasonable detail Horizon
Management’s compliance at the end of such period with the applicable financial
covenants contained in Section 7.16;

 

(e)          as soon as available, but in any event prior to the commencement of
each fiscal year of Borrower and Horizon, copies of Projections for Borrower and
for Horizon (including income statement and balance sheet, in form and substance
(including as to scope and underlying assumptions) satisfactory to Agent, in its
Permitted Discretion, for the forthcoming three (3) years, year by year, and for
the forthcoming fiscal year, no less than month-by-month, certified by the chief
financial officer of Borrower and the chief financial officer of Horizon, as
applicable, as being the most recent Projections provided to the board of
directors of Horizon for the period covered thereby;

 

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(f)           if and when filed by Borrower or Horizon;

 

(i)          Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
current reports,

 

(ii)         any other filings made by Borrower or Horizon with the SEC, and

 

(iii)        copies of Borrower’s or Horizon’s federal income tax returns, and
any amendments thereto, filed with the Internal Revenue Service (but only to the
extent that Borrower or Horizon is treated other than as an entity that is not
itself subject to federal income tax on operating income, a partnership or a
disregarded entity for federal income tax purposes),

 

(g)          promptly notify Agent of the following regarding each Note
Receivable and collateral which secures such Note Receivable:

 

(i)          the occurrence of any event which could reasonably be expected to
materially impair the prospect of payment of such Note Receivable;

 

(ii)         the sending by Servicer or Borrower of any notice of default,
recordation by Servicer or Borrower of any notice of foreclosure and the date of
any scheduled foreclosure sale thereon, or filing by Servicer or Borrower of any
lawsuit (including case number and court) on a Note Receivable or related
collateral securing such Note Receivable;

 

(iii)        the consummation of any foreclosure sale or any deed or bill of
sale in lieu of foreclosure, retention of collateral in satisfaction of debt or
similar transaction, and deliver to Agent true and complete copies of all
documentation executed in respect thereof (in the case of notices, postings and
the like, and in the case of deeds, bills of sale or retention of collateral
transactions, all documents related to consummation of such transaction or
transfer of such property); and

 

(iv)        the receipt by Servicer or Borrower of a notice by any Person of (x)
a default with respect to any agreement evidencing or governing a Lien on any
collateral securing any Note Receivable or (y) any foreclosure sale with respect
to any collateral securing any Note Receivable;

 

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(h)          promptly, but in any event within five (5) days after an Authorized
Person has knowledge of any event or condition that constitutes a Default or an
Event of Default, notice thereof and a statement of the curative action that
Borrower proposes to take with respect thereto,

 

(i)          promptly, but in any event within five (5) days after an Authorized
Person has knowledge of any event or condition that has resulted in or could
reasonably be expected to result in a Material Adverse Change.

 

(j)          promptly, but in any event within five (5) days after an Authorized
Person has knowledge of the occurrence of any ERISA Event, and

 

(k)          upon the request of Agent, any other information reasonably
requested relating to the business, financial or corporate affairs of Borrower,
its Subsidiaries, Horizon or Horizon Management.

 

In addition, Borrower agrees to deliver financial statements prepared on both a
consolidated and consolidating basis to the extent required by this Section 6.3,
and agrees that Borrower will not have a fiscal year different from that of
Horizon or Horizon Management and that no Subsidiary of Borrower will have a
fiscal year different from that of Borrower. Borrower, Horizon and Horizon
Management each also agrees to cooperate with Agent to allow Agent to (A) audit
Borrower or its Subsidiaries, Horizon and Horizon Management, and (B) consult
with its and each such other Person’s independent certified public accountants
if Agent reasonably requests the right to do so. In such connection, each of
Horizon, Horizon Management and Borrower authorizes, and will cooperate with
Agent to cause its respective Subsidiaries to authorize, its independent
certified public accountants to communicate with Agent and to release to Agent
whatever financial information concerning such Person as Agent reasonably may
request.

 

6.4           Notices Regarding Authorized Persons or Servicing and Accounting
Staff. Provide Agent with (a) notice promptly (and in any case within two (2)
Business Days) if any Authorized Person of Borrower, Horizon or Horizon
Management ceases to continue to hold such position, and (b) notice promptly
(and in any case within five (5) Business Days) if more than thirty percent
(30%) of the employees of Borrower, Horizon or Horizon Management involved in
the servicing of and accounting for the Notes Receivable cease, within any
period of sixty (60) days to continue to hold such positions.

 

6.5           Collection of Notes Receivable. (a) Subject to Section 4.8, to use
or cause Servicer to, at Borrower’s sole cost and expense (including through the
application of available funds pursuant to Section 2.3(b)), in accordance with
industry standards and applicable Laws, to promptly and diligently collect and
enforce payment of all Notes Receivable to the extent that it is commercially
reasonable to do so and in a commercially reasonable manner, and defend and hold
Lender Group harmless from any and all loss, damage, penalty, fine or expense
arising from such collection or enforcement, (b) in accordance with the Required
Procedures, maintain at its chief executive office, and, upon the request of
Agent, make available to Agent copies of its Notes Receivable and all related
documents and instruments, and all files, surveys, certificates, correspondence,
appraisals, computer programs, accounting records and other information and data
relating to the Collateral, and (c) permit Agent or its representatives to
discuss with Borrower’s officers or with appraisers furnishing appraisals of
property securing any Note Receivable the procedures for preparation, review and
retention of, and to review and obtain copies of, such appraisals.

 

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6.6           Maintenance of Properties. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct of its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times and in all material respects with the provisions of all leases to
which it is a party as lessee so as to prevent any loss or forfeiture thereof or
thereunder.

 

6.7           Taxes. File or cause to be filed all federal and other Tax
returns, reports and information returns required to be filed by Borrower or any
of its Subsidiaries, and cause all assessments and Taxes, whether real, personal
or otherwise, due or payable by, or imposed, levied, or assessed against
Borrower, its Subsidiaries or any of their respective assets to be paid in full,
before delinquency or before the expiration of any extension period, except to
the extent that the validity of such assessment or Tax shall be the subject of a
Permitted Protest or the failure to pay such tax could not reasonably be
expected to result in a Material Adverse Change. Subject to Permitted Protests,
Borrower will and will cause its Subsidiaries to make timely payment or deposit
of all Tax payments and withholding taxes required of it and them by applicable
Laws, except to the extent that the failure to pay such Tax could not reasonably
be expected to result in a Material Adverse Change, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Borrower and its
Subsidiaries have made such payments or deposits. Borrower and each of its
Subsidiaries will at all times be treated as flow-through entities for United
States federal income tax purposes and will not elect under section
301.7701-3(c) of the Treasury Regulations to be treated as an association
taxable as a corporation.

 

6.8           Insurance.

  

(a)          At Borrower’s expense, maintain insurance respecting its and its
Subsidiaries’ assets wherever located covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrower also shall
maintain general liability insurance, as well as insurance against fraud,
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrower shall deliver copies of all such
policies to Agent with an endorsement naming Agent as the sole loss payee (under
a satisfactory lender’s loss payable endorsement) or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than thirty (30) days prior written
notice to Agent in the event of cancellation of the policy for any reason
whatsoever. Borrower shall also ensure that Servicer maintains similar insurance
coverages for the benefit of Borrower under the Sale and Servicing Agreement.

 

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(b)          Borrower shall give Agent prompt notice of any loss covered by such
insurance. Borrower shall use commercially reasonable efforts to collect any
claims under any such insurance policies and shall give Agent prompt notice of
any material development with respect to such claim, including any proposed
compromise or settlement of such claim. After the occurrence and during the
continuation of an Event of Default, Agent shall have the exclusive right to
give notice of, adjust and compromise claims under any such insurance policies,
in accordance with Agent’s Permitted Discretion. Any monies received as payment
for any loss under any insurance policy mentioned above (other than liability
insurance policies) or as payment of any award or compensation for condemnation
or taking by eminent domain, shall be paid over to Agent to be applied at the
option of Agent or the Required Lenders either to the prepayment of the
Obligations or shall be disbursed to Borrower under staged payment terms
reasonably satisfactory to Agent for application to the cost of repairs,
replacements, or restorations. Any such repairs, replacements, or restorations
shall be effected with reasonable promptness and shall be of a value at least
equal to the value of the items of property destroyed prior to such damage or
destruction.

  

(c)          Borrower will not and will not suffer or permit its Subsidiaries to
take out separate insurance concurrent in form or contributing in the event of
loss with that required to be maintained under this Section 6.8, unless Agent is
included thereon as an additional insured or loss payee under a lender’s loss
payable endorsement. Borrower promptly shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.

 

6.9           Location of Collateral. Keep the Collateral only at the Collateral
Custodian in the case of Notes Receivable, and maintain the chief executive
offices of Borrower and its Subsidiaries only at the locations identified on
Schedule 5.6(b); provided, however, that Borrower may amend Schedules 5.4 and
5.6 so long as such amendment occurs by written notice to Agent not less than
thirty (30) days prior to the date on which such Collateral is moved to such new
location or such chief executive office is relocated, so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, Borrower provides to Agent a Collateral Access
Agreement and all other documents and instruments reasonably requested by Agent
with respect thereto.

 

6.10         Compliance with Laws. Comply with the requirements of all
applicable Laws of any Governmental Authority, other than Laws the
non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.

 

6.11         Leases. Pay when due all rents and other amounts payable under any
leases to which Borrower or any of its Subsidiaries is a party or by which
Borrower’s or any such its Subsidiaries’ properties and assets are bound, unless
such payments are the subject of a Permitted Protest.

 

6.12         Existence. At all times preserve and keep in full force and effect
Borrower’s and its Subsidiaries’ valid existence and good standing and any
rights and franchises material to their businesses. Borrower acknowledges that
the Lender Group is entering into the Loan Documents in reliance upon Borrower’s
identity as a separate legal entity from each of its Affiliates. From and after
the Closing Date, Borrower shall conduct its own business in its own name and
take all reasonable steps, including, without limitation, all steps that Agent
may from time to time reasonably request, to maintain Borrower’s identity and
existence as a separate legal entity and to make it manifest to third parties
that Borrower is an entity with assets and liabilities distinct from those of
its Affiliates. Without limiting the generality of the foregoing and in addition
to the other covenants set forth herein, Borrower shall:

 

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(a)          except to the extent otherwise permitted by Sections 7.10 or 7.13
of this Agreement, conduct all transactions with its Affiliates strictly on an
arm’s-length basis and allocate all overhead expenses (including, without
limitation, telephone and other utility charges) for items shared between such
Affiliates and Borrower on the basis of actual use to the extent practicable
and, to the extent such allocation is not practicable, on a basis reasonably
related to actual use;

 

(b)          observe all limited liability company formalities as a distinct
entity, and ensure that all actions relating to the dissolution or liquidation
of Borrower or the initiation or participation in, acquiescence in, or consent
to any bankruptcy, insolvency, reorganization, or similar proceeding involving
Borrower, are duly authorized by unanimous vote of its directors;

 

(c)           maintain Borrower’s Books separate from those of its Affiliates
and otherwise readily identifiable as its own assets rather than assets of its
Affiliates;

 

(d)          maintain (i) proper Books, in which full, true and correct entries
in accordance with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of Borrower and its
Subsidiaries; and (ii) such Borrower’s Books in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over Borrower or its Subsidiaries.

 

(e)          except as herein specifically otherwise provided, not commingle
funds or other assets of Borrower with those of its Affiliates and not maintain
bank accounts or other depository accounts to which Borrower is an account
party, into which Borrower makes deposits or from which Borrower has the power
to make withdrawals; and

 

(f)          not permit Borrower to pay or finance any of its Affiliates’
operating expenses not properly allocable to Borrower.

 

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6.13         Environmental. (a) Keep any property either owned or operated by
Borrower or its Subsidiaries free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Borrower or its Subsidiaries and take any Remedial Actions required
to abate said release or otherwise to come into compliance with applicable
Environmental Law, and (d) promptly, but in any event within five (5) days of
its receipt thereof, provide Agent with written notice of any of the following:
(i) notice that an Environmental Lien has been filed against any of the real or
personal property of Borrower or its Subsidiaries, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against Borrower or its Subsidiaries, and (iii) notice of a violation, citation,
or other administrative order which could reasonably be expected to result in a
Material Adverse Change.

 

6.14         Disclosure Updates. Promptly and in no event later than five (5)
Business Days after an Authorized Person obtains knowledge thereof, notify Agent
if any written information, exhibit, or report (when taken as a whole) furnished
to Agent or the Lenders contained, at the time it was furnished, any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made. The foregoing to the contrary notwithstanding, any
notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the effect of amending or
modifying this Agreement or any of the Schedules hereto.

 

6.15         Formation of Subsidiaries. Not form or acquire any Subsidiary of
Borrower on or after the Closing Date without the prior written consent of
Agent, and at the time that Borrower forms any direct or indirect Subsidiary or
acquires any direct or indirect Subsidiary after the Closing Date with the prior
written consent of the Agent, Borrower shall, if and to the extent required by
Agent, (a) cause such new Subsidiary to provide to Agent a joinder to this
Agreement, together with such other security documents (including mortgages with
respect to any Real Property of such new Subsidiary), as well as appropriate
financing statements (and with respect to all property subject to a mortgage,
fixture filings), all in form and substance reasonably satisfactory to Agent
(including being sufficient to grant Agent a first priority Lien (subject to
Permitted Liens) in and to the assets of such newly formed or acquired
Subsidiary), (b) provide to Agent a pledge agreement and appropriate
certificates and powers or financing statements, hypothecating all of the direct
or beneficial ownership interest in such new Subsidiary, in form and substance
satisfactory to Agent, and (c) provide to Agent all other documentation,
including one or more opinions of counsel satisfactory to Agent, if requested by
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 mortgage). Any document, agreement, or instrument executed or issued
pursuant to this Section 6.15 shall be a Loan Document.

 

6.16         Required Asset Documents. Immediately upon receipt, deliver to
Agent or the Collateral Custodian all of the Required Asset Documents related to
such Note Receivable.

 

6.17         Sale and Servicing Agreement. Cause Servicer to promptly provide
Agent with true and complete copies of all notices sent or received by Servicer
under the Sale and Servicing Agreement.

 

6.18         Escrow Deposits; Lockbox; Collection Account.

 

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(a)          Deposit into a Deposit Account that is subject to a perfected
Agent’s Lien all amounts advanced by Borrower into escrow and all amounts
delivered to Borrower to be held in escrow, including, without limitation,
construction funds, insurance premiums and proceeds, taxes, and other funds
delivered to Borrower to be held on behalf of any Account Debtor.

 

(b)          (i) At all times maintain the Lockbox Account and shall, and shall
instruct all Account Debtors and all other Persons required to make, or
otherwise making, any payment on or with respect to any Note Receivable or any
proceeds of collateral therefrom, remit such payment or proceeds to the Lockbox
Account and cause such proceeds to be swept and (ii) transfer all amounts in the
Lockbox Account into the Collection Account on a daily basis.

 

(c)          Unless otherwise applied pursuant to the terms of Section 2.3(f)(i)
or (f)(iii), at all times keep all amounts constituting Principal Collections in
the Collection Account; provided, however, that Borrower may, during the
Availability Period use Principal Collections in the Collection Account to pay
or reimburse all or a portion of the purchase price of Eligible Notes Receivable
purchased by Borrower in the ordinary course of business in accordance with the
Required Procedures so long as (w) the purchase price does not exceed the
principal amount of the Eligible Note Receivable being purchased, (x)
immediately upon such purchase, such Eligible Note Receivable will be subject to
Agent’s lien, (y) at the time of the request, at the proposed time of the
transfer to the Designated Account and at the time of the purchase of such
Eligible Note Receivable, both before and after giving effect to such purchase,
(i) the Overcollateralization Ratio is equal to or greater than 150%, (ii)
Borrower shall be in compliance with Section 7.16 and (iii) no Default or Event
of Default shall have occurred and be continuing and (z) Agent shall have
received a Principal Withdrawal Request not later than 12:00 Noon, New York
time, on the Business Day at least two (2) Business Days prior to the requested
date of such use; provided that in the event Borrower satisfies the foregoing
conditions, Agent shall direct the Collection Account Bank to transmit the
amounts set forth in the Principal Withdrawal Request on or before the requested
date of such use. Unless otherwise applied pursuant to the terms of Section
2.3(f)(ii) or (f)(iii), Borrower shall at all times keep all amounts
constituting Interest Collections in the Collection Account; provided, however,
that Borrower may make Restricted Payments permitted under Section 7.10.

 

6.19         Minimum Amount in Collection Account. Maintain at all times
Unrestricted Cash in the Collection Account in an amount at least equal to the
projected amount of interest payments due at the end of the next two calendar
months pursuant to Section 2.5.

 

6.20         Servicing. At any time following the occurrence and during the
continuation of an Event of Default, a Servicer Default or upon the resignation
of Servicer, the Back-up Servicer shall, at the request of Agent, perform the
duties of the Servicer as set out in the Sale and Servicing Agreement. Upon the
Back-up Servicer becoming the successor Servicer, the Back-up Servicer, Agent,
and any other parties to the Sale and Servicing Agreement may supplement the
duties set out in the Sale and Servicing Agreement by a separate servicing
agreement to include the minimum Servicer functions currently set out in the
Sale and Servicing Agreement as well as such other functions as may be agreed by
the parties thereto.

 

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7.            NEGATIVE COVENANTS.

 

Borrower covenants and agrees that, until the payment in full of the Obligations
and the termination of the Commitments, Borrower will not and will not permit
any of its Subsidiaries to do any of the following and each of Horizon and
Horizon Management covenant and agree with respect to itself that, until the
payment in full of the Obligations and the termination of the Commitments,
Horizon will not do any of the following applicable to it under Sections 7.6,
7.16 and 7.17 and Horizon Management will not do any of the following applicable
to it under Sections 7.16 and 7.17:

 

7.1         Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

 

(a)          Indebtedness evidenced by this Agreement and the other Loan
Documents,

 

(b)          obligations under any Hedge Agreement entered into by Borrower and
incurred in the ordinary course of business and consistent with prudent business
practice to hedge against fluctuations in interest rates; provided that such
Indebtedness shall not have been entered into for speculative purposes, and

 

(c)          endorsement of instruments or other payment items for deposit.

  

7.2         Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.

 

7.3         Restrictions on Fundamental Changes.

 

(a)          Enter into any merger, consolidation, reorganization, or
recapitalization, or amend, in a manner that is adverse to Agent or Lenders, any
of its Governing Documents as in effect on the Closing Date.

 

(b)          Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution).

 

(c)          Suspend or go out of a substantial portion of its or their
business.

 

(d)          Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets, other than through Permitted Dispositions.

 

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7.4         Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of (or enter into an
agreement to convey, sell, lease, license, assign, transfer, or otherwise
dispose of) any of Borrower’s or its Subsidiaries’ assets.

 

7.5         Change Name. Change Borrower’s or any of its Subsidiaries’ name,
organizational identification number, state of organization or organizational
identity; provided, however, that Borrower or any of its Subsidiaries may change
their names upon at least thirty (30) days prior written notice to Agent of such
change and so long as, at the time of such written notification, Borrower or its
Subsidiary provides any financing statements necessary to perfect and continue
perfected the Agent’s Liens.

 

7.6         Nature of Business. Make any material change in the nature of its or
their business, or acquire any properties or assets that are not reasonably
related to the conduct of such business activities, including without
limitation, making a material change in its underwriting, approval, or servicing
operations. Without limiting the generality of the foregoing, Horizon shall not
and Borrower shall not permit Horizon to cause the portfolio of Notes Receivable
held by Borrower, as opposed to Horizon or any other Subsidiary or Affiliate of
Horizon, to be selected in a manner adverse to Borrower or the Lenders.

 

7.7          Prepayments and Amendments. Except in connection with a Restricted
Payment or other payment permitted by Section 7.10,

 

(a)          optionally prepay, redeem, defease, purchase, or otherwise acquire
any Indebtedness of Borrower or its Subsidiaries, other than the Obligations in
accordance with this Agreement,

  

(b)          make any payment on account of Indebtedness that has been
contractually subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions, or

 

(c)          directly or indirectly, amend, modify, alter, increase, or change
any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning any Indebtedness, except
the Obligations or as permitted by Section 7.1(b).

 

7.8          Burdensome Agreements. Enter into, or permit any Subsidiary of
Borrower to enter into, any contractual obligation (other than this Agreement or
any other Loan Document) that (a) limits the ability of any Subsidiary of
Borrower to make Restricted Payments to Borrower or to otherwise transfer
Property to Borrower and (b) permits Borrower or any Subsidiary of Borrower to
create, incur or assume Liens on any of its assets other than Liens in favor of
Agent securing the Obligations.

 

7.9          Required Procedures. Make any changes or revisions to the Required
Procedures except in the manner permitted by the definition of Required
Procedures.

 

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7.10         Restricted Payments. Make any Restricted Payment; provided,
however, that so long as (i) the Overcollateralization Ratio is greater than
150% both before and after giving effect to such Restricted Payment, (ii) no
Event of Default shall have occurred and be continuing at the time of such
Restricted Payment or would occur as a result thereof and (iii) and Agent and
Lenders shall have received the financial statements required by Section 6.3(a)
for the most recently completed fiscal month, then Borrower may make
distributions solely from Interest Collections remaining after giving effect to
any payments made or required to be made pursuant to Section 2.3(f) to the
holders of its Stock to the extent permitted by applicable Law.

 

7.11         Accounting Methods. Modify or change its fiscal year or its method
of accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Borrower’s or its Subsidiaries’ accounting records
without said accounting firm or service bureau agreeing to provide Agent
information regarding the Collateral or Borrower’s and its Subsidiaries’
financial condition.

 

7.12         Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment.

 

7.13         Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Borrower except for
transactions that (a)(i) are in the ordinary course of Borrower’s business, (ii)
are upon fair and reasonable terms, (iii) are fully disclosed to Agent, and (iv)
are no less favorable to Borrower or its Subsidiaries, as applicable, than would
be obtained in an arm’s length transaction with a non-Affiliate or (b) are
otherwise permitted under this Agreement.

  

7.14         Use of Proceeds. Use the proceeds of the Loans for any purpose
other than to finance Borrower’s acquisition of Eligible Notes Receivable or,
with respect to Transferred Notes Receivable previously contributed by Horizon
to the Borrower, to make a return of capital in respect of such Transferred
Notes Receivable up to the amount of such Transferred Notes Receivable and for
the sole purpose of originating new Notes Receivable, and to pay transactional
fees, costs, and expenses incurred in connection with this Agreement, the other
Loan Documents, and the transactions contemplated hereby and thereby.

 

7.15         Collateral with Bailees. Store any Collateral at any time now or
hereafter with a bailee, warehouseman, or similar party, other than Agent or
Collateral Custodian; provided, that loan files that do not include original
promissory notes, Lien instruments, or assignments of Lien instruments may be
stored, from time to time, in a public warehouse, access to which has been
assigned by Borrower to Agent.

 

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7.16       Financial Covenants of Borrower, Horizon and Horizon Management.

  

(a)          Minimum Tangible Net Worth of Borrower. Fail to maintain, as of the
end of each of its fiscal months, a Tangible Net Worth of Borrower that is equal
to or greater than $5,000,000.

 

(b)          Minimum Tangible Net Worth of Horizon. Permit Horizon, on a
consolidated basis with its Subsidiaries, to fail to maintain as of the end of
each of its fiscal quarters, a Tangible Net Worth that is equal to or greater
than $100,000,000.

 

(c)          Minimum Tangible Net Worth of Horizon Management. Permit Horizon
Management, on a consolidated basis with its Subsidiaries, to fail to maintain
as of the end of each of its fiscal quarters, a Tangible Net Worth that is equal
to or greater than $500,000.

 

(d)          Overcollateralization Ratio of Borrower. Fail to maintain at any
time an Overcollateralization Ratio of greater than 120%.

 

7.17       Sale and Servicing Agreement.

 

(a)          With respect to the Sale and Servicing Agreement (i) amend or
modify the Sale and Servicing Agreement in any manner that (A) causes or allows
the aggregate amount of the servicing fees payable under the Sale and Servicing
Agreement to exceed, as of any time of determination, an amount equal to the
amount of the servicing fees as determined pursuant to the Sale and Servicing
Agreement on the Closing Date, (B) except as allowed by clause (A) preceding,
obligates Borrower for payment of any professional costs or court costs incurred
by Custodian or Servicer in servicing under the Sale and Servicing Agreement,
(C) causes or allows the requirements applicable to Custodian’s or Servicer’s
standards of conduct, compliance with laws or licensing requirements to be less
restrictive than exist on the Closing Date, (D) releases any indemnity
obligations of Custodian or Servicer or modifies any such obligations in any
manner that is less restrictive than exist on the Closing Date, (E) relieves
Custodian or Servicer of its obligation to perform under the Sale and Servicing
Agreement, or (ii) terminate the Sale and Servicing Agreement, or allow the Sale
and Servicing Agreement to be terminated, in any such case without the prior
written consent of Agent. 

 

(b)          Allow Custodian or Servicer to delegate any of its duties or
functions under the Sale and Servicing Agreement to any Person, or otherwise
engage any such Person to perform any such duties or functions for or on behalf
of Custodian, Servicer or Borrower, in any such case without the prior written
consent of Agent.

 

(c)          Transfer the duties and functions of Custodian or Servicer under
the Sale and Servicing Agreement to any other Person without the prior written
consent of Agent.

 

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8.            EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

 

8.1           Non-Payment. If Borrower fails to pay when due and payable, or
when declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due Agent
or any Lender, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations);

 

8.2           Non-Compliance. If Borrower (a) fails to perform, keep, or observe
any covenant or other provision contained in Sections 2.3, 6.2, 6.3, 6.4, 6.5,
6.8, 6.12, 6.14, 6.19 or 7.1 through 7.17 of this Agreement or any comparable
provision contained in any of the other Loan Documents (b) fails to perform,
keep, or observe any covenant or other provision contained in Sections 6.1, 6.6,
6.7, 6.9, 6.10, 6.11, 6.13, 6.15, 6.16, 6.17 or 6.18 of this Agreement and such
failure continues for a period of ten (10) days after the date on which such
failure first occurs, or (c) fails to perform, keep, or observe any covenant or
other provision contained in any Section of this Agreement (other than a Section
that is expressly dealt with elsewhere in this Section 8.2) or the other Loan
Documents, and such failure continues for a period of fifteen (15) Business Days
after the date on which such failure first occurs;

 

8.3           Attachment. If any material portion of the assets of Borrower or
any of its Subsidiaries, or of Horizon, is attached, seized, subjected to a writ
or distress warrant, levied upon, or comes into the possession of any third
Person;

 

8.4           Insolvency-Voluntary. If an Insolvency Proceeding is commenced by
Borrower or any of its Subsidiaries, or Horizon;

 

8.5           Insolvency-Involuntary. If an Insolvency Proceeding is commenced
against Borrower, or any of its Subsidiaries, or Horizon, and any of the
following events occur: (a) such Person consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted; provided, however, that, during the
pendency of such period, Agent (including any successor agent) and each other
member of the Lender Group shall be relieved of their obligations to extend
credit hereunder, (c) the petition commencing the Insolvency Proceeding is not
dismissed within forty-five (45) calendar days of the date of the filing
thereof; provided, however, that, during the pendency of such period, Agent
(including any successor agent) and each other member of the Lender Group shall
be relieved of their obligations to extend credit hereunder, (d) an interim
trustee is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of such Person, or (e) an order for relief shall have been entered
therein;

 

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8.6           Enjoinment. If Borrower or any of its Subsidiaries, or Horizon, is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs;

 

8.7           Lien. If a notice of Lien, levy, or assessment is filed of record
with respect to any assets of Borrower or any of its Subsidiaries, or any assets
of Horizon Management, having an aggregate value in excess of $250,000, or of
any assets of Horizon having an aggregate value in excess of $1,000,000, by the
United States, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien upon
any assets of Borrower or any of its Subsidiaries, or any assets of Horizon
Management, having an aggregate value in excess of $250,000, or of any assets of
Horizon having an aggregate value in excess of $1,000,000, and in any such case
the same is not paid before such payment is delinquent;

 

8.8           Judgment. If a judgment or other claim becomes a Lien or
encumbrance upon any assets of Borrower or any of its Subsidiaries, or any
assets of Horizon Management, having an aggregate value in excess of $250,000,
or of any of the assets of Horizon having an aggregate value in excess of
$1,000,000, and in any such case either (a) enforcement of such judgment or
claim remains unstayed or unsatisfied for a period of thirty (30) consecutive
days and is not fully covered (subject to standard deductibles) by insurance
coverage under which the insurer has accepted liability, or (b) the judgment
creditor or claimant begins enforcement proceedings of such judgment or Lien;

 

8.9           Default in Other Agreements. If there is a default by Borrower or
any of its Subsidiaries under any Indebtedness (other than the Obligations)
having an aggregate principal amount in excess of $250,000, or a default by
Horizon Management under any Indebtedness having an aggregate principal amount
in excess of $250,000, or a default by Horizon under any Indebtedness having an
aggregate principal amount in excess of $1,000,000, and in any such case such
default (a) occurs at the final maturity of the obligations thereunder, or (b)
results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of the obligations thereunder of Borrower
or any of its Subsidiaries, or Horizon, or Horizon Management, as the case may
be, to terminate such agreement, or to refuse to renew such agreement in
accordance with any automatic renewal right therein;

 

8.10         ERISA Event. An ERISA Event occurs with respect to a Pension Plan
or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $250,000, or
(ii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration
of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $250,000;

 

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8.11         Non-Permitted Payments. If Borrower or any of its Subsidiaries
makes any payment on account of Indebtedness that has been contractually
subordinated in right of payment to the payment of the Obligations, except to
the extent such payment is permitted by the terms of the subordination
provisions applicable to such Indebtedness;

 

8.12         Breach of Warranty. If any warranty, representation, statement, or
Record made or provided to the Lender Group by Borrower, its Subsidiaries,
Horizon, or Horizon Management, or any officer, employee, agent, or director of
Borrower or any of its Subsidiaries, Horizon, or Horizon Management is incorrect
or misleading in any material respect as of the date when made or deemed made;

 

8.13         Reserved;

 

8.14         Invalidity of Liens. If this Agreement or any other Loan Document
that purports to create a Lien in favor of Agent or Lenders shall, for any
reason, fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on or security
interest in the Collateral covered hereby or thereby in favor of Agent or
Lenders, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement;

 

8.15         Management. Robert D. Pomeroy, Jr. and Gerald A. Michaud shall for
any reason cease to be Chief Executive Officer and President, respectively, of
Horizon and Borrower, or perform the roles customarily performed by each of them
in their respective capacities as Chief Executive Officer and President and such
individuals have not been replaced within ninety (90) days by individuals of
like qualifications and experience (and with respect to whom the Agent has
completed a background check with the results of such background check being
acceptable to Agent in its Permitted Discretion);

 

8.16         Servicer Default. A Servicer Default occurs, or either Horizon or
Borrower fails to comply, in any material respect, with its obligations under
the Sale and Servicing Agreement;

 

8.17         Change of Control. A Change of Control shall occurs; or

 

8.18         Invalidity of Loan Documents Any provision of any Loan Document
that Agent in its Permitted Discretion deems to be material shall at any time
for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by Borrower or its Subsidiaries, or by
Horizon or Horizon Management, or a proceeding shall be commenced by Borrower or
its Subsidiaries, or by Horizon or Horizon Management, or by any Governmental
Authority having jurisdiction over Borrower or its Subsidiaries or Horizon or
Horizon Management seeking to establish the invalidity or unenforceability
thereof, or Borrower or its Subsidiaries, or Horizon or Horizon Management,
shall deny that such Person has any liability or obligation purported to be
created under any Loan Document to which it is a party.

 

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9.          THE LENDER GROUP’S RIGHTS AND REMEDIES.

 

9.1         Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, Agent may, and, at the instruction of the
Required Lenders, shall, in addition to any other rights or remedies provided
for hereunder or under any other Loan Document or by applicable Law, do any one
or more of the following:

 

(a)          declare the Obligations, whether evidenced by this Agreement or by
any of the other Loan Documents immediately due and payable, whereupon the same
shall become and be immediately due and payable and Borrower shall be obligated
to repay all of such Obligations in full, without presentment, demand, protest,
or further notice or other requirements of any kind, all of which are hereby
expressly waived by Borrower;

 

(b)          declare the Availability Period and the Commitments terminated,
whereupon the Availability Period and the Commitments shall immediately be
terminated together with any obligation of any Lender hereunder to make Loans;

 

(c)          settle or adjust disputes and claims directly with Borrower’s
Account Debtors and makers of Notes Receivable for amounts and upon terms which
Agent considers advisable, and in such cases, Agent will apply any amounts
received by Agent in payment of such disputed Accounts or Notes Receivable to
the payment of Obligations as set forth in Section 2.3(f)(iii);

 

(d)          exercise or assign any and all rights to collect, manage, and
service the Notes Receivables, including the rights to (i) receive, process and
account for all Collections in respect of Notes Receivables, (ii) appoint a
Back-up Servicer or any other successor Servicer, (iii) terminate the Sale and
Servicing Agreement and assign servicing responsibilities to any replacement
servicer, (iv) without notice to or demand upon Borrower, make any payments as
are reasonably necessary or desirable in connection with the Sale and Servicing
Agreement or any other agreement that Agent enters into with any replacement
servicer, and (v) take all lawful actions and procedures which Agent or such
assignee deems necessary to enforce any and all rights of Borrower under any
Note Receivable Document or collect the amounts due to Borrower in connection
with Notes Receivables (with all amounts incurred by Agent pursuant to this
Section 9.1(d) being Lender Group Expenses);

 

(e)          without notice to or demand upon Borrower or any other Person, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Borrower agrees to assemble
the Collateral if Agent so requires, and to make the Collateral available to
Agent at a place that Agent may designate which is reasonably convenient to both
parties. Borrower authorizes Agent to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Agent’s
determination appears to conflict with the priority of Agent’s Liens in and to
the Collateral and to pay all expenses incurred in connection therewith (which
expenses shall be Obligations). With respect to any of Borrower’s owned or
leased premises, Borrower hereby grants Agent a license to enter into possession
of such premises and to occupy the same, without charge, in order to exercise
any of the Lender Group’s rights or remedies provided herein, at law, in equity,
or otherwise;

 

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(f)          without notice to Borrower (such notice being expressly waived),
and without constituting an acceptance of any collateral in full or partial
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by the Lender Group, or (ii) Indebtedness at any time owing to or for the credit
or the account of Borrower held by the Lender Group;

  

(g)          hold, as cash collateral, any and all balances and deposits of
Borrower held by the Lender Group to secure the full and final repayment of all
of the Obligations;

 

(h)          ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Borrower Collateral. Borrower hereby grants to Agent a license or other right to
use, without charge, Borrower’s labels, patents, copyrights, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any property
of a similar nature, as it pertains to the Borrower Collateral, in completing
production of, advertising for sale, and selling any Borrower Collateral and
Borrower’s rights under all licenses and all franchise agreements shall inure to
the Lender Group’s benefit;

 

(i)          sell the Borrower Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower’s premises) as Agent
determines is commercially reasonable. It is not necessary that the Borrower
Collateral be present at any such sale;

 

(j)          except in those circumstances where no notice is required under the
Code, Agent shall give notice of the disposition of the Borrower Collateral as
follows:

 

(i)          Agent shall give Borrower a notice in writing of the time and place
of public sale, or, if the sale is a private sale or some other disposition
other than a public sale is to be made of the Borrower Collateral, the time on
or after which the private sale or other disposition is to be made; and

 

(ii)         the notice shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in Section 12, at least 10 days before the
earliest time of disposition set forth in the notice; no notice needs to be
given prior to the disposition of any portion of the Borrower Collateral that is
perishable or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;

  

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(k)          Agent, on behalf of the Lender Group, may credit bid and purchase
at any public sale;

 

(l)          Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Borrower Collateral or to operate same
and, to the maximum extent permitted by applicable Law, may seek the appointment
of such a receiver without the requirement of prior notice or a hearing;

 

(m)          exercise any and all rights of Borrower under the Sale and
Servicing Agreement or assume or assign any and all rights and responsibilities
to collect, manage, and service the Notes Receivables, including (i) the
responsibility for the receipt, processing and accounting for all payments on
account of the Notes Receivables, (ii) periodically sending demand notices and
statements to the Account Debtors or makers of Notes Receivable, (iii) enforcing
legal rights with respect to the Notes Receivables, including hiring attorneys
to do so to the extent Agent or such assignee deems such engagement necessary,
and (iv) taking all lawful actions and procedures which Agent or such assignee
deems necessary to collect the Notes Receivables (with all amounts incurred by
Agent pursuant to this Section 9.1(m) being Lender Group Expenses); and

  

(n)          exercise all other rights and remedies available to Agent or the
Lenders under the Loan Documents or applicable Law.

 

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrower or any other Person or any act
by the Lender Group, the Availability Period and the Commitments shall
automatically terminate and the Obligations, inclusive of all accrued and unpaid
interest thereon and all fees and all other amounts owing under this Agreement
or under any of the other Loan Documents, shall automatically and immediately
become due and payable and Borrower shall be obligated to repay all of such
Obligations in full, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by Borrower.

 

9.2           Special Rights of the Lender Group in Respect of Notes Receivable
and Purchased Participations. Without limiting Section 9.1, upon the occurrence
and during the continuation of an Event of Default involving the failure by
Borrower, Servicer or any replacement servicer to perform its servicing
obligations in respect of any Notes Receivable or purchased participations, or
failure to take any action necessary to preserve the ongoing performance,
enforceability or value thereof, Agent shall have the right to take such action
as Agent may deem necessary in its Permitted Discretion to preserve the ongoing
performance and enforceability of any such Note Receivable or purchased
participation and preserve the value thereof, respectively, including without
limitation, taking any action that Borrower or Servicer is required or
authorized to take in respect thereof or to otherwise properly service same, or
contract with any Person to take or perform any such actions. Borrower hereby
grants to Agent, exercisable upon the occurrence and during the continuation of
an Event of Default, a special power of attorney (which shall be irrevocable,
coupled with an interest and include power of substitution) to take any action
authorized in this paragraph until the earliest to occur of the waiver of such
Event of Default, the cure of such Event of Default to Agent’s satisfaction, or
the payment in full of the Obligations. Any advances, payments or other costs or
expenses made or incurred by Agent in taking any action authorized under this
paragraph shall be Lender Group Expenses and included within the Obligations and
reimbursed to Agent on demand or, at Agent’s Permitted Discretion charged and
treated as Loans. Agent’s rights under this Section 9.2 are cumulative of all
other rights of the Agent under the Loan Documents and may be exercised in whole
or in part, in Agent’s Permitted Discretion. Agent shall have no obligation to
take any action under this Section 9.2, and no undertaking by Agent under this
paragraph shall obligate Agent to continue any such action or to take any other
or additional action under this Section 9.2. Nothing in this Section 9.2 shall
be construed as authorizing or causing a replacement of the Servicer absent the
occurrence and continuation of an Event of Default.

 

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9.3           Remedies Cumulative. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

 

10.         TAXES AND EXPENSES.

 

If Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Agent, in its Permitted Discretion and without
prior notice to Borrower, may do any or all of the following: (a) make payment
of the same or any part thereof (provided that Agent shall not pay taxes that
are the subject of a Permitted Protest and that Agent shall, in any event,
consult with the Borrower prior to making any such payment or (b) in the case of
the failure to comply with Section 6.8 hereof, obtain and maintain insurance
policies of the type described in Section 6.8 and take any action with respect
to such policies as Agent deems prudent. Any such amounts paid by Agent shall
constitute Lender Group Expenses and any such payments shall not constitute an
agreement by the Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.

 

11.         WAIVERS; INDEMNIFICATION.

 

11.1         Demand; Protest; etc. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which Borrower may in any way be liable.

 

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11.2       The Lender Group’s Liability for Borrower Collateral. Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Borrower Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Borrower Collateral shall be borne
by Borrower.

 

11.3       Indemnification.

  

(a)          Borrower shall pay, indemnify, defend, and hold the Agent-Related
Persons, the Lender-Related Persons with respect to each Lender (each, an
“Borrower Indemnified Person”) harmless (to the fullest extent permitted by
applicable Law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, costs (but excluding for the avoidance
of doubt any Excluded Taxes), penalties, and damages, and all reasonable fees
and disbursements of attorneys, experts and consultants and other reasonable
costs and expenses actually incurred in connection therewith or in connection
with the enforcement of this indemnification (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (i) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
(including any amendment, restructuring or workout with respect hereto) of this
Agreement, any of the other Loan Documents, or the transactions contemplated
hereby or thereby or the monitoring of Borrower’s and its Subsidiaries’
compliance with the terms of the Loan Documents, (ii) with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Borrower Indemnified Person is a party thereto), or
any act, omission, event, or circumstance in any manner related thereto, and
(iii) in connection with or arising out of any presence or release of Hazardous
Materials at, on, under, to or from any assets or properties owned, leased or
operated by Borrower or any of its Subsidiaries or any Environmental Actions,
Environmental Liabilities or Remedial Actions related in any way to any such
assets or properties of Borrower or any of its Subsidiaries (all the foregoing,
collectively, the “Borrower Indemnified Liabilities”). The foregoing to the
contrary notwithstanding, Borrower shall have no obligation to any Borrower
Indemnified Person under this Section 11.3(a) with respect to any Borrower
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Borrower Indemnified Person. This provision shall survive the termination of
this Agreement and the repayment of the Obligations. If any Borrower Indemnified
Person makes any payment to any other Borrower Indemnified Person with respect
to a Borrower Indemnified Liability as to which Borrower was required to
indemnify the Borrower Indemnified Person receiving such payment, the Borrower
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH BORROWER INDEMNIFIED PERSON WITH RESPECT TO
BORROWER INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH BORROWER INDEMNIFIED PERSON
OR OF ANY OTHER PERSON.

 

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(b)          Each of Horizon and Horizon Management shall pay, indemnify,
defend, and hold the Agent-Related Persons, the Lender-Related Persons with
respect to each Lender (each, an “Horizon and Horizon Management Indemnified
Person”) harmless (to the fullest extent permitted by applicable Law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, costs (but excluding for the avoidance of doubt any
Excluded Taxes), penalties, and damages, and all reasonable fees and
disbursements of attorneys, experts and consultants and other reasonable costs
and expenses actually incurred in connection therewith or in connection with the
enforcement of this indemnification (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them in connection with or as a result of or related
to (i) fraud or willful misconduct of Horizon or Horizon Management or any
Horizon-Related Person and (ii) any intentional misrepresentation of Horizon or
Horizon Management in any Loan Document (the “Horizon and Horizon Management
Indemnified Liabilities”). The foregoing to the contrary notwithstanding,
neither Horizon nor Horizon Management shall have any obligation to any Horizon
and Horizon Management Indemnified Person under this Section 11.3(b) with
respect to any Horizon and Horizon Management Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Horizon and Horizon Management
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Horizon and Horizon
Management Indemnified Person makes any payment to any other Horizon and Horizon
Management Indemnified Person with respect to a Horizon and Horizon Management
Indemnified Liability as to which Horizon and Horizon Management was required to
indemnify the Horizon and Horizon Management Indemnified Person receiving such
payment, the Horizon and Horizon Management Indemnified Person making such
payment is entitled to be indemnified and reimbursed by Horizon and Horizon
Management with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY
SHALL APPLY TO EACH HORIZON AND HORIZON MANAGEMENT INDEMNIFIED PERSON WITH
RESPECT TO HORIZON AND HORIZON MANAGEMENT INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
HORIZON AND HORIZON MANAGEMENT INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

12.         NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands by Borrower
or Agent to the other relating to this Agreement or any other Loan Document
shall be in writing and shall be personally delivered or sent by overnight
courier, electronic mail (at such email addresses as Borrower or Agent, as
applicable, may designate to each other in accordance herewith), or
telefacsimile to Borrower or Agent, as the case may be, at its address set forth
below:

 

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If to Borrower:

Horizon Credit III LLC

c/o Horizon Technology Finance Corporation

312 Farmington Avenue

Farmington, CT 06032

Attn: Robert D. Pomeroy, Jr.

Email: rob@horizontechfinance.com

Fax No.:   860-676-8655 

    with copies to:

Dickstein Shapiro LLP

One Stamford Plaza
263 Tresser Boulevard
Suite 1400

Stamford, CT 06901-3271

Attn: Evan S. Seideman, Esq.
Email: seidemane@dicksteinshapiro.com
Fax No.:   203-547-7686 

    If to Agent:

Fortress Credit Co LLC

1345 Avenue of the Americas, 46th Floor

New York, NY 10105

Attn: Constantine M. Dakolias

Email: ddakolias@fortress.com

Fax No.:   646-224-8716 

    with copies to:

Fortress Credit Co LLC

c/o Fortress Investment Group

1345 Avenue of the Americas, 46th Floor

New York, NY 10105

Attn: Douglas Cardoni

Email: dcardoni@fortress.com

Fax No.:  646-224-8716

 

- and -

 

Skadden, Arps, Slate, Meagher & Flom LLP

155 North Wacker Drive

Chicago, IL 60606

Attn:   Seth Jacobson

Email:   seth.jacobson@skadden.com

Fax No.:   312-407-8511 

 

Agent and Borrower may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 12, other
than notices by Agent in connection with enforcement rights against the Borrower
Collateral under the provisions of the Code, shall be deemed received the date
of actual receipt or if sent by facsimile when sent with receipt confirmed by
the recipient. Borrower acknowledges and agrees that notices sent by the Lender
Group in connection with the exercise of enforcement rights against Borrower
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.

 

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13.         CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

(a)          THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

 

(b)          THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).

 

(c)          TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND
EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

 

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(d)          BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
NEW YORK AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST BORROWER OR ITS PROPERTIES IN THE
COURTS OF ANY JURISDICTION.

 

14.         ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

14.1       Assignments and Participations

 

(a)          With the prior written consent of (i) Agent, which consent of Agent
shall not be unreasonably withheld, delayed or conditioned, and shall not be
required in connection with an assignment to a Person that is a Lender or an
Affiliate (other than individuals) of a Lender and (ii) in the case of an
assignment of any Commitment, Borrower, which consent of Borrower shall not be
unreasonably withheld, delayed or conditioned, and shall not be required (A) if
a Default or Event of Default has occurred and is continuing, or (B) in
connection with an assignment to a Person that is a Lender or an Affiliate
(other than individuals) of a Lender (provided that Borrower shall be deemed to
have consented to a proposed assignment unless it objects thereto by written
notice to Agent within five (5) Business Days after having received notice
thereof), any Lender may assign and delegate to one or more assignees so long as
in each case such prospective assignee is an Eligible Transferee (each, an
“Assignee”; provided, however, that neither Borrower nor any Affiliate of
Borrower shall be permitted to become an Assignee) all or any portion of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount (unless waived
by the Agent) of $5,000,000 (except such minimum amount shall not apply to (x)
an assignment or delegation by any Lender to any other Lender or an Affiliate of
any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each
other or a fund or account managed by any such new Lender or an Affiliate of
such new Lender to the extent that the aggregate amount to be assigned to all
such new Lenders is at least $5,000,000); provided, however, that Borrower and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (1) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrower and Agent
by such Lender and the Assignee, (2) such Lender and its Assignee have delivered
to Borrower and Agent an Assignment and Acceptance and Agent has notified the
assigning Lender of its receipt thereof in accordance with Section 14.1(b), and
(3) unless waived by the Agent, the assigning Lender or Assignee has paid to
Agent for Agent’s separate account a processing fee in the amount of $5,000.

 

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(b)          From and after the date that Agent notifies the assigning Lender
(with a copy to Borrower) that it has received an executed Assignment and
Acceptance and, if applicable, payment of the required processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from any future obligations
under this Agreement (and in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender’s rights and obligations
under this Agreement and the other Loan Documents, such Lender shall cease to be
a party hereto and thereto), and such assignment shall effect a novation among
Borrower, the assigning Lender, and the Assignee; provided, however, that
nothing contained herein shall release any assigning Lender from obligations
that survive the termination of this Agreement, including such assigning
Lender’s obligations under Section 16 and Section 17.9(a) of this Agreement.

 

(c)          By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto, (iii)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement, (v)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (vi) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

 

(d)          Immediately upon Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to Section
14.1(b), this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

 

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(e)          Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons (a “Participant”) participating
interests in all or any portion of its Obligations, its Commitment, and the
other rights and interests of that Lender (the “Originating Lender”) hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Lender shall remain a “Lender” for all purposes of this Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrower,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrower hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrower, the Collections, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves. Each Participant shall be
entitled to the benefits of Section 11.3 and Section 2.11(a) (subject to the
requirements and limitations therein and otherwise in this Agreement, read as if
a Participant were a Lender) to the same extent as if it were a Lender and had
acquired its interest by assignment; provided, however, that a Participant shall
not be entitled to receive any greater payment under Section 11.3 and Section
2.11(a) than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant.

 

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(f)          In connection with any such assignment or participation or proposed
assignment or participation, a Lender may, subject to the provisions of Section
17.9, disclose all documents and information which it now or hereafter may have
relating to Borrower and its Subsidiaries and their respective businesses.

 

(g)          Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable Law.

 

(h)          Agent, acting solely for this purpose as an Agent of Borrower,
shall maintain at one of its lending offices a copy of each assignment pursuant
to this Section 14.1 delivered to it and a register for the recordation of the
names and addresses of the Lenders and the Commitments of, and all principal and
interest in respect of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). Notwithstanding anything to the
contrary in this Agreement, no assignment pursuant to this Section 14.1 shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 14.1(h). The entries in the Register shall
be conclusive, in the absence of manifest error, and Borrower and each Lender
shall treat each Person whose name is recorded therein pursuant to this Section
14.1(h) as a Lender hereunder for all purposes of this Loan Agreement,
notwithstanding any notice to the contrary. The Register shall be available for
inspection by Borrower and any Lender at any reasonable time during regular
business hours and from time to time upon reasonable prior notice. The
provisions of this Section 14.1(h) are intended to cause the Loans to be treated
as having been issued in “registered form” within the meaning of section
5f.103-1(c) of the Treasury Regulations and shall be interpreted and carried out
in a manner consistent therewith.

 

(i)          In addition, each Lender that sells a participation shall, acting
solely for this purpose as an agent of Borrower, maintain a register on which it
records the name and address of each Participant and the principal amounts (and
stated interest) of each Participant’s interest in the Loans or other
obligations under this Agreement (the “Participant Register”). 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. No Lender shall have any obligation
to disclose all or any portion of a Participant Register (including the identity
of any Participant or any information relating to a Participant’s interest in
any Loans or any other Obligations) to any Person except to the extent that such
disclosure is required to establish that such Loans or Obligations are in
“registered form” within the meaning of Section 5f.103-1(c) of the Treasury
Regulations.

 

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(j)          Any other provision in this Agreement notwithstanding, Borrower
hereby acknowledges that the Lenders and their Affiliates may sell or securitize
the Loans (a “Securitization”) through the pledge of the Loans as collateral
security for loans to the Lenders or their Affiliates or through the sale of the
Loans or the issuance of direct or indirect interests in the Loans. Borrower
shall cooperate with the Lender and their Affiliates to effect the
Securitization including, without limitation, by (a) amending this Agreement and
the other Loan Documents, and executing such additional documents, as reasonably
requested by the Lender in connection with the Securitization; provided that (i)
Borrower is reimbursed for all out-of-pocket costs and expenses incurred in
connection with effecting such Securitization, including reasonable attorneys’
fees and (ii) any such amendment or additional documentation does not materially
adversely affect the rights, or materially increase the obligations, of Borrower
under the Loan Documents or change or affect in a manner adverse to Borrower the
financial terms of the Loans, (b) providing such information as may be
reasonably requested by the Lenders in connection with the rating of the Loans
or the Securitization, and (c) providing in connection with any rating of the
Loans a certificate (i) agreeing to indemnify each Lender and its Affiliates,
any rating agencies rating the Loans, or any party providing credit support or
otherwise participating in the Securitization (collectively, the “Securitization
Parties”) for any losses, claims, damages or liabilities (the “Liabilities”) to
which such Lender, its Affiliates or such Securitization Parties may become
subject insofar as the Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact by Borrower or any
Affiliate of Borrower contained in any Loan Document or in any writing delivered
by or on behalf of Borrower or any Affiliate of Borrower to the Lenders in
connection with any Loan Document or arise out of or are based upon the omission
or alleged omission by Borrower or any Affiliate of Borrower to state therein a
material fact required to be stated therein, or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and such indemnity shall survive any transfer by any Lender or
its successors or assigns of the Loans and (ii) agreeing to reimburse each
Lender and its Affiliates for any legal or other expenses reasonably incurred by
such Persons in connection with defending the Liabilities.

 

14.2       Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders’ prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.

 

15.         AMENDMENTS; WAIVERS.

 

15.1       Amendments and Waivers.

  

(a)          No amendment or waiver of any provision of this Agreement or any
other Loan Document (other than the Fee Letter), and no consent with respect to
any departure by Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders (or by Agent at the written
request of the Required Lenders), Agent and Borrower and then any such waiver or
consent shall be effective, but only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all of the Lenders
directly affected thereby and Borrower, do any of the following:

 

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(i)          increase the amount of or extend the expiration date of any
Commitment of any Lender,

 

(ii)         postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

 

(iii)        reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except in connection with the waiver
of applicability of Section 2.5(b), which waiver shall be effective with the
written consent of the Required Lenders),

 

(iv)        amend, modify, or eliminate this Section or any provision of this
Agreement providing for consent or other action by all Lenders,

 

(v)         amend, modify, or eliminate Section 16.12 or the first sentence of
Section 3.6,

 

(vi)        other than as permitted by Section 16.12, release Agent’s Lien in
and to any of the Collateral,

 

(vii)       amend, modify, or eliminate the definition of “Required Lenders” or
“Pro Rata Share”,

 

(viii)      contractually subordinate any of the Agent’s Liens,

 

(ix)         release Borrower from any obligation for the payment of money, or
consent to the assignment or transfer by Borrower of any of its rights or duties
under this Agreement or the other Loan Documents,

 

(x)          amend, modify, or eliminate any of the provisions of Section
2.3(b), (c) or (g),

 

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(xi)          amend, modify, or eliminate any of the provisions of Section
14.1(a) to permit Borrower or an Affiliate of Borrower to be permitted to become
an Assignee,

 

(xii)        amend, modify, or eliminate the definition of
“Overcollateralization Ratio” or any of the defined terms (including the
definition of Eligible Notes Receivable) that are used in such definition to the
extent that any such change results in more credit being made available to
Borrower based upon the Overcollateralization Ratio, but not otherwise, or the
definitions of “Commitment,” or

 

(xiii)       amend, modify, or eliminate the definition of “Availability
Period,” or any of the provisions of Section 2.3(f).

 

(b)          No amendment, waiver, modification, elimination, or consent shall
amend, modify, or waive the definition of, or any of the terms or provisions of,
the Fee Letter, without the written consent of Agent and Borrower (and shall not
require the written consent of any of the Lenders),

 

(c)          Anything in this Section 15.1 to the contrary notwithstanding, any
amendment, modification, elimination, waiver, consent, termination, or release
of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of Borrower,
shall not require consent by or the agreement of Borrower.

  

15.2       Replacement of Certain Lenders.

  

(a)          If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders or
all Lenders affected thereby and if such action has received the consent,
authorization, or agreement of the Required Lenders but not of all Lenders or
all Lenders affected thereby, then Borrower or Agent, upon at least 5 Business
Days prior irrevocable notice, may permanently replace any Lender that failed to
give its consent, authorization, or agreement (a “Holdout Lender”) with one or
more lenders reasonably acceptable to Agent in its Permitted Discretion (each, a
“Replacement Lender”), and the Holdout Lender shall have no right to refuse to
be replaced hereunder. Such notice to replace the Holdout Lender shall specify
an effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.

 

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(b)          Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid in full its share of
the outstanding Obligations (without any premium or penalty of any kind
whatsoever, but including all interest, fees and other amounts that may be due
in payable in respect thereof). If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance prior to the effective
date of such replacement, Agent may, but shall not be required to, execute and
deliver such Assignment and Acceptance in the name or and on behalf of the
Holdout Lender and irrespective of whether Agent executes and delivers such
Assignment and Acceptance, the Holdout Lender shall be deemed to have executed
and delivered such Assignment and Acceptance. The replacement of any Holdout
Lender shall be made in accordance with the terms of Section 14.1. Until such
time as one or more Replacement Lenders shall have acquired all of the
Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender’s Pro Rata Share of Loans.

 

15.3       No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.

 

16.         AGENT; THE LENDER GROUP.

 

16.1         Appointment and Authorization of Agent. Each Lender hereby
designates and appoints Fortress Credit Co LLC as its agent under this Agreement
and the other Loan Documents and each Lender hereby irrevocably authorizes Agent
to execute and deliver each of the other Loan Documents on its behalf and to
take such other action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to Agent by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Fortress Credit Co LLC agrees to act as agent for and on behalf of the Lenders
on the conditions contained in this Section 16. Any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein or in the other Loan Documents, nor shall Agent
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent. Without limiting the generality of the foregoing,
the use of the term “agent” in this Agreement or the other Loan Documents with
reference to Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only a representative relationship between independent
contracting parties. Each Lender hereby further authorizes Agent to act as the
secured party under each of the Loan Documents that create a Lien on any item of
Collateral. Except as expressly otherwise provided in this Agreement, Agent
shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Borrower and its Subsidiaries, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Loans, for itself or on behalf of Lenders, as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Borrower and its Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrower or its
Subsidiaries, the Obligations, the Collateral, the Collections of Borrower and
its Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.

 

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16.2         Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

 

16.3         Liability of Agent. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any of its
Subsidiaries or Affiliates, or any officer or director thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or its
Subsidiaries or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lenders to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the books and records or properties of
Borrower or its Subsidiaries.

 

16.4         Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Lenders.

 

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16.5         Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a “notice of default.” Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.

 

16.6         Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such due diligence, 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 Borrower or any other Person party to a
Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan 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 Borrower or any other Person party to a Loan Document.
Except for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrower or any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
Each Lender acknowledges that Agent does not have any duty or responsibility,
either initially or on a continuing basis (except to the extent, if any, that is
expressly specified herein) to provide such Lender with any credit or other
information with respect to Borrower, its Affiliates or any of their respective
business, legal, financial or other affairs, and irrespective of whether such
information came into Agent’s or its Affiliates’ or representatives’ possession
before or after the date on which such Lender became a party to this Agreement.

 

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16.7         Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of Borrower and its Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses by Borrower or its Subsidiaries, each Lender hereby agrees that it is
and shall be obligated to pay to Agent such Lender’s ratable thereof. Whether or
not the transactions contemplated hereby are consummated, each of the Lenders,
on a ratable basis, shall indemnify and defend the Agent-Related Persons (to the
extent not reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so) from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person’s gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender’s ratable share of any costs or out of pocket expenses
(including attorneys, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any other Loan Document to
the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.

 

16.8         Agent in Individual Capacity. Fortress Credit Co LLC and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in, and generally engage in any kind of
trust, financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Document as
though Fortress Credit Co LLC were not Agent hereunder, and, in each case,
without notice to or consent of the other members of the Lender Group. The other
members of the Lender Group acknowledge that, pursuant to such activities,
Fortress Credit Co LLC or its Affiliates may receive information regarding
Borrower or its Affiliates or any other Person party to any Loan Documents that
is subject to confidentiality obligations in favor of Borrower or such other
Person and that prohibit the disclosure of such information to the Lenders, and
the Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver Agent will use its
reasonable best efforts to obtain), Agent shall not be under any obligation to
provide such information to them. The terms “Lender” and “Lenders” include
Fortress Credit Co LLC in its individual capacity.

 

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16.9         Successor Agent. Agent may resign as Agent upon thirty (30) days
prior written notice to the Lenders (unless such notice is waived by the
Required Lenders) and Borrower (unless such notice is waived by Borrower. If
Agent resigns under this Agreement, the Required Lenders shall be entitled, with
(so long as no Event of Default has occurred and is continuing) the consent of
Borrower (such consent not to be unreasonably withheld, delayed, or
conditioned), appoint a successor Agent for the Lenders. If no successor Agent
is appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders and Borrower, a successor Agent. In
any such event, upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers, and
duties of the retiring Agent and the term “Agent” shall mean such successor
Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is thirty
(30) days following a retiring Agent’s notice of resignation, the retiring
Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of Agent hereunder until such time, if
any, as the Lenders appoint a successor Agent as provided for above.

 

16.10         Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
trust, financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Borrower or its Affiliates or any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them.

 

16.11         Withholding Taxes. Without limiting any of Borrower’s obligations
under Section 2.11(a)(i) or Section 2.11(a)(iii), if the IRS or any other
Governmental Authority of the United States or other jurisdiction asserts a
claim that Agent did not properly withhold tax from amounts paid to or for the
account of any Lender for any reason (including because the appropriate form was
not delivered or was not properly executed, because such Lender failed to notify
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or because of such Lender’s failure
to comply with the provisions of Section 14.1(i) relating to the maintenance of
a Participant Register), such Lender shall indemnify and hold Agent harmless for
all amounts paid, directly or indirectly, by Agent, as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to Agent under this Section 16.11, together
with all costs and expenses (including attorneys fees and expenses). The
obligations of the Lenders under this Section 16.11 shall survive the
satisfaction, discharge or payment of all Obligations, the resignation or
replacement of Agent and any assignment of rights by (or the replacement of) any
Lender.

 

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16.12      Collateral Matters

 

(a)          The Lenders hereby irrevocably authorize Agent to release any Lien
on any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Obligations, (ii) constituting property
being sold or disposed of if a release is required or desirable in connection
therewith and if such sale or disposition is a Permitted Disposition or Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which Borrower owned no interest at the time the Agent’s Lien was granted nor
at any time thereafter, or (iv) constituting property leased to Borrower under a
lease that has expired or is terminated in a transaction permitted under this
Agreement. Borrower and the Lenders hereby irrevocably authorize Agent, to (a)
consent to, credit bid or purchase (either directly or through one or more
acquisition vehicles) all or any portion of the Collateral at any sale thereof
conducted under the provisions of the Bankruptcy Code, including under Section
363 of the Bankruptcy Code, (b) credit bid or purchase (either directly or
through one or more acquisition vehicles) all or any portion of the Collateral
at any sale or other disposition thereof conducted under the provisions of the
Code, including pursuant to Sections 9-610 or 9-620 of the Code, or (c) credit
bid or purchase (either directly or through one or more acquisition vehicles)
all or any portion of the Collateral at any other sale or foreclosure conducted
by Agent (whether by judicial action or otherwise) in accordance with applicable
Law. In connection with any such credit bid or purchase, the Obligations owed to
the Lenders shall be entitled to be, and shall be, credit bid on a ratable basis
(with Obligations with respect to contingent or unliquidated claims being
estimated for such purpose if the fixing or liquidation thereof would not unduly
delay the ability of Agent to credit bid or purchase at such sale or other
disposition of the Collateral and, if such claims cannot be estimated without
unduly delaying the ability of Agent to credit bid, then such claims shall be
disregarded, not credit bid, and not entitled to any interest in the asset or
assets purchased by means of such credit bid) and the Lenders whose Obligations
are credit bid shall be entitled to receive interests (ratably based upon the
proportion of their Obligations credit bid in relation to the aggregate amount
of Obligations so credit bid) in the asset or assets so purchased (or in the
Stock of the acquisition vehicle or vehicles that are used to consummate such
purchase). Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Borrower at any time, the Lenders will confirm in writing Agent’s authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 16.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent’s opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrower in respect of) all
interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.

 

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(b)          Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by Borrower or its Subsidiaries or
is cared for, protected, or insured or has been encumbered, or that Agent’s
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or that any
particular items of Collateral meet the eligibility criteria applicable in
respect thereof or whether to impose, maintain, reduce, or eliminate any
particular reserve hereunder or whether the amount of any such reserve is
appropriate or not, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent pursuant to any of
the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to the terms
and conditions contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent’s own interest in the Collateral
in its capacity as one of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.

 

16.13     Restrictions on Actions by Lenders; Sharing of Payments

 

(a)          Each of the Lenders agrees that it shall not, without the express
written consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the written request of Agent, set off against the
Obligations, any amounts owing by such Lender to Borrower or any deposit
accounts of Borrower now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do so
in writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.

  

(b)          If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that to the extent that such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

 

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16.14      Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting Agent’s Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected by possession or control.
Should any Lender obtain possession or control of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor
shall deliver possession or control of such Collateral to Agent or in accordance
with Agent’s instructions.

 

16.15     Payments by Agent to the Lenders. All payments to be made by Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, fees, or interest of the Obligations.

 

16.16     Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

 

16.17     Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:

 

(a)          is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a “Report”) prepared by or at the request of Agent, and Agent shall
so furnish each Lender with such Reports,

  

(b)          expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,

 

(c)          expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon the Books, as well as on representations of
Borrower’s personnel,

 

(d)          agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner in
accordance with Section 17.9, and

 

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(e)          without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or fail to take or any conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit accommodations that
the indemnifying Lender has made or may make to Borrower, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

 

In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender and (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender’s notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender.

 

16.18     Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts of any other member of the Lender Group. No Lender shall
be responsible to Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for such Lender or on its behalf, nor to take any other action on behalf
of such Lender hereunder or in connection with the financing contemplated
herein.

 

17.         GENERAL PROVISIONS.

 

17.1       Effectiveness. This Agreement shall be binding and deemed effective
when executed by Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.

 

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17.2         Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.

 

17.3         Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

 

17.4         Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

 

17.5         [Reserved].

 

17.6         Debtor-Creditor Relationship. The relationship between the Lenders
and Agent, on the one hand, and Borrower, on the other hand, is solely that of
creditor and debtor. No member of the Lender Group has (or shall be deemed to
have) any fiduciary relationship or duty to Borrower arising out of or in
connection with the Loan Documents or the transactions contemplated thereby, and
there is no agency or joint venture relationship between the members of the
Lender Group, on the one hand, and the Borrower, on the other hand, by virtue of
any Loan Document or any transaction contemplated therein.

 

17.7         Counterparts; Electronic Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

   

17.8         Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Borrower or the transfer to the Lender Group of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (each, a “Voidable Transfer”), and if the Lender Group is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys fees
of the Lender Group related thereto, the liability of Borrower automatically
shall be revived, reinstated, and restored and shall exist as though such
Voidable Transfer had never been made.

 

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17.9       Confidentiality.

  

(a)          Agent and the Lenders each individually (and not jointly or jointly
and severally) agree that material, non-public information regarding Borrower
and its Affiliates, their operations, assets, and existing and contemplated
business plans (“Confidential Information”) shall be treated by Agent and the
Lenders in a confidential manner, and shall not be disclosed by Agent and the
Lenders to Persons who are not parties to this Agreement, except: (i) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group and to employees, directors and officers of any
member of the Lender Group (the Persons in this clause (i), “Lender Group
Representatives”) on a “need to know” basis in connection with this Agreement
and the transactions contemplated hereby and on a confidential basis, (ii) to
Subsidiaries and Affiliates of any member of the Lender Group, and to their
respective employees, directors and officers, provided that any such Subsidiary
or Affiliate shall have been advised of the confidential nature of such
information hereunder subject to the terms of this Section 17.9, (iii) as may be
required by regulatory authorities so long as such authorities are informed of
the confidential nature of such information, (iv) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation; provided
that (x) prior to any disclosure under this clause (iv), the disclosing party
agrees to provide Borrower with prior notice thereof, to the extent that it is
practicable to do so and to the extent that the disclosing party is permitted to
provide such prior notice to Borrower pursuant to the terms of the applicable
statute, decision, or judicial or administrative order, rule, or regulation and
(y) any disclosure under this clause (iv) shall be limited to the portion of the
Confidential Information as may be required by such statute, decision, or
judicial or administrative order, rule, or regulation, (v) as may be agreed to
in advance in writing by Borrower, (vi) as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process,
provided, that, (x) prior to any disclosure under this clause (vi) the
disclosing party agrees to provide Borrower with prior written notice thereof,
to the extent that it is practicable to do so and to the extent that the
disclosing party is permitted to provide such prior written notice to Borrower
pursuant to the terms of the subpoena or other legal process and (y) any
disclosure under this clause (vi) shall be limited to the portion of the
Confidential Information as may be required by such Governmental Authority
pursuant to such subpoena or other legal process, (vii) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or the Lenders or the Lender Group
Representatives), (viii) in connection with any assignment, participation,
financing or pledge of any Lender’s interest under this Agreement or in
connection with a Securitization, provided that prior to receipt of Confidential
Information any Person receiving the information from Lender in connection with
the respective assignment, participation, financing or pledge shall have agreed
in writing to receive such Confidential Information hereunder subject to the
terms of this Section, (ix) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents; provided, that, prior to any
disclosure to any Person (other than Borrower, Agent, any Lender, any of their
respective Affiliates, or their respective counsel) under this clause (ix) with
respect to litigation involving any Person (other than Borrower, Agent, any
Lender, any of their respective Affiliates, or their respective counsel), the
disclosing party agrees to provide Borrower with prior written notice thereof,
and (x) in connection with, and to the extent reasonably necessary for, the
exercise of any secured creditor remedy under this Agreement or under any other
Loan Document.

 

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(b)          Anything in this Agreement to the contrary notwithstanding, Agent
may (i) provide customary information concerning the terms and conditions of
this Agreement and the other Loan Documents to pricing reporting services, and
(ii) subject to the prior written approval of Borrower and Horizon in its sole
discretion, use the name, logos, and other insignia of Borrower and Horizon and
the total Commitments provided hereunder in any “tombstone” or comparable
advertising, on its website or in other marketing materials of Agent. Anything
in this Agreement to the contrary notwithstanding, Borrower, Horizon and Horizon
Management may, subject to the prior written approval of the Agent and each
member of the Lender Group, in their sole discretion, use the name, logos and
other insignia of Agent and members of the Lender Group, along with the total
Commitments provided hereunder, in any “tombstone” or comparable advertising, on
its website or in other marketing materials of Borrower, Horizon or Horizon
Management.

 

17.10     Lender Group Expenses. Borrower agrees to pay the Lender Group
Expenses on the earlier of (a) the first day of the month following the date on
which such Lender Group Expenses were first incurred or (b) the date on which
demand therefor is made by Agent. Borrower agrees that its obligations contained
in this Section 17.10 shall survive payment or satisfaction in full of all other
Obligations.

 

17.11     Survival. All representations and warranties made by Borrower or its
Affiliates in the Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of the Loan Documents and
the making of any loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that Agent or any Lender may have had
notice or knowledge of any Default or Event of Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated.

 

17.12     Patriot Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies Borrower that pursuant to the requirements of the
Act, it is required to obtain, verify and record information that identifies
Borrower, which information includes the name and address of Borrower and other
information that will allow such Lender to identify Borrower in accordance with
the Patriot Act. In addition, if Agent is required by law or regulation or
internal policies to do so, it shall have the right to periodically conduct (a)
Patriot Act searches, OFAC/PEP searches, and customary individual background
checks for Borrower and its Affiliates and (b) OFAC/PEP searches and customary
individual background checks for the senior management and key principals of
Borrower and its Affiliates, and Borrower agrees to cooperate in respect of the
conduct of such searches and further agrees that the reasonable costs and
charges for such searches shall constitute Lender Expenses hereunder and be for
the account of Borrower.

 

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17.13         Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

  HORIZON CREDIT III LLC,             a Delaware limited liability company, as
Borrower             By: /s/ Robert D. Pomeroy, Jr.     Name: Robert D. Pomeroy,
Jr.     Title: Chief Executive Officer             FORTRESS CREDIT CO LLC,    
as Agent and as a Lender             By: /s/ Constantine M. Dakolias     Name:
Constantine M. Dakolias     Title: President  

 

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JOINDER

 

The undersigned, intending to be legally bound, hereby join the Loan and
Security Agreement, dated as of August 23, 2012, among Agent, the Lenders, and
the Borrower, for the limited purposes of being bound by Section 11.3(b) and
making the representations and warranties specifically applicable to such party
in Section 5 and the negative covenants specifically applicable to such party in
Section 7.

 

HORIZON TECHNOLOGY FINANCE CORPORATION, 

 

a Delaware limited liability company

    By: /s/ Robert D. Pomeroy, Jr. Name: Robert D. Pomeroy, Jr. Title: Chief
Executive Officer     HORIZON TECHNOLOGY FINANCE MANAGEMENT LLC,     a Delaware
limited liability company     By: /s/ Robert D. Pomeroy, Jr. Name: Robert D.
Pomeroy, Jr. Title: Chief Executive Officer 

 

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