Exhibit 10.1

EXECUTION COPY

 

 

NEWSTAR FINANCIAL, INC.

 

 

$75,000,000

REVOLVING CREDIT FACILITY

 

 

NOTE AGREEMENT

 

 

DATED AS OF JANUARY 5, 2010

 

 

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TABLE OF CONTENTS

 

          Page

ARTICLE I.

  

DEFINITIONS AND ACCOUNTING TERMS

   1

  1.01

   Defined Terms    1

  1.02

   Other Interpretive Provisions    25

  1.03

   Accounting Terms    26

  1.04

   Rounding    26

  1.05

   References to Agreements and Laws    26

  1.06

   Times of Day    26

ARTICLE II.

  

THE REVOLVING LOANS

   27

  2.01

   Revolving Loans    27

  2.02

   Prepayments of Revolving Loans    28

  2.03

   Expiration, Termination or Reduction of Revolving Commitments    29

  2.04

   Fees    29

  2.05

   Interest    30

  2.06

   Payment Records    31

  2.07

   Payments Generally    31

  2.08

   Sharing of Payments    32

ARTICLE III.

  

TAXES, YIELD PROTECTION AND ILLEGALITY

   33

  3.01

   Taxes    33

  3.02

   Illegality    33

  3.03

   Inability to Determine Rates    34

  3.04

   Increased Cost and Reduced Return; Capital Adequacy    34

  3.05

   Funding Losses    34

  3.06

   Matters Applicable to all Requests for Compensation    35

  3.07

   Survival    35

  3.08

   Substitution of Holders    35

ARTICLE IV.

  

CONDITIONS PRECEDENT

   36

  4.01

   Conditions to Effectiveness of this Agreement and Initial Borrowing    36

  4.02

   Conditions to all Borrowings    38

ARTICLE V.

  

REPRESENTATIONS, WARRANTIES AND COVENANTS

   38

  5.01

   Existence, Qualification and Power; Compliance with Laws    38

  5.02

   Authorization; No Contravention    39

  5.03

   No Consent or Other Action    39

 

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TABLE OF CONTENTS

(continued)

 

          Page

  5.04

   Binding Effect    39

  5.05

   Financial Statements; No Material Adverse Effect    39

  5.06

   Litigation    39

  5.07

   No Default    40

  5.08

   Insurance    40

  5.09

   Taxes    40

  5.10

   ERISA Compliance    40

  5.11

   Company Information; Subsidiaries, Etc    41

  5.12

   Purpose of Revolving Loans; Margin Regulations; Investment Company Act;
Public Utility Holding Company Act    41

  5.13

   Disclosure    41

  5.14

   Compliance with Laws    41

  5.15

   Business and Location    41

  5.16

   Financing Statement; Perfected Security Interest    42

  5.17

   Title; Sufficiency; No Liens    42

  5.18

   No Further Liens on Collateral    42

  5.19

   Capitalization; Solvency    42

  5.20

   Brokers and Financial Advisors    43

ARTICLE VI.

  

AFFIRMATIVE COVENANTS

   43

  6.01

   Financial Statements    43

  6.02

   Certificates; Other Information    44

  6.03

   Notices    44

  6.04

   Payment of Obligations    45

  6.05

   Preservation of Existence, Etc    45

  6.06

   Maintenance of Insurance    45

  6.07

   Compliance with Laws    45

  6.08

   Books and Records    45

  6.09

   Inspection Rights    46

  6.10

   Banks and Payments    46

  6.11

   Securities and Investments    47

  6.12

   Additional Subsidiary Guarantors    47

  6.13

   Use of Proceeds    47

 

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TABLE OF CONTENTS

(continued)

 

          Page

  6.14

   Certain Financial Covenants    47

  6.15

   Certain Property Interests    48

  6.16

   Transfer of Unencumbered Assets    48

  6.17

   Dissolution of Boulders NS First Holding, LLC    48

  6.18

   NewStar Collateral Subsidiary Account    48

  6.19

   2007-1 Class E Note    48

  6.20

   Capital Stock of NewStar Commercial Loan LLC 2009-1    48

ARTICLE VII.

  

NEGATIVE COVENANTS

   49

  7.01

   Indebtedness    49

  7.02

   Liens    50

  7.03

   Fundamental Changes    51

  7.04

   Dispositions    51

  7.05

   Restricted Payments    52

  7.06

   Change in Nature of Business    53

  7.07

   Transactions with Affiliates    53

  7.08

   Burdensome Agreements    54

  7.09

   Use of Proceeds    54

ARTICLE VIII.

  

INTENTIONALLY OMITTED

   54

ARTICLE IX.

  

EVENTS OF DEFAULT AND REMEDIES

   54

  9.01

   Events of Default    54

  9.02

   Remedies Upon Event of Default    56

  9.03

   Application of Funds    57

ARTICLE X.

  

RIGHT TO CURE; POST-DEFAULT POWER OF ATTORNEY

   57

  10.01

   Right to Cure    57

  10.02

   Power of Attorney    58

ARTICLE XI.

  

ADMINISTRATIVE AGENT

   58

  11.01

   Appointment and Authorization of Administrative Agent    58

  11.02

   Delegation of Duties    59

  11.03

   Liability of Administrative Agent    59

  11.04

   Reliance by Administrative Agent    59

  11.05

   Notice of Default    60

  11.06

   Credit Decision; Disclosure of Information by Administrative Agent    60

 

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TABLE OF CONTENTS

(continued)

 

          Page

  11.07

   Indemnification of Administrative Agent    60

  11.08

   Administrative Agent in its Individual Capacity    61

  11.09

   Successor Administrative Agent    61

  11.10

   Administrative Agent May File Proofs of Claim    61

  11.11

   Collateral Matters    62

  11.12

   Duties in the Case of Enforcement    62

ARTICLE XII.

  

MISCELLANEOUS

   63

  12.01

   Amendments, Etc    63

  12.02

   Notices and Other Communications; Facsimile Copies    64

  12.03

   No Waiver; Cumulative Remedies    65

  12.04

   Attorney Costs, Expenses and Taxes    65

  12.05

   Indemnification by the Company    65

  12.06

   Payments Set Aside    66

  12.07

   Successors and Assigns    66

  12.08

   Confidentiality    68

  12.09

   Set-off    69

  12.10

   Interest Rate Limitation    69

  12.11

   Counterparts    69

  12.12

   Integration    69

  12.13

   Survival of Representations and Warranties    69

  12.14

   Severability    70

  12.15

   Tax Forms    70

  12.16

   Governing Law; Consent to Jurisdiction    71

  12.17

   Waiver of Right to Trial by Jury and Other Rights    72

  12.18

   Time of the Essence    72

  12.19

   ENTIRE AGREEMENT    73

 

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SCHEDULES

 

1.01A

   Certain Eligible CLO Notes

1.01B

   Certain Eligible Investment Vehicles

1.01C

   Certain Excluded Collateral

1.01D

   Certain Excluded Subsidiaries

2.01

   Revolving Commitments

5.06

   Litigation

5.11(a)

   Legal names, Federal Taxpayer Identification Numbers, States of Formation,
Prior Legal Names and Mailing Addresses for the Note Parties

5.11(b)

   Mergers, etc.; Subsidiaries; Other Equity Investments

5.19(a)

   Capitalization

5.20

   Brokers and Financial Advisors

6.10

   Deposit Accounts

6.11

   Securities Accounts

7.01(c)

   Existing Indebtedness

7.02(b)

   Existing Liens

12.02

   Administrative Agent’s Office; Certain Addresses for Notices

EXHIBITS

 

A

   Form of Note

B

   Form of Assignment and Assumption

C

   Form of Financing Statement

D

   Filing Offices

E

   Form of Compliance Certificate

F

   Form of Restricted Payments Officer’s Certificate

G

   Form of Borrowing Base Certificate

H

   Form of Borrowing Notice

I

   Form of Subsidiary Guaranty

 

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NOTE AGREEMENT

This NOTE AGREEMENT (this “Agreement”) is entered into as of January 5, 2010, by
and among NEWSTAR FINANCIAL, INC., a Delaware corporation (the “Company”), THE
HOLDERS FROM TIME TO TIME PARTY HERETO, and FORTRESS CREDIT CORP., as
Administrative Agent (as hereinafter defined).

WHEREAS (i) the Company has requested that from time to time the Holders party
hereto make Revolving Loans (as hereinafter defined) to the Company, and
(ii) the Holders have indicated their willingness to make such Revolving Loans,
in each case on the terms and conditions set forth herein;

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

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

“Actual/360 Basis” means on the basis of a 360-day year and charged on the basis
of actual days elapsed for any period for which interest is calculated.

“Adjusted Loan Amount” means, at any time of determination, with respect to any
Obligor Loan, the product of (a) the Outstanding Obligor Loan Balance of such
Obligor Loan at such time multiplied by (b) the Adjustment Percentage (expressed
as a fraction) applicable to such Obligor Loan at such time.

“Adjustment Percentage” means (a) with respect to any Real Estate Loan
(including without limitation, any REO Loan) or any Structured Product, 60%,
(b) with respect to any Obligor Second Lien Loan, any Obligor Subordinated Loan
or any other Obligor Loan that does not constitute Obligor Senior Debt, 5% and
(c) with respect to any Obligor Loan that constitutes Obligor Senior Debt as of
any date of determination, the percentage set forth below opposite the Obligor
Senior Leverage Ratio applicable to such Obligor Loan as of the Measurement Date
then most recently ended:

 

Obligor Senior Leverage Ratio

  

Percentage

 

Less than 3.00 to 1.00

   100 % 

Greater than or equal to 3.00 to 1.00 but less than 4.00 to 1.00

   90 % 

Greater than or equal to 4.00 to 1.00 but less than 5.50 to 1.00

   80 % 

Greater than or equal to 5.50 to 1.00 but less than 7.00 to 1.00

   65 % 

Greater than or equal to 7.00 to 1.00 but less than 9.00 to 1.00

   50 % 

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Greater than or equal to 9.00 to 1.00 (or where the Obligor EBITDA for the
relevant period is negative)

   30 % 

Notwithstanding anything herein to the contrary, if at any time of determination
of the Borrowing Base, a Drawable Unencumbered Revolving Asset Excess exists, a
portion of the Eligible Drawable Unencumbered Revolving Assets equal in amount
to such Drawable Unencumbered Revolving Asset Excess shall be deemed to have an
Adjustment Percentage which is equal to the percentage set forth above which
would have applied thereto without giving effect to this sentence multiplied by
0.50 (the reduction to the Adjustment Percentage resulting from such
multiplication being the “Revolving Asset Haircut”).

“Administrative Agent” means Fortress Credit Corp., in its capacity as
contractual representative of the Holders to the extent and in the manner
provided in Article XI, or any successor in such capacity appointed pursuant to
Section 11.09.

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 12.02, or such other address or
account as the Administrative Agent may from time to time notify the Company and
the Holders.

“Affiliate” means, with respect to any Person, (i) any Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified, including any Person that is
a manager, director or officer of, general partner in, or trustee of, the
specified Person, or (ii) any Person who, directly or indirectly, is the legal
or beneficial owner of or Controls 10% or more of any class of Capital Stock of
the specified Person.

“Agent-Related Persons” means the Administrative Agent, together with its
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of the Administrative Agent and such Affiliates.

“Aggregate Investment Vehicle Equity Amount” means, at any time of determination
thereof, the aggregate sum of the Investment Vehicle Equity Amount of all
Eligible Investment Vehicles.

“Agreement” means this Note Agreement.

“Applicable Margin” means, as of any date of determination, (i) for the period
from the Closing Date through the date the Administrative Agent receives the
first Borrowing Base Certificate required to be delivered pursuant to
Section 6.02(c) hereunder after the Closing Date, the applicable margin based
upon the Availability Ratio calculation delivered to the Administrative Agent on
the Closing Date, and (ii) thereafter, the applicable margin set forth in the
table below that corresponds to the Availability Ratio set forth in the
Borrowing Base Certificate most recently delivered to the Administrative Agent
pursuant to Section 6.02(c) of this Agreement prior to such date.

 

Level

  

Availability Ratio

   Applicable Margin  

I

   If the Availability Ratio is less than 0.50:1.0    9.0 % 

II

   If the Availability Ratio is greater than or equal to 0.50:1.0 and less than
or equal to 0.76:1.0    10.5 % 

 

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III

   If the Availability Ratio is greater than 0.76:1.0    12.0 % 

Notwithstanding the foregoing, without prejudicing or limiting any rights or
remedies of the Administrative Agent or any Holder hereunder, if the Company
fails to provide any such Borrowing Base Certificate when such Borrowing Base
Certificate is due in accordance with the requirements of Section 6.02(c), the
Applicable Margin shall be set at the margin in the row styled “Level III”
commencing on the date on which such Borrowing Base Certificate was required to
be delivered and ending on the date that is the earlier of (x) the date on which
such Borrowing Base Certificate is delivered (on which date (but not
retroactively), without constituting a waiver of any Default or Event of Default
occasioned by the failure to timely deliver such Borrowing Base Certificate or
otherwise prejudicing or limiting any rights or remedies of the Administrative
Agent or any Holder hereunder, the Applicable Margin shall be set at the margin
based upon the Availability Ratio calculation contained in such Borrowing Base
Certificate) and (y) the date on which such failure constitutes an Event of
Default under Section 9.01(a), at which time upon written notice from the
Administrative Agent, at the direction of the Required Holders, the Interest
Rate hereunder shall be equal to the Default Rate.

“Applicable Unused Fee Rate” means, as of any date of determination, (i) at all
times when the Total Outstandings are less than 50% of the aggregate
Commitments, a rate per annum equal to 4.0%, (ii) at all times when the Total
Outstandings are greater than or equal to 50% of the aggregate Commitments, but
are less than 75% of the aggregate Commitments, a rate per annum equal to 3.0%,
and (iii) at all times when the Total Outstandings are greater than or equal to
75% of the aggregate Commitments, a rate per annum equal to 2.0%.

“Assignment and Assumption” means an Assignment and Assumption substantially in
the form attached hereto as Exhibit B.

“Attorney Costs” means and includes, subject to any limits with respect thereto,
all reasonable and documented fees, out-of-pocket expenses and disbursements of
any law firm or other external counsel.

“Availability” means, at any date of determination thereof, the difference
between (a) the lesser of (i) the aggregate Commitments of all of the Holders at
such time and (ii) the Borrowing Base at such time and (b) the Total
Outstandings at such time.

“Availability Period” means the period from and including the Closing Date to
the Maturity Date.

“Availability Ratio” means, at any date of determination thereof, the ratio of
(a) the Total Outstandings as of such date to (b) the Borrowing Base as of such
date (provided, that for purposes of calculating the Availability Ratio on any
date a borrowing of Revolving Loans is requested, such Availability Ratio shall
be calculated, after giving pro forma effect to the Revolving Loan to be made on
the applicable borrowing date).

“Bankruptcy Code” means title II, United States Code.

“Borrowing Base” means, as of date of determination, an amount equal to the sum
of (a) the Unencumbered Asset Amount as of such date plus (b) the Aggregate
Investment Vehicle Equity Amount as of such date plus (c) the CLO Note Amount as
of such date plus (d) the CLO Manager Amount as of such date.

 

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“Borrowing Base Certificate” means a certificate delivered by the Company,
substantially in the form of Exhibit G, certifying the amount of the Borrowing
Base as of the date set forth therein and showing in reasonable detail the
calculations used in determining the Availability Ratio, the Minimum Interest
Coverage, the Coverage Test and Consolidated Net Worth as of such date.

“Borrowing Notice” means a notice of borrowing pursuant to Section 2.01(b),
which shall be substantially in the form of Exhibit H.

“Business” means any financial services, including (i) the making, holding,
purchase and trading of direct or indirect investments, loans and other
extensions of credit, (ii) finance leasing, (iii) the purchase, sale and
brokerage of securities, shares and commodities, (iv) issuing shares, securities
and investment units, (v) buying and selling commodities, (vi) the management
and acquisition of loan and other debt portfolios, CLOs, CDOs and assets related
to any of the foregoing, (vii) the arrangement and syndication of loan
facilities, in each case as conducted by the Company and its Subsidiaries from
time to time and (viii) any other business involving the origination, management
or servicing of loans or credit-related investment products or business lines
ancillary to any of the foregoing that are not otherwise specifically mentioned
in the foregoing clauses (i) through (vii).

“Business Day” means any day which is not a Saturday or Sunday or a legal
holiday and on which banks are not required or permitted by law or other
governmental action to close (i) in New York, New York, and (ii) in the case of
a Business Day which relates to the LIBO Rate, in London, England.

“Capital Lease” means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in accordance
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.

“Capital Stock” means shares of capital stock (whether denominated as common
stock or preferred stock), beneficial, partnership or membership interests,
trust certificates, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company,
trust or equivalent entity, whether voting or non-voting, and any warrant or
other option to purchase any of the above.

“Cash” means Money or a credit balance in a Deposit Account.

“Cash Equivalents” means, as of any date of determination (i) marketable
securities issued or fully guaranteed or insured by the United States federal
government or any agency thereof, (ii) certificates of deposit, eurodollar time
deposits, overnight bank deposits and bankers’ acceptances of any commercial
bank organized under the laws of the United States, any state thereof, the
District of Columbia, any foreign bank, or its branches or agencies (fully
protected against currency fluctuations) that, at the time of acquisition, are
rated at least “A-1” by Standard & Poor’s Ratings Group (“S&P”) or “P-1” by
Moody’s Investors Service, Inc. (“Moody’s”), (iii) commercial paper of an issuer
rated at least “A-1” by S&P or “P-1” by Moody’s, (iv) repurchase obligations
rated at least “A-1” by S&P or “P-1” by Moody’s, (v) any negotiable instruments
or securities or other investments subject to the satisfaction of at least an
“A-1” rating by S&P or a “P-1” rating by Moody’s, and (vi) shares of any money
market fund that (a) has net assets whose Dollar equivalent exceeds
$500,000,000, and (b) is rated at least “AAAm” or “AAAm-G” by S&P or “Aaa” by
Moody’s.

“CDOs” means securitized interests in a pool of assets consisting of loans or
other debt instruments, which interests are commonly referred to as
“collateralized debt obligations”.

“CDO Subsidiary” means a Subsidiary that (a) is engaged as its sole business in
issuing CDOs, or (b) is engaged as its sole business in acting as a trust
depositor in connection with CDOs.

 

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“Change of Control” means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding (i) Permitted Holders, and
(ii) any employee benefit plan of such person or its subsidiaries, and any
person or entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an
“option right”)), directly or indirectly, of 40% or more of the equity
securities of the Company entitled to vote for members of the board of directors
or equivalent governing body of the Company on a fully-diluted basis (and taking
into account all such securities that such person or group has the right to
acquire pursuant to any option right);

(b) during any period of 12 consecutive months commencing after the Closing
Date, a majority of the members of the board of directors or other equivalent
governing body of the Company cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day of such
period, (ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body or by Permitted Holders holding 51% or more of the
voting Capital Stock of the Company, or (iii) whose election or nomination to
that board or other equivalent governing body was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors); or

(c) any Person or two or more Persons (other than Permitted Holders) acting in
concert shall have acquired by contract or otherwise, or shall have entered into
a contract or arrangement that, upon consummation thereof, will result in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Company, or control
over the equity securities of the Company entitled to vote for members of the
board of directors or equivalent governing body of the Company on a
fully-diluted basis (and taking into account all such securities that such
Person or group has the right to acquire pursuant to any option right)
representing 40% or more of the combined voting power of such securities.

“Citigroup Demand Note” means that certain demand note dated as of November 19,
2008 by and among the Company, as obligor, and NewStar Warehouse Funding 2005
LLC, as holder, as the same has been and may hereafter be amended from time to
time.

“Citigroup Facility” means collectively (i) that certain Amended and Restated
Sale and Servicing Agreement dated as of November 19, 2008 by and among the
Company, as servicer and as seller, NewStar Warehouse Funding 2005 LLC, as
purchaser, and Lyon Financial d/b/a U.S. Bank Portfolio Services, as backup
servicer, (ii) that certain Amended and Restated Indenture dated as of
November 19, 2008 by and between NewStar Warehouse Funding 2005 LLC, as issuer,
and U.S. Bank National Association, as indenture trustee and custodian, and
(iii) that certain Note Purchase Agreement dated as of November 19, 2008 by and
among NewStar Warehouse Funding 2005 LLC, as issuer, the Company, as seller and
servicer, the liquidity banks and investors party thereto, and Citibank, N.A.,
as successor note purchaser agent, together with any other documents executed in
connection the foregoing, as each has been and may hereafter be amended from
time to time.

 

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“CLO Manager” means any Person (other than a natural person) which manages,
advises, services or administers a Fund.

“CLO Manager Amount” means, with respect to any CLO Manager acquired by the
Company or any Subsidiary Guarantor after the Closing Date, an amount equal to
50% of the purchase price paid in cash (whether paid upon the consummation of
the acquisition or thereafter pursuant to earn-out or other deferred payment
arrangements) by the Company or such Subsidiary Guarantor, as the case may be,
to parties that are not Affiliates for such CLO Manager, provided that the
aggregate CLO Manager Amount for all CLO Managers shall at no time exceed
$10,000,000, and further provided that the Capital Stock of such CLO Manager is
the subject of a first priority perfected security interest in favor of the
Administrative Agent.

“CLO Note” means a promissory note issued by a CLO Subsidiary to the Company or
to the NewStar Collateral Subsidiary.

“CLO Note Amount” means, as of any date of determination, the product of (a) the
aggregate outstanding principal balance of all Eligible CLO Notes as of the
Measurement Date ending on or most recently ended prior to such date multiplied
by (b) 0.15.

“CLOs” means securitized interests in a pool of loans, which interests are
commonly referred to as “collateralized loan obligations”.

“CLO Subsidiary” means any Subsidiary (a) that is engaged as its sole business
in issuing CLOs, or (b) that is engaged as its sole business in acting as a
trust depositor in connection with CLOs.

“Closing Date” means the first date all of the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 4.01.

“Code” means the Internal Revenue Code of 1986.

“Collateral” has the meaning specified in the Security Agreement; provided that
the term Collateral shall not include any of the Excluded Collateral.

“Collateral Availability” means, at any date of determination thereof, the
difference between (a) the Borrowing Base at such time, and (b) the Total
Outstandings at such time.

“Collateral Revenues” means, with respect to any Collateral, all interest,
income, dividends, distributions, rents, revenues, profits and earnings thereon
or other monies or revenues derived therefrom, including all moneys which may
become payable or received under any policy insuring the Collateral or otherwise
required to be maintained under the Note Documents (including any return of
unearned premiums).

“Commitment” means, with respect to any Holder, such Holder’s Revolving
Commitment.

“Company” has the meaning specified in the introductory paragraph hereto.

“Compliance Certificate” has the meaning specified in Section 6.02(a).

“Concentration Account” has the meaning specified in Section 6.10.

“Conflict” or “Conflicting” means, with respect to any Contractual Obligation,
Organizational Document, Requirement of Law, Consent or Other Action or any
other item, any conflict with, breach of or default under, or any triggering of
any remedial rights, benefits, or obligations under or in connection

 

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with, the terms of such item.

“Consent(s) and/or Other Action” means any consent, authorization, Judgment,
directive, approval, license, certificate, registration, permit, exemption,
filing, notice, declaration or other action by, with or to any Person.

“Consolidated Net Worth” means, as to any Person as of any date of
determination, the amount which would be included under stockholders’ equity on
a consolidated balance sheet of such Person determined on a consolidated basis
in accordance with GAAP.

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise, and the
terms “Controlling” and “Controlled” shall have meanings correlative thereto.

“Control Collateral” means all Collateral with respect to which a security
interest may be perfected by the secured party’s obtaining “control” of such
collateral within the meaning of the UCC.

“Corporate Loan Workout Subsidiary” means any wholly-owned Workout Subsidiary of
the Company which is not a Real Estate Loan Workout Subsidiary, provided that
the assets of such Workout Subsidiary are pledged to secure an Unencumbered
Asset.

“Coverage Test” has the meaning specified in Section 6.14(b).

“Currency Agreement” means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement.

“Customary Permitted Liens” means, with respect to any Person, any of the
following Liens:

(a) Liens with respect to the payment of taxes, assessments or governmental
charges in each case that are not yet due or that are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained to the extent required by
GAAP;

(b) Liens of landlords arising by statute and liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other liens imposed by law
created in the ordinary course of business for amounts not yet due or that are
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being maintained to
the extent required by GAAP;

(c) deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance or other types of social security benefits
or to secure the performance of bids, tenders, sales, contracts (other than for
the repayment of borrowed money) and surety, appeal, customs or performance
bonds;

(d) encumbrances arising by reason of zoning restrictions, easements, licenses,
reservations, covenants, rights-of-way, utility easements, building restrictions
and other similar encumbrances on the use of real property not materially
detracting from the value of such real property or not materially

 

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interfering with the ordinary conduct of the business conducted and proposed to
be conducted at such real property;

(e) encumbrances arising under leases or subleases of real property that do not,
in the aggregate, materially detract from the value of such real property or
interfere with the ordinary conduct of the business conducted and proposed to be
conducted at such real property; and

(f) financing statements with respect to a lessor’s rights in and to personal
property leased to such Person in the ordinary course of such Person’s business
other than through a Capital Lease.

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

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

“Default Rate” means, as of any date of determination, a rate per annum equal to
the sum of (i) the greater of (a) the LIBO Rate and (b) 3.00% plus (ii) 12.00%.

“Deposit Account” shall have the meaning accorded to such term in the UCC.

“Deposit Account Control Agreement” means, with respect to any Deposit Account,
any control agreement or other similar agreement between each applicable
depositary bank, the Company and the Administrative Agent, as the Administrative
Agent shall deem necessary in its reasonable discretion, in form and substance
reasonably acceptable to the Administrative Agent, providing for such depositary
bank’s agreement to comply with the instructions of the Administrative Agent
with respect to such Deposit Account without the further consent of, or notice
to, the Company, which instructions shall be delivered by the Administrative
Agent only so long as an Event of Default shall have occurred and be continuing.

“Disposition” or “Dispose” means, with respect to any property, assets,
obligations or other items, the sale, assignment, conveyance, transfer, license,
lease, gift, abandonment or other disposition (including any sale and leaseback
transaction) thereof by any Person, including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith; provided that cash payments made by
such Person in satisfaction of payment obligations for reasonable and customary
costs and expenses incurred in the ordinary course of business and in connection
with maintaining its business operations shall not constitute a “Disposition”.

“Disqualified Capital Stock” means, with respect to any Person as of any date of
determination, any class or series of Capital Stock of such Person that, by its
terms or otherwise, (a) is required to be redeemed or repurchased or is
redeemable or subject to repurchase at the option of any holder or holders of
such class or series of Capital Stock (whether pursuant to any sinking fund
obligation, or upon the occurrence of specified events, or otherwise) at any
time on or prior to the date which is 180 days after the Maturity Date, or
(b) is convertible into or exchangeable at the option of the holder or holders
thereof for (whether upon the occurrence of specified events or otherwise)
either Capital Stock of the type referred to in the preceding clause (a) or any
Indebtedness; provided that the foregoing shall not be construed to prohibit
rights to receive dividends and distributions in preference to those paid on any
other class of Capital Stock of such Person. Notwithstanding the foregoing, any
Capital Stock that would otherwise constitute Disqualified Capital Stock solely
because the holders of such Capital Stock have the right to require such Person
to repurchase such Capital Stock upon the occurrence of a Change of Control

 

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will not constitute Disqualified Capital Stock if the terms of such Capital
Stock provided that such Person may not repurchase or redeem any such Capital
Stock pursuant to such provisions prior to the termination of the Commitments
and the payment in full of all Obligations.

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

“Drawable Unencumbered Revolving Asset” means any Unencumbered Revolving Asset
other than (a) any Unencumbered Revolving Asset with respect to which the
commitment has been fully funded or (b) any Unencumbered Revolving Asset with
respect to which the applicable lender has no obligation to lend as a result of
the existence of an event of default under the applicable Obligor Loan
Documents.

“Drawable Unencumbered Revolving Asset Excess” means, at any time of
determination thereof, the difference (only if positive) between (a) the
aggregate Outstanding Obligor Loan Balance of Eligible Drawable Unencumbered
Revolving Assets at such time (excluding Drawable Unencumbered Revolving Assets
consisting of (i) all amounts drawn prior to the Closing Date under Obligor
Delayed Draw Term Loans, and (ii) amounts drawn after the Closing Date under
Obligor Delayed Draw Term Loans up to an aggregate amount not to exceed
$4,000,000) and (b) the Drawable Unencumbered Revolving Asset Threshold at such
time.

“Drawable Unencumbered Revolving Asset Threshold” means, as of any date of
determination, the greater of (a) the product of (i) 0.20 multiplied by (ii) the
Borrowing Base (calculated solely for purposes of this definition without giving
effect to the Revolving Asset Haircut) as of the Measurement Date ending on or
most recently ended prior to such date, and (b) (i) $10,000,000, if the
Borrowing Base is less than $40,000,000, or (ii) $15,000,000, if the Borrowing
Base is equal to or greater than $40,000,000.

“Eligible CLO Note” means (i) any CLO Note that is listed on Schedule 1.01A
hereto, (ii) any CLO Note purchased by the Company or a Subsidiary Guarantor
after the date hereof that was issued by a CLO Subsidiary that issued any CLO
Note listed on Schedule 1.01A hereto, (iii) those certain $31,000,000 Class C
Floating Rate Deferrable Interest Notes and $56,921,299 Subordinated Notes to be
issued by NewStar Commercial Loan Trust 2009-1 and described in that certain
Offering Memorandum dated as of January 5, 2010, and (iv) any other CLO Note
issued after the date hereof by a CLO Subsidiary formed after the date hereof so
long as (a) the structure and capitalization of such CLO Note and the related
CLO Subsidiary are substantially similar to, or not otherwise less favorable to
the holder than, those CLO Notes listed on Schedule 1.01A, or (b) such CLO Note
has been approved in writing by the Administrative Agent, such approval not to
be unreasonably withheld, conditioned or delayed; provided that in each case of
clauses (i), (ii), (iii) and (iv), such CLO Note satisfies the General
Eligibility Criteria.

“Eligible Drawable Unencumbered Revolving Asset” means any Drawable Unencumbered
Revolving Asset that satisfies the General Eligibility Criteria and is held by
the NewStar Collateral Subsidiary or, solely during the period from the Closing
Date until the 60th day following the Closing Date, by the Company.

“Eligible Holder” means (i) an Affiliate or Fund Affiliate of a Holder; (ii) a
commercial bank organized under the laws of the United States, or any State
thereof, respectively, and having total assets in excess of $500,000,000;
(iii) a savings and loan association or savings bank organized under the laws of
the United States or any State thereof, and having total assets in excess of
$500,000,000; (iv) a finance company, insurance company or other financial
institution (whether a corporation, partnership, trust or other entity) that is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business and having total assets in excess of
$500,000,000; (v) a Fund, and (vi) any other Person approved by the
Administrative Agent and, unless a Default has occurred and is continuing

 

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at the time any assignment is effected pursuant to Section 12.07, the Company,
each such approval not to be unreasonably withheld or delayed, subject to the
terms of Section 12.07 hereof.

“Eligible Investment Vehicle” means an Investment Vehicle that satisfies the
following criteria:

(i) in the case of an Investment Vehicle existing on the date hereof, such
Investment Vehicle is listed on Schedule 1.01B, provided that such Schedule
1.01B shall be automatically amended to add NewStar Warehouse Funding 2005 LLC
and Schedule 1.01C shall be automatically amended to delete NewStar Warehouse
Funding 2005 LLC, in each case without further action on the part of any party
if (a) the Company delivers, or causes to be delivered, to the Administrative
Agent all consents and other documentation reasonably required to grant to the
Administrative Agent, and to permit the grant of, a first priority perfected
security interest in 100% of the Capital Stock of NewStar Warehouse Funding 2005
LLC, and (b) NewStar Warehouse Funding 2005 LLC otherwise satisfies the
conditions set forth in clauses (iii), (iv) and (v) of this definition;

(ii) in the case of an Investment Vehicle not existing on the date hereof, the
structure and capitalization of such Investment Vehicle are substantially
similar to, or not otherwise less favorable to a pledgee of the Capital Stock of
such Investment Vehicle than, the Investment Vehicles listed on Schedule 1.01B;

(iii) 100% of the Capital Stock of such Investment Vehicle is owned by the
Company or a Subsidiary Guarantor, free and clear of all Liens and other claims,
other than the security interest of the Administrative Agent, and the
Administrative Agent has a first priority perfected security interest in all of
such Capital Stock;

(iv) such Investment Vehicle has no material liabilities, other than the
Indebtedness included in the calculation of “Investment Vehicle Debt” for such
Investment Vehicle, Indebtedness permitted pursuant to Section 7.01(m) hereof,
and customary fees, indemnity obligations and similar liabilities incurred in
the ordinary course of its financing operations; and

(v) such Investment Vehicle is not a CDO Subsidiary or CLO Subsidiary.

“Eligible Unencumbered Asset” means any Unencumbered Asset that satisfies the
General Eligibility Criteria and is held by the NewStar Collateral Subsidiary
or, solely during the period from the Closing Date until the 60th day following
the Closing Date, by the Company.

“ERISA” means the Employee Retirement Income Security Act of 1974.

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

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Company 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 the Company 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

 

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any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate.

“Event of Default” has the meaning specified in Section 9.01.

“Excluded Collateral” means (i) any Capital Stock or other Investment held by
the Company in any Subsidiary of the Company in existence as of the date hereof
to the extent such Subsidiary is listed on Schedule 1.01C hereto, (ii) any
Capital Stock or other Investment held by the Company or any Subsidiary
Guarantor in Investment Vehicles hereafter existing, formed or acquired (other
than as set forth in clause (i) above) or in any other Person (other than a
natural Person), in each case to the extent and for so long as the grant of a
security interest therein would Conflict with any Contractual Obligation, any
Organizational Document of an Investment Vehicle, or a Requirement of Law,
except, if and to the extent the terms of any Contractual Obligation or other
document prohibiting such grant of a security interest is ineffective under
Article 9 of the UCC or other applicable law or if such Conflict is waived or
otherwise consented to by the related counterparty or the waiver of such
Conflict does not require the consent of any party other than the Company or an
Affiliate thereof, (iii) any assets owned by any Excluded Subsidiary, (iv) any
rights under Capital Leases, documents evidencing purchase money financing
transactions and any equipment financed under any of the foregoing, to the
extent (A) such Capital Leases and documents evidencing purchase money financing
transactions are permitted under Section 7.01(g) hereof and (B) the creation of
a security interest therein in favor of the Administrative Agent would Conflict
with the terms of such Capital Lease or documents and such prohibition is not
rendered ineffective under Article 9 of the UCC or other applicable law,
(v) rights of a party that is not an Investment Vehicle under licenses and
Contractual Obligations, in each case to the extent (and only to the extent
that) and for so long as the grant of a security interest therein would Conflict
with such Contractual Obligation or Requirement of Law, except, if and to the
extent the terms of any such Contractual Obligation or other document
prohibiting such grant of a security interest is ineffective under Article 9 of
the UCC or other applicable law or if such Conflict is waived or otherwise
consented to by the related counterparty or the waiver of such Conflict does not
require the consent of any party other than the Company or an Affiliate thereof,
(vi) rights of any Investment Vehicle under Contractual Obligations in each case
to the extent (and only to the extent that) and for so long as the grant of a
security interest therein would Conflict with such Contractual Obligation or any
Organizational Document of such Investment Vehicle or Requirement of Law,
except, if and to the extent the terms of any such Contractual Obligation or
other document prohibiting such grant of a security interest is ineffective
under Article 9 of the UCC or other applicable law or if such Conflict is waived
or otherwise consented to by the related counterparty or the waiver of such
Conflict does not require the consent of any party other than the Company or an
Affiliate thereof, (vii) the Deposit Accounts described in clauses (i) through
(iii) of Section 6.10 hereof, and (viii) any other assets not excluded in
clauses (i)-(vii) above which have a book value of less than $1,000,000 in the
aggregate and are identified in writing from time to time by the Company or a
Subsidiary Guarantor to the Administrative Agent as being Excluded Collateral
pursuant to this clause (viii); provided that the term “Excluded Collateral”
shall not include any dividend, income or other distribution arising from any
Excluded Collateral or any Proceeds received by the Company with respect to the
Company’s rights or interests in such Excluded Collateral.

“Excluded Subsidiaries” means (i) all Investment Vehicles, whether now existing
or hereafter formed or acquired, but only if and for so long as (A) such entity
remains an Investment Vehicle and (B) the Contractual Obligations owing to Third
Party Lenders or the provisions of the Organizational Documents of such
Investment Vehicle which cannot be amended without the consent of parties other
than the Company or an Affiliate thereof prohibit such Investment Vehicle from
incurring any Indebtedness, or granting any Liens, other than Securitization
Debt and Liens securing such Securitization Debt, (ii) all Corporate Loan
Workout Subsidiaries hereafter formed or acquired, (iii) those certain
Subsidiaries of the Company listed on Schedule 1.01D hereto, (iv) any Subsidiary
which is not wholly-owned by the Company or by a Subsidiary Guarantor, and
(v) other Subsidiaries of the Company whether

 

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now existing or hereafter formed or acquired and which are not set forth in
clauses (i) through (iv) above, to the extent the aggregate book value of the
assets of all such Subsidiaries does not exceed $1,000,000 and such Subsidiaries
are identified in writing from time to time by the Company or a Subsidiary
Guarantor to the Administrative Agent as being Excluded Subsidiaries pursuant to
this clause (v).

“Fair Market Value” means (i) with respect to any asset or group of assets at
any date, the value of the consideration obtainable in a sale of such asset at
such date assuming a sale by a willing seller to a willing purchaser dealing at
arm’s length and arranged in an orderly manner over a reasonable period of time
having regard to the nature and characteristics of such asset, provided that
(a) if after to giving effect to any such Disposition pursuant to
Section 7.04(e) and to the application of the proceeds thereof, Collateral
Availability is greater than or equal to $10,000,000, then the value of the
consideration obtainable pursuant to this clause (i) shall be reasonably
determined in good faith by the Company, or (b) if after to giving effect to any
such Disposition pursuant to Section 7.04(e) and to the application of the
proceeds thereof, Collateral Availability is less than $10,000,000, then the
value of the consideration obtainable pursuant to this clause (i) shall be
reasonably determined in good faith by the Company and approved by the
Administrative Agent, such approval not to be unreasonably withheld, but if the
Company and the Administrative Agent cannot mutually agree on such determination
of value, then the determination of value shall be established by obtaining firm
bids for such Unencumbered Asset from two unaffiliated loan market participants
(such market participants to be mutually agreed upon by the parties, each acting
in a commercially reasonable manner), with the highest bid constituting the
value thereof (and if two such bids cannot be obtained, then determination of
value shall be established by reference to a valuation by a third party loan
pricing service, such as Loan Pricing Corporation, with such loan pricing
service to be mutually agreed upon by the parties, each acting in a commercially
reasonable manner), and (ii) with respect to any marketable security that cannot
be valued in accordance with the preceding clause (i), the closing sale price of
such security on the Business Day next preceding such date, as appearing in any
published list of any national securities exchange or the NASDAQ Stock Market
or, if there is no such closing sale price of such security, the final price for
the purchase of such security at face value quoted on such Business Day by a
financial institution of recognized standing regularly dealing in Securities of
such type and selected by the Company and the Administrative Agent.

“Federal Funds Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) 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 that
is a Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.

“Filing Collateral” means all Collateral with respect to which a security
interest may be perfected by the filing of financing statements under the UCC.

“Filing Offices” means the filing offices listed on Exhibit D attached hereto.

“Financing Statement” means the UCC financing statement naming the Company, as
debtor, and the Administrative Agent, for the benefit of Holders, as secured
party, and describing the Collateral as the collateral.

“Foreign Holder” has the meaning specified in Section 12.15(a)(i).

“FRB” means the Board of Governors of the Federal Reserve System of the United
States or any successor thereto performing similar functions.

 

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“Fund Affiliate” means, with respect to any Holder that is a fund that invests
in commercial loans, any other fund that invests in commercial loans and is
advised or managed by such Holder or an Affiliate of such Holder or by the same
investment advisor as such Holder or by an Affiliate of such investment advisor.

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

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

“General Eligibility Criteria” means a CLO Note or Unencumbered Asset:

(a) (i) in which, to secure the Obligations, whether contingent or otherwise,
the Administrative Agent has a first priority perfected security interest, or
(ii) if such CLO Note is held by a CLO Subsidiary acting as a trust depositor,
the Administrative Agent has a first priority perfected security interest in the
Capital Stock in the CLO Subsidiary holding such CLO Note;

(b) which is not subject to any right of recoupment or set-off;

(c) which is denominated in Dollars;

(d) which is not “margin stock” as defined in Regulation U of the Federal
Reserve Board; and

(e) which is not subject to any security interest or Lien, any participation
interest, or any other claim other than Liens in favor of the Administrative
Agent for the benefit of the Holders and Customary Permitted Liens.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank, public office,
court, arbitration or mediation panel, or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of government.

“Grant” or “Grants” or “Granting” shall include to grant, assign, pledge,
transfer, convey, set over and dispose.

“Guaranty Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
Indebtedness of another Person, if the purpose or intent of such Person in
incurring the Guaranty Obligation is to provide assurance to the obligee of such
Indebtedness that such Indebtedness will be paid or discharged.

“Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement.

“Holder” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption, other
than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.

 

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“Incur” means, with respect to any Indebtedness, to directly or indirectly
create, incur, issue, assume or guaranty, or otherwise become directly or
indirectly liable (contingently or otherwise) with respect to, such
Indebtedness, and the terms “Incurred” and “Incurrence” shall have meanings
correlative thereto; provided, that the assumption by the Company or any of its
Subsidiaries (such Person, the “Assuming Party”) of Indebtedness owing to
another Person by the Company or any Subsidiary shall not constitute an
additional Incurrence of Indebtedness by the Assuming Party for purposes of
calculating compliance with Section 7.01.

“Indebtedness” means, as applied to any Person, (i) all indebtedness for
borrowed money, including senior and subordinated indebtedness and corporate
debt and any working capital, liquidity or subscription agreement facilities,
(ii) all notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iii) any obligation
owed for all or any part of the deferred purchase price of property or services,
which purchase price is (a) due more than six months from the date of Incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, (iv) all Capital Lease obligations and the present value of
all future rental payments under all synthetic leases, (v) obligations under any
traditional repurchase agreement financings and (vi) all Guaranty Obligations.

“Indemnified Liabilities” has the meaning set forth in Section 12.05.

“Indemnitees” has the meaning set forth in Section 12.05.

“Initial Revolving Commitment Reduction Date” means July 5, 2011, or, if such
day is not a Business Day, the next succeeding Business Day.

“Insurance Requirements” means the insurance requirements set forth in
Section 6.06.

“Interest Accrual Period” means, with respect to any Revolving Loan, (i) in the
case of the initial such Interest Accrual Period, the period commencing on the
date of the making of such Revolving Loan and ending on the last Business Day of
the first calendar month ending thereafter, and (ii) in the case of any
subsequent such Interest Accrual Period, the period commencing on the last day
of the immediately preceding Interest Accrual Period with respect to such Note
and ending on the last Business Day of the first calendar month ending
thereafter.

“Interest Rate” means, for any day, a rate per annum equal to the sum of (i) the
greater of (a) the LIBO Rate and (b) 3.00% plus (ii) the Applicable Margin in
effect on such day; provided that upon written notice from the Administrative
Agent, at the direction of the Required Holders after the occurrence and during
the continuance of an Event of Default, the Interest Rate shall be the Default
Rate and further provided that no such written notice shall be required and such
Default Rate shall be imposed automatically upon the occurrence of an Event of
Default under Section 9.01(g).

“Interest Rate Agreement” means any interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement or other similar agreement or
arrangement.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (i) the purchase or other
acquisition of Capital Stock or other securities of another Person, (ii) a loan,
advance or capital contribution to, or purchase or other acquisition of any
other Indebtedness of or equity participation or interest in, another Person,
including any partnership or Investment Vehicle interest in such other Person or
(iii) the purchase or other acquisition (in one transaction or a series of
transactions) of assets of another Person that constitute a business unit. The
amount of any Investment shall be the original cost of such Investment plus the
cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-

 

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offs with respect to such Investment.

“Investment Vehicle” means a CDO Subsidiary, CLO Subsidiary, Warehouse
Subsidiary or any other limited liability company, limited partnership, or other
entity created or acquired by the Company for the purpose of engaging in issuing
CDOs or CLOs, in providing “warehouse” lending or borrowing facilities, or
engaging in similar securitization transactions; provided that an entity shall
be deemed to be an “Investment Vehicle” only if and for so long as (i) it has
Indebtedness outstanding, or has been formed for the purpose of incurring
Indebtedness, in each case related to CLOs, CDOs, warehouse lending or borrowing
facilities or similar securitization transactions (“Securitization Debt”) that
is held or to be held by parties that are not Affiliates (“Third Party
Lenders”), and (ii) it is a securitization vehicle which issues or acquires debt
held or to be held by a third party purchaser.

“Investment Vehicle Debt” means, as at any date of determination thereof, (a) so
long as no party has any recourse to the Company in respect of any Indebtedness
of an Eligible Investment Vehicle, the outstanding principal balance of all
Indebtedness of such Eligible Investment Vehicle as of such date, and (b) if a
third party has total or partial recourse to the Company in respect of any
Indebtedness of an Eligible Investment Vehicle, the sum of (i) the outstanding
principal balance of all Indebtedness of such Eligible Investment Vehicle as of
such date plus (ii) the Liquidated Recourse Amount as of such date; provided
that all Indebtedness permitted by Section 7.01(m) hereof shall be excluded from
the calculation of Investment Vehicle Debt.

“Investment Vehicle Equity Amount” means, as at any date of determination, with
respect to each Eligible Investment Vehicle, the product of (i) 0.25 multiplied
by (ii) the difference between (A) the Adjusted Loan Amount of all Obligor Loans
held by such Eligible Investment Vehicle as of the Measurement Date ending on or
most recently ended prior to such date and (B) the difference between (1) the
Investment Vehicle Debt of such Eligible Investment Vehicle as of the
Measurement Date ending on or most recently ended prior to such date and (2) the
Principal Cash of each Eligible Investment Vehicle as of such date, provided
that (a) so long as no party has any recourse to the Company in respect of any
Indebtedness of an Eligible Investment Vehicle, the Investment Vehicle Equity
Amount with respect to such Eligible Investment Vehicle shall not be an amount
less than zero, and (b) with respect to any Investment Vehicle Debt as to which
a third party has total or partial recourse to the Company, the Investment
Vehicle Equity Amount with respect to such Eligible Investment Vehicle may be
less than zero, but the amount by which such Investment Vehicle Equity Amount
may be less than zero shall not exceed the Liquidated Recourse Amount in respect
of such Investment Vehicle Debt.

“IRS” means the United States Internal Revenue Service.

“Judgment” means any judgment, order, writ, decision, decree, award or
injunction of any Governmental Authority.

“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.

“LIBO Rate” means, for any Interest Accrual Period with respect to any Revolving
Loan, 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 Accrual Period or, if such rate
shall not be so quoted, the rate per annum at which (as determined by the
Administrative Agent) Wells Fargo

 

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Bank, National Association is offered Dollar deposits at or about 11:00 A.M.,
London time, on such date by prime banks in the interbank eurodollar market for
delivery on such day for a period of one month and in an amount comparable to
the amount of such Revolving Loan. In the event that such rate does not appear
or is not quoted as provided above, the LIBO 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 the Company and the Administrative Agent. The LIBO Rate for any
Revolving Loan with an initial Interest Accrual 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 Revolving 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.

“License” means any license, permit, directive, authorization, approval or
stipulation required to operate the Business at any location.

“Lien” means (i) any mortgage, pledge, hypothecation, assignment for security,
encumbrance, lien (statutory or other), charge, or other security interest of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing), and (ii) any right of set off or
offset, or other liens (including federal or state tax liens).

“Liquidated Recourse Amount” means (a) at any time from and after the making of
demand for payment from a holder of a full or partial recourse obligation of the
Company in respect of Investment Vehicle Debt, the amount payable by the Company
with respect to such obligation, and (b) at any other time, $0.

“Litigation” means any action, proceeding, litigation, investigation,
arbitration, mediation, claim or Judgment.

“Loan” means a Revolving Loan.

“Margin Stock” shall have the meaning accorded to such term in Regulation U, T
or X of the Board of Governors of the Federal Reserve System, as amended.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or financial condition of the Company and its Subsidiaries, taken
as a whole, (b) a material impairment of the ability of the Company to perform
its payment obligations under any Note Document or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against any Note
Party of any Note Document to which it is a party.

“Maturity Date” means July 5, 2013 or, earlier, the date on which the Revolving
Loans become due and payable in full, by acceleration or otherwise.

“Measurement Date” means for purposes of calculating the Borrowing Base, the
last day of each calendar month, provided that for any Borrowing Base
Certificate delivered in connection with a borrowing of Revolving Loans as
required by Section 4.02(e) hereof or a prepayment of Revolving Loans in
accordance with Sections 2.02, 2.03(b) or 2.03(c), the date three (3) Business
Days prior to such borrowing or repayment. For purposes of determining the
Obligor Senior Leverage Ratio for any Obligor Loan in connection with such
calculation, the Company shall use the most recently available information for
each Obligor which is reflected in the Company’s internal credit performance
tracking system, which to the extent that the Company has received such required
information from the Obligor, shall be updated

 

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not less frequently than quarterly, it being understood that such information or
calculation with respect to any Obligor Loan shall be conclusive absent the
Company’s fraud, gross negligence or manifest error.

“Minimum Interest Coverage” has the meaning set forth in Section 6.14(a).

“Money” shall have the meaning accorded to such term in the UCC.

“Mortgaged Property” means the underlying real property and any improvements
thereon on which a Lien is granted to secure a Real Estate Loan.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Company 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.

“Natixis Facility” means that certain Secured Loan and Servicing Agreement dated
as of August 26, 2005 by and among NewStar Short-Term Funding, LLC, as borrower,
the Company, as originator and servicer, MMP-7 Funding, LLC, as lender, NATIXIS
Financial Products, Inc., as administrative agent, and U.S. Bank National
Association, as trustee, together with any documents executed in connection
therewith, as the same have been and may hereafter be amended from time to time.

“NewStar Collateral Subsidiary” means NewStar Loan Funding, LLC, a Delaware
limited liability company.

“Non-Performing Loan” means an Obligor Loan held by the Company or any
Investment Vehicle which is (or should have been, in accordance with the
Company’s customary practices as in effect on the date hereof) classified as a
non-performing loan by the Company.

“Note Documents” means this Agreement, the Security Agreement, each Note and
each Subsidiary Guaranty, together with any other note, security agreement,
pledge agreement, control agreement, any guarantee of the Company’s Obligations,
collateral assignments, and other contractual Obligations, filings and
recordings executed, delivered or filed, including any amendments, supplements,
renewals, extensions or replacements thereof, executed between any Note Party or
its Affiliates and any Holder or the Administrative Agent or by any Note Party
or its Affiliates for the benefit of the Administrative Agent or any Holder.

“Note Party” means the Company, each Subsidiary Guarantor and each other
Subsidiary, if any, which becomes a party to any Note Document.

“Note” means a promissory note made by the Company in favor of a Holder
evidencing Revolving Loans made by such Holder, substantially in the form of
Exhibit A hereto.

“Obligations” means all Loans to, and debts, liabilities and obligations of, the
Company or any other Note Party arising under or in connection with any Note
Document, whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising,
and any future advances thereon, renewals, extensions, modifications,
amendments, substitutions and consolidations thereof, including the Company’s
obligations to pay (or reimburse Administrative Agent and Holders for) for costs
and expenses payable by the Company pursuant to Section 12.04 and Section 12.05
hereof and fees payable by the Company as provided under Section 2.04 hereof,
and including interest and fees that accrue after the commencement by or against
the Company of any proceeding under any Debtor Relief Laws naming the Company as
the debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.

 

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“Obligor” means, with respect to any Obligor Loan, any Person or Persons which
is a borrower or guarantor with respect thereto.

“Obligor Delayed Draw Term Loan” means an Obligor Loan that is fully committed
on the closing date thereof and is required by its terms to be fully funded in
one or more installments on draw dates to occur after the closing thereof but
which, once fully funded, has the characteristics of an Obligor Term Loan. Once
fully funded, such Loan will cease to be an Obligor Delayed Draw Term Loan. For
the avoidance of doubt, if any particular individual tranche of an Obligor Loan
meets the conditions described in the first sentence of this definition, then
such individual tranche of such Obligor Loan shall, until fully funded,
constitute an Obligor Delayed Draw Term Loan for the purposes of the calculation
of the Borrowing Base.

“Obligor EBITDA” means, for any period with respect to each Obligor Loan, EBITDA
of such Obligor as reflected in the Company’s internal credit performance
tracking system (to the extent the Company has received the required information
from such Obligor) and approved by the chief credit officer of the Company, it
being understood that the EBITDA reflected in such system shall be updated not
less frequently than quarterly and shall be conclusive evidence of Obligor
EBITDA with respect to such Obligor Loan, absent the Company’s fraud, gross
negligence or manifest error.

“Obligor Loan” means any loan to an Obligor owned by the Company or any of its
Subsidiaries.

“Obligor Loan Documents” means, with respect to any Obligor Loan, any and all
promissory notes, loan agreements, credit agreements, note purchase agreements,
guaranties, pledge agreements, mortgages, intercreditor agreements,
subordination agreements and other agreements, instruments and documents
executed and delivered by the Obligors from time to time in connection with such
Obligor Loan.

“Obligor Revolving Loan” means an Obligor Loan that is a line of credit or
contains an unfunded commitment (other than an Obligor Delayed Draw Term Loan)
arising from an extension of credit to an Obligor, pursuant to the terms of
which amounts borrowed may be repaid and subsequently reborrowed.

“Obligor Second Lien Loan” means any Obligor Loan (a) that is secured by a
second priority security interest on all of the Related Property securing such
Obligor Loan, (b) with respect to which the holders of the second priority
security interest and first priority security interest have entered into an
intercreditor agreement establishing the relative priorities of their respective
security interests, and (c) which is not a REO Loan or a Real Estate Loan.

“Obligor Senior Debt” means, as of any date of determination with respect to any
Obligor Loan (other than Obligor Second Lien Loans, REO Loans, Obligor
Subordinated Loans and Real Estate Loans), the senior Indebtedness of such
Obligor as of such date which Indebtedness (i) if secured, is secured by a first
priority perfected security interest in substantially all of the property
securing such debt, subject to exceptions to such first priority security
interest set forth in the relevant Obligor Loan Documents evidencing such
Obligor Loan which are customary in commercial loan transactions, including
without limitation, for purchase money indebtedness, and (ii) is not
contractually subordinated to any other Indebtedness of such Obligor.

“Obligor Senior Leverage Ratio” means, with respect to any Obligor Loan as of
any Measurement Date, the ratio of (a) Obligor Senior Debt in respect of such
Obligor Loan as of such Measurement Date to (b) Obligor EBITDA in respect of
such Obligor Loan for the period of twelve consecutive calendar months ending on
or most recently ended prior to such Measurement Date.

“Obligor Subordinated Loan” means any Obligor Loan which is by its terms
subordinate in right

 

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of payment and priority to any other Indebtedness of the Obligor of such Loan
and which is not an Obligor Second Lien Loan, a Real Estate Loan or a Structured
Product.

“Obligor Term Loan” means an Obligor Loan that is a term loan that has been
fully funded, does not contain any unfunded commitment arising from an extension
of credit to an Obligor and which is not a Real Estate Loan or a Structured
Product.

“Organizational Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other Taxes” shall have the meaning accorded to such term in Section 3.01(b).

“Outstanding Obligor Loan Balance” means, as of any date of determination
(a) with respect to any Performing Loan, the outstanding principal balance of
such Performing Loan as of such date, (b) with respect to any Non-Performing
Loan other than an REO Loan, the outstanding principal balance of such
Non-Performing Loan as of the date on which it became a Non-Performing Loan
minus the amount of all cash payments subsequently received (net of any expenses
owed to the agent and/or the lenders, and their agents, representatives, and
legal counsel in connection with the enforcement of such loan, the exercise of
remedies, the liquidation of collateral, the holding of collateral pending
liquidation and similar expenses) in respect of such loan after such loan became
a Non-Performing Loan, and (c) with respect to any REO Loan, the outstanding
principal balance of such REO Loan immediately prior to the consummation of the
REO Acquisition giving rise to such Obligor Loan’s designation as an REO Loan
minus the amount of all cash payments subsequently received (net of any expenses
owed to the agent and/or the lenders, and their agents, representatives, and
legal counsel in connection with the enforcement of such loan, the exercise of
remedies, the liquidation of collateral, the holding of collateral pending
liquidation or similar expenses) in respect of such loan after such loan became
an REO Loan. For avoidance of doubt, in the case of any Obligor Revolving Loan
or Obligor Delayed Draw Term Loan, the Outstanding Obligor Loan Balance shall
include only the funded portion thereof as of such date of determination and
shall not include the unfunded portion of the applicable lender’s commitment
with respect thereto.

“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 the Company or
any ERISA Affiliate or to which the Company 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.

“Performing Loan” means any Obligor Loan other than a Non-Performing Loan.

“Permitted Encumbrances” means those Liens permitted by Section 7.02 and any
Customary Permitted Liens.

“Permitted Holders” means (i) any of Corsair Capital, LLC and Capital Z
Partners, Ltd., or (ii)

 

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any Person or group of Persons that Controls, is Controlled by, or is under
common Control with, any of the foregoing, including without limitation, any
fund that is an Affiliate of Corsair Capital, LLC or Capital Z Partners, Ltd.
and/or managed by Corsair Capital, LLC or Capital Z Partners, Ltd. or any of
their Affiliates.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or
any of its Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of the Company or any such Subsidiary; provided that: (i) the principal amount
of such Permitted Refinancing Indebtedness does not exceed the principal amount
of, plus accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a weighted
average life to maturity equal to or greater than the weighted average life to
maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Revolving Loans, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is expressly
subordinated in right of payment to, the Revolving Loans on terms at least as
favorable to the Holders as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) if such Permitted Refinancing Indebtedness is secured, such
Permitted Refinancing Indebtedness is secured by the same collateral as the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.

“Permitted Use” means, with respect to the proceeds of a Revolving Loan at any
time after the Closing Date, the following use or uses:

(a) for working capital purposes, provided that the aggregate outstanding
principal amount of Revolving Loans used for such purposes, together with the
aggregate amount of Revolving Loans utilized for the Permitted Use set forth in
clause (f) below, shall at no time exceed the lesser of (i) $20,000,000, and
(ii) 30% of the aggregate Commitments hereunder (as such Commitments may be
reduced from time to time in accordance with the terms hereof);

(b) for funding and origination of one or more Obligor Loans, that, subject to
the provisions of Section 6.16 hereof, are to be owned by the Company or the
NewStar Collateral Subsidiary and not subject to any Lien (other than Permitted
Liens) (as measured prior to such funding or origination but after giving effect
to the making of a Revolving Loan hereunder for such purpose);

(c) for the purchase, subject to the provisions of Section 6.16 hereof, by the
Company or by the NewStar Collateral Subsidiary of one or more Obligor Loans and
Investments from any Investment Vehicle that are to be owned by the Company or
the NewStar Collateral Subsidiary and not subject to any Lien (other than
Permitted Liens) (as measured prior to such purchase but giving effect to the
making of a Revolving Loan hereunder for such purpose) (together with the
Obligor Loans described in clause (b) above, the “Unencumbered Assets”);

(d) unless the Collateral Availability (as measured after giving effect to the
making of a Revolving Loan hereunder for the purpose provided for under this
clause (d)) shall equal or exceed $25,000,000 (in which case no purchase
pursuant to the clause (d) shall be permitted), for the purchase by the Company
of outstanding debt obligations issued by Investment Vehicles;

(e) unless the Collateral Availability (as measured after giving effect to the
making of a Revolving Loan hereunder for the purpose provided for under this
clause (e)) shall equal or exceed $25,000,000 (in which case no purchase
pursuant to the clause (e) shall be permitted) for the repurchase

 

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of Capital Stock of the Company not to exceed $10,000,000 in the aggregate; and

(f) subject to clause (a) above, unless the Collateral Availability (as measured
after giving effect to the making of a Revolving Loan hereunder for the purpose
provided for under this clause (f)) shall equal or exceed $25,000,000 (in which
case no purchase pursuant to the clause (f) shall be permitted), for the
acquisition of one or more CLO Managers not to exceed $10,000,000 in the
aggregate.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

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

“Possessory Collateral” means all Collateral with respect to which a security
interest may be perfected by the secured party taking possession of such
Collateral within the meaning of the UCC.

“Principal Cash” means, as of any date of determination, the aggregate amount of
all restricted cash held by any Eligible Investment Vehicle in its principal and
revolving credit reserve accounts related to its Investment Vehicle Debt as of
such date, but excluding any restricted cash held in any interest reserve
accounts.

“Proceeds” shall have the meaning accorded to such term in the UCC and shall
include any and all insurance proceeds and loss proceeds in respect of the
Collateral.

“Pro Forma Interest Charges” means, for any six-month period, the sum of all
cash interest scheduled to be paid by the Company in connection with the Note
Documents during such period. Pro Forma Interest Charges on the Total
Outstandings hereunder shall be calculated based on the effective rate of
interest for six-month period immediately succeeding the date of the Borrowing
Base Certificate most recently delivered to the Administrative Agent as required
by Section 6.02(c) hereof based on the Applicable Margin set forth therein as
though such Pro Forma Interest Charges were payable on the first day of such
six-month period.

“Pro Rata Share” means, with respect to each Holder at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the Commitment of such Holder at such time and the
denominator of which is the aggregate Commitments of all Holders at such time
(provided that if the Commitments have terminated or expired at such time, the
Pro Rata Share shall be determined based on such Holder’s pro rata share of the
aggregate Total Outstandings at such time).

“Real Estate Loan” means any Obligor Loan for which the underlying Related
Property consists primarily of commercial real estate owned by the Obligor.

“Real Estate Loan Workout Subsidiary” means any wholly-owned Workout Subsidiary
of the Company formed or acquired in connection with any REO Loan owed solely to
the Company or any of its wholly-owned Subsidiaries.

“Register” has the meaning set forth in Section 12.07(c).

“Related Property” means, with respect to any Obligor Loan, any property or
assets designated and pledged or mortgaged as collateral to secure repayment of
such Obligor Loan (including Mortgaged Property and/or a pledge of the equity
interests of the Obligor), including all proceeds from any sale or other
disposition of such property or assets.

 

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“REO Acquisition” means the acquisition by the Company, any Investment Vehicle
or any REO Affiliate on behalf of the Company or any Investment Vehicle of any
Mortgaged Property through foreclosure or by deed in lieu of foreclosure.

“REO Affiliate” means a corporation, limited partnership, limited liability
company or business trust organized under the laws of any state of the United
States which is wholly owned by the Company or any Subsidiary and acquires title
to any REO Property.

“REO Loan” means any Obligor Loan as to which the related Mortgaged Property has
been acquired by the Company, any Investment Vehicle or any REO Affiliate on
behalf of the Company or any Investment Vehicle through foreclosure or by deed
in lieu of foreclosure.

“REO Property” means a Mortgaged Property acquired by REO Acquisition.

“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 Holders” means, as of any date of determination, a Holder or Holders
having Revolving Loans and unused Commitments representing more than 50% of the
sum of the Total Outstandings and unused Commitments of all Holders at such
time.

“Requirement of Law” or “Requirements of Law” means any requirement, direction,
policy or procedure of any Law or License, Judgment, or Consent or Other Action.

“Responsible Officer” means, in the case of any Person, the chief executive
officer, president, chief financial officer or chief investment officer of such
Person, or, in the case of a limited partnership, the general partner of such
Person. Any document delivered hereunder that is signed by a Responsible Officer
of a Person shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action on the part of such Person
and such Responsible Officer shall be conclusively presumed to have acted on
behalf of such Person.

“Restricted Payment” means, with respect to any Person, (i) any dividend or
other distribution (whether direct or indirect, and whether in cash, securities
or other property) with respect to any class of Capital Stock of such Person now
or hereafter outstanding, other than a dividend payable to the holders of any
class of Capital Stock solely in shares of Capital Stock of such Person (other
than Disqualified Capital Stock), (ii) any payment (whether direct or indirect,
and whether in cash, securities or other property), including any sinking fund
or similar deposit, on account of the purchase, full or partial redemption, full
or partial withdrawal, retirement, acquisition, cancellation or termination of
any such Capital Stock or of any option, warrant or other right to acquire any
such Capital Stock, and (iii) any prepayment of principal of, premium, if any,
or interest on, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to, any subordinated Indebtedness of such Person.

“Revolving Asset Haircut” has the meaning specified in the definition of
Adjustment Percentage.

“Revolving Commitment” means, with respect to each Holder, the commitment of
such Holder to make Revolving Loans hereunder, as such commitment may be
(1) reduced from time to time pursuant to Section 2.03(b), Section 2.03(c)
and/or Section 2.03(d), or (2) reduced or increased from time to time pursuant
to assignments by or to such Holder pursuant to Section 12.07. The initial
maximum amount of each Holder’s Commitment is set forth on Schedule 2.01, or in
the Assignment and Assumption pursuant to which such Holder shall have assumed
its Revolving Commitment, as applicable. The aggregate original maximum amount
of the Revolving Commitments is equal to $75,000,000.

 

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“Revolving Commitment Reduction Amount” means, with respect to any Revolving
Commitment Reduction Date, an amount equal to (a) for the Initial Revolving
Commitment Reduction Date, $15,000,000, and (b) for each Revolving Commitment
Reduction Date after the Initial Revolving Commitment Reduction Date,
$7,500,000; any such Revolving Commitment Reduction Amount to be subject to
reduction as provided in the last sentence of Section 2.03(d).

“Revolving Commitment Reduction Date” means each of the Initial Revolving
Commitment Reduction Date, October 5, 2011, January 5, 2012, April 5,
2012, July 5, 2012, October 5, 2012, January 5, 2013, and April 5, 2013, or, in
each case if such day is not a Business Day, the next succeeding Business Day.

“Revolving Commitments Excess” has the meaning specified in Section 2.02(b).

“Revolving Loan” means a loan made pursuant to Section 2.01(a) that utilizes the
Revolving Commitments.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Securities Account” shall have the meaning accorded to such term in the UCC.

“Securities Account Control Agreement” means, with respect to any Securities
Account, any control agreement or other similar agreement between each
institution maintaining a Securities Account, the Company and the Administrative
Agent as the Administrative Agent shall deem necessary in its reasonable
discretion, in form reasonably acceptable to the Administrative Agent, providing
for such institution’s agreement to accept entitlement orders from the
Administrative Agent as to the disposition of Investments held in the applicable
Securities Account, which entitlement orders shall be issued by the
Administrative Agent only so long as an Event of Default shall have occurred and
be continuing.

“Securitization Debt” has meaning given such term in the definition of
“Investment Vehicle”.

“Security Agreement” means the Pledge and Security Agreement of even date
herewith executed by the Company, the Subsidiary Guarantors and the
Administrative Agent, as the same is amended or otherwise modified from time to
time.

“Senior Secured Debt” means any Indebtedness Incurred by the Company or any of
its Subsidiaries prior to, on or after the Closing Date that (i) is secured by
Liens on any assets of the Company or any such Subsidiary and (ii) in the case
of any such Indebtedness other than the Obligations, is not contractually
subordinated in right of payment to the Obligations on terms satisfactory to the
Administrative Agent.

“Solvent” means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) 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; (ii) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) 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 (B) 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

 

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existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

“Structured Product” means any loan made by the Company to an entity holding a
portfolio of financial assets for which the Company is not the owner, manager or
sponsor or any security owned by the Company or any Subsidiary issued by a CLO,
CDO or other special purpose vehicle which CLO, CDO or special purpose vehicle
is not sponsored or managed by the Company.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Company.

“Subsidiary Guarantor” means each wholly-owned Subsidiary of the Company,
whether now owned or hereafter formed or acquired, other than the Excluded
Subsidiaries.

“Subsidiary Guaranty” means a Subsidiary Guaranty, in the form attached hereto
as Exhibit I with appropriate insertions, executed and delivered by each
Subsidiary Guarantor that is required to execute the Subsidiary Guaranty on the
Closing Date or pursuant to Section 6.12.

“Taxes” shall have the meaning accorded to such term in Section 3.01(a).

“Tax Party” shall have the meaning accorded to such term in Section 5.09.

“Third Party Lender” has the meaning given such term in the definition of
“Investment Vehicle”.

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

“Total Outstandings” means, as of any date of determination, the aggregate
outstanding principal amount of all Revolving Loans as of such date.

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time as adopted in the State of New York; provided, however,
that, if by reason of mandatory provisions of law, any of the attachment,
perfection or priority of the Administrative Agent’s security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the terms “UCC” and “Uniform
Commercial Code” shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.

“Unencumbered Assets” has the meaning specified in the definition of Permitted
Use.

“Unencumbered Asset Amount” means, as of any date of determination, the product
of (a) 0.70 multiplied by (b) of the aggregate Adjusted Loan Amount of all
Eligible Unencumbered Assets as of the Measurement Date ending on or most
recently ended prior to such date.

“Unencumbered Revolving Asset” means any Unencumbered Asset constituting an
Obligor Revolving Loan or an Obligor Delayed Draw Term Loan.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in

 

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accordance with the assumptions used for funding that Pension Plan pursuant to
Section 412 of the Code for the applicable plan year.

“United States” and “U.S.” mean the United States of America.

“Unrestricted Cash” means, at any time, all Cash and Cash Equivalents (expressed
in U.S. dollar denominated currency based, as applicable, on then current
exchange rates) held at such time by the Company and its Subsidiaries that are
not subject to any Lien (other than in favor of the Administrative Agent for the
benefit of the Holders) and would not appear in the consolidated financial
statements of the Company, prepared in accordance with GAAP, as a line item on
the balance sheet as “restricted cash” or similar caption.

“Wachovia Facility” means that certain Third Amended and Restated Sale and
Servicing Agreement, amended and restated as of July 15, 2009, by and among
NewStar CP Funding, LLC, as the Seller, the Company, as the Originator and
Servicer, Wells Fargo Securities, LLC, formerly known as Wachovia Capital
Markets, LLC, as administrative agent and as WBNA Agent, U.S. Bank National
Association, as the Trustee, Lyon Financial Services, Inc., as Backup Servicer,
each of the conduit purchasers and institutional purchasers from time to time
party thereto and each of the purchaser agents from time to time party thereto,
together with any documents executed in connection therewith, as the same have
been and may hereafter be amended from time to time.

“Warehouse Subsidiary” means a Subsidiary that is engaged as its sole business
in acquiring loans or other debt instruments for purposes of transferring such
loans or debt instruments to a CDO Subsidiary or a CLO Subsidiary.

“Workout Assets” means assets obtained in connection with any repossession or
foreclosure proceeding, a consensual or voluntary settlement or workout
proceeding, or any similar proceeding in connection with the exercise of
creditors’ rights and remedies.

“Workout Subsidiary” means any Subsidiary of the Company which is formed or
acquired solely in connection with repossession, foreclosure, insolvency,
workout, settlement or other similar proceedings in respect of Workout Assets.

1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Note Document, unless otherwise specified herein or in such other Note
Document:

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

(b) (i) The words “herein,” “hereto,” “hereof’ and “hereunder” and words of
similar import, when used in any Note Document, shall refer to such Note
Document as a whole and not to any particular provision thereof.

(ii) Article, Section, Exhibit and Schedule references are to the Note Document
in which such reference appears.

(iii) The terms “include” and “including” are by way of example and not
limitation.

(iv) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

 

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(c) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(d) Section headings herein and in the other Note Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Note Document.

1.03 Accounting Terms.

(a) All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent
basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the financial statements referred to in Section 5.05, except
as otherwise specifically prescribed herein.

(b) If any change in GAAP used in the preparation of the most recent financial
statements referred to in Section 5.05 is hereafter required or permitted by the
rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
any successors thereto) and such change is adopted by the Company and results in
a change in any of the calculations under Article VII or any financial ratio set
forth in any Note Documents (to the extent required to be calculated in
accordance with GAAP) that would not have resulted had such accounting change
not occurred, the parties hereto agree to enter into negotiations in order to
amend such provisions so as to equitably reflect such change such that the
criteria for evaluating compliance with such covenants by the Company and the
operation of any other provision of this Agreement shall be the same after such
change as if such change had not been made; provided that no change in GAAP that
would affect a calculation that measures compliance with any covenant contained
in Article VII or any financial ratio under any Note Document shall be given
effect until such provisions are amended to reflect such changes in GAAP.

1.04 Rounding. Any financial ratios required to be maintained by the Company
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding- up if there is no nearest
number). Any interest rate calculated in accordance with the terms of this
Agreement shall be rounded upward to the nearest whole multiple of one
thousandth of one percent (0.001%).

1.05 References to Agreements and Laws. Unless otherwise expressly provided
herein, (a) references to Organizational Documents, agreements (including the
Note Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Note Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

1.06 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to Eastern time (daylight or standard, as applicable).

 

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ARTICLE II.

THE REVOLVING LOANS

2.01 Revolving Loans.

(a) Revolving Commitments. Subject to the terms and conditions set forth herein,
each Holder severally agrees to make Revolving Loans to the Company from time to
time on any Business Day during the Availability Period in an aggregate
principal amount that will not result in the outstanding principal balance of
the Revolving Loans of such Holder exceeding the lesser of (i) such Holder’s
Revolving Commitment at such time and (ii) an amount equal to such Holder’s Pro
Rata Share of the Borrowing Base at such time; provided that the Total
Outstandings shall not at any time exceed the lesser of (A) the aggregate
Revolving Commitments of all of the Holders at such time and (B) the Borrowing
Base at such time. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Company may borrow, prepay and reborrow
Revolving Loans.

(b) Requests for Revolving Loans. To request the funding or any Revolving Loan
hereunder, the Company shall deliver to the Administrative Agent 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 proposed Revolving Loan, by facsimile or
electronic mail transmission, a Borrowing Base Certificate in the form of
Exhibit G hereto and a Borrowing Notice in the form of Exhibit H attached
hereto, and setting forth all of the information required to be set forth
therein, including without limitation, requested date of such Revolving Loan
(which shall be a Business Day during the Availability Period), the amount of
the Revolving Loan requested (which shall be in a minimum principal amount of
$2,000,000 or a whole multiple of $100,000 in excess thereof), the Permitted Use
or Permitted Uses for which the proceeds of such Revolving Loan are to be
utilized, the portion of the then outstanding Revolving Loans (determined on a
pro forma basis after giving effect to the requested Revolving Loan) allocable
to each Permitted Use and the Deposit Account of the Company to which such
proceeds are to be delivered. During any single calendar month, the Company may
not request, and the Holders shall not be required to fund, more than six
(6) Revolving Loans during such calendar month.

(c) Funding of Borrowings. Each Holder shall make the proceeds of its Pro Rata
Share of each Revolving 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 the Administrative Agent most recently designated by it
for such purpose by notice to the Holders. The Administrative Agent will make
such Revolving Loans available to the Company by wire transfer of the proceeds
of such Loans to such account as the Company may specify in the Borrowing
Notice. The failure of any Holder to make the proceeds of its Pro Rata Share of
any Revolving Loan required to be made hereunder shall not relieve any other
Holder of its obligation to make the proceeds of its Pro Rata Share of any
Revolving Loan required to be made hereunder.

(d) Repayment of Revolving Loans. The Company unconditionally promises to pay
(and such amount shall be required to be paid) to the Administrative Agent for
the account of each Holder the then unpaid principal amount of such Holder’s
Revolving Loans on the Maturity Date.

(e) Notes. On or prior to the Closing Date, the Company shall execute and
deliver to each Holder a Note in the principal amount of such Holder’s Revolving
Commitment.

 

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2.02 Prepayments of Revolving Loans.

(a) Optional Prepayments. The Company shall have the right at any time and from
time to time to prepay Revolving Loans in whole or in part, without penalty or
premium, subject to prior written notice in accordance with Section 2.02(c), and
subject to the payment of any amounts due under Section 2.04(d) and payment in
full of any other fees, expenses and Attorney Costs of the Administrative Agent.
Any such optional prepayments shall be applied to repay any outstanding
Revolving Loans utilized for any “Permitted Use” set forth in clauses (a), (b),
(c) and/or (d) of the definition thereof on a pro rata basis based on the
percentage the outstanding Revolving Loans utilized for each respective
Permitted Use set forth in clauses (a), (b), (c) and/or (d) bears to the total
outstanding Revolving Loans for all Permitted Uses set forth in clauses (a),
(b), (c) and (d) on an aggregate basis.

(b) Mandatory Prepayments. The Company shall be obligated to, and shall, make
prepayments of Revolving Loans hereunder as follows:

(i) Overadvances. If following any reduction in the Revolving Commitments or at
any other time the Total Outstandings shall exceed the lesser of (A) the
aggregate Revolving Commitments and (B) the Borrowing Base, the Company shall
immediately repay Revolving Loans in an aggregate amount equal to such excess
(the “Revolving Commitments Excess”).

(ii) Change of Control. Within five Business Days after the occurrence of a
Change of Control, the Company shall prepay all Revolving Loans then outstanding
and pay the fee required to be paid in connection therewith under
Section 2.04(d) and the Revolving Commitments shall automatically terminate
concurrently with such prepayment.

Any mandatory prepayments required to be made pursuant to this Agreement shall
be applied to repay any outstanding Revolving Loans utilized for any “Permitted
Use” set forth in clauses (a), (b), (c) and/or (d) of the definition thereof on
a pro rata basis based on the percentage the outstanding Revolving Loans
utilized for each respective Permitted Use set forth in clauses (a), (b),
(c) and/or (d) bears to the total outstanding Revolving Loans for all Permitted
Uses set forth in clauses (a), (b), (c) and (d) on an aggregate basis.

(c) Notification of Certain Prepayments. The Company shall notify the
Administrative Agent by telephone (confirmed by facsimile or email transmission)
of any voluntary prepayment of the Revolving Loans under Section 2.02(a) not
later than 12:00 Noon, New York time, one Business Day before the date of such
prepayment. The Company shall notify the Administrative Agent of any mandatory
prepayment of the Revolving Loans pursuant to Section 2.02(b) as soon as
practicable. Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Revolving Loan or portion thereof
to be prepaid, the Revolving Commitments Excess (if applicable), the section of
this Agreement pursuant to which such prepayment is to be made, and the
Permitted Use or Permitted Uses applicable to the Revolving Loans being prepaid.
Promptly following receipt of any such notice, the Administrative Agent shall
advise each Holder of the contents thereof, and of the amount of such Holder’s
Pro Rata Share of such prepayment. Each such prepayment shall be applied to the
Loans of the Holders in accordance with their respective Pro Rata Shares. The
Company shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.

(d) Prepayments Accompanied by Interest. All prepayments of the Revolving Loans
pursuant to this Section 2.02 shall be accompanied by accrued interest through
the date of prepayment, together with any amounts payable pursuant to
Section 3.05.

 

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2.03 Expiration, Termination or Reduction of Revolving Commitments.

(a) Expiration of Revolving Commitments. Unless previously terminated, the
Revolving Commitments shall expire at the close of business on the Business Day
immediately prior to the Maturity Date.

(b) Scheduled Optional Reductions of Revolving Commitments. The Company shall
have the right to reduce the Revolving Commitments in part on the dates that are
90 days, 180 days and 360 days from the Closing Date (or if such dates are not
Business Days on the respective Business Days immediately succeeding such
dates), subject to the payment of any amounts due under Section 2.04(c) and any
other fees required to be paid hereunder; provided that the aggregate amount of
all such partial reductions in the Revolving Commitments pursuant to this
Section 2.03(b) shall not exceed $25,000,000. The Company shall notify the
Administrative Agent of any election to reduce the Revolving Commitments at
least one Business Day prior to the effective date of such reduction, specifying
the effective date thereof and how such reduction shall be applied, consistent
with the last sentence of Section 2.03(d) hereof. Each notice of reduction of
the Revolving Commitments shall be irrevocable. Each reduction of the Revolving
Commitments shall be permanent and shall be made ratably among the Holders in
accordance with their respective Revolving Commitments.

(c) Optional Termination of Revolving Commitments. The Company shall have the
right at any time to terminate the Revolving Commitments in their entirety at
any time other than on the dates specified in Section 2.03(b), subject to the
payment of any amounts due under Section 2.04(d). The Company shall notify the
Administrative Agent of any election to terminate the Revolving Commitments
under this Section 2.03(c) in writing at least one Business Day prior to the
effective date of such termination, specifying the effective date thereof. Each
notice of termination shall be irrevocable; provided that a notice of
termination of the Revolving Commitments may state that such notice is
conditional upon the effectiveness of other credit facilities, in which case,
such notice may be revoked by the Company by notice to the Administrative Agent
if such condition is not satisfied. Any termination of the Revolving Commitments
under this Section 2.03(c) shall be permanent.

(d) Scheduled Mandatory Reductions of Revolving Commitments. Unless previously
terminated in full, the Revolving Commitments shall be automatically reduced, in
addition to any mandatory reductions or terminations under Section 2.03(a) or
2.02(b)(ii) or any optional reductions under Section 2.03(b), at the close of
business on each Revolving Commitment Reduction Date by an amount equal to the
Revolving Commitment Reduction Amount for such Revolving Commitment Reduction
Date. If the Company shall so elect and shall notify the Administrative Agent of
such election in writing prior to any Revolving Commitment Reduction Date, any
optional reduction of Revolving Commitments made in accordance with
Section 2.03(b) hereof shall be applied to the reduce the amount of one or more
Revolving Commitment Reduction Amounts in such order and manner as the Company
may elect.

2.04 Fees.

(a) Upfront Fee. The Company shall pay to the Administrative Agent for its own
account, an upfront fee in the amount of $2,250,000. Such upfront fee shall be
payable on the earlier of (i) the date occurring 10 days after the Closing Date
(or if such date is not a Business Day, on the first Business Day occurring
after date), and (ii) the date the initial Revolving Loan hereunder is made by
the Holders to the Company.

(b) Unused Fee. The Company shall pay to the Administrative Agent for the
account of each Holder in accordance with its Pro Rata Share, an unused fee
equal to the Applicable Unused Fee Rate adjusted to a per diem rate times the
daily average amount by which the aggregate Commitments exceed

 

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the Total Outstandings (assuming for the purpose of calculation hereof that all
Revolving Loans requested by the Company and which the Company is entitled to
receive in accordance with this Agreement have been fully funded). 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 on the
date on which the Commitments terminate. All unused fees shall be computed on an
Actual/360 Basis.

(c) Partial Revolving Commitment Reduction Fee. In the event that the Company
effects a partial reduction of the Revolving Commitments pursuant to
Section 2.03(b), the Company shall pay to the Administrative Agent, for the
account of the Holders, on or prior to the date of such reduction, a fee equal
to 0.50% of the aggregate amount of such reduction.

(d) Revolving Commitment Termination Fee. In the event that the Revolving
Commitments are terminated in whole pursuant to Section 2.02(b)(ii) or 2.03(c),
the Company shall pay to the Administrative Agent, for the account of the
Holders, concurrently with such termination, a fee equal to the product of
(i) the amount of the Revolving Loans prepaid concurrently with such termination
multiplied by (ii) the applicable Termination Percentage set forth below:

 

Period During Which Termination Occurs

  

Termination Percentage

 

Prior to the first anniversary of the Closing Date

   3.00 % 

On or after the first anniversary of the Closing Date but prior to the second
anniversary of the Closing Date

   2.00 % 

On or after the second anniversary of the Closing Date but prior to the third
anniversary of the Closing Date

   1.00 % 

On or after the third anniversary of the Closing Date

   0.00 % 

In the event that any such termination of the Revolving Commitments pursuant to
Section 2.03(c) is accompanied by a prepayment of Revolving Loans which is
funded with the proceeds of any Capital Stock of the Company issued on, or
within the 150 day period immediately preceding, the date of such termination
and prepayment (but excluding, in any event, any Indebtedness that is
convertible into equity interests), the Termination Percentage set forth above
which is applicable thereto shall be deemed to be increased by 2.00%.

2.05 Interest.

(a) Subject to the provisions of Section 2.05(b), interest on the outstanding
principal balance of the Revolving Loans will accrue for each day at the
Interest Rate. All calculations of interest shall be computed on an Actual/360
Basis (which results in more interest being paid than if computed on a 30/360
Basis).

(b) Anything contained herein to the contrary notwithstanding, automatically
without notice upon the occurrence and during the continuation of any Event of
Default under Section 9.01(g), and upon written notice from the Administrative
Agent, at the direction of the Required Holders upon the occurrence and during
the continuance of any other Event of Default (i) interest (including
post-petition interest in any proceeding under any Debtor Relief Law) on the
Revolving Loans will accrue and be charged on the outstanding principal balance
thereof for each day at the Default Rate and (ii) to the fullest

 

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extent permitted by applicable Laws, interest (including post-petition interest
in any proceeding under any Debtor Relief Law) 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. The Company 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 the
Administrative Agent or any Holder.

(c) Except as otherwise provided in Section 2.05(b), interest on the Revolving
Loans shall be due and payable in arrears on the last Business Day of each
Interest Accrual Period, on the date of any prepayment of all or any portion of
the outstanding principal amount of such Revolving 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
proceeding under any Debtor Relief Law.

(d) Interest shall accrue on each Revolving 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 2.05(b), bear interest for one day.

2.06 Payment Records. All payments of interest and fees made by the Company
under this Agreement and the Notes shall be evidenced by one or more accounts or
records maintained by the Administrative Agent and each applicable Holder in the
ordinary course of business. Such accounts or records shall be conclusive,
absent manifest error, of the amount of such interest and fees paid by the
Company. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Company hereunder to pay any
amount owing with respect to the Obligations. In the event of any conflict
between the accounts and records maintained by any Holder and the accounts and
records of the Administrative Agent in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest
error. Each Holder may attach schedules to any of its Notes and endorse thereon
the date and amount of any payments with respect thereto.

2.07 Payments Generally.

(a) All payments to be made by the Company 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 the
Company in respect of the Obligations shall be made to the Administrative Agent,
for its own account or for the account of the respective Holders 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. The Administrative Agent will promptly distribute to each Holder 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 Holder notified
to the Administrative Agent from time to time. All payments received by the
Administrative 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.

(b) If any payment to be made by the Company 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.

 

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(c) Unless the Company shall have notified the Administrative Agent, prior to
the date any payment is required to be made by it to the Administrative Agent
hereunder, that the Company will not make such payment, the Administrative Agent
may assume that the Company 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 the Administrative Agent in a timely manner in immediately
available funds, then each Holder shall forthwith on demand repay to the
Administrative Agent the portion of such assumed payment that was made available
to such Holder, in immediately available funds, together with interest thereon
in respect of each day from the date such amount was made available by the
Administrative Agent to such Holder to the date such amount is repaid to the
Administrative Agent at the Federal Funds Rate from time to time in effect. A
notice of the Administrative Agent to the Company with respect to any amount
owing under this Section 2.07(c) shall be conclusive, absent manifest error.

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

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

2.08 Sharing of Payments. If, other than as expressly provided elsewhere herein,
any Holder shall obtain, on account of any Revolving Loan held by it, any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Holder shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Holders such
participations in the Revolving Loans held by them as shall be necessary to
cause such purchasing Holder to share the excess payment in respect of such
Revolving Loan pro rata with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from the purchasing
Holder under any of the circumstances described in Section 12.06 (including
pursuant to any settlement entered into by the purchasing Holder in its
discretion), such purchase shall to that extent be rescinded and each other
Holder shall repay to the purchasing Holder the purchase price paid therefor,
together with an amount equal to such paying Holder’s ratable share (according
to the proportion of (i) the amount of such paying Holder’s required repayment
to (ii) the total amount so recovered from the purchasing Holder) of any
interest or other amount paid or payable by the purchasing Holder in respect of
the total amount so recovered, without further interest thereon. The Company
agrees that any Holder so purchasing a participation from another Holder may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 12.07 with respect to
such participation as fully as if such Holder were the direct creditor of the
Company in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section 2.08 and will in each case notify
the Holders following any such purchases or repayments. Each Holder that
purchases a participation pursuant to this Section 2.08 shall from and after
such purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Holder were
the original owner of the Obligations purchased.

 

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ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Any and all payments by the Company to or for the account of the
Administrative Agent or any Holder under any Note Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding (i) in the case of
the Administrative Agent and each Holder, taxes imposed on or measured by its
overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which the Administrative Agent or such Holder, as the case may be, is
organized or, in the case of each Holder, maintains a lending office and
(ii) any United States withholding taxes payable with respect to payments under
the Note Documents under laws (including any statute, treaty or regulation) in
effect on the Closing Date (or, in the case of an Eligible Holder, the date of
the Assignment and Assumption) applicable to such Holder or the Administrative
Agent, as the case may be, but not excluding any United States withholding taxes
payable as a result of any change in such laws, or in the interpretation or
application thereof by any applicable taxing authority, occurring after the
Closing Date (or the date of such Assignment and Assumption) (all such
non-excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and liabilities being hereinafter referred to
as “Taxes”). If the Company shall be required by any Laws to deduct any Taxes
from or in respect of any sum payable under any Note Document to the
Administrative Agent or any Holder, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), each of the
Administrative Agent and such Holder receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company shall
make such deductions, (iii) the Company shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
Laws, and (iv) within 30 days after the date of such payment, the Company shall
furnish to the Administrative Agent (which shall forward the same to such
Holder) the original or a certified copy of a receipt, or other documentation
reasonably satisfactory to the Administrative Agent, evidencing payment thereof.

(b) In addition, the Company agrees to pay any and all present or future stamp,
court or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under any Note Document or from
the execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, any Note Document (hereinafter referred to as “Other
Taxes”).

(c) The Company agrees to indemnify the Administrative Agent and each Holder for
(i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section)
paid by the Administrative Agent and such Holder and (ii) any liability
(including additions to tax, penalties, interest and expenses) arising therefrom
or with respect thereto, in each case whether or not such Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. Payment under this subsection (c) shall be made within 30 days after
the date the Holder or the Administrative Agent makes a demand therefor.

3.02 Illegality. If any Holder determines that any Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for such
Holder to continue to make Revolving Loans or to determine or charge interest
rates based upon the LIBO Rate, such Holder shall give notice thereof to the
Company through the Administrative Agent. Upon receipt of such notice, the
Company shall, upon demand from such Holder (with a copy to the Administrative
Agent), either (i) prepay in full all Revolving Loans, either on the last day of
the current Interest Accrual Period in respect of thereof, if such Holder may
lawfully continue to maintain Revolving Loans until such date, or immediately,
if such

 

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Holder may not lawfully continue to do so, or (ii) at the option of the Company,
pay interest on such Holder’s Revolving Loans at a rate per annum, as determined
by such Holder, that will provide a corresponding yield to such Holder compared
to the yield that such Holder would have been realized if its Revolving Loans
had continued to accrue interest at a rate based upon the LIBO Rate (taking into
account any increased cost to such Holder of continuing to maintain Revolving
Loans). Upon any such prepayment, the Company shall also pay accrued interest on
the amount so prepaid. Each Holder agrees make Revolving Loans through a
different office of such Holder if such designation will avoid the need for such
notice and will not, in the good faith judgment of such Holder, otherwise be
materially disadvantageous to such Holder.

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

3.04 Increased Cost and Reduced Return; Capital Adequacy.

(a) If any Holder determines that, as a result of the introduction of or any
change in or in the interpretation of any Law, or such Holder’s compliance
therewith, there shall be any increase in the cost to such Holder of funding or
maintaining Revolving Loans at the Interest Rate based upon the LIBO Rate or a
reduction in the amount received or receivable by such Holder in connection with
any of the foregoing (excluding, for purposes of this Section 3.04(a), any such
increased costs or reduction in amount resulting from (i) Taxes or Other Taxes
(as to which Section 3.01 shall govern), or (ii) 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 Holder is organized or maintains its Revolving Loans), or any
acquisition of funds by such Holder (or its parent corporation), then from time
to time upon demand of such Holder (with a copy of such demand to the
Administrative Agent), the Company shall pay to such Holder such additional
amounts as will compensate such Holder for such increased cost or reduction.

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

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

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

 

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(b) any payment or prepayment of any Revolving Loan (whether by reason of
acceleration or otherwise) on a day other than on the last day of its Interest
Accrual Period, the Maturity Date, on the date specified in a notice of
prepayment issued in accordance with Section 2.02(c), or on a date specified
therefor in Section 2.03;

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to purchase, hold or make Revolving 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 the Company to any Holder under this Section 3.05, such Holder shall
be deemed to have funded Revolving 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
Revolving Loans were in fact so funded; in each case, provided that such Holder
delivers to the Company a certificate showing in reasonable detail the
calculations used in determining the amounts payable by the Company under this
Section 3.05.

3.06 Matters Applicable to all Requests for Compensation.

(a) Any Holder claiming any additional amounts payable pursuant to this Article
III 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 Holder, be
otherwise disadvantageous to such Holder.

(b) A certificate of the Administrative Agent or any Holder claiming
compensation under this Article III and setting forth the additional amount or
amounts to be paid to it hereunder and accompanied by a reasonably detailed
invoice therefor and supporting calculations shall be conclusive in the absence
of manifest error. In determining such amount, the Administrative Agent or such
Holder may use any reasonable averaging and attribution methods.

3.07 Survival. All of the Company’s obligations under this Article III shall
survive the termination of the Commitments and the repayment of all Obligations
hereunder.

3.08 Substitution of Holders.

(a) In the event that (i) (A) any Holder makes a claim under Section 3.04,
(B) it becomes illegal for any Holder to continue to make Revolving Loans or to
determine or charge interest rates based upon the LIBO Rate and such Holder so
notifies the Company pursuant to Section 3.02, or (C) any Holder is required to
make any payment pursuant to Section 3.01 that is attributable to a particular
Holder, (ii) in the case of clause (i)(A) above, as a consequence of increased
costs in respect of which such claim is made, the effective rate of interest
payable to such Holder under this Agreement with respect to its Revolving Loans
materially exceeds the effective average annual rate of interest payable to the
Required Holders under this Agreement and (iii) in the case of clause (i)(A),
(B) or (C) above, Holders holding at least 75% of the Total Outstandings and
aggregate unused Commitments are not subject to such increased costs or
illegality, payment or proceedings (any such Holder, an “Affected Holder”), the
Company may substitute any Holder and, if reasonably acceptable to the
Administrative Agent, any other Eligible Holder (a “Substitute Institution”) for
such Affected Holder hereunder, after delivery of a written notice (a
“Substitution Notice”) by the Company to the Administrative Agent and the
Affected Holder within a reasonable time (in any case not to exceed 90 days)
following the occurrence of any of the events described above that the Company
intends to make such substitution; provided that, if more than one Holder claims
increased costs, illegality or right to payment arising from the same act or
condition and such claims are received by the Company within 30 days of each
other, then the Company may substitute all, but not (except to the extent the
Company has already substituted one of such Affected

 

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Holders before the Company’s receipt of the other Affected Holders’ claim) less
than all, Holders making such claims.

(b) If the Substitution Notice was properly issued under this Section 3.08, the
Affected Holder shall sell, and the Substitute Institution shall purchase, all
rights and claims of such Affected Holder under the Note Documents, and the
Substitute Institution shall assume, and the Affected Holder shall be relieved
of all prior unperformed obligations of the Affected Holder under the Note
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 Holder of its Pro
Rata Share of the Total Outstandings owed to it pursuant to the Note Documents,
together with any other Obligations owing to it, (ii) the receipt by the
Administrative Agent of an agreement in form and substance satisfactory to it
and the Company whereby the Substitute Institution shall agree to be bound by
the terms hereof and (iii) the payment in full to the Affected Holder 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 “Holder” hereunder for all
purposes of this Agreement.

(c) Each Holder agrees that, if it becomes an Affected Holder and its rights and
claims are assigned hereunder to a Substitute Institution pursuant to this
Section 3.08, it shall execute and deliver to the Administrative Agent an
Assignment and Assumption to evidence such assignment, together with any Note
held by it; provided that the failure of any Affected Holder to execute an
Assignment and Assumption or deliver such Notes shall not render such assignment
invalid.

ARTICLE IV.

CONDITIONS PRECEDENT

4.01 Conditions to Effectiveness of this Agreement and Initial Borrowing. The
effectiveness of this Agreement and the obligation of the Holders to make the
initial Revolving Loan hereunder is subject to the prior or concurrent
satisfaction of the following conditions precedent:

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing
Person, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent and its legal counsel:

(i) executed counterparts of this Agreement, the Security Agreement, the
Subsidiary Guaranty (if any Subsidiaries are Subsidiary Guarantors on the
Closing Date), the Note and the other Note Documents, sufficient in number for
distribution to the Administrative Agent, each Holder and the Company;

(ii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Note Party as the
Administrative Agent may reasonably require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Note
Documents to which such Note Party is a party;

(iii) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Note Party is duly organized or formed,
and that each Note Party is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such

 

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qualification, except to the extent that the failure to be so qualified in any
such jurisdiction other than the jurisdiction of such Note Party’s organization
or formation could not reasonably be expected to result in a Material Adverse
Effect;

(iv) a certificate of a Responsible Officer of the Company stating that no
consent, license or approval is required in connection with the execution,
delivery and performance by any Note Party and the validity against such Note
Party of the Note Documents to which it is a party, other than those consents,
licenses and approvals that have already been obtained;

(v) a certificate signed by a Responsible Officer of the Company certifying that
(A) the representations and warranties of the Company contained in Article V or
any other Note Document, or which are contained in any document furnished under
or in connection herewith or therewith, shall be true and correct in all
material respects on and as of the Closing Date, except to the extent that such
representations and warranties specifically refer 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 as of the Closing Date,
or would result from the occurrence thereof; (C) there shall be no Law or
Judgment binding on any Note Party, and the Administrative Agent shall not have
received from the Company any notice that any action, suit, investigation,
litigation or proceeding is pending or overtly threatened in any court or before
any arbitrator or Governmental Authority, which would be reasonably expected to
impose or result in the imposition of a Material Adverse Effect; and (D) there
has been no event or circumstance since September 30, 2009 that has had or could
be reasonably expected to have, either individually or in the aggregate, a
Material Adverse Effect; and

(vi) a Borrowing Base Certificate setting forth the Borrowing Base as of the
Closing Date, and including, without limitation, a calculation of the
Availability Ratio as of the Closing Date after giving effect to the initial
Revolving Loans, if any, made on the Closing Date.

(b) The Administrative Agent shall be satisfied that all actions have been taken
that are necessary in order for the Administrative Agent to have a valid,
perfected, first priority security interest in all of the Collateral, subject
only to Permitted Encumbrances.

(c) The Administrative Agent shall have received one or more favorable written
opinions of counsel to the Note Parties, dated the Closing Date and addressed to
the Administrative Agent and the Holders, as to such matters concerning the Note
Parties, the Note Documents and the validity, perfection and priority of the
security interests of the Administrative Agent in the Collateral as the
Administrative Agent may reasonably request.

(d) Any fees required to be paid on or before the Closing Date shall have been
paid or will be paid in accordance with this Agreement.

(e) Unless waived by the Administrative Agent, the Company shall have paid all
Attorney Costs of the Administrative Agent to the extent invoiced prior to or on
the Closing Date, plus such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Company and the
Administrative Agent); provided that in each case, the Company is required to
pay such Attorney Costs pursuant to Section 12.04.

(f) The Administrative Agent shall have received such other assurances,
certificates, documents, consents or opinions as the Administrative Agent may
reasonably require.

 

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4.02 Conditions to all Borrowings. The obligation of each Holder to make
Revolving Loans hereunder is subject to the satisfaction of the following
conditions precedent as of the applicable borrowing date of such Revolving Loan:

(a) The representations and warranties of the Company contained in Article V or
any other Note Document, or which are contained in any document furnished at any
time under or in connection herewith or therewith, shall be true and correct in
all material respects on and as of such borrowing date, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they shall be true and correct as of such earlier date, and except
that for purposes of this Section 4.02, the representations and warranties
contained in Section 5.05(a) shall be deemed to refer to the most recent
financial statements furnished pursuant to clauses (b) and (c), respectively, of
Section 6.01.

(b) No Default or Event of Default shall have occurred and be continuing, or
would result from the making of such Revolving Loan.

(c) The Administrative Agent shall have received a Borrowing Notice in
accordance with the requirements hereof, which Borrowing Notice shall include a
description of the Permitted Use or Uses for which the proceeds of such
Revolving Loan will be utilized, and a summary of the Total Outstandings for
each category of Permitted Uses after giving effect to the Revolving Loan
requested in such Borrowing Notice.

(d) There shall be no Law or Judgment binding on any Note Party, and the
Administrative Agent shall not have received any notice that any action, suit,
investigation, litigation or proceeding is pending or overtly threatened in any
court or before any arbitrator or Governmental Authority, in any such case which
(i) purports to enjoin, prohibit, restrain or otherwise affect the making of
such Revolving Loan or (ii) would be reasonably expected to impose or result in
the imposition of a Material Adverse Effect.

(e) The Company shall have delivered to the Administrative Agent a Borrowing
Base Certificate, including without limitation, calculations demonstrating, in
reasonable detail, that after giving effect to the making of such Revolving
Loan, the Company is in compliance with the financial covenants set forth in
Section 6.14.

Each Borrowing Notice submitted by the Company, and the receipt and acceptance
by the Company of the proceeds of each Revolving Loan, shall be deemed to be a
representation and warranty by the Company that the conditions specified in this
Section 4.02 will be or have been satisfied on and as of the applicable
borrowing date, as the case may be.

ARTICLE V.

REPRESENTATIONS, WARRANTIES AND COVENANTS

The Company represents, warrants and covenants to the Administrative Agent and
the Holders that:

5.01 Existence, Qualification and Power; Compliance with Laws. Each Note Party
(a) is a corporation, partnership or limited liability company duly organized or
formed, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation or organization, (b) has all requisite power and authority
and all requisite governmental licenses, authorizations, consents and approvals
to (i) own its assets and carry on its business, except to the extent that the
failure to obtain such governmental licenses, authorizations, consents or
approvals could not reasonably be expected to result in a Material Adverse
Effect and (ii) execute, deliver and perform its obligations under the Note
Documents to which it is a party, (c) is duly qualified and is licensed and in
good standing under the Laws of each jurisdiction

 

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where any Collateral is located and in each other jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license, except to the extent that the failure to
be so qualified could not reasonably be expected to result in a Material Adverse
Effect and (d) is in compliance with all Laws except to the extent that the
failure to so comply could not reasonably be expected to result in a Material
Adverse Effect.

5.02 Authorization; No Contravention. The execution, delivery and performance by
each Note Party of each Note Document to which it is a party have been duly
authorized by all necessary corporate or other organizational action, and do not
and will not (with the passage of time, the giving of notice or otherwise)
(a) contravene or Conflict with the terms of any of such Person’s Organizational
Documents; (b) Conflict with, or result in the creation of any Lien under,
(i) any material Contractual Obligation to which such Person is a party or
(ii) any Judgment or any arbitral award to which such Person or its property is
subject; or (c) violate any Law, except, in the case of the foregoing clauses
(b) and (c), to the extent that such Conflict or violation could not reasonably
be expected to result in a Material Adverse Effect.

5.03 No Consent or Other Action. No Consent or Other Action by, from, with or to
any other Person is required prior to or otherwise in connection with (a) the
Company’s ownership of the Collateral and conduct of its Business, except those
Consents the failure to obtain which could not reasonably be expected to result
in a Material Adverse Effect, (b) any Note Party’s execution and delivery of,
and performance of its obligations under, the Note Documents to which it is a
party, (c) the Grant of any Lien granted under the Security Agreement, or
(d) the validity, perfection and maintenance of any Lien created under the
Security Agreement, except for (i) those consents already obtained and (ii) in
the case of the foregoing clauses (c) and (d), the filing of the Financing
Statement with the Filing Offices.

5.04 Binding Effect. This Agreement has been, and each other Note Document, when
delivered hereunder, will have been, duly executed and delivered by or on behalf
of each Note Party that is a party thereto. This Agreement constitutes, and each
other Note Document when so delivered will constitute, a legal, valid and
binding obligation of each Note Party that is a party thereto, enforceable
against such Note Party in accordance with its terms, subject to applicable
Debtor Relief Laws and general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

5.05 Financial Statements; No Material Adverse Effect.

(a) The audited financial statements of the Company for the fiscal year ended
December 31, 2008 and the unaudited financial statements of the Company for the
fiscal quarter ended September 30, 2009, copies of which have been made
available to the Administrative Agent, (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (ii) fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein.

(b) Since September 30, 2009, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

5.06 Litigation. Except as set forth on Schedule 5.06 attached hereto, there is
no Litigation pending or, to the knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, (i) against the Company or any of its Subsidiaries or any of the
Collateral that could reasonably be expected to result in a Material Adverse
Effect, or (ii) pertaining to this Agreement or any other Note Document, or any
of the transactions contemplated hereby.

 

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5.07 No Default. Neither the Company nor any of its Subsidiaries is in default
under any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. 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
Note Document.

5.08 Insurance. The Company is in compliance with the Insurance Requirements.

5.09 Taxes. The Company, its Subsidiaries and each Person which might have tax
liabilities for which the Company or any Subsidiary is or may be liable (each, a
“Tax Party”) (a) have filed, or caused to be filed, and will continue to file in
a timely manner all Federal, state and other material tax returns and reports
required to be filed, (b) have paid, and will continue to pay, all Federal,
state and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets, (c) have paid
or caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by them, and (d) have collected, deposited and remitted, in
accordance with all Requirements of Law, all sales and/or use taxes applicable
to the conduct of their respective businesses, except, in each case, taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to the applicable Tax Party and with respect to
which adequate reserves have been set aside on its books. There are no Liens on
any properties or assets of the Company or any of its Subsidiaries imposed or
arising as a result of the delinquent payment or the nonpayment of any tax,
assessment, fee or other governmental charge. No Tax Party has given or
consented to any waiver of the statute of limitations with respect to its tax
liabilities for any fiscal year. Except as reflected in the most recent
financial statements provided to the Administrative Agent, the Company does not
know of any transaction or matter which might or could result in additional tax
assessments to any Tax Party.

5.10 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Company, nothing has occurred which would prevent, or cause the
loss of, such qualification. The Company and each ERISA Affiliate have made all
required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of the Company, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Company
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.

 

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5.11 Company Information; Subsidiaries, Etc.

(a) As of the Closing Date, the legal names, federal taxpayer identification
numbers, states of formation, prior legal names, organizational identification
numbers and mailing addresses, as applicable, for each Note Party are accurately
set forth on Schedule 5.11(a) attached hereto. The Company will not change its
name or state of incorporation without providing the Administrative Agent with
10 Business Days prior written notice thereof.

(b) Except as disclosed in part (a) of Schedule 5.11(b) attached hereto, as of
the Closing Date, the Company has not merged, consolidated, acquired all or
substantially all of the assets of any Person or used any other name (whether in
connection with the Business or the Collateral or for other business, obtaining
credit or financing or otherwise) since January 5, 2005. As of the Closing Date,
the Company does not have any Subsidiaries or Investments in the Capital Stock
of any Person other than those owned by the Company that are set forth in part
(b) of Schedule 5.11(b) attached hereto. Part (c) of Schedule 5.11(b) sets forth
as of the Closing Date each Subsidiary of the Company which is an Investment
Vehicle together with a classification of each such Investment Vehicle as a CDO
Subsidiary, a CLO Subsidiary or a Warehouse Subsidiary. Part (d) of Schedule
5.11(b) sets forth as of the Closing Date each Subsidiary of the Company which
is a Workout Subsidiary.

5.12 Purpose of Revolving Loans; Margin Regulations; Investment Company Act;
Public Utility Holding Company Act.

(a) The Company intends to use the proceeds of Revolving Loans solely as
provided in Section 6.12 and does not intend to (and will not) use all or any
portion of the proceeds of any Revolving Loan for any purpose that would
constitute a violation of Regulation T, U or X of the FRB.

(b) The Company (i) is not a “holding company,” or a “subsidiary company” of a
“holding company,” or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company,” within the meaning of the Public Utility
Holding Company Act of 1935 and (ii) is not, and is not required to be,
registered as an “investment company” under the Investment Company Act of 1940.

5.13 Disclosure. No report, financial statement, certificate or other written
information furnished by or on behalf of any Note Party to the Administrative
Agent or any Holder in connection with the transactions contemplated hereby and
the negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Company represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

5.14 Compliance with Laws. The Company and each Subsidiary is in compliance in
all material respects with the requirements of all Laws and all Judgments
applicable to it or to its properties, except in such instances in which
(a) such requirement of Law or Judgment is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

5.15 Business and Location.

(a) On the Closing Date, the Company’s chief executive office address is located
at 500 Boylston Street, Suite 1200, Boston, MA 02116. The Company does not
conduct any business or operations other than the Business and activities
reasonably related or incidental thereto. Accurate and complete records of all
Collateral are maintained at the Company’s chief executive office. The Company

 

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will not engage in any business or activities other than the Business and
activities reasonably related or incidental thereto during the term hereof.

(b) Except as otherwise provided in Section 6.10 hereof or agreed to by the
Administrative Agent, on the Closing Date, all Collateral Revenues and Proceeds
of Collateral are on deposit in a Deposit Account that is subject to a Deposit
Account Control Agreement.

5.16 Financing Statement; Perfected Security Interest. The Company hereby
authorizes the Administrative Agent, on behalf of Holders, to file the Financing
Statement in the form attached hereto as Exhibit C in the Filing Office or in
such other locations as the Administrative Agent, on behalf of Holders, may now
or hereafter deem necessary or prudent in its reasonable discretion. The
execution and delivery of this Agreement and the Security Agreement and the
Grant of the Lien in favor of the Administrative Agent under the Security
Agreement create a valid, enforceable Lien in the Collateral and the Proceeds
thereof. The Filing Office is the only office where a financing statement is
required to be filed under the UCC in order to perfect such security interest in
all Filing Collateral. Following the filing of the Financing Statement in the
form attached hereto as Exhibit C in the Filing Office and subject to Permitted
Encumbrances, the Lien of the Administrative Agent, on behalf of Holders, in all
Filing Collateral (including all Securities Accounts) is a first priority
perfected security interest. Following the Administrative Agent’s obtaining
“control” within the meaning of the UCC, and subject to Permitted Encumbrances,
the Lien of the Administrative Agent, on behalf of Holders, in all Control
Collateral that does not also constitute Filing Collateral is a first priority
perfected security interest. Upon delivery into the Administrative Agent’s
possession of all Possessory Collateral that does not also constitute Filing
Collateral, the Lien therein of the Administrative Agent, on behalf of Holders,
will be a first priority perfected security interest.

5.17 Title; Sufficiency; No Liens. The Company has and will maintain good title
to the Collateral free of all Liens (other than the Lien granted to the
Administrative Agent, on behalf of the Holders, hereunder and Permitted
Encumbrances). Except with respect to filings reflecting Permitted Encumbrances,
there is no effective financing statement (or similar statement, agreement,
pledge, deed of trust, mortgage, notice or registration), Lien, or, to the
Company’s knowledge, Judgment filed with, registered, indexed or recorded in any
Governmental Authority, directly or indirectly identifying or encumbering or
covering or involving any Collateral or which could reasonably be expected to
have a Material Adverse Effect. The Company shall take actions necessary to
terminate all effective filings other than those reflecting Permitted
Encumbrances prior to or concurrently with the Closing Date.

5.18 No Further Liens on Collateral. Other than with respect to the Lien granted
herein to the Administrative Agent on behalf of the Holders and other than with
respect to Permitted Encumbrances, the Company has not entered into, and will
not enter into, any agreement or understanding or take, permit or suffer to
exist any action (including the filing of a financing statement, agreement,
pledge, deed of trust or mortgage, notice or registration) or event (whether by
operation of law or otherwise) for the purpose of, or that may have the effect
of, directly or indirectly, Granting or permitting any Lien on any Collateral,
any interest therein or rights pertaining thereto.

5.19 Capitalization; Solvency.

(a) As of the Closing Date, the Company’s authorized capital stock consists of
145,000,000 shares of common stock, par value $0.01 per share, and 5,000,000
shares of preferred stock, par value $0.01 per share, all of which preferred
stock is undesignated. The Company’s common stock beneficially owned as of
December 18, 2009 by each person or group who is known by the Company to own
beneficially more than 5% of its common stock based solely upon reports filed
with the Securities and Exchange Commission is described on Schedule 5.19(a)
attached hereto. As of December 18, 2009, the

 

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issued and outstanding shares of common stock and of preferred stock are set
forth on Schedule 5.19(a) hereto and all outstanding shares are duly and validly
issued, fully paid and nonassessable.

(b) The Company is Solvent and will continue to be Solvent after giving effect
to each Revolving Loan hereunder, the security interests of Administrative
Agent, on behalf of Holders, and the other transactions contemplated hereunder.

5.20 Brokers and Financial Advisors. Other than as set forth on Schedule 5.20,
no brokers or finders were used by the Company in connection with the financing
contemplated hereby and the Company hereby agrees to indemnify and hold the
Administrative Agent and the Holders harmless from and against any and all
liabilities, costs and expenses (including reasonable attorney’s fees and court
costs) suffered or incurred by the Administrative Agent or any such Holder as a
result of any Person claiming to have acted as a broker or finder on behalf of
the Company in connection with the transaction contemplated hereby. The
provisions of this Section shall survive the expiration and termination of this
Agreement and the payment of the Obligations.

ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Commitment remains in effect or any Revolving Loan or other
Obligation hereunder (other than, following the termination of this Agreement in
accordance with its terms, any Obligation as to which no claim has been made)
shall remain unpaid or unsatisfied, the Company shall:

6.01 Financial Statements. Deliver to the Administrative Agent and, except as
indicated below, each Holder, in form and detail reasonably satisfactory to the
Administrative Agent:

(a) As soon as available, but in any event within 30 days after the end of each
fiscal month of the Company (except the fiscal months that coincide with the end
of each fiscal quarter and fiscal year), the unaudited consolidated balance
sheets of the Company and its Subsidiaries as of the end of such fiscal month,
together with consolidated statements of income for such fiscal month, in each
case as prepared for the Company’s internal purposes and in form substantially
similar to the monthly financial statements of the Company and its Subsidiaries
delivered to the Administrative Agent prior to the date hereof (which for the
avoidance of doubt, do not include monthly “true-up” adjustments to the
allowance for loan loss reserve, the provision for credit losses, the equity
compensation expense, incentive accruals and income tax expense) and certified
by the chief financial officer, the controller or the treasurer of the Company;

(b) As soon as available, but in any event within 45 days after the end of each
fiscal quarter of the Company (except the last fiscal quarter of each fiscal
year of the Company), consolidated balance sheets of the Company and its
Subsidiaries as of the end of such fiscal quarter, together with consolidated
statements of income and cash flows for such fiscal quarter and for the period
beginning with the first day of such fiscal year and ending on the last day of
such fiscal quarter, certified by the chief financial officer, the controller or
the treasurer of the Company; and

(c) As soon as available, but in any event within 120 days after the end of each
fiscal year of the Company, consolidated balance sheets of the Company and its
Subsidiaries as at the end of such fiscal year, and the related consolidated
statements of income, cash flows and stockholders’ equity for such fiscal year,
all in reasonable detail and prepared in accordance with GAAP, audited and
accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and shall not
be subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit.

 

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6.02 Certificates; Other Information. Deliver to the Administrative Agent:

(a) Concurrently with the delivery of the financial statements referred to in
Sections 6.01(a), (b) and (c) above, a certificate of a Responsible Officer of
the Company substantially in the form attached hereto as Exhibit E (each, a
“Compliance Certificate”) (i) showing in reasonable detail the calculations used
in determining the Minimum Interest Coverage, Coverage Test and Consolidated Net
Worth for demonstrating compliance with Section 6.14 and for demonstrating
compliance with the other matters specified therein, and (ii) stating that no
Default or Event of Default has occurred and is continuing or, if a Default or
an Event of Default has occurred and is continuing, stating the nature thereof
and the action that the Company proposes to take with respect thereto;

(b) Promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the stockholders
of the Company, and copies of all annual, regular, periodic and special reports
and registration statements which the Company may file or be required to file
with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934,
and not otherwise required to be delivered to the Administrative Agent pursuant
hereto;

(c) On the Closing Date and concurrently with (i) any borrowing of Revolving
Loans as required by Section 4.02(e) hereof and (ii) any prepayment of Revolving
Loans in accordance with Sections 2.02, 2.03(b) and/or 2.03(c), but in any event
within 15 days after the end of each calendar month, a Borrowing Base
Certificate, as at the end of such month, in each case duly certified by the
chief financial officer, treasurer or controller of the Company;

(d) Concurrently with the acquisition or formation of any Subsidiary, written
notice of same, together with a designation of whether or not such Subsidiary
constitutes an Excluded Subsidiary; and

(e) Promptly, such additional information regarding the business, financial or
corporate affairs of the Company or any Subsidiary, or compliance with the terms
of the Note Documents, as the Administrative Agent may from time to time
reasonably request.

Any documents, schedules, invoices or other papers delivered to the
Administrative Agent or the Holders may (but shall not be required to) be
destroyed or otherwise disposed of by the Administrative Agent or the Holders at
any time after the same are delivered to the Administrative Agent or the
Holders, except as otherwise designated by the Company to the Administrative
Agent in writing, but shall at all times be subject to the confidentiality
provisions of Section 12.08 hereof.

The Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by the Company with any such request for
delivery, and each Holder shall be solely responsible for requesting delivery to
it or maintaining its copies of such documents.

6.03 Notices. Promptly notify the Administrative Agent and each Holder:

(a) of the occurrence of any Default or Event of Default;

(b) of any matter that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including, to the extent applicable, (i) breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary; (ii) any dispute or Litigation between the Company or
any Subsidiary and any Governmental Authority; (iii) the commencement of, or any
material development in, any Litigation affecting the Company or any Subsidiary;
or (iv) any material loss, damage, or Litigation relating to the Collateral;

 

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(c) of the occurrence of any ERISA Event; and

(d) of any material change in accounting policies or financial reporting
practices by the Company requiring the Company to restate any of its financial
statement previously delivered to the Administrative Agent pursuant to
Section 6.01.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Company setting forth details of the occurrence
referred to therein and stating what action the Company has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Note Document that have been breached.

6.04 Payment of Obligations. Pay and discharge, as the same shall become due and
payable, all its obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by appropriate
proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by the Company; (b) all lawful claims which, if unpaid,
would by law become a Lien (other than a Permitted Encumbrance) upon any
property of the Company; and (c) all Indebtedness of the Company, as and when
due and payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.

6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization; and (b) take all reasonable action to maintain
all rights, privileges, permits, licenses and franchises necessary or desirable
in the normal conduct of its business, except (in the case of this clause (b))
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.

6.06 Maintenance of Insurance. At the Company’s sole cost and expense,
(a) maintain policies of insurance for director, officer and company liability
with the insurance companies providing such policies to the Company as of the
Closing Date, or such other financially sound and reputable insurance companies
acceptable to the Administrative Agent, in amounts not less than the amounts of
the Company’s policies existing as of the Closing Date, and in each case, which
policies are otherwise consistent with sound business practice for entities with
lines of business substantially similar to those lines of business conducted by
the Company, and the Company will furnish to the Administrative Agent upon
request full information as to the insurance carried, (b) timely pay all
premiums, fees and charges required in connection with all of its insurance
policies and otherwise continue to maintain such policies in full force and
effect; and (c) promptly notify the Administrative Agent of any loss in excess
of $2,000,000 covered by or claim under or notice made in connection with any
such insurance policies (collectively, the “Insurance Requirements”).

6.07 Compliance with Laws. Comply in all material respects with the requirements
of all Laws and all Judgments applicable to it or its business or property,
except in such instances in which (a) such requirement of Law or Judgment is
being contested in good faith by appropriate proceedings diligently conducted;
or (b) the failure to comply therewith could not reasonably be expected to have
a Material Adverse Effect.

6.08 Books and Records. Maintain (a) proper books of record and account, 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 the Company and its Subsidiaries; and (b) such books of
record and account in material conformity with all applicable requirements of
any Governmental Authority having regulatory jurisdiction over the Company or
its Subsidiaries.

 

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6.09 Inspection Rights. Permit representatives and agents of the Administrative
Agent to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make abstracts therefrom (but not copies
thereof), and to discuss its affairs, finances and accounts with its directors,
officers and independent public accountants (provided that representatives of
the Company may be present at any such discussion), all at the expense of the
Administrative Agent (unless an Event of Default has occurred and is continuing)
(which expense shall not be reimbursable by the Company pursuant to
Sections 12.04 or 12.05) and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon a reasonable advance
written notice to the Company; provided that when an Event of Default exists the
Administrative Agent (or any of representative or agent thereof) may do any of
the foregoing at the expense of the Company at any time during normal business
hours and without advance notice.

6.10 Banks and Payments. Cause all Collateral Revenues and Proceeds to be
deposited (x) into that certain account of NewStar Concentration LLC held at
Wachovia Bank, National Association the last four digits of which are 5215 or
any replacement or successor account (the “Concentration Account”), and to
further cause all Collateral Revenues and Proceeds to be transferred out of such
Concentration Account and into an account listed on Schedule 6.10 or 6.11
attached hereto within two Business Days of the deposit thereof into such
Concentration Account, or (y) directly into Deposit Accounts listed on
Schedule 6.10 attached hereto, which Schedule may be updated by the Company from
time to time by delivering to the Administrative Agent a revised Schedule 6.10
reflecting any changes with respect to the Deposit Accounts maintained by the
Company or any Subsidiary Guarantor. With respect to any new Deposit Account
reflected on a revised Schedule 6.10 delivered after the Closing Date, prior to
depositing any Collateral, Collateral Revenues or Proceeds into such new
account, the Company or such Subsidiary Guarantor shall enter into a Deposit
Account Control Agreement with respect to such Deposit Account. Notwithstanding
anything in this Section 6.10 or in the other Note Documents to the contrary,
the Administrative Agent agrees that (a) it shall not give instructions to any
depository bank pursuant to any Deposit Account Control Agreement unless an
Event of Default shall have occurred and be continuing, and (b) if it shall have
given instructions to any depositary bank pursuant to any Deposit Account
Control Agreement and the Event of Default related thereto shall be cured to the
satisfaction of the Administrative Agent or waived by the Administrative Agent,
the Administrative Agent shall, upon the request of the Company, withdraw such
instruction. Each Deposit Account Control Agreement shall constitute a present
grant of control to the Administrative Agent and shall provide the
Administrative Agent, for the benefit of the Holders, a first priority security
interest in the affected Deposit Account. Notwithstanding anything in this
Section 6.10 to the contrary, the Company and the Subsidiary Guarantors shall be
permitted to maintain the following accounts not subject to the Administrative
Agent’s control: (i) accounts of the Company or any Subsidiary Guarantor
established and maintained for the purpose of holding funds in escrow for the
benefit of third parties, (ii) accounts of the Company established and
maintained for the purpose of clearing amounts (A) held in the Company’s
capacity as the administrative or collateral agent for a syndicate of lenders
(but excluding for the avoidance of doubt any syndicate of lenders composed
entirely of Note Parties), and/or (B) owed to Investment Vehicles that are not
Note Parties in connection with their ordinary course financing transactions,
(iii) that certain account of the Company held at Bank of America, N.A. the last
four digits of which are 6695 or any replacement or successor account used for
payroll, employee bonuses, taxes, accounts payable and other miscellaneous
finance-related payments, provided that the total amount of funds on deposit in
such account (exclusive of amounts to be used to pay annual year-end employee
bonuses related to such fiscal year-end and amounts transferred into such
account on a quarterly basis and disbursed out of such account within three
Business Days of such transfer for the payment of taxes) do not exceed
$1,500,000 in the aggregate at any given time, and (iv) provided that no Default
or Event of Default shall have occurred and be continuing, those other accounts
of the Company or any Subsidiary Guarantor expressly designated on Schedule 6.10
attached hereto so long as the total amount of funds on deposit in such
designated accounts does not exceed $500,000 in the aggregate at any given time.
Each Deposit Account and Securities Account maintained by the Company and each
Subsidiary Guarantor is an account permitted under the preceding

 

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sentence or is, or pursuant to Section 6.18 hereof will be, subject to a Deposit
Account Control Agreement or Securities Account Control Agreement, as
applicable, and is listed on Schedule 6.10 or Schedule 6.11.

6.11 Securities and Investments. Cause all Collateral consisting of securities
and Investments (other than Excluded Collateral) owned by the Company or any
Subsidiary Guarantor and held by a securities intermediary (other than Excluded
Collateral) to be held in one of the Securities Accounts listed on Schedule 6.11
attached hereto, which Schedule may be updated by the Company from time to time
by delivering to the Administrative Agent a revised Schedule 6.11 reflecting any
changes with respect to the Securities Accounts maintained by the Company. With
respect to any new Securities Account reflected on a revised Schedule 6.11
delivered after the Closing Date, prior to causing any Collateral consisting of
securities or Investments owned by the Company or any Subsidiary Guarantor
(other than Excluded Collateral) to be held in any such new Securities Account,
the Company or such Subsidiary Guarantor shall enter into a Securities Account
Control Agreement with respect to such Securities Account. Notwithstanding
anything in this Section 6.11 or in the other Note Documents to the contrary,
the Administrative Agent agrees that (a) it shall not give instructions to any
institution maintaining a Securities Account pursuant to a Securities Account
Control Agreement unless an Event of Default shall have occurred and be
continuing, and (b) if it shall have given instructions to any institution
maintaining a Securities Account pursuant to any Securities Account Control
Agreement and the Event of Default related thereto shall be cured to the
satisfaction of the Administrative Agent or waived by the Administrative Agent,
the Administrative Agent shall, upon the request of the Company, withdraw such
instruction. Each such Securities Account Control Agreement shall constitute a
present grant of control to the Administrative Agent and shall provide the
Administrative Agent, for the benefit of the Holders, a first priority security
interest in the affected Securities Account.

6.12 Additional Subsidiary Guarantors. At such time, if any, as the Company
acquires or creates a new Subsidiary which is not an Excluded Subsidiary
(including, for the purposes of this Section 6.12 any existing Subsidiary that
ceases to be an Excluded Subsidiary), the Company shall (if such Subsidiary is
not already a Subsidiary Guarantor), within ten Business Days thereafter,
(i) cause such Subsidiary to become a party to the Subsidiary Guaranty and to
the Security Agreement in the manner contemplated by each such document, and
(ii) deliver to the Administrative Agent all such documents, certificates,
resolutions, opinions and other items pertaining to such Subsidiary as would be
required to be delivered to the Administrative Agent on the Closing Date with
respect to any Subsidiary Guarantor that would be an initial party to the
Subsidiary Guaranty and/or the Security Agreement.

6.13 Use of Proceeds. The Company shall use the proceeds of Revolving Loans only
for a Permitted Use or Uses.

6.14 Certain Financial Covenants.

(a) Minimum Interest Coverage. The Company and its Subsidiaries shall at all
times maintain the sum of Unrestricted Cash plus Availability in an amount at
least equal to Pro Forma Interest Charges for the six month period immediately
succeeding any date of determination (the “Minimum Interest Coverage”).

(b) Coverage Test. The Company shall at all times cause the Borrowing Base as of
any date of determination less the Pro Forma Interest Charges as of such date to
equal or exceed the Total Outstandings as of such date (the “Coverage Test”).

(c) Consolidated Net Worth. The Company and its Subsidiaries shall at all times
maintain a Consolidated Net Worth of at least $400,000,000, less the amounts of
any reduction in the assets designated on the Company’s consolidated balance
sheet as “deferred income taxes, net” and/or “deferred

 

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financing costs, net” from the amounts thereof shown on the Company’s
consolidated balance sheet as of September 30, 2009.

6.15 Certain Property Interests. In the event the Company or any Subsidiary
Guarantor has or acquires any fee interest in real property (including, without
limitation, any REO Property), the Company shall, upon the Administrative
Agent’s request and at the expense of the Company promptly (i) furnish to the
Administrative Agent all information relating to such property as the
Administrative Agent may reasonably request and (ii) execute and deliver (or
cause such Subsidiary Guarantor to execute and deliver) such mortgages or deeds
of trust in form and substance reasonably acceptable to the Administrative Agent
covering such property, together with evidence that such mortgages or deeds of
trust have been recorded in all places to the extent necessary or reasonably
desirable, in the judgment of the Administrative Agent, to create a valid and
enforceable first priority lien on such property in favor of the Administrative
Agent for the benefit of the Holders (or in favor of such other trustee as may
be required or reasonably desired under local law).

6.16 Transfer of Unencumbered Assets. On or before the 60th day after the date
hereof, the Company shall cause all Unencumbered Assets held by it to be
assigned and assumed by the NewStar Collateral Subsidiary; provided that no such
assignment and assumption of any Unencumbered Asset shall be required if it
would Conflict with any Contractual Obligation or would require the Consent
and/or Other Action of any third party that the Company is unable to obtain or
complete after using commercially reasonable efforts.

6.17 Dissolution of Boulders NS First Holding, LLC. On or before the 90th day
after the date hereof, the Company shall cause Boulders NS First Holding, LLC to
be dissolved.

6.18 NewStar Collateral Subsidiary Account. On or before the 30th day after the
date hereof, the Company shall cause the NewStar Collateral Subsidiary to enter
into a control agreement in form and substance reasonably acceptable to the
Administrative Agent with respect to that certain account of the NewStar
Collateral Subsidiary held at U.S. Bank National Association the last four
digits of which are 0200.

6.19 2007-1 Class E Note. On or before the 60th day after the date hereof,
provided that the Company and U.S. Bank National Association, in its capacity as
trustee, have received, on or prior to the date of delivery of the Class E Note
referenced below, a fully executed Transferee Letter in the form agreed upon by
the Company and the Administrative Agent as of the date hereof, the Company
shall deliver to the Administrative Agent that certain Class E Note issued by
NewStar Commercial Loan Trust 2007-1 to the Company in the original principal
amount of $29,100,000, together with an undated transfer power executed in blank
with respect thereto.

6.20 Capital Stock of NewStar Commercial Loan LLC 2009-1. On or before the 15th
day after the date hereof, or on such earlier or later date of the closing of
the Company’s 2009 CLO transaction described in the Offering Memorandum dated as
of January 5, 2010, provided that the Company has received on or prior to the
consummation of the pledge of Capital Stock described in this Section 6.20, a
fully executed LLC Membership Interests Pledgee Transferee Certificate in the
form agreed upon by the Company and the Administrative Agent as of the date
hereof, the Company shall deliver to the Administrative Agent, that certain
Consent of Designated Manager in the form agreed upon by the Company and the
Administrative Agent as of the date hereof, together with any other
documentation reasonably requested by the Administrative Agent to effect a first
priority perfected security interest of the Administrative Agent for the benefit
of the Holders in 100% of the Capital Stock of NewStar Commercial Loan LLC
2009-1.

 

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ARTICLE VII.

NEGATIVE COVENANTS

So long as any Commitment remains in effect or any Revolving Loan or other
Obligation hereunder (other than, following the termination of this Agreement in
accordance with its terms, any Obligation as to which no claim has been made)
shall remain unpaid or unsatisfied, the Company shall not:

7.01 Indebtedness. Subject to Section 7.06, incur, or permit any of its
Subsidiaries to Incur, any Indebtedness on or after the Closing Date, except for
the following:

(a) Indebtedness created under any Note Document;

(b) any Indebtedness in an aggregate principal amount not to exceed $20,000,000
under any traditional repurchase agreement financing with a term of not longer
than 60 days;

(c) Indebtedness existing on the date of this Agreement and disclosed on
Schedule 7.01(c);

(d) any Permitted Refinancing Indebtedness;

(e) any Indebtedness arising from intercompany loans that is expressly
subordinated to the Revolving Loans pursuant to a written subordination
agreement satisfactory to the Administrative Agent;

(f) Guaranty Obligations incurred after the Closing Date in respect of
Indebtedness not prohibited by this Section 7.01 in an aggregate principal
amount not to exceed $5,000,000;

(g) Indebtedness consisting of Capital Lease obligations and/or secured by
Permitted Encumbrances under Section 7.02(e), in a principal amount not in
excess of $5,000,000 in the aggregate;

(h) Indebtedness of the Company existing or arising under Hedge Agreements
entered into in the ordinary course of business consistent with past practices,
but only to the extent either (i) hedged or entered into for bona fide hedging
purposes and not for speculative purposes, or (ii) entered into in connection
with the provision of interest rate hedging facilities to the Company’s
borrowers;

(i) Indebtedness of any Investment Vehicle, but excluding Indebtedness of any
Investment Vehicle arising under a Hedge Agreement unless such Indebtedness is
permitted pursuant to Section 7.01(m) or such Indebtedness is entered into after
the Closing Date pursuant to a Hedge Agreement that has been consented to by the
Administrative Agent in the exercise of its reasonable discretion;

(j) Indebtedness that is expressly subordinated to the Revolving Loans pursuant
to written terms reasonably satisfactory to the Administrative Agent;

(k) the Citigroup Demand Note, provided that such Citigroup Demand Note shall
not be amended to increase the maximum stated principal amount of Indebtedness
thereunder as of the date hereof without the prior written consent of the
Administrative Agent, such consent not to be unreasonably withheld;

(l) the Natixis Facility, the Wachovia Facility and the Citigroup Facility,
provided that none of the foregoing facilities shall be amended to increase the
respective maximum stated principal amounts of Indebtedness thereunder as of the
date hereof without the prior written consent of the Administrative Agent, such
consent not to be unreasonably withheld

 

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(m) Guaranty Obligations pursuant to that certain Guaranty by NewStar CP Funding
LLC dated July 15, 2009 in favor of Wachovia Bank, National Association which
are not in excess of $1,000,000 in the aggregate;

(n) unsecured Indebtedness;

(o) Indebtedness of Workout Subsidiaries incurred after the Closing Date and
Permitted Refinancing Indebtedness related thereto;

(p) in addition to Indebtedness expressly permitted by the preceding provisions
of this Section 7.01, Indebtedness of Subsidiary Guarantors incurred after the
Closing Date to the extent consented to by the Administrative Agent in the
exercise of its reasonable discretion; and

(q) in addition to Indebtedness expressly permitted by the preceding provisions
of this Section 7.01, Indebtedness of Subsidiaries of the Company which are not
Subsidiary Guarantors (other than Investment Vehicles and Workout Subsidiaries)
incurred after the Closing Date to the extent consented to by the Administrative
Agent in the exercise of its sole discretion; provided that for the avoidance of
doubt, no such consent shall be required in connection with Permitted
Refinancing Indebtedness of Hereford Financial LLC.

7.02 Liens. Directly or indirectly create, incur, assume or suffer to exist, or
permit any of its Subsidiaries, directly or indirectly, to create, incur, assume
or suffer to exist, any Lien on any of their respective properties or assets of
any kind (including any Excluded Collateral), whether now owned or hereafter
acquired, or any income or profits therefrom, or otherwise assign any rights to
receive any income or profits therefrom, except for the following:

(a) Liens pursuant to any Note Document;

(b) Liens existing on the date hereof and listed on Schedule 7.02(b) and any
renewal, extension, refinancing or refunding thereof which does not encumber
additional property;

(c) Customary Permitted Liens;

(d) Liens securing any Indebtedness (including any Permitted Refinancing
Indebtedness) that is not prohibited under Section 7.01;

(e) Liens arising in respect of purchase money Indebtedness or Capital Leases
permitted under Section 7.01(g) (including the interest of a lessor under a
Capital Lease and purchase money Liens to which any property is subject at the
time, on or after the date hereof;

(f) Liens on Cash or Cash Equivalents pledged to secure obligations under Hedge
Agreements, following demand by any counterparty entitled, based upon reasonable
calculations of the value of such obligations on a mark-to-market basis, to
require cash collateralization of such obligations;

(g) Liens securing judgments (including, without limitation, pre-judgment
attachments) but only to the extent for an amount and for a period not resulting
in an Event of Default under Section 9.01(i) hereof;

(h) Liens consisting of bankers’ liens and rights of setoff, in each case,
arising by operation of law, and Liens on documents presented in letter of
credit drawings;

 

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(i) Liens on property of a Person existing at the time such Person is merged
into or consolidated with the Company; provided that such Liens were not created
in contemplation of such merger, consolidation or Investment and do not extend
to any assets other than those of the Person merged into or consolidated with
the Company or acquired by the Company;

(j) Liens on Obligor Loans not included in the Collateral, provided that such
Liens secure Indebtedness permitted by Section 7.01(i);

(k) Liens on Workout Assets which secure Obligor Loans to the extent such Liens
are in existence on the date such assets become Workout Assets; and

(l) Liens not otherwise permitted by the foregoing clauses of this Section 7.02
securing obligations or other liabilities; provided, however, that the aggregate
outstanding amount of all such obligations and liabilities shall not exceed
$500,000 at any time.

7.03 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into
another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, or permit any Subsidiary
Guarantor to do any of the foregoing provided that (a) any Subsidiary Guarantor
may merge or consolidate with, or dispose of all or substantially all of its
assets to or in favor of the Company or any other Subsidiary Guarantor; (b) any
Subsidiary Guarantor with assets having a book value of less than $1,000,000 may
liquidate, dissolve or merge or consolidate with the Company or any other
Subsidiary Guarantor of the Company, so long as, in the cases of clauses (a) and
(b) above, if the Company is party to any such transaction, it shall be the
surviving or continuing Person after the consummation thereof; and (c) the
Company may merge or consolidate with, or Dispose of all or substantially all of
its assets to or in favor of any Person so long as (i) either (A) the Company is
the surviving or continuing Person after such merger or consolidation or (B) the
surviving or continuing Person after such merger or consolidation, or the Person
to which such Disposition is made, as the case may be, is incorporated or
organized under the laws of any State of the United States and such corporation
expressly assumes all obligations of Company under this Agreement and the other
Note Documents pursuant to written agreements reasonably satisfactory to the
Administrative Agent, (ii) after giving effect to such transaction, the Company
or such other corporation, as the case may be, has a Consolidated Net Worth at
least equal to the Consolidated Net Worth of the Company prior to giving effect
to such transaction, (iii) no Default or Event of Default has occurred and is
continuing either prior to or after giving effect to such transaction and
(iv) prior to and after giving effect to such transaction, the Company is in
compliance with the financial covenants set forth under Section 6.14 hereto on a
pro forma basis.

7.04 Dispositions. Dispose, or permit any Subsidiary to Dispose, of any
Collateral or any other property or assets of the Company or such Subsidiary, or
enter into any agreement to make any such Disposition, except:

(a) Dispositions permitted by Section 6.16, Section 7.03 or Section 7.05 and
Liens permitted by Section 7.02;

(b) Dispositions of property by any Subsidiary to the Company or any other
Subsidiary Guarantor and Dispositions of property by the Company to any
Subsidiary Guarantor;

(c) Dispositions of Cash and Cash Equivalents;

(d) Dispositions of (i) obsolete or worn-out property (including leasehold
interests), equipment or other tangible property no longer used or useful in
their business, and (y) any inventory or other property (including receivables)
sold or disposed of in the ordinary course of business and on

 

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ordinary business terms), provided that the Company may sublease real property
to the extent such sublease would not interfere with the operation of the
Business;

(e) Dispositions of Unencumbered Assets by the NewStar Collateral Subsidiary, by
the Company, and by Investment Vehicles to NewStar Credit Opportunities Fund,
Ltd., NewStar Credit Opportunities Funding I, NewStar Credit Opportunities
Funding II, or to unaffiliated third parties; provided that (i) the party making
the Disposition shall receive at least the Fair Market Value of the Unencumbered
Assets Disposed of, (ii) at least 75% of the consideration received in respect
of such Disposition is for Cash, and (iii) after giving effect to such
Disposition and the application of the proceeds thereof, the Coverage Test shall
be satisfied;

(f) Dispositions of Unencumbered Assets by the NewStar Collateral Subsidiary
and/or by the Company to Investment Vehicles and by Investment Vehicles to the
NewStar Collateral Subsidiary, to the Company, or to other Investment Vehicles,
provided that after giving effect to any such Disposition and the application of
the proceeds thereof, the Coverage Test shall be satisfied, and further provided
that if after to giving effect to any such Disposition pursuant to this clause
(f) and the application of the proceeds thereof, the Collateral Availability is
less than $10,000,000, then such Disposition shall be subject to the approval of
the Administrative Agent, such approval not to be unreasonably withheld,
conditioned or delayed;

(g) Dispositions of Collateral to Investment Vehicles in exchange for other
Collateral in accordance with the Company’s ordinary course substitution and
trading mechanism, its Contractual Obligations and Requirements of Law, provided
that after giving effect to any such Disposition, the Coverage Test shall be
satisfied; and

(h) Dispositions of Workout Assets to non-Affiliates that (i) are
seller-financed by the Company or any of its Subsidiaries, or (ii) are made in
the ordinary course of business on arm’s length terms, provided that in each
case, both before and after giving effect thereto, the Coverage Test shall be
satisfied.

7.05 Restricted Payments. Directly or indirectly declare, pay or make any
Restricted Payment, or set aside or otherwise deposit or invest any sums for
such purpose, or agree to do any of the foregoing; provided that the Company may
declare, pay or make any Restricted Payment if, at the time of and after giving
effect to such Restricted Payment:

(a) no Default or Event of Default shall have occurred and be continuing or
shall be caused thereby; and

(b) the aggregate amount of such Restricted Payments made in Cash in any fiscal
year does not exceed $10,000,000 for any purposes other than repurchases by the
Company of its own Capital Stock which repurchases, together with any Restricted
Payments permitted in the last paragraph of this Section 7.05, shall not be
subject to such $10,000,000 threshold; and

(c) not less than 5 days prior to making such Restricted Payment, the Company
shall have delivered to the Administrative Agent a certificate of a Responsible
Officer of the Company in the form attached hereto as Exhibit F to the effect
that the requirements set forth in the immediately preceding clauses (a) and
(b) will be complied with, which certificate shall be true, correct and complete
in all material respects both immediately before and after giving effect to such
Restricted Payment.

In addition to the Restricted Payments expressly permitted above, the following
Restricted Payments shall also be permitted (without duplication): (i) so long
as no Default or Event of Default has occurred and is continuing, Restricted
Payments which constitute Permitted Uses pursuant to clause (e)

 

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thereof, and (ii) whether or not a Default or Event of Default has occurred and
is continuing, (A) the defeasance, redemption, retirement, repurchase or other
acquisition of subordinated Indebtedness of the Company with the net cash
proceeds from an Incurrence of Permitted Refinancing Indebtedness; (B) the
repurchase, redemption or other acquisition or retirement for value in the
ordinary course of business of any Capital Stock of the Company from any present
or former employee, officer or independent director of the Company or any of its
Subsidiaries received by such Person in connection with such Person’s
compensation (including in connection with such Person’s death, disability, or
termination of employment), provided that any Restricted Payment pursuant to
this clause (ii)(B) shall not exceed $2,000,000 during any period while a
Default or an Event or Default is continuing, and (C) Restricted Payments the
proceeds of which will be used by the Company to make cash payments in lieu of
the issuance of fractional shares in connection with the exercise of warrants,
options or other securities convertible into or exchangeable for Capital Stock
of the Company, provided that any Restricted Payment pursuant to this clause
(ii)(C) shall not exceed $500,000 during any period while a Default or an Event
or Default is continuing.

7.06 Change in Nature of Business. (a) Without the Administrative Agent’s prior
consent, engage, or permit any subsidiary to engage, in any material line of
business substantially different from the Business.

(b) Notwithstanding anything to the contrary in Article VII, the Company shall
not permit any of the following:

(i) NewStar Securities Corporation, Inc. to incur any Indebtedness or to engage
in any activity other than holding Cash, Cash Equivalents and marketable
securities, which Cash, Cash Equivalents and marketable securities shall not
exceed $20,000,000 in the aggregate at any time when any Revolving Loan
hereunder is outstanding;

(ii) NewStar Concentration LLC to incur any Indebtedness or to engage in any
activity other than the holding of the Concentration Account and the management,
clearing and disbursement of funds held in the Concentration Account;

(iii) the NewStar Collateral Subsidiary to incur any Indebtedness other than
Indebtedness owed to the Administrative Agent or to engage in any other activity
other than the holding, management and administration of Unencumbered Assets;

(iv) any of NewStar Structured Finance Opportunities, LLC NewStar Structured
Finance Opportunities II, LLC and Boulders NS First Holding, LLC to incur any
Indebtedness; and

(v) Hereford Financial LLC to incur any Indebtedness other than as set forth on
Schedule 7.01(c) hereto and Permitted Refinancing Indebtedness.

7.07 Transactions with Affiliates. Enter into, or permit any Subsidiary to enter
into, any transaction of any kind with any Affiliate of the Company, whether or
not in the ordinary course of business, other than (a) transactions (i) among
the Company and its Subsidiaries or (ii) among the Subsidiaries,
(b) transactions pursuant to Contractual Obligations in effect on the Closing
Date, (c) Restricted Payments that are not prohibited hereunder, (d) issuances
of Capital Stock by the Company and/or any non-wholly owned Subsidiaries to
Affiliates (other than wholly-owned Subsidiaries), (e) payment of reasonable
fees, compensation or employee benefit arrangements, and any indemnity provided
for the benefit of directors of the Company in the ordinary course of business
and consistent with industry practice, (f) other transactions with Affiliates
otherwise expressly permitted by the terms of this Agreement, and
(g) transactions with Affiliates conducted on fair and reasonable terms
substantially

 

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as favorable to the Company and any Subsidiary, as the case may be, as would be
obtainable by the Company or such Subsidiary at the time in a comparable arm’s
length transaction with a Person other than an Affiliate; provided that any
transactions described in this clause (g) involving amounts in excess of
$2,000,000 individually and $10,000,000 in the aggregate shall be approved in
advance by the board of directors of the Company.

7.08 Burdensome Agreements. Enter into, or permit any Subsidiary to enter into,
any Contractual Obligation (other than this Agreement or any other Note
Document) that limits the ability of:

(a) any Subsidiary or any Investment Vehicle to make Restricted Payments to the
Company or to otherwise transfer property to the Company, other than (i) in the
case of any Investment Vehicle existing on the date hereof, the limitations set
forth in the Organizational Documents or in the underlying agreements to which
such Investment Vehicle is a party, (ii) in the case of any Investment Vehicle
formed or acquired after the date hereof, such limitations as are of a type
customarily set forth in the Organizational Documents of CLOs, CDOs or
“warehouse” lending or borrowing facilities or in the underlying agreements for
Investments of the type being made by any such Investment Vehicle or (iii) such
limitations as are reasonable and customary in connection with a financing
entered into by any non-wholly owned Subsidiary or Investment Vehicle; or

(b) the Company or any Subsidiary Guarantor to create, incur or assume Liens on
its assets or property (other than assets or property which have been identified
as Excluded Collateral in the deliveries made to the Administrative Agent in
accordance with the definition of “Excluded Collateral” and Section 6.01(c)
hereof) in favor of the Administrative Agent to secure the Obligations.

7.09 Use of Proceeds. Use, or permit any Subsidiary to use, the proceeds of
Revolving Loans for any purpose that (a) constitutes a violation of Regulations
T, U or X promulgated by the FRB or (b) is not otherwise permitted by
Section 6.13.

ARTICLE VIII.

INTENTIONALLY OMITTED

ARTICLE IX.

EVENTS OF DEFAULT AND REMEDIES

9.01 Events of Default. Any of the following shall constitute an Event of
Default:

(a) Non-Payment. The Company fails to pay (i) when and as required to be paid as
set forth herein, any payment of principal or (ii) within five days after the
same becomes due, any interest, fee or other amount (other than principal) due
hereunder or under any other Note Document; or

(b) Specific Covenants. The Company fails to perform or observe (i) any term,
covenant or agreement contained in any of Section 6.05(a), Section 6.14(a),
Section 6.14(c), Section 6.16, Section 6.17 or Article VII, (ii) any term,
covenant or agreement contained in any of Section 6.18, 6.19 or 6.20 and such
failure continues for 10 Business Days after written notice thereof by the
Administrative Agent to the Company, or (iii) any term, covenant or agreement
contained in any of Section 6.01, 6.02, 6.03, 6.10, 6.11, 6.12 or 6.13 and such
failure continues for 10 Business Days; provided that, with respect to any
Default under Section 6.01 or Section 6.02, if such Default occurred as a result
of extraordinary circumstances without any fault on the part of the Company,
such cure period shall be extended by such additional time as may be reasonably
requested by the Company, which request shall not be unreasonably withheld;
provided that no Revolving Loans shall be made hereunder at any time when
Company shall have failed to deliver a Compliance Certificate or Borrowing Base
Certificate to the extent required by, and in accordance with, Section 6.02(a)
or 6.02(c); or

 

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(c) Coverage Test. The Company fails to satisfy the Coverage Test and such
failure continues for 60 days after the date of such failure; or

(d) Other Defaults. The Company fails to perform or observe any other covenant
or agreement (not specified in subsection (a), (b) or (c) above) contained in
any Note Document on its part to be performed or observed and such failure
continues for 30 days; or

(e) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of any Note Party
herein, in any other Note Document, or in any document delivered in connection
herewith or therewith shall be incorrect or misleading in any material respect
when made or deemed made; or

(f) Payment Default under Other Instruments. A default shall occur under any of
the Company’s Indebtedness (other than the Obligations), which default (i) is
caused by a failure by the Company to pay any principal on such Indebtedness at
final maturity (a “Payment Default”) or (ii) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, (A) the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5,000,000 or more and (B) such
Payment Default has not been cured, or such acceleration has not been rescinded,
as the case may be, within 30 days after the occurrence or declaration thereof;
provided, that such 30 day period shall be deemed to have terminated upon the
commencement of the exercise of remedies by the holders of such Indebtedness; or

(g) Insolvency Proceedings, Etc. The Company or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 consecutive calendar days; or any proceeding under any Debtor
Relief Law relating to any such Person or to all or any material part of its
property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 consecutive calendar days, or an order for relief
is entered in any such proceeding; or

(h) Inability to Pay Debts; Attachment. (i) The Company becomes unable or admits
in writing its inability or fails generally to pay its debts as they become due,
or (ii) any writ or warrant of attachment or execution or similar process is
issued or levied against all or any material part of the property of the Company
and is not released, vacated or fully bonded within 30 days after its issue or
levy; or

(i) Judgments. There is entered against the Company or any of its Subsidiaries
(i) a final judgment or order of a court of competent jurisdiction for the
payment of money in an aggregate amount exceeding $5,000,000 (to the extent not
covered by independent third-party insurance as to which the insurer does not
dispute coverage), or (ii) any one or more non-monetary final judgments that
have, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) such judgment or
order remains undischarged, unpaid, unstayed, unbonded or undismissed as of the
earlier to occur of (x) 30 consecutive days after such judgment or order is
entered and (y) the date such judgment or order becomes non-appealable; or

(j) ERISA. (i) 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 the Company under Title

 

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IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate
amount in excess of $5,000,000, or (ii) the Company 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
$5,000,000; or

(k) Invalidity of Note Documents. Any Note Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Note Party denies in writing the validity or
enforceability of any Note Document to which it is a party; or any Note Party
denies in writing that it has any or further liability or obligation under any
Note Document to which it is a party, or purports in writing to revoke,
terminate or rescind any such Note Document; or

(l) Fundamental Changes. The Company or any other Note Party shall attempt to
terminate, revoke or disclaim any Obligation to the Administrative Agent or any
Holder (except strictly in accordance with its terms).

9.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, subject to Section 11.12, at the
request of, or may, with the consent of, the Required Holders, take any or all
of the following actions:

(a) declare the Commitments to be terminated, whereupon the Commitments shall be
terminated;

(b) declare the unpaid aggregate principal amount of all outstanding Revolving
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Note Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Company;

(c) exercise on behalf of itself and the Holders all rights and remedies
available to it and the Holders under the Note Documents (subject to any
limitations on such rights and remedies set forth in the Security Agreement) or
under applicable law, which shall include the rights, powers and remedies
(i) granted to secured parties under the UCC or other applicable Uniform
Commercial Code; (ii) granted to the Administrative Agent or the Holders under
any other applicable Law; or (iii) granted to the Administrative Agent or the
Holders under this Agreement, the Notes or any other Note Document or any other
agreement between any Note Party and the Administrative Agent or the Holders;

(d) direct the Company (i) to cause Unencumbered Assets to be sold through a
competitive market sales process at fair market value, and/or (ii) to the extent
not prohibited by an applicable Contractual Obligation, Organizational Document
or Requirement of Law, to sell Obligor Loans owned by any Warehouse Subsidiary
in a commercially reasonable manner through a competitive market sales process
at fair market value, and the Company hereby agrees to follow any such
directions;

(e) exercise its rights under the Security Agreement;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Company under the Bankruptcy Code, the
Commitments shall automatically terminate, the unpaid outstanding principal
amount of all Revolving Loans and all interest and other amounts as aforesaid
shall automatically become due and payable, without further act of the
Administrative Agent or any Holder.

All such rights, powers and remedies shall be cumulative and not alternative and
enforceable, in Required Holders’ discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall

 

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include the right to apply to a court of equity for an injunction to restrain a
breach or threatened breach by any Note Party of this Agreement or any of the
other Note Documents. Any single or partial exercise of, or forbearance, failure
or delay in exercising any right, power or remedy shall not be, nor shall any
such single or partial exercise of, or forbearance, failure or delay be deemed
to be a limitation, modification or waiver of any right, power or remedy and
shall not preclude the further exercise thereof; and every right, power and
remedy of the Administrative Agent or the Holders shall continue in full force
and effect until such right, power and remedy is specifically waived by an
instrument in writing executed and delivered with respect to each such waiver by
such parties.

9.03 Application of Funds. After the exercise of remedies provided for in
Section 9.02 (or after the Revolving Loans and other Obligations have
automatically become immediately due and payable), any amounts received on
account of the Obligations shall be applied by the Administrative Agent in the
following order:

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such and including all costs and expenses (including Attorney Costs, trustee
fees and court costs) incurred in connection with any collection, receipt,
recovery, appropriation, foreclosure or realization, or from any use, operation,
sale, assignment, lease, pledge, transfer, delivery or disposition of all or any
of the Collateral, or with respect to the care, safekeeping, custody,
maintenance, protection, administration or otherwise of any and all of the
Collateral or in any way relating to the rights of the Administrative Agent and
the Holders under this Agreement;

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Holders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Revolving Loans, ratably among the Holders in proportion
to the respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting the unpaid
principal amount of the Revolving Loans (in such order as shall be determined by
the Administrative Agent in its reasonable discretion), ratably among the
Holders in proportion to the respective amounts described in this clause Fourth
held by them;

Fifth, to the payment, satisfaction or discharge of any other Indebtedness or
Obligations (including any reimbursement, subrogation, contribution or other
obligation to any Person), or otherwise as may be permitted or as required by
any law, rule or regulation (including Section 9-615(a)(3) of the UCC); and

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Company or as otherwise required by Law.

ARTICLE X.

RIGHT TO CURE; POST-DEFAULT POWER OF ATTORNEY

10.01 Right to Cure. The Administrative Agent, on behalf of the Holders, may, at
its option but without any obligation, after an Event of Default that is
continuing, after consultation with the Company, cure any default by any Note
Party under any Contractual Obligation when due or pay or bond on appeal any
judgment entered against any Note Party; discharge taxes or other Liens at any
time levied

 

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on or existing with respect to the Collateral; and pay any amount, incur any
expense or perform any act which, in the Administrative Agent’s reasonable
judgment, after consultation with the Company, is necessary or appropriate to
preserve, protect, insure or maintain the Collateral and the rights of the
Administrative Agent or the Holders with respect thereto. The Administrative
Agent may add any amounts so expended to the Obligations, such amounts to be
repayable by the Company on demand. The Administrative Agent shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of any Note Party. Any
payment made or other action taken by the Administrative Agent under this
Section shall be without prejudice to any right to assert an Event of Default
hereunder and to proceed accordingly.

10.02 Power of Attorney. Each Note Party hereby, or by executing and delivering
the Subsidiary Guaranty, as the case may be, irrevocably constitutes and
appoints, effective during the continuance of an Event of Default, the
Administrative Agent acting through any authorized officer or agent thereof,
with full power of substitution, as such Note Party’s true and lawful
attorney-in-fact with full irrevocable power and authority in such Note Party’s
place and stead and in such Note Party’s name or in its own name, from time to
time in the Administrative Agent’s reasonable discretion, to receive and open
mail addressed to such Note Party, to take any and all action, to do all things,
to execute, endorse, deliver and file any and all writings, documents,
instruments, notices, statements (including financing statements and writings to
correct any ambiguity in any Note Document), checks, drafts, acceptances, money
orders, or other evidence of payment or Proceeds with respect to the Collateral,
which may be or become necessary or desirable in the discretion of the
Administrative Agent to accomplish the terms, purposes and intent of, or to
fulfill such Note Party’s obligations under the Note Documents to which such
Note Party is a party, including the right to enter into any control agreements
on behalf of the Company in accordance with Sections 6.10 and 6.11, to appear in
and defend any action or proceeding brought with respect to the Collateral, and
to bring any action or proceeding, in the name and on behalf of the Company,
which the Administrative Agent, in its discretion, deems necessary or
appropriate to protect its interest in the Collateral. This power is coupled
with an interest and is irrevocable until the Event of Default is cured or
waived. Each Note Party hereby, or by executing and delivering the Subsidiary
Guaranty, as the case may be, releases the Administrative Agent, the Holders and
their respective officers, directors, members, partners, trustees, debt holders,
employees, representatives, agents and designees from any liabilities arising
from any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except and only to the extent the same
results from the applicable released party’s gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a court of
competent jurisdiction.

ARTICLE XI.

ADMINISTRATIVE AGENT

11.01 Appointment and Authorization of Administrative Agent. Each Holder hereby
irrevocably appoints, designates and authorizes the Administrative Agent to take
such action as contractual representative on its behalf under the provisions of
this Agreement and each other Note Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Note Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Note Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
trustee or fiduciary relationship with any Holder or participant, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Note Document or otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” herein and in the other Note
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law. Instead, such term is used merely as a

 

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matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.

11.02 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Note Document by or through agents,
employees or attorneys-in- fact and shall be entitled to advice of counsel and
other consultants or experts concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney- in-fact that it selects in the absence of
gross negligence or willful misconduct with respect to such selection.

11.03 Liability of Administrative Agent.

(a) No Agent-Related Person shall (i) 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 Note Document or the transactions contemplated hereby (except for its own
gross negligence or willful misconduct in connection with its duties expressly
set forth herein), or (ii) be responsible in any manner to any Holder or
participant for any recital, statement, representation or warranty made by the
Company or any of its Affiliates or any officer thereof, contained herein or in
any other Note Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or any other Note Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Note Document, or for any failure of the Company or any
other Note Party to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Holder or participant
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 Note
Document, or to inspect the properties, books or records of the Company or any
Affiliate thereof.

(b) The Administrative Agent shall have no obligation whatsoever to the Holders
or to any other Person (other than to the Company to the extent set forth in
this Agreement) to assure that the Collateral exists or is owned by the Company,
or is cared for, protected or insured or that the Liens granted to the
Administrative Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to the Administrative
Agent hereunder or in any of the Note Documents, it being understood and agreed
that in respect of the Collateral, or any act, omission or event related
thereto, the Administrative Agent may act in any manner it may deem appropriate,
in its reasonable discretion, given the Administrative Agent’s own interest in
the Collateral as one of the Holders and that the Administrative Agent shall
have no duty or liability whatsoever to the Holders, except to the extent
resulting from its gross negligence or willful misconduct.

11.04 Reliance by Administrative Agent.

(a) The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation reasonably 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 the
Company or any of its Affiliates), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under any Note Document
unless it shall first receive such advice or concurrence of the Required Holders
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Holders against any and all liability and expense which
may be

 

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incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Note Document in
accordance with a request or consent of the Required Holders (or such greater
number of Holders as may be expressly required hereby in any instance) and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Holders.

(b) For purposes of determining compliance with the conditions specified in
Section 4.01, the Holders shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Holders unless the Administrative Agent shall have received notice from any
Holder prior to the proposed Closing Date specifying its objection thereto.

11.05 Notice of Default. The Administrative 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 and fees required
to be paid to the Administrative Agent for the account of the Holders, unless
the Administrative Agent shall have received written notice from a Holder or the
Company referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a “notice of default.” The Administrative Agent
will notify the Holders of its receipt of any such notice. The Administrative
Agent shall take such action with respect to such Default or Event of Default as
may be directed by the Required Holders in accordance with Article IX; provided,
however, that unless and until the Administrative Agent has received any such
direction, the Administrative 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 or in the best interest of the
Holders.

11.06 Credit Decision; Disclosure of Information by Administrative Agent. Each
Holder acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by the Administrative Agent hereafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of the Company or any Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Holder as to
any matter, including whether Agent-Related Persons have disclosed material
information in their possession. Each Holder represents to the Administrative
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Affiliates, and all applicable bank or other regulatory Laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Company hereunder. Each
Holder 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 Note Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly required to be furnished to the Holders by
the Administrative Agent herein, the Administrative Agent shall not have any
duty or responsibility to provide any Holder with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Company or any of its
Affiliates which may come into the possession of any Agent-Related Person.

11.07 Indemnification of Administrative Agent. Whether or not the transactions
contemplated hereby are consummated, the Holders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Holder shall
be liable for the

 

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payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person’s own gross negligence or willful misconduct; provided, however, that no
action taken in accordance with the directions of the Required Holders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Holder shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
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, any other Note Document, or any document
contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive termination of the Commitments, the
payment of all other Obligations and the resignation of the Administrative
Agent.

11.08 Administrative Agent in its Individual Capacity. Fortress Credit Corp. 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 banking, trust, financial advisory, underwriting or other business with
the Company and its Affiliates as though Fortress Credit Corp. were not the
Administrative Agent hereunder and without notice to or consent of the Holders.
The Holders acknowledge that, pursuant to such activities, Fortress Credit Corp.
or its Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information to
them. With respect to its Notes and its Revolving Loans, Fortress Credit Corp.
shall have the same rights and powers under this Agreement as any other Holder
and may exercise such rights and powers as though it were not the Administrative
Agent, and the terms “Holder” and “Holders” include Fortress Credit Corp. in its
individual capacity.

11.09 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Holders, which resignation
shall become effective once the successor Administrative Agent succeeds to the
rights, duties and obligations of the Administrative Agent hereunder. If the
Administrative Agent resigns or removed under this Agreement, the Required
Holders shall appoint from among the Holders a successor administrative agent
for the Holders, with the approval of the Company at all times other than during
the existence of a Default or an Event of Default (which approval of the Company
shall not be unreasonably withheld or delayed). If no successor administrative
agent is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after consulting
with the Holders and the Company, a successor administrative agent from among
the Holders. Upon the acceptance of its appointment as successor administrative
agent hereunder, the Person acting as such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term “Administrative Agent” means such successor administrative
agent and the retiring Administrative Agent’s appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative
Agent’s resignation hereunder as the Administrative Agent, the provisions of
this Article XI and Sections 12.04 and 12.05 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was the Administrative
Agent under this Agreement.

11.10 Administrative Agent May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company, the Administrative Agent (irrespective of whether any amount of any
Revolving Loan shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Company) shall be entitled and empowered, by
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(a) to file and prove a claim for the aggregate principal amount and interest
owing and unpaid in respect of the Revolving Loans, and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Holders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Holders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Holders and the
Administrative Agent hereunder) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same in accordance with Section 9.03;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Administrative Agent.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Holder or to authorize the Administrative Agent
to vote in respect of the claim of any Holder in any such proceeding.

11.11 Collateral Matters. The Holders irrevocably authorize the Administrative
Agent, at its option and in its discretion:

(a) to take any action with respect to the Collateral which may be necessary to
perfect and maintain perfected the Liens upon the Collateral granted pursuant to
any of the Note Documents;

(b) to release any Lien on any property granted to or held by the Administrative
Agent under any Note Document (i) upon termination of the Commitments and
payment in full of all Obligations, (ii) that is sold or to be sold as part of
or in connection with any Disposition permitted hereunder or under any other
Note Document, (iii) in accordance with any provision for the release thereof
provided for in this Agreement or the other Note Documents, or (iv) subject to
Section 12.01, if approved, authorized or ratified in writing by the Required
Holders;

(c) to subordinate any Lien on any property granted to or held by the
Administrative Agent under any Note Document to the holder of any Lien on such
property that is permitted by Section 7.02; and

(d) following any such release or subordination described in the preceding
clauses (b) and (c), to deliver to the Company, at its expense, any Collateral
so released that is then held by the Administrative Agent hereunder and to
execute and deliver to the Company such releases or other documents as the
Company shall reasonably request to evidence or effectuate such release or
subordination of Liens (including UCC termination statements, termination
letters with respect to control agreements in favor of the Administrative Agent
relating to the Company’s Deposit Accounts and Securities Accounts,
intercreditor agreements and collateral agency agreements).

Upon request by the Administrative Agent at any time, the Required Holders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property pursuant to
this Section 11.11.

11.12 Duties in the Case of Enforcement. In case one of more Events of Default
have occurred and shall be continuing, the Administrative Agent shall, if (a) so
requested (or consented to) by the Required Holders and (b) the Holders have
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indemnities and assurances against expenses and liabilities as the
Administrative Agent may reasonably request, proceed to enforce the provisions
of any Note Documents authorizing the sale or other disposition of all or any
part of the Collateral (or any other property which is security for the
Obligations) and exercise all or any such other legal and equitable and other
rights or remedies as it may have in respect of such Collateral (or such other
property). The Required Holders may direct the Administrative Agent in writing
as to the method and the extent of any such sale or other disposition to the
extent permitted under the terms hereof, the Holders hereby agreeing to
indemnify and hold the Administrative Agent harmless from all liabilities
incurred in respect of all actions taken or omitted in accordance with such
directions, provided that the Administrative Agent need not comply with any such
direction to the extent that the Administrative Agent reasonably believes the
Administrative Agent’s compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.

ARTICLE XII.

MISCELLANEOUS

12.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Note Document, and no consent to any departure by the Company
therefrom, shall be effective unless in writing signed by the Required Holders
and the Company and acknowledged by the Administrative Agent, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall:

(a) waive any condition set forth in Section 4.01(a) without the written consent
of the initial Holder;

(b) extend or increase the Commitment of any Holder without the written consent
of such Holder;

(c) (i) postpone any date fixed by Section 2.03(a) or Section 2.03(b) for any
payment of the principal amount or interest due to the Holders (or any of them),
or (ii) except as pursuant to the terms of Section 2.03(b), postpone any
scheduled reduction of Commitments hereunder pursuant to Section 2.03(d) or
change the amount of any scheduled reduction, in each case without the written
consent of each Holder directly affected thereby;

(d) reduce the principal amount of, or the rate of interest specified herein on,
any Revolving Loan, or any fees or other amounts payable hereunder or under any
other Note Document, without the written consent of each Holder directly
affected thereby; provided, however, that only the consent of the Required
Holders shall be necessary to amend the definition of “Default Rate” or to waive
any obligation of the Company to pay interest at the Default Rate;

(e) change Section 2.08 or Section 9.03 in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each
Holder;

(f) change any provision of this Section or the definition of “Required Holders”
or any other provision hereof specifying the number or percentage of Holders
required to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Holder; or

(g) release all or substantially all of the Collateral securing the Obligations
without the written consent of each Holder;

 

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and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Holders
required above and the Company, affect the rights or duties of the
Administrative Agent under this Agreement or any other Note Document.

12.02 Notices and Other Communications; Facsimile Copies.

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing or by any
telecommunication device capable of creating a written record (including
electronic mail and facsimile transmission). All such written notices shall be
mailed, e-mailed, faxed or delivered to the applicable address or facsimile
number, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

(i) if to the Company or the Administrative Agent, to the address, the e-mail
address, facsimile number or telephone number specified for such Person on
Schedule 12.02 or to such other address, the e-mail address, facsimile number or
telephone number as shall be designated by such party in a notice to the other
parties; and

(ii) if to any Holder, to the address, the e-mail address, facsimile number or
telephone number specified from time to time by such Holder to the Company and
the Administrative Agent or to such other address, the e-mail address, facsimile
number or telephone number as shall be designated by such party in a notice to
the Company and the Administrative Agent.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) the actual receipt thereof by the relevant
party hereto and (ii) (A) if delivered by hand or by courier, when signed for by
or on behalf of the relevant party hereto; (B) if delivered by mail, four
Business Days after deposit in the mails, postage prepaid; and (C) if delivered
by facsimile, when sent and receipt has been confirmed by telephone; provided,
however, that notices and other communications to the Administrative Agent
pursuant to Article II shall not be effective until actually received by the
Administrative Agent. In no event shall a voicemail message be effective as a
notice, communication or confirmation hereunder.

(b) Effectiveness of Facsimile Documents and Signatures. Note Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually-signed originals and shall be binding on each applicable Note Party,
the Administrative Agent and the Holders. The Administrative Agent may also
require that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however, that the failure to request or deliver the
same shall not limit the effectiveness of any facsimile document or signature.

(c) Reliance by the Administrative Agent and the Holders. The Administrative
Agent and the Holders shall be entitled to rely and act upon any notices given
by or on behalf of the Company even if (i) such notices were not made in a
manner specified herein, were incomplete or were not preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof, so long as, in each
case, such notice is issued by a Responsible Officer of the Company or by a
person reasonably believed in good faith by the Administrative Agent to be a
Responsible Officer of the Company. The Company shall indemnify each
Agent-Related Person and each Holder from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Company. All telephonic notices to and
other communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

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12.03 No Waiver; Cumulative Remedies. No failure by any Holder or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege, subject to the terms of
applicable Law. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

12.04 Attorney Costs, Expenses and Taxes. The Company agrees (a) to pay or
reimburse the Administrative Agent for all reasonable, out-of-pocket costs and
expenses incurred in connection with the development, preparation, negotiation
and execution of this Agreement and the other Note Documents and any amendment,
waiver, consent or other modification of the provisions hereof and thereof
(whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or
reimburse the Administrative Agent and each Holder for all reasonable,
out-of-pocket costs and expenses incurred in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or the other Note Documents (including all such reasonable,
out-of-pocket costs and expenses incurred during any “workout” or restructuring
in respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including obtaining, maintaining,
protecting and preserving the Administrative Agent’s and the Holder’s interest
in the Collateral or security interest therein, foreclosing, retaking, holding,
preparing for sale or lease, selling or otherwise disposing or realizing on the
Collateral or in exercising their rights hereunder or as secured party under the
UCC, any other applicable Law or any Note Document, in each case including all
Attorney Costs. The foregoing costs and expenses shall include all reasonable,
out-of-pocket search, filing, recording, audit and appraisal charges and fees
and taxes related thereto, and other reasonable out-of-pocket expenses incurred
by the Administrative Agent and the cost of independent public accountants and
other outside experts retained by the Administrative Agent or any Holder to the
extent permitted to be retained by the Administrative Agent and reimbursed by
the Company hereunder. All amounts due under this Section 12.04 shall be payable
within five Business Days after written demand therefor to the Company,
accompanied by a reasonably detailed accounting thereof. The agreements in this
Section shall survive the termination of the Commitments and the repayment of
all Obligations.

12.05 Indemnification by the Company. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold
harmless each Agent-Related Person, each Holder and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against any such Indemnitee in any way relating to or arising out of or
in connection with (a) the execution, delivery, enforcement, performance or
administration of any Note Document or any other agreement, letter or instrument
delivered in connection with the transactions contemplated thereby or the
consummation of the transactions contemplated thereby, (b) the Commitments, any
Revolving Loan, or the use or proposed use of the proceeds therefrom, or (c) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory
(including any investigation of, preparation for, or defense of any pending or
threatened claim, investigation, litigation or proceeding) and regardless of
whether any Indemnitee is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”); provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee. No Indemnitee shall be liable for any
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materials obtained through any website or other similar information transmission
systems in connection with this Agreement, nor shall any Indemnitee have any
liability for any indirect or consequential damages relating to this Agreement
or any other Note Document or arising out of its activities in connection
herewith or therewith (whether before or after the Closing Date). All amounts
due under this Section 12.05 shall be payable within ten Business Days after
written demand therefor to the Company, accompanied by a reasonably detailed
calculation thereof. The agreements in this Section shall survive the
resignation of the Administrative Agent, the replacement of any Holder, the
termination of the Commitments and the repayment, satisfaction or discharge of
all the Obligations.

12.06 Payments Set Aside. To the extent that any payment by or on behalf of the
Company is made to the Administrative Agent or any Holder, or the Administrative
Agent or any Holder exercises its right of set-off, and such payment or the
proceeds of such set-off or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Administrative Agent or such
Holder in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Holder severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal Funds
Rate from time to time in effect.

12.07 Successors and Assigns.

(a) Conditions to Assignment by Holders. Except as provided herein, each Holder
may assign all or any portion of its Revolving Commitment, Notes and other
rights and obligations to any Eligible Holder; provided that (i) each of the
Administrative Agent and, unless a Default or an Event of Default shall have
occurred and be continuing, the Company shall have given its prior written
consent to such assignment, which consents will not be unreasonably withheld or
delayed, it being understood by the parties hereto that it shall be reasonable
for the Company not to grant its consent to any proposed assignment to an
assignee that the Company reasonably believes may not be able to fulfill
obligations to make Revolving Loans hereunder; provided that the consent of the
Company or the Administrative Agent shall not be required in connection with any
assignment by a Holder of all or any portion of its Revolving Commitment, Notes
or other rights or obligations to (x) an existing Holder or (y) an Affiliate of
such Holder; and provided, further that if such Holder or Affiliate is (or
would, if it were a Holder, be) a Foreign Holder, such Person has complied with
the requirements set forth in Section 12.15 (as though it were a Holder) prior
to such assignment, (ii) each such assignment shall be in a minimum principal
amount of $1,000,000 (or, if less, the Revolving Commitment of such Holder) or
such lesser amount consented to by the Administrative Agent, and (iii) the
parties to such assignment shall execute and deliver to the Administrative
Agent, for recording in the Register (as hereinafter defined), an Assignment and
Assumption. Upon each such recordation, the assigning Holder agrees to pay to
the Administrative Agent a registration fee in the sum of $3,500. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Assumption, which effective date shall be at
least five (5) Business Days after the execution thereof, (1) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Assumption, have the rights and obligations of a Holder
hereunder, and (2) the assigning Holder shall, to the extent provided in such
Assignment and Assumption and upon payment to the Administrative Agent of the
registration fee referred to in this Section 12.07(a), be released from its
obligations under this Agreement.

(b) Certain Representations and Warranties Limitations; Covenants. By executing
and delivering an Assignment and Assumption, the parties to the assignment
thereunder confirm to and agree with each other and the other parties hereto as
follows:

 

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(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, the assigning Holder makes no representation or warranty, express
or implied, 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, the other Note Documents or any other instrument or
document furnished pursuant hereto or the attachment, perfection or priority of
any security interest or mortgage,

(ii) the assigning Holder makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations, or the performance or observance by the Note Parties or
any other Person primarily or secondarily liable in respect of any of the
Obligations of any of its obligations under this Agreement or any of the other
Note Documents or any other instrument or document furnished pursuant hereto or
thereto;

(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the most recent financial statements referred to in
Section 5.05 and Section 6.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Assumption;

(iv) such assignee will, independently and without reliance upon the assigning
Holder, the Administrative Agent or any other Holder 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 the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Note Documents as are delegated to the Administrative Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto;

(vi) such assignee agrees that it will perform in accordance with this Agreement
and the other Note Documents all of the obligations that by the terms thereof
are required to be performed by it as a Holder;

(vii) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Assumption; and

(viii) such assignee acknowledges that it has complied with the provisions of
Section 12.15 to the extent applicable.

(c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Company, shall maintain at the Administrative Agent’s Office a copy
of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Holders, and of the principal
amounts of Revolving Loans owing to, each Holder pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive absent manifest error, and the Company, the Administrative Agent and
the Holders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Holder hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Company and any Holder, at any reasonable time
and from time to time upon reasonable prior notice.

(d) New Notes. Upon its receipt of an Assignment and Assumption executed by the
parties to such assignment, the Administrative Agent shall (i) record the
information contained therein in the

 

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Register and (ii) give prompt notice thereof to the Company and the Holders
(other than the assigning Holder). Promptly after the effectiveness of any
assignment by any Holder of all or any portion of such Holder’s Commitment, the
Company (at its expense) shall execute and deliver (x) to the assignee Holder, a
Note in the amount of the Commitment assigned to such assignee Holder and (y) to
the assignor Holder, a Note in the amount, if any, of its remaining Commitment.

(e) Participations. Anything contained herein to the contrary notwithstanding,
any Holder may, from time to time and at any time, sell participations in all or
any portion of such Holder’s rights and obligations under this Agreement
(including all of a portion of its Commitments and the outstanding principal
amount of Revolving Loans owing to it) to any financial institution that invests
in loans; provided that the terms of any such participation shall not entitle
the participant to direct such Holder as to the manner in which it votes in
connection with any amendment, supplement or other modification of this
Agreement or any waiver or consent with respect to any departure from the terms
hereof, in each case unless and to the extent that the subject matter thereof is
one as to which the consent of all Holders is required in order to approve the
same.

(f) Miscellaneous Assignment Provisions. Any assigning Holder shall retain its
rights to be indemnified pursuant to Section 12.05 with respect to any claims or
actions arising prior to the date of such assignment. Anything contained in this
Section 12.07 to the contrary notwithstanding, any Holder may at any time pledge
or assign a security interest in all or any portion of its interest and rights
under this Agreement (including all or any portion of its Notes) to secure
obligations to any of the twelve Federal Reserve Banks organized under §4 of the
Federal Reserve Act, 12 U.S.C. §341. Any foreclosure or similar action by any
Person in respect of such pledge or assignment shall be subject to the other
provisions of this Section 12.07. No such pledge or the enforcement thereof
shall release the pledgor Holder from its obligations hereunder or under any of
the other Note Documents, provide any voting rights hereunder to the pledgee
thereof, or affect any rights or obligations of the Company or the
Administrative Agent hereunder, including any of the provisions of Section 12.08
hereof.

(g) Assignment by the Company. The Company shall not assign or transfer any of
its rights or obligations under this Agreement or any of the other Note
Documents without the prior written consent of the Administrative Agent and each
of the Holders.

12.08 Confidentiality. Each of the Administrative Agent and the Holders agrees
(i) to maintain the confidentiality of the Information (as defined below) and
(ii) to use such Information exclusively for the purposes of administering and
enforcing its rights under the Note Documents (the “Confidential Use”), except
that Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information, its
Confidential Use and instructed to keep such Information confidential and to use
it only for Confidential Uses), (b) to the extent requested by any regulatory
authority having authority over such Person (including any internal or external
self-regulatory authority), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
hereto, (e) in connection with the exercise of any remedies hereunder or under
any other Note Document or any action or proceeding relating to this Agreement
or any other Note Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or participant in, or prospective
assignee of or participant in, any of its rights or obligations under this
Agreement or under any other Indebtedness or securities of the Company or its
Affiliates, (g) with the consent of the Company or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to the Administrative Agent or any Holder
on a nonconfidential basis from a source other than the Company that did not
result from the breach of a confidentiality provision with Company.

 

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For purposes of this Section, “Information” means all information received from
the Company relating to the Company or the Business, other than any such
information that is available to the Administrative Agent or any Holder on a
nonconfidential basis prior to disclosure by the Company. Any Person required to
maintain the confidentiality of Information as provided in this Section 12.08
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

12.09 Set-off. In addition to any rights and remedies of the Holders provided by
law, upon the occurrence and during the continuance of any Event of Default,
each Holder is authorized at any time and from time to time, without prior
notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Holder to or for the credit or
the account of the Company against any and all Obligations owing to such Holder
hereunder or under any other Note Document, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Holder shall
have made demand under this Agreement or any other Note Document and although
such Obligations may be denominated in a currency different from that of the
applicable deposit or indebtedness. Each Holder agrees promptly to notify the
Company and the Administrative Agent after any such set-off and application made
by such Holder; provided, however, that the failure to give such notice shall
not affect the validity of such set-off and application.

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

12.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

12.12 Integration. This Agreement, together with the other Note Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Note Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Administrative Agent or the Holders in any other Note
Document shall not be deemed a conflict with this Agreement. Each Note Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.

12.13 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Note Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Holder, regardless of any investigation made by
the Administrative Agent or any Holder or on their behalf and notwithstanding
that the Administrative Agent or any Holder may have had notice or knowledge of
any Default or Event of Default at the time any Revolving Loan is made, and
shall continue

 

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in full force and effect as long as any Revolving Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied.

12.14 Severability. If any provision of this Agreement or the other Note
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Note Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

12.15 Tax Forms.

(a) (i) Each Holder that is not a “United States person” within the meaning of
Section 7701(a)(30) of the Code (a “Foreign Holder”) shall deliver to the
Administrative Agent, prior to receipt of any payment subject to withholding
under the Code (or upon accepting an assignment of an interest herein), two duly
signed completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Foreign Holder and entitling it to an exemption from
withholding tax on all payments to be made to such Foreign Holder by the Company
pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Foreign Holder by the Company
pursuant to this Agreement) or, in the case of a Foreign Holder claiming
exemption from U.S. withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of “portfolio interest,” an IRS Form W-8BEN or any
successor thereto (and, if such Foreign Holder delivers an IRS Form W-8, a
certificate representing that such Foreign Holder is not a bank for purposes of
Section 881(c)(3)(A) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Company and is not a
controlled foreign corporation related to Company (within the meaning of
Section 864(d)(4) of the Code)) claiming complete exemption from U.S.
withholding tax. Thereafter and from time to time, each such Foreign Holder
shall (A) promptly submit to the Administrative Agent such additional duly
completed and signed copies of one of such forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to the Company and the
Administrative Agent of any available exemption from United States withholding
taxes in respect of all payments to be made to such Foreign Holder by the
Company pursuant to this Agreement, (B) promptly notify the Administrative Agent
of any change in circumstances which would modify or render invalid any claimed
exemption, and (C) take such steps as shall not be materially disadvantageous to
it, in the reasonable judgment of such Holder, and as may be reasonably
necessary to avoid any requirement of applicable Laws that the Company make any
deduction or withholding for taxes from amounts payable to such Foreign Holder.

(ii) Each Foreign Holder, to the extent it does not act or ceases to act for its
own account with respect to any portion of any sums paid or payable to such
Holder under any of the Note Documents (for example, in the case of a typical
participation by such Holder), shall deliver to the Administrative Agent on the
date when such Foreign Holder ceases to act for its own account with respect to
any portion of any such sums paid or payable, and at such other times as may be
necessary in the determination of the Administrative Agent (in the reasonable
exercise of its discretion), (A) two duly signed completed copies of the forms
or statements required to be provided by such Holder as set forth above, to
establish the portion of any such sums paid or payable with respect to which
such Holder acts for its own account that is not subject to U.S. withholding
tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any
successor thereto), together with any information such Holder chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish

 

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that such Holder is not acting for its own account with respect to a portion of
any such sums payable to such Holder.

(iii) The Company shall not be required to pay any additional amount to any
Foreign Holder under Section 3.01: (A) with respect to any Taxes required to be
deducted or withheld on the basis of the information, certificates or statements
of exemption such Holder transmits with an IRS Form W-8IMY pursuant to this
Section 12.15(a) or (B) if such Holder shall have failed to satisfy the
foregoing provisions of this Section 12.15(a); provided that if such Holder
shall have satisfied the requirement of this Section 12.15(a) on the date such
Holder became a Holder or ceased to act for its own account with respect to any
payment under any of the Note Documents, nothing in this Section 12.15(a) shall
relieve the Company of its obligation to pay any amounts pursuant to
Section 3.01 in the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Holder is no longer
properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Holder or other Person for the
account of which such Holder receives any sums payable under any of the Note
Documents is not subject to withholding.

(iv) The Administrative Agent may, without reduction, withhold any Taxes
required to be deducted and withheld from any payment under any of the Note
Documents with respect to which the Company is not required to pay additional
amounts under this Section 12.15(a).

(b) Upon the request of the Administrative Agent, each Holder that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code shall
deliver to the Administrative Agent two duly signed completed copies of IRS Form
W-9. If such Holder fails to deliver such forms, then the Administrative Agent
may withhold from any interest payment to such Holder an amount equivalent to
the applicable back-up withholding tax imposed by the Code, without reduction.

(c) If any Governmental Authority asserts that the Administrative Agent did not
properly withhold or backup withhold, as the case may be, any tax or other
amount from payments made to or for the account of any Holder, such Holder shall
indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, and costs and expenses (including
Attorney Costs) of the Administrative Agent. The obligation of the Holders under
this Section shall survive the termination of the Commitments, repayment of all
other Obligations hereunder and the resignation of the Administrative Agent.

12.16 Governing Law; Consent to Jurisdiction.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED TN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH
HOLDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) THE PARTIES HERETO HEREBY CONSENT, UNCONDITIONALLY AND IRREVOCABLY, TO THE
NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS OF THE STATE OF NEW
YORK AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT
TO ANY PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING UNDER THIS
AGREEMENT, THE OTHER NOTE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT,

 

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TORT, EQUITY OR OTHERWISE OTHER THAN PURSUIT OF A JUDGMENT ON A NOTE WHERE SUIT
IS ALSO BROUGHT IN THE STATE WHERE ANY COLLATERAL IS LOCATED TO TAKE
JURISDICTION OF SUCH COLLATERAL. THE COMPANY FURTHER CONSENTS, GENERALLY,
UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS OF EACH STATE WHERE ANY COLLATERAL IS LOCATED IN RESPECT OF
ANY PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING WITH RESPECT TO
SUCH COLLATERAL INCLUDING BUT NOT LIMITED TO FORECLOSURES, AND THE COMPANY
AGREES THAT ADMINISTRATIVE AGENT AND HOLDERS SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION WHICH THE ADMINISTRATIVE AGENT OR HOLDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS OR TO OTHERWISE ENFORCE ITS RIGHTS AGAINST THE COMPANY’S PROPERTY.
THE COMPANY FURTHER IRREVOCABLY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS TO THE SERVICE OF PROCESS, GENERALLY, UNCONDITIONALLY AND
IRREVOCABLY, AT THE ADDRESSES SET FORTH HEREIN IN CONNECTION WITH ANY OF THE
AFORESAID PROCEEDINGS IN ACCORDANCE WITH THE RULES APPLICABLE TO SUCH
PROCEEDINGS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW HAVE OR HAVE IN THE FUTURE TO
THE LAYING OF VENUE IN RESPECT OF ANY OF THE AFORESAID PROCEEDINGS BROUGHT IN
THE COURTS REFERRED TO ABOVE AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT AND THE HOLDERS TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW OR TO COMMENCE PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
JURISDICTION. To the extent that the Company has or may hereafter acquire any
immunity from the jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to the Company or the Company’s
property, the Company hereby irrevocably waives such immunity in respect of its
obligations under this Agreement.

12.17 Waiver of Right to Trial by Jury and Other Rights. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT TO TRIAL BY JURY AND ANY RIGHT OR CLAIM TO ANY
CONSEQUENTIAL DAMAGES, EXEMPLARY DAMAGES, EXPECTANCY DAMAGES, SPECIAL DAMAGES
AND GENERAL DAMAGES IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY PARTY OR ANY
EXERCISE BY ANY PARTY OF ITS RESPECTIVE RIGHTS HEREUNDER OR IN ANY WAY RELATING
TO ANY REVOLVING LOAN, ANY NOTE OR ANY PROPERTY (INCLUDING ANY ACTION TO RESCIND
OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT
WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A
MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT AND TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREUNDER.

12.18 Time of the Essence. For all payments to be made and all obligations to be
performed under the Note Documents, time is of the essence.

 

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12.19 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER NOTE DOCUMENTS EMBODY THE
FINAL, ENTIRE AGREEMENT BETWEEN THE COMPANY, THE ADMINISTRATIVE AGENT AND THE
HOLDERS AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS
AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER
HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS BETWEEN ANY PARTIES
HERETO. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THERE ARE NO ORAL
AGREEMENTS BETWEEN THE COMPANY AND ANY OTHER PARTY HERETO. EACH OF THE PARTIES
HERETO UNDERSTANDS AND AGREES THAT ORAL AGREEMENTS AND ORAL COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE. THIS AGREEMENT AND THE OTHER NOTE DOCUMENTS REPRESENT THE ENTIRE
UNDERSTANDING OF THE ADMINISTRATIVE AGENT, THE HOLDERS AND THE COMPANY WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.

[Remainder of Page Intentionally Left Blank]

 

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

 

NEWSTAR FINANCIAL, INC. By:  

/s/ John J. Frishkopf

  Name: John J. Frishkopf   Title: Treasurer

FORTRESS CREDIT CORP.,

as Administrative Agent and Holder

By:  

/s/ Constantine M. Dakolias

  Name: Constantine M. Dakolias   Title: President

[SIGNATURE PAGE TO NOTE AGREEMENT]

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Exhibit A

FORM OF NOTE

 

A-1

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FORM OF NOTE

 

$[            ]   [            ], 20[    ]

FOR VALUE RECEIVED, the undersigned, NEWSTAR FINANCIAL, INC., a Delaware
corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of
[            ] (the “Holder”), at the offices of FORTRESS CREDIT CORP.
(“Fortress”), as administrative agent for the Holders (in such capacity, the
“Administrative Agent”), at its address at [            ], or at such other
place as the Administrative Agent may designate from time to time in writing, in
lawful money of the United States of America and in immediately available funds,
the amount of [            ] DOLLARS AND NO CENTS ($[            ]) or, if less,
the aggregate unpaid amount of all Loans made to the undersigned under the “Note
Agreement” (as hereinafter defined). All capitalized terms used but not
otherwise defined herein have the meanings given to them in the Note Agreement.

This Note is being issued pursuant to that certain Note Agreement dated as of
December [    ], 2009 by and among the Borrower, the Holders from time to time
party thereto, and Fortress, as the Administrative Agent (including all annexes,
exhibits and schedules thereto, and as from time to time amended, restated,
supplemented or otherwise modified, the “Note Agreement”), and is entitled to
the benefit and security of the Note Agreement and all of the other Note
Documents referred to therein. Reference is hereby made to the Note Agreement
for a statement of all of the terms and conditions under which the Loans
evidenced hereby are made and are to be repaid. The date and amount of each Loan
made by the Holders to the Borrower, the rates of interest applicable thereto
and each payment made on account of the principal thereof, shall be recorded by
the Administrative Agent on its books; provided that the failure of the
Administrative Agent to make any such recordation shall not affect the
obligations of the Borrower to make a payment when due of any amount owing under
the Note Agreement or this Note in respect of the Loans made by the Holders to
the Borrower.

The principal amount of the indebtedness evidenced hereby shall be payable in
the amounts and on the dates specified in the Note Agreement, the terms of which
are hereby incorporated herein by reference. Interest thereon shall be paid
until such principal amount is paid in full at such interest rates and at such
times, and pursuant to such calculations, as are specified in the Note
Agreement.

If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.

Upon and after the occurrence of any Event of Default, this Note may, as
provided in the Note Agreement, and without demand, notice or legal process of
any kind, be declared, and immediately shall become, due and payable on the
Maturity Date.

Time is of the essence of this Note. Demand, presentment, protest and notice of
nonpayment and protest are hereby waived by the Borrower.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.

 

A-2

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NEWSTAR FINANCIAL, INC. By:  

 

Name:   Title:  

 

A-3

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Exhibit B

FORM OF ASSIGNMENT AND ASSUMPTION

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each] Assignor identified in item 1 below ([the][each, an] “Assignor”) and
[the][each] Assignee identified in item 2 below ([the][each, an] “Assignee”).
[It is understood and agreed that the rights and obligations of [the
Assignors][the Assignees] hereunder are several and not joint.] Capitalized
terms used but not defined herein shall have the meanings given to them in the
Note Agreement identified below (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Note Agreement”), receipt
of a copy of which is hereby acknowledged by the Assignee. The Standard Terms
and Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Note Agreement, as of the Effective Date inserted by the Administrative
Agent as contemplated below (i) all of [the Assignor’s][the respective
Assignors’] rights and obligations in [its capacity as a Holder][their
respective capacities as Holders] under the Note Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of [the Assignor][the respective Assignors] under the
respective facilities identified below and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of [the Assignor (in its capacity as a Holder)][the respective Assignors
(in their respective capacities as Holders)] against any Person, whether known
or unknown, arising under or in connection with the Note Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned by [the][any] Assignor to [the][any] Assignee
pursuant to clauses (i) and (ii) above being referred to herein collectively as
[the][an] “Assigned Interest”). Each such sale and assignment is without
recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by [the][any]
Assignor.

 

1.

   Assignor[s]:  

 

       

 

   2.   

Assignee[s]:

 

 

       

 

  

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Holder]]

 

B-1

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3. Borrower: NewStar Financial, Inc.

 

4. Administrative Agent: Fortress Credit Corp., as the administrative agent
under the Note Agreement

 

5. Note Agreement: Note Agreement, dated as of January 5, 2010 (as further
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Note Agreement;” the terms defined therein being used herein
as therein defined), among NewStar Financial, Inc., Fortress Credit Corp., as
Administrative Agent, and the Holders from time to time party thereto.

 

6. Assigned Interest[s]:

 

Assignor[s]

  

Assignee[s]

  

Facility

Assigned

  

Aggregate

Amount of
Commitment/Loans

for all Holders

  

Amount of
Commitment

/Loans

Assigned

  

Percentage
Assigned of

Commitment/

Loans

                                  $                           
$                                    %                                  
$                            $                                    %      
                            $                            $                    
               %

 

7. [Trade Date:             ]

Effective Date:             , 20         [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR] By:  

 

  Title: ASSIGNEE [NAME OF ASSIGNEE] By:  

 

  Title:

 

B-2

--------------------------------------------------------------------------------

[Consented to and] Accepted:

FORTRESS CREDIT CORP.,

as Administrative Agent

By:  

 

  Title: [Consented to:] NEWSTAR FINANCIAL, INC. By:  

 

  Name:   Title:

 

B-3

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ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

[                    ]

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of [the][[the relevant] Assigned Interest,
(ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Note Agreement or any other Note Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Note Documents or any collateral thereunder, (iii) the financial
condition of the Company, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Note Document or (iv) the performance or
observance by the Company, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Note Document.

1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Holder under the Note Agreement, (ii) it is
an Eligible Holder and otherwise meets all the requirements to be an assignee
under Section 12.07 of the Note Agreement (subject to such consents, if any, as
may be required under Section 12.07 of the Note Agreement), (iii) from and after
the Effective Date, it shall be bound by the provisions of the Note Agreement as
a Holder thereunder and, to the extent of [the][the relevant] Assigned Interest,
shall have the obligations of a Holder thereunder, (iv) it is sophisticated with
respect to decisions to acquire assets of the type represented by [the][such]
Assigned Interest and either it, or the Person exercising discretion in making
its decision to acquire [the][such] Assigned Interest, is experienced in
acquiring assets of such type, (v) it has received a copy of the Note Agreement,
and has received or has been accorded the opportunity to receive copies of the
most recent financial statements delivered pursuant to Section      thereof, as
applicable, and such other documents and information as it deems appropriate to
make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase [the][such] Assigned Interest, (vi) it has,
independently and without reliance upon the Administrative Agent or any other
Holder and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a
Foreign Holder, attached hereto is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed by
[the][such] Assignee; and (b) agrees that (i) it will, independently and without
reliance upon the Administrative Agent, [the][any] Assignor or any other Holder,
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 the Note Documents, and (ii) it will perform in accordance with their
terms

 

B-4

--------------------------------------------------------------------------------

all of the obligations which by the terms of the Note Documents are required to
be performed by it as a Holder.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of [the][each] Assigned Interest (including
payments of principal, interest, fees and other amounts) to [the][the relevant]
Assignor for amounts which have accrued to but excluding the Effective Date and
to [the][the relevant] Assignee for amounts which have accrued from and after
the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

 

B-5

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Exhibit C

FORM OF FINANCING STATEMENT

[see attached]

 

C-1

--------------------------------------------------------------------------------

LOGO [g12712exapg84-90.jpg]                  UCC FINANCING STATEMENT           
      FOLLOW INSTRUCTIONS (front and back) CAREFULLY                 

A. NAME & PHONE OF CONTACT AT FILER [optional]

 

                      

B. SEND ACKNOWLEDGMENT TO: (Name and Address)

 

                                                                               
                                                                              
                                                                                

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

 

1. DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (1a or 1b) – do
not abbreviate or combine names

 

 

OR

 

1a. ORGANIZATION’S NAME

      NewStar Loan Funding, LLC

 

1b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

1c. MAILING ADDRESS

      500 Boylston Street, Suite 1200

     

CITY

Boston

 

STATE

MA

 

POSTAL CODE

02116

 

COUNTRY

USA

1d. SEE INSTRUCTIONS

 

 

ADD’L INFO RE

ORGANIZATION

DEBTOR

 

1e. TYPE OF ORGANIZATION

Limited Liability Co.

 

1f. JURISDICTION OF ORGANIZATION

Delaware

 

1g. ORGANIZATIONAL ID #, if any

DE 4767821

 

 

¨ NONE

2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (2a
or 2b) – do not abbreviate or combine names

 

 

OR

 

2a. ORGANIZATION’S NAME

 

 

2b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

2c. MAILING ADDRESS

 

      CITY   STATE   POSTAL CODE   COUNTRY

2d. SEE INSTRUCTIONS

 

 

ADD’L INFO RE

ORGANIZATION

DEBTOR

  2e. TYPE OF ORGANIZATION   2f. JURISDICTION OF ORGANIZATION  
2g. ORGANIZATIONAL ID #, if any  

 

¨ NONE

3. SECURED PARTY’S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) – insert
only one secured party name (3a or 3b)

 

 

OR

 

3a. ORGANIZATION’S NAME

      Fortress Credit Corp.

 

3b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

3c. MAILING ADDRESS

      1345 Avenue of the Americas, 46th Floor

     

CITY

New York

 

STATE

NY

 

POSTAL CODE

10105

 

COUNTRY

USA

4. This FINANCING STATEMENT covers the following collateral:

 

All of the Debtor’s personal property and other assets, whether now owned or
existing or hereafter acquired or arising, together with all products and
proceeds thereof, substitutions and replacements therefor, and additions and
accessions thereto.

 

 

5. ALTERNATIVE DESIGNATION [if applicable]: ¨ LESSEE/LESSOR  ¨ CONSIGNEE/CONSIGNOR  ¨ BAILEE/BAILOR  ¨ SELLER/BUYER  ¨ AG. LIEN  ¨ NON-UCC FILING

6. ¨ This FINANCING STATEMENT is to be filed [for record] (or recorded) in the REAL

         ESTATE RECORDS.        Attach Addendum                [if applicable]

  7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)  
   [ADDITIONAL FEE]        [optional]            ¨ All Debtors ¨ Debtor 1 ¨ Debtor 2

8. OPTIONAL FILER REFERENCE DATA

 

To be filed in the office of the Delaware Secretary of State.

FILING OFFICE COPY – UCC FINANCING STATEMENT (FORM UCC1) (REV. 05/22/02)

--------------------------------------------------------------------------------

LOGO [g12712exapg84-90.jpg]                  UCC FINANCING STATEMENT           
      FOLLOW INSTRUCTIONS (front and back) CAREFULLY                 

A. NAME & PHONE OF CONTACT AT FILER [optional]

 

                      

B. SEND ACKNOWLEDGMENT TO: (Name and Address)

 

                                                                               
                                                                              
                                                                                

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

 

1. DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (1a or 1b) – do
not abbreviate or combine names

 

 

OR

 

1a. ORGANIZATION’S NAME

      NewStar Asset Management LLC

 

1b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

1c. MAILING ADDRESS

      500 Boylston Street, Suite 1200

     

CITY

Boston

 

STATE

MA

 

POSTAL CODE

02116

 

COUNTRY

USA

1d. SEE INSTRUCTIONS

 

 

ADD’L INFO RE

ORGANIZATION

DEBTOR

 

1e. TYPE OF ORGANIZATION

Limited Liability Co.

 

1f. JURISDICTION OF ORGANIZATION

Delaware

 

1g. ORGANIZATIONAL ID #, if any

DE 4344117

 

 

¨ NONE

2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (2a
or 2b) – do not abbreviate or combine names

 

 

OR

 

2a. ORGANIZATION’S NAME

 

 

2b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

2c. MAILING ADDRESS

 

      CITY   STATE   POSTAL CODE   COUNTRY

2d. SEE INSTRUCTIONS

 

 

ADD’L INFO RE

ORGANIZATION

DEBTOR

  2e. TYPE OF ORGANIZATION   2f. JURISDICTION OF ORGANIZATION  
2g. ORGANIZATIONAL ID #, if any  

 

¨ NONE

3. SECURED PARTY’S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) – insert
only one secured party name (3a or 3b)

 

 

OR

 

3a. ORGANIZATION’S NAME

      Fortress Credit Corp.

 

3b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

3c. MAILING ADDRESS

      1345 Avenue of the Americas, 46th Floor

     

CITY

New York

 

STATE

NY

 

POSTAL CODE

10105

 

COUNTRY

USA

4. This FINANCING STATEMENT covers the following collateral:

 

All of the Debtor’s personal property and other assets, whether now owned or
existing or hereafter acquired or arising, together with all products and
proceeds thereof, substitutions and replacements therefor, and additions and
accessions thereto.

 

 

5. ALTERNATIVE DESIGNATION [if applicable]: ¨ LESSEE/LESSOR  ¨ CONSIGNEE/CONSIGNOR  ¨ BAILEE/BAILOR  ¨ SELLER/BUYER  ¨ AG. LIEN  ¨ NON-UCC FILING

6. ¨ This FINANCING STATEMENT is to be filed [for record] (or recorded) in the REAL

         ESTATE RECORDS.        Attach Addendum                [if applicable]

  7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)  
   [ADDITIONAL FEE]        [optional]            ¨ All Debtors ¨ Debtor 1 ¨ Debtor 2

8. OPTIONAL FILER REFERENCE DATA

 

To be filed in the office of the Delaware Secretary of State.

FILING OFFICE COPY – UCC FINANCING STATEMENT (FORM UCC1) (REV. 05/22/02)

--------------------------------------------------------------------------------

LOGO [g12712exapg84-90.jpg]                  UCC FINANCING STATEMENT           
      FOLLOW INSTRUCTIONS (front and back) CAREFULLY                 

A. NAME & PHONE OF CONTACT AT FILER [optional]

 

                      

B. SEND ACKNOWLEDGMENT TO: (Name and Address)

 

                                                                               
                                                                              
                                                                                

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

 

1. DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (1a or 1b) – do
not abbreviate or combine names

 

 

OR

 

1a. ORGANIZATION’S NAME

      NewStar Financial California, LLC

 

1b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

1c. MAILING ADDRESS

      500 Boylston Street, Suite 1200

     

CITY

Boston

 

STATE

MA

 

POSTAL CODE

02116

 

COUNTRY

USA

1d. SEE INSTRUCTIONS

 

 

ADD’L INFO RE

ORGANIZATION

DEBTOR

 

1e. TYPE OF ORGANIZATION

Limited Liability Co.

 

1f. JURISDICTION OF ORGANIZATION

Delaware

 

1g. ORGANIZATIONAL ID #, if any

DE 4147103

 

 

¨ NONE

2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (2a
or 2b) – do not abbreviate or combine names

 

 

OR

 

2a. ORGANIZATION’S NAME

 

 

2b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

2c. MAILING ADDRESS

 

      CITY   STATE   POSTAL CODE   COUNTRY

2d. SEE INSTRUCTIONS

 

 

ADD’L INFO RE

ORGANIZATION

DEBTOR

  2e. TYPE OF ORGANIZATION   2f. JURISDICTION OF ORGANIZATION  
2g. ORGANIZATIONAL ID #, if any  

 

¨ NONE

3. SECURED PARTY’S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) – insert
only one secured party name (3a or 3b)

 

 

OR

 

3a. ORGANIZATION’S NAME

      Fortress Credit Corp.

 

3b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

3c. MAILING ADDRESS

      1345 Avenue of the Americas, 46th Floor

     

CITY

New York

 

STATE

NY

 

POSTAL CODE

10105

 

COUNTRY

USA

4. This FINANCING STATEMENT covers the following collateral:

 

All of the Debtor’s personal property and other assets, whether now owned or
existing or hereafter acquired or arising, together with all products and
proceeds thereof, substitutions and replacements therefor, and additions and
accessions thereto.

 

 

5. ALTERNATIVE DESIGNATION [if applicable]: ¨ LESSEE/LESSOR  ¨ CONSIGNEE/CONSIGNOR  ¨ BAILEE/BAILOR  ¨ SELLER/BUYER  ¨ AG. LIEN  ¨ NON-UCC FILING

6. ¨ This FINANCING STATEMENT is to be filed [for record] (or recorded) in the REAL

         ESTATE RECORDS.        Attach Addendum                [if applicable]

  7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)  
   [ADDITIONAL FEE]        [optional]            ¨ All Debtors ¨ Debtor 1 ¨ Debtor 2

8. OPTIONAL FILER REFERENCE DATA

 

To be filed in the office of the Delaware Secretary of State.

FILING OFFICE COPY – UCC FINANCING STATEMENT (FORM UCC1) (REV. 05/22/02)

 

--------------------------------------------------------------------------------

LOGO [g12712exapg84-90.jpg]                  UCC FINANCING STATEMENT           
      FOLLOW INSTRUCTIONS (front and back) CAREFULLY                 

A. NAME & PHONE OF CONTACT AT FILER [optional]

 

                      

B. SEND ACKNOWLEDGMENT TO: (Name and Address)

 

                                                                               
                                                                              
                                                                                

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

 

1. DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (1a or 1b) – do
not abbreviate or combine names

 

 

OR

 

1a. ORGANIZATION’S NAME

      NewStar Financial, Inc.

 

1b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

1c. MAILING ADDRESS

      500 Boylston Street, Suite 1200

     

CITY

Boston

 

STATE

MA

 

POSTAL CODE

02116

 

COUNTRY

USA

1d. SEE INSTRUCTIONS

 

 

ADD’L INFO RE

ORGANIZATION

DEBTOR

 

1e. TYPE OF ORGANIZATION

Corporation

 

1f. JURISDICTION OF ORGANIZATION

Delaware

 

1g. ORGANIZATIONAL ID #, if any

DE 3646542

 

 

¨ NONE

2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME – insert only one debtor name (2a
or 2b) – do not abbreviate or combine names

 

 

OR

 

2a. ORGANIZATION’S NAME

 

 

2b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

2c. MAILING ADDRESS

 

      CITY   STATE   POSTAL CODE   COUNTRY

2d. SEE INSTRUCTIONS

 

 

ADD’L INFO RE

ORGANIZATION

DEBTOR

  2e. TYPE OF ORGANIZATION   2f. JURISDICTION OF ORGANIZATION  
2g. ORGANIZATIONAL ID #, if any  

 

¨ NONE

3. SECURED PARTY’S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) – insert
only one secured party name (3a or 3b)

 

 

OR

 

3a. ORGANIZATION’S NAME

      Fortress Credit Corp.

 

3b. INDIVIDUAL’S LAST NAME

 

  FIRST NAME   MIDDLE NAME   SUFFIX

3c. MAILING ADDRESS

      1345 Avenue of the Americas, 46th Floor

     

CITY

New York

 

STATE

NY

 

POSTAL CODE

10105

 

COUNTRY

USA

4. This FINANCING STATEMENT covers the following collateral:

 

All of the Debtor’s personal property and other assets, whether now owned or
existing or hereafter acquired or arising, together with all products and
proceeds thereof, substitutions and replacements therefor, and additions and
accessions thereto.

 

 

5. ALTERNATIVE DESIGNATION [if applicable]: ¨ LESSEE/LESSOR  ¨ CONSIGNEE/CONSIGNOR  ¨ BAILEE/BAILOR  ¨ SELLER/BUYER  ¨ AG. LIEN  ¨ NON-UCC FILING

6. ¨ This FINANCING STATEMENT is to be filed [for record] (or recorded) in the REAL

         ESTATE RECORDS.        Attach Addendum                [if applicable]

  7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)  
   [ADDITIONAL FEE]        [optional]            ¨ All Debtors ¨ Debtor 1 ¨ Debtor 2

8. OPTIONAL FILER REFERENCE DATA

 

To be filed in the office of the Delaware Secretary of State.

FILING OFFICE COPY – UCC FINANCING STATEMENT (FORM UCC1) (REV. 05/22/02)

 

--------------------------------------------------------------------------------

Exhibit D

FILING OFFICES

Secretary of State of the State of Delaware

 

D-1

--------------------------------------------------------------------------------

Exhibit E

FORM OF COMPLIANCE CERTIFICATE

NEWSTAR FINANCIAL, INC.

Date:             , 201    

This certificate is given by NewStar Financial, Inc., a Delaware corporation
(the “Company”), pursuant to Section 6.02(a) of that certain Note Agreement,
dated as of January 5, 2010 (as amended, supplemented or otherwise modified from
time to time, the “Note Agreement”), among the Company, Fortress Credit Corp.,
as Holder and Administrative Agent, and the other Holders party thereto.
Capitalized terms used herein, but not defined herein, have the meanings given
to such terms in the Note Agreement.

The officer executing this certificate is a Responsible Officer of the Company
and as such is duly authorized to execute and deliver this certificate on behalf
of the Company. By executing this certificate, such Responsible Officer hereby
certifies, on behalf and in the name of the Company and without assuming any
personal liability, to the Administrative Agent that:

(a) As of the date hereof, I have obtained no knowledge of any Default or Event
of Default; and

(b) Attached hereto as Schedule I is a correct calculation of the Minimum
Interest Coverage, Coverage Test and Consolidated Net Worth, each as of the date
of the related financial statements delivered in connection herewith under
Sections 6.01(a), (b) or (c), as applicable.

[Remainder of page intentionally left blank]

 

E-1

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Company has caused this certificate to be executed by
one of its Responsible Officers this              day of             , 201    .

 

NEWSTAR FINANCIAL, INC. By:  

 

  Name:  

 

  Title:  

 

[COMPLIANCE CERTIFICATE SIGNATURE PAGE]

 

E-2

--------------------------------------------------------------------------------

Exhibit F

FORM OF RESTRICTED PAYMENTS OFFICER’S CERTIFICATE

NEWSTAR FINANCIAL, INC.

Date:             , 201    

This certificate is given by NewStar Financial, Inc., a Delaware corporation
(the “Company”), pursuant to Section 7.05 of that certain Note Agreement, dated
as of January 5, 2010 (as amended, supplemented or otherwise modified from time
to time, the “Note Agreement”), among the Company, Fortress Credit Corp., as
Holder and Administrative Agent, and the other Holders party thereto.
Capitalized terms used herein, but not defined herein, have the meanings given
to such terms in the Note Agreement.

The officer executing this certificate is a Responsible Officer of the Company
and as such is duly authorized to execute and deliver this certificate on behalf
of the Company. By executing this certificate, such Responsible Officer hereby
certifies, on behalf and in the name of the Company and without assuming any
personal liability, to the Administrative Agent that:

(a) the date of the proposed Restricted Payment (the “Current Restricted
Payment”) is             , 20     (the “Restricted Payment Date”) and the amount
of the Current Restricted Payment is $             (the “Restricted Payment
Amount”);

(b) as of the Restricted Payment Date, no Default or Event of Default shall have
occurred and be continuing or be caused thereby;

(c) the aggregate amount of all other Restricted Payments (other than
repurchases by the Company of its own Capital Stock and Restricted Payments
permitted in the last paragraph of Section 7.05 of the Note Agreement) made in
Cash on or after the first day of the current fiscal year and prior to the
making of the Current Restricted Payment is $             (the “Aggregate
Existing RP Amount”); and

(d) the Restricted Payment Amount, when added to the Aggregate Existing RP
Amount, does not exceed $10,000,000 (other than repurchases by the Company of
its own Capital Stock and Restricted Payments permitted in the last paragraph of
Section 7.05 of the Note Agreement) for the current fiscal year.

[Remainder of page intentionally left blank]

 

F-1

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IN WITNESS WHEREOF, the Company has caused this certificate to be executed by
one of its Responsible Officers this             day of             , 201    .

 

NEWSTAR FINANCIAL, INC. By:  

 

  Name:  

 

  Title:  

 

 

F-2

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Exhibit G

FORM OF BORROWING BASE CERTIFICATE

NEWSTAR FINANCIAL, INC.

Date:             , 201    

This certificate is given by NewStar Financial, Inc., a Delaware corporation
(the “Company”), pursuant to Section 6.02(c) of that certain Note Agreement,
dated as of January 5, 2010 (as amended, supplemented or otherwise modified from
time to time, the “Note Agreement”), among the Company, Fortress Credit Corp.,
as Holder and Administrative Agent, and the other Holders party thereto.
Capitalized terms used herein, but not defined herein, have the meanings given
to such terms in the Note Agreement.

The officer executing this certificate is the chief financial officer, treasurer
or controller of the Company and as such is duly authorized to execute and
deliver this certificate on behalf of the Company. By executing this
certificate, such chief financial officer, treasurer or controller hereby
certifies, on behalf and in the name of the Company and without assuming any
personal liability, to the Administrative Agent that attached hereto as Schedule
I is a correct calculation of the Applicable Margin, Availability Ratio,
Borrowing Base, Minimum Interest Coverage, Coverage Test and Consolidated Net
Worth, and each calculation made in connection therewith, in each case as of the
date such calculation is required to be made pursuant to the terms of the Note
Agreement.1

[Remainder of page intentionally left blank]

 

1 Subject to the express terms of the Note Agreement, (i) the calculations of
the Borrowing Base and in respect of the financial covenants under Section 6.14
contained in any Borrowing Base Certificate delivered on a monthly basis are to
be made as of the last day of the immediately preceding calendar month and
(ii) the calculation of the Borrowing Base contained in any Borrowing Base
Certificate delivered in connection with a borrowing of Revolving Loans as
required by Section 4.02(e) hereof or a prepayment of Revolving Loans in
accordance with Sections 2.02, 2.03(b) or 2.03(c) is to be made as of the date
three Business Days prior to such borrowing or prepayment and the calculation of
the financial covenants under Section 6.14 is to be made as of the date of such
Borrowing Base Certificate

 

G-1

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IN WITNESS WHEREOF, the Company has caused this certificate to be executed by
one of one of the persons specified above this             day of             ,
201    .

 

NEWSTAR FINANCIAL, INC. By:  

 

  Name:  

 

  Title:  

 

[BORROWING BASE CERTIFICATE SIGNATURE PAGE]

 

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Exhibit H

FORM OF BORROWING NOTICE

 

To: Fortress Credit Corp., as Administrative Agent

400 Galleria Parkway, Suite 1500

Atlanta, GA 30339

Attention:

Telephone:

Facsimile:

E-mail:

and

10250 Constellation Blvd. #2350

Los Angeles, CA 90067

Attention:

Telephone:

E-mail:

and

 

To: [Insert Name of Holder]

[Address]

[Address]

Attention:

Telecopy:

Telephone:

Reference is hereby made to the Note Agreement, dated as of January 5, 2010 (as
amended, supplemented or otherwise modified from time to time, the “Note
Agreement”), among NewStar Financial, Inc., a Delaware Corporation (the
“Company”), Fortress Credit Corp., as Holder and Administrative Agent, and the
other Holder party thereto. Capitalized terms used herein, but not defined
herein, have the meanings given to such terms in the Note Agreement.

The Company hereby gives notice to the above-referenced Holder and the
Administrative Agent pursuant to Section 2.01 of the Note Agreement of the
Company’s request for Revolving Loans as follows:

 

Requested Loan Date

  

Amount Requested

            , 201  

   $                    

[BORROWING BASE CERTIFICATE SIGNATURE PAGE]

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The Company hereby requests that the proceeds of such Revolving Loans to be made
pursuant to this Borrowing Notice be made available to it at the following
Deposit Account of the Company:

[insert Deposit Account information and transmittal instructions].

A description of the Permitted Use or Uses for which the proceeds of such
Revolving Loan will be utilized, the amounts thereof and a summary of the Total
Outstandings for each category of Permitted Uses after giving effect to the
Revolving Loans requested in this Borrowing Notice are as follows:

 

Description of Permitted Use

  

Amount

  

Total Outstandings

                                

   $                        $                    

                                

   $                        $                    

                                

   $                        $                    

                                

   $                        $                    

                                

   $                        $                    

                                

   $                        $                    

 

H-2

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The Company hereby certifies that all conditions contained in Section 4.02 of
the Note Agreement have been met or satisfied.

 

NEWSTAR FINANCIAL, INC. By:  

 

  Name:   Title:

DATE:             ,     , 201    

 

H-3

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Exhibit I

FORM OF SUBSIDIARY GUARANTY

 

I-1

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SUBSIDIARY GUARANTY

THIS SUBSIDIARY GUARANTY (this “Guaranty”) is made as of the
                     day of December, 2009, by             , a             ;
            , a             ;              a             ;             , a
            ;             , a             ; and             , a
            (each, an “Initial Guarantor”, and together with any additional
Subsidiaries which become parties to this Guaranty by executing a Supplement
hereto in the form attached hereto as Annex I, the “Subsidiary Guarantors”) in
favor of the Administrative Agent, for the benefit of the Holders, under the
Note Agreement referred to below;

WITNESSETH:

WHEREAS, NewStar Financial, Inc., a Delaware corporation (the “Company”), and
Fortress Credit Corp., a Delaware corporation having its principal office in New
York, New York, as Administrative Agent (the “Administrative Agent”), and
certain other Holders from time to time party thereto have entered into a
certain Note Agreement dated as of even date herewith (as same may be amended or
modified from time to time, the “Note Agreement”), providing, subject to the
terms and conditions thereof, for extensions of credit to be made by the Holders
to the Company;

WHEREAS, it is a condition precedent to the Administrative Agent and the Holders
executing the Note Agreement that each of the Subsidiary Guarantors execute and
deliver this Guaranty whereby each of the Subsidiary Guarantors shall guarantee
the payment when due, subject to Section 9 hereof, of all Guaranteed
Obligations, as defined below; and

WHEREAS, in consideration of the financial and other support that the Company
has provided, and such financial and other support as the Company may in the
future provide, to the Subsidiary Guarantors, and in order to induce the Holders
and the Administrative Agent to enter into the Note Agreement, and because each
Subsidiary Guarantor has determined that executing this Guaranty is in its
interest and to its financial benefit, each of the Subsidiary Guarantors is
willing to guarantee the obligations of the Company under the Note Agreement,
any Note and the other Note Documents;

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1.1. Selected Terms Used Herein.

“Guaranteed Obligations” is defined in Section 3 below.

SECTION 1.2. Terms in Note Agreement. Other capitalized terms used herein but
not defined herein shall have the meaning set forth in the Note Agreement.

 

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SECTION 2.1. Representations and Warranties. Each of the Subsidiary Guarantors
represents and warrants (which representations and warranties shall be deemed to
have been renewed upon each date a Revolving Loan is made under the Note
Agreement) that:

(a) It is a corporation, partnership or limited liability company duly and
properly incorporated or organized, as the case may be, validly existing and (to
the extent such concept applies to such entity) in good standing under the laws
of its jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except to the extent that the failure to obtain or have such
authority could not reasonable be expected to have a Material Adverse Effect.

(b) It has the power and authority and legal right to execute and deliver this
Guaranty and to perform its obligations hereunder. The execution and delivery by
it of this Guaranty and the performance of its obligations hereunder have been
duly authorized by proper corporate proceedings, and this Guaranty constitutes a
legal, valid and binding obligation of such Subsidiary Guarantor enforceable
against it in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally.

(c) The execution, delivery and performance by it of this Guaranty have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (with the passage of time, the giving of notice or
otherwise) (i) contravene or Conflict with the terms of its Organizational
Documents; (ii) Conflict with, or result in the creation of any Lien under,
(A) any material Contractual Obligation to which it is a party (other than in
favor of the Administrative Agent pursuant to the Note Documents) or (B) any
Judgment or any arbitral award to which it or its property is subject; or
(iii) violate any Law, except, in the case of the foregoing clauses (ii) and
(iii), to the extent that such Conflict or violation could not reasonably be
expected to result in a Material Adverse Effect.

(d) No Consent or Other Action by, from, with or to any other Person is required
prior to or otherwise in connection with (i) its ownership of the Collateral
owned by it and conduct of its Business, except those Consents the failure to
obtain which could not reasonably be expected to result in a Material Adverse
Effect or (ii) its execution and delivery of, and performance of its obligations
under this Guaranty, except for those consents already obtained.

SECTION 2.2. Covenants. Each of the Subsidiary Guarantors covenants that, so
long as any Holder has any Commitment outstanding under the Note Agreement or
any of the Guaranteed Obligations shall remain unpaid, that it will, and, if
necessary, will enable the Company to, fully comply with those covenants and
agreements set forth in the Note Agreement.

SECTION 3. The Guaranty. Subject to Section 9 hereof, each of the Subsidiary
Guarantors hereby absolutely and unconditionally guarantees, as primary obligor
and not as surety, the full and punctual payment (whether at stated maturity,
upon acceleration or early termination or otherwise, and at all times
thereafter) and performance of the Obligations, including without limitation any
such Obligations incurred or accrued during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, whether or not allowed or

 

I-3

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allowable in such proceeding (collectively, subject to the provisions of
Section 9 hereof, being referred to collectively as the “Guaranteed
Obligations”). Upon failure by the Company to pay punctually any such amount,
each of the Subsidiary Guarantors agrees that it shall forthwith on demand pay
to the Administrative Agent for the benefit of the Holders and, if applicable,
their Affiliates, the amount not so paid at the place and in the manner
specified in the Note Agreement, any Note or the relevant Note Document, as the
case may be. This Guaranty is a guaranty of payment and not of collection. Each
of the Subsidiary Guarantors waives any right to require the Holder to sue the
Company, any other guarantor, or any other person obligated for all or any part
of the Guaranteed Obligations, or otherwise to enforce its payment against any
collateral securing all or any part of the Guaranteed Obligations.

SECTION 4. Guaranty Unconditional. Subject to Section 9 hereof, the obligations
of each of the Subsidiary Guarantors hereunder shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:

(i) any extension, renewal, settlement, compromise, waiver or release in respect
of any of the Guaranteed Obligations, by operation of law or otherwise, or any
obligation of any other guarantor of any of the Guaranteed Obligations, or any
default, failure or delay, willful or otherwise, in the payment or performance
of the Guaranteed Obligations;

(ii) any modification or amendment of or supplement to the Note Agreement, any
Note or any other Note Document;

(iii) any release, nonperfection or invalidity of any direct or indirect
security for any obligation of the Company under the Note Agreement, any Note,
the Security Agreement, any other Note Document, or any obligations of any other
guarantor of any of the Guaranteed Obligations, or any action or failure to act
by the Administrative Agent, any Holder or any Affiliate of any Holder with
respect to any collateral securing all or any part of the Guaranteed
Obligations;

(iv) any change in the corporate existence, structure or ownership of the
Company or any other guarantor of any of the Guaranteed Obligations, or any
insolvency, bankruptcy, reorganization or other similar proceeding affecting the
Company, or any other guarantor of the Guaranteed Obligations, or its assets or
any resulting release or discharge of any obligation of the Company, or any
other guarantor of any of the Guaranteed Obligations;

(v) the existence of any claim, setoff or other rights which the Subsidiary
Guarantors may have at any time against the Company, any other guarantor of any
of the Guaranteed Obligations, the Administrative Agent, any Holder or any other
Person, whether in connection herewith or any unrelated transactions;

(vi) any invalidity or unenforceability relating to or against the Company, or
any other guarantor of any of the Guaranteed Obligations, for any reason related
to the Note Agreement, any other Note Document, or any provision of applicable
law or regulation purporting to prohibit the payment by the Company, or any
other guarantor of the Guaranteed Obligations, of the principal of or interest
on any Note or any other amount

 

I-4

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payable by the Company under the Note Agreement, any Note or any other Note
Document; or

(vii) any other act or omission to act or delay of any kind by the Company, any
other guarantor of the Guaranteed Obligations, the Administrative Agent, any
Holder or any other Person or any other circumstance whatsoever (other than
payment in full of the Obligations) which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of any Subsidiary
Guarantor’s obligations hereunder.

SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In Certain
Circumstances. Each of the Subsidiary Guarantor’s obligations hereunder shall
remain in full force and effect until all Guaranteed Obligations (other than
contingent indemnification obligations as to which no claim has been asserted)
shall have been paid in full in cash and the Commitments under the Note
Agreement shall have terminated or expired (herein, the “Termination
Conditions”). If at any time any payment of the principal of or interest on any
Note or any other amount payable by the Company or any other party under the
Note Agreement or any other Note Document is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Company or otherwise, each of the Subsidiary Guarantor’s obligations hereunder
with respect to such payment shall be reinstated as though such payment had been
due but not made at such time.

SECTION 6. Waivers. Each of the Subsidiary Guarantors irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any Person against the Company, any
other guarantor of any of the Guaranteed Obligations, or any other Person.

SECTION 7. Subrogation. Each of the Subsidiary Guarantors hereby agrees not to
assert any right, claim or cause of action, including, without limitation, a
claim for subrogation, reimbursement, indemnification or otherwise, against the
Company arising out of or by reason of this Guaranty or the obligations
hereunder, including, without limitation, the payment or securing or purchasing
of any of the Guaranteed Obligations by any of the Subsidiary Guarantors unless
and until the Guaranteed Obligations are indefeasibly paid in full and any
commitment to lend under the Note Agreement and any other Note Documents is
terminated.

SECTION 8. Stay of Acceleration. If acceleration of the time for payment of any
of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Company, all such amounts otherwise subject to
acceleration under the terms of the Note Agreement, any Note or any other Note
Document shall nonetheless be payable by each of the Subsidiary Guarantors
hereunder forthwith on demand by the Administrative Agent made at the request of
the Required Holders.

SECTION 9. Limitation on Obligations. (a) Notwithstanding any other provision of
this Guaranty, the amount guaranteed by each Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations hereunder shall
not be subject to avoidance under Section 548 of the Bankruptcy Code or under
any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law. In determining the

 

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limitations, if any, on the amount of any Guarantor’s obligations hereunder
pursuant to the preceding sentence, it is the intention of the parties hereto
that any rights of subrogation or contribution which such Guarantor may have
under this Guaranty, any other agreement or applicable law shall be taken into
account.

(b) To the extent that any Subsidiary Guarantor shall make a payment under any
Subsidiary Guaranty (a “Guarantor Payment”) which, taking into account all other
Guarantor Payments then previously or concurrently made by any other Subsidiary
Guarantor, exceeds the amount which otherwise would have been paid by or
attributable to such Subsidiary Guarantor if each Subsidiary Guarantor had paid
the aggregate Guaranteed Obligations satisfied by such Guarantor Payment in the
same proportion as such Subsidiary Guarantor’s “Allocable Amount” (as defined
below) (as determined immediately prior to such Guarantor Payment) bore to the
aggregate Allocable Amounts of each of the Subsidiary Guarantors as determined
immediately prior to the making of such Guarantor Payment, then, following the
prior and complete satisfaction of the Termination Conditions, such Subsidiary
Guarantor shall be entitled to receive contribution and indemnification payments
from, and be reimbursed by, each other Subsidiary Guarantor for the amount of
such excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment.

(c) As of any date of determination, the “Allocable Amount” of any Subsidiary
Guarantor shall be equal to the excess of the fair saleable value of the
property of such Subsidiary Guarantor over the total liabilities of such
Subsidiary Guarantor (including the maximum amount reasonably expected to become
due in respect of contingent liabilities, calculated, without duplication
assuming each other Subsidiary Guarantor that is also liable for such contingent
liability pays its ratable share thereof), giving effect to all payments made by
other Subsidiary Guarantors as of such date in a manner to maximize the amount
of such contributions.

(d) This Section 9 is intended only to define the relative rights of the
Subsidiary Guarantors, and nothing set forth in this Section 9 is intended to or
shall impair the obligations of the Subsidiary Guarantors, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of the applicable Subsidiary Guaranty.

(e) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder, and under any other Subsidiary Guaranty, shall
constitute assets of the applicable Subsidiary Guarantor or Subsidiary
Guarantors to which such contribution and indemnification is owing.

(f) The rights of the indemnifying Subsidiary Guarantors against other
Subsidiary Guarantors under any Subsidiary Guaranty shall be exercisable upon
the prior and complete satisfaction of the Termination Conditions.

SECTION 10. Application of Payments. All payments received by the Administrative
Agent hereunder shall be applied by the Administrative Agent to payment of the
Guaranteed Obligations in accordance with Section 9.03 of the Note Agreement
unless a court of competent jurisdiction shall otherwise direct.

 

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SECTION 11. Notices. All notices, requests and other communications to any party
hereunder shall be given or made by facsimile or other writing and telecopied,
e-mailed, mailed or delivered to the intended recipient at its address or
facsimile number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by
notice to the Administrative Agent in accordance with the provisions of
Section 12.02 of the Note Agreement. Except as otherwise provided in this
Guaranty, all such communications shall be deemed to have been duly given upon
the earlier to occur of (i) the actual receipt thereof by the relevant party
hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on
behalf of the relevant party hereto; (B) if delivered by mail, four Business
Days after deposit in the mails, postage prepaid; and (C) if delivered by
facsimile, when sent and receipt has been confirmed by telephone, in each case
given or addressed as aforesaid.

SECTION 12. No Waivers. No failure or delay by the Administrative Agent or any
Holders in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided in this Guaranty, the Note
Agreement, any Note and the other Note Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.

SECTION 13. No Duty to Advise. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of the Company’s financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks that each of the Subsidiary Guarantors assumes and incurs under this
Guaranty, and agrees that neither the Administrative Agent nor any Holder has
any duty to advise any of the Subsidiary Guarantors of information known to it
regarding those circumstances or risks.

SECTION 14. Successors and Assigns. This Guaranty is for the benefit of the
Administrative Agent and the Holders and their respective successors and
permitted assigns and in the event of an assignment of any amounts payable under
the Note Agreement, any Note or the other Note Documents, the rights hereunder,
to the extent applicable to the indebtedness so assigned, shall be transferred
with such indebtedness. This Guaranty shall be binding upon each of the
Subsidiary Guarantors and their respective successors and permitted assigns.

SECTION 15. Changes in Writing. Other than in connection with the addition of an
additional Subsidiary which shall become a party hereto by executing a
supplement hereto in the form attached as Annex I, neither this Guaranty nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by each of the Subsidiary Guarantors and the
Administrative Agent with the consent of the Required Holders.

SECTION 16. Costs of Enforcement. Each of the Subsidiary Guarantors agrees to
pay all reasonable out-of-pocket costs and expenses including, without
limitation, all court costs and reasonable attorneys’ fees and expenses paid or
incurred by the Administrative Agent or any Holder or any Affiliate of any
Holder in endeavoring to collect all or any part of the Guaranteed Obligations
from, or in prosecuting any action against, the Company, the Subsidiary
Guarantors or any other guarantor of all or any part of the Guaranteed
Obligations.

 

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SECTION 17. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH HOLDER SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. THE PARTIES HERETO HEREBY CONSENT,
UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL
AND STATE COURTS OF THE STATE OF NEW YORK AND WAIVE ANY OBJECTION BASED ON VENUE
OR FORUM NON CONVENIENS WITH RESPECT TO ANY PROCEEDING RELATING TO ANY MATTER,
CLAIM OR DISPUTE ARISING UNDER THIS AGREEMENT, THE OTHER NOTE DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE OTHER THAN
PURSUIT OF A JUDGMENT ON A NOTE WHERE SUIT IS ALSO BROUGHT IN THE STATE WHERE
ANY COLLATERAL IS LOCATED TO TAKE JURISDICTION OF SUCH COLLATERAL. EACH
SUBSIDIARY GUARANTOR FURTHER CONSENTS, GENERALLY, UNCONDITIONALLY AND
IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF
EACH STATE WHERE ANY COLLATERAL IS LOCATED IN RESPECT OF ANY PROCEEDING RELATING
TO ANY MATTER, CLAIM OR DISPUTE ARISING WITH RESPECT TO SUCH COLLATERAL
INCLUDING BUT NOT LIMITED TO FORECLOSURES, AND SUCH SUBSIDIARY GUARANTOR AGREES
THAT ADMINISTRATIVE AGENT AND HOLDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST SUCH SUBSIDIARY GUARANTOR OR ITS PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION WHICH THE ADMINISTRATIVE AGENT OR HOLDERS DEEM NECESSARY
OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS OR TO OTHERWISE ENFORCE ITS RIGHTS AGAINST SUCH SUBSIDIARY
GUARANTOR’S PROPERTY. EACH SUBSIDIARY GUARANTOR FURTHER IRREVOCABLY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS TO THE SERVICE OF
PROCESS, GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, AT THE ADDRESSES SET FORTH
HEREIN IN CONNECTION WITH ANY OF THE AFORESAID PROCEEDINGS IN ACCORDANCE WITH
THE RULES APPLICABLE TO SUCH PROCEEDINGS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH SUBSIDIARY GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW HAVE OR HAVE IN THE FUTURE TO THE LAYING OF VENUE IN RESPECT OF ANY OF
THE AFORESAID PROCEEDINGS BROUGHT IN THE COURTS REFERRED TO ABOVE AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT AND THE HOLDERS TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY SUBSIDIARY GUARANTOR IN ANY JURISDICTION. To the extent that
a Subsidiary Guarantor has or may hereafter acquire any immunity from the
jurisdiction of any court or from any legal process

 

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(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to such Subsidiary
Guarantor or such Subsidiary Guarantor’s property, such Subsidiary Guarantor
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH PARTY HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO TRIAL BY JURY AND
ANY RIGHT OR CLAIM TO ANY CONSEQUENTIAL DAMAGES, EXEMPLARY DAMAGES, EXPECTANCY
DAMAGES, SPECIAL DAMAGES AND GENERAL DAMAGES IN RESPECT OF ANY LITIGATION BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR
ACTION OF ANY PARTY OR ANY EXERCISE BY ANY PARTY OF ITS RESPECTIVE RIGHTS
HEREUNDER OR IN ANY WAY RELATING TO ANY REVOLVING LOAN, ANY NOTE OR ANY PROPERTY
OF THE COMPANY OR ANY SUBSIDIARY GUARANTOR (INCLUDING ANY ACTION TO RESCIND OR
CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT
WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A
MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT AND TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREUNDER.

SECTION 18. Taxes. etc. All payments required to be made by any of the
Subsidiary Guarantors hereunder shall be made without setoff or counterclaim and
free and clear of and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority thereof,
provided, however, that if any of the Subsidiary Guarantors is required by law
to make such deduction or withholding, such Subsidiary Guarantor shall forthwith
(i) pay to the Administrative Agent or any Holder, as applicable, such
additional amount as results in the net amount received by the Administrative
Agent or any Holder, as applicable, equaling the full amount which would have
been received by the Administrative Agent or any Holder, as applicable, had no
such deduction or withholding been made, (ii) pay the full amount deducted to
the relevant authority in accordance with applicable law, and (iii) furnish to
the Administrative Agent or any Holder, as applicable, certified copies of
official receipts evidencing payment of such withholding taxes within 30 days
after such payment is made.

SECTION 19. Setoff. Without limiting the rights of the Administrative Agent or
the Holders under applicable law, if following the occurrence and during the
continuance of an Event of Default all or any part of the Guaranteed Obligations
is then due, whether pursuant to the occurrence of such Event of Default or
otherwise, then the Subsidiary Guarantor authorizes the Administrative Agent and
the Holders to apply any sums standing to the credit of the Subsidiary Guarantor
with the Administrative Agent or any Holder or any Loan of the Administrative
Agent or any Holder toward the payment of the Guaranteed Obligations.

 

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IN WITNESS WHEREOF, each of the Subsidiary Guarantors has caused this Guaranty
to be duly executed, under seal, by its authorized officer as of the day and
year first above written.

 

 

By:  

 

Title:  

 

 

By:  

 

Title:  

 

 

By:  

 

Title:  

 

 

By:  

 

Title:  

 

 

By:  

 

Title:  

 

 

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ANNEX I TO GUARANTY

Reference is hereby made to the Subsidiary Guaranty (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Guaranty”),
dated as of December [    ], 2009, made by             , a             ,
            , a              and             , a              (each an “Initial
Guarantor”, and together with any additional Subsidiaries which become parties
to this Guaranty by executing a Supplement hereto in the form attached hereto as
Annex I, the “Guarantors”), in favor of Fortress Credit Corp., as the
Administrative Agent for the benefit of itself and the other Holders (in each
case, under and as defined in the Note Agreement). Each capitalized term used
herein and not defined herein shall have the meaning given to it in the
Guaranty.

By its execution below, the undersigned, [NAME OF NEW GUARANTOR], a
[corporation] [partnership] [limited liability company], agrees to become, and
does hereby become, a Subsidiary Guarantor under the Guaranty and agrees to be
bound by such Guaranty as if originally a party thereto. By its execution below,
the undersigned represents and warrants as to itself that all of the
representations and warranties contained in Section 1 of the Guaranty are true
and correct in all respects as of the date hereof.

IN WITNESS WHEREOF, [NAME OF NEW GUARANTOR], a [corporation] [partnership]
[limited liability company] has executed and delivered this Annex I counterpart
to the Guaranty as of this                      day of             ,         .

 

[NAME OF NEW GUARANTOR] By:  

 

Name:   Title:  

 

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