Exhibit 10.1

 

 

EXECUTION COPY

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT AGREEMENT

 

dated as of July 11, 2013

 

among

 

Energy Funding LLC,

as Borrower,

 

the Lenders Referred to Herein,

 

Natixis, New York Branch,
as Administrative Agent,

 

and

 

Wells Fargo Bank, National Association,
as Collateral Agent and Custodian

 

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS AND INTERPRETATION

2

 

 

 

SECTION 1.1

DEFINITIONS

2

SECTION 1.2

ACCOUNTING TERMS AND DETERMINATIONS AND UCC TERMS

46

SECTION 1.3

ASSUMPTIONS AND CALCULATIONS WITH RESPECT TO COLLATERAL LOANS

46

SECTION 1.4

CROSS-REFERENCES; REFERENCES TO AGREEMENTS

48

SECTION 1.5

REFERENCE TO SECURED PARTIES

49

 

 

 

ARTICLE II THE LOANS

49

 

 

 

SECTION 2.1

THE COMMITMENTS

49

SECTION 2.2

MAKING OF THE LOANS

49

SECTION 2.3

EVIDENCE OF INDEBTEDNESS; NOTES

50

SECTION 2.4

MATURITY OF LOANS

51

SECTION 2.5

INTEREST RATES

51

SECTION 2.6

COMMITMENT FEES

52

SECTION 2.7

REDUCTION OF COMMITMENTS; PREPAYMENTS

52

SECTION 2.8

GENERAL PROVISIONS AS TO PAYMENTS

54

SECTION 2.9

FUNDING LOSSES

54

SECTION 2.10

COMPUTATION OF INTEREST AND FEES

54

SECTION 2.11

INCREASED COMMITMENTS; ADDITIONAL LOANS

55

SECTION 2.12

NO CANCELLATION OF INDEBTEDNESS

55

SECTION 2.13

LOANS HELD BY BORROWER AFFILIATED LENDERS

56

 

 

 

ARTICLE III CONDITIONS TO BORROWINGS

56

 

 

 

SECTION 3.1

EFFECTIVENESS OF COMMITMENTS

56

SECTION 3.2

BORROWINGS

58

SECTION 3.3

EFFECTIVENESS OF INCREASED COMMITMENTS

59

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BORROWER

61

 

 

 

SECTION 4.1

EXISTENCE AND POWER

61

SECTION 4.2

POWER AND AUTHORITY

61

SECTION 4.3

NO VIOLATION

61

SECTION 4.4

LITIGATION

61

SECTION 4.5

COMPLIANCE WITH ERISA

62

SECTION 4.6

ENVIRONMENTAL MATTERS

62

SECTION 4.7

TAXES

62

SECTION 4.8

FULL DISCLOSURE

62

SECTION 4.9

SOLVENCY

62

SECTION 4.10

USE OF PROCEEDS; MARGIN REGULATIONS

62

SECTION 4.11

GOVERNMENTAL APPROVALS

63

SECTION 4.12

INVESTMENT COMPANY ACT

63

SECTION 4.13

REPRESENTATIONS AND WARRANTIES IN LOAN DOCUMENTS

63

SECTION 4.14

PATENTS, TRADEMARKS, ETC.

63

SECTION 4.15

OWNERSHIP OF ASSETS

63

SECTION 4.16

NO DEFAULT

63

SECTION 4.17

LABOR MATTERS

63

SECTION 4.18

SUBSIDIARIES/EQUITY INTERESTS

63

SECTION 4.19

RANKING

64

SECTION 4.20

REPRESENTATIONS CONCERNING COLLATERAL

64

 

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ARTICLE V AFFIRMATIVE AND NEGATIVE COVENANTS OF THE BORROWER

64

 

 

 

SECTION 5.1

INFORMATION

64

SECTION 5.2

PAYMENT OF OBLIGATIONS

67

SECTION 5.3

MAINTENANCE OF PROPERTY; INSURANCE

67

SECTION 5.4

GOOD STANDING

67

SECTION 5.5

COMPLIANCE WITH LAWS

67

SECTION 5.6

INSPECTION OF PROPERTY, BOOKS AND RECORDS; AUDITS; ETC.

67

SECTION 5.7

EXISTENCE

68

SECTION 5.8

SUBSIDIARIES/EQUITY INTEREST

68

SECTION 5.9

INVESTMENTS

68

SECTION 5.10

RESTRICTION ON FUNDAMENTAL CHANGES

69

SECTION 5.11

ERISA

69

SECTION 5.12

LIENS

69

SECTION 5.13

BUSINESS ACTIVITIES

69

SECTION 5.14

FISCAL YEAR; FISCAL QUARTER

69

SECTION 5.15

MARGIN STOCK

69

SECTION 5.16

INDEBTEDNESS

69

SECTION 5.17

USE OF PROCEEDS

69

SECTION 5.18

BANKRUPTCY REMOTENESS; SEPARATENESS

70

SECTION 5.19

AMENDMENTS, MODIFICATIONS AND WAIVERS TO COLLATERAL LOANS

71

SECTION 5.20

HEDGING

71

SECTION 5.21

TITLE COVENANTS

72

SECTION 5.22

FURTHER ASSURANCES

72

SECTION 5.23

COSTS OF TRANSFER; TAXES; AND EXPENSES

72

SECTION 5.24

COLLATERAL AGENT MAY PERFORM

73

SECTION 5.25

NOTICE OF NAME CHANGE

73

SECTION 5.26

STAMP AND OTHER SIMILAR TAXES

73

SECTION 5.27

FILING FEES, EXCISE TAXES, ETC.

73

SECTION 5.28

CREDIT STANDARDS

74

SECTION 5.29

DELIVERY OF PROCEEDS

74

SECTION 5.30

PERFORMANCE OF OBLIGATIONS

74

SECTION 5.31

LIMITATION ON DIVIDENDS

74

SECTION 5.32

COLLATERAL LOAN DOCUMENTATION; APPROVED APPRAISAL FIRMS

75

SECTION 5.33

ANNUAL RATING REVIEW

75

SECTION 5.34

COLLATERAL MANAGEMENT AGREEMENT; MASTER TRANSFER AGREEMENT

75

SECTION 5.35

TRANSACTIONS WITH AFFILIATES

75

SECTION 5.36

REPORTS BY INDEPENDENT ACCOUNTANTS

75

SECTION 5.37

TAX MATTERS AS TO THE BORROWER

76

SECTION 5.38

CREDIT ESTIMATES; FAILURE TO HAVE A DBRS LONG TERM RATING

77

SECTION 5.39

REINVESTMENT PERIOD EVENT

77

 

 

 

ARTICLE VI EVENTS OF DEFAULT

78

 

 

 

SECTION 6.1

EVENTS OF DEFAULT

78

SECTION 6.2

REMEDIES

80

SECTION 6.3

ADDITIONAL COLLATERAL PROVISIONS

81

SECTION 6.4

APPLICATION OF PROCEEDS

84

 

 

 

ARTICLE VII THE AGENTS

85

 

 

 

SECTION 7.1

APPOINTMENT AND AUTHORIZATION

85

SECTION 7.2

AGENTS AND AFFILIATES

85

SECTION 7.3

ACTIONS BY AGENT

86

SECTION 7.4

DELEGATION OF DUTIES; CONSULTATION WITH EXPERTS

86

SECTION 7.5

LIABILITY OF AGENTS

86

SECTION 7.6

INDEMNIFICATION

88

SECTION 7.7

CREDIT DECISION

88

 

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SECTION 7.8

SUCCESSOR AGENT

88

 

 

 

ARTICLE VIII ACCOUNTS AND COLLATERAL

89

 

 

 

SECTION 8.1

COLLECTION OF MONEY

89

SECTION 8.2

COLLECTION ACCOUNT

90

SECTION 8.3

PAYMENT ACCOUNT; FUTURE FUNDING RESERVE ACCOUNT; LENDER COLLATERAL ACCOUNT;
CLOSING EXPENSE ACCOUNT

92

SECTION 8.4

CUSTODIAL ACCOUNT

95

SECTION 8.5

ACQUISITION OF COLLATERAL LOANS AND ELIGIBLE INVESTMENTS

96

SECTION 8.6

RELEASE OF SECURITY INTEREST IN SOLD COLLATERAL LOANS AND ELIGIBLE INVESTMENTS;
RELEASE OF SECURITY INTERESTS UPON TERMINATION

96

SECTION 8.7

METHOD OF COLLATERAL TRANSFER

97

SECTION 8.8

CONTINUING LIABILITY OF THE BORROWER

98

SECTION 8.9

REPORTS

99

 

 

 

ARTICLE IX APPLICATION OF MONIES

99

 

 

 

SECTION 9.1

DISBURSEMENTS OF FUNDS FROM PAYMENT ACCOUNT

99

 

 

 

ARTICLE X SALE OF COLLATERAL LOANS; ELIGIBILITY CRITERIA

103

 

 

 

SECTION 10.1

SALE OF COLLATERAL LOANS

103

SECTION 10.2

ELIGIBILITY CRITERIA

105

 

 

 

ARTICLE XI CHANGE IN CIRCUMSTANCES

105

 

 

 

SECTION 11.1

BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR

105

SECTION 11.2

ILLEGALITY

106

SECTION 11.3

INCREASED COST AND REDUCED RETURN

106

SECTION 11.4

TAXES

108

SECTION 11.5

REPLACEMENT OF LENDERS; DOWNGRADED LENDERS; DEFAULTING LENDERS

110

 

 

 

ARTICLE XII MISCELLANEOUS

112

 

 

 

SECTION 12.1

NOTICES

112

SECTION 12.2

NO WAIVERS

112

SECTION 12.3

EXPENSES; INDEMNIFICATION

113

SECTION 12.4

SHARING OF SET-OFFS

114

SECTION 12.5

AMENDMENTS AND WAIVERS

114

SECTION 12.6

SUCCESSORS AND ASSIGNS

116

SECTION 12.7

COLLATERAL

118

SECTION 12.8

GOVERNING LAW; SUBMISSION TO JURISDICTION

118

SECTION 12.9

MARSHALLING; RECAPTURE

118

SECTION 12.10

COUNTERPARTS; INTEGRATION; EFFECTIVENESS

118

SECTION 12.11

WAIVER OF JURY TRIAL

119

SECTION 12.12

SURVIVAL

119

SECTION 12.13

DOMICILE OF LOANS

119

SECTION 12.14

LIMITATION OF LIABILITY

119

SECTION 12.15

RECOURSE; NON-PETITION

119

SECTION 12.16

CONFIDENTIALITY

120

SECTION 12.17

SPECIAL PROVISIONS APPLICABLE TO CP LENDERS

120

SECTION 12.18

DIRECTION OF COLLATERAL AGENT

122

SECTION 12.19

BORROWINGS/LOANS MADE IN THE ORDINARY COURSE OF BUSINESS

122

 

 

 

ARTICLE XIII THE FUNDING AGENT

122

 

 

 

SECTION 13.1

APPOINTMENT

122

SECTION 13.2

DELEGATION OF DUTIES

122

SECTION 13.3

EXCULPATORY PROVISIONS

123

SECTION 13.4

RELIANCE BY FUNDING AGENT

123

SECTION 13.5

NON-RELIANCE ON FUNDING AGENT

123

 

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SECTION 13.6

FUNDING AGENT IN ITS INDIVIDUAL CAPACITY

123

SECTION 13.7

CONFLICT WAIVER

124

 

 

 

ARTICLE XIV ASSIGNMENT OF COLLATERAL MANAGEMENT AGREEMENT

124

 

 

 

SECTION 14.1

ASSIGNMENT OF COLLATERAL MANAGEMENT AGREEMENT

124

 

 

SCHEDULES AND EXHIBITS

 

Schedule A

-  

Approved Appraisal Firms

 

Schedule B

-  

DBRS Industry Classifications

 

Schedule C

-  

DBRS Risk Scores

 

Schedule D

-  

Diversity Score Calculation

 

Schedule E

-  

DBRS Rating Procedure

 

Schedule F

-  

DBRS Contact Information

 

 

 

 

 

Exhibit A

-  

Form of Note

 

Exhibit B

-  

Form of Notice of Borrowing

 

Exhibit C

-  

Form of Assignment and Assumption Agreement

 

Exhibit D

-  

Form of Joinder Agreement

 

Exhibit E

-  

Scope of Collateral Report

 

Exhibit F

-  

Scope of Payment Date Report

 

Exhibit G

-  

Scope of Asset-Level Reporting to Lenders

 

Exhibit H

-  

Form of Retention of Net Economic Interest Letter

 

 

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CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT dated as of July 11, 2013, is entered into by and among
ENERGY FUNDING LLC, a limited liability company organized under the law of the
State of Delaware, as Borrower, the Lenders party hereto from time to time,
NATIXIS, NEW YORK BRANCH, as Administrative Agent, and WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Collateral Agent and Custodian.

 

W I T N E S S E T H:

 

WHEREAS, the Borrower desires that the Lenders make Loans on a revolving basis
to the Borrower on the terms and subject to the conditions set forth in this
Agreement, and each Lender is willing to make Loans to the Borrower on the terms
and subject to the conditions set forth in this Agreement; and

 

WHEREAS, the proceeds of the Loans made by the Lenders to the Borrower shall be
used by the Borrower to purchase and originate Collateral Loans (including the
acquisition of Collateral Loans from the BDC), to fund Exposure Amounts and to
make Permitted Distributions, all in accordance with the terms hereof.

 

NOW, THEREFORE, the Borrower, the Lenders, the Administrative Agent and the
Collateral Agent hereby agree as follows:

 

 

GRANTING CLAUSE

 

To secure the due and punctual payment and performance of all Obligations,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or due or to become due, in accordance
with the terms thereof, the Borrower hereby Grants to the Collateral Agent for
the benefit of the Secured Parties a security interest in all of the Borrower’s
right, title and interest in and to the following, whether now owned or
hereafter acquired (collectively, the “Pledged Collateral”):

 

(a)        all Collateral Loans, all other loans and securities of the Borrower
whether or not such loans and securities constitute Collateral Loans, all
Related Contracts and Collections with respect thereto, all collateral security
granted under any Related Contracts, and all interests in any of the foregoing,
whether now or hereafter existing;

 

(b)        (i)  the Custodial Account and all Collateral which is delivered to
the Collateral Agent in the future pursuant to the terms hereof and all payments
thereon or with respect thereto, (ii) each of the other Covered Accounts and
(iii) Eligible Investments or other investments (whether or not such investments
constitute Eligible Investments) purchased with funds on deposit in the Covered
Accounts, and all income or Distributions from the investment of funds in the
Covered Accounts;

 

(c)        cash, Money, securities, reserves and other property now or at any
time in the possession of the Borrower or which is delivered or received by the
Collateral Agent or its bailee, agent or custodian (including, without
limitation, all Eligible Investments and other investments with respect to any
Collateral or proceeds thereof);

 

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(d)        all liens, security interests, property or assets securing or
otherwise relating to any Collateral Loan, Eligible Investment, other
investment, Collateral or any Related Contract;

 

(e)        the Interest Hedge Agreements;

 

(f)        the Master Transfer Agreement;

 

(g)        the Collateral Management Agreement; provided that the collateral
assignment of the Collateral Management Agreement shall not in any event include
any assignment of the Borrower’s right to terminate the Collateral Management
Agreement or to terminate the Collateral Manager’s rights and responsibilities
thereunder or to remove the Collateral Manager;

 

(h)        the Account Control Agreement;

 

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

 

(j)         all products, proceeds, rents and profits of any of the foregoing,
all substitutions therefor and all additions and accretions thereto (whether the
same now exist or arise or are acquired), including, without limitation,
proceeds of insurance policies insuring any or all of the foregoing, any
indemnity or warranty payable by reason of loss or damage to or otherwise in
respect of any of the foregoing or any guaranty.

 

Except as set forth in the Priority of Payments, the Loans are secured by the
foregoing Grant equally and ratably without prejudice, priority or distinction
between any Loan and any other Loan by reason of difference in time of borrowing
or otherwise.  The Grant is made to secure, in accordance with the priorities
set forth in the Priority of Payments, the payment of all amounts due on the
Loans in accordance with their terms, the payment by the Borrower of all other
sums payable under this Agreement and the other Loan Documents and compliance
with the provisions of this Agreement and the other Loan Documents, all as
provided herein.

 

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.1       Definitions.  The following terms, as used herein, have the
following meanings:

 

“ABL Facility” means a lending facility pursuant to which the loans thereunder
are secured by a perfected, first priority security interest in accounts
receivable, inventory, machinery, equipment, real estate, oil and gas reserves,
vessels or periodic revenues, where such collateral security consists of assets
generated or acquired by the related Obligor in its business.

 

“Account Control Agreement” means the Securities Account Control Agreement among
the Borrower, as debtor, the Collateral Agent, as secured party, and Wells
Fargo, as Custodian and Securities Intermediary, dated on or about the date
hereof.

 

- 2 -

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“Accountants’ Report” means an agreed upon procedures report prepared by a firm
of independent certified public accountants of recognized international
reputation appointed by the Borrower.

 

“Additional Lender” means a Lender that has made an Additional Loan or provided
an Increased Commitment hereunder.

 

“Additional Loans” has the meaning assigned to such term in Section 2.11(a).

 

“Adjusted London Interbank Offered Rate” means, with respect to any Interest
Period, a rate per annum (expressed as a percentage) equal to the quotient
obtained (rounded upward, if necessary, to the next higher 1/100th of 1%) by
dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.

 

“Administrative Agent” means Natixis, in its capacity as administrative agent
for the Lenders hereunder, and its successors in such capacity.

 

“Administrative Agent Fee” means the fee payable to the Administrative Agent in
arrears on each Quarterly Payment Date, equal to $10,000 per Quarterly Payment
Date; provided that the Administrative Agent Fee will be payable from time to
time only if there is more than one Lender.

 

“Administrative Expenses” means, without duplication, fees, expenses (including
indemnities) and other amounts due or accrued with respect to any Quarterly
Payment Date (including, with respect to any Quarterly Payment Date, any such
amounts that were due and not paid on any prior Quarterly Payment Date) and
payable in the following order by the Borrower to:

 

(a)        first, to the Collateral Agent in respect of the Collateral Agent Fee
and any fees owed to the Custodian and Wells Fargo as Securities Intermediary
(if any), and for the reimbursement of other reasonable and documented
Administrative Expenses and disbursements incurred and payable hereunder by the
Collateral Agent, the Custodian and Wells Fargo, as Securities Intermediary
under any Loan Documents, in accordance with the provisions of this Agreement;

 

(b)        second, to the Administrative Agent in respect of the Administrative
Agent Fee and for the reimbursement of reasonable and documented expenses and
disbursements incurred and payable hereunder by the Administrative Agent or the
Lenders in accordance with the provisions of this Agreement;

 

(c)        third, on a pro rata basis, the following amounts (excluding
indemnities) to the following parties:

 

(i)         the Borrower and the Collateral Manager for the reimbursement of
reasonable and documented expenses and disbursements incurred by the Borrower
and the Collateral Manager in accordance with the provisions of this Agreement
and the Collateral Management Agreement, including appraisal fees and other
out-of-pocket expenses incurred in connection with the Collateral Loans and
payable to third parties and including any amounts payable by the Borrower and
the Collateral Manager in connection with any advances made to protect or
preserve rights against an Obligor or to indemnify an agent or representative
for lenders pursuant to any Related Contracts (but excluding Collateral
Management Fees);

 

- 3 -

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(ii)        DBRS for fees and reasonable and documented expenses in connection
with any rating of the Loans or the Collateral Loans, including fees related to
the obtaining of credit estimates by DBRS and ongoing Rating Agency surveillance
fees;

 

(iii)       any other Person in respect of any governmental fee, charge or tax
incurred on behalf of the Borrower; and

 

(iv)       any other Person in respect of any other fees or expenses expressly
permitted under this Agreement and the documents delivered pursuant to or in
connection with this Agreement and the Loan Documents; and

 

(d)        fourth, on a pro rata basis, indemnities payable to any Person
permitted under this Agreement and the documents delivered pursuant to or in
connection with this Agreement and the Loan Documents not otherwise paid;

 

provided that Administrative Expenses shall not include (i) any amounts due or
accrued with respect to the actions taken on or in connection with the Closing
Date, (ii) any salaries of any employees of the Borrower (for the avoidance of
doubt, the Borrower does not pay any salaries) (but Administrative Expenses may
include any fees, reimbursements, indemnities, costs and expenses payable to the
directors and/or independent directors of the Borrower) or the Collateral
Manager or (iii) any Increased Costs; provided further that amounts due in
respect of actions taken on or before the Closing Date or in connection with the
closing of the transactions contemplated by this Agreement shall not be payable
as Administrative Expenses but shall be payable only from the Closing Expense
Account pursuant to Section 8.3(e) or as otherwise agreed by the parties hereto.

 

“Administrative Officer” means, (i) when used with respect to the Collateral
Agent (or Wells Fargo in each of its capacities under the Loan Documents), any
vice president, assistant vice president, treasurer, assistant treasurer, trust
officer, associate or any other officer of the Collateral Agent who shall have
direct responsibility for the administration of this Agreement or to whom any
corporate trust matter is referred within the Corporate Trust Office because of
his or her knowledge of and familiarity with the particular subject and
(ii) when used with respect to the Administrative Agent, any officer within the
office of the Administrative Agent at the address listed on the signature
pages hereto, including any vice president, assistant vice president, officer of
the Administrative Agent customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at such location because of
his or her knowledge of and familiarity with the particular subject.

 

“Administrative Questionnaire” means, with respect to each Lender, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Lender.

 

“Affiliate” or “Affiliated” means, with respect to any Person, (a) any other
Person who, directly or indirectly, is in control of, or controlled by, or is
under common control with, such Person or (b) any other Person who is a
director, officer or employee of (i) such Person, (ii) any subsidiary or parent
company of such Person or (iii) any Person described in clause (a) above.

 

“Agents” means the Administrative Agent, the Collateral Agent and Wells Fargo,
in its capacities of Custodian and Securities Intermediary under the Loan
Documents, and “Agent” means any of them.

 

- 4 -

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

 

“Aggregate Participation Exposure” means, at any time, the Maximum Principal
Balance of all Collateral Loans that are in the form of Participation Interests
owned by the Borrower at such time.

 

“Aggregate Participation Percentage” means, for any Selling Institution at any
time, the percentage of Total Capitalization represented by the Aggregate
Participation Exposure at such time for such Selling Institution.

 

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

 

“Agreement” means this Credit Agreement, including all amendments, modifications
and supplements and any exhibits or schedules to any of the foregoing, and shall
refer to the Agreement as the same may be in effect at the time such reference
becomes operative.

 

“Alternate Base Rate” means, for any day, a fluctuating rate of interest per
annum equal to the highest of:

 

(a)        the Prime Rate in effect on such day;

 

(b)        the Federal Funds Rate in effect on such day plus ½ of 1% per annum;
and

 

(c)        LIBOR.

 

Any change in the Alternate Base Rate due to a change in the Prime Rate, the
Federal Funds Rate or LIBOR shall be effective from and including the effective
day of such change in the Prime Rate, the Federal Funds Rate or LIBOR,
respectively.

 

The Alternate Base Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer of any Agent or any
Lender.  Interest calculated pursuant to clause (a) above will be determined
based on a year of 365 days or 366 days, as applicable, and actual days
elapsed.  Interest calculated pursuant to clauses (b) and (c) above will be
determined based on a year of 360 days and actual days elapsed.

 

“Applicable Counterparty Criteria” means, with respect to any Participation
Interest acquired or committed to be acquired by the Borrower, criteria that
will be met if immediately after giving effect to such acquisition, (a) the
percentage of Total Capitalization that consists in the aggregate of
Participation Interests with Selling Institutions that have the same or a lower
DBRS Long Term Rating does not exceed the “Aggregate Percentage Limit” set forth
below for such DBRS Long Term Rating and (b) the percentage of Total
Capitalization that consists in the aggregate of Participation Interests with
any single Selling Institution that has the DBRS Long Term Rating set forth
below or a lower credit rating does not exceed the “Individual Percentage Limit”
set forth below for such DBRS Long Term Rating:

 

- 5 -

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DBRS Long Term Rating of
Selling Institution (at or
below)

 

Aggregate Percentage
Limit

 

Individual
Percentage Limit

AAA

 

20%

 

20%

AA (high)

 

20%

 

20%

AA

 

20%

 

20%

AA (low)

 

20%

 

15%

A (high)

 

10%

 

5%

A

 

7.5%

 

5%

 

“Applicable Lending Office” means, with respect to any Lender, the office or
offices designated as its “Lending Office” opposite its name in the signature
pages hereto or such other office of such Lender as such Lender may from time to
time specify in writing to the Borrower and the Administrative Agent.

 

“Applicable Margin” means, in respect of any Loans, (a) if a CP Conduit is a
Lender with respect to such Loans, 2.25% per annum, (b) in the case of Natixis,
as the initial Lender hereunder, 2.40% per annum and (c) if any other Person is
a Lender with respect to such Loans, 2.75% per annum.

 

“Applicable Rate” means, with respect to each Loan, (i) if a CP Conduit is a
Lender with respect to such Loan, the sum of (x) the Cost of Funds Rate for such
Loan plus (y) the Applicable Margin and (ii) if any other Person is a Lender
with respect to such Loan, the sum of (x) the Adjusted London Interbank Offered
Rate applicable to the relevant Interest Period plus (y) the Applicable Margin
(provided in the case of this clause (ii) that, in the case of any Interest
Period on or after the first day on which a Lender shall have notified the
Administrative Agent pursuant to Section 11.1 that the Adjusted London Interbank
Offered Rate will not adequately and fairly reflect the cost to such Lender of
funding its Loans for such Interest Period or shall have notified the
Administrative Agent pursuant to Section 11.2 that it is not permitted to fund
Loans at the Adjusted London Interbank Offered Rate (and such Lender shall not
have subsequently notified the Administrative Agent that the circumstances
giving rise to such situation no longer exist), the Applicable Rate shall be a
rate per annum equal to the sum of (1) the Alternate Base Rate in effect on each
day of such Interest Period plus (2) the Applicable Margin for such Loans minus
(3) 1.00%).

 

“Applicable Row Level” means the column of that name as set forth in the
Collateral Quality Matrix.

 

“Appraisal” means, with respect to any Collateral Loan, an appraisal of either
(A) such Collateral Loan or (B) the assets securing such Collateral Loan, in
each case, that is conducted by an Approved Appraisal Firm on the basis of the
fair market value of such Collateral Loan or such assets (that is, the price
that would be paid by a willing buyer to a willing seller of such Collateral
Loan or such assets in an expedited sale on an arm’s-length basis).  Any
Appraisal required hereunder (i) may be in the form of an update or
reaffirmation by an Approved Appraisal Firm of an Appraisal previously performed
by an Approved Appraisal Firm and (ii) shall be provided within five Business
Days following completion to the Collateral Agent for purposes of the Collateral
Report.

 

“Appraised Value” means, with respect to any Collateral Loan, the value
(determined in Dollars, and which, if Appraisals for both of the following are
available, the greater) of either (A) such Collateral Loan or (B) the assets
securing such Collateral Loan, net of estimated costs of their liquidation as
determined by the applicable Approved Appraisal Firm, in each case as set forth
in the related Appraisal or, if a range of values is set forth therein, the
midpoint of such values.  If the Borrower owns less than 100% of the total
lenders’ interests secured by the assets securing any Collateral Loan or has

 

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sold Participation Interests in such Collateral Loan, then the Appraised Value
with respect to such Collateral Loan will be reduced to reflect the
proportionate interests of all other lenders or participants secured by such
assets (taking into account the relative seniority of all such lenders and
participants) that rank pari passu with or senior to (including with respect to
liquidation) the Borrower’s interest under the Collateral Loan.

 

“Approved Appraisal Firm” means those entities whose names are set forth on
Schedule A, as it may be amended from time to time in accordance with
Section 5.32(b), provided that (a) any such entity shall be an independent
appraisal firm (i) recognized as being experienced in conducting valuations of
loans of the type constituting Collateral Loans and (ii) that the Borrower or
the Collateral Manager determines, in accordance with the Servicing Standard, is
qualified with respect to each Collateral Loan, (b) at no time may the Borrower,
the Collateral Manager or any Affiliate thereof be an Approved Appraisal Firm
and (c) any amendment to Schedule A will be not effective without the
satisfaction of the Rating Condition.

 

“Approved Indices” has the meaning assigned to such term in the definition of
Eligible Loan Index.

 

“Approved Lender” means (a) with respect to any Lender that is not a CP Conduit,
a financial institution (including a securities broker-dealer or Affiliate
thereof) or other institutional lender with a DBRS Short Term Rating of at least
“R-1 (middle)” (or an entity whose obligations hereunder are absolutely and
unconditionally guaranteed by an entity that has a DBRS Short Term rating of at
least “R-1 (middle)”) and (b) any CP Conduit whose Commercial Paper Notes are
rated at least “A-1”, “P-1” or the equivalent rating by a Conduit Rating Agency;
provided in each case that any Lender (including a CP Lender) that has fully
funded the Lender Collateral Account in accordance with the provisions set forth
in Sections 8.3(d) and 11.5(b)(i) shall be an Approved Lender notwithstanding
that its (or any such parent guarantor’s or its Commercial Paper Notes’) ratings
are below such levels; provided further that after the Commitment Period, all
Lenders shall be Approved Lenders.

 

“Article 122a” means Article 122a of the European Union Directive 2006/48/EC (as
amended from time to time and as implemented by the member states of the
European Union) together with any guidelines and technical standards published
in relation thereto by the EBA; provided that any reference to Article 122a
shall be deemed to include any successor or replacement provisions included in
any European Union directive or regulation subsequent to the European Union
directives 2006/48/EC or 2006/49/EC and including, in particular, any successor
or replacement provisions set out in the CRR.

 

“Article 122a Lender” means a Lender that is subject to regulation under
Article 122a as the same may apply from time to time or party to liquidity or
credit support arrangements provided by a financial institution that is subject
to regulation under Article 122a as the same may apply from time to time.

 

“Assignee” has the meaning set forth in Section 12.6(c)(i).

 

“Assignment and Assumption” means an Assignment and Assumption Agreement in
substantially the form of Exhibit C hereto, entered into by a Lender, an
assignee, the Borrower (if applicable) and the Administrative Agent (if
applicable).

 

“Assumed Reinvestment Rate” means, at any time, LIBOR minus 1.00% per annum;
provided that the Assumed Reinvestment Rate shall not be less than 0.00%.

 

“Authorized Officer” means:

 

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(a)        with respect to each of the Borrower and the Collateral Manager,
those of its respective officers and agents whose signatures and incumbency
shall have been certified to the Agents on the Closing Date pursuant to the
documents delivered pursuant to Section 3.1 or thereafter from time to time in
substantially similar form; and

 

(b)        with respect to either Agent or any other bank or trust company
acting as trustee of an express trust or as custodian, an Administrative Officer
thereof.

 

Each party may receive and accept a certification of the authority of any other
party as conclusive evidence of the authority of any person to act, and such
certification may be considered as in full force and effect until receipt by
such other party of written notice to the contrary.

 

“Bankruptcy Code” means Title 11 of the United States Code, entitled
“Bankruptcy”, as amended from time to time, and any successor statute or
statutes.

 

“Base Rate Loans” means Loans accruing interest at an Applicable Rate based upon
the Alternate Base Rate.

 

“BDC” means FS Energy and Power Fund, a Delaware statutory trust.

 

“Borrower” means Energy Funding LLC, a limited liability company organized under
the law of the State of Delaware.

 

“Borrower Affiliated Lender” means any Lender that is (or has granted a
participation (but only to the extent of such participation) to or for the
benefit of) the Borrower, the Collateral Manager or an Affiliate of the Borrower
or the Collateral Manager.

 

“Borrower Order” mean a written order or request dated and signed in the name of
the Borrower by an Authorized Officer of the Borrower.

 

“Borrowing” has the meaning assigned to such term in Section 2.1.

 

“Borrowing Date” means the date of a Borrowing.

 

“Bridge Loan” means any loan or other obligation that (a) is unsecured and
incurred in connection with a merger, acquisition, consolidation or sale of all
or substantially all of the assets of a person or similar transaction and (b) by
its terms, is required to be repaid within one year of the incurrence thereof
with proceeds from additional borrowings or other refinancings (it being
understood that any such loan or debt security that has a nominal maturity date
of one year or less from the incurrence thereof but has a term-out or other
provision whereby (automatically or at the sole option of the Obligor thereof)
the maturity of the indebtedness thereunder may be extended to a later date is
not a Bridge Loan).

 

“Business Day” means any day except a Saturday, Sunday or a day on which
commercial banks in London, England, New York, New York or in the city in which
the Corporate Trust Office of the Collateral Agent is located (initially being
Columbia, Maryland) are authorized or required by law to close; provided that,
if the location of the Corporate Trust Office of the Collateral Agent changes at
any time, the Collateral Agent shall provide prompt written notice of such
change to the Borrower, the Administrative Agent and the Lenders.

 

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“Calculation Date” means the 10th day of each month in which a Quarterly Payment
Date occurs, commencing in November 2013 and the last Calculation Date occurring
on the date that is ten days prior to the Stated Maturity; provided that, if any
such date is not a Business Day, such Calculation Date shall be the next
succeeding Business Day.

 

“Cash” means such coin or currency of the United States of America as at the
time shall be legal tender for payment of all public and private debts.

 

“CFTC” means the Commodity Futures Trading Commission.

 

“Closing Date” means July 11, 2013.

 

“Closing Expense Account” means the trust account established pursuant to
Section 8.3(e).

 

“Code” means the Internal Revenue Code of 1986, as amended, or any successor
statute.

 

“Collateral” means the Pledged Collateral and all other property and/or rights
on or in which a Lien is or is to be granted to the Collateral Agent for the
benefit of the Secured Parties pursuant to this Agreement, any of the Loan
Documents or any other instruments provided for herein or therein or delivered
or to be delivered hereunder or thereunder or in connection herewith or
therewith.

 

“Collateral Agent” means Wells Fargo in its capacity as collateral agent under
this Agreement, and its successors in such capacity.

 

“Collateral Agent Fee” means the fee payable to the Collateral Agent in arrears
on each Quarterly Payment Date in an amount specified in the Fee Letter, dated
as of June 4, 2013, between the Borrower and the Collateral Agent.

 

“Collateral Loan” means a Senior Secured Loan, a Second Lien Loan or a Senior
Secured Bond (in each case whether originated by or assigned to the Borrower) or
a Participation Interest in any Senior Secured Loan or Second Lien Loan that as
of the date of acquisition or origination by the Borrower meets each of the
following criteria:

 

(a)        except to the extent that the acquisition of Collateral Loans from
third parties is permitted in accordance with Article 122a (including any
prospective requirements set out in the CRR), is acquired from (i) the Retention
Provider or (ii) if the date of acquisition by the Borrower is on or after
January 1, 2014, another entity that enters into, in relation to the proportion
of Collateral Loans for which such entity is the seller, an agreement
substantially in the form of the Retention of Net Economic Interest Letter and
addressed to the Borrower, the Administrative Agent and each Article 122a
Lender;

 

(b)        provides the Borrower with a valid, perfected security interest in
the collateral granted under the related Underlying Instruments and/or Related
Contracts at the level of priority indicated in the related Underlying
Instruments; constitutes the legal and enforceable obligation of the applicable
Obligor (except as enforceability may be limited by applicable insolvency,
bankruptcy or other laws affecting creditors rights generally, or general
principles of equity, whether such enforceability is considered in a proceeding
in equity or at law); is owned by the Borrower free and clear of adverse claims
(other than Permitted Liens); may be pledged and assigned freely by the Borrower
in accordance with the terms of the related Underlying Instruments and/or
Related Contracts; with respect to which all steps required by Section 8.7 have

 

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been taken and in which the Collateral Agent holds a first-priority perfected
security interest for the benefit of the Secured Parties; and, at the time such
Collateral Loan was purchased or originated, was not subject to set-off or
defense (other than a discharge in the event of a subsequent bankruptcy) by the
related Obligor and, together with the documentation relating thereto, does not
contravene in any material respect any applicable law, rule or regulation;

 

(c)        is denominated and payable in Dollars (and is not convertible into,
or payable in, any other currency) and is governed by the law of a state of the
United States or, in the case of a Collateral Loan with a Canadian Obligor, the
law of a province of Canada;

 

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

 

(e)        is not a Defaulted Loan;

 

(f)        is not a Credit Risk Loan, a Bridge Loan, a Synthetic Security, a
Zero Coupon Loan or a Real Estate Loan;

 

(g)        is not a Structured Finance Obligation, a finance lease or chattel
paper;

 

(h)        is not subject to forfeiture of principal based on a material
non-credit related risk (such as the occurrence of a catastrophe), as reasonably
determined by the Borrower or the Collateral Manager in accordance with the
Servicing Standard;

 

(i)         (x) is not an equity security or a component of an equity security;
and (y) is not exchangeable or convertible into equity at the option of the
Obligor; provided that, notwithstanding the foregoing, a Unit may be a
Collateral Loan if the relevant conversion or exchange right with respect to the
equity component thereof has a value that is less than 5.0% of the purchase
price of such Collateral Loan as determined by the Collateral Manager in its
discretion;

 

(j)         [reserved];

 

(k)        is not the subject of an Offer or called for redemption (except for
any repayment under a Revolving Collateral Loan of amounts that may be
reborrowed thereunder pursuant to the applicable Underlying Instrument);

 

(l)         does not constitute Margin Stock;

 

(m)       does not subject the Borrower to withholding tax unless the relevant
Obligor is required to make “gross-up” payments or pay “additional amounts” in
respect of, or otherwise compensate the Borrower for, the full amount of such
withholding tax for any reason (including in the event of a change of law);

 

(n)        (i) provides for the full principal balance to be payable at or prior
to its maturity and (ii) has a maturity date falling no later than the Stated
Maturity of the Loans;

 

(o)        if such Collateral Loan is a Participation Interest, then such
Participation Interest is acquired from (i) a Selling Institution incorporated
or organized under the laws of the United States (or any state thereof) or any
U.S. branch of a Selling Institution incorporated or organized outside the
United States or (ii) with respect to a Collateral Loan with a Canadian Obligor,
a

 

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Selling Institution organized or incorporated in Canada (or any province
thereof), in each case to the extent such Selling Institution satisfies the
Applicable Counterparty Criteria;

 

(p)        provides for payment of interest at least semi-annually;

 

(q)        pays interest in cash of at least LIBOR (for any relevant funding
period) plus 2.00% per annum (or a rate equivalent thereto);

 

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

 

(s)        will not cause the Borrower or the pool of assets to be required to
be registered as an investment company under the Investment Company Act;

 

(t)         has a DBRS Long Term Rating or a DBRS Risk Score;

 

(u)        is not (i) a Subordinated Loan, (ii) a mezzanine loan or debt
security or (iii) an unsecured loan or debt security;

 

(v)        the acquisition price (exclusive of the portion thereof attributable
to accrued interest) paid by the Borrower therefor is not less than 75% of the
Principal Balance thereof; and

 

(w)       is not an obligation of an Obligor Affiliated with the BDC.

 

“Collateral Management Agreement” means the Collateral Management Agreement
dated as of July 11, 2013 between the Borrower and the Collateral Manager, as
amended from time to time in accordance with the terms hereof and thereof.

 

“Collateral Management Fees” means, collectively, the Senior Management Fees and
the Subordinated Management Fees.

 

“Collateral Manager” means FS Energy and Power Fund, a Delaware statutory trust,
or any successor in such capacity in accordance with the Collateral Management
Agreement.

 

“Collateral Quality Matrix” means the table set forth below.  On or prior to the
Closing Date, the Collateral Manager shall specify to the Agents (with a copy to
DBRS and the Lenders) the Applicable Row Level to be in effect initially. 
Thereafter, upon not less than ten Business Days’ prior written notice to the
Agents (with a copy to DBRS and the Lenders), the Borrower or the Collateral
Manager may specify a different Applicable Row Level than the one in use at that
time; provided that the Borrower demonstrates compliance with all columns in the
table below for the proposed Applicable Row Level.

 

Applicable
Row
Level

Minimum Diversity
Score Test Level

Row OC Level

Row Equity
Distribution
OC Level

1

< 5

237.50%

250.00%

2

>=5 and <10

211.11%

222.22%

3

>= 10

190.00%

200.00%

 

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“Collateral Quality Test” means a test that is satisfied if, as of any date of
determination, in the aggregate, the Collateral Loans owned (or in relation to a
proposed purchase of a Collateral Loan, both owned and proposed to be owned) by
the Borrower satisfy each of the tests set forth below, calculated in each case
in accordance with Section 1.3:

 

(a)        the Minimum Weighted Average Spread Test;

 

(b)        the Minimum Weighted Average Coupon Test;

 

(c)        the Maximum Weighted Average Life Test;

 

(d)        the Minimum Diversity Score Test; and

 

(e)        the Maximum DBRS Risk Score Test.

 

“Collateral Report” has the meaning set forth in Section 5.1(h).

 

“Collateral Report Determination Date” means the 10th day of each calendar
month; provided that, if any such date is not a Business Day, such Collateral
Report Determination Date shall be the next succeeding Business Day.

 

“Collection Account” means the trust account established pursuant to
Section 8.2(a).

 

“Collections” means, with respect to any Collateral, all principal payments,
interest payments, fees and other payments received by the Borrower with respect
thereto and all other amounts paid with respect to such Collateral, including
dividends of any type, distributions with respect thereto and any proceeds of
collateral for, or any guaranty of, such Collateral or the relevant Obligor’s
obligation to make payments with respect thereto.

 

“Commercial Paper Funding” means, with respect to any Loan funded by a CP
Lender, at any time, the funding by a CP Lender of all or a portion of the
outstanding principal amount of such Loan with funds provided by the issuance of
Commercial Paper Notes.

 

“Commercial Paper Funding Period” means, with respect to any Loan funded by a CP
Conduit, a period of time during which all or a portion of the outstanding
principal amount of such Loan is funded by a Commercial Paper Funding.

 

“Commercial Paper Notes” means commercial paper notes or secured liquidity notes
issued by a CP Conduit or a conduit providing funding to a CP Conduit in the
commercial paper market from time to time.

 

“Commercial Paper Rate” means, with respect to any Commercial Paper Funding, a
rate per annum equal to the sum of (i) the rate or, if more than one rate, the
weighted average of the rates, determined if necessary by converting to an
interest-bearing equivalent rate per annum (based on a year of 360 days and
actual days elapsed) the discount rate (or rates) at which Commercial Paper
Notes are sold by any placement agent or commercial paper dealer of a commercial
paper conduit providing funding to a CP Conduit, plus (ii) if not included in
the calculations in clause (i), the commissions and charges charged by such
placement agent or commercial paper dealer with respect to such Commercial Paper
Notes, incremental carrying costs incurred with respect to such Commercial Paper
Notes maturing on dates other than those on which corresponding funds are
received by such CP Conduit, other borrowings by such CP Conduit and any other
costs (such as interest rate or currency swaps) associated with the issuance of

 

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Commercial Paper Notes that are allocated, in whole or in part, by such CP
Conduit or its Program Manager or Funding Agent to fund or maintain such portion
of the applicable Loan (and which may be also allocated in part to the funding
of other assets of such CP Conduit) and discount on Commercial Paper Notes
issued to fund the discount on maturing Commercial Paper Notes, in all cases
expressed as a percentage of the face amount thereof and converted to an
interest-bearing equivalent rate per annum (based on a year of 360 days and
actual days elapsed).

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans to the Borrower in the amount set forth opposite such Lender’s
name on the signature pages hereto (or pursuant to an Assignment and
Assumption), as such amount may be terminated, reduced or increased (including
pursuant to Sections 2.7 and 2.11) from time to time in accordance with the
terms of this Agreement.

 

“Commitment Fee” has the meaning set forth in Section 2.6(a).

 

“Commitment Period” means the period commencing on the Closing Date and ending
on the earliest of:

 

(a)        the time at which the Commitments are terminated or reduced to zero
as provided in this Agreement (whether pursuant to Article II, Article VI or
otherwise); and

 

(b)        the last day of the Reinvestment Period;

 

provided that the Commitment Period shall not end unless and until, if
necessary, the Future Funding Reserve Borrowing has occurred.

 

“Commitment Shortfall” means the amount by which:

 

(a)        the aggregate Unfunded Amount exceeds

 

(b)        the sum of (i) the Total Commitment minus the aggregate principal
amount of the Loans outstanding at such time plus (ii) amounts on deposit in the
Collection Account, including Eligible Investments credited thereto,
representing Principal Proceeds, plus (iii) amounts on deposit in the Future
Funding Reserve Account, including Eligible Investments credited thereto.

 

“Competitor” means (a) any Person primarily engaged in the business of private
investment management as a mezzanine fund, private debt fund, hedge fund or
private equity fund, which is in direct or indirect competition with the BDC,
the Investment Advisor or any Affiliate thereof that is an investment adviser,
(b) any Person controlled by, or controlling, or under common control with, a
Person referred to in clause (a) above, or (c) any Person for which a Person
referred to in clause (a) above serves as an investment adviser with
discretionary investment authority; provided that in no event will an Eligible
Assignee be a “Competitor”.

 

“Concentration Limitations” means limitations that are satisfied if, as of any
date of determination, in the aggregate, the Maximum Principal Balance of the
Collateral Loans owned (or, in relation to a proposed purchase or origination of
a Collateral Loan, proposed to be owned) by the Borrower comply with all of the
requirements set forth below, calculated as a percentage of Total Capitalization
(unless otherwise specified) and in each case in accordance with the procedures
set forth in Section 1.3:

 

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(a)        not more than 15.0% consist of Collateral Loans with Obligors
domiciled in Canada (or any province thereof);

 

(b)        not more than 25.0% consist of Collateral Loans that are not Senior
Secured Loans;

 

(c)        not more than 15.0% consist of Collateral Loans that are Senior
Secured Bonds;

 

(d)        not more than 25.0% consist of Collateral Loans that are Second Lien
Loans and not more than 12.5% consist of Collateral Loans that are Second Lien
Loans in the same DBRS Industry Classification;

 

(e)        not more than 20.0% consist of Fixed Rate Obligations;

 

(f)        not more than 40.0% consist of Cov-Lite Loans;

 

(g)        not more than 10.0% consist of DIP Loans;

 

(h)        not more than 5.0% consist of Current Pay Obligations;

 

(i)         not more than 5.0% consist of obligations of any one Obligor (and
Affiliates thereof), provided that up to three Obligors (and their respective
Affiliates) may each constitute up to 8.0%, and one Obligor (and Affiliates
thereof) may constitute up to 10.0%;

 

(j)         not more than 20.0% consist of Collateral Loans that permit the
payment of interest to be made less frequently than quarterly (“Semi-Annual
Payment Loans”); provided that no more than 15.0% consist of Semi-Annual Payment
Loans that pay scheduled interest during the same Due Period;

 

(k)        not more than 10.0% consist of Revolving Collateral Loans and Delayed
Funding Loans;

 

(l)         not more than 8.0% consist of Collateral Loans with Obligors in any
one DBRS Industry Classification; provided that (i) Oil & gas may represent up
to 50.0%, (ii) Utilities may represent up to 30.0% and (iii) Industrial
equipment may represent up to 10.0%;

 

(m)       the Aggregate Participation Exposure is not more than 20.0%; provided
that (i) no more than 10.0% shall consist of Participation Interests of which
the BDC is the Selling Institution and (ii) such Participation Interests
referred to in clause (i) shall be assigned to the Borrower from the BDC within
90 days after the sale of such Participation Interest;

 

(n)        not more than 10.0% consist of Collateral Loans (i) that (x) have a
DBRS Rating of “B (low)” or lower or (y) are in the process of receiving a
credit estimate from DBRS and (ii) whose Obligors have a trailing twelve month
EBITDA of less than $12,500,000 at the time of acquisition; and

 

(o)        not more than 10.0% consist of PIK Loans; provided that each PIK Loan
must pay interest in cash of at least LIBOR plus 2.00% per annum (or a rate
equivalent thereto).

 

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“Conduit Assignee” means any multi-seller commercial paper conduit or special
purpose entity funded by a multi-seller commercial paper conduit which is, in
either case, administered by a common manager or an Affiliate of a CP Conduit,
or the collateral trustee of such entity.

 

“Conduit Rating Agency” means each nationally recognized investment rating
agency that is then rating the Commercial Paper Notes of any CP Conduit.

 

“Conduit Support Provider” means, without duplication, (i) a provider of a
Credit Facility or Liquidity Facility to or for the benefit of any CP Conduit,
and any guarantor of such provider or (ii) an entity that issues commercial
paper or other debt obligations, the proceeds of which are used (directly or
indirectly) to fund the obligations of any CP Conduit.

 

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

 

“Contingent Obligation” means, as to any Person, without duplication, (i) any
contingent obligation of such Person required to be shown on such Person’s
balance sheet in accordance with GAAP, and (ii) any obligation required to be
disclosed in the footnotes to such Person’s financial statements in accordance
with GAAP, guaranteeing partially or in whole any non-recourse Indebtedness,
lease, dividend or other obligation, exclusive of contractual indemnities
(including, without limitation, any indemnity or price-adjustment provision
relating to the purchase or sale of securities or other assets) and guarantees
of non-monetary obligations (other than guarantees of completion) which have not
yet been called on or quantified, of such Person or of any other Person.  The
amount of any Contingent Obligation described in clause (ii) shall be deemed to
be (a) with respect to a guaranty of interest or interest and principal, or
operating income guaranty, the sum of all payments required to be made
thereunder (which in the case of an operating income guaranty shall be deemed to
be equal to the debt service for the note secured thereby), calculated at the
applicable interest rate, through (i) in the case of an interest or interest and
principal guaranty, the stated date of maturity of the obligation (and
commencing on the date interest could first be payable thereunder), or (ii) in
the case of an operating income guaranty, the date through which such guaranty
will remain in effect, and (b) with respect to all guarantees not covered by the
preceding clause (a), an amount equal to the stated or determinable amount of
the primary obligation in respect of which such guaranty is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as recorded on
the balance sheet and on the footnotes to the most recent financial statements
of the Borrower required to be delivered pursuant to Section 5.1 hereof. 
Notwithstanding anything contained herein to the contrary, guarantees of
completion shall not be deemed to be Contingent Obligations unless and until a
claim for payment or performance has been made thereunder by the person entitled
to performance or payment thereunder, at which time any such guaranty of
completion shall be deemed to be a Contingent Obligation in an amount equal to
any such claim.  Subject to the preceding sentence, (i) in the case of a joint
and several guaranty given by such Person and another Person (but only to the
extent such guaranty is directly or indirectly recourse to such Person), the
amount of the guaranty, to the extent it is directly or indirectly recourse to
such Person, shall be deemed to be 100% thereof unless and only to the extent
that such other Person has delivered Cash or cash equivalents to secure all or
any part of such Person’s guaranteed obligations and (ii) in the case of any
other guaranty, (whether or not joint and several) of an obligation otherwise
constituting Indebtedness of such Person, the amount of such guaranty shall be

 

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deemed to be only that amount in excess of the amount of the obligation
constituting Indebtedness of such Person.

 

“Corporate Trust Office” means the corporate trust office of the Collateral
Agent currently located at 9062 Old Annapolis Road, Columbia, Maryland 21045,
Attention: Corporate Trust Services – Energy Funding LLC, or such other address
as the Collateral Agent may designate from time to time by notice to the
Borrower, the Administrative Agent, and the Lenders or the principal corporate
trust office of any successor Collateral Agent.

 

“Cost of Funds Rate” means, with respect to any Loan funded by a CP Lender, the
weighted average of the Commercial Paper Rate, the Liquidity Funding Rate and
the Credit Funding Rate at any time and from time to time based upon the portion
of the outstanding principal amount of such Loan that is funded by Commercial
Paper Funding, Liquidity Funding or Credit Funding for one or more Commercial
Paper Funding Periods, Liquidity Funding Periods or Credit Funding Periods,
respectively; provided that in no event shall the Cost of Funds Rate for any
period exceed the Cost of Funds Rate Cap for such period.  For purposes of this
definition and its use in this Agreement, the Commercial Paper Rate established
by a CP Lender shall be associated with the Commercial Paper Funding undertaken
by such CP Lender.

 

“Cost of Funds Rate Cap” means, for any Interest Period, the sum of (i) the
Adjusted London Interbank Offered Rate applicable to such Interest Period plus
(ii) 0.75% per annum; provided that, if, pursuant to Section 11.1(a), the
Administrative Agent is unable to obtain a quotation for the London Interbank
Offered Rate, the Cost of Funds Rate Cap shall mean the sum, for each day in any
Interest Period, of (i) the Alternate Base Rate applicable to such day minus
(ii) 0.25% per annum.

 

“Cov-Lite Loan” means a Collateral Loan the Related Contracts for which do not
require the borrower thereunder to comply with any Maintenance Covenant
(regardless of whether compliance with one or more Incurrence Covenants is
otherwise required by such Related Contracts); provided that, notwithstanding
the foregoing, a Collateral Loan shall be deemed not to be a Cov-Lite Loan if
the Related Contracts for such Collateral Loan contain a cross-default provision
to, or the Collateral Loan is pari passu with, another loan, debt obligation or
credit facility of the underlying Obligor that requires such Obligor to comply
with one or more Maintenance Covenants.

 

“Coverage Tests” means each of the Overcollateralization Ratio Test and Interest
Coverage Ratio Test.

 

“Covered Accounts” means, collectively, the Collection Account, the Custodial
Account, the Future Funding Reserve Account, the Payment Account, the Lender
Collateral Account, the Closing Expense Account and any subaccounts of each of
the foregoing.

 

“CP Conduit” means any limited-purpose entity established to use the direct or
indirect proceeds of the issuance of Commercial Paper Notes to finance financial
assets.

 

“CP Lender” means a CP Conduit that is a Lender, and that is identified to the
Borrower as a CP Conduit on its signature page to this Agreement, an Assignment
and Assumption or otherwise.

 

“Credit Estimate” means, with respect to any Collateral Loan, a credit estimate
obtained from DBRS in accordance with the procedures set forth in Section 5.38.

 

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“Credit Facility” means, with respect to any Loan by any CP Lender, a credit
asset purchase agreement or other similar facility that provides credit support
for defaults in respect of the failure to make such Loan, and any guaranty of
any such agreement or facility.

 

“Credit Funding” means, with respect to any Loan by any CP Lender, at any time,
funding by a CP Lender of all or a portion of the outstanding principal amount
of such Loan with funds provided under a Credit Facility.

 

“Credit Funding Period” means, with respect to any Loan by any CP Lender, a
period of time during which all or a portion of the outstanding principal amount
of such Loan is funded by a Credit Funding.

 

“Credit Funding Rate” means, with respect to any Credit Funding on any day, the
per annum rate of interest provided for in the relevant Credit Facility on such
day.

 

“Credit Improved Loan” means any Collateral Loan that, in the Collateral
Manager’s commercially reasonable business judgment applying the Servicing
Standard has significantly improved in credit quality from the condition of its
credit at the time of origination or purchase, which judgment may (but need not)
be based on one or more of the following facts:

 

(a)        the Obligor in respect of such Collateral Loan has shown improved
financial results since the published financial reports first produced after it
was originated or purchased by the Borrower;

 

(b)        the Obligor in respect of such Collateral Loan since the date on
which such Collateral Loan was originated or purchased by the Borrower has
raised significant equity capital or has raised other capital that has improved
the liquidity or credit standing of such Obligor; or

 

(c)        with respect to which one or more of the following criteria applies: 
(i) such Collateral Loan has been upgraded or put on a watch list for possible
upgrade by DBRS since the date on which such Collateral Loan was originated or
purchased by the Borrower; (ii) the proceeds from a sale of such Collateral Loan
would be at least 101% of its purchase price; (iii) the price of such Collateral
Loan has changed during the period from the date on which it was originated or
purchased by the Borrower to the proposed sale date by a percentage either more
positive, or less negative, as the case may be, than the percentage change in
the average price of the applicable Eligible Loan Index plus 0.25% over the same
period; or (iv) the price of such Collateral Loan changed during the period from
the date on which it was originated or purchased by the Borrower to the date of
determination by a percentage either more positive, or less negative, as the
case may be, than the percentage change in a nationally recognized loan index
selected by the Borrower or the Collateral Manager over the same period plus
0.50%.

 

“Credit Risk Loan” means a Collateral Loan that is not a Defaulted Loan but
which has, in the Collateral Manager’s reasonable judgment applying the
Servicing Standard, a significant risk of declining in credit quality and, with
lapse of time, becoming a Defaulted Loan, and is designated as a “Credit Risk
Loan” by the Borrower or the Collateral Manager.

 

“CRR” means EU Regulation 575/2013 (on prudential requirements for credit
institutions and investment firms and amending Regulation (EU) 648/2012)
together with any draft or final guidelines and technical standards published in
relation thereto by the EBA.

 

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“Current Pay Obligation” means a Collateral Loan that would otherwise be a
Defaulted Loan as to which (i) all scheduled interest and principal payments due
(other than those due as a result of any bankruptcy, insolvency, receivership or
other analogous proceeding) were paid in Cash and the Borrower or the Collateral
Manager reasonably expects, and delivers to DBRS (if DBRS is then rating any
Loans) a certificate of an Authorized Officer certifying that it reasonably
expects, that the remaining scheduled interest and principal payments due will
be paid in cash, (ii) the DBRS Rating of such Collateral Loan is at least “CCC”
and is not on a watch list for possible downgrade, (iii) the Market Value (which
is not determined pursuant to clause (d) or (e) of the definition thereof) of
such Collateral Loan is at least 85% of par and (iv) if the Obligor of such
Collateral Loan is the subject of a bankruptcy, insolvency, receivership or
other analogous proceeding, the bankruptcy court or other authorized official
has authorized the payment of interest due and payable on such Collateral Loan;
provided that to the extent that more than 5% of Total Capitalization would
otherwise constitute Current Pay Obligations, one or more Collateral Loans
designated by the Borrower having a Principal Balance plus aggregate Exposure
Amounts at least equal to such excess shall be deemed not to constitute Current
Pay Obligations (and shall therefore constitute Defaulted Loans).

 

“Custodial Account” means a custodial account at the Custodian, established in
the name of the Collateral Agent pursuant to Section 8.4(a).

 

“Custodian” has the meaning set forth in Section 8.4(a).

 

“Daily Report” has the meaning set forth in Section 8.9(a).

 

“DBRS” means DBRS, Inc., together with its successors.

 

“DBRS Industry Classification” means each industry identified on Schedule B.

 

“DBRS Long Term Rating” means a long term credit rating determined in accordance
with the provisions set forth in Schedule E.

 

“DBRS Rating” means, as the context requires, a DBRS Long Term Rating or a DBRS
Short Term Rating.

 

“DBRS Recovery Rate” means (a) for any Senior Secured Loan, 48.00%; and (b) for
any Senior Secured Bond or Second Lien Loan, 30.00%.

 

“DBRS Risk Score” has the meaning set forth in Schedule C.

 

“DBRS Short Term Rating” means a short term credit rating determined in
accordance with the provisions set forth in Schedule E.

 

“Default” means any condition or event which constitutes an Event of Default or
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.

 

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

 

(a)        a default as to the payment of principal and/or interest has occurred
and is continuing with respect to such Collateral Loan (without regard to any
grace period applicable thereto, or waiver thereof, after the passage of five
Business Days in the case of interest or three Business Days in the case of
principal if the Borrower or the Collateral Manager certifies to the

 

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Collateral Agent in writing that such default is unrelated to credit-related
causes, but in no case beyond the passage of any grace period applicable
thereto);

 

(b)        the Borrower or the Collateral Manager has received written notice or
a Senior Authorized Officer of the Borrower or the Collateral Manager has actual
knowledge that a default as to the payment of principal and/or interest has
occurred and is continuing on another debt obligation of the same Obligor that
is senior or pari passu in right of payment to such Collateral Loan (in each
case, after passage of three Business Days, but in no case beyond the passage of
any grace period applicable thereto; provided that both the Collateral Loan and
such other debt obligation are full recourse obligations of the applicable
Obligor);

 

(c)        except in the case of a DIP Loan, the Obligor in respect of such
Collateral Loan has, or others have, instituted proceedings to have such Obligor
adjudicated as bankrupt or insolvent or placed into receivership and such
proceedings have not been stayed or dismissed, or such Obligor has filed for
protection under Chapter 11 of the Bankruptcy Code;

 

(d)        such Collateral Loan has a DBRS Long Term Rating of “D”, or had such
a rating immediately before such rating was withdrawn;

 

(e)        the Borrower or the Collateral Manager has received notice or a
Senior Authorized Officer of the Borrower or the Collateral Manager has actual
knowledge that another debt obligation of the same Obligor that is senior or
pari passu in right of payment to such Collateral Loan has a DBRS Long Term
Rating of “D”, or had such a rating immediately before such rating was
withdrawn;

 

(f)        a default with respect to which the Borrower or the Collateral
Manager has received written notice, or a Senior Authorized Officer of the
Borrower or the Collateral Manager has actual knowledge, that a default has
occurred under the Underlying Instruments and any applicable grace period has
expired and the holders of such Collateral Loan have accelerated the repayment
of the Collateral Loan (but only until such acceleration has been rescinded) in
the manner provided in the Underlying Instruments;

 

(g)        such Collateral Loan is a Participation Interest (until it is
elevated or converted to an assigned loan) with respect to which the related
Selling Institution has defaulted in any material respect in the performance of
any of its payment obligations under the Participation Interest;

 

(h)        such Collateral Loan is a Participation Interest (until it is
elevated or converted to an assigned loan) in a loan that would, if such loan
were a Collateral Loan, constitute a “Defaulted Loan” (other than under this
clause (h)) or with respect to which the Selling Institution has a DBRS Long
Term Rating of “D”, or had such a rating immediately before such rating was
withdrawn;

 

(i)         the Borrower or the Collateral Manager has in accordance with the
Servicing Standard otherwise declared such Collateral Loan to be a “Defaulted
Loan”; or

 

(j)         such Collateral Loan has been placed on non-accrual by the
Collateral Manager;

 

provided that Current Pay Obligations up to 5.0% of Total Capitalization shall
be deemed not to be Defaulted Loans.

 

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“Defaulting Lender” means a Lender that has at any time (i) failed to fund all
or any portion of its Loans when and as required hereunder (other than failures
to fund (a) solely as a result of a bona fide dispute as to whether the
conditions to borrowing were satisfied on the relevant Borrowing Date, but only
for such time as such Lender is continuing to engage in good faith discussions
regarding the determination or resolution of such dispute, and such Lender has
notified the Administrative Agent in writing of its intention not to fund and
has specifically identified such condition precedent to funding that was not
satisfied, or (b) solely as a result of a failure to disburse due to an
administrative error or omission by such Lender, and such failure is cured
within five Business Days after such Lender receives written notice or has
actual knowledge of such administrative error or omission) or (ii) has notified
the Borrower and the Administrative Agent in writing, or has made a public
statement to the effect, that it does not intend or expect to comply with any of
its funding obligations under this Agreement (unless such writing or public
statement indicates that such position is based on such Lender’s dispute as to
the satisfaction of any condition precedent pursuant to the foregoing clause
(a)) or generally under other agreements under which it shall have committed to
extend credit.

 

“Delayed Funding Loan” means a Collateral Loan pursuant to which one or more
future advances will be required to be made to the Obligor thereunder but which
does not permit any such advance that has been made to be reborrowed once repaid
by the Obligor; provided that such loan shall only be considered to be a Delayed
Funding Loan to the extent of the undrawn commitment and only for so long as any
future funding obligations remain in effect.

 

“DIP Loan” means any interest in a loan or financing facility with a DBRS Rating
(i) which is an obligation of a debtor-in-possession as described in
Section 1107 of the Bankruptcy Code or a trustee (if appointment of such trustee
has been ordered pursuant to Section 1104 of the Bankruptcy Code) (a “Debtor”)
organized under the laws of the United States or any State therein; (ii) which
is paying interest on a current basis; and (iii) the terms of which have been
approved by an order of the United States Bankruptcy Court, the United States
District Court, or any other court of competent jurisdiction, the enforceability
of which order is not subject to any pending contested matter or proceeding (as
such terms are defined in the Federal Rules of Bankruptcy Procedure) and which
order provides that (a) such DIP Loan is secured by liens on the Debtor’s
otherwise unencumbered assets pursuant to Section 364(c)(2) of the Bankruptcy
Code; (b) such DIP Loan is secured by liens of equal or senior priority on
property of the Debtor’s estate that is otherwise subject to a lien pursuant to
Section 364(d) of the Bankruptcy Code; (c) such DIP Loan is secured by junior
liens on the Debtor’s encumbered assets and such DIP Loan is fully secured based
upon a current valuation or appraisal report; or (d) if the DIP Loan or any
portion thereof is unsecured, the repayment of such DIP Loan retains priority
over all other administrative expenses pursuant to Section 364(c)(1) of the
Bankruptcy Code (provided, in the case of this clause (d), that notice has been
provided to DBRS prior to the acquisition of such loan).

 

“Discount Loan” means any Collateral Loan that is acquired by the Borrower for a
purchase price paid by the Borrower to the seller of such Collateral Loan of
less than 95% of the principal balance of such Collateral Loan; provided that
such Collateral Loan shall cease to be a Discount Loan at such time as the
Market Value of such Collateral Loan, as determined daily for any period of 30
consecutive days since the acquisition by the Borrower of such Collateral Loan,
equals or exceeds 95% of the principal balance of such Collateral Loan; and
provided further that Collateral Loans for which the purchase price paid by the
Borrower to the seller of such Collateral Loan was less than 95%, but at least
85%, of the principal balance of such Collateral Loan shall be deemed not to be
Discount Loans, except that at any time when the Maximum Principal Balance of
such Collateral Loans exceeds 12.5% of Total Capitalization, the excess portion
shall constitute Discount Loans.

 

“Distribution” means any payment of principal or interest or any dividend or
premium payment made on, or any other distribution in respect of, a Collateral
Loan or other security.

 

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“Diversity Score” means a single number that indicates collateral concentration
in terms of both issuer and industry concentration, calculated as set forth in
Schedule D hereto.

 

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

 

“Downgraded Lender” means a Lender that fails to be an Approved Lender in
accordance with the terms of such definition.

 

“Due Date” means each date on which a Distribution is due on a Collateral Loan.

 

“Due Period” means, with respect to any Quarterly Payment Date, the period
commencing on the last day of the immediately preceding Due Period (or, in the
case of the initial Due Period, the period commencing on the Closing Date) and
ending on (and including) the Calculation Date immediately preceding such
Quarterly Payment Date (or, in the case of the Due Period that is applicable to
the Quarterly Payment Date occurring on the Stated Maturity, ending on the day
preceding such Quarterly Payment Date).

 

“EBA” means the European Banking Authority and/or its predecessor, the Committee
of European Banking Supervisors, and any successor or replacement agency or
authority.

 

“EBITDA” means earnings before interest, taxes, depreciation and amortization
(determined, for any Collateral Loan, in the manner provided in the Related
Contracts).

 

“Eligibility Criteria” means, in connection with each acquisition or origination
of a debt obligation, each of the following:

 

(a)        the Collateral Quality Test is satisfied after giving effect to such
acquisition or origination (or, if not satisfied immediately prior to such
acquisition or origination, compliance with the Collateral Quality Test is
maintained or improved after giving effect to such acquisition or origination);

 

(b)        each Coverage Test is satisfied after giving effect to such
acquisition or origination;

 

(c)        there is no Commitment Shortfall after giving effect to such
acquisition or origination; and

 

(d)        each of the criteria in the definition of “Collateral Loan” is
satisfied with respect to such acquisition or origination of a debt obligation.

 

“Eligible Account Bank” means, with respect to any specified account, a
financial institution:

 

(a)        (x) that (i) if such account is a fully segregated trust account with
the trust department or corporate trust department of such financial
institution, has a DBRS Long Term Rating of at least “A”; or (ii) otherwise, has
a DBRS Long Term Rating of at least “AA” (provided that if such financial
institution ceases to have a DBRS Long Term Rating of at least “AA”, it is
replaced within 30 days by a financial institution with a DBRS Long Term Rating
of at least “AA”); and (y) that has a combined capital and surplus of at least
$200,000,000; or

 

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(b)        as to which the Rating Condition is satisfied and the Borrower and
the Majority Lenders have consented to such financial institution constituting
an “Eligible Account Bank” hereunder.

 

“Eligible Assignee” means any commercial bank, commercial finance company or
insurance company with, at the time of any proposed assignment to such entity,
(a) long-term senior unsecured credit ratings of at least “A-” by S&P and at
least “A3” by Moody’s or (b) short-term senior unsecured credit ratings of at
least “A-2” by S&P and at least “P-2” by Moody’s.

 

“Eligible Investment Required Ratings” means, in the case of each Eligible
Investment, a DBRS Short Term Rating of at least “R-1 (middle)” and, in the case
of any Eligible Investment with a maturity of longer than 90 days, a DBRS Long
Term Rating of at least “AA (low)”.

 

“Eligible Investments” means any investment denominated in Dollars that, at the
time it is delivered to the Collateral Agent (directly or through a financial
intermediary or bailee), is one or more of the following obligations or
securities:

 

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

 

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

 

(iii)       unleveraged repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or guaranteed by
an agency or instrumentality of the United States of America, in either case
entered into with a depositary institution or trust company (acting as
principal) described in clause (ii) above or entered into with a corporation
(acting as principal) with, or whose parent company has (in addition to a
guarantee agreement with such entity), the Eligible Investment Required Ratings;

 

(iv)       securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof that satisfies the Eligible Investment Required Ratings at the
time of such investment or contractual commitment providing for such investment;

 

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

 

(vi)       a Reinvestment Agreement issued by any bank (if treated as a deposit
by such bank), or a Reinvestment Agreement issued by any insurance company or
other corporation or entity, in each case with the Eligible Investment Required
Ratings; provided that (a) the Borrower

 

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has satisfied the Rating Condition and the Majority Lenders have consented
thereto or (b) such Reinvestment Agreement may be unwound at the option of the
Borrower without penalty;

 

(vii)      money market funds domiciled outside of the United States which funds
have, at all times, the highest Moody’s credit rating assignable at such time
and credit ratings of “AAA-mf” by Standard & Poor’s;

 

(viii)     any other investment similar to those described in clauses
(i) through (vii) above which (a) has the Eligible Investment Required Ratings
at the time of such investment and (b) has been approved by the Majority
Lenders; provided that the Rating Condition has been satisfied with respect to
any such investment;

 

and, in the case of (i) through (vi) and (viii) above, with a stated maturity
(after giving effect to any applicable grace period) no later than the Business
Day immediately preceding the Quarterly Payment Date next following the Interest
Period in which the date of investment occurs; provided that none of the
foregoing obligations or securities shall constitute Eligible Investments if
(a) such obligation or security has an “f”, “r”, “p”, “pi”, “q” or “t” subscript
assigned by Standard & Poor’s, (b) all, or substantially all, of the remaining
amounts payable thereunder consist of interest and not principal payments,
(c) such obligation or security is subject to any withholding tax unless the
issuer of the security is required to make “gross-up” payments or pay
“additional amounts” in respect of, or otherwise compensate the holder of such
security for, the full amount of such withholding tax for any reason (including
in the event of a change of law), (d) such obligation or security is secured by
real property, (e) such obligation or security is purchased at a price greater
than 100% of the principal or face amount thereof, (f) such obligation or
security is subject of a tender offer, voluntary redemption, exchange offer,
conversion or other similar action or (g) in the Borrower’s or the Collateral
Manager’s judgment, such obligation or security is subject to material
non-credit related risks.  Eligible Investments may include, without limitation,
those investments for which an Agent or an affiliate of an Agent provides
services.  Any investment, which otherwise qualifies as an Eligible Investment,
may (1) be made by the Collateral Agent or any of its Affiliates and (2) be made
in securities of any entity for which the Collateral Agent or any of its
Affiliates receives compensation or serves as offeror, distributor, investment
advisor or other service provider.

 

“Eligible Loan Index” means, with respect to each Collateral Loan, one of the
following indices as selected by the Borrower or the Collateral Manager upon the
origination or acquisition of such Collateral Loan:  the CSFB Leveraged Loan
Indices (formerly the DLJ Leveraged Loan Index Plus), the Deutsche Bank
Leveraged Loan Index, the Goldman Sachs/Loan Pricing Corporation Liquid
Leveraged Loan Index, the Banc of America Securities Leveraged Loan Index, the
S&P/LSTA Leveraged Loan Indices or any other nationally recognized loan index
subject to the consent of the Majority Lenders with written notice thereof to be
provided to DBRS (collectively, the “Approved Indices”); provided that the
Borrower or the Collateral Manager may change the index applicable to a
Collateral Loan to another of the Approved Indices at any time following the
origination or acquisition thereof after giving notice to the Administrative
Agent and the Collateral Agent.

 

“Engagement Letter” means the Letter Agreement, dated as of February 22, 2013,
between the BDC and Natixis North America LLC, as amended from time to time in
accordance with the terms thereof.

 

“Environmental Claim” means, with respect to any Person, any written notice,
claim, demand or similar communication by any other Person having jurisdiction
alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damage, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Hazardous Substances
at any location, whether or not owned by such

 

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Person or (ii) circumstances forming the basis of any violation, of any
applicable Environmental Law, in each case as to which there is a reasonable
likelihood of an adverse determination with respect thereto and which, if
adversely determined, would have a Material Adverse Effect.

 

“Environmental Laws” means any and all federal, state, local and foreign
statutes, laws, judicial decisions,  regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.

 

“Equity Distribution Test” means a test that will be satisfied if the
Overcollateralization Ratio as of the applicable Measurement Date is greater
than or equal to the Row Equity Distribution OC Level for the Applicable Row
Level in effect at such time in the Collateral Quality Matrix.

 

“Equity Kicker” means a warrant (or other “attached” Equity Security) that is
received with respect to a Collateral Loan or purchased as part of a “unit” with
a Collateral Loan (so long as such warrant or other Equity Security is not
Margin Stock and is not convertible or exchangeable into Margin Stock).  The
term “Equity Kicker” does not include any warrant that is detached or detachable
from the underlying Collateral Loan.

 

“Equity Security” means any equity security or any other security or loan that
is not eligible for purchase by the Borrower as a Collateral Loan and any
security purchased by the Borrower as part of a “unit” with a Collateral Loan
and which itself is not eligible for purchase by the Borrower as a Collateral
Loan.

 

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

 

“ERISA Group” means each controlled group of corporations or trades or
businesses (whether or not incorporated) under common control that is treated as
a single employer under Section 414(b), (c), (m) or (o) of the Code with the
Borrower.

 

“Eurodollar Rate Loans” means Loans accruing interest at an Applicable Rate
based upon the Adjusted London Interbank Offered Rate.

 

“Euro-Dollar Reserve Percentage” means, for any day, the percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
for a member bank of the Federal Reserve System in New York City in respect of
“Eurocurrency liabilities” (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Lender to United States
residents).  The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.

 

“Event of Default” has the meaning set forth in Section 6.1.

 

“Excess Concentration Loans” means, without duplication, any portion of the
Collateral Loans that falls outside of the Concentration Limitations.

 

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“Excess Reserve Amount” means, on any date, the excess (if any) of:

 

(a)        the amount standing to the credit of the Future Funding Reserve
Account on such date over

 

(b)        (i) the aggregate Unfunded Amount on such date minus (ii) if such
date is prior to the last day of the Reinvestment Period, the excess (if any) of
(x) the Total Commitment on such date over (y) the aggregate principal amount of
the Loans outstanding on such date.

 

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

 

“Exposure Amount” as of any date means, with respect to any Revolving Collateral
Loan or Delayed Funding Loan, the excess of (a) the Borrower’s maximum funding
commitment thereunder over (b) the Principal Balance of such Revolving
Collateral Loan or Delayed Funding Loan.  For the avoidance of doubt, Exposure
Amounts in respect of a Defaulted Loan shall be included in the calculation of
the Exposure Amount if the Borrower is at such time subject to contractual
funding obligations with respect to such Defaulted Loan.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any legislation, law, regulation
or practice enacted or promulgated pursuant to an intergovernmental agreement
entered into in connection with such Sections of the Code.

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the FRBNY on the Business Day next succeeding such day, provided that (i) if
such day is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the immediately preceding Business Day as so
published on the next succeeding Business Day, and (ii) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average (rounded upward, if necessary, to the next 1/100th of
1%) of the quotations for such day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.

 

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System as constituted from time to time.

 

“Fee Proceeds” means all amounts in the Collection Account representing upfront,
commitment, anniversary, annual, prepayment, redemption or any other fees of any
type received in respect of any Collateral Loan and any excess, with respect to
Participation Interests in Collateral Loans which have been sold by the Borrower
pursuant to Section 10.1(b), of the interest paid by the applicable Obligor in
respect of the portion of such Collateral Loan that is the subject of such
Participation Interest over the amount of interest required to be paid by the
Borrower to the purchaser of such Participation Interest pursuant to the
underlying participation agreement; provided that Fee Proceeds shall not include

 

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any reimbursement of expenses payable by the Borrower to third parties,
including legal fees, that may be received by the Borrower from any Obligor. 
Fee Proceeds shall in all cases constitute Interest Proceeds.

 

“Fitch” means Fitch Ratings, Inc., together with its successors.

 

“Fixed Rate Obligation” means any Collateral Loan that bears a fixed rate of
interest.

 

“Floating Rate Obligation” means any Collateral Loan that bears a floating rate
of interest.

 

“FRBNY” means the Federal Reserve Bank of New York.

 

“Funding Agent” means the bank or other financial institution acting as the
agent of a CP Lender under this Agreement pursuant to a Joinder Agreement, as
applicable.

 

“Future Funding Reserve Account” means the trust account established pursuant to
Section 8.3(b).

 

“Future Funding Reserve Borrowing” means a borrowing of a Future Funding Reserve
Loan hereunder.

 

“Future Funding Reserve Loan” has the meaning set forth in Section 2.1.

 

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

 

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

 

“Hazardous Substances” means any toxic, radioactive, caustic or otherwise
hazardous substance, identified as such as a matter of Environmental Law,
including petroleum, its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the foregoing
characteristics.

 

“Hedge Counterparty Rating Criteria” means, in respect of a counterparty or
entity guaranteeing the obligations of such counterparty, a DBRS Long Term
Rating of “A (high)” or higher; provided that if an Interest Hedge Counterparty
or guarantor ceases to meet the Hedge Counterparty Rating Criteria, within 30
Business Days after such failure to meet the Hedge Counterparty Rating Criteria,
such Interest Hedge Counterparty or guarantor must either (a) provide a
guarantee acceptable to DBRS from a guarantor rated “A (high)” or higher or
(b) assign its obligations under the Interest Hedge Agreement to a counterparty
that holds a rating of “A (high)” or higher.

 

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“Increased Commitment Date” means the date of the effectiveness of the Increased
Commitments pursuant to the terms of this Agreement.

 

“Increased Commitment Notice” has the meaning assigned to such term in
Section 2.11(a).

 

“Increased Commitments” has the meaning assigned to such term in
Section 2.11(a).

 

“Increased Costs” means any amounts due pursuant to Section 2.9 and/or
Article XI.

 

“Incurrence Covenant” means a covenant by any borrower to comply with one or
more financial covenants (including without limitation any covenant relating to
a borrowing base, asset valuation or similar asset-based requirement) only upon
the occurrence of certain actions of the borrower, including a debt issuance,
dividend payment, share purchase, merger, acquisition or divestiture.

 

“Indebtedness” of any Person means, without duplication, (a) as shown on such
Person’s balance sheet (i) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property and (ii) all indebtedness of such
Person evidenced by a note, bond, debenture or similar instrument (whether or
not disbursed in full), (b) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all unreimbursed amounts
drawn thereunder, (c) all Contingent Obligations of such Person, and (d) all
payment obligations of such Person under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps, floors, collars
and similar agreements) and currency swaps and similar agreements which were not
entered into specifically in connection with Indebtedness set forth in clauses
(a), (b) or (c) hereof.

 

“Indemnitee” has the meaning set forth in Section 12.3(b).

 

“Initial Borrowing Date” has the meaning assigned to such term in
Section 3.2(a).

 

“Initial Key Manager” means each of Donald (Dwight) Scott, Daniel Smith and
Douglas I. Ostrover.

 

“Initial Portfolio Conditions” means conditions that are satisfied as of any
date if the Borrower owns Collateral Loans that meet the following
requirements:  (a) there are at least five different Collateral Loans with at
least five different Obligors; (b) such Collateral Loans have an aggregate
Principal Collateralization Amount of at least $25,000,000; (c) such Collateral
Loans comprise at least two DBRS Industry Classifications; (d) no single
Collateral Loan has a Principal Collateralization Amount that is greater than
40% of the aggregate Principal Collateralization Amount of all of the Collateral
Loans that are owned by the Borrower on such date; (e) all such Collateral Loans
are either Senior Secured Loans or Senior Secured Bonds (provided that the
aggregate Principal Collateralization Amount of such Senior Secured Bonds is not
greater than 20% of the aggregate Principal Collateralization Amount of all of
the Collateral Loans that are owned by the Borrower on such date); and (f) the
Collateral Quality Test is satisfied.

 

“Initial Rating” means the rating given to the Loans by DBRS as of the Closing
Date.

 

“Interest Coverage Amount” means, at any time, the sum, without duplication, of
(a) the scheduled interest payments and scheduled fees due (in each case
regardless of whether the applicable payment date has yet occurred) on the
Collateral Loans (excluding Defaulted Loans to the extent set forth in the
definition of “Interest Proceeds”) for the then-current Due Period; (b) amounts
on deposit in the Collection Account, including Eligible Investments,
representing Interest Proceeds; (c) scheduled interest

 

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on Eligible Investments held in the Collection Account, in each case for the
then-current Due Period; and (d) all regularly scheduled amounts due and payable
to the Borrower under Interest Hedge Agreements during the then-current Due
Period.

 

“Interest Coverage Ratio” means, as of any Measurement Date, the ratio
(expressed as a percentage) obtained by dividing:

 

(a)        (i) the Interest Coverage Amount less (ii) all amounts payable on the
related Quarterly Payment Date pursuant to clauses (A) through (D) of
Section 9.1(a)(i) by

 

(b)        the sum of (i) all interest due on the Loans on the related Quarterly
Payment Date and (ii) the Commitment Fees due on the related Quarterly Payment
Date.

 

“Interest Coverage Ratio Test” means a test satisfied on any Measurement Date if
the Interest Coverage Ratio is greater than or equal to 200.0% on such date.

 

“Interest Hedge Agreement” means an interest rate protection agreement that may
be entered into between the Borrower and an Interest Hedge Counterparty after
the Closing Date, for the sole purpose of hedging interest rate risk between the
portfolio of Collateral Loans and the Loans, as amended from time to time in
accordance with the terms thereof, with respect to which the Rating Condition is
satisfied.

 

“Interest Hedge Counterparty” means a counterparty meeting, at the time of entry
by the Borrower into an Interest Hedge Agreement, the Hedge Counterparty Rating
Criteria (or, with respect to any counterparty not meeting such Hedge
Counterparty Rating Criteria at such time, any counterparty whose obligations in
respect of such Interest Hedge Agreement are absolutely and unconditionally
guaranteed by an Affiliate of such counterparty meeting such criteria at such
time), together with any permitted assignee or successor (which meets the Hedge
Counterparty Rating Criteria) under such Interest Hedge Agreement with respect
to which the Rating Condition is satisfied.

 

“Interest Period” means, with respect to each Borrowing, (a) the period from
(and including) the date of such Borrowing to but excluding the following
Quarterly Payment Date, and (b) each successive period from and including each
Quarterly Payment Date to but excluding the following Quarterly Payment Date
until the principal of such Borrowing is repaid.

 

“Interest Proceeds” means, with respect to any Pledged Collateral (including
Cash), (a) any payments with respect thereto that are attributable to interest
or yield in accordance with the Underlying Instruments of such Pledged
Collateral, (b) all Fee Proceeds, (c) all cash capital contributions made to the
Borrower that, to the extent provided in Section 8.2(h), are to be treated as
Interest Proceeds and (d) any amounts deposited in the Collection Account from
the Closing Expense Account in accordance with Section 8.3(e).  Interest
Proceeds shall also include any amounts paid to the Borrower pursuant to an
Interest Hedge Agreement.  No amounts that are required by the terms of any
participation agreement to be paid by the Borrower to any Person to whom the
Borrower has sold a Participation Interest shall constitute “Interest Proceeds”
hereunder.  Any amounts received in respect of any Defaulted Loan will
constitute Principal Proceeds (and not Interest Proceeds) until the aggregate of
all Collections in respect of such Defaulted Loan since it became a Defaulted
Loan equals the outstanding principal balance of such Collateral Loan at the
time it became a Defaulted Loan; thereafter, any such amounts will constitute
Interest Proceeds.  Any amounts received in respect of any Equity Security
(other than the attached equity component of a Unit) will constitute Principal
Proceeds (and not Interest Proceeds).

 

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“Interpolated Rate” means (a) for any Interest Period equal to three months,
three month LIBOR as calculated in accordance with the definition of LIBOR and
(b) for any Interest Period of less than three months, the rate determined
through the use of straight-line interpolation by reference to two rates
calculated in accordance with the definition of LIBOR, one of which shall be
determined as if the maturity of the Dollar deposits referred to therein were
the period of time for which rates are available next shorter than the Interest
Period and the other of which shall be determined as if such maturity were the
period of time for which rates are available next longer than the Interest
Period; provided that, if an Interest Period is less than or equal to seven
days, then LIBOR shall be determined by reference to a rate calculated in
accordance with the definition of LIBOR as if the maturity of the Dollar
deposits referred to therein were a period of time equal to seven days.

 

“Investment Advisers Act” means the Investment Advisers Act of 1940, as amended.

 

“Investment Advisor” means FS Investment Advisor, LLC, a Delaware limited
liability company, or any successor in such capacity in accordance with the
Investment Advisory Agreement.

 

“Investment Advisory Agreement” means the Investment Advisory and Administrative
Services Agreement dated as of April 28, 2011 between the BDC and FS Investment
Advisor, LLC, as amended, supplemented or replaced from time to time.

 

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

 

“Investment Criteria Adjusted Balance” means, with respect to any Collateral
Loan, the Principal Balance of such Collateral Loan; provided that for all
purposes the Investment Criteria Adjusted Balance of any Discount Loan shall be
the purchase price of such Discount Loan.

 

“IRS” means the U.S. Internal Revenue Service.

 

“Joinder Agreement” means an agreement substantially in the form of Exhibit D
pursuant to which a Funding Agent may act as agent of a CP Lender under this
Agreement.

 

“Key Manager” means a Person employed by the Sub-Advisor or an Affiliate of the
Sub-Advisor as an employee or a portfolio manager or in a management level
position who is actively involved in the management of the Collateral on behalf
of the Borrower and is either one of the Initial Key Managers or a Person
subsequently appointed as such pursuant to the procedures described in
Section 5.39.

 

“Lender” means each Person that is listed as “Lender” on the signature
pages hereto, any Person that shall have become a party hereto pursuant to an
Assignment and Assumption, each Additional Lender and, in each case, their
respective successors, in each case other than any such Person that ceases to be
a party hereto pursuant to an Assignment and Assumption.

 

“Lender Collateral Account” means the trust account established pursuant to
Section 8.3(d).

 

“Lender Collateral Subaccount” has the meaning set forth in Section 8.3(d)(ii).

 

“LIBOR Business Day” means any day except a Saturday, a Sunday or a day on which
commercial banks in London or New York City are authorized or required by law to
close.

 

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“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind, or any other type of preferential
arrangement that has the practical effect of creating a security interest, in
respect of such asset.  For the purposes of this Agreement, any Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.

 

“Liquidity Facility” means, with respect to any Loan by any CP Lender, a
liquidity asset purchase agreement, swap transaction or other facility that
provides liquidity for Commercial Paper Notes, and any guaranty of any such
agreement or facility.

 

“Liquidity Funding” means, with respect to any Loan by any CP Lender, at any
time, funding by a CP Lender of all or a portion of the outstanding principal
amount of such Loan with funds provided under a Liquidity Facility.

 

“Liquidity Funding Period” means, with respect to any Loan by any CP Lender, a
period of time during which all or a portion of the outstanding principal amount
of such Loan is funded through a Liquidity Funding.

 

“Liquidity Funding Rate” means with respect to any Liquidity Funding under a
Liquidity Facility, the per annum rate of interest provided for in the relevant
Liquidity Facility.

 

“LLC Agreement” means the Limited Liability Company Agreement of the Borrower,
dated as of the date hereof, among the BDC, as member, and the independent
managers party thereto, as further amended, restated or otherwise modified from
time to time.

 

“Loan” has the meaning assigned to such term in Section 2.1.

 

“Loan Documents” means this Agreement, the Account Control Agreement, the
Collateral Management Agreement, the Notes, the Interest Hedge Agreements, each
Joinder Agreement, the Master Transfer Agreement, the Investment Advisory
Agreement, the Sub-Advisory Agreement, each Retention of Net Economic Interest
Letter and the Engagement Letter.

 

“London Interbank Offered Rate” or “LIBOR” means, with respect to each Interest
Period for a Eurodollar Rate Loan, the rate determined by the Administrative
Agent in accordance with the following provisions:

 

(a)        The rate (expressed as a percentage per annum rounded upwards to the
nearest one hundredth (1/100) of one percent (1%)) for deposits in Dollars for
the appropriate periods (as provided in the definition of “Interpolated Rate”)
that appear on Reuters Page 3750 (or such page as may replace Reuters Page 3750)
as reported by Bloomberg Financial Markets Commodities News as of 11:00 a.m.,
London time, two LIBOR Business Days before the first day of such Interest
Period.

 

(b)        If the rates referred to in clause (a) above do not appear on Reuters
Page 3750 (or such page as may replace Reuters Page 3750) as of 11:00 a.m.,
London time, two LIBOR Business Days before the first day of such Interest
Period, the London Interbank Offered Rate will be the arithmetic mean of the
offered rates (expressed as a percentage per annum rounded upwards, if
necessary, to the nearest one hundredth (1/100) of one percent (1%)) for
deposits in Dollars for the appropriate periods (as provided in the definition
of “Interpolated Rate”) that

 

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appear on the Reuters Screen LIBO Page as of 11:00 a.m., London time, two LIBOR
Business Days before the first day of such Interest Period, if at least two such
offered rates so appear.

 

(c)        If fewer than two such offered rates appear on the Reuters Screen
LIBO Page as of 11:00 a.m., London time, on any such date (as provided in clause
(b) above), the Administrative Agent will request the principal London office of
any four (4) major reference banks in the London interbank market selected by
the Administrative Agent to provide such bank’s offered quotation (expressed as
a percentage per annum rounded upwards to the nearest one hundredth (1/100) of
one percent (1%)) to prime banks in the London interbank market for deposits in
Dollars for the appropriate periods (as provided in the definition of
“Interpolated Rate”) that as of 11:00 a.m., London time, on such date for
amounts comparable to the then outstanding principal amount of the applicable
Loan (if available).  If at least two such offered quotations are so provided,
LIBOR will be the arithmetic mean of such quotations.

 

(d)        If fewer than two such quotations are so provided pursuant to clause
(c) above, the Administrative Agent will request any three (3) major banks in
New York City selected by the Administrative Agent to provide such bank’s rate
(expressed as a percentage per annum rounded upwards to the nearest one
hundredth (1/100) of one percent (1%)) for loans in Dollars to leading European
banks for the appropriate periods (as provided in the definition of
“Interpolated Rate”) that as of approximately 11:00 a.m., New York City time, on
the date which is two LIBOR Business Days before the first day of such Interest
Period for amounts comparable to the then outstanding principal amount of the
applicable Loan (if available).  If at least two such rates are so provided, the
London Interbank Offered Rate will be the arithmetic mean of such rates.

 

(e)        If only one rate is so provided pursuant to clause (d) above, then
the London Interbank Offered Rate will be the rate so provided.  If no such rate
is provided, the London Interbank Offered Rate for such Interest Period will be
the London Interbank Offered Rate in effect for the prior Interest Period.

 

“Maintenance Covenant” means a covenant by any borrower to comply with one or
more financial covenants (including without limitation any covenant relating to
a borrowing base, asset valuation or similar asset-based requirement) during
each reporting period, whether or not such borrower has taken any specified
action.

 

“Majority Lenders” means the Lender or Lenders holding, collectively, more than
50% of the sum of (a) the aggregate principal amount of all of the Loans
outstanding at such time plus (b) the aggregate undrawn Commitments in respect
of such Loans at such time; provided that in determining whether the Majority
Lenders have consented to or approved any action or inaction, (x) the vote of
any Borrower Affiliated Lender shall not be taken into account and the
outstanding principal amounts and aggregate unutilized commitments held by each
Borrower Affiliated Lender shall be excluded from the amounts set forth in
clauses (a) and (b) of this definition and (y) the vote of any Defaulting Lender
shall not be taken into account to the extent provided in Section 11.5(b)(ii).

 

“Margin Stock” shall have the meaning provided such term in Regulation U.

 

“Market Value” means, as of any date of determination, with respect to any loans
or other assets, the amount (determined by the Borrower or the Collateral
Manager in accordance with the Servicing Standard) equal to the product of the
principal amount thereof and the price determined in the following manner:

 

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(a)        the bid-side quote determined by any of (i) Loan Pricing Corporation,
LoanX Inc., MarkIt Partners, Mergent, Inc., IDC or Houlihan Lokey or
(ii) subject to satisfaction of the Rating Condition, any other nationally
recognized loan pricing service selected by the Borrower or the Collateral
Manager with notice to the Lenders; provided that the Majority Lenders may
object to the selection of any loan pricing service selected pursuant to the
immediately preceding clause (ii) within 5 Business Days after receipt of
notice;

 

(b)        if such quote described in clause (a) is not available,

 

(i)         the average of the bid-side quotes determined by three independent
SEC-registered broker-dealers active in the trading of such asset;

 

(ii)        if only two such bids can be obtained, the average of the bid-side
quotes of such two bids; or

 

(iii)       if only one such bid can be obtained, such bid;

 

provided that a bid provided pursuant to this clause (b) shall not be from any
of the Borrower, the Collateral Manager, the Investment Advisor, the Sub-Advisor
or any Affiliate of any thereof; or

 

(c)        if the Market Value of an asset cannot be determined in accordance
with clause (a) or (b) above, then the Market Value shall be the Appraised
Value, provided that (i) the Appraised Value of such Collateral Loan has been
obtained or updated within the immediately preceding three months and (ii) if
the Appraised Value of a Collateral Loan is determined pursuant to clause (B) of
the definition of “Appraised Value”, the Market Value of such Collateral Loan
shall not exceed the aggregate principal amount thereof (or the portion thereof
held by the Borrower);

 

(d)        if such quote or bid described in clause (a), (b) or (c) is not
available, then the Market Value of such Collateral Loan shall be the lower of
(i) the DBRS Recovery Rate and (ii) if any, the Market Value determined by the
Borrower or the Collateral Manager (according to its own internal marking
procedure) exercising reasonable commercial judgment in accordance with the
Servicing Standard, consistent with the manner in which it would determine the
market value of an asset for purposes of other funds or accounts managed by it;
provided that the Market Value of any such asset may not be determined in
accordance with this clause (d) for more than thirty days; or

 

(e)        if the Market Value of an asset cannot be determined in accordance
with clause (a), (b), (c) or (d) above, then the Market Value shall be deemed to
be zero until such determination is made in accordance with clause (a), (b),
(c) or (d) above.

 

“Market Value Overcollateralization Test” means a test satisfied on any
Measurement Date if the following ratio (expressed as a percentage) is greater
than 225%:

 

(a)        the sum of (i) the Market Value of all Collateral Loans (including
Excess Concentration Loans) as of such date, plus (ii) the Net Aggregate
Exposure Amount (excluding any Unsettled Amounts to the extent already included
in the amount in clause (i)) for all Collateral Loans as of such date, plus
(iii) the aggregate amount of funds on deposit in the Collection Account,
including Eligible Investments, constituting Principal Proceeds, plus (iv) the
aggregate amount of funds on deposit in the Future Funding Reserve Account,
including Eligible Investments; divided by

 

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(b)        the sum of (i) the aggregate outstanding principal amount of the
Loans as of such date plus (ii) the Net Aggregate Exposure Amount for all
Collateral Loans as of such date.

 

“Master Transfer Agreement” means the Purchase and Contribution Agreement, dated
as of July 11, 2013, between the BDC, as seller, and the Borrower, as buyer, as
amended, restated, supplemented or otherwise modified from time to time.

 

“Material Adverse Effect” means a material adverse effect individually or in the
aggregate with other adverse effects on the ability of the Borrower or the
Collateral Manager to perform its respective obligations under any of the Loan
Documents or the rights, interests or remedies (taken as a whole) of the Agents
or any Lender under the Loan Documents (taken as a whole).

 

“Maximum DBRS Risk Score Test” means a test that will be satisfied on any
Measurement Date if the Weighted Average DBRS Risk Score of the Collateral Loans
is less than or equal to 36.0%.

 

“Maximum Principal Balance” means, as of any date of determination and with
respect to all or any specified portion of the Collateral Loans, the sum of
(a) the Principal Balance of such Collateral Loans as of such date and (b) in
the case of any such Collateral Loans that are Revolving Collateral Loans or
Delayed Funding Loans, the Exposure Amounts thereof.

 

“Maximum Weighted Average Life Test” is a test satisfied on any Measurement Date
if the Weighted Average Life of all Collateral Loans as of such date is less
than 6.0 years minus (b) the number of years (rounded to the nearest quarter)
that have elapsed since the Closing Date.

 

“Measurement Date” means each Calculation Date, each day Collateral Loans are
purchased, originated or sold, each Collateral Report Determination Date, each
day any Permitted Distribution is made and each day pursuant to the request of
the Majority Lenders or DBRS; provided that if any such date is not a Business
Day, such Measurement Date shall be the next succeeding Business Day.

 

“Member” has the meaning assigned to such term in the LLC Agreement.

 

“Minimum Diversity Score Test” means a test that will be satisfied on any
Measurement Date if the Diversity Score (calculated as a single number in
accordance with standard diversity scoring methodology using DBRS Industry
Classifications) equals or exceeds the Minimum Diversity Score Test Level for
the Applicable Row Level in effect at such time in the Collateral Quality
Matrix.

 

“Minimum Diversity Score Test Level” means the applicable Minimum Diversity
Score Test Level as set forth in the column of that name in the Collateral
Quality Matrix.

 

“Minimum Weighted Average Coupon Test” means a test that will be satisfied on
any Measurement Date if the Weighted Average Coupon equals or exceeds 7.00%.

 

“Minimum Weighted Average Spread Test” means a test that will be satisfied on
any Measurement Date if the Weighted Average Spread equals or exceeds 5.50%.

 

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

 

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

 

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“Multiemployer Plan” means at any time an “employee pension benefit plan” within
the meaning of Section 4001(a) (3) of ERISA that is sponsored by the Borrower or
a member of its ERISA Group or to which the Borrower or a member of its ERISA
Group is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.

 

“Natixis” means Natixis, New York Branch.

 

“Natixis Conduit” means any CP Conduit that is an Affiliate of Natixis, or that
is provided liquidity or credit support by Natixis or an Affiliate.

 

“Net Aggregate Exposure Amount” means the excess (if any) of (i) the aggregate
Unfunded Amount on such date over (ii) the sum of (x) amounts on deposit in the
Future Funding Reserve Account on such date and (y) amounts on deposit in the
Collection Account on such date, including Eligible Investments, representing
Principal Proceeds.

 

“Net Purchased Collateral Loan Balance” means, as of any date of determination,
an amount equal to (a) the Aggregate Principal Balance of all Collateral Loans
sold and/or contributed to the Borrower prior to such date minus (b) the
Aggregate Principal Balance of all Collateral Loans sold and/or distributed by
the Borrower to its Affiliates prior to such date.

 

“Note” means each promissory note, if any, issued by the Borrower to a Lender in
accordance with the provisions of this Agreement, substantially in the form set
forth on Exhibit A hereto, as the same may from time to time be amended,
supplemented, waived or modified.

 

“Notice of Borrowing” has the meaning set forth in Section 2.2(a).

 

“Obligations” means all obligations, liabilities and Indebtedness of every
nature of the Borrower, from time to time owing to the Agents, the Interest
Hedge Counterparties, the Lenders and the other Secured Parties under or in
connection with this Agreement and the other Loan Documents, including, without
limitation, (a) the unpaid principal amount of, and interest on, all Loans then
outstanding, and (b) all fees, expenses, indemnity payments and other amounts
owed to any Secured Party pursuant to this Agreement and the other Loan
Documents, in each case, whether or not then due and payable.

 

“Obligor” means, with respect to a Collateral Loan, the person who is obligated
to repay such Collateral Loan (including, if applicable, a guarantor thereof),
and whose assets are principally relied upon by the Borrower at the time such
Collateral Loan was originated or purchased by the Borrower as the source of
repayment of such Collateral Loan.

 

“Offer” means with respect to any security, any offer by the issuer of such
security or by any other Person made to all of the holders of such security to
purchase or otherwise acquire such security (other than pursuant to any
redemption in accordance with the terms of the related Underlying Instruments)
or to convert or exchange such security into or for Cash, securities or any
other type of consideration.

 

“Other Connection Taxes” means, with respect to any Lender or the Administrative
Agent, taxes imposed as a result of a present or former connection between such
Lender or the Administrative Agent and the jurisdiction imposing such tax (other
than connections arising from such Lender or the Administrative Agent having
executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in

 

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any other transaction pursuant to or enforced any Loan Document, or sold or
assigned an interest in any Loan or Loan Document).

 

“Other Taxes” has the meaning set forth in Section 11.4(b).

 

“Overcollateralization Ratio” means, as of any Measurement Date, the ratio
(expressed as a percentage) obtained by dividing:

 

(a)        the sum of (i) the Principal Collateralization Amount as of such date
plus (ii) the Net Aggregate Exposure Amount (excluding any Unsettled Amounts to
the extent already included in the amount in clause (i)) for all Collateral
Loans as of such date; by

 

(b)        the sum of (i) the aggregate outstanding principal amount of the
Loans as of such date plus (ii) the Net Aggregate Exposure Amount for all
Collateral Loans as of such date.

 

“Overcollateralization Ratio Test” means a test satisfied on any Measurement
Date if the Overcollateralization Ratio is greater than the Row OC Level for the
Applicable Row Level in effect at such time in the Collateral Quality Matrix.

 

“Participant” has the meaning set forth in Section 12.6(b)(i).

 

“Participant Register” has the meaning set forth in Section 12.6(b)(ii).

 

“Participation Interest” means a participation interest in a loan or other
obligation that would, at the time of acquisition, or the Borrower’s commitment
to acquire the same, constitute a Collateral Loan.

 

“Payment Account” means the payment account established pursuant to
Section 8.3(a).

 

“Payment Date Report” has the meaning set forth in Section 9.1(c).

 

“Percentage Share” means:

 

(a)        with respect to a Lender’s obligation to make Loans and receive
payments of interest, fees, principal and other amounts with respect thereto,
the percentage obtained by dividing (i) such Lender’s Commitment by (ii) the
Total Commitment, provided that, if the Total Commitment has been reduced to
zero, the numerator shall be the aggregate unpaid principal amount of such
Lender’s Loans and the denominator shall be the aggregate unpaid principal
amount of all Loans; and

 

(b)        with respect to all other matters in relation to a Lender at any
time, the percentage obtained by dividing (i) the sum of such Lender’s undrawn
Commitments plus the aggregate outstanding principal amount of Loans held by
such Lender at such time by (ii) the sum of all Lenders’ undrawn Commitments
plus the aggregate outstanding principal amount of all Loans at such time.

 

“Permitted Distribution” means any dividend or other distribution (whether in
cash, securities or other property) with respect to any ownership interest in
the Borrower, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any
ownership interest in the Borrower or any option, warrant or other right to
acquire any ownership interest in the Borrower.

 

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“Permitted Liens” means (a) Liens in favor of the Collateral Agent for the
benefit of the Secured Parties granted pursuant to this Agreement and any other
Loan Document and (b) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded (provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor).

 

“Person” means an individual, a corporation, a partnership, an association, a
trust, a limited liability company, member or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.

 

“PIK Loan” means any loan on which a portion (but not all) of the interest
accrued for a specified portion of time or until the maturity thereof is, or at
the option of the Obligor may be, added to the principal balance of such loan or
otherwise deferred rather than being paid in cash; provided that a loan that, in
addition to any capitalized interest, requires by the terms of its applicable
Underlying Instrument interest to be paid in cash at a rate of (in the case of a
PIK Loan that is a Fixed Rate Obligation) at least 4.00% and (in the case of a
PIK Loan that is a Floating Rate Obligation) at least LIBOR plus 3.00% per annum
shall be deemed not to be a PIK Loan hereunder.  For the avoidance of doubt,
(i) a Zero Coupon Loan shall be deemed not to be a PIK Loan hereunder and
(ii) if the Obligor under a PIK Loan fails to make a required cash interest
payment thereunder and such failure continues longer than the grace period set
forth for such payment in clause (a) of the definition of “Defaulted Loan”, such
PIK Loan shall become a Defaulted Loan.

 

“Plan” means at any time an “employee pension benefit plan” as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and either (i) is maintained, or contributed to, by the Borrower or
a member of its ERISA Group or (ii) has at any time within the preceding five
plan years been maintained, or contributed to, by the Borrower or a member of
its ERISA Group.

 

“Pledged Collateral” has the meaning specified in the Granting Clause hereof.

 

“Post-Default Rate” has the meaning assigned to such term in Section 2.5(b).

 

“Prime Rate” means, for any day, the rate of interest in effect for such day
that is identified and normally published by The Wall Street Journal as the
“Prime Rate” (or, if more than one rate is published as the Prime Rate, then the
highest of such rates), with any change in Prime Rate to become effective as of
the date the rate of interest which is so identified as the “Prime Rate” is
different from that published on the preceding Business Day.  If The Wall Street
Journal no longer reports the Prime Rate, or if the Prime Rate no longer exists,
or the Administrative Agent determines in good faith that the rate so reported
no longer accurately reflects an accurate determination of the prevailing Prime
Rate, then the Administrative Agent may select a reasonably comparable index or
source to use as the basis for the Prime Rate.

 

“Principal Balance” means, as of any date of determination with respect to any
Collateral Loan, the aggregate outstanding principal amount of such Collateral
Loan as of such date, excluding (a) deferred or capitalized interest on any
Collateral Loan (other than any such interest that was added to principal on or
before the date when such Collateral Loan was acquired by the Borrower) and
(b) any portion of such principal amount that has been assigned or participated
by the Borrower pursuant to Section 10.1.

 

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“Principal Collateralization Amount” means, at any time, the sum of:

 

(a)        the Aggregate Principal Balance of all Collateral Loans (excluding
Defaulted Loans, Discount Loans and Current Pay Obligations (each as to which
the applicable rule below shall apply)), plus

 

(b)        (i) the aggregate amount of funds on deposit in the Collection
Account, including Eligible Investments, constituting Principal Proceeds, plus
(ii) the aggregate amount of funds on deposit in the Future Funding Reserve
Account, including Eligible Investments; plus

 

(c)        for each Discount Loan, the aggregate purchase price, excluding
accrued interest, expressed as a Dollar amount, for such Discount Loan (after
adding the amount of any subsequent borrowings and/or subtracting the amount of
any subsequent repayments thereof); plus

 

(d)        for each Defaulted Loan that has been a Defaulted Loan for less than
one year, the lowest of:

 

(i)         the Principal Balance of such Defaulted Loan multiplied by the
applicable DBRS Recovery Rate for such Defaulted Loan;

 

(ii)        the Market Value of such Defaulted Loan; and

 

(iii)       the carrying value of such Defaulted Loan on the books and records
of the Borrower; plus

 

(e)        for each Current Pay Obligation, 90% of such Current Pay Obligation’s
Market Value (but no greater than the par value of such Current Pay Obligation);
minus

 

(f)        the principal amount of all Excess Concentration Loans;

 

provided that, (i) with respect to any Collateral Loan that satisfies more than
one of the definitions of Defaulted Loan, Discount Loan or Current Pay
Obligation, such Collateral Loan shall, for the purposes of this definition, be
treated as belonging to the category of Collateral Loans which results in the
lowest Principal Collateralization Amount on any date of determination and
(ii) the Principal Collateralization Amount for any Defaulted Loan which has
been a Defaulted Loan for one year or more will be zero.

 

“Principal Proceeds” means (a) with respect to any Pledged Collateral (including
Cash) any payments with respect thereto that are attributable to principal in
accordance with the Underlying Instruments of such Pledged Collateral or that do
not otherwise constitute Interest Proceeds (including unapplied proceeds of the
Collateral Loans) and (b) any cash capital contributions made to the Borrower
and applied pursuant to Section 8.2(h) (except to the extent that such capital
contributions are to be treated as Interest Proceeds in accordance with
Section 8.2(h)).  All sales of Participation Interests or assignments pursuant
to Section 10.1 shall be for cash the proceeds of which shall be deemed to be
Principal Proceeds for all purposes hereunder and all amounts deposited pursuant
to Section 8.2(h) and designated as Principal Proceeds in accordance therewith
shall be deemed to be Principal Proceeds for all purposes hereunder.  No amounts
that are required by the terms of any participation agreement to be paid by the
Borrower to any Person to whom the Borrower has sold a Participation Interest
shall constitute “Principal Proceeds” hereunder.

 

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“Priority of Payments” has the meaning set forth in Section 9.1(a), provided
that, at all times after the Majority Lenders have exercised their right to
direct the liquidation of the Collateral under Article VI, “Priority of
Payments” shall mean the priorities set forth in Section 6.4 hereof.

 

“Proceeding” means any suit in equity, action at law or other judicial or
administrative proceeding.

 

“Program Manager” means the investment manager or administrator of a CP Lender,
as applicable.

 

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

 

“Quarterly Cap” with respect to any Quarterly Payment Date means an amount equal
to (x) $50,000 plus (y) 0.02% multiplied by the sum of, without duplication,
(i) the Aggregate Principal Balance of all Collateral Loans, (ii) the aggregate
amount of funds on deposit in the Collection Account, including Eligible
Investments, constituting Principal Proceeds, (iii) the aggregate amount of
funds on deposit in the Future Funding Reserve Account, including Eligible
Investments and (iv) the Net Aggregate Exposure Amount, in each case, measured
as of the Calculation Date immediately preceding such Quarterly Payment Date.

 

“Quarterly Payment Date” means the 20th day of February, May, August and
November in each year, commencing in November 2013 and the last Quarterly
Payment Date occurring on the Stated Maturity; provided that, if any such date
is not a Business Day, such Quarterly Payment Date shall be the next succeeding
Business Day.

 

“Rating Agency” means (i) with respect to the Loans, DBRS (and/or, if, at any
time any other nationally recognized investment rating agency provides a rating
of any Loans, such rating agency) or (ii) with respect to the Collateral
generally, DBRS, Moody’s, Fitch or Standard & Poor’s (or, if, at any time DBRS,
Moody’s, Fitch or Standard & Poor’s ceases to provide rating services with
respect to debt obligations, any other nationally recognized investment rating
agency selected by the Borrower or the Collateral Manager).

 

In the event that at any time any of the rating agencies referred to above
ceases to be a “Rating Agency” and a replacement rating agency is selected in
accordance with the preceding sentence, then references to rating categories of
such replaced rating agency in this Agreement shall be deemed instead to be
references to the equivalent categories of such replacement rating agency as of
the most recent date on which such replacement rating agency and such replaced
rating agency’s published ratings for the type of obligation in respect of which
such replacement rating agency is used.

 

“Rating Condition” means, with respect to any action taken or to be taken by or
on behalf of the Borrower, a condition that is satisfied if DBRS has been
notified in writing by the Borrower of such action or proposed action and none
of the Borrower, the Collateral Manager or any of the Secured Parties has
received a written communication objecting to such action or proposed action
from DBRS within 10 Business Days following such notification by the Borrower;
provided that such 10 Business Day period may be waived in writing by DBRS in
its sole discretion.  If at any time the Loans are not then rated by DBRS, the
Rating Condition will automatically be deemed to be satisfied at such time with
respect to any action or proposed action.

 

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“Real Estate Loan” means any debt obligation that is (a) primarily secured by a
mortgage, deed of trust or similar Lien on commercial real estate, residential
real estate, office, retail or industrial property or undeveloped land and is
underwritten as a mortgage loan or (b) a loan to a company engaged solely in
acquiring and developing undeveloped land (whether or not such loan is secured
by real estate) (provided that this clause (b) excludes loans to any companies
in the oil and gas and energy industries that are engaged in acquiring and
developing undeveloped land with proven reserves or for the purpose of
constructing power plants, pipelines, accommodation units or other facilities
that provide services to the oil and gas and energy industries).

 

“Register” has the meaning set forth in Section 12.6(f).

 

“Regulation U” means Regulation U of the Federal Reserve Board, as in effect
from time to time.

 

“Reinvestment Agreement” means a guaranteed reinvestment agreement from a bank,
insurance company or other corporation or entity having an Eligible Investment
Required Ratings; provided that such agreement provides that it is terminable by
the purchaser, without penalty and with the return of all invested funds, if
within 60 days after the provider of such agreement no longer satisfies the
Eligible Investment Required Ratings the provider has failed to obtain either
(i) a guarantor with an Eligible Investment Required Ratings that satisfies the
Rating Condition to guarantee the obligations of such provider under such
agreement or (ii) a replacement provider with an Eligible Investment Required
Ratings that satisfies the Rating Condition.

 

“Reinvestment Period” means the period from and including the Closing Date to
and including the earliest of (a) the date that is 18 months after the Closing
Date, (b) the date of the acceleration of the maturity of the Loans or the
termination of the Commitments pursuant to Section 6.2, (c) any date on which
the Borrower or the Collateral Manager reasonably determines that it can no
longer purchase or originate additional Collateral Loans appropriate for
inclusion in the Collateral in accordance with the terms of this Agreement and
the Collateral Management Agreement (provided that, in the case of this clause
(c), an Authorized Officer of the Collateral Manager shall provide a written
certification as to such determination to the Agents, the Lenders and DBRS at
least five Business Days prior to such date), (d) the date of expiration of the
latest cure period applicable to and in respect of a Reinvestment Period Event
that has not been cured in accordance with Section 5.39 and (e) the date on
which any of the events set forth in Section 6.1(m) occurs.

 

“Reinvestment Period Event” has the meaning set forth in Section 5.39.

 

“Related Contracts” means all credit agreements, indentures, notes, security
agreements, leases, financing statements, guaranties, and other contracts,
agreements, instruments and other papers evidencing, securing, guaranteeing or
otherwise relating to any Collateral Loan or other loan or security of the
Borrower or Eligible Investment or other investment with respect to any
Collateral or proceeds thereof (including the related Underlying Instruments),
together with all of the Borrower’s right, title and interest in and to all
property or assets securing or otherwise relating to any Collateral Loan or
other loan or security of the Borrower or Eligible Investment or other
investment with respect to any Collateral or proceeds thereof or any Related
Contract.

 

“Related CP Issuer” means a multi-seller commercial paper conduit that issues
commercial paper, the proceeds of which are loaned to or are otherwise the CP
Lender’s source of funding for the CP Lender’s acquisition or maintenance of its
funding obligations hereunder.

 

“Requested Amount” has the meaning assigned to such term in Section 2.2(a).

 

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“Restricted Trading Period” means each day during which (a) the DBRS rating of
any of the Loans is one or more sub-categories below the Initial Rating by DBRS
or (b) the DBRS rating of any Loans then outstanding has been withdrawn and not
reinstated; provided that such period will not be a Restricted Trading Period
upon the direction of 100% of the Lenders (provided that such direction shall
not apply to any subsequent occurrence of any of the Loans being downgraded,
withdrawn or put on watch).

 

“Retained Expense Amount” with respect to any Quarterly Payment Date means the
amount, if any, by which (x) the sum of the amount determined pursuant to the
definition of “Quarterly Cap” for such Quarterly Payment Date and each of the
three prior Quarterly Payment Dates exceeds (y) the sum of (i) the aggregate
payments made under Section 9.1(a)(i)(B)(1) on such Quarterly Payment Date and
each of the three prior Quarterly Payment Dates and (ii) Administrative Expenses
paid pursuant to Section 8.2(d) during each of the Due Periods prior to each of
the three prior Quarterly Payment Dates.

 

“Retention of Net Economic Interest Letter” means a letter relating to the
retention of net economic interest in substantially the form of Exhibit H hereto
(relating to the requirements of Article 122a), from the Retention Provider and
addressed to the Borrower, the Administrative Agent, Natixis (as Lender) and any
other Article 122a Lender.

 

“Retention Provider” means the BDC.

 

“Retention Requirement” means the requirements and obligations of the Retention
Provider as set forth in the Retention of Net Economic Interest Letter.

 

“Revolving Collateral Loan” means a Collateral Loan that provides the Obligor
thereunder with a revolving credit facility from which one or more borrowings
may be made up to the stated principal amount of such revolving credit facility
and which provides that borrowed amounts may be repaid and reborrowed from time
to time.

 

“Row Equity Distribution OC Level” means the column of that name in the
Collateral Quality Matrix.

 

“Row OC Level” means the column of that name in the Collateral Quality Matrix.

 

“Sale Proceeds” means all proceeds (excluding accrued interest, if any) received
with respect to Collateral as a result of sales of such Collateral less any
reasonable expenses incurred by the Borrower, the Collateral Manager or the
Collateral Agent (other than amounts payable as Administrative Expenses) in
connection with such sales.

 

“Scheduled Distribution” means, with respect to any Collateral Loan, for each
Due Date, the scheduled payment of principal and/or interest and/or fee due on
such Due Date with respect to such Collateral Loan, determined in accordance
with the assumptions specified in Section 1.3.

 

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

 

“Second Lien Loan” means any origination or assignment of or Participation
Interest in a loan that: (a) is not (and cannot by its terms become) subordinate
in right of payment to any other obligation of the Obligor of the loan (other
than with respect to trade claims, capitalized leases or similar obligations)
but which is subordinated (with respect to liquidation preferences with respect
to the primary pledged collateral securing such loan) to a Senior Secured Loan
of the Obligor; (b) is secured by a valid

 

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second-priority perfected security interest or lien in, to or on specified
collateral securing the Obligor’s obligations under the Second Lien Loan the
value of which is adequate (in the commercially reasonable judgment of the
Borrower) to repay the loan in accordance with its terms and to repay all other
loans of equal or higher seniority secured by a lien or security interest in the
same collateral and (c) is not secured solely or primarily by common stock or
other equity interests.

 

“Secured Parties” means, collectively, the Agents, the Custodian and the
Lenders.

 

“Securities Intermediary” means Wells Fargo in its capacity as securities
intermediary under the Account Control Agreement.

 

“Selling Institution” means an entity obligated to make payments to the Borrower
under the terms of a Participation Interest.

 

“Senior Authorized Officer” means an Authorized Officer that is a chief
executive officer, chief operating officer, chief credit officer, credit
committee member, executive vice president or president (or, in each case, any
other Authorized Officer with a position analogous to those identified above).

 

“Senior Management Fee” has the meaning assigned to such term in the Collateral
Management Agreement.

 

“Senior Secured Bond” means a debt security (that is not a loan) that (a) is
issued by a corporation, limited liability company, partnership or trust and is
in the form of, or represented by, a bond, note, certificated debt security or
other debt security (other than any of the foregoing that evidences a loan or
Participation Interest); (b) is secured by a valid first priority perfected
security interest or lien in, to or on specified collateral securing the
Obligor’s obligations under such obligation but is not secured solely or
primarily by common stock or other equity interests and (c) the value of the
collateral securing such debt security at the time of origination or purchase
together with other attributes of the Obligor (including, without limitation,
its general financial condition, ability to generate cash flow available for
debt service and other demands for that cash flow) is adequate (in the
commercially reasonable judgment of the Borrower) to repay such debt security in
accordance with its terms and to repay all other such debt securities of equal
seniority secured by a first lien or security interest in the same collateral.

 

“Senior Secured Loan” means any origination or assignment of or Participation
Interest in a loan that: (a) is not (and cannot by its terms become) subordinate
in right of payment to any other obligation of the Obligor of such loan (other
than with respect to trade claims, capitalized leases or similar obligations);
(b) is secured by a valid first priority perfected security interest or lien in,
to or on specified collateral securing the Obligor’s obligations under such
loan; (c) the value of the collateral securing such loan at the time of
origination or purchase together with other attributes of the Obligor
(including, without limitation, its general financial condition, ability to
generate cash flow available for debt service and other demands for that cash
flow) is adequate (in the commercially reasonable judgment of the Borrower) to
repay such loan in accordance with its terms and to repay all other such loans
of equal seniority secured by a first lien or security interest in the same
collateral; and (d) is not secured solely or primarily by common stock or other
equity interests.

 

“Servicing Standard” means, with respect to the Borrower and the Collateral
Manager, in rendering its services hereunder and under the other Loan Documents,
commercially reasonable care in rendering its services hereunder and thereunder,
using a degree of skill and attention no less than that which (i) would be
exercised by a prudent institutional portfolio manager in connection with the
servicing and administration of assets similar to the Collateral Loans under
similar circumstances and (ii) each of

 

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the Borrower, the Collateral Manager and its respective Affiliates exercises
with respect to comparable assets that it manages for itself and for others
having similar investment objectives and restrictions in accordance with its
existing practices and procedures relating to assets of the nature and character
of the Collateral Loans.

 

“Similar Law” means any federal, state or local law or regulations that are
substantially similar to Title I of ERISA or Section 4975 of the Code.

 

“Special Member” has the meaning assigned to such term in the LLC Agreement.

 

“Specified Change” means any amendment, consent, modification or waiver of, or
supplement to, an Underlying Instrument that (a) extends the final maturity of a
Collateral Loan beyond the Stated Maturity, (b) reduces or forgives the
principal amount of a Collateral Loan (other than a Defaulted Loan that has been
a Defaulted Loan for one year or more), (c) reduces the rate of interest payable
on a Collateral Loan by more than 25% for a Credit Risk Loan and more than 50%
for all other Collateral Loans, (d) postpones the Due Date of any Scheduled
Distribution in respect of a Collateral Loan, unless the Weighted Average Life
Test is satisfied, or failed by no more than 0.50 years, after giving effect to
such change, (e) subordinates (in right of payment, with respect to liquidation
preferences or otherwise) a Collateral Loan if such subordination causes any of
the Coverage Tests or the Collateral Quality Test to cease to be in compliance
(or, if any of the Coverage Tests or the Collateral Quality Test are not
satisfied prior to such subordination, causes any such Coverage Test or
Collateral Quality Test to be worsened), (f) releases any material guarantor or
co-obligor of a Collateral Loan from its obligations, (g) releases a material
portion of the collateral securing such Collateral Loan (excluding Defaulted
Loans and any such releases associated with a prepayment) or (h) changes any of
the provisions of an Underlying Instrument specifying the number or percentage
of lenders required to effect any of the foregoing; provided that, in the case
of clause (e) above, such tests have been calculated, if applicable, after the
Underlying Instrument has been re-evaluated by DBRS; provided further, that in
the case of clauses (f) and (g) above, such a release shall not constitute a
“Specified Change” if 100% of the net proceeds received in connection with such
release is applied to permanently reduce the principal balance of such
Collateral Loan.

 

“Standard & Poor’s” or “S&P” means Standard & Poor’s Ratings Services, a
Standard & Poor’s Financial Services LLC business, and any successor thereto.

 

“Stated Maturity” means July 11, 2023.

 

“Step-Down Loan” means an obligation or security which by the terms of the
related Underlying Instruments provides for a decrease in the per annum interest
rate on such obligation or security (other than by reason of any change in the
applicable index or benchmark rate used to determine such interest rate) or in
the spread over the applicable index or benchmark rate, solely as a function of
the passage of time; provided that, an obligation or security providing for
payment of a constant rate of interest or in the spread over the applicable
index or benchmark rate at all times after the date of acquisition by the
Borrower shall not constitute a Step-Down Loan.

 

“Step-Up Loan” means an obligation or security which by the terms of the related
Underlying Instruments provides for an increase in the per annum interest rate
on such obligation or security, or in the spread over the applicable index or
benchmark rate, solely as a function of the passage of time; provided that, an
obligation or security providing for payment of a constant rate of interest or
in the spread over the applicable index or benchmark rate at all times after the
date of acquisition by the Borrower shall not constitute a Step-Up Loan.

 

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

 

“Sub-Advisor” means GSO Capital Partners LP, a Delaware limited partnership, or
any successor in such capacity in accordance with the Sub-Advisory Agreement.

 

“Sub-Advisory Agreement” means the Investment Sub-Advisory Agreement, dated as
of April 28, 2011, between FS Investment Advisor, LLC and GSO Capital Partners
LP, as amended, supplemented or replaced from time to time.

 

“Subordinated Loan” means a loan obligation of any corporation, partnership,
trust or other business entity which is (whether by its terms or otherwise)
subordinate in right of payment to any other debt for borrowed money incurred by
the Obligor under such loan and that is not a Second Lien Loan.

 

“Subordinated Management Fee” has the meaning assigned to such term in the
Collateral Management Agreement.

 

“Subsidiary” means any corporation, limited partnership, limited liability
company or other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or indirectly
owned by the Borrower.

 

“Synthetic Security” means a security or swap transaction, other than a
Participation Interest, that has payments associated with either payments of
interest on and/or principal of a reference obligation or the credit performance
of a reference obligation.

 

“Taxes” has the meaning set forth in Section 11.4(a).

 

“Total Capitalization” means, at any time, the sum of (a) the Aggregate
Principal Balance of the Collateral Loans (excluding any Defaulted Loans),
(b) the Net Aggregate Exposure Amount (excluding any Unsettled Amounts to the
extent already included in the amount in clause (a)), (c) the aggregate amount
of the undrawn Commitments above the Net Aggregate Exposure Amount and (d) the
amount of all cash and Eligible Investments in the Collection Account and in the
Future Funding Reserve Account, in each case constituting Principal Proceeds.

 

“Total Commitment” as of any date of determination means the aggregate amount of
the Commitments (funded or unfunded) on such date, which as of the Closing Date
is $150,000,000.

 

“Trading Plan” has the meaning set forth in Section 1.3(o).

 

“Trading Plan Period” has the meaning set forth in Section 1.3(o).

 

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

 

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“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

 

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

 

“Undrawn Commitment Amount” means, on any day, the amount by which the aggregate
principal amount of all Loans outstanding at the close of business on such day
is less than the Total Commitment on such day.

 

“Unfunded Amount” means, at any time, the sum of (i) the aggregate Exposure
Amount at such time plus (ii) the aggregate Unsettled Amount at such time.

 

“Unit” means an obligation or security with a warrant, option or other equity
component attached or received with respect to a Collateral Loan that is
exercisable solely at the option of the Borrower, which obligation or security
otherwise satisfies the definition of “Collateral Loan”; provided that such
warrant, option or other equity component (a) is not Margin Stock and is not
convertible or exchangeable into Margin Stock or (b) is not detached or
detachable from the underlying Collateral Loan.

 

“United States” means the United States of America, including the states and the
District of Columbia, but excluding its territories and possessions.

 

“Unsettled Amount” as of any date means all amounts due in respect of any
Collateral Loans that the Borrower has entered into a binding commitment to
originate or purchase but has not yet settled.

 

“Weighted Average Coupon” means, with respect to Fixed Rate Obligations
(including PIK Loans that are Fixed Rate Obligations, but in each case excluding
Defaulted Loans), as of any date, the number obtained by:

 

(x) summing (i) the sum of the products obtained by multiplying the cash-pay
portion of the interest coupon of each such Fixed Rate Obligation (plus any
other fees (such as anniversary fees, commitment fees, etc.) that are
contractually required to be paid) as of such date by the Principal Balance of
each such Collateral Loan as of such date and (ii) the sum of the products
obtained by multiplying, with respect to each such Fixed Rate Obligation that is
a Revolving Collateral Loan or a Delayed Funding Loan, the related commitment or
undrawn fee as of such date by the Exposure Amount of each such Collateral Loan
as of such date, and

 

(y) dividing such sum by the sum of the Aggregate Principal Balance plus the
Exposure Amount of all such Fixed Rate Obligations, and rounding the result up
to the nearest 0.001%,

 

provided that, if the foregoing amount is less than 7.00%, then all or a portion
of the Weighted Average Coupon Adjustment, if any, as of such date, to the
extent not exceeding such shortfall, shall be added to such result.

 

“Weighted Average Coupon Adjustment” means, as of any date, a fraction
(expressed as a percentage), the numerator of which is equal to the product of
(i) the excess, if any, of the Weighted Average Spread for such date over 5.50%,
and (ii) the Aggregate Principal Balance plus the Exposure Amount of all
Floating Rate Obligations (in each case excluding Defaulted Loans), and the
denominator

 

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of which is the Aggregate Principal Balance plus Exposure Amount of all Fixed
Rate Obligations (in each case excluding Defaulted Loans).  In computing the
Weighted Average Coupon Adjustment on any date, the Weighted Average Spread for
such Measurement Date shall be computed as if the Weighted Average Spread
Adjustment was equal to zero.

 

“Weighted Average DBRS Risk Score” means the number (rounded up to the nearest
hundredth) determined by:

 

 

The Maximum Principal Balance of each Collateral Loan

 X

The DBRS Risk Score of such Collateral Loan (as determined as provided on
Schedule C hereto)

divided by

 

 

The Aggregate Maximum Principal Balance of all such Collateral Loans

 

 

“Weighted Average Life” means, as of any Measurement Date, the number obtained
by (a) for each Collateral Loan (other than a Defaulted Loan), multiplying the
amount of each Scheduled Distribution of principal (treating each Revolving
Collateral Loan and Delayed Funding Loan as if the same were fully funded) to be
paid after such Measurement Date by the number of years (rounded to the nearest
hundredth) from such Measurement Date until such Scheduled Distribution of
principal is due; (b) summing all of the products calculated pursuant to
clause (a); and (c) dividing the sum calculated pursuant to clause (b) by the
sum of all Scheduled Distributions of principal due on all the Collateral Loans
(other than Defaulted Loans) as of such Measurement Date.

 

“Weighted Average Life Test” means a test that will be satisfied on any
Measurement Date if the Weighted Average Life of all Collateral Loans as of such
date is less than or equal to (a) 6.0 minus (b) the number of years (rounded to
the nearest quarter year) that have elapsed since the Closing Date.

 

“Weighted Average Spread” means, with respect to Floating Rate Obligations (in
each case excluding Defaulted Loans), as of any date, the number obtained by:

 

(x) summing (i) the sum of the products obtained by multiplying the excess of
the cash-pay portion of the interest rate payable on such Collateral Loan (plus
for any Collateral Loan, any other fees (such as anniversary fees, commitment
fees, etc.) that are contractually required to be paid) (such rate stated as a
per annum rate) over LIBOR as then in effect (which spread or excess may be
expressed as a negative percentage) by the Principal Balance of each Floating
Rate Obligation as of such date and (ii) the sum of the products obtained by
multiplying, with respect to each such Floating Rate Obligation that is a
Revolving Collateral Loan or a Delayed Funding Loan, the related commitment or
undrawn fee as of such date by the Exposure Amount of each such Collateral Loan
as of such date; and

 

(y) dividing such sum by the Aggregate Principal Balance plus the Exposure
Amount of all such Floating Rate Obligations, and rounding the result up to the
nearest 0.001%,

 

provided that, if the foregoing amount is less than 5.50%, then all or a portion
of the Weighted Average Spread Adjustment, if any, as of such date, to the
extent not exceeding such shortfall, shall be added to such result.

 

“Weighted Average Spread Adjustment” means, as of any date, a fraction
(expressed as a percentage), the numerator of which is equal to the product of
(i) the excess, if any, of the Weighted

 

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Average Coupon for such date over 7.00% and (ii) the Aggregate Principal Balance
plus the Exposure Amount of all Fixed Rate Obligations (in each case excluding
Defaulted Loans), and the denominator of which is the Aggregate Principal
Balance plus the Exposure Amount of all Floating Rate Obligations as of such
date (in each case excluding Defaulted Loans).  In computing the Weighted
Average Spread Adjustment on any Measurement Date, the Weighted Average Coupon
for such date shall be computed as if the Weighted Average Coupon Adjustment was
equal to zero.

 

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

 

“Zero Coupon Loan” means a Collateral Loan that at the time of purchase does not
by its terms provide for periodic payments of interest in Cash.

 

Section 1.2       Accounting Terms and Determinations and UCC Terms.

 

(a)        Unless otherwise specified herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP as in effect from time to time.

 

(b)        Unless otherwise specified herein and unless the context requires a
different meaning, all terms used herein that are defined in Articles 8 and 9 of
the UCC are used herein as so defined.

 

Section 1.3       Assumptions and Calculations with respect to Collateral Loans.

 

In connection with all calculations required to be made pursuant to this
Agreement with respect to Scheduled Distributions on any Collateral Loans, or
any payments on any other assets included in the Collateral, with respect to the
sale of and reinvestment in Collateral Loans, and with respect to the income
that can be earned on Scheduled Distributions on such Collateral Loans and on
any other amounts that may be received for deposit in the Collection Account,
the provisions set forth in this Section 1.3 shall be applied.  The provisions
of this Section 1.3 shall be applicable to any determination or calculation that
is covered by this Section 1.3, whether or not reference is specifically made to
Section 1.3, unless some other method of calculation or determination is
expressly specified in the particular provision.

 

(a)        Scheduled interest due on Collateral Loans on which payments are
subject to foreign withholding taxes will be the minimum net amount to be
received after giving effect to the maximum permitted withholding and to any
“gross-up” payments required to be made by the related Obligor pursuant to such
loan’s Underlying Instruments.

 

(b)        Notwithstanding any other provision of this Agreement to the
contrary, all monetary calculations under this Agreement shall be in Dollars.

 

(c)        The determination of the percentage of Total Capitalization that
would be represented by a specified type of Collateral Loans will be calculated
by dividing the aggregate Maximum Principal Balance of such specified type of
Collateral Loans by Total Capitalization.  For purposes of this Section 1.3(c),
a “type” of Collateral Loan shall correspond to each clause of the definition of
“Concentration Limitations”.

 

(d)        Any portion of a Collateral Loan or other loan or security owned of
record by the Borrower that has been assigned by the Borrower to a third party
and released from the Lien of this Agreement in accordance with the terms hereof
shall no longer constitute Collateral or a Collateral Loan hereunder.

 

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(e)        For purposes of calculating the Coverage Tests, except as otherwise
specified in the Coverage Tests, such calculations will not include scheduled
interest and principal payments on Defaulted Loans unless or until such payments
are actually made.

 

(f)        For each Due Period and as of any date of determination, the
Scheduled Distribution on any Collateral Loans (other than Defaulted Loans,
which, except as otherwise provided herein, shall be assumed to have a Scheduled
Distribution of zero) shall be the sum of (i) the total amount of payments and
collections to be received during such Due Period in respect of such Collateral
Loans (including the proceeds of the sale of such Collateral Loans received and,
in the case of sales which have not yet settled, to be received during such Due
Period) and not reinvested in additional Collateral Loans or retained in the
Collection Account for subsequent reinvestment pursuant to Section 10.2 that, if
received as scheduled, will be available in the Collection Account at the end of
such Due Period and (ii) any such amounts received in prior Due Periods that
were not disbursed on a previous Quarterly Payment Date or retained in the
Collection Account for subsequent reinvestment pursuant to Section 10.2.

 

(g)        Each Scheduled Distribution receivable with respect to a Collateral
Loan shall be assumed to be received on the applicable Due Date, and each such
Scheduled Distribution shall be assumed to be immediately deposited in the
Collection Account to earn interest at the Assumed Reinvestment Rate.  All such
funds shall be assumed to continue to earn interest until the date on which they
are required to be available in the Collection Account for application, in
accordance with the terms hereof, to payments of principal of or interest on the
Loans or other amounts payable pursuant to this Agreement.

 

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

 

(i)         For purposes of calculating all Concentration Limitations, in the
numerator of any component of the Concentration Limitations, Defaulted Loans
will be treated as having a Maximum Principal Balance equal to zero.

 

(j)         Except as otherwise provided herein, Defaulted Loans will not be
included in the calculation of the Collateral Quality Test.

 

(k)        For purposes of calculating the Coverage Tests, the Collateral
Quality Test and the Concentration Limitations, capitalized or deferred interest
(and any other interest that is not paid in cash) on Collateral Loans will be
excluded.

 

(l)         References in this Agreement to the Borrower’s “purchase” or
“acquisition” of a Collateral Loan include references to the Borrower’s making
or origination of such Collateral Loan.  Portions of the same Collateral Loan
acquired or originated by the Borrower on different dates (whether through
purchase, receipt by contribution or the making or origination thereof, but
excluding subsequent draws under Revolving Collateral Loans or Delayed Funding
Loans) will, for purposes of determining the purchase price of such Collateral
Loan, be treated as separate purchases on separate dates (and not a weighted
average purchase price for any particular Collateral Loan).  Each Collateral
Loan that is originated by the Borrower shall be deemed to have a “purchase
price” of par.

 

(m)       For purposes of calculating the Weighted Average Spread or Weighted
Average Coupon, (i) a Collateral Loan that is a Step-Down Loan will be treated
as having the lowest per annum interest rate or spread over the applicable index
or benchmark rate over the remaining maturity of such

 

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Collateral Loan and (ii) a Collateral Loan that is a Step-Up Loan will be
treated as having the then current per annum interest rate or spread over the
applicable index or benchmark rate.

 

(n)        For purposes of calculating compliance with any tests under this
Agreement (including without limitation the Coverage Tests, the Collateral
Quality Test and the Concentration Limitations), the trade date (and not the
settlement date) with respect to any acquisition or disposition of a Collateral
Loan or Eligible Investment shall be used to determine whether and when such
acquisition or disposition has occurred.

 

(o)        For purposes of calculating compliance with the Eligibility Criteria,
at the election of the Collateral Manager in its sole discretion, any proposed
investment (whether a single Collateral Loan or a group of Collateral Loans
identified by the Collateral Manager at the time when compliance with the
Eligibility Criteria is required to be calculated (a “Trading Plan”)) may be
evaluated after giving effect to all sales and reinvestments proposed to be
entered into, and all payments (including prepayments) expected to be received,
within the 10 Business Days following the date of determination of such
compliance (such period, the “Trading Plan Period”); provided that (i) no
Trading Plan may result in the purchase of Collateral Loans having an Aggregate
Principal Balance that exceeds 10% of the Principal Collateralization Amount as
of the first day of the Trading Plan Period, (ii) no Trading Plan may result in
the purchase of Collateral Loans with a Weighted Average Life less than six
months, (iii) if the Collateral Loan with the shortest scheduled life to
maturity to be acquired under a Trading Plan has a scheduled life to maturity of
less than two years, then no such Trading Plan may result in the purchase of a
group of Collateral Loans if the difference between the shortest Weighted
Average Life of any Collateral Loan in such group and the longest Weighted
Average Life of any Collateral Loan in such group is greater than two years,
(iv) no Trading Plan Period may include a Calculation Date, (v) no more than one
Trading Plan may be in effect at any time during a Trading Plan Period and
(vi) if the Eligibility Criteria are not satisfied upon the expiry of the
related Trading Plan Period solely as a result of the failure to implement the
Trading Plan, the Collateral Manager may not elect any Trading Plan at any time
thereafter; and provided further that the Collateral Manager shall notify DBRS,
the Collateral Agent and the Administrative Agent of the commencement of any
Trading Plan Period and any Collateral Loans covered in such Trading Plan.

 

(p)        At any time when the Collateral Loans of a given type exceed the
Concentration Limitations, the Collateral Manager shall determine from time to
time which Collateral Loans of a given type shall be treated as Excess
Concentration Loans, and the Borrower may change the allocation of particular
Collateral Loans to Excess Concentration Loans from time to time so long as no
provision of this Agreement is violated by such allocation and, immediately
after giving effect to such allocation, no Default or Event of Default shall
have occurred and be continuing.

 

(q)        At any time when the Maximum Principal Balance of Collateral Loans
described in the second proviso of the definition of “Discount Loan” exceeds the
percentage of Total Capitalization specified in such proviso, the Collateral
Manager shall determine from time to time which Collateral Loans described in
such proviso shall be treated as Discount Loans, and the Borrower may change the
allocation of particular Collateral Loans described in such proviso to Discount
Loans from time to time so long as no provision of this Agreement is violated by
such allocation and, immediately after giving effect to such allocation, no
Default or Event of Default shall have occurred and be continuing.

 

Section 1.4       Cross-References; References to Agreements. “Herein,” “hereof”
and other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision.  Unless otherwise
specified, references in this Agreement to any Article, Section, Schedule or
Exhibit are references to such Article or Section of, or Schedule or Exhibit to,
this Agreement, and references in any Article, Section, Schedule or definition
to any subsection or clause are

 

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references to such subsection or clause of such Article, Section, Schedule or
definition.  Unless otherwise specified, all references herein to any agreement
or instrument shall be interpreted as references to such agreement or instrument
as it may be amended, supplemented or restated from time to time in accordance
with its terms and the terms of this Agreement and the other Loan Documents.

 

Section 1.5       Reference to Secured Parties.  In each case herein where any
payment or distribution is to be made or notice is to be given to the “Secured
Parties”, such payments, distributions and notices in respect of the Lenders
shall be made to the Administrative Agent.

 

ARTICLE II

 

THE LOANS

 

Section 2.1       The Commitments.

 

On the terms and subject to the applicable conditions hereinafter set forth,
including, without limitation, Article III, each Lender severally agrees to make
loans to the Borrower (each, a “Loan”) from time to time on any Business Day
during the period from the Closing Date through the end of the Commitment
Period, in each case in an aggregate principal amount at any one time
outstanding up to but not exceeding such Lender’s Commitment and, as to all
Lenders, in an aggregate principal amount up to but not exceeding the Total
Commitment as then in effect.

 

Each such borrowing of a Loan on any single day is referred to herein as a
“Borrowing”.

 

Within such limits and subject to the other terms and conditions of this
Agreement, the Borrower may borrow (and re-borrow) Loans under this Section 2.1
and prepay Loans under Section 2.7.

 

Each Lender severally agrees, on the last day of the Reinvestment Period (except
if the Reinvestment Period terminates as a result of clause (b) of the
definition thereof), to make a Loan (and the Borrower hereby directs that such
Loan be made) in an amount equal to its Percentage Share of the Unfunded Amount
(less the amount on deposit in the Future Funding Reserve Account) as of the
date such Loan is made (such Loan, the “Future Funding Reserve Loan”), but only
to the extent that its Percentage Share does not exceed its unfunded
Commitment.  The Borrower shall deposit the proceeds of such Loans in the Future
Funding Reserve Account such that the amounts on deposit in the Future Funding
Reserve Account equal the Unfunded Amount.

 

Section 2.2       Making of the Loans.

 

(a)        If the Borrower desires to make a Borrowing under this Agreement it
shall give the Agents a written notice in substantially the form set forth on
Exhibit B hereto (each, a “Notice of Borrowing”), which Notice of Borrowing
shall promptly be sent by the Administrative Agent to each Lender, for such
Borrowing not later than 1:00 p.m. (New York City time) at least two Business
Days prior to the day of the requested Borrowing; provided that, with respect to
the Borrowing to be made on the Closing Date, the Notice of Borrowing shall be
received by 3:00 p.m. (New York City time) on the Business Day immediately prior
to the Closing Date.

 

Each Notice of Borrowing shall be substantially in the form of Exhibit B hereto,
dated the date the request for the related Borrowing is being made, signed by an
Authorized Officer of the Borrower and otherwise be appropriately completed
(including an indication by the Borrower of the Loans proposed to be borrowed). 
The proposed Borrowing Date specified in each Notice of Borrowing shall be a
Business Day falling during the Commitment Period.

 

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The amount of the Borrowing requested in each Notice of Borrowing (the
“Requested Amount”) shall be equal to at least $500,000 and integral multiples
of $1,000 in excess thereof (or, if less, the remaining unfunded Commitments
hereunder).

 

Each Notice of Borrowing shall be revocable by the Borrower only if notice of
such revocation is given to the Lenders and the Administrative Agent no later
than 5:00 p.m. (New York City time) on the date that is two Business Days before
the date of the related Borrowing.  Notices of Borrowing shall otherwise be
irrevocable.

 

(b)        Each Lender shall, not later than 1:00 p.m. (New York City time) on
each Borrowing Date (including the Closing Date) in respect of the Loans to be
made by it hereunder, make its Percentage Share of the applicable Requested
Amount available to the Borrower by disbursing such funds in Dollars to the
Collateral Agent.

 

(c)        Unless the Collateral Agent has been notified that any applicable
condition specified in Article III or otherwise has not been satisfied, the
Collateral Agent will make the funds so received from the Lenders available to
the Borrower on the date of each Borrowing not later than 4:00 p.m. (New York
City time) at the Collateral Agent’s address.

 

(d)        Unless the Agents shall have received notice from a Lender prior to
the date of any Borrowing that such Lender will not make available to the
Collateral Agent such Lender’s Percentage Share of such Borrowing, the Agents
may assume that such Lender has made such Percentage Share available to the
Collateral Agent on the date of such Borrowing in accordance with
subsection (b) of this Section 2.2 and the Collateral Agent may (but shall have
no obligation to, until its receipt of good funds), in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount. 
If and to the extent that such Lender shall not have so made such funds
available to the Collateral Agent, such Lender and the Borrower severally agree
to repay to the Collateral Agent forthwith upon demand therefor such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Collateral Agent, at (i) in the case of the Borrower, a rate per
annum equal to the higher of the Federal Funds Rate and the interest rate
applicable to such Borrowing pursuant to Section 2.5 and (ii) in the case of
such Lender, the Federal Funds Rate.  If such Lender shall repay to the
Collateral Agent such corresponding amount, such amount so repaid shall
constitute such Lender’s Loan included in such Borrowing for purposes of this
Agreement.  The failure of any Lender to make any Loan on a date of Borrowing
hereunder shall not relieve any other Lender of any obligation hereunder to make
a Loan on such date.  Notwithstanding the foregoing and any other provision to
the contrary contained herein, if any Lender shall have failed to fund its
Percentage Share of a previously requested Loan on the applicable date of
Borrowing and the Borrower provides a new Notice of Borrowing as a result of
such failure to fund, then, in each such case, if necessary to make such
Borrowing, the Borrower shall be permitted a single additional Loan without
regard to the minimum borrowing limit set forth herein.

 

Section 2.3       Evidence of Indebtedness; Notes.

 

(a)        Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to it and
resulting from the Loans made by such Lender to the Borrower, from time to time,
including the amounts of principal and interest thereon and paid to it, from
time to time hereunder.  Notwithstanding any provision herein to the contrary,
the parties hereto intend that the Loans made hereunder shall constitute a
“loan” and not a “security” for purposes of Section 8-102(15) of the UCC.

 

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(b)        The Administrative Agent shall maintain, in accordance with its usual
practices, accounts in which it will record (i) the amount of each Loan made
hereunder to the Borrower, (ii) the amount of any principal due and payable or
to become due and payable from the Borrower to each Lender hereunder and
(iii) the amount of any principal sum paid by the Borrower hereunder and each
Lender’s share thereof.

 

(c)        The entries maintained in the accounts maintained pursuant to
clauses (a) and (b) of this Section 2.3 shall, absent manifest error, be prima
facie evidence of the existence and amounts of the Loans therein recorded;
provided that the failure of the Administrative Agent or any Lender to maintain
such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this
Agreement.

 

(d)        Any Lender may request that its Loans to the Borrower be evidenced by
a Note.  In such event, the Borrower shall promptly prepare, execute and deliver
to such Lender a Note payable to such Lender (or, if requested by such Lender,
to such Lender and its registered assigns) and otherwise appropriately
completed.  Thereafter, the Loans of such Lender evidenced by such Note and
interest thereon shall at all times (including after any assignment pursuant to
Section 12.6) be represented by one or more Notes payable to such Lender (or
registered assigns pursuant to Section 12.6), except to the extent that such
Lender (or registered assignee) subsequently returns any such Note for
cancellation and requests that such Loans once again be evidenced as described
in clauses (a) and (b) of this Section 2.3.  At the time of any payment or
prepayment in full of the Loans evidenced by any Note, such Note shall be
surrendered to the Administrative Agent promptly (but no more than 5 Business
Days) following such payment or prepayment in full.  Any such Note shall be
cancelled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note.

 

Section 2.4       Maturity of Loans.

 

Each Loan shall mature, and the principal amount thereof shall be due and
payable, on the Stated Maturity thereof.

 

Section 2.5       Interest Rates.

 

(a)        Each Loan shall bear interest on the unpaid principal amount thereof,
for each day such Loan is outstanding during each Interest Period applicable
thereto, at a rate per annum equal to the Applicable Rate with respect thereto. 
The Loans shall be Eurodollar Rate Loans, except as otherwise provided in this
Agreement, including without limitation, in clause (i) of the definition of
“Applicable Rate” and Sections 11.1 and 11.2.   Such interest shall be payable
for each Interest Period on the Quarterly Payment Date immediately following the
end of such Interest Period.

 

(b)        In the event that, and for so long as, an Event of Default shall have
occurred and be continuing, the outstanding principal amount of the Loans, and,
to the extent permitted by applicable law, overdue interest in respect of all
Loans, shall bear interest for each day at the annual rate of the sum of (i) the
Applicable Rate for such Loan for such day plus (ii) two percent (the
“Post-Default Rate” for such Loan).

 

(c)        The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder for any Interest Period or portion thereof
pursuant to this Section 2.5 and the related definitions; provided that the
relevant CP Lender, its Program Manager or its Funding Agent, as applicable,
shall determine and announce to the Administrative Agent the Cost of Funds Rate
for each Loan that is made by a CP Lender, such determination to be conclusive
absent manifest error.  The Administrative Agent shall give prompt notice to the
Borrower and the participating Lenders of each rate

 

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of interest so determined, and its determination thereof shall be conclusive in
the absence of manifest error.  The Administrative Agent shall, at the request
of the Borrower, the Collateral Agent or any Lender, deliver to the Borrower,
the Collateral Agent or such Lender, as the case may be, a statement showing the
quotations and demonstrating the calculations used by the Administrative Agent
or the relevant CP Lender, its Program Manager or its Funding Agent, as
applicable, in determining any interest rate pursuant to this Section 2.5.

 

(d)        The Administrative Agent agrees to use its best efforts to obtain
quotations of LIBOR as contemplated by Section 2.5(c) and the definition of
“London Interbank Offered Rate”.  If the Administrative Agent does not obtain a
timely quotation, the provisions of Section 11.1 shall apply.

 

Section 2.6       Commitment Fees.

 

(a)        Commitment Fees Payable.  The Borrower shall, subject to
Section 11.5(b)(ii)(y), pay to the Lenders pursuant to Section 6.4 or 9.1, as
applicable, ratably in proportion to their respective Percentage Shares, a
commitment fee (the “Commitment Fee”) accruing for each day during each Interest
Period during the Commitment Period at a per annum rate equal to 1.00% of the
Undrawn Commitment Amount; provided that the Commitment Fee for the period
accruing from (and including) the Closing Date to (and excluding) the date that
is three months after the Closing Date will be payable at a per annum rate equal
to 0.50% of the Undrawn Commitment Amount.  The Commitment Fee shall be payable
quarterly in arrears on the Quarterly Payment Date immediately following each
Interest Period for which it accrues as provided in the Priority of Payments and
shall be calculated by the Administrative Agent pursuant to Section 2.10.

 

(b)        Fees Non-Refundable.  All fees set forth in this Section 2.6 shall be
deemed to have been earned on the date such payment is due in accordance with
the provisions of this Agreement and shall be non-refundable.  The obligation of
the Borrower to pay such fees in accordance with the provisions of this
Agreement shall be binding upon the Borrower and shall inure to the benefit of
the Lenders regardless of whether any Loans are actually made.

 

Section 2.7       Reduction of Commitments; Prepayments.

 

(a)        Reduction and Termination.  (i) The Total Commitment (and the
Commitment of each Lender) shall be automatically reduced to zero at the close
of business (New York City time) on the last day of the Commitment Period.

 

(ii)        Prior to the end of the Commitment Period, the Borrower shall have
the right at any time (x) to terminate in their entirety the Total Commitments
or (y) to permanently reduce all or a portion of the unfunded amount of the
Commitments, in each case upon not less than five Business Days’ prior notice to
the Lenders, DBRS and the Administrative Agent of any such termination or
reduction, which notice shall specify the effective date of such termination or
reduction; provided, in the case of clause (x) above, that all amounts due under
this Agreement and the other Loan Documents are satisfied in full, including
without limitation all principal, interest, Commitment Fees and Administrative
Expenses.  Such notice of termination or reduction shall be effective only upon
receipt and shall terminate or permanently reduce (as applicable) the
Commitments of each Lender on the date specified in such notice and, in the case
of clause (y) above, shall specify the amount of any such reduction; provided
that no such reduction will reduce the Total Commitments below the aggregate
principal amount of the Loans at such time.

 

(iii)       The Total Commitment (and the Commitment of each Lender) once
terminated or reduced may not be reinstated.  Each reduction of the Total
Commitment pursuant to this

 

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Section 2.7 shall be applied ratably among the Lenders in accordance with their
respective Commitments.

 

(iv)       The Borrower will not terminate or reduce the Total Commitment if,
after giving effect to such reduction or termination, it would result in a
Commitment Shortfall.

 

(b)        Prepayments on Quarterly Payment Dates.  The Loans may be prepaid in
whole or in part on each Quarterly Payment Date in accordance with Article IX. 
Each such prepayment of Loans may be made with not less than two Business Days’
prior written notice thereof to the Agents and DBRS.

 

(c)        Other Prepayments.  Notwithstanding anything to the contrary
contained herein, subject to the requirement that each Coverage Test is in
compliance and there is no Commitment Shortfall after giving effect thereto, the
Borrower may at any time, upon at least five Business Days’ notice to the
Administrative Agent and DBRS, prepay with amounts on deposit in the Collection
Account constituting Principal Proceeds, without penalty or premium, all or any
portion of the Loans then outstanding on any Business Day that is not a
Quarterly Payment Date by paying to the Lenders the principal amount to be
prepaid together with accrued interest thereon to the date of prepayment and any
amount due pursuant to Section 2.9.  Each notice of such prepayment shall be
effective upon receipt and shall be dated the date such notice is being given,
signed by an Authorized Officer of the Borrower and otherwise appropriately
completed.  Each prepayment of any Loan by the Borrower pursuant to this
Section 2.7(c) shall in each case be in a principal amount of at least
$1,000,000 or a whole multiple of $100,000 in excess thereof or, if less, the
entire outstanding principal amount of the Loans.  If a notice of such
prepayment is given by the Borrower, the Borrower shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the date
specified therein.  Each prepayment pursuant to this Section 2.7(c) shall be
(i) subject to Section 2.9 and (ii) applied to the Loans of the Lenders in
accordance with their respective Percentage Share.  Prepayments of Loans
pursuant to this Section 2.7(c) shall not be subject to the Priority of Payments
except as provided pursuant to Sections 9.1(a)(i)(L)(1)(ii),
9.1(a)(i)(L)(2)(i) and 9.1(a)(ii)(B)(2).

 

(d)        Upon receipt of a notice of reduction or prepayment from the Borrower
pursuant to Section 2.7(a), 2.7(b) or 2.7(c), the Administrative Agent shall
promptly notify each Lender of the contents thereof and of such Lender’s ratable
share (if any) of such reduction or prepayment and such notice shall thereafter
be revocable by the Borrower no later than 10:00 a.m. (New York City time) three
Business Days before the date set forth by the Borrower in the applicable notice
of reduction or prepayment as the reduction or prepayment date.  Upon the
expiration of such time period, the notice of reduction or prepayment shall be
irrevocable; provided that any such notice may provide that repayment shall be
subject to and contingent on the consummation of alternative financing.

 

All reductions of the Commitments shall be applied to the Commitments of each
Lender ratably in accordance with their relevant applicable Percentage Shares,
and all prepayments of the Loans shall be applied to the Loans of each
applicable Lender in accordance with their relevant applicable Percentage
Shares.

 

(e)        All reductions of the Commitments pursuant to Section 2.7(a) shall be
permanent, and the Commitments, once reduced, shall not be reinstated.  Any
amount of the Loans prepaid pursuant to Section 2.7(b) or 2.7(c) may be
reborrowed to the extent permitted by Section 2.1.

 

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Section 2.8       General Provisions as to Payments.

 

(a)        The failure of any Lender to make any Loan to be made by it on the
date specified therefor shall not relieve any other Lender of its obligation to
make its Loan on such date, neither Agent shall be responsible for the failure
of any Lender to make any Loan, and no Lender shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender.

 

(b)        Except as otherwise provided in Section 2.7(c), all payments by the
Borrower pursuant to this Agreement or any of the Loan Documents in respect of
principal of, or interest on or other amounts owing in respect of, the Loans
shall be made in Dollars pursuant to the Priority of Payments.  All amounts
payable to the Administrative Agent or the Collateral Agent under this Agreement
or otherwise (including, but not limited to, fees) shall be paid to the
Administrative Agent or the Collateral Agent for the account of the Person
entitled thereto.  All payments hereunder or under the other Loan Documents
shall be made, without setoff or counterclaim, in funds immediately available in
New York City, to the Administrative Agent or the Collateral Agent at its
address referred to in Section 12.1.  All payments hereunder or under the other
Loan Documents to the Administrative Agent or the Collateral Agent shall be made
not later than 1:00 p.m. (New York City time) on the date when due.

 

(c)        The Administrative Agent will promptly distribute to each Lender its
ratable share, if any, of each payment received hereunder by the Administrative
Agent for the account of the Lenders without setoff or counterclaim.  Whenever
any payment of principal of, or interest on, the Loans or any other amount
hereunder shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day unless
such Business Day falls in another calendar month, in which case the date for
payment thereof shall be the immediately preceding Business Day.  If the date
for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.

 

Section 2.9       Funding Losses.  If the Borrower (1) makes any payment of
principal with respect to any Loan on any day other than on a Quarterly Payment
Date, (2) fails to borrow any Loans after notice thereof has been given to any
Lender in accordance with Section 2.2 and not revoked as permitted in this
Agreement or (3) fails to prepay any Loans after notice thereof has been given
to any Lender in accordance with Section 2.7 and not revoked as permitted in
this Agreement, then, in each case, upon demand therefor from a Lender, any
resulting loss or expense reasonably and actually incurred by it (including,
without limitation, (a) in the case of any payment of principal with respect to
any Loan on any day other than on a Quarterly Payment Date, the amount, if any,
by which (i) the reasonable and documented losses, costs and expenses (including
those incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such Lender to fund the Loan being repaid or by reason of a CP
Lender’s inability to retire the source of the Borrowing being prepaid
simultaneously with the prepayment, but excluding in any event the loss of
anticipated profits) sustained by such Lender exceed (ii) the income, if any,
received by such Lender from such Lender’s investment of the proceeds of such
prepayment or (b) in the case of any failure to borrow, the amount, if any, by
which (i) any losses (excluding loss of anticipated profits), costs or expenses
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Loan to be made by such Lender as part of
the Borrowing requested in such Notice of Borrowing when such Loan, as a result
of such failure, is not made on such date exceed (ii) the income, if any,
received by such Lender from such Lender’s investment of funds acquired by such
Lender to fund the Loan to be made as part of such Borrowing), shall constitute
Increased Costs payable by the Borrower on the next Quarterly Payment Date
pursuant to the Priority of Payments.

 

Section 2.10     Computation of Interest and Fees.  Except as otherwise
expressly provided herein, interest and fees payable pursuant to this Agreement
shall be computed on the basis of a

 

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year of 360 days and paid for the actual number of days elapsed (including the
first day but excluding the last day except in the case of interest or fees
calculated on the basis of an Interest Period).  All amounts payable hereunder
shall be paid in Dollars.

 

Section 2.11     Increased Commitments; Additional Loans.

 

(a)        At any time during the Reinvestment Period, with the consent of the
Administrative Agent, the Borrower may propose that the Commitments of the
existing Loans be increased (each such increase being “Increased Commitments”
and any loans made to the Borrower pursuant to the Increased Commitments,
“Additional Loans”) by notice to the Agents, DBRS and the Lenders; provided that
(i) the Borrower shall comply with the requirements of Section 3.3, (ii) the net
proceeds of any Additional Loans are used (x) to purchase or originate
additional Collateral Loans, (y) to pay fees and expenses of the Agents and the
Lenders in connection therewith and/or (z) as Principal Proceeds for purposes
permitted hereunder, (iii) the Rating Condition for the existing Loans is
satisfied after giving effect to any such Increased Commitments,
(iv) immediately prior to, and after giving effect to, such increase and the
application of the proceeds of the Additional Loans, each Coverage Test is
satisfied and the Collateral Quality Test is satisfied (or, only with respect to
the Collateral Quality Test, if not satisfied, maintained or improved); and
(v) no Lender shall have any obligation to increase its Commitment hereunder,
and any election to do so shall be in the sole discretion of each Lender.  Such
notice (the “Increased Commitment Notice”) shall be provided by the Borrower not
less than 10 Business Days prior to the proposed date of the Increased
Commitments.

 

(b)        The terms and conditions (other than the Applicable Margin and
Commitment Fees) of the Additional Loans issued pursuant to this Section 2.11
will be identical to those of the initial Loans (except that the interest and
commitment fees due on the Additional Loans will accrue from the issue date of
such Additional Loans and the interest rate and commitment fee rate in respect
of such Additional Loans do not have to be identical to those of the initial
Loans).  Interest on the Additional Loans will be payable commencing on the
first applicable Quarterly Payment Date following the issue date of such
Additional Loans.  The Additional Loans will rank pari passu in all respects
with the initial Loans.

 

(c)        The issuance of Additional Loans shall be in a cumulative amount no
greater than the amount of Cash and/or Collateral Loans (to be valued at the
Principal Collateralization Amount for each such Collateral Loan) that is
contributed, or otherwise invested, in the Borrower (and deposited in, or
credited to, the Collection Account or the Custodial Account, as applicable)
concurrently with the issuance of such Additional Loans.

 

(d)        To the extent that any portion of Increased Commitments shall remain
unfunded after the date that such Increased Commitments take effect, each
Additional Lender shall be an Approved Lender and, upon the making of an
Additional Loan or the extension of an Increased Commitment, shall be deemed to
be a Lender for all purposes hereunder.

 

Section 2.12     No Cancellation of Indebtedness.  Notwithstanding anything to
the contrary herein, no Loan may be cancelled, surrendered, abandoned or
forgiven except for payment as provided herein.

 

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Section 2.13     Loans Held by Borrower Affiliated Lenders.  Notwithstanding
anything to the contrary herein, in determining whether Lenders constituting the
requisite outstanding amount of Loans and Commitments have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, any Loans
or Commitments held by Borrower Affiliated Lenders shall be disregarded and
deemed not to be outstanding.

 

ARTICLE III

 

CONDITIONS TO BORROWINGS

 

Section 3.1       Effectiveness of Commitments.  The effectiveness of the
Commitments shall occur when each of the following conditions is satisfied (or
waived by the Administrative Agent and each Lender), each document to be dated
the Closing Date (unless otherwise indicated) and delivered to the relevant
Persons indicated below, and each document and other condition or evidence to be
in form and substance reasonably satisfactory to the Administrative Agent:

 

(a)        The Agents shall have received counterparts of (i) this Agreement
duly executed and delivered by all of the parties hereto and (ii) each of the
other Loan Documents to be executed and delivered on the Closing Date duly
executed and delivered by all of the parties thereto.

 

(b)        The Agents shall have received (i) proper financing statements, duly
filed on or before the Closing Date (and the Borrower hereby consents to such
filing by the Collateral Agent or the Administrative Agent) under the UCC in all
jurisdictions that the Administrative Agent reasonably deems necessary or
desirable in order to perfect the interests in the Collateral contemplated by
this Agreement and any other Loan Documents and (ii) copies of proper financing
statements, if any, necessary to release all security interests and other rights
of any Person in the Collateral previously granted by the Borrower or any other
transferor.

 

(c)        The Agents shall have received legal opinions (addressed to each of
the Secured Parties and DBRS) from (i) Dechert LLP, New York counsel to the
Borrower and the Collateral Manager, (ii) Locke Lord LLP, New York counsel to
the Collateral Agent and Custodian, (iii) in-house counsel for Wells Fargo and
(iv) Dorsey & Whitney LLP, Minnesota counsel to the Collateral Agent and
Custodian, each covering such matters as the Administrative Agent and its
counsel shall reasonably request (and including, without limitation, true sale
and non-consolidation opinions from counsel to the Borrower).

 

(d)        The Administrative Agent shall have received evidence reasonably
satisfactory to it that (i) all of the Covered Accounts shall have been
established, (ii) the Account Control Agreement shall have been executed and
delivered by the respective parties thereto and shall be in full force and
effect and (iii) all amounts required to be deposited in any of the Covered
Accounts as of the Closing Date pursuant to Section 8.3 shall have been so
deposited.

 

(e)        The Agents shall have received a letter from DBRS addressed to the
Borrower confirming that the Loans have been assigned a rating of “AAA (sf)”;
provided that such letter shall be provided by DBRS to the Agents on the Closing
Date to be held in escrow until such time as the Borrower has provided written
certification to DBRS and the Agents that the Initial Portfolio Conditions are
satisfied as of the date of such certification.  Following such certification
from the Borrower, such letter shall be released by DBRS.

 

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(f)        The Borrower shall have paid (i) the fees to be received by Natixis
North America LLC on the Closing Date pursuant to the Engagement Letter and
(ii) all reasonable and documented fees and out-of-pocket costs and expenses of
the Agents, the Lenders, DBRS, respective legal counsel and each other Person
payable under and in accordance with the Engagement Letter and as otherwise
agreed by the parties hereto, in connection with the preparation, execution and
delivery of this Agreement and the other Loan Documents.

 

(g)        The Agents shall have received evidence satisfactory to them and the
Lenders that (i) the grant of security pursuant to the Granting Clause herein of
all of the Borrower’s right, title and interest in and to the Collateral pledged
to the Collateral Agent on the Closing Date shall be effective in all relevant
jurisdictions, (ii) delivery of such Collateral in accordance with Section 8.7
(including any promissory notes, executed assignment agreements and word or pdf
copies of the principal credit agreement for each initial Collateral Loan, to
the extent in the possession of the Borrower) to the Custodian shall have been
effected and (iii) the Collateral Agent (for the benefit of the Secured Parties)
shall have a security interest in such Collateral.

 

(h)        The Agents shall have received a certificate of an Authorized Officer
of the Borrower:

 

(i)         to the effect that, as of the Closing Date (A) subject to any
conditions that are required to be satisfactory or acceptable to any Agent, all
conditions set forth in this Section 3.1 have been fulfilled; (B) all
representations and warranties of the Borrower set forth in this Agreement and
each of the other Loan Documents are true and correct in all material respects;
and (C) no Default has occurred and is continuing; and

 

(ii)        certifying as to and attaching (A) its Constituent Documents;
(B) its resolutions or other action of its board of directors or members
approving this Agreement, the other Loan Documents to which it is a party and
the transactions contemplated thereby; (C) the incumbency and specimen signature
of each of its Authorized Officers authorized to execute the Loan Documents to
which it is a party; and (D) a good standing certificate from its state or
jurisdiction of incorporation or organization and any other state or
jurisdiction in which it is qualified to do business in which the failure to be
so qualified would reasonably be expected to have a Material Adverse Effect.

 

(i)         The Agents shall have received a certificate of an Authorized
Officer of the Collateral Manager:

 

(i)         to the effect that, as of the Closing Date, all representations and
warranties of the Collateral Manager set forth in each of the Loan Documents are
true and correct in all material respects; and

 

(ii)        certifying as to and attaching (A) its Constituent Documents;
(B) its resolutions or other action of its board of directors or members
approving the Loan Documents to which it is a party and the transactions
contemplated thereby; (C) the incumbency and specimen signature of each of its
Authorized Officers authorized to execute the Loan Documents to which it is a
party; and (D) a good standing certificate from its state or jurisdiction of
incorporation or organization and any other state or jurisdiction in which it is
qualified to do business in which the failure to be so qualified would
reasonably be expected to have a Material Adverse Effect.

 

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(j)         [Reserved].

 

(k)        [Reserved].

 

(l)         The Agents shall have received a certificate of the Borrower
certifying that the Borrower does not have outstanding prior to the Closing
Date, and is not at such time party to, any interest rate hedging agreements or
currency hedging agreements.

 

(m)       The Administrative Agent shall have received a back-up certificate
from an Authorized Officer of the Retention Provider relating to certain factual
matters pertaining to the Retention Provider that are relevant pursuant to
Article 122a.

 

(n)        The Administrative Agent shall have received a secretary’s
certificate from the Collateral Agent, which shall include the incumbency and
specimen signature of each of its Authorized Officers authorized to execute the
Loan Documents to which it is a party.

 

(o)        The Agents shall have received from the Borrower either (A) a
certificate thereof or other official document evidencing the due authorization,
approval or consent of any governmental body or bodies, at the time having
jurisdiction in the premises, together with an opinion of counsel of the
Borrower, as applicable, that no other authorization, approval or consent of any
governmental body is required for the making of the Loans contemplated hereby,
or (B) an opinion of counsel of the Borrower that no such authorization,
approval or consent of any governmental body is required for the making of the
Loans contemplated hereby except as have been given.

 

(p)        All legal matters incident to this Agreement and the other Loan
Documents shall be satisfactory to the Borrower, the Agents, the Lenders and
their respective counsel.

 

(q)        The Agents shall have received such other opinions, instruments,
certificates and documents from the Borrower as the Agents or any Lender shall
have reasonably requested and provided that sufficient notice of such request
has been given to the Borrower.

 

Section 3.2       Borrowings.  The obligation of any Lender to make a Loan on
the occasion of any Borrowing is subject to the satisfaction of the following
conditions:

 

(a)        in the case of the initial Borrowing hereunder, (i) the conditions
precedent set forth in Section 3.1 shall have been fully satisfied on or prior
to the applicable Borrowing Date (such date, the “Initial Borrowing Date”);
(ii) the rating letter from DBRS referred to in Section 3.1(e) shall have been
released, the Agents shall have received a certification pursuant to
Section 3.1(e) from the Borrower that the Initial Portfolio Conditions are
satisfied, and all matters related thereto shall be satisfactory to the
Administrative Agent; and (iii) the Agents shall have received a certificate of
an Authorized Officer of the Collateral Manager (which certificate shall include
a schedule listing the Collateral Loans owned by the Borrower on the Initial
Borrowing Date), to the effect that, in the case of each item of Collateral
pledged to the Collateral Agent, on the Initial Borrowing Date and immediately
prior to the delivery thereof, (A) (w) the Borrower is the owner of such
Collateral free and clear of any liens, claims or encumbrances of any nature
whatsoever except for those which are being released on the Initial Borrowing
Date; (x) the Borrower has acquired its ownership in such Collateral in good
faith without notice of any adverse claim, except as described in clause
(w) above; (y) the Borrower has not assigned, pledged or otherwise encumbered
any interest in such Collateral (or, if any such interest has been assigned,
pledged or otherwise encumbered, it has been released) other than pursuant to
this Agreement; and (z) the

 

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Borrower has full right to grant a security interest in and assign and pledge
such Collateral to the Collateral Agent; and (B) upon grant by the Borrower, the
Collateral Agent has a first priority perfected security interest in the
Collateral, except as permitted by this Agreement;

 

(b)        the Administrative Agent shall have received a Notice of Borrowing as
required by Section 2.2 and the conditions set forth in clause (c) below are met
in connection with such Borrowing (as evidenced by the Notice of Borrowing);

 

(c)        immediately after such Borrowing, the aggregate outstanding principal
amount of the Loans shall not exceed the Total Commitment as in effect on such
Borrowing Date;

 

(d)        except in the case of Loans obtained to fund Unfunded Amounts,
immediately before and after such Borrowing, no Default shall have occurred and
be continuing both before and after giving effect to the making of such Loans;

 

(e)        except in the case of Loans obtained to fund Unfunded Amounts, the
representations and warranties of the Borrower contained in this Agreement and
each of the other Loan Documents shall be true and correct in all material
respects on and as of the date of such Borrowing (unless stated to relate solely
to an earlier date, in which case such representations and warranties shall be
true and correct in all material respects as of such earlier date) both before
and after giving effect to the making of such Loans;

 

(f)        except in the case of Loans obtained to fund Unfunded Amounts, no law
or regulation shall have been adopted, no order, judgment or decree of any
governmental authority shall have been issued, and no litigation shall be
pending or, to the actual knowledge of a Senior Authorized Officer of the
Borrower, threatened, which does or, with respect to any threatened litigation,
seeks to enjoin, prohibit or restrain, the making or repayment of the Loans or
the consummation of the transactions among the Borrower, the Collateral Manager,
the Lenders and the Agents contemplated by this Agreement;

 

(g)        except in the case of Loans obtained to fund Unfunded Amounts, each
of the Loan Documents remains in full force and effect and is the binding and
enforceable obligation of the Borrower and the Collateral Manager, in each case,
to the extent such Person is a party thereto (except for those provisions of any
Loan Document not material, individually or in the aggregate with other affected
provisions, to the interests of any of the Lenders); and

 

(h)        except in the case of Loans obtained to fund Unfunded Amounts,
immediately before and after giving effect to the requested Borrowing, each
Coverage Test shall be satisfied (as demonstrated in a writing attached to such
Notice of Borrowing).

 

Section 3.3       Effectiveness of Increased Commitments.  The effectiveness of
the Increased Commitments and the obligation of any Lender to make an Additional
Loan on the occasion of any Borrowing is each subject to the satisfaction of the
following conditions:

 

(a)        The Agents shall have received a certificate of an Authorized Officer
of the Borrower:

 

(i)         to the effect that, and subject to any conditions that are required
to be satisfactory or acceptable to any Agent, as of the Increased Commitment
Date (A) all conditions set forth in this Section 3.3 have been fulfilled;
(B) all representations and warranties of the Borrower set forth in this
Agreement and each of the other Loan

 

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Documents are true and correct in all material respects; and (C) no Default has
occurred and is continuing; and

 

(ii)        certifying as to and attaching (A) its Constituent Documents;
(B) its resolutions or other action of its board of directors or members
approving the Increased Commitments, the Additional Loans and any other matters
related thereto; and (C) a good standing certificate from its state or
jurisdiction of incorporation or organization and any other state or
jurisdiction in which it is qualified to do business in which the failure to be
so qualified would reasonably be expected to have a Material Adverse Effect.

 

(b)        The Agents shall have received legal opinions (addressed to each of
the Secured Parties and DBRS) from counsel to the Borrower in New York and any
other applicable jurisdictions (as reasonably determined by the Agents), dated
the Increased Commitment Date, substantially in the form of the legal opinions
delivered at the Closing Date (but excluding any true sale and non-consolidation
opinions), each with additions or deletions reflecting the Increased Commitments
and Additional Loans.

 

(c)        The Agents shall have received a certificate of an Authorized Officer
of the Borrower, to the effect that, in the case of each item of Collateral
pledged to the Collateral Agent on the Increased Commitment Date, (A) the
Borrower is the owner of such Collateral free and clear of any liens, claims or
encumbrances of any nature whatsoever except for Permitted Liens; (B) the
Borrower has acquired its ownership in such Collateral in good faith without
notice of any adverse claim, except as described in clause (A) above; (C) the
Borrower has not assigned, pledged or otherwise encumbered any interest in such
Collateral (or, if any such interest has been assigned, pledged or otherwise
encumbered, it has been released) other than Permitted Liens; (D) the Borrower
has full right to grant a security interest in and assign and pledge such
Collateral to the Collateral Agent; and (E) upon grant by the Borrower, the
Collateral Agent has a first priority perfected security interest in the
Collateral, except as permitted by this Agreement.

 

(d)        The Agents shall have received (i) a letter from DBRS addressed to
the Borrower (or other written confirmation from DBRS) confirming that the
rating of the Loans by DBRS shall not have been lowered from the Initial Rating,
and will not be lowered as a result of such increase of the Commitments and the
making of the Additional Loans and (ii) a letter from DBRS addressed to the
Borrower confirming that the Additional Loans have been assigned a rating of
“AAA (sf)”.

 

(e)        The Agents shall have received from the Borrower either (A) a
certificate thereof or other official document evidencing the due authorization,
approval or consent of any governmental body or bodies, at the time having
jurisdiction in the premises, together with an opinion of counsel of the
Borrower that no other authorization, approval or consent of any governmental
body is required for the making of the Additional Loans, or (B) an opinion of
counsel of the Borrower that no such authorization, approval or consent of any
governmental body is required for the making of the Additional Loans except as
have been given.

 

(f)        The Administrative Agent and Natixis (as Lender) (and any other
Article 122a Lender) shall have received a Retention of Net Economic Interest
Letter.

 

(g)        The Borrower shall have paid all reasonable and documented fees and
expenses (including reasonable and documented fees and expenses of one counsel
to the Administrative Agent and the initial Lender and one New York counsel and
one local counsel to Wells Fargo, as

 

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Collateral Agent, Custodian and Securities Intermediary) payable in connection
with such increase of the Commitments.

 

(h)        The Agents shall have received such other documents as they may
reasonably require in connection with such increase of the Commitments.

 

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE BORROWER

 

In order to induce the Administrative Agent and each of the Lenders which may
become a party to this Agreement to make the Loans, the Borrower makes the
following representations and warranties as of the Closing Date.  Such
representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the other Loan Documents and the making
of the Loans and shall be deemed to be reaffirmed as of the date of each
Borrowing.

 

Section 4.1       Existence and Power.  The Borrower is a limited liability
company duly organized and validly existing and in good standing under the laws
of the State of Delaware.  The Borrower has all powers and all material
governmental licenses, authorizations, consents and approvals required to own
its property and assets and carry on its business as now conducted or as it
presently proposes to conduct it, and has been duly qualified and is in good
standing (as applicable) in every jurisdiction in which the failure to be so
qualified and/or in good standing is likely to have a Material Adverse Effect.

 

Section 4.2       Power and Authority.  The Borrower has the power and authority
to execute, deliver and carry out the terms and provisions of each of the Loan
Documents and has taken all necessary action to authorize the execution,
delivery and the performance of such Loan Documents.  The Borrower has duly
executed and delivered each Loan Document, and each Loan Document constitutes
the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms, except as enforceability may be limited by applicable
insolvency, bankruptcy or other laws affecting creditors rights generally, or
general principles of equity, whether such enforceability is considered in a
proceeding in equity or at law.

 

Section 4.3       No Violation.  Neither the execution, delivery or performance
by the Borrower of the Loan Documents nor compliance by the Borrower with the
terms and provisions thereof nor the consummation of the transactions among the
Borrower, the Collateral Manager, the Lenders and the Agents contemplated by the
Loan Documents, (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict, in any respect, with or result
in any breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Borrower pursuant to the terms of any indenture, agreement, lease,
instrument or undertaking to which the Borrower is a party or by which it or any
of its property or assets is bound or to which it is subject (except the Lien
created by the Loan Documents), or (iii) will contravene the terms of any
organizational documents of the Borrower, or any amendment thereof.

 

Section 4.4       Litigation.  There is no action, suit or proceeding pending
against, or to the actual knowledge of a Senior Authorized Officer of the
Borrower, after due inquiry, threatened against or adversely affecting, (i) the
Borrower or the Collateral Manager, (ii) the Loan Documents or any of the
transactions contemplated by the Loan Documents or (iii) any of the Borrower’s
assets, before any

 

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court, arbitrator or any governmental body, agency or official which has had or
would reasonably be expected to have a Material Adverse Effect.

 

Section 4.5       Compliance with ERISA.

 

 

(a)        Neither the Borrower nor any member of its ERISA Group, if any, has,
or in the past five years had, any liability or obligation with respect to any
Plan or any Multiemployer Plan.

 

(b)        The assets of the Borrower are not treated as “plan assets” for
purposes of Section 3(42) of ERISA or Similar Law and the Collateral is not
deemed to be “plan assets” for purposes of Section 3(42) of ERISA or Similar
Law.  The Borrower has not taken, or omitted to take, any action which would
result in any Collateral being treated as “plan assets” for purposes of
Section 3(42) of ERISA or Similar Law or the occurrence of any Prohibited
Transaction in connection with the transactions contemplated hereunder.

 

Section 4.6      Environmental Matters.

 

(a)        The Borrower’s operations comply in all material respects with all
applicable Environmental Laws;

 

(b)        None of the Borrower’s operations is the subject of a federal or
state investigation evaluating whether any remedial action, involving
expenditures, is needed to respond to a release of any Hazardous Substances into
the environment; and

 

(c)        The Borrower does not have any material contingent liability in
connection with any release of any Hazardous Substances into the environment.

 

Section 4.7       Taxes.  The Borrower has filed all tax returns and reports
required to be filed by it and has paid all taxes, assessments, fees, and other
governmental charges levied or imposed on it or its property, income or assets
except such as are being contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP have been provided.

 

Section 4.8       Full Disclosure.  All written information (other than
projections, other forward-looking information, information of a general
economic or general industry nature and pro forma financial information)
heretofore (as of each date when this representation and warranty is made)
furnished by or on behalf of the Borrower to the Agents or any Lender for
purposes of, or in connection with this Agreement or any transaction
contemplated hereby is true and accurate in all material respects, and, taken as
a whole, contained as of the date of delivery thereof no untrue statement of a
material fact and did not omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading in light of the
circumstances under which such information was furnished.  The projections and
pro forma financial information contained in the materials referenced above are
based upon good faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such projections and pro forma financial information as it relates to
future events are not to be viewed as fact and that actual results during the
period or periods covered by such projections and pro forma financial
information may differ from the projected and pro forma results set forth
therein by a material amount.

 

Section 4.9       Solvency.  On the Closing Date and on the date of each
Borrowing, and after giving effect to the transactions contemplated by the Loan
Documents, the Borrower will be solvent.

 

Section 4.10     Use of Proceeds; Margin Regulations.  All proceeds of the Loans
will be used by the Borrower only in accordance with the provisions of this
Agreement and the other Loan

 

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Documents.  No part of the proceeds of any Loan will be used by the Borrower to
purchase or carry any Margin Stock.  Neither the making of any Loan nor the use
of the proceeds thereof will violate or be inconsistent with the provisions of
Regulations T, U or X of the Federal Reserve Board.

 

Section 4.11     Governmental Approvals.  No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of any Loan Document or the consummation of
any of the transactions contemplated thereby other than those that have already
been duly made or obtained and remain in full force and effect or those
recordings and filings in connection with the Liens granted to the Collateral
Agent under the Loan Documents, except for any order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption, that, if not obtained, would not, either individually or in
the aggregate reasonably be expected to have a Material Adverse Effect.

 

Section 4.12     Investment Company Act.  The Borrower is neither (i) an
“investment company” as defined in, or subject to regulation under, the
Investment Company Act nor (ii) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.

 

Section 4.13     Representations and Warranties in Loan Documents.  All
representations and warranties made by the Borrower in the Loan Documents are
true and correct in all material respects as of the date of this Agreement and
as of any date that Borrower is deemed to reaffirm the same under this Agreement
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date).

 

Section 4.14     Patents, Trademarks, Etc.  The Borrower has obtained and holds
in full force and effect all patents, trademarks, service marks, trade names,
copyrights and other such rights, free from any burdensome restrictions, which
are necessary for the operation of its business as presently conducted, the
impairment of which has had or would reasonably be expected to have a Material
Adverse Effect.

 

Section 4.15     Ownership of Assets.  The Borrower owns all of its properties
and assets, of any nature whatsoever, free and clear of all Liens, except
Permitted Liens.

 

Section 4.16     No Default.  No Default exists under or with respect to any
Loan Document.  The Borrower is not in default under or with respect to any
material agreement, instrument or undertaking to which it is a party or by which
it or any of its properties is bound in any respect, the existence of which
default has had or would reasonably be expected to have a Material Adverse
Effect.

 

Section 4.17     Labor Matters.  There is no labor controversy pending with
respect to or, to the best knowledge of a Senior Authorized Officer of the
Borrower, threatened against the Borrower, which has had or, if adversely
determined, would reasonably be expected to have a Material Adverse Effect.

 

Section 4.18     Subsidiaries/Equity Interests.  The Borrower (a) has no
Subsidiaries and (b) owns no equity interest in any other entity except
(i) Units pursuant to clause (i) of the definition of “Collateral Loan”,
(ii) exchangeable or convertible securities pursuant to clause (i) of the
definition of “Collateral Loan” and (iii) equity received in connection with the
exercise of remedies against an Obligor or through a restructuring of the
Obligor, subject to Section 10.1(a)(iv).

 

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Section 4.19     Ranking.  All Obligations, including the Obligations to pay
principal of, interest on and any other amounts in respect of, the Loans,
constitute senior indebtedness of the Borrower.

 

 

Section 4.20     Representations Concerning Collateral.

 

(a)        Upon each transfer of Collateral in the manner specified in
Section 8.7 and after the other actions described in Section 8.7 have been taken
by the appropriate parties, the Collateral Agent in accordance with Section 8.7,
for the benefit of the Secured Parties, will have a perfected pledge of and
security interest in such Collateral and all proceeds thereof (subject to §
9-315(c) of the UCC), which security interest shall be prior to all other
interests in such Collateral, other than certain Permitted Liens that are prior
to the security interest of the Secured Parties by operation of law.  No filings
other than those described or referred to in Section 8.7 or any other action
other than those described in Section 8.7 will be necessary to perfect such
security interest.

 

(b)        Immediately before giving effect to each transfer of Collateral
Loans, Eligible Investments and other Collateral by the Borrower to the
Collateral Agent in accordance with Section 8.7, the Borrower will be the
beneficial owner of such Collateral Loans, Eligible Investments and other
Collateral, and the Borrower will have the right to receive all Collections on
such Collateral Loans, Eligible Investments and other Collateral, in each case
free and clear of all Liens, security interests and adverse claims other than
Permitted Liens.

 

(c)        All of the Obligors and administrative agents, as applicable, in
respect of the Collateral Loans, or Selling Institutions in respect of
Participation Interests, have been instructed to make payments to the Collection
Account.

 

ARTICLE V

 

AFFIRMATIVE AND NEGATIVE COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees that, so long as any Lender has any Commitment
hereunder or any Obligations remain unpaid, and unless the Majority Lenders
shall otherwise consent in writing:

 

Section 5.1       Information.  The Borrower will deliver the following to the
Agents and DBRS (and the Administrative Agent shall furnish copies thereof to
each of the Lenders); provided that (1) the information described in clause
(e) below will not be required to be delivered to DBRS, (2) the information
described in clause (k) below will be required to be furnished solely to the
Administrative Agent for distribution to each of the Lenders, (3) the
information described in clause (l) below will be required to be furnished
solely to the Administrative Agent for distribution to each Article 122a Lender
and (4) the information described in clause (m) below will be required to be
delivered only to the Collateral Agent:

 

(a)        as soon as reasonably available and in any event within 120 days
after the end of each fiscal year, a balance sheet of the Borrower or, if the
Borrower is consolidated with the balance sheet of the BDC, of the BDC as of the
end of such fiscal year and the related statements of operations and cash flows
for such fiscal year audited by independent public accountants of nationally
recognized standing;

 

(b)        as soon as available and in any event within 60 days after the end of
each of the first three quarters of each fiscal year, a balance sheet of the
Borrower or, if the Borrower is consolidated with the balance sheet of the BDC,
of the BDC as of the end of such quarter and the

 

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related statements of operations for such quarter and for the portion of the
Borrower’s fiscal year ended at the end of such quarter;

 

(c)        simultaneously with the delivery of each set of financial statements
referred to in clauses (a) and (b) above, a certificate of the Borrower
certifying (x) that such financial statements fairly present in all material
respects the financial condition and the results of operations of the Borrower
on the dates and for the periods indicated, on the basis of GAAP, subject, in
the case of interim financial statements, to normally recurring year-end
adjustments and the absence of notes, and (y) that an Authorized Officer of the
Borrower has reviewed the terms of the Loan Documents and has made, or caused to
be made under his or her supervision, a review in reasonable detail of the
business and condition of the Borrower during the period beginning on the date
through which the last such review was made pursuant to this Section 5.1(c) (or,
in the case of the first certification pursuant to this Section 5.1(c), the
Closing Date) and ending on a date not more than ten Business Days prior to the
date of such delivery and that on the basis of such financial statements and
such review of the Loan Documents, no Default occurred and is continuing or, if
any such Default has occurred and is then continuing, specifying the nature and
extent thereof and, if continuing, the action the Borrower is taking or proposes
to take in respect thereof;

 

(d)        (i) within seven days after a Senior Authorized Officer of the
Borrower obtains actual knowledge of any Default or Event of Default, if such
Default or Event of Default is then continuing, a certificate of such Senior
Authorized Officer setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto; (ii) promptly and
in any event within ten days after such Senior Authorized Officer obtains
knowledge thereof, notice of any (x) litigation or governmental proceeding
pending or actions threatened against the Borrower or its rights in the
Collateral Loans or other Collateral which have had or would reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect,
and (y) any other event, act or condition which has had or would reasonably be
expected to have a Material Adverse Effect; and (iii) promptly after a Senior
Authorized Officer of the Borrower obtains knowledge that any loan included in
the Collateral does not qualify as a “Collateral Loan,” notice setting forth the
details with respect to such disqualification;

 

(e)        promptly upon the sending thereof, copies of all reports, notices or
documents that the Borrower sends to any governmental body, agency or regulatory
authority (excluding routine filings) and not otherwise required to be delivered
hereunder;

 

(f)        promptly and in any event within ten Business Days after a Senior
Authorized Officer of the Borrower obtains actual knowledge of any of the
following events, a certificate of the Borrower, executed by a Senior Authorized
Officer of the Borrower, specifying the nature of such condition and the
Borrower’s proposed response thereto:  (i) the receipt by the Borrower of any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Borrower is not in compliance with
applicable Environmental Laws, and such noncompliance had or would reasonably be
expected to have a Material Adverse Effect, (ii) the Borrower has actual
knowledge that there exists any Environmental Claim pending or threatened
against the Borrower that has had or would reasonably be expected to have a
Material Adverse Effect or (iii) the Borrower has actual knowledge of any
release, emission, discharge or disposal of any Hazardous Substances that has
had or would reasonably be expected to have a Material Adverse Effect;

 

(g)        within ten Business Days after receipt of any material notices or
correspondence from any company or administrative agent for any company
providing insurance coverage to the

 

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Borrower relating to any material loss of the Borrower, copies of such notices
and correspondence;

 

(h)        not later than the 10th day after the Collateral Report Determination
Date for each calendar month (or if such day is not a Business Day, the next
succeeding Business Day), a report concerning the Collateral Loans and Eligible
Investments (the “Collateral Report”); the first Collateral Report shall be
delivered in October 2013 and shall be determined with respect to the Collateral
Report Determination Date occurring in October 2013; the Collateral Report for a
calendar month shall contain the information with respect to the Collateral
Loans and Eligible Investments described in Exhibit E, and shall be determined
as of the Collateral Report Determination Date for such calendar month;

 

(i)         on each Quarterly Payment Date, a Payment Date Report in accordance
with Section 9.1(c);

 

(j)         from time to time such additional information regarding the
Collateral or the financial position or business of the Borrower as the Agents,
on either their own initiative or at the request of the Majority Lenders or
DBRS, may reasonably request in writing;

 

(k)        the information described in Exhibit G, at the times indicated
therein, which shall be subject to adjustment with the prior written consent of
the Borrower and the Majority Lenders;

 

(l)         (i) promptly following a request by any Article 122a Lender which is
(x) received in connection with (A) a material amendment of any Loan Document or
(B) any Additional Loan or Increased Commitment, a refreshed Retention of Net
Economic Interest Letter from the Retention Provider, or (y) for additional
information which is either in the possession of the Retention Provider or can
be obtained at no material cost to the Retention Provider, such additional
information as such Article 122a Lender may reasonably request in order for such
Article 122a Lender to comply with the requirements of Article 122a;

 

(ii) promptly on becoming aware of the occurrence thereof, written notice of any
failure to satisfy the Retention Requirement at any time;

 

(iii) on a monthly basis (concurrent with the delivery of each Collateral
Report), a certificate from an Authorized Officer of the Retention Provider
confirming continued compliance with the requirements set forth in clauses
(a) through (h) of the Retention of Net Economic Interest Letter as set forth in
Exhibit H; and

 

(iv)  upon any written request therefor by or on behalf of the Borrower or any
Article 122a Lender delivered as a result of a material change in (x) the
performance of the Loans, (y) the risk characteristics of the transaction, or
(z) the Collateral Loans and/or the Eligible Investments from time to time, a
certificate from an Authorized Officer of the Retention Provider confirming
continued compliance with the requirements set forth in clauses (a) through
(h) of the Retention of Net Economic Interest Letter as set forth in Exhibit H;

 

(m)       within 5 Business Days of the receipt thereof, any letters received
from DBRS in respect of credit estimates; and

 

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(n)        within 5 Business Days of the receipt thereof, written notice of the
occurrence of an event that would permit the termination of the Collateral
Management Agreement, the Investment Advisory Agreement or the Sub-Advisory
Agreement, or the replacement of the Collateral Manager under the Collateral
Management Agreement, the Investment Advisor under the Investment Advisory
Agreement or the Sub-Advisor under the Sub-Advisory Agreement, as applicable.

 

Section 5.2       Payment of Obligations.  The Borrower will pay and discharge,
at or before maturity, all its respective material obligations and liabilities,
including, without limitation, any obligation pursuant to any agreement by which
it or any of its properties or assets is bound and any material tax liabilities,
except where such liabilities may be contested in good faith by appropriate
proceedings, and will maintain in accordance with GAAP, appropriate reserves for
the accrual of any of the same.

 

Section 5.3       Maintenance of Property; Insurance.

 

(a)        The Borrower will maintain and preserve all its property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted, and make all necessary repairs thereto and renewals and
replacements thereof, in each case except where the failure to do so would not
have a Material Adverse Effect.

 

(b)        The Borrower will maintain, with financially sound and reputable
insurers, insurance with respect to its properties and business against such
liabilities and contingencies and of such types and in such amounts as is
customary in accordance with prudent business practice of similar businesses in
similar locations and otherwise acceptable to the Majority Lenders, including
without limitation, fidelity bond coverage and director and officer liability
insurance.  The Borrower will, upon request of the Majority Lenders, furnish to
the Lenders at reasonable intervals (but, so long as no Event of Default shall
have occurred and be continuing, not more frequently than annually) a
certificate of an Authorized Officer of the Borrower setting forth the nature
and extent of all insurance maintained by the Borrower in accordance with this
Section 5.3(b).  The Borrower shall retain all the incidents of ownership of the
insurance maintained pursuant to this Section 5.3(b) and shall not borrow upon
or otherwise impair its right to receive the proceeds of such insurance.  Unless
replaced concurrently with replacement coverage, the Borrower shall not cancel
any insurance referred to in this Section 5.3(b) without the consent of the
Majority Lenders (which shall not be unreasonably withheld, delayed or
conditioned), and the Borrower will deliver to the Lenders, within five Business
Days of receipt thereof, a copy of any notice from any insurer, a copy of any
notice of cancellation or a copy of any notice providing for a change in
coverage from that existing on the date of this Agreement.  The Borrower shall
provide the Agents with prompt notice of the filing by the Borrower of any
insurance claim that in its judgment could be reasonably expected to exceed
$5,000,000.

 

Section 5.4       Good Standing.  The Borrower will remain qualified to do
business and in good standing (as applicable) in every jurisdiction in which the
nature of its businesses so requires, except where the failure to be so
qualified and in good standing (other than in the State of Delaware) would not
reasonably be expected to have a Material Adverse Effect.

 

Section 5.5       Compliance with Laws.  The Borrower will comply in all
material respects with all applicable material laws, ordinances, rules,
regulations, and requirements of governmental authorities except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings.

 

Section 5.6       Inspection of Property, Books and Records; Audits; Etc.

 

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(a)        The Borrower will keep proper books of record and accounts in which
full, true and correct entries in all material respects in accordance with GAAP
shall be made of all material financial matters and transactions in relation to
its business and activities; and will permit representatives of the
Administrative Agent and the Collateral Agent (in each case at the Borrower’s
expense, in the case of not more than one inspection during any fiscal year
except during the continuance of an Event of Default) to visit and inspect any
of its properties, to examine and make abstracts from any of its books and
records and to discuss its affairs, finances and accounts with its officers,
employees and independent public accountants, all at reasonable times in a
manner so as to not unduly disrupt the business of the Borrower, upon reasonable
prior notice to the Borrower and as often as may reasonably be desired.

 

(b)        If requested by the Majority Lenders, the Borrower agrees that
representatives of the Majority Lenders (or an independent third party auditing
firm selected by the Majority Lenders) shall (at the Borrower’s expense) conduct
an audit and/or field examination of the Borrower and the Collateral Manager, at
reasonable times in a manner so as to not unduly disrupt the business of the
Borrower or the Collateral Manager, for the purpose of examining the servicing
and administration of the Collateral Loans, the results of which audit and/or
field examination shall be promptly provided to the Lenders, provided that no
more than one such audit or field examination shall be conducted during any
fiscal year of the Borrower.

 

(c)        If requested by the Administrative Agent or the Majority Lenders, the
Borrower and the Collateral Manager shall participate in a meeting with the
Administrative Agent and the Lenders once during each fiscal year of the
Borrower, to be held at a location in New York City and at a time reasonably
determined by the Borrower and the Collateral Manager.

 

Section 5.7       Existence.  The Borrower shall do or cause to be done, all
things necessary to preserve and keep in full force and effect its existence,
its material rights, and its material privileges, obligations, licenses and
franchises.

 

Section 5.8       Subsidiaries/Equity Interest.  The Borrower shall not directly
or indirectly own any Subsidiaries or any equity interest in any entity other
than as otherwise permitted pursuant to Section 4.18.

 

Section 5.9       Investments.              (a)        The Borrower shall not
make any investment other than in Collateral Loans or Eligible Investments;
provided that the Borrower may own Defaulted Loans, Equity Securities and other
Collateral as permitted by the terms of this Agreement.  On and after the date
of the first Borrowing through the end of the Reinvestment Period, the Borrower
shall not purchase or originate any debt obligation unless, at the time of such
purchase or origination and after giving effect thereto, the Eligibility
Criteria are satisfied with respect to the debt obligations so purchased or
originated.  The Borrower shall not purchase, originate or fund any debt
obligations after the Reinvestment Period except for (i) the funding of Exposure
Amounts of Revolving Collateral Loans and Delayed Funding Loans that were
originated or purchased prior to the end of the Reinvestment Period and (ii) the
origination or purchase of a Collateral Loan where the commitment to make such
purchase or origination was made prior to the end of the Reinvestment Period, so
long as such commitment provided for settlement in accordance with customary
procedures in the relevant markets, but in any event for a settlement period no
longer than three months following the date of such commitment.

 

(b)        The Borrower shall not at any time obtain or maintain title to any
real property or obtain or maintain a controlling interest in an entity that
owns any real property (except for Equity Securities that are acquired as a
result of the restructuring of a Collateral Loan so long as the Borrower directs
the Collateral Agent to sell any such Equity Security pursuant to
Section 10.1(a)(iv)).

 

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(c)        The Borrower shall not make any investments at any time when the
Overcollateralization Ratio is less than 125.0%.

 

Section 5.10     Restriction on Fundamental Changes.

 

(a)        The Borrower shall not enter into any merger or consolidation or
reorganization.  The Borrower shall not liquidate, wind-up or dissolve (or
suffer any liquidation or dissolution), discontinue its business or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or any part of its business or property, whether now or
hereafter acquired, except for transfers of its property expressly permitted by
the Loan Documents.

 

(b)        The Borrower shall not amend its Constituent Documents in a manner
adverse to the Lenders without the Majority Lenders’ prior written consent,
which consent shall not be unreasonably withheld, conditioned or delayed.

 

Section 5.11     ERISA.  Neither the Borrower nor any member of the ERISA Group
shall establish any Plan or Multiemployer Plan.

 

Section 5.12     Liens.  The Borrower shall not at any time directly or
indirectly create, incur, assume or permit to exist, on any of its property, any
Lien for borrowed monies or any other Lien except for Permitted Liens.

 

Section 5.13     Business Activities.  The Borrower shall not engage in any
business activity other than the making, purchase, origination and maintenance
of Collateral Loans and the ownership of equity interests, in each case in
compliance with the terms of this Agreement and the other Loan Documents.

 

Section 5.14     Fiscal Year; Fiscal Quarter.  The Borrower shall not change its
fiscal year or any of its fiscal quarters, without the Administrative Agent’s
prior written consent, which consent shall not be unreasonably withheld or
delayed.

 

Section 5.15     Margin Stock.  None of the proceeds of any Loan will be used by
the Borrower, directly or indirectly, for the purpose of buying or carrying any
Margin Stock.

 

Section 5.16     Indebtedness.  The Borrower shall not incur or suffer to exist
any Indebtedness other than the Obligations.

 

Section 5.17     Use of Proceeds.  The Borrower shall use the proceeds of the
Loans solely (a) for the purchase and origination of Collateral Loans during the
Reinvestment Period (and after the Reinvestment Period only for the purchase and
origination of Collateral Loans committed to during the Reinvestment Period,
subject to Section 5.9), (b) to acquire Collateral Loans from the BDC, (c) to
fund Exposure Amounts and/or (d) to make Permitted Distributions, in each case
on and subject to the terms and conditions set forth in this Agreement and the
other Loan Documents.

 

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Section 5.18     Bankruptcy Remoteness; Separateness.

 

(a)        Limited Purpose Entity.

 

(i)         The Borrower at all times since its formation has been, and will
continue to be, a duly organized and existing limited liability company formed
under the laws of the State of Delaware.  The Borrower at all times since its
formation has been, and will continue to be, duly qualified in each jurisdiction
in which such qualification was or may be necessary for the conduct of its
business, except where the failure to be so qualified in any jurisdiction (other
than in the State of Delaware) would not reasonably be expected to have a
Material Adverse Effect;

 

(ii)        the Borrower at all times since its formation has complied, and will
continue to comply, with the provisions of its Constituent Documents and the
laws of the jurisdiction of its formation relating to limited liability
companies;

 

(iii)       all customary formalities regarding the existence of the Borrower
have been observed at all times since its formation and will continue to be
observed;

 

(iv)       the Borrower has been adequately capitalized at all times since its
formation and will continue to be adequately capitalized in light of the nature
of its business; and

 

(v)        the Borrower has not any time since its formation assumed or
guaranteed, and will not assume or guarantee, the liabilities of any other
Persons (other than any reimbursement obligation or indemnity in favor of its
officers or directors; provided that any such reimbursement obligation or
indemnity shall be subject to the Priority of Payments).

 

(b)        No Bankruptcy Filing.  The Borrower is not contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws of any jurisdiction or the liquidation of all or a major portion of its
assets or property, and it has no knowledge of any Person contemplating the
filing of any such petition against it.

 

(c)        Separate Existence.

 

(i)         At all times since its formation, the Borrower has accurately
maintained, and will continue to accurately maintain, in all material respects,
its financial statements, accounting records and other corporate documents, as
applicable, separate from those of the Collateral Manager and any other Person;
provided however, that if the Borrower prepares consolidated financial
statements with any Affiliates, (y) any such consolidated financial statements
shall contain a note indicating the Borrower’s separateness from any such
Affiliates and indicates its assets are not available to pay the debts of such
Affiliate or any other Person and (z) if the Borrower prepares its own separate
balance sheet, such assets shall also be listed on the Borrower’s own separate
balance sheet.  The Borrower has not at any time since its formation commingled,
and will not commingle, its assets with those of the Collateral Manager or any
other Person.  The Borrower has at all times since its formation accurately
maintained, in all material respects, and will continue to accurately maintain
in all material respects, its own bank accounts and separate books of account.

 

(ii)        The Borrower has at all times since its formation paid, and will
continue to pay, its own liabilities from its own separate assets.

 

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(iii)       The Borrower has at all times since its formation identified itself,
and will continue to identify itself, in all dealings with the public, under its
own name and as a separate and distinct entity.  The Borrower has not at any
time since its formation identified itself, and will not identify itself, as
being a division or a part of any other entity.

 

(iv)       The Borrower will comply at all times with Section 9(j) of the LLC
Agreement in effect on the Closing Date without regard to subsequent amendments
thereto.

 

Section 5.19     Amendments, Modifications and Waivers to Collateral Loans. 
(a)   In the performance of its obligations hereunder, the Borrower may enter
into any amendment or waiver of or supplement to any Underlying Instrument or
Related Contract; provided that (1) the prior written consent of the Majority
Lenders to any such amendment, waiver or supplement shall be required if (i) an
Event of Default has occurred and is continuing or would result from such
amendment, waiver or supplement, (ii) such amendment, waiver or supplement,
individually or together with all other such amendments, waivers and/or
supplements, would result in a Material Adverse Effect or (iii) such amendment,
waiver or supplement constitutes a Specified Change, (2) the Borrower has
notified DBRS of any such amendment, waiver or supplement and (3) the Borrower
may not enter into any such amendment, waiver or supplement that would result in
the Minimum Weighted Average Coupon Test or the Minimum Weighted Average Spread
Test not being satisfied (or if not satisfied at such time, being worsened)
after giving effect to such amendment, waiver or supplement.

 

(b)        Any Collateral Loan that, as a result of any amendment or supplement
thereto, ceases to qualify as a Collateral Loan, will thereafter have a value
equal to zero when calculating the Principal Collateralization Amount for
purposes of the Overcollateralization Ratio Test for so long as it remains
unqualified to be a Collateral Loan by the terms of this Agreement.

 

(c)        In the event of an amendment or supplement to a Collateral Loan that
is not consented to by the Majority Lenders and that results in the failure of
the Weighted Average Life Test by more than 0.50 years (and in the event of any
amendment or supplement to a Collateral Loan subsequent to such amendment or
supplement that extends the maturity of a Collateral Loan) (but would otherwise
qualify as a Collateral Loan), such Collateral Loan will thereafter be treated
as a Defaulted Loan hereunder until such time as the Weighted Average Life Test
is satisfied (provided that, if at the time of such satisfaction of the Weighted
Average Life Test, such Collateral Loan would otherwise be considered a
Defaulted Loan in accordance with the terms of this Agreement, such Collateral
Loan will continue to be treated as a Defaulted Loan hereunder).

 

(d)        In the event of an amendment or supplement to a Collateral Loan that
is not consented to by the Majority Lenders and that results in such Collateral
Loan having a maturity date that is later than the Stated Maturity, such
Collateral Loan will thereafter be treated as a Defaulted Loan hereunder.

 

Section 5.20     Hedging.                    (a)        The Borrower may, at any
time and from time to time, enter into any Interest Hedge Agreements (subject in
each case to satisfaction of the Rating Condition).  The Borrower will not amend
or replace any Interest Hedge Agreement unless the Rating Condition shall have
been satisfied in connection with such amendment or replacement.  The Borrower
(or the Collateral Manager on behalf of the Borrower) shall promptly provide
written notice of entry into, and the amendment or replacement of, any Interest
Hedge Agreement to the Agents and the Lenders.  Notwithstanding anything to the
contrary contained herein, the Borrower (or the Collateral Manager on behalf of
the Borrower) shall not enter into any Interest Hedge Agreement unless either
(i) the Borrower or the Collateral Manager is registered as a commodity pool
operator with the CFTC or (ii) the Borrower obtains written advice of nationally
recognized legal counsel (which the Borrower shall

 

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provide to the Agents and the Lenders) that such Interest Hedge Agreement will
not cause the Borrower or the Collateral Manager to be required to register as a
commodity pool operator with the CFTC or that the Borrower and the Collateral
Manager would be eligible for an exemption to the requirement to register as a
commodity pool operator with the CFTC.

 

(b)        Each Interest Hedge Agreement shall contain appropriate limited
recourse and non-petition provisions equivalent (mutatis mutandis) to those
contained in Section 12.15.  Each Interest Hedge Counterparty shall be required
to satisfy, at the time that any Interest Hedge Agreement to which it is a party
is entered into, the Hedge Counterparty Rating Criteria.  Payments with respect
to any Interest Hedge Agreements shall be subject to Article IX.  Each Interest
Hedge Agreement shall contain an acknowledgement by the Interest Hedge
Counterparty that the obligations of the Borrower to the Interest Hedge
Counterparty under the relevant Interest Hedge Agreement shall be payable in
accordance with Article IX and the Borrower shall use its commercially
reasonable efforts to provide that it may not be terminated due to the
occurrence of an Event of Default until liquidation of the Collateral has
commenced.

 

Section 5.21     Title Covenants.  The Borrower covenants that at no time shall
it:

 

(a)        create, permit or suffer to be created any Lien or security interest
in the Collateral other than Permitted Liens; or

 

(b)        except as otherwise expressly permitted herein sell, transfer,
assign, deliver or otherwise dispose of any Collateral or any interest therein.

 

The Borrower further covenants and agrees to defend the Collateral against the
claims and demands of all other parties to the extent necessary to preserve the
first-priority security interest of the Collateral Agent in the Collateral.

 

Section 5.22     Further Assurances.               (a)        The Borrower shall
at its sole expense file, record, make, execute and deliver all such notices,
instruments, statements and other documents, and take such acts, as the
Collateral Agent may reasonably request from time to time to register in the
name of the Collateral Agent, and to perfect, preserve or otherwise protect the
security interest of the Collateral Agent, for the benefit of the Secured
Parties in, the Collateral or any part thereof, or to give effect to the rights,
powers and remedies of the Collateral Agent hereunder, including but not limited
to execution and delivery of financing statements.  The Borrower shall be
obligated to perform its obligations under this Agreement notwithstanding the
ability of the Collateral Agent to take such actions pursuant to the provisions
of Section 5.24.

 

(b)        At least one month (but not more than six months) prior to the fifth
anniversary of the Closing Date and at least one month (but not more than six
months) prior to each five-year anniversary of the Closing Date thereafter, the
Borrower shall furnish to the Collateral Agent an opinion of counsel stating
that, in the opinion of such counsel, as the date of such opinion, the lien and
security interest created by this Agreement with respect to the Collateral
remains a valid and perfected first priority lien in favor of the Collateral
Agent for the benefit of the Secured Parties and stating what action (if any)
needs to be taken to retain the validity and perfection of such lien for the
following five years.

 

Section 5.23     Costs of Transfer; Taxes; and Expenses.

 

(a)        The Borrower shall pay all transfer taxes and other costs incurred in
connection with all transfers of Collateral.  For the avoidance of doubt, any
amounts paid pursuant to this Section 5.23(a) shall not be indemnifiable
pursuant to Section 11.4.

 

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(b)        Without duplication of any other provision of this Agreement, the
Borrower agrees to pay the Collateral Agent the reasonable and documented
out-of-pocket costs and expenses, including but not limited to reasonable and
documented attorneys’ fees and other charges, incurred by the Collateral Agent
in connection with making collections on any Collateral.

 

Section 5.24     Collateral Agent May Perform.

 

(a)        If the Borrower fails to perform any agreement contained herein to be
performed by it, the Collateral Agent may, upon the written instructions of the
Majority Lenders, itself file, record, make, execute and deliver all such
notices, instruments, statements and other documents, and take such acts, as the
Majority Lenders may determine to be necessary or desirable from time to time to
perfect, preserve or otherwise protect the security interest of the Collateral
Agent, for the benefit of itself and the Secured Parties and otherwise perform,
or cause performance of, any other such actions as the Majority Lenders shall
determine is necessary or desirable, and the reasonable and documented
out-of-pocket expenses of the Collateral Agent incurred in connection therewith
shall be payable by the Borrower and shall be part of the Obligations.

 

(b)        The powers conferred on the Collateral Agent hereunder are solely to
protect its interest (on behalf of the Secured Parties) in the Collateral and
shall not impose any duty on it to exercise any such powers.  Except for
reasonable care of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent shall have no
duty as to any Collateral or responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not the Collateral Agent
has or is deemed to have knowledge of such matters, or (ii) taking any necessary
steps to preserve rights against prior parties or any other rights pertaining to
any Collateral.

 

Section 5.25     Notice of Name Change.  The Borrower shall give the Collateral
Agent not less than 30 days’ notice of any change of its name and not less than
30 days’ notice of any change of its principal place of business and will take
all steps necessary to preserve the first priority perfected security interest
of the Collateral Agent in the Collateral.  The Borrower shall not change its
type of organization, jurisdiction of organization or other legal structure.

 

Section 5.26     Stamp and Other Similar Taxes.  The Borrower agrees to
indemnify and hold harmless the Collateral Agent and each Secured Party from any
present or future claim for liability for any stamp or other similar tax and any
penalties or interest with respect thereto, which are assessed, levied or
collected by any jurisdiction in connection with this Agreement, the Collateral
or the attachment or perfection of the security interest granted to the
Collateral Agent in any Collateral.  The obligations of the Borrower under this
Section 5.26 shall survive the termination of the other provisions of this
Agreement.  For the avoidance of doubt, any amounts paid pursuant to this
Section 5.26 shall not be duplicative of amounts paid pursuant to Section 11.4.

 

Section 5.27     Filing Fees, Excise Taxes, etc.  The Borrower agrees (a) to pay
or to reimburse the Collateral Agent for any and all amounts in respect of all
search, filing, recording and registration fees, taxes, excise taxes and other
similar imposts which are payable in respect of the execution, delivery,
performance and enforcement of this Agreement and the other Loan Documents and
(b) to save the Collateral Agent harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.  The obligations of the Borrower under this
Section 5.27 shall survive the termination of the other provisions of this
Agreement.  For the avoidance of doubt, any amounts paid pursuant to this
Section 5.27 shall not be indemnifiable pursuant to Section 11.4.

 

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Section 5.28     Credit Standards.  The standards and procedures, including
without limitation credit standards, applied by the Borrower in evaluating and
determining the creditworthiness of the Obligors and the terms of, and the
advisability of originating or acquiring, each Collateral Loan shall not be less
stringent than (i) the customary and usual standards and procedures applied by
its Affiliates as of the date hereof in connection with loans originated or
acquired by them or (ii) the customary and usual standards and procedures
applied by its Affiliates as of the date of determination in connection with
loans originated or acquired by them.

 

Section 5.29     Delivery of Proceeds.  In the event that the Borrower receives
any payments in respect of or other proceeds of Collateral Loans or other
Collateral or any capital contribution, the Borrower shall pay such payments or
other proceeds to the Collateral Agent promptly and, in no event, later than two
Business Days after the Borrower’s receipt thereof.

 

Section 5.30     Performance of Obligations.  The Borrower shall timely and
fully comply with and perform its obligations under the Collateral Loans and
other Collateral in accordance with the terms thereof.

 

Section 5.31     Limitation on Dividends.                   (a)        The
Borrower will not declare or make any direct or indirect distribution, dividend
or other payment to any person on account of any membership or other equity
interest in, or ownership of any similar interests or securities of the
Borrower, except for distributions made pursuant to Sections 6.4 and 9.1 and as
provided in this Section 5.31.

 

(b)        On any Business Day (other than a Quarterly Payment Date or a
Calculation Date) during the Reinvestment Period, the Borrower may make a
Permitted Distribution out of the direct cash proceeds of a Borrowing (provided
that such cash proceeds shall be immediately applied toward a Permitted
Distribution) or in the form of an in-kind distribution of all or any portion of
Eligible Investments, Collateral Loans or other assets included in the
Collateral then held by the Borrower, in each case so long as (1) each of the
Market Value Overcollateralization Test, the Coverage Tests, the Collateral
Quality Test and the Equity Distribution Test is satisfied after giving effect
to such Permitted Distribution, (2) on the date of such Permitted Distribution,
all principal, interest, fees and other amounts due and payable by the Borrower
hereunder or under any other Loan Document shall have been paid, (3) no
Commitment Shortfall has occurred and is continuing or would result from such
Permitted Distribution, (4) no Default or Event of Default has occurred and is
continuing or would result from such Permitted Distribution, (5) the Borrower
has given at least three Business Days’ prior written notice (which notice shall
include (x) a certification from an Authorized Officer of the Borrower or the
Collateral Manager stating that each of the conditions set forth in clauses
(1) through (4) above is satisfied, including, if requested by any Lender,
detailed calculations supporting such certification and (y) written confirmation
from the Collateral Agent that it has recalculated the items set forth in clause
(1) above and that there is no discrepancy of +/- .02 between the Collateral
Agent’s and the Collateral Manager’s calculations) of the amount of such
Permitted Distribution to the Administrative Agent and the Collateral Agent, and
(6) the Aggregate Principal Balance of (i) all Collateral Loans that are
distributed to the BDC and (ii) all Collateral Loans sold to Affiliates of the
Borrower, collectively, in the 12-month period preceding the proposed date of
distribution (or such lesser number of months as shall have elapsed since the
Closing Date) shall not exceed 20% of the Net Purchased Collateral Loan Balance
as of such date of distribution; provided that the Aggregate Principal Balance
of (i) all Collateral Loans that were Defaulted Loans distributed to the BDC and
(ii) all Collateral Loans that were Defaulted Loans sold to Affiliates of the
Borrower, collectively, in the 12-month period preceding the proposed date of
distribution (or such lesser number of months as shall have elapsed since the
Closing Date) shall not exceed 10% of the Net Purchased Collateral Loan Balance
as of such date of distribution.

 

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Section 5.32     Collateral Loan Documentation; Approved Appraisal Firms

 

(a)        The Borrower shall require each Obligor under any Collateral Loan (or
other loan included in the Collateral) that is documented on the Borrower’s
forms to waive its right to a jury trial.

 

(b)        The initial Approved Appraisal Firms shall be as set forth in
Schedule A hereto.  Any other independent appraisal firm selected by the
Borrower may be added as an Approved Appraisal Firm, provided that the Rating
Condition is satisfied.

 

Section 5.33     Annual Rating Review.  Unless waived in writing by the Majority
Lenders, on or before July 31 in each calendar year, commencing in 2014, the
Borrower shall pay for the ongoing monitoring of the rating of the Loans by
DBRS.  The Borrower shall promptly notify the Agents, the Collateral Manager and
the Lenders in writing if at any time the rating of the Loans has been, or is
known will be, changed or withdrawn, or the rating outlook on the Loans has
been, or is known will be, changed.

 

Section 5.34     Collateral Management Agreement; Master Transfer Agreement. 
The Borrower shall not amend the Collateral Management Agreement or the Master
Transfer Agreement except pursuant to the terms thereof and Section 12.5 of this
Agreement.

 

Section 5.35     Transactions With Affiliates.  (a)      The Borrower shall not
sell, lease or otherwise transfer any property or assets to, or purchase, lease
or otherwise acquire any property or assets from, or otherwise engage in any
other transactions with, any of its Affiliates, other than (i) the payment of
the Senior Management Fee or the Subordinated Management Fee, (ii) the making of
Permitted Distributions permitted hereunder, (iii) the receipt of funds from the
Borrower or the Collateral Manager pursuant to Section 8.2(h) and (iv) the
acquisition of Collateral Loans from the BDC pursuant to the Master Transfer
Agreement for consideration consisting of an increase in the value of its equity
ownership of the Borrower, unless such transaction is upon terms no less
favorable to the Borrower than it would obtain in a comparable arm’s length
transaction with a Person that is not an Affiliate.

 

(b)        The Borrower shall ensure that all purchases of Collateral Loans from
any Affiliate of the Borrower and all sales of Collateral Loans and other assets
to any Affiliate of the Borrower that are conducted after the Closing Date will
be accompanied by a written agreement (which written agreement shall be, in the
case of all such purchases, substantially in the form of the Master Transfer
Agreement) between the Borrower and the relevant Affiliate that contains a
provision stating that such purchase or sale was conducted in the ordinary
course of business.

 

Section 5.36     Reports by Independent Accountants.(a)      At the Closing
Date, the Borrower (or the Collateral Manager on behalf of the Borrower) shall
select one or more firms of independent certified public accountants of
recognized international reputation for purposes of performing agreed-upon
procedures required by this Agreement, which may be the firm of independent
certified public accountants that performs accounting services for the Borrower
or the Collateral Manager.  The Borrower may remove any firm of independent
certified public accountants at any time.  Upon any resignation by such firm or
removal of such firm by the Borrower, the Borrower (or the Collateral Manager on
behalf of the Borrower) shall promptly appoint a successor thereto that shall
also be a firm of independent certified public accountants of recognized
international reputation, which may be a firm of independent certified public
accountants that performs accounting services for the Borrower or the Collateral
Manager.  If the Borrower shall fail to appoint a successor to a firm of
independent certified public accountants which has resigned or has been removed
within 30 days after such resignation or removal (as applicable), the Borrower
shall promptly notify the Collateral Agent and the Collateral

 

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Manager of such failure in writing.  If the Borrower shall not have appointed a
successor within ten days thereafter, the Collateral Manager shall appoint a
successor firm of independent certified public accountants of recognized
international reputation.  The fees of such independent certified public
accountants and its successor shall be payable by the Borrower as Administrative
Expenses in accordance with the Priority of Payments and the terms of this
Agreement.  In the event such firm requires the Collateral Agent to agree
(whether in writing or otherwise) to the procedures performed by such firm, the
Borrower hereby directs the Collateral Agent to so agree and directs the
Collateral Agent to execute a specified user agreement, access letter or
agreement of similar import requested by such accountants, which may include a
release of liability and confidentiality provisions; it being understood and
agreed that the Collateral Agent will deliver such letters of agreement and
similar documents in conclusive reliance on the foregoing direction of the
Borrower, and the Collateral Agent shall not make any inquiry or investigation
as to, and shall have no obligation in respect of, the validity or correctness
of such procedures or the content of such letters.

 

(b)          On or before the date that is 90 days following the end of each
fiscal year of the Borrower commencing in 2014, the Borrower shall cause to be
delivered to the Collateral Agent an agreed-upon procedures report from a firm
of independent certified public accountants appointed pursuant to clause
(a) above for each Payment Date Report received since the last statement
(i) indicating that the calculations within those Payment Date Reports have been
recalculated and compared to the information provided by the Borrower in
accordance with the applicable provisions of this Agreement and (ii) listing the
Aggregate Principal Balance of the Collateral Loans securing the Loans as of the
immediately preceding Measurement Dates; provided that in the event of a
conflict between such firm of independent certified public accountants and the
Borrower with respect to any matter in this Section 5.36, the determination by
such firm of independent public accountants shall be conclusive; provided
further that, if there is any inconsistency between the calculations of the
Borrower and the calculations of the firm of independent certified public
accountants, the Borrower shall promptly notify the Administrative Agent and the
Lenders and describe such inconsistency in reasonable detail.  In the event such
independent certified public accountants require the Custodian, the
Administrative Agent or the Collateral Agent to agree to the procedures to be
performed by such firm in any of the reports required to be prepared pursuant to
this Section 5.36(b), the Borrower shall direct the Custodian, the
Administrative Agent or the Collateral Agent in writing to so agree. 
Notwithstanding anything to the contrary herein, if the Custodian,
Administrative Agent or Collateral Agent fail within 75 days following the end
of each fiscal year of the Borrower to execute any documentation required by the
independent certified public accountants selected by the Borrower prior to the
delivery of any report contemplated by this Section 5.36(b), then the Borrower
shall have no obligation to furnish any report covering such fiscal year
pursuant to this Section 5.36(b).

 

Section 5.37      Tax Matters as to the Borrower.

 

The Borrower shall (and each Lender hereby agrees to) treat the Loans as debt
for U.S. Federal income tax purposes and will take no contrary position.  The
Borrower shall not engage in or permit any activity that causes it to be treated
as a corporation for U.S. federal income tax purposes, including, without
limitation, by election or by operation of Section 7704 of the Code.  Each
Member and Special Member of the Borrower shall at all times be a United States
person within the meaning of Section 7701(a)(30) of the Code.   Notwithstanding
any contrary agreement or understanding, the Collateral Manager, the Borrower,
the Agents and the Lenders (and each of their respective employees,
representatives or other agents) may disclose to any and all Persons the tax
treatment and tax structure of the transactions contemplated by this Agreement
(and, for the avoidance of doubt, only those transactions contemplated by this
Agreement) and all materials of any kind (including opinions or other tax
analyses) that are provided to them relating to such tax treatment and tax
structure.  The foregoing provision shall apply from the beginning of
discussions between the parties hereto.  For this purpose, the tax treatment of
a

 

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transaction is the purported or claimed U.S. tax treatment of the transaction
under applicable U.S. Federal, state or local law, and the tax structure of a
transaction is any fact that may be relevant to understanding the purported or
claimed U.S. tax treatment of the transaction under applicable U.S. Federal,
state or local law.

 

Section 5.38      Credit Estimates; Failure to Have a DBRS Long Term
Rating.(a)        If at any time a Collateral Loan does not have a DBRS Long
Term Rating, then the Borrower shall, within 30 days after (x) the purchase of
such Collateral Loan or (y) the withdrawal of a DBRS Long Term Rating from such
Collateral Loan, apply to DBRS for a Credit Estimate (and promptly notify the
Collateral Agent of such application), which shall be used to determine the DBRS
Risk Score for such Collateral Loan; provided that, if the DBRS Risk Score of a
Collateral Loan is determined based on a Credit Estimate, (i) such Credit
Estimate must be renewed at least annually and (ii) the Borrower shall notify
DBRS within 10 Business Days of any amendment to the Underlying Instruments for
such Collateral Loan.

 

(b)          Promptly following the receipt of a Credit Estimate from DBRS, the
Borrower shall notify the Collateral Agent and provide the Collateral Agent with
the details of such Credit Estimate.

 

Section 5.39  Reinvestment Period Event.  If at any time at least two Key
Managers are not acting in a management capacity for the Sub-Advisor and its
Affiliates, a “Reinvestment Period Event” will be deemed to have occurred.  Upon
the occurrence of a Reinvestment Period Event, the Borrower shall notify the
Administrative Agent within 30 days after such event with the name and relevant
biographical information (including relevant employment history and management
experience) of one or more proposed replacement Key Managers and a schedule for
implementation of such proposed replacement Key Manager(s).  The Borrower will
make each such proposed replacement Key Manager available for meetings and/or
telephonic conferences with the Lenders.  As to any such proposed replacement
Key Manager, if the Administrative Agent (at the direction of the Majority
Lenders) does not object in writing, based on reasonable grounds, to such
proposed replacement Key Manager within 30 days after written notice thereof is
provided to the Administrative Agent, the appointment of such proposed
replacement Key Manager will be deemed confirmed.  If no replacement Key Manager
is appointed as described in the preceding sentence because of timely written
objections of the Administrative Agent as set forth above, the Borrower shall
have the right to propose one or more replacement Key Managers (which may, but
need not, be different from any proposed replacement Key Manager that was
proposed in connection with a prior Reinvestment Period Event) by delivering
notice of each such subsequent proposed replacement Key Manager (which includes
the name and biographical information (including relevant employment history and
management experience) of the proposed replacement Key Manager and a schedule
for implementation of such proposed replacement Key Manager) to the
Administrative Agent within ten days after receiving the last notice of such
objection that causes the objections collectively to constitute timely
objections of the Administrative Agent as set forth above.  The Borrower will
make each such subsequent proposed replacement Key Manager available for
meetings and/or telephonic conferences with the Lenders.  (For the avoidance of
doubt, no such subsequent proposed replacement Key Manager may be proposed later
than 70 days after the occurrence of a Reinvestment Period Event.)  If the
Administrative Agent (at the direction of the Majority Lenders) does not object
in writing, based on reasonable grounds, to such subsequent proposed replacement
Key Manager within 15 days after written notice thereof is provided to the
Administrative Agent, the appointment of such proposed replacement Key Manager
will be deemed confirmed.  If, however, the Administrative Agent (at the
direction of the Majority Lenders) does timely object in writing, based on
reasonable grounds, to such subsequent proposed replacement Key Manager, the
Borrower shall not have the right to propose any additional replacement Key
Managers, and the Reinvestment Period shall terminate thereupon.  In addition,
at any time prior to the occurrence of a Reinvestment Period Event, the Borrower
may propose a replacement Key Manager (including in replacement of a Person that
ceases to

 

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be a Key Manager) in accordance with, and who will be subject to approval or
deemed approval as provided in, the foregoing procedures.

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

Section 6.1        Events of Default.  The term “Event of Default” shall mean
any of the events set forth in this Section 6.1:

 

(a)          a default in the payment, when due and payable, of any interest,
fees, costs, expenses, indemnities or other amounts (other than principal) due
on any Loan or any related Obligations in respect thereof and, in each case, the
continuation of such default for five Business Days after the date such amounts
become due and payable if such date is provided in this Agreement or the
applicable Loan Document (or, if no such date is provided or such amount is not
fixed, five Business Days after notice shall have been given to the Borrower by
the Majority Lenders, the intended recipient of such amounts or the
Administrative Agent, specifying such amount that has become due and payable);

 

(b)          a default in the payment of any principal due on any Loans when
such principal becomes due and payable;

 

(c)          the failure on any Quarterly Payment Date to disburse amounts
available in the Payment Account or Collection Account in accordance with the
Priority of Payments and continuation of such failure for a period of five
Business Days or, in the case of a failure to disburse due to an administrative
error or omission by the Administrative Agent or the Collateral Agent, such
failure continues for seven Business Days after the Administrative Agent or the
Collateral Agent, as applicable, receives written notice or has actual knowledge
of such administrative error or omission and has provided notice of such failure
to the Borrower;

 

(d)          the Borrower or the pool of Collateral Loans becomes an investment
company required to be registered under the Investment Company Act;

 

(e)          the occurrence of any one or more of the following:

 

(i)           failure of any representation or warranty in Section 4.9 or 4.12
to be correct in all material respects when made, or default in the performance,
or breach, of any covenant contained in Section 5.1(d), 5.10, 5.11, 5.12 (except
for involuntary Liens that secure obligations in an aggregate amount not
exceeding $100,000 at any one time outstanding), 5.13, 5.16, 5.18 or 5.19;

 

(ii)          failure of the representation or warranty in Section 4.4 to be
correct in all material respects when made with respect to the Borrower’s
obligations under one or more Collateral Loans or other items of Collateral, or
default or breach of any covenant contained in Section 5.30, and there has
occurred or there would reasonably be expected to occur a material adverse
effect on the rights, interests or remedies of the Agents or the Lenders under
any of the Loan Documents; or

 

(iii)         (x) default in the performance, or breach, of any other covenant,
warranty or other agreement of the Borrower or the Collateral Manager under this
Agreement or any other Loan Document in any material respect, or (y) the failure
of any

 

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representation or warranty of the Borrower or the Collateral Manager made in
this Agreement, any other Loan Document or in any related certificate or other
writing delivered pursuant hereto or thereto or in connection herewith or
therewith to be correct in all material respects when made and such failure
would reasonably be expected to have a Material Adverse Effect (other than a
covenant, representation, warranty or other agreement or a portion thereof a
default in the performance or breach or failure of which is otherwise
specifically dealt with in this Section 6.1, it being understood, without
limiting the generality of the foregoing, that any failure to meet any
Concentration Limitation, Collateral Quality Test or Coverage Test (except as
provided in clause (h) below) is not an Event of Default), and such default,
breach or failure either (A) is not susceptible of cure or (B) continues for a
period of 30 days following the Borrower’s actual knowledge of such default;

 

(f)           the entry of a decree or order by a court of competent
jurisdiction (i) adjudging the Borrower as bankrupt or insolvent, or
(ii) approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Borrower under the Bankruptcy
Code or any other applicable law, or (iii) appointing a receiver, liquidator,
assignee, or sequestrator (or other similar official) of the Borrower or of any
substantial part of its respective properties, or (iv) ordering the winding up
or liquidation of the affairs of the Borrower;

 

(g)          the institution by the Borrower of proceedings for the Borrower to
be adjudicated as bankrupt or insolvent, or the consent by the Borrower to the
institution of bankruptcy or insolvency proceedings against it, or the filing by
the Borrower of a petition or answer or consent seeking reorganization or relief
under the Bankruptcy Code or any other similar applicable law, or the consent by
the Borrower to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Borrower of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or the
taking of any action by the Borrower in furtherance of any such action;

 

(h)          the Overcollateralization Ratio is less than 125.0% as of any
Measurement Date and remains so for three Business Days after such Measurement
Date; provided that during such time as the Overcollateralization Ratio is less
than 125.0%, the Borrower shall not be permitted to make any investments;

 

(i)           any Lien on any Collateral created pursuant to the Loan Documents
shall, at any time after delivery of the respective Loan Documents, cease to be
fully valid and perfected as a first priority Lien subject only to Permitted
Liens (other than directly due to the action of the Lenders or the Agents);

 

(j)           any of the Loan Documents (other than the Interest Hedge
Agreements, the Joinder Agreements and the Engagement Letter) ceases to be in
full force and effect;

 

(k)          one or more judgments or decrees shall be entered against the
Borrower, the Collateral Manager or the Investment Advisor involving in the
aggregate a liability of $1,000,000 or more in excess of the amounts paid or
fully covered by insurance and the same shall not have been vacated, satisfied,
undischarged, stayed or bonded pending appeal within 10 days from the entry
thereof;

 

(l)           the occurrence of an act by (i) the Borrower or the Collateral
Manager or (ii) any company that controls the Borrower or the Collateral Manager
or is a material subsidiary of the

 

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Borrower or the Collateral Manager (a “Controlled Entity”), that constitutes
fraud (as determined in an adjudication) in the performance of its obligations
under this Agreement or any other Loan Document or in the performance of
investment advisory services comparable to those contemplated to be provided by
the Borrower or the Collateral Manager under this Agreement or any other Loan
Document, or any such Person being indicted for a criminal offense materially
related to the performance of its obligations under this Agreement or any other
Loan Document or in the performance of investment advisory services comparable
to those contemplated to be provided by the Borrower or the Collateral Manager
under this Agreement or any other Loan Documents (it being understood that for
the purposes of the definition “Controlled Entity”, control of a Person shall
mean the power, direct or indirect, (x) to vote more than 50% of the securities
having ordinary voting power for the election of directors of such Person or
(y) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise);

 

(m)         (i)(x) the occurrence of any event permitting the Borrower to remove
the Collateral Manager for “cause” pursuant to Section 11(a) of the Collateral
Management Agreement, (y) an assignment of the Collateral Management Agreement
in violation of the assignment provisions thereof or (z) any other termination
of the Collateral Management Agreement or the termination or resignation of the
BDC as the Collateral Manager, (ii) the inability of the Collateral Manager to
perform its duties under the Collateral Management Agreement due to the
termination of, or the non-performance of, the Investment Advisor under the
Investment Advisory Agreement or the Sub-Advisor under the Sub-Advisory
Agreement or for any other reason relating to any occurrence with respect to the
Investment Advisory Agreement or the Sub-Advisory Agreement, (iii) GSO Capital
Partners LP is no longer acting as the Sub-Advisor or (iv) FS Investment
Advisor, LLC is no longer acting as the Investment Advisor; or

 

(n)          the occurrence of a material adverse change in the business,
financial condition or operations of the Collateral Manager or the Borrower that
has a Material Adverse Effect.

 

Upon the occurrence of an Event of Default, the Borrower shall promptly notify
the Agents, the Collateral Manager, the Lenders and DBRS in writing (which
notice shall refer to this Agreement and state that such notice is a notice of
Default).

 

Section 6.2        Remedies.  If an Event of Default shall have occurred and be
continuing, the Majority Lenders or the Administrative Agent (acting at the
direction of the Majority Lenders) may exercise the rights, privileges and
remedies set forth in this Section 6.2.

 

(a)          Upon the occurrence and during the continuance of any Event of
Default, each of the following actions shall require the prior written approval
by the Majority Lenders, whether or not approved by the Borrower’s board of
directors or other persons performing similar functions:  (i) issuance of any
commitment to make, and the purchase or origination (other than pursuant to
commitments then in effect) of, any Collateral Loan or other loan or security
constituting any Collateral or any interest therein, (ii) any amendment,
modification, or waiver of, or any consent to departure from, any term or
provision of any Collateral Loan or other loan or security constituting any
Collateral, (iii) any release of any collateral for, or guarantor of or other
credit support provider for, any Collateral Loan or other loan or security
constituting any Collateral, except upon payment in full of such Collateral Loan
or other loan or security, or any subordination or limitation of recourse with
respect thereto, (iv) any sale, purchase, assignment or participation in respect
of any Collateral Loan or other loan or security constituting any Collateral
(other than pursuant to commitments then in effect or in the case of a sale or
assignment upon

 

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payment in full of such Collateral Loan or other loan or security), (v) any
determination to exercise, or not to exercise, remedies in respect of a
Collateral Loan or other loan or security constituting any Collateral following
a default or event of default thereunder, and (vi) any other action or decision
not to act which impairs or could be reasonably likely to impair the value of
any Collateral Loan or other loan or security constituting any Collateral, or to
extend or increase the Borrower’s obligations with respect thereto or to
interfere with the exercise of rights or remedies with respect to any Collateral
Loan or other loan or security constituting any Collateral.

 

(b)          Upon the occurrence and during the continuance of any Event of
Default, in addition to all rights and remedies specified in this Agreement and
the other Loan Documents, including Section 6.3, and the rights and remedies of
a secured party under applicable law, including the UCC, the Administrative
Agent or the Majority Lenders, by notice to the Borrower, may do any one or more
of the following:

 

(1)          declare the Commitments to be terminated forthwith, whereupon the
Commitments shall forthwith terminate (provided that, unless an Event of Default
described in Section 6.1(d), (f) or (g) has occurred and is continuing, the
Commitments shall not be terminated unless the Net Aggregate Exposure Amount is
equal to zero); and

 

(2)          declare the principal of and the accrued interest on the Loans and
the Notes and all other amounts whatsoever payable by the Borrower hereunder
(including any amounts payable under Section 2.9) to be forthwith due and
payable, whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby waived by the Borrower;

 

provided that, upon the occurrence of any Event of Default described in
clause (f) or (g) of Section 6.1, the Commitments shall automatically terminate
and the Loans and all such other amounts shall automatically become due and
payable, without any further action by any party.

 

(c)          Upon the occurrence and during the continuance of an Event of
Default, the Majority Lenders or the Collateral Agent will have the right to
take any other remedies set forth in Section 6.3(b) below or other remedies
permitted by law.

 

Section 6.3        Additional Collateral Provisions.

 

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

 

(b)          Additional Rights and Remedies.  The Collateral Agent (for itself
and on behalf of the other Secured Parties), acting at the direction of the
Majority Lenders through the Administrative Agent, shall have all of the rights
and remedies of a secured party under the UCC and other applicable law.  Upon
the occurrence and during the continuance of an Event of Default, the Collateral
Agent or its

 

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designees shall, at the direction of the Majority Lenders through the
Administrative Agent, to the extent permitted by applicable law and
notwithstanding anything in the Loan Documents to the contrary, (i) instruct the
Borrower to deliver any or all of the Collateral, the Related Contracts,
Underlying Instruments and any other documents relating to the Collateral to the
Collateral Agent or its designees and otherwise give all instructions for the
Borrower regarding the Collateral; (ii) sell or otherwise dispose of the
Collateral, all without judicial process or proceedings; (iii) take control of
the proceeds of any such Collateral; (iv) subject to the provisions of the
applicable Related Contracts, exercise any consensual or voting rights in
respect of the Collateral; (v) release, make extensions, discharges, exchanges
or substitutions for, or surrender all or any part of the Collateral;
(vi) enforce the Borrower’s rights and remedies with respect to the Collateral;
(vii) institute and prosecute legal and equitable proceedings to enforce
collection of, or realize upon, any of the Collateral; (viii) require that the
Borrower immediately take all actions necessary to cause the liquidation of the
Collateral in order to pay all amounts due and payable in respect of the
Obligations, in accordance with the terms of the Related Contracts; (ix) to
redeem or withdraw or cause the Borrower to redeem or withdraw any asset of the
Borrower to pay amounts due and payable in respect of the Obligations;
(x) subject to Section 12.16, make copies of or, if necessary, remove from the
Borrower’s and its agents’ place of business all books, records and documents
relating to the Collateral; and (xi) endorse the name of the Borrower upon any
items of payment relating to the Collateral or upon any proof of claim in
bankruptcy against an account debtor.  The Collateral Agent shall provide
written notice of any liquidation of the Collateral to DBRS.

 

The Collateral Agent shall not be under any duty or obligation to take any
affirmative action to exercise or enforce any power, right or remedy available
to it under this Agreement unless and until (and to the extent) at the express
direction of the Majority Lenders through the Administrative Agent; provided
that the Collateral Agent shall not be required to take any such action at the
direction of the Majority Lenders through the Administrative Agent, any Secured
Party or otherwise if the taking of such action, in the reasonable determination
of the Collateral Agent, (x) shall be in violation of any applicable law or
contrary to any provisions of this Agreement or (y) shall expose the Collateral
Agent to liability hereunder (unless it has been provided with an indemnity
agreement (including the indemnity provisions contained herein and in the other
Loan Documents) which it reasonably deems to be satisfactory with respect
thereto).

 

The Borrower hereby agrees that, upon the occurrence and during the continuance
of an Event of Default, at the reasonable request of the Collateral Agent or the
Majority Lenders, it shall execute all documents and agreements which are
necessary or appropriate to have the Collateral assigned to the Collateral Agent
or its designee.  For purposes of taking the actions described in clauses
(i) through (xi) of this Section 6.3(b) the Borrower hereby irrevocably appoints
the Collateral Agent as its attorney-in-fact (which appointment being coupled
with an interest and is irrevocable while any of the Obligations remain unpaid
and which can be exercised only if such Event of Default is continuing), with
power of substitution, in the name of the Collateral Agent or in the name of the
Borrower or otherwise, for the use and benefit of the Collateral Agent, but at
the cost and expense of the Borrower and, except as permitted by applicable law,
without notice to the Borrower.

 

All documented and reasonable sums paid or advanced by the Collateral Agent in
connection with the foregoing and all documented and reasonable out-of-pocket
costs and expenses (including documented and reasonable and documented
attorneys’ fees and expenses) incurred in connection therewith, together with
interest thereon at the Post-Default Rate for the Loans from the date of demand
of repayment by the Collateral Agent until repaid in full, shall be paid by the
Borrower to the Collateral Agent from time to time on demand in accordance with
the Priority of Payments and shall constitute and become a part of the
Obligations secured hereby.

 

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Without the prior written consent of the Majority Lenders, credit bidding by any
Lender (or any other Person) in connection with any foreclosure sale hereunder
shall not be permitted.

 

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

 

(d)          Related Contracts.

 

(i)           The Borrower hereby agrees that, to the extent not expressly
prohibited by the terms of the Related Contracts, after the occurrence and
during the continuance of an Event of Default, it shall (x) upon the written
request of either Agent promptly forward to such Agent all information and
notices which it receives under or in connection with the Related Contracts
relating to the Collateral, subject to applicable confidentiality requirements,
and (y) upon the written request of either Agent, act and refrain from acting in
respect of any request, act, decision or vote under or in connection with the
Related Contracts relating to the Collateral only in accordance with the
direction of such Agent.

 

(ii)          The Borrower agrees that, to the extent the same shall be in the
Borrower’s possession, it will hold all Related Contracts relating to the
Collateral in trust for the Collateral Agent on behalf of the Secured Parties,
and upon request of either Agent following the occurrence and during the
continuance of an Event of Default or as otherwise provided herein, promptly
deliver the same to the Collateral Agent or its designee.

 

(e)          Borrower Remains Liable.

 

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

 

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

 

(f)           Protection of Collateral.  The Borrower, or the Collateral Manager
on behalf of and at the expense of the Borrower, shall from time to time execute
and deliver all such supplements and amendments hereto and file or authorize the
filing of all such UCC-1 financing statements, continuation statements,
instruments of further assurance and other instruments, and shall take such
other action as

 

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may be necessary or advisable or desirable to secure the rights and remedies of
the Lenders hereunder and to:

 

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

 

(ii)          maintain, preserve and perfect any grant of security made or to be
made by this Agreement including, without limitation, the first priority nature
of the lien or carry out more effectively the purposes hereof;

 

(iii)         perfect, publish notice of or protect the validity of any grant
made or to be made by this Agreement (including, without limitation, any and all
actions necessary or desirable as a result of changes in law or regulations);

 

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

 

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

 

(vi)         pay or cause to be paid any and all material taxes levied or
assessed upon all or any part of the Collateral, except to the extent such taxes
are being contested in good faith by appropriate proceedings promptly instituted
and diligently concluded; provided that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been made
therefor.

 

The Borrower hereby authorizes the Collateral Agent as its agent and attorney in
fact to prepare and file any UCC-1 financing statement, continuation statement
and all other instruments, and take all other actions, required pursuant to this
Section 6.3.  Such authorization shall not impose upon the Collateral Agent, or
release or diminish, the Borrower’s obligations under this Section 6.3.  The
Borrower further authorizes the Administrative Agent’s United States counsel to
file any UCC-1 or UCC-3 financing statements that may be required by the Agents
in connection with this Agreement and the transactions contemplated hereby.

 

Section 6.4        Application of Proceeds.  Unless and until the Majority
Lenders have exercised their right to direct the liquidation of the Collateral
pursuant to this Article VI, all proceeds received in respect of the Collateral
will be applied in accordance with the Priority of Payments specified in
Section 9.1(a).  All proceeds received after the Majority Lenders have exercised
their right to direct the liquidation of the Collateral will be applied to the
Obligations in the following order of priority on each date or dates fixed by
the Collateral Agent (at the direction of the Majority Lenders):

 

(a)          first, to the payment to the Collateral Agent for all due and
unpaid Collateral Agent Fees and all other Administrative Expenses owing to the
Collateral Agent, all amounts owing and payable hereunder to the Custodian and
Wells Fargo as Securities Intermediary (including, in each case, without
limitation, indemnity payments); and second, to the payment to the
Administrative Agent for all due and unpaid Administrative Agent Fees and all
other Administrative Expenses owing to the Administrative Agent (including,
without limitation, indemnity payments);

 

(b)          to the payment of Administrative Expenses (other than those paid
under clause (a) above), in the order of priority set forth in the definition of
“Administrative Expenses”;

 

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(c)          to the payment of all other amounts due to the Agents hereunder;

 

(d)          to the payment of all amounts due to the Interest Hedge
Counterparties under all Interest Hedge Agreements (exclusive of any early
termination or liquidation payment owing by the Borrower by reason of the
occurrence of an event of default or termination event thereunder with respect
to such Interest Hedge Counterparty where such Interest Hedge Counterparty is
the sole affected party or the defaulting party);

 

(e)          to the payment to the Collateral Manager of all due and unpaid
Senior Management Fees;

 

(f)           first, to the payment to the Lenders hereunder on a pro rata
basis, of all amounts due which constitute principal, interest (other than the
additional two percent of interest payable at the Post-Default Rate) and
Commitment Fees; and second, to the payment to the Lenders hereunder on a pro
rata basis, of all interest payable at the Post-Default Rate (to the extent not
paid in clause “first” above) and all amounts due which constitute Increased
Costs and all other amounts on and in respect of all Loans;

 

(g)          to the payment of all amounts due to any Interest Hedge
Counterparty under all Interest Hedge Agreements to the extent not paid under
clause (d) above;

 

(h)          to the payment to the Collateral Manager of all due and unpaid
Subordinated Management Fees; and

 

(i)           any remainder, to the equity of the Borrower.

 

If on any date that payments are made pursuant to this Section 6.4 the amount
available to be paid pursuant to any of the foregoing clauses (a) through (i) is
insufficient to make the full amount of the disbursements required pursuant to
any such clause, such payments will be applied in the order and according to the
priority set forth in clauses (a) through (i) above and (except as provided in
sub-clauses “first” and “second” of clause (a) above) ratably in accordance with
the respective amounts owing under any such clause to the extent funds are
available therefor.

 

ARTICLE VII

 

THE AGENTS

 

Section 7.1        Appointment and Authorization.  Each Lender irrevocably
appoints and authorizes the Agents to take such action as agent on its behalf
and to exercise such powers under this Agreement and the other Loan Documents as
are delegated to such Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto.  Only the Agents (and not one
or more of the Lenders) shall have the authority to deal directly with the
Borrower under this Agreement and each Lender acknowledges that all notices,
demands or requests from such Lender to the Borrower must be forwarded to the
applicable Agent for delivery to the Borrower.  Each Lender acknowledges that
the Borrower has no obligation to act or refrain from acting on instructions or
demands of one or more Lenders absent written instructions from an Agent in
accordance with its rights and authority hereunder.

 

Section 7.2        Agents and Affiliates.  The Agents shall each have the same
rights and powers under this Agreement as the Lenders and may each exercise or
refrain from exercising the same as though it were not an Agent, and such Agents
and their respective affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Affiliate of
the

 

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Borrower as if it were not an Agent hereunder, and the term “Lender” and
“Lenders” may include Natixis, Wells Fargo and/or any Affiliate of Natixis or
Wells Fargo in its individual capacity.  The provisions in this Article VII with
respect to the Agents shall apply only to the Agents acting in their capacities
as such hereunder and not as Lenders.

 

Section 7.3        Actions by Agent.  The obligations of the Agents hereunder
are only those expressly set forth herein.  Neither Agent shall have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of any Agent
shall be read into this Agreement or any other Loan Document or shall otherwise
exist against any Agent.  The provisions of this Article VII are solely for the
benefit of the Agents and the Lenders (other than Sections 7.1 and 7.8, which
are also for the benefit of the Borrower).  In performing its functions and
duties solely under this Agreement, each Agent shall act solely as the agent of
the Lenders and does not assume, nor shall be deemed to have assumed, any
obligation or relationship of trust with or for the Lenders.  Without limiting
the generality of the foregoing, no Agent shall be required to take any action
with respect to any Default, except as expressly provided in Article VI.

 

Section 7.4        Delegation of Duties; Consultation with Experts.  Each Agent
may execute any of its duties under this Agreement by or through its
subsidiaries, affiliates, agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.  No Agent
shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.  Each Agent may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.

 

Section 7.5        Liability of Agents.(a) No Agent nor any of their respective
affiliates, directors, officers, agents or employees shall be liable for any
action taken or not taken by it in connection herewith (i) with the consent or
at the request of the Majority Lenders or (ii) in the absence of its own gross
negligence or willful misconduct.  No Agent nor any of their respective
affiliates, directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any statement, warranty
or representation made in connection with this Agreement or any Borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any condition specified in
Article III, except receipt of items required to be delivered to such Agent; or
(iv) the validity, effectiveness or genuineness of this Agreement, the other
Loan Documents or any other instrument or writing furnished in connection
herewith.  No Agent shall incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.  Each Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document or any other document furnished in connection herewith or therewith in
accordance with a request of the Majority Lenders and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders.  Under no circumstances shall the Agents be deemed liable for any
special, indirect, punitive or consequential damages (including lost profits)
even if the Collateral Agent has been advised of the likelihood of such damages
and regardless of the form of action.

 

(b)          The following additional provisions apply with respect to the
Collateral Agent:

 

(i)           the Collateral Agent shall not be deemed to have notice or
knowledge of the occurrence and continuance of an Event of Default until an
Administrative Officer of the Collateral Agent shall have received written
notice (which notice shall refer to this Agreement

 

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and state that such notice is a notice of Default or Event of Default) thereof
from the Borrower, the Collateral Manager, the Administrative Agent, a Lender or
any other Person;

 

(ii)          no provision of this Agreement or the other Loan Documents shall
require the Collateral Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties hereunder or in
the exercise of any of its rights or powers contemplated hereunder, if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it;
provided, however, that the reasonable and documented costs of performing its
ordinary services under this Agreement shall not be deemed an “financial
liability” for purposes hereof;

 

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

 

(iv)         the Collateral Agent shall be under no liability for interest on
any funds received by it hereunder except to the extent of income or other gain
on Eligible Investments which are deposits in or certificates of deposit of
Wells Fargo or any Affiliate in its commercial capacity and income or other gain
actually received (and not subsequently reinvested, withdrawn or distributed) by
the Collateral Agent in Eligible Investments;

 

(v)          the Collateral Agent shall not be liable or responsible for delays
or failures in the performance of its obligations hereunder arising out of or
caused, directly or indirectly, by circumstances beyond its control (such acts
include but are not limited to acts of God, strikes, lockouts, riots, acts of
war and interruptions, losses or malfunctions of utilities, computer (hardware
or software) or communications services); it being understood that the
Collateral Agent shall use commercially reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as soon as
reasonably practicable under the circumstances; and

 

(vi)         without prejudice to the Collateral Agent’s duties under Article VI
or any other provision of any Loan Document, the Collateral Agent shall be under
no obligation to take any action to collect from any Obligor any amount payable
by such Obligor on the Collateral Loans or any other Collateral under any
circumstances, including if payment is refused after due demand.

 

(c)          The Collateral Agent shall have no duties or responsibilities
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenants or obligations shall be implied in this Agreement or
the other Loan Documents against the Collateral Agent.

 

(d)          In no event shall the Collateral Agent be liable for the selection
of any investments or any losses in connection therewith, or for any failure of
the Borrower to timely provide investment instruction to the Collateral Agent in
connection with the investment of funds in or from any account set forth
herein.  Except with respect to Section 8.2(c) or Section 8.3, in the absence of
a Borrower Order all funds in any account held under this Agreement shall be
held uninvested.

 

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(e)          The Collateral Agent and its Affiliates shall be permitted to
receive additional compensation that could be deemed to be in the Collateral
Agent’s economic self interest for (i) serving as investment adviser,
administrator, shareholder, servicing agent, custodian or sub-custodian with
respect to certain of the Eligible Investments, (ii) using Affiliates to effect
transactions in certain Eligible Investments, and (iii) effecting transactions
in certain investments.  Such compensation shall not be considered an amount
that is reimbursable or payable pursuant to this Agreement.

 

(f)           Without limiting the generality of any terms of this section, the
Collateral Agent shall have no liability for any failure, inability or
unwillingness on the part of the Lenders, the Administrative Agent, the
Collateral Manager or the Borrower to provide accurate and complete information
on a timely basis to the Collateral Agent, or otherwise on the part of any such
party to comply with the terms of this Agreement, and shall have no liability
for any inaccuracy or error in the performance or observance on the Collateral
Agent’s part of any of its duties hereunder that is caused by or results from
any such inaccurate, incomplete or untimely information received by it, or other
failure on the part of any such other party to comply with the terms hereof.

 

(g)          In order to comply with the laws, rules, regulations and executive
orders in effect from time to time applicable to banking institutions, including
those relating to the funding of terrorist activities and money laundering
(collectively, “Applicable Laws”), the Collateral Agent is required to obtain,
verify and record certain information relating to individuals and entities which
maintain a business relationship with the Collateral Agent.  Accordingly, each
of the parties agrees to provide to the Collateral Agent upon its request from
time to time such identifying information and documentation as may be available
for such party in order to enable the Collateral Agent to comply with Applicable
Laws.

 

Section 7.6        Indemnification.  Each Lender shall, ratably in accordance
with its Percentage Share, indemnify the Agents, their respective affiliates,
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower as may be required under this Agreement) against any cost, expense
(including fees of counsel and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees’ gross negligence or
willful misconduct) that such indemnitees may suffer or incur in connection with
this Agreement, the other Loan Documents or any action taken or omitted by such
indemnitees hereunder or thereunder.

 

Section 7.7        Credit Decision.  Each Lender acknowledges that it has,
independently and without reliance upon any Agent or any other Lender or any of
their respective affiliates, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also acknowledges that it will, independently and
without reliance upon any Agent or any other Lender or their respective
affiliates, 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 any action under this Agreement or in connection therewith.  The
Agents shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
prospects, financial and other condition or creditworthiness of the Borrower
which may come into the possession of the Agents or any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates other
than in connection with their acting as Agents under this Agreement and the
other Loan Documents.

 

Section 7.8        Successor Agent.  An Agent may give notice of its intent to
resign at any time by giving notice thereof to the Lenders, the Borrower, the
Collateral Manager and DBRS.  Upon receipt of any such notice, the Majority
Lenders shall have the right to appoint a successor Agent with the consent of
the Borrower (which consent shall not be unreasonably withheld or delayed).  If
no successor Agent shall have been so appointed by the Majority Lenders, shall
have been approved by the Borrower, and shall have accepted such appointment,
within 30 days after the notice of resignation or removal

 

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thereof, then the retiring Agent may (i) petition a court of competent
jurisdiction to appoint a successor Agent or (ii) appoint a successor Agent, in
each case, which such successor Agent shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $50,000,000.  Upon the
acceptance of its appointment as such Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder, and the successor Agent shall provide
written notice of such appointment to the Lenders, the Collateral Manager and
DBRS.  In addition, upon the affirmative vote of the Majority Lenders exercising
good faith that an Agent has acted with gross negligence or committed an act of
willful misconduct or failed to act as required due to gross negligence or
willful misconduct in its capacity as agent for the Lenders hereunder, the
Majority Lenders may immediately remove such Agent; provided that (i) a Lender
hereunder agrees to serve as Agent and (ii) the Borrower has consented to such
Lender serving as Agent (which consent shall not be unreasonably withheld or
delayed) until a successor Agent shall be appointed pursuant to the terms of
this Section 7.8.  After any retiring Agent’s resignation hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was an Agent.

 

ARTICLE VIII

 

ACCOUNTS AND COLLATERAL

 

Section 8.1        Collection of Money.

 

(a)          Except as otherwise expressly provided herein, the Collateral Agent
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all Money and other property payable to or receivable by the Collateral Agent
pursuant to this Agreement (other than amounts specifically required herein to
be paid to the Administrative Agent), including, but not limited to, all
payments or any other amounts due on the Collateral Loans and Eligible
Investments, in accordance with the terms and conditions of such Collateral
Loans and Eligible Investments.   The Collateral Agent shall segregate and hold
all such Money and property received by it in trust for the Lenders and shall
apply it as provided in this Agreement.

 

(b)          All payments on the Collateral Loans and other Collateral shall be
made directly to the Collateral Agent (at a bank in the United States), will be
held in the Collection Account, and will be divided into Interest Proceeds
(including Fee Proceeds) and Principal Proceeds.  Such amounts shall be applied
in accordance with the Priority of Payments and the terms of this Agreement.

 

(c)          The Borrower will provide the Collateral Agent with a certified
copy of each agreement under which the Borrower sells a Participation Interest
in any Collateral Loan pursuant to Section 10.1(b) or sells all or any part of a
Collateral Loan by assignment pursuant to Section 10.1.  Upon receipt of written
certification by the Borrower (which may take the form of standing instructions
with respect to a specified portion of all payments received on designated
Collateral Loans) to the effect that specified amounts received by the
Collateral Agent from an Obligor do not constitute Collections subject to this
Agreement but are required by the terms of such a participation or assignment
agreement to be paid by the Borrower to the purchaser of a Participation
Interest sold by the Borrower or assignee of the Borrower, as the case may be,
the Collateral Agent will disburse such amounts, as directed in such
certificate.

 

(d)          The parties to the transactions contemplated by this Agreement
intend that each of the Covered Accounts shall be securities accounts of the
Collateral Agent and not accounts of the Borrower.  The Custodian shall comply
with entitlement orders originated by the Collateral Agent

 

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without the further consent of any other person or entity.  Without limiting the
generality of the foregoing, if the Collateral Agent notifies the Custodian that
the Collateral Agent shall exercise exclusive control over the Covered Accounts,
the Custodian shall cease complying with entitlement orders or other directions
relating to the Covered Accounts (or any financial assets or other funds or
property credited to or held, deposited, or carried in the Covered Accounts)
originated by the Borrower or any other Person or entity other than the
Collateral Agent.

 

The Custodian shall agree, and Wells Fargo as Custodian hereby agrees, with the
Collateral Agent that (i) each of the Covered Accounts shall be securities
accounts of the Collateral Agent, (ii) all property credited to the Covered
Accounts shall be treated as a “financial asset” for purposes of the UCC,
(iii) the Custodian shall treat the Collateral Agent as entitled to exercise the
rights that comprise each financial asset credited to the Covered Accounts,
(iv) the Custodian shall not agree with any person or entity other than the
Collateral Agent to comply with entitlement orders originated by any person or
entity other than the Collateral Agent, (v) the Covered Accounts and all
property credited to the Covered Accounts shall not be subject to any lien,
security interest, right of set-off, or encumbrance in favor of the Custodian or
any person or entity claiming through the Custodian (other than the Collateral
Agent) except for the right to debit for any item returned by reason of
non-sufficient funds, (vi) the State of New York shall be the securities
intermediary’s jurisdiction of the Custodian for purposes of the UCC, and
(vii) any agreement between the Custodian and the Collateral Agent with respect
to the Covered Accounts shall be governed by the laws of the State of New York.

 

Section 8.2        Collection Account.

 

(a)          The Collateral Agent shall, on or prior to the Closing Date,
establish a single, segregated non-interest bearing trust account in the name
“Energy Funding LLC Collection Account, subject to the lien of the Collateral
Agent”, which shall be designated as the “Collection Account” and which shall be
governed solely by the terms of this Agreement and the Account Control
Agreement.  Such account shall be held in trust in the name of the Collateral
Agent for the benefit of the Secured Parties and the Collateral Agent shall have
exclusive control over such account, subject to the Borrower’s right to give
instructions specified herein, and the sole right of withdrawal, into which the
Collateral Agent shall from time to time deposit (i) any amount received under
any Interest Hedge Agreement, (ii) all proceeds received from the disposition of
any Collateral (unless, during the Reinvestment Period, simultaneously
reinvested in Collateral Loans, subject to Article X, or in Eligible Investments
or to prepay the Loans in accordance with Section 2.7) and (iii) all Interest
Proceeds (including all Fee Proceeds) and all Principal Proceeds.  All Monies
deposited from time to time in the Collection Account pursuant to this Agreement
shall be held by the Collateral Agent as part of the Collateral and shall be
applied for the purposes herein provided.  The Collection Account shall remain
at all times with an Eligible Account Bank.  The only permitted withdrawal from
or application of funds on deposit in, or otherwise to the credit of, the
Collection Account shall be in accordance with the provisions of Sections 6.4,
8.2 and 9.1.

 

(b)          All Distributions and any net proceeds from the sale or disposition
of Pledged Collateral or any Interest Hedge Agreement or other collateral
received by the Collateral Agent shall, subject to the parenthetical in
Section 8.2(a)(ii), be immediately deposited into the Collection Account. 
Subject to Sections 8.2(d) and 8.2(e), all such property, together with any
investments in which funds included in such property are or will be invested or
reinvested during the term of this Agreement, and any income or other gain
realized from such investments, shall be held by the Collateral Agent in the
Collection Account as part of the Collateral subject to disbursement and
withdrawal as provided in this Section 8.2.  (i) So long as no Event of Default
has occurred and is continuing, by Borrower Order (which may be in the form of
standing instructions), the Borrower shall and (ii) after the occurrence and
during the continuation of an Event of Default, the Administrative Agent (at the
direction of the Majority

 

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Lenders) shall direct the Collateral Agent to, and, upon receipt of such
Borrower Order or direction, as applicable, the Collateral Agent shall, invest
all funds received into the Collection Account during a Due Period, and amounts
received in prior Due Periods and retained in the Collection Account, as so
directed in Eligible Investments having stated maturities no later than the
second Business Day immediately preceding the next Quarterly Payment Date.  The
Borrower and the Administrative Agent each agrees that it shall not give any
instruction to invest such funds other than in accordance with, or subject to an
exemption from, Article 122a.  So long as no Event of Default has occurred and
is continuing, the Collateral Agent, within one Business Day after receipt of
any Distribution or other proceeds which are not Cash, shall so notify the
Borrower and the Borrower shall, within six months of receipt of such notice
from the Collateral Agent, sell such Distribution or other proceeds for Cash (at
a price equal to fair market value as reasonably determined by the Borrower or
the Collateral Manager in accordance with the Servicing Standard) to any Person
(including an Affiliate of the Borrower) and deposit the proceeds thereof in the
Collection Account for investment pursuant to this Section 8.2; provided that
the Borrower need not sell such Distributions or other proceeds if it delivers a
certificate of an Authorized Officer to the Administrative Agent certifying that
such Distributions or other proceeds constitute Collateral Loans or Eligible
Investments or securities subject to transfer restrictions that do not permit
such sale.

 

(c)          So long as no Event of Default has occurred and is continuing, if
the Borrower shall not have given any investment directions pursuant to
Section 8.2(b), the Collateral Agent shall seek instructions from the Borrower
within one Business Day after transfer of such funds to the Collection Account. 
If the Collateral Agent does not thereupon receive written instructions from the
Borrower within five Business Days after transfer of such funds to the
Collection Account, the Collateral Agent shall again seek instructions from the
Borrower.  The Borrower agrees that it shall not give any instruction to invest
such funds other than in accordance with, or subject to an exemption from,
Article 122a.  After the occurrence and during the continuation of an Event of
Default, if the Administrative Agent (at the direction of the Majority Lenders)
shall not have given investment directions to the Collateral Agent pursuant to
Section 8.2(b) for three consecutive days, the Collateral Agent shall seek
instructions from the Administrative Agent.  The Administrative Agent agrees
that it shall not give any instruction to invest such funds other than in
accordance with, or subject to an exemption from, Article 122a.  All interest
and other income from such investments shall be deposited in the Collection
Account, any gain realized from such investments shall be credited to the
Collection Account, and any loss resulting from such investments shall be
charged to the Collection Account.

 

(d)          During the Reinvestment Period, the Borrower may by Borrower Order
direct the Collateral Agent to, and upon receipt of such Borrower Order the
Collateral Agent shall, (i) withdraw funds on deposit in the Collection Account
representing Principal Proceeds and reinvest such funds in Collateral Loans as
permitted under and in accordance with the requirements of Article X and such
Borrower Order, (ii) apply Principal Proceeds to make a prepayment of the Loans
in accordance with Section 2.7 so long as on the date of such prepayment no
Commitment Shortfall results therefrom and (iii) transfer Principal Proceeds to
the Future Funding Reserve Account so long as on the date of such transfer and
after giving effect thereto the amount standing to the credit of the Future
Funding Reserve Account shall not exceed the aggregate Unfunded Amount.

 

After the Reinvestment Period, the Borrower may by Borrower Order direct the
Collateral Agent to, and upon receipt of such Borrower Order the Collateral
Agent shall apply Principal Proceeds received by the Borrower towards (A) the
purchase or origination of Collateral Loans, (B) the payment or funding of
Unfunded Amounts or (C) the funding of the Future Funding Reserve Account on any
Business Day (in an amount not exceeding the Unfunded Amount), in each case
pursuant to commitments entered into by the Borrower prior to the end of the
Reinvestment Period.

 

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By Borrower Order, the Borrower may at any time direct the Collateral Agent to,
and, upon receipt of such Borrower Order, the Collateral Agent shall, pay from
time to time on dates other than Quarterly Payment Dates from Interest Proceeds
on deposit in the Collection Account, Administrative Expenses; provided that the
aggregate amount of Administrative Expenses paid in any Due Period (excluding
Administrative Expenses paid on Quarterly Payment Dates pursuant to the Priority
of Payments) shall not exceed the Retained Expense Amount determined on the
immediately prior Quarterly Payment Date plus, without duplication, the
Quarterly Cap applicable on the next Quarterly Payment Date.

 

(e)          The Collateral Agent shall transfer to the Payment Account for
application pursuant to Section 9.1(a), on or about the Business Day (but in no
event more than two Business Days) prior to each Quarterly Payment Date, any
amounts then held in the Collection Account other than proceeds received after
the end of the Due Period with respect to such Quarterly Payment Date.

 

(f)           [Reserved].

 

(g)          The Collateral Agent agrees to give the Borrower and the Lenders
prompt notice if an Administrative Officer of the Collateral Agent obtains
actual knowledge of or receives written notice that the Collection Account or
any funds on deposit therein, or otherwise to the credit of the Collection
Account, shall become subject to any writ, order, judgment, warrant of
attachment, execution or similar process.

 

(h)          At any time and from time to time the Borrower, or the Collateral
Manager on the Borrower’s behalf, may deposit (including for purposes of
satisfying the Overcollateralization Ratio Test) into the Collection Account
funds not previously subject to the Lien of the Collateral Agent (for the
benefit of the Secured Parties) granted under this Agreement; provided that
(i) all such funds are to be treated as Principal Proceeds or Interest Proceeds
as designated by the Borrower and (ii) upon the deposit of such funds into the
Collection Account, such funds shall automatically be subject to the Lien of the
Collateral Agent (for the benefit of the Secured Parties) granted under this
Agreement.  Any such deposit shall be irrevocable.

 

Section 8.3        Payment Account; Future Funding Reserve Account; Lender
Collateral Account; Closing Expense Account.

 

(a)          Payment Account.  The Collateral Agent shall, on or prior to the
Closing Date, establish a single, segregated non-interest bearing trust account
in the name “Energy Funding LLC Payment Account, subject to the lien of the
Collateral Agent”, which shall be designated as the “Payment Account” and which
shall be governed solely by the terms of this Agreement and the Account Control
Agreement.  Such account shall be held in trust in the name of the Collateral
Agent for the benefit of the Secured Parties and the Collateral Agent shall have
exclusive control over such account, subject to the Borrower’s right to give
instructions specified herein, and the sole right of withdrawal.  Any and all
funds at any time on deposit in, or otherwise to the credit of, the Payment
Account shall be held in trust by the Collateral Agent for the benefit of the
Secured Parties.  Except as provided in Sections 6.4 and 9.1, the only permitted
withdrawal from or application of funds on deposit in, or otherwise to the
credit of, the Payment Account shall be to pay the interest on and the principal
of the Loans in accordance with their terms and the provisions of this Agreement
and, upon Borrower Order or in accordance with the Payment Date Report, to pay
fees, Administrative Agent Fees, Collateral Agent Fees, Administrative Expenses,
Commitment Fees, Increased Costs and other amounts specified therein, each in
accordance with (and subject to the limitations contained in) the Priority of
Payments.  The Collateral Agent agrees to give the Borrower and the Lenders
immediate notice if an Administrative Officer of the Collateral Agent obtains
actual knowledge of or receives written notice that the Payment Account or any
funds on deposit therein,

 

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or otherwise to the credit of the Payment Account, shall become subject to any
writ, order, judgment, warrant of attachment, execution or similar process.  The
Borrower shall not have any legal, equitable or beneficial interest in the
Payment Account other than in accordance with the Priority of Payments.  The
Payment Account shall remain at all times with an Eligible Account Bank.

 

(b)          Future Funding Reserve Account.  The Collateral Agent shall, on or
prior to the Closing Date, establish a single, segregated non-interest bearing
trust account in the name “Energy Funding LLC Future Funding Reserve Account,
subject to the lien of the Collateral Agent”, which shall be designated as the
“Future Funding Reserve Account” and which shall be governed solely by the terms
of this Agreement and the Account Control Agreement.  Such account shall be held
in trust in the name of the Collateral Agent for the benefit of the Secured
Parties and amounts shall be deposited from time to time in such account in
accordance with Articles VIII and IX.  By Borrower Order (which may be in the
form of standing instructions), the Borrower may, so long as no Event of Default
has occurred and is continuing, direct the Collateral Agent to, and, upon
receipt of such Borrower Order, the Collateral Agent shall, invest all funds
received into the Future Funding Reserve Account as so directed solely in
overnight funds that are Eligible Investments.  The only permitted withdrawals
from or applications of funds on deposit in, or otherwise to the credit of, the
Future Funding Reserve Account shall be (i) to fund or pay Unfunded Amounts,
(ii) at the election of the Borrower during the Reinvestment Period, to be
applied as Principal Proceeds for use as is provided in this Agreement
(including, without limitation, as provided in Section 9.1(a)(ii)) and
(iii) after the Reinvestment Period, to the extent of any Excess Reserve Amount,
to be applied as Principal Proceeds in accordance with Section 9.1(a)(ii). 
Notwithstanding the foregoing, the amount of all funds on deposit in the Future
Funding Reserve Account on any date that exceeds the aggregate Unfunded Amount
on such date shall be transferred to the Collection Account on such date and
applied as Principal Proceeds.  For the avoidance of doubt, any amounts
transferred from the Future Funding Reserve Account for application as Principal
Proceeds as provided above shall be further invested in Collateral Loans (to the
extent expressly permitted by the other provisions in this Agreement) or applied
as Principal Proceeds in accordance with Section 9.1(a)(ii), in each case as
expressly provided in this Agreement.  The Collateral Agent agrees to give the
Borrower immediate notice if an Administrative Officer of the Collateral Agent
obtains actual knowledge of or receives written notice that the Future Funding
Reserve Account or any funds on deposit therein, or otherwise to the credit of
the Future Funding Reserve Account, shall become subject to any writ, order,
judgment, warrant of attachment, execution or similar process.  The Future
Funding Reserve Account shall remain at all times with an Eligible Account
Bank.  Any interest earned on Eligible Investments held in the Future Funding
Reserve Account shall be applied as Interest Proceeds.

 

(c)          [Reserved].

 

(d)          Lender Collateral Account.

 

(i)           The Collateral Agent shall, on or prior to the Closing Date,
establish a single, segregated non-interest bearing trust account in the name
“Energy Funding LLC Lender Collateral Account, subject to the lien of the
Collateral Agent”, which shall be designated as the “Lender Collateral Account”
and which shall be governed solely by the terms of this Agreement and the
Account Control Agreement and maintained with the Securities Intermediary in
accordance with the Account Control Agreement for the benefit of the Secured
Parties.  The Collateral Agent shall have exclusive control over such account
(and each subaccount thereof) and the sole right of withdrawal.  The Lender
Collateral Account may contain any number of subaccounts for the purposes
described in this Section 8.3(d).  The only permitted deposits to or withdrawals
from the Lender Collateral Account shall be in accordance with the provisions of
this Agreement.  The Borrower shall not have any legal, equitable or beneficial
interest in the Lender Collateral Account (or any subaccount thereof).

 

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(ii)          If any Lender shall at any time be required to deposit any amount
in the Lender Collateral Account in accordance with Section 11.5(b)(i), then
(x) the Collateral Agent shall create a segregated subaccount of the Lender
Collateral Account with respect to such Lender (the “Lender Collateral
Subaccount” of such Lender) and (y) the Collateral Agent shall deposit all funds
received from such Lender into such Lender Collateral Subaccount.  The only
permitted withdrawal from or application of funds credited to a Lender
Collateral Subaccount shall be as specified in this Section 8.3(d).

 

(iii)         With respect to any Lender, the deposit of any funds in the
applicable Lender Collateral Subaccount by such Lender shall not constitute a
Borrowing by the Borrower and shall not constitute a utilization of the
Commitment of such Lender, and the funds so deposited shall not constitute
principal outstanding under the Loans.  However, from and after the
establishment of a Lender Collateral Subaccount, the obligation of such Lender
to make Loans as part of any Borrowing under this Agreement shall be satisfied
by the Collateral Agent withdrawing funds from such Lender Collateral Subaccount
in the amount of such Lender’s pro rata share of such Borrowing.  All payments
of principal from the Borrower with respect to Loans made by such Lender
(whether or not originally funded from such Lender Collateral Subaccount) shall
be made by depositing the related funds into such Lender Collateral Subaccount
and all other payments from the Borrower (including without limitation all
interest and Commitment Fees) shall be made to such Lender in accordance with
the order specified in the Priority of Payments.  The Collateral Agent shall
have full power and authority to withdraw funds from each such Lender Collateral
Subaccount at the time of, and in connection with, the making of any such
Borrowing and to deposit funds into each such Lender Collateral Subaccount, all
in accordance with the terms of and for the purposes set forth in this
Agreement.

 

(iv)         If on any Quarterly Payment Date (or on any other Business Day upon
three Business Days’ prior written request from such Lender) the sum of the
amount of funds on deposit in the Lender Collateral Subaccount exceeds such
Lender’s undrawn Commitment at such time (whether due to a reduction in the
aggregate amount of the Commitments or otherwise), then the Collateral Agent
shall remit to such Lender a portion of the funds then held in the related
Lender Collateral Subaccount in an aggregate amount equal to such excess.

 

(v)          Except as otherwise provided in this Agreement, for so long as any
amounts are on deposit in any Lender Collateral Subaccount, the Collateral Agent
shall invest and reinvest such funds in Eligible Investments of the type
described in clause (vii) of the definition thereof that mature overnight. 
Interest received on such Eligible Investments shall be retained in such Lender
Collateral Subaccount and invested and reinvested as aforesaid.  Any gain
realized from such investments shall be credited to such Lender Collateral
Subaccount and any loss resulting from such investments shall be charged to such
Lender Collateral Subaccount.  Neither the Borrower nor the Collateral Agent
shall in any way be held liable by reason of any insufficiency of such Lender
Collateral Subaccount resulting from any loss relating to any such investment.

 

(e)          Closing Expense Account.  The Collateral Agent shall, on or prior
to the Closing Date, establish a single, segregated non-interest bearing trust
account in the name “Energy Funding LLC Closing Expense Account, subject to the
lien of the Collateral Agent”, which shall be designated as the “Closing Expense
Account” and which shall be governed solely by the terms of this Agreement and
the Account Control Agreement.  The Collateral Agent shall have exclusive
control over such account, subject to the Borrower’s right to give instructions
specified herein, and the sole right of withdrawal.  Any and all funds at any
time on deposit in, or otherwise to the credit of, the Closing Expense Account
shall be held in trust by the Collateral Agent for the benefit of the Secured
Parties.  On or prior to the Closing

 

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Date, the Borrower shall deposit $0 into the Closing Expense Account.  On any
Business Day during the period that the Closing Expense Account is open, the
Collateral Agent shall apply funds from the Closing Expense Account, as directed
by the Borrower, to pay fees and expenses of the Borrower incurred in connection
with the structuring, consummation, closing and post-closing of the transaction
contemplated by this Agreement.  Upon the delivery on any date that is at least
30 days after the Closing Date of a Borrower Order instructing the Collateral
Agent to close the Closing Expense Account, all funds in the Closing Expense
Account will be deposited in the Collection Account as Interest Proceeds and the
Closing Expense Account will be closed.  By Borrower Order (which may be in the
form of standing instructions), the Borrower may, so long as no Event of Default
has occurred and is continuing, direct the Collateral Agent to, and, upon
receipt of such Borrower Order, the Collateral Agent shall, invest all funds
received into the Closing Expense Account during a Due Period as so directed by
the Borrower in Eligible Investments.  Any income earned on amounts deposited in
the Closing Expense Account will be deposited in the Collection Account as
Interest Proceeds as it is received.  The Collateral Agent agrees to give the
Borrower immediate notice if an Administrative Officer of the Collateral Agent
obtains actual knowledge of or receives written notice that the Closing Expense
Account or any funds on deposit therein, or otherwise to the credit of the
Closing Expense Account, shall become subject to any writ, order, judgment,
warrant of attachment, execution or similar process.  The Closing Expense
Account shall remain at all times with an Eligible Account Bank.  The only
permitted withdrawal from or application of funds on deposit in, or otherwise to
the credit of, the Closing Expense Account shall be in accordance with the
provisions of this Section 8.3(e).

 

Section 8.4        Custodial Account.

 

(a)          The Collateral Agent shall, on or prior to the Closing Date,
establish a single, segregated non-interest bearing trust account in the name
“Energy Funding LLC Custodial Account, subject to the lien of the Collateral
Agent”, which shall be designated as the “Custodial Account” and which shall be
governed solely by the terms of this Agreement and the Account Control
Agreement.  Such account shall be held in trust for the Collateral Agent acting
for the benefit of the Secured Parties and over which the Collateral Agent shall
have exclusive control, subject to the Borrower’s right to give instructions
specified herein, and the sole right of withdrawal.  Any and all assets or
securities at any time on deposit in, or otherwise to the credit of, the
Custodial Account shall be held in trust by the Collateral Agent for the benefit
of the Secured Parties.  Except in connection with a liquidation pursuant to
Article VI, the only permitted withdrawal from the Custodial Account or in, or
otherwise to the credit of, the Custodial Account shall be as directed, upon
Borrower Order, in accordance with the provisions of Sections 5.31(b), 8.5 and
8.6.  The Collateral Agent agrees to give the Borrower and the Lenders immediate
notice if an Administrative Officer of the Collateral Agent obtains actual
knowledge of or receives written notice that the Custodial Account or any assets
or securities on deposit therein, or otherwise to the credit of the Custodial
Account, has become subject to any writ, order, judgment, warrant of attachment,
execution or similar process.  The Custodial Account shall remain at all times
with an Eligible Account Bank.

 

The Collateral Agent shall appoint a custodian (the “Custodian”) to act as a
securities intermediary for purposes of this Agreement and the other Loan
Documents.  Initially, such Custodian shall be Wells Fargo.  Any successor
custodian shall be a state or national bank or trust company which (i) is not an
Affiliate of the Borrower, (ii) has a combined capital and surplus of at least
U.S. $200,000,000, (iii) has a DBRS Long Term Rating of at least “A”, (iv) has a
DBRS Short Term Rating of at least “R-1 (middle)” and (v) is a securities
intermediary.  The rights, protections, immunities and indemnities afforded to
the Collateral Agent under this Agreement shall also be afforded to the
Custodian.

 

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(b)        Except as otherwise provided in Sections 8.5 and 8.6, all right,
title and interest of the Borrower in and to the Custodial Account, all related
property, and all proceeds thereof shall be subject to the security interest of
the Collateral Agent hereunder.

 

(c)        With respect to securities (including without limitation debt and
equity securities, bonds, money market funds and mutual funds) issued in the
United States, the Shareholders Communications Act of 1985 (the “Act”) requires
the Custodian to disclose to the issuers of such securities, upon their request,
the name, address and securities position of its customers who are (a) the
“beneficial owners” (as defined in the Act) of such issuer’s securities, if the
beneficial owner does not object to such disclosure, or (b) acting as a
“respondent bank” (as defined in the Act) with respect to such securities. 
(Under the Act, “respondent banks” do not have the option of objecting to such
disclosure upon the issuers’ request.)  The Act defines a “beneficial owner” as
any person who has, or shares, the power to vote a security (pursuant to an
agreement or otherwise), or who directs the voting of a security.  The Act
defines a “respondent bank” as any bank, association or other entity that
exercises fiduciary powers which holds securities on behalf of beneficial owners
and deposits such securities for safekeeping with a bank, such as the
Custodian.  Under the Act, a customer is either the “beneficial owner” or a
“respondent bank”.  The “customer” for purposes hereof shall mean the Borrower
and each Lender, each of which shall be deemed to be the “beneficial owner” (as
defined in the Act) of such securities to be held by the Custodian hereunder,
and each of the Borrower and the Lenders hereby waives any objection to the
disclosure of its name, address and securities position to any such issuer which
requests such information pursuant to the Act for the specific purpose of direct
communications between such issuer and the Borrower and each Lender.  Each of
the Borrower and the Lenders may, by written notice to the Custodian, opt out of
the waiver referred to in the foregoing sentence and elect not to consent to the
disclosure referred to in the foregoing sentence.  With respect to such
securities issued outside of the United States, information shall be released to
issuers only if required by law or regulation of the particular country in which
the securities are located.

 

(d)        At any time and from time to time the Borrower, or the Collateral
Manager on the Borrower’s behalf, may deposit (including for purposes of
satisfying the Overcollateralization Ratio Test) into the Custodial Account
Collateral Loans and/or Eligible Investments not previously subject to the Lien
of the Collateral Agent (for the benefit of the Secured Parties) granted under
this Agreement; provided that (i) all such funds are to be treated as Collateral
Loans and/or Eligible Investments, as applicable, for all purposes of this
Agreement, and (ii) upon the deposit of such funds into the Custodial Account,
such funds shall automatically be subject to the Lien of the Collateral Agent
(for the benefit of the Secured Parties) granted under this Agreement.  Except
as provided in Section 5.31, any such deposit shall be irrevocable.

 

Section 8.5      Acquisition of Collateral Loans and Eligible Investments.  Each
time that the Borrower acquires any Collateral Loan, Eligible Investment or
other Collateral, the Borrower shall, if such Collateral Loan or Eligible
Investment or other Collateral has not already been transferred to the Custodial
Account, transfer or cause the transfer of such Collateral Loan or Eligible
Investment and other Collateral to the Custodian to be held for the benefit of
the Collateral Agent in accordance with the terms of this Agreement.  The
security interest of the Collateral Agent in the funds or other property
utilized in connection with such acquisition shall, immediately and without
further action on the part of the Collateral Agent, be released.  The security
interest of the Collateral Agent shall nevertheless come into existence and
continue in the Collateral Loans and Eligible Investments and other Collateral
so acquired, including all rights of the Borrower in and to any Related
Contracts and Collections with respect to such Collateral Loans and Eligible
Investments and other Collateral.

 

Section 8.6      Release of Security Interest in Sold Collateral Loans and
Eligible Investments; Release of Security Interests Upon
Termination.                      (a)        Upon any sale or other

 

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disposition of a Collateral Loan or Eligible Investment or other Collateral (or
portion thereof) in accordance with the terms of this Agreement, the security
interest of the Collateral Agent in such Collateral Loan or Eligible Investment
or other Collateral (or the portion thereof which has been sold or otherwise
disposed of), and in all Collections and rights under Related Contracts with
respect to such Collateral Loan or Eligible Investment or other Collateral (but
not in the proceeds of such sale or other disposition) shall, immediately upon
the sale or other disposition of such Collateral Loan or Eligible Investment or
other Collateral (or such portion), and without any further action on the part
of the Collateral Agent, be released, except for the proceeds of such sale or
other disposition and except to the extent of the interest, if any, in such
Collateral Loan or Eligible Investment or other Collateral which is then
retained by the Borrower or which thereafter reverts to the Borrower for any
reason.

 

(b)        Upon the payment in full of the Obligations and termination of all
Commitments hereunder, the Collateral shall be released from the liens created
hereby and under the other Loan Documents, and this Agreement and all
obligations of the Agents and each Lender hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Borrower. At the request and sole
expense of the Borrower following any such termination, the Administrative Agent
and/or the Collateral Agent, as applicable, shall promptly deliver to the
Borrower (or its designee) any Collateral held by such Agent hereunder, and
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence such termination.  Any such release or
termination shall be subject to the provision that the Obligations shall be
reinstated if after such release or termination any portion of any payment in
respect of the Obligations shall be rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any substantial part of its property, or otherwise, all as though
such payment had not been made.

 

Section 8.7    Method of Collateral Transfer.  Notwithstanding any other
provision of this Agreement, each item of Collateral shall be delivered to the
Custodian by:

 

(a)        with respect to such of the Collateral as constitutes an instrument,
tangible chattel paper, a negotiable document, or money, causing the Custodian
to take possession of such instrument indorsed to the Custodian or in blank, or
such money, negotiable document, or tangible chattel paper, in the State of
Minnesota separate and apart from all other property held by the Custodian;

 

(b)        with respect to such of the Collateral as constitutes a certificated
security in bearer form, causing the Custodian to take possession of the related
security certificate in the State of Minnesota;

 

(c)        with respect to such of the Collateral as constitutes a certificated
security in registered form, causing the Custodian to take possession of the
related security certificate in the State of Minnesota, indorsed to the
Custodian or in blank by an effective indorsement, or registered in the name of
the Custodian, upon original issue or registration of transfer by the issuer of
such certificated security;

 

(d)        with respect to such of the Collateral as constitutes an
uncertificated security, causing the issuer of such uncertificated security to
register the Custodian or its nominee for the account of the Custodian as the
registered owner of such uncertificated security;

 

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(e)        with respect to such of the Collateral as constitutes a security
entitlement, causing the Securities Intermediary to indicate by book entry that
the financial asset relating to such security entitlement has been credited to
the Custodial Account;

 

(f)        with respect to such of the Collateral as constitutes a deposit
account, causing such deposit account to be established and maintained in the
name of the Collateral Agent or the Custodian, as applicable, by a bank the
jurisdiction of which for purposes of the UCC is the State of New York; and

 

(g)        taking such additional or alternative procedures as may hereafter
become appropriate to grant a first priority, perfected security interest in
such items of the Collateral to the Collateral Agent, consistent with applicable
law or regulations.

 

If any item of Collateral is a financial asset issued by an issuer that is not
the United States of America, an agency or instrumentality thereof, or some
other United States person or entity, and if such item cannot be delivered as
set forth above, such item may be delivered by the Collateral Agent holding such
item in an account created and maintained in the name of the Collateral Agent
with a banking or securities institution or a clearing agency or system located
outside the United States such that the Collateral Agent holds a first priority,
perfected security interest in such item of Collateral.

 

The Borrower shall record and file on or before the Closing Date all financing
statements, and the Borrower agrees to record and file after the Closing Date
all appropriate financing statements, continuation statements, and other
amendments, meeting the requirements of applicable law in such manner and in
such jurisdictions as are necessary to perfect and protect the interests of the
Secured Parties in the Collateral under the applicable Uniform Commercial Code
against all creditors of and purchasers from the Borrower.  The Borrower
promptly shall deliver file-stamped copies of such financing statements,
continuation statements, and amendments to the Agents.

 

In connection with each transfer of an item of Collateral to the Collateral
Agent and/or the Custodian, the Collateral Agent or the Custodian, as
applicable, shall make appropriate notations on its records indicating that such
item of the Collateral is held for the benefit of the Secured Parties pursuant
to and as provided in this Agreement and the other Loan Documents.  Effective
upon the transfer of an item of Collateral to the Collateral Agent and/or the
Custodian, the Collateral Agent or the Custodian, as applicable, shall be deemed
to acknowledge that it holds such item of Collateral as Collateral Agent or as
Custodian, as applicable, under this Agreement and the other Loan Documents for
the benefit and security of the Secured Parties.

 

Notwithstanding any other provision of this Agreement, the Collateral Agent
shall not hold any item of Collateral through an agent except as expressly
permitted by this Section 8.7.

 

Section 8.8      Continuing Liability of the Borrower.  Anything herein to the
contrary notwithstanding, the Borrower shall remain liable under each Related
Contract, interest and obligation included in the Collateral, to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder (including any undertaking to maintain insurance), all in accordance
with and pursuant to the terms and provisions thereof, and shall do nothing to
impair the security interest of the Collateral Agent in any Collateral.  Neither
the Collateral Agent nor any Secured Party shall have any obligation or
liability under any such Related Contract, interest or obligation by reason of
or arising out of this Agreement or the receipt by the Collateral Agent or any
Secured Party of any payment relating to any such Related Contract, interest or
obligation pursuant hereto, nor shall the Collateral Agent or any Secured Party
be required or obligated in any manner to perform or fulfill any of the
obligations of the Borrower thereunder or pursuant thereto, or to make any
payment, or to make any inquiry as to the nature

 

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or the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any such Related Contract, interest or
obligation, or to present or file any claim, or to take any action to collect or
enforce any performance or the payment of any amount thereunder to which it may
be entitled at any time.

 

Section 8.9      Reports.(a)    The Collateral Agent shall deliver to the
Borrower by facsimile (or such other medium as may be agreed upon by the
Borrower and the Collateral Agent) by 11:00 a.m. (New York time) on each
Business Day a report describing all Money (including but not limited to a
breakdown of all such amounts into Interest Proceeds and Principal Proceeds) and
other property received by it pursuant to the terms of this Agreement and the
other Loan Documents on the preceding Business Day (the “Daily Report”).  If any
Money or property shall be received by the Collateral Agent on a day that is not
a Business Day, the Collateral Agent shall deliver the Daily Report with respect
thereto to the Borrower on the next Business Day.

 

(b)        The Collateral Agent shall calculate, subject to the Collateral
Agent’s receipt from the Collateral Manager, the Borrower or the Administrative
Agent, as applicable, of information with respect to the Collateral Loans and
Eligible Investments that is not maintained or in the possession of the
Collateral Agent, each item required to be stated in the Collateral Report and
the Payment Date Report in accordance with Exhibit E and Exhibit F hereof,
respectively, and prepare drafts of such Collateral Report and Payment Date
Report and provide such drafts to the Collateral Manager for review and
approval; provided that each such draft is to be provided no later than five
days prior to the date the Collateral Report or the Payment Date Report, as
applicable, is due.

 

The Collateral Manager, the Administrative Agent and the Borrower shall
cooperate with the Collateral Agent in connection with the preparation by the
Collateral Agent of Collateral Reports and Payment Date Reports.  The Collateral
Manager shall review and verify the contents of the aforesaid reports,
instructions, statements and certificates, and upon verification shall make such
reports available to DBRS.  Upon receipt of approval from the Collateral
Manager, the Collateral Agent shall transmit the same to the Borrower and shall
make such reports available to the Administrative Agent and each Lender.

 

ARTICLE IX

 

APPLICATION OF MONIES

 

Section 9.1      Disbursements of Funds from Payment Account.

 

(a)        Notwithstanding any other provision of this Agreement other than
Section 6.4, but subject to the other subsections of this Section and Article II
(with respect to optional repayment of Loans), on each Quarterly Payment Date,
the Collateral Agent shall disburse amounts transferred to the Payment Account
from the Collection Account pursuant to Section 8.2(e) as follows and for
application in accordance with the following priorities (the “Priority of
Payments”):

 

(i)         On each Quarterly Payment Date, prior to the distribution of any
Principal Proceeds, Interest Proceeds shall be applied as follows:

 

(A)       to the payment of taxes (but not including any accrued and unpaid
Increased Costs, which are addressed solely by Sections 9.1(a)(i)(G) and
9.1(a)(ii)(D)), registration and filing fees then due and owing by the Borrower;

 

(B)       to the payment of the following amounts in the following priority
(without duplication):

 

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(1)        accrued and unpaid Administrative Expenses in the order set forth in
the definition thereof; and

 

(2)        on any Quarterly Payment Date other than the final Quarterly Payment
Date, to the retention in the Collection Account of an amount equal to the
Retained Expense Amount for such Quarterly Payment Date;

 

provided that the aggregate amount of payments under this clause (B) shall not
exceed on any Quarterly Payment Date the sum of (a) the Quarterly Cap plus
(b) the Retained Expense Amount determined on the immediately prior Quarterly
Payment Date less (c) Administrative Expenses paid pursuant to
Section 8.2(d) during the Due Period relating to such Quarterly Payment Date;

 

(C)       if the Borrower is party to any Interest Hedge Agreements, to the
payment of any amounts owing by the Borrower to the Interest Hedge
Counterparties thereunder (exclusive of any early termination or liquidation
payment owing by the Borrower by reason of the occurrence of an event of default
or termination event thereunder with respect to such Interest Hedge Counterparty
where such Interest Hedge Counterparty is the sole affected party or the
defaulting party);

 

(D)       unless waived or deferred by the Collateral Manager (or its designee),
which waiver (but not deferral) shall be permanent and irrevocable, to the
payment to the Collateral Manager (or its designee) of all due and unpaid Senior
Management Fees that have not been deferred on prior Quarterly Payment Dates
(provided that, for the avoidance of doubt, no deferred Collateral Management
Fees shall be payable pursuant to this clause (D));

 

(E)       to the Lenders for payment (on a pro rata basis) of accrued interest
on the Loans and Commitment Fees due on such Quarterly Payment Date;

 

(F)       if any of the Coverage Tests is not satisfied as of the related
Calculation Date, (1) to the repayment of principal of the Loans, or (2) only if
the outstanding principal amount of the Loans equals zero (both before and after
giving effect to any payment made pursuant to clause (1)), to deposit in the
Future Funding Reserve Account, in each case in the amount necessary to result
in the satisfaction of the Coverage Tests (on a pro forma basis as of such
Calculation Date);

 

(G)       to the applicable Lenders on a pro rata basis for payment of accrued
and unpaid Increased Costs;

 

(H)       to the payment of amounts described in clause (B) above to the extent
not paid thereunder (without regard to any cap or limitation);

 

(I)        to the payment to the Collateral Manager (or its designee) of any
previously deferred Senior Management Fees that the Collateral Manager elects to
be paid on such Quarterly Payment Date by notice to the Collateral Agent prior
to the related Calculation Date;

 

(J)        unless waived or deferred by the Collateral Manager (or its
designee), which waiver (but not deferral) shall be permanent and irrevocable,
to the payment to the

 

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Collateral Manager (or its designee) of (1) all due and unpaid Subordinated
Management Fees that have not been deferred on prior Quarterly Payment Dates and
(2) any previously deferred Subordinated Management Fees that the Collateral
Manager elects to be paid on such Quarterly Payment Date by notice to the
Collateral Agent prior to the related Calculation Date;

 

(K)       if the Borrower is party to any Interest Hedge Agreements, to any
amounts owing by the Borrower to the Interest Hedge Counterparties under such
Interest Hedge Agreements to the extent not paid under clause (C) above;

 

(L)       all remaining Interest Proceeds:

 

(1)        during the Reinvestment Period, at the sole discretion of the
Borrower, either (i) to the Collection Account to be applied as Principal
Proceeds for the purchase of additional Collateral Loans, (ii) to be applied to
prepay the principal of the Loans pursuant to Section 2.7, (iii) for deposit
into the Future Funding Reserve Account and/or (iv) to the equity of the
Borrower; and

 

(2)        after the Reinvestment Period, at the sole discretion of the
Borrower, either (i) to be applied to prepay the principal of the Loans pursuant
to Section 2.7 or (ii) only if the Equity Distribution Test is satisfied on the
related Calculation Date, to the equity of the Borrower; for the avoidance of
doubt, to the extent that the Equity Distribution Test is not satisfied on the
related Calculation Date, the Borrower shall prepay the principal of the Loans
until the Equity Distribution Test is satisfied (on a pro forma basis as of such
Calculation Date).

 

(ii)        On each Quarterly Payment Date, following the distribution of all
Interest Proceeds as set forth in Section 9.1(a)(i) above, Principal Proceeds
(other than Principal Proceeds previously reinvested in Collateral Loans or
otherwise designated by the Borrower for application pursuant to the
parenthetical contained in Section 8.2(a)(ii)) shall be applied as follows,
provided that after giving effect to any such payment no Commitment Shortfall
would exist (and, to the extent that any Commitment Shortfall would exist,
Principal Proceeds shall first be deposited in the Future Funding Reserve
Account in the amount needed to eliminate such Commitment Shortfall):

 

(A)       to the payment of the amounts referred to in clauses (A) through
(F) of subsection (i) above (in the priority stated therein), but only to the
extent not paid in full thereunder;

 

(B)       during the Reinvestment Period, all remaining Principal Proceeds, at
the sole discretion of the Borrower or the Collateral Manager, either:

 

(1)        to the Collection Account for the purchase of additional Collateral
Loans;

 

(2)        to be applied to prepay the principal of the Loans pursuant to
Section 2.7; or

 

(3)        to be deposited into the Future Funding Reserve Account;

 

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(C)       after the Reinvestment Period, to be applied to the payment of
principal on the Loans until repaid in full;

 

(D)       to the payment of the amounts referred to in clause (G) of subsection
(i) above, but only to the extent not paid in full thereunder;

 

(E)       after the Reinvestment Period, to the payment of amounts referred to
in clauses (H) through (K) of subsection (i) above, in the priority set forth
therein but only to the extent not paid in full thereunder; and

 

(F)        after the Reinvestment Period, to the equity of the Borrower.

 

(b)        If on any Quarterly Payment Date the amount available in the Payment
Account from amounts received in the related Due Period is insufficient to make
the full amount of the disbursements required pursuant to any clause in the
Priority of Payments, the Collateral Agent shall make the disbursements called
for in the order and according to the priority set forth under
Section 9.1(a) and ratably or in the order provided within a clause, as
applicable, in accordance with the respective amounts owing under any such
clause to the extent funds are available therefor.

 

(c)        On each Quarterly Payment Date, the Collateral Agent (on behalf of
the Borrower) shall deliver to the Administrative Agent and to DBRS (so long as
DBRS is rating the Loans) a report (the “Payment Date Report”) containing the
information described in Exhibit F hereto pursuant to Section 8.9 specifying the
amount of Interest Proceeds (and, of such amount, the amount of Fee Proceeds)
and Principal Proceeds received during the preceding Due Period, the amounts to
be applied to each purpose set forth in Section 9.1(a), and a calculation of the
Net Aggregate Exposure Amount (which shall be determined based on information
provided by the Borrower to the Collateral Agent including any Revolving
Collateral Loans and Delayed Funding Loans and the unpaid purchase price of all
Collateral Loans that the Borrower entered into binding commitments before the
end of the Reinvestment Period to originate or purchase after the end of the
Reinvestment Period).  The information in each Payment Date Report shall be
determined as of the Calculation Date immediately preceding the applicable
Quarterly Payment Date.

 

(d)        In the event that the Collateral Agent obtains actual knowledge of or
receives written notice that any Interest Hedge Counterparty defaults in the
payment of its obligations to the Borrower under any Interest Hedge Agreement on
the payment date therefor, the Collateral Agent shall make a demand on such
Interest Hedge Counterparty, or any guarantor, if applicable, demanding payment
by 12:00 noon, New York time, on the next Business Day.  The Collateral Agent
shall give notice to the Lenders, the Administrative Agent, the Borrower and the
Collateral Manager upon the continuing failure by such Interest Hedge
Counterparty (or applicable guarantor) to perform its obligations for one
Business Day following a demand made by the Collateral Agent on such Interest
Hedge Counterparty.

 

(e)        All amounts to be paid to the Borrower under this Section 9.1 shall
be paid to such account as the Borrower may designate and upon such payment will
be released from the lien of this Agreement.

 

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ARTICLE X

 

SALE OF COLLATERAL LOANS; ELIGIBILITY CRITERIA

 

Section 10.1    Sale of Collateral Loans.

 

(a)        Sales and Assignments.  Provided that no Event of Default has
occurred and is continuing (except for sales pursuant to clauses (i), (iii),
(iv), (v)(B) or (vi) below which shall be permitted during the continuance of an
Event of Default but only so long as the Majority Lenders have provided their
written consent thereto pursuant to Section 6.2(a)) and subject to the
satisfaction of the conditions specified in this Agreement, including without
limitation Section 10.1(c), the Borrower or the Collateral Manager may direct
the Collateral Agent in writing to sell, and the Collateral Agent shall sell in
the manner directed by the Borrower or the Collateral Manager in writing, any
Collateral Loan or other loan included in the Collateral (including, without
limitation, the sale by assignment of a portion of the Borrower’s interest in
any Collateral Loan or other loan); provided that such sale meets the
requirements of any one of clauses (i) through (vi) of this
Section 10.1(a) which shall be satisfied upon receipt by the Collateral Agent of
a trade ticket or other direction to sell (which shall be deemed to be a
representation and certification from the Borrower or the Collateral Manager
that such conditions are satisfied):

 

(i)         Credit Risk Loans.  The Borrower or the Collateral Manager may
direct the Collateral Agent in writing to sell any Credit Risk Loan at any time
during or after the Reinvestment Period without restriction; provided that the
sale of a Credit Risk Loan to an Affiliate shall be at a price at least equal to
its Market Value and such Market Value shall not be determined pursuant to
clause (d) or (e) of the definition thereof.

 

(ii)        Credit Improved Loans.  The Borrower or the Collateral Manager may
direct the Collateral Agent in writing to sell any Credit Improved Loan either:

 

(A)       at any time if the Sale Proceeds from such sale are at least equal to
the Investment Criteria Adjusted Balance of such Credit Improved Loan; or

 

(B)       during the Reinvestment Period if the Borrower or the Collateral
Manager reasonably believes prior to such sale that it will be able to enter
into binding commitments to reinvest all or a portion of the proceeds of such
sale, in compliance with the Servicing Standard, in one or more additional
Collateral Loans with an Aggregate Principal Balance (together with any
Collateral (which, for the avoidance of doubt, may be Collateral Loans or Cash)
contributed (which contribution shall be irrevocable) by the Borrower or the
Collateral Manager on the Borrower’s behalf prior to such sale) at least equal
to the Investment Criteria Adjusted Balance of such Credit Improved Loan within
30 Business Days of such sale.

 

(iii)       Defaulted Loans.  The Borrower or the Collateral Manager may direct
the Collateral Agent in writing to sell any Defaulted Loan at any time during or
after the Reinvestment Period without restriction; provided that the sale of a
Defaulted Loan to an Affiliate shall be at a price at least equal to its Market
Value and such Market Value shall not be determined pursuant to clause (d) or
(e) of the definition thereof.

 

(iv)       Equity Securities.  The Borrower or the Collateral Manager (A) may
direct the Collateral Agent in writing to sell any Equity Security at any time
without restriction and (B) shall use its commercially reasonable efforts to
effect the sale of any Equity Security within 45 days after receipt if such
Equity Security constitutes Margin Stock, unless such sale is prohibited

 

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by applicable law, in which case such Equity Security shall be sold as soon as
such sale is permitted by applicable law.

 

(v)        Discretionary Sales.

 

(A)       So long as no Event of Default shall have occurred and be continuing,
the Borrower or the Collateral Manager may at any time direct the Collateral
Agent in writing to sell any Collateral Loan other than a Credit Risk Loan, a
Credit Improved Loan, a Defaulted Loan or an Equity Security; provided, that
solely during the Reinvestment Period, (i) the sale price (expressed as a
percentage of par) of such Collateral Loan shall be at least equal to the
purchase price (expressed as a percentage of par) of such Collateral Loan, or
(ii) if the sale price (expressed as a percentage of par) is less than the
purchase price (expressed as a percentage of par) of such Collateral Loan, such
sale shall be permitted so long as the Aggregate Principal Balance of all such
Collateral Loans sold during the preceding period of twelve calendar months (or,
for the first twelve calendar months after the Closing Date, during the period
commencing on the Closing Date) is not greater than 15% of Total Capitalization,
as of the first day of such twelve calendar month period (or as of the Closing
Date, as the case may be); and

 

(B)       if an Event of Default has occurred and is continuing, (x) if the Sale
Proceeds from the sale of such Collateral Loan are at least equal to the
Investment Criteria Adjusted Balance of such Collateral Loan or (y) during the
Reinvestment Period other than during a Restricted Trading Period, if the
Borrower or the Collateral Manager reasonably believes prior to such sale that
it will be able to enter into binding commitments to reinvest all or a portion
of the proceeds of such sale, in compliance with the Servicing Standard, in one
or more additional Collateral Loans with an Aggregate Principal Balance
(together with any Collateral (which, for the avoidance of doubt, may be
Collateral Loans or Cash) contributed (which contribution shall be irrevocable)
by the Borrower or the Collateral Manager on the Borrower’s behalf prior to such
sale) at least equal to the Investment Criteria Adjusted Balance of such
Collateral Loan within 30 Business Days of such sale.

 

Any written direction given by the Borrower or the Collateral Manager to the
Collateral Agent pursuant to this clause (v) shall be deemed a representation
and certification by the Borrower or the Collateral Manager to the Collateral
Agent that subclauses (A) and (B) of this clause (v) have been satisfied.

 

(vi)       Mandatory Sales.  The Borrower or the Collateral Manager shall use
its commercially reasonable efforts to effect the sale of any Collateral Loan
(other than Defaulted Loans) that no longer meets the criteria described in
clause (m) in the definition of “Collateral Loan,” within 18 months of the
failure of such Collateral Loan to meet any such criteria (unless (1) the Rating
Condition is satisfied or (2) the Borrower or the Collateral Manager determines
that such sale would not be in the best interests of the Lenders).

 

(b)        Participations.

 

(i)         During the Reinvestment Period, the Borrower may direct the
Collateral Agent in writing to sell, and the Collateral Agent shall sell in the
manner directed by the Borrower in writing, a Participation Interest in any
Collateral Loan that is a term loan (other than a Delayed Funding Loan);
provided that at the time such Participation Interest is sold (A) after giving
effect to such sale, the Concentration Limitations are satisfied and (B) the
party purchasing such

 

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Participation Interest satisfies the Applicable Counterparty Criteria.

 

(ii)        For the avoidance of doubt, the Borrower may not sell a
Participation Interest in a Revolving Collateral Loan or a Delayed Funding Loan.

 

(c)        Rules Generally Applicable to Sales of Collateral Loans.  (i) All
sales of Collateral Loans or any portion thereof (including Participation
Interests) pursuant to this Section 10.1 shall be for Cash on a non-recourse
basis, which shall be deemed Principal Proceeds for all purposes hereunder. 
(ii) Anything herein to the contrary notwithstanding, the Borrower shall cause
any sale of any Collateral Loan or other property or assets to be conducted on
an arm’s length basis upon fair and reasonable terms no less favorable to the
Borrower than would be obtainable in a comparable arm’s length transaction with
a Person not an Affiliate.  (iii) Anything herein to the contrary
notwithstanding, the Aggregate Principal Balance of (A) all Collateral Loans
that are sold to Affiliates of the Borrower and (B) all Collateral Loans
distributed to the BDC pursuant to Section 5.31(b), collectively, in the
12-month period preceding the proposed date of sale (or such lesser number of
months as shall have elapsed since the Closing Date) shall not exceed 20% of the
Net Purchased Collateral Loan Balance as of such date of sale; provided that the
Aggregate Principal Balance of (A) all Collateral Loans that were Defaulted
Loans sold to Affiliates of the Borrower and (B) all Collateral Loans that were
Defaulted Loans distributed to the BDC pursuant to Section 5.31(b),
collectively, in the 12-month period preceding the proposed date of sale (or
such lesser number of months as shall have elapsed since the Closing Date) shall
not exceed 10% of the Net Purchased Collateral Loan Balance as of such date of
sale.

 

Section 10.2    Eligibility Criteria.  On and after the date of the first
Borrowing, a debt obligation will be eligible for purchase or origination by the
Borrower and inclusion in the Collateral only if as evidenced by an officer’s
certificate of an Authorized Officer of the Borrower delivered to the Collateral
Agent, the Eligibility Criteria are satisfied at the time such debt obligation
is purchased or originated, after giving effect to the inclusion of such debt
obligation.

 

ARTICLE XI

 

CHANGE IN CIRCUMSTANCES

 

Section 11.1    Basis for Determining Interest Rate Inadequate or Unfair.  In
the case of Eurodollar Rate Loans, if on or prior to the first day of any
Interest Period:

 

(a)        the Administrative Agent is unable to obtain a quotation for the
London Interbank Offered Rate as contemplated by Section 2.5, or

 

(b)        the Majority Lenders advise the Administrative Agent that as a result
of changes arising after the date of this Agreement the Adjusted London
Interbank Offered Rate as determined by the Administrative Agent will not
adequately and fairly reflect the cost to such Lenders of funding their
Eurodollar Rate Loans for such Interest Period,

 

in each case the Administrative Agent shall forthwith give notice thereof (by
telephone confirmed in writing) to the Borrower, DBRS, the Collateral Agent and
the Lenders, whereupon until the Administrative Agent notifies the Borrower and
the Collateral Agent that the circumstances giving rise to such suspension no
longer exist, the obligations (if any) of the Lenders to make Eurodollar Rate
Loans shall be suspended, except in the case of Eurodollar Rate Loans required
to fund Exposure Amounts; provided that such Lenders shall instead fund Base
Rate Loans.

 

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Section 11.2      Illegality.  If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender in good faith with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for any Lender to make, maintain or fund its
Eurodollar Rate Loans (if any) and such Lender shall so notify the
Administrative Agent, the Administrative Agent shall forthwith give notice
thereof (by telephone confirmed in writing) to the Lenders, the Collateral
Agent, DBRS and the Borrower, whereupon until such Lender notifies the
Administrative Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Lender to make Eurodollar Rate Loans (if
any) shall be suspended (provided that such Lender shall instead fund Base Rate
Loans).  Before giving any notice to the Administrative Agent pursuant to this
Section 11.2, such Lender shall designate a different Applicable Lending Office
if such designation would avoid the need for giving such notice and would not be
otherwise disadvantageous to such Lender.  If circumstances subsequently change
so that it is no longer unlawful for an affected Lender to make or maintain
Eurodollar Rate Loans as contemplated hereunder, such Lender will, as soon as
reasonably practicable after such Lender becomes aware of such change in
circumstances, notify the Borrower, the Collateral Agent and the Administrative
Agent and upon receipt of such notice, the obligations of such Lender to make or
continue Eurodollar Rate Loans shall be reinstated.

 

Section 11.3      Increased Cost and Reduced Return.

 

(a)          If, on or after the date hereof, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency shall
impose, modify or deem applicable any reserve (including, without limitation,
any such requirement imposed by the Federal Reserve Board (but excluding with
respect to any Loan any such requirement reflected in an applicable Euro-Dollar
Reserve Percentage)), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (or its Applicable Lending Office) or shall impose on
any Lender (or its Applicable Lending Office) or on the London interbank market
any other condition affecting its Eurodollar Rate Loans, its Notes evidencing
Eurodollar Rate Loans, or its obligation to make Eurodollar Rate Loans, and the
result of any of the foregoing is to increase the cost to such Lender (or its
Applicable Lending Office) of making or maintaining any Loan, or to reduce the
amount of any sum received or receivable by such Lender (or its Applicable
Lending Office) under this Agreement or under its Notes with respect thereto
(including if any such adoption, change or change in interpretation subjects any
Lender to taxes that increase such cost to, or reduce such amount received or
receivable by, such Lender (other than (a) Taxes, but only to the extent such
Taxes are imposed on or with respect to a payment hereunder, and (b) taxes
described in Sections 11.4(a)(I)(i) through (iv)) by an amount deemed by such
Lender to be material, then, upon demand (which demand shall set forth in
reasonable detail the basis for such demand for compensation) by such Lender
(with a copy to the Administrative Agent, the Collateral Agent and DBRS), such
additional amount or amounts as will compensate such Lender for such increased
cost or reduction shall constitute Increased Costs payable by the Borrower
pursuant to Section 9.1(a) and 6.4; provided that such amounts shall be no
greater than that which such Lender is generally charging other borrowers
similarly situated to Borrower.

 

(b)          If any Lender shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,

 

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central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Lender as a consequence of such Lender’s obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then, upon demand (which demand shall set forth in reasonable
detail the basis for such demand for compensation) by such Lender (with a copy
to the Administrative Agent, the Collateral Agent and DBRS), such additional
amount or amounts as will compensate such Lender  for such reduction (to the
extent funds are available therefor in accordance with the Priority of Payments)
shall constitute Increased Costs payable by the Borrower pursuant to
Section 9.1(a) and 6.4; provided that such amount shall be no greater than that
which such Lender is generally charging other borrowers similarly situated to
Borrower.

 

(c)          Each Lender will promptly notify the Borrower, the Collateral
Agent, DBRS and the Administrative Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to compensation
pursuant to this Section and will designate a different Applicable Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not be otherwise disadvantageous to such Lender.  A
certificate of any Lender claiming compensation under this Section and setting
forth in reasonable detail a calculation of the additional amount or amounts to
be paid to it hereunder shall be conclusive in the absence of manifest error. 
In determining such amount, such Lender may use any reasonable averaging and
attribution methods.  Failure or delay on the part of any Lender to demand
compensation under this Section shall not constitute a waiver of such Lender’s
right to demand such compensation; provided that the Borrower shall not be
required to compensate a Lender pursuant to this Section for any increased costs
or reductions incurred more than six months prior to the earlier of (x) the date
on which the applicable Lender has actual knowledge of the event giving rise to
such increased costs or reductions and (y) the date on which the applicable
Lender should, in the exercise of reasonable care, have knowledge of the event
giving rise to such increased costs or reductions; provided that, if the event
giving rise to such increased costs or reductions is retroactive, then the six
month period referred to above shall be extended to include the period of
retroactive effect thereof.

 

(d)          Notwithstanding anything to the contrary contained herein, (i) no
Lender shall demand compensation for any increased cost, reduction or capital
referred to above in Section 11.3(a) or (b) if it shall not at the time be the
general policy and practice of such Lender to demand such compensation in
similar circumstances under comparable provisions of other credit agreements
from similarly situated borrowers and (ii) all requests, rules, guidelines,
requirements and directives promulgated (x) by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority), the Committee of European Banking Supervisors or the United
States or foreign regulatory authorities, in each case, pursuant to Basel III or
similar capital requirements directive existing on the Closing Date impacting
European banks and other regulated financial institutions and (y) pursuant to
the Dodd-Frank Wall Street Reform and Consumer Protection Act, shall, in each
case, be deemed to be a change or adoption of any law, rule or regulation for
purposes of this Section 11.3, regardless of the date enacted, adopted, issued
or implemented.

 

(e)          If the Borrower is required to pay additional amounts to any Lender
under this Section 11.3, then the Borrower may, at its own expense and in its
sole discretion, require such Lender to transfer or assign, in whole, without
recourse (in accordance with Section 11.5) all of its interests, rights and
obligations under this Agreement and the Notes to an assignee (it being
understood that such Lender shall have no obligation to search for, seek,
designate or otherwise try to find, such assignee) which shall assume such
obligations (and which may be another Lender, if such other Lender accepts such
assignment).

 

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(f)           Notwithstanding anything to the contrary in this Section 11.3, the
Borrower shall not be required to pay amounts to any Lender under this
Section 11.3 to the extent such amounts would be duplicative of amounts payable
by the Borrower under Section 11.4 of this Agreement.  To the extent the
Borrower is required to pay any Lender additional amounts or indemnify any
Lender in respect of Taxes or Other Taxes, the provisions of Section 11.4 of
this Agreement shall control.

 

(g)          For the avoidance of doubt, the Borrower shall not be obligated to
pay additional amounts to a Lender pursuant to clauses (a) or (b) of this
Section 11.3 to the extent any such additional amounts are attributable to a
failure by a Lender to comply with its obligations under Article 122a that are
within its control.

 

Section 11.4      Taxes.

 

(a)          (I) Any and all payments by or on behalf of the Borrower to or for
the account of any Lender or the Administrative Agent hereunder or under any
other Loan Document shall be made free and clear, of and without deduction for,
any and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender and the Administrative Agent, (i) taxes imposed on or
measured by its net income (however denominated), franchise taxes, and branch
profits taxes, in each case (A) imposed as a result of any Lender or the
Administrative Agent (as the case may be) being organized under the laws of, or
having its principal office or, in the case of each Lender, its applicable
lending office located in, the jurisdiction imposing such tax (or any political
subdivision thereof) or (B) that are Other Connection Taxes, (ii) in the case of
each Lender, withholding taxes imposed on amounts payable to or for the account
of such Lender with respect to an applicable interest in a Loan or Commitment
pursuant to a law in effect on the date on which (y) such Lender acquires such
interest in the Loan or Commitment (other than pursuant to an assignment request
by the Borrower under Section 11.5) or (z) such Lender changes its lending
office, except in each case to the extent that, pursuant to this Section 11.4,
amounts with respect to such taxes were payable either to such Lender’s assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its lending office, (iii) taxes attributable to
such Lender or the Administrative Agent’s failure to comply with
Section 11.4(d) and (iv) any withholding taxes imposed under FATCA (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as “Taxes”).  (II) If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under any Note to any Lender or the Administrative Agent,
(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 11.4(a)) such Lender or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant governmental
authority in accordance with applicable law and the Priority of Payments and
(iv) the Borrower shall furnish to the Administrative Agent, at its address set
forth on the signature pages hereof, the original or a certified copy of a
receipt evidencing payment thereof or, if a receipt is not available, such other
evidence of payment as may be reasonably acceptable to such Lender or the
Administrative Agent.

 

(b)          In addition, the Borrower agrees to pay, in accordance with the
Priority of Payments, any present or future stamp or documentary taxes and any
other excise or property taxes, or charges or similar levies which arise from
any payment made hereunder or under any Note or from the execution or delivery
of, or otherwise with respect to, this Agreement or any Note (other than any
such taxes arising with respect to an assignment) (hereinafter referred to as
“Other Taxes”).

 

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(c)          (i) The Borrower agrees to indemnify each Lender and the
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 11.4) paid by such Lender or
the Administrative Agent (as the case may be) and any liability (including
penalties, interest and reasonable expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 15 days from the date such
Lender or the Administrative Agent (as the case may be) makes demand therefor
accompanied by evidence reasonably satisfactory to the Borrower establishing
liability for such Taxes or Other Taxes.

 

(ii)          Each Lender shall severally indemnify the Borrower and the
Administrative Agent for any taxes (but only to the extent such taxes are
excluded from the definition of Taxes pursuant to Section 11.4(a)) attributable
to such Lender that are payable or paid by the Borrower or the Administrative
Agent (as the case may be) and any liability (including penalties, interest and 
reasonable expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 15 days from the date the Borrower or the
Administrative Agent (as the case may be) makes demand therefor accompanied by
evidence reasonably satisfactory to the relevant Lender establishing liability
for such taxes.

 

(d)          (i) Each Lender that is a U.S. Person, on or prior to the date of
its execution and delivery of this Agreement, or on or prior to the date on
which it becomes a Lender, as the case may be, and from time to time thereafter
if requested in writing by the Borrower (but only so long as such Lender remains
lawfully able to do so), shall provide the Borrower with two executed original
IRS Forms W-9 certifying that such Lender is exempt from U.S. Federal backup
withholding tax. Each Lender that is not a U.S. Person, on or prior to the date
of its execution and delivery of this Agreement, or on or prior to the date on
which it becomes a Lender, as the case may be, and from time to time thereafter
if requested in writing by the Borrower (but only so long as such Lender remains
lawfully able to do so), shall provide the Borrower with two executed original
IRS Forms W-8BEN, W-8BEN-E, W-8ECI or W-8IMY, as appropriate, or any successor
form prescribed by the IRS, either (w) certifying that such Lender is entitled
to benefits under an applicable income tax treaty to which the United States is
a party which eliminates, or reduces the rate of U.S. Federal withholding tax on
payments hereunder, (x) certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States, (y) in the case of a Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, accompanied
by a certificate to the effect that such Lender is not (A) a “bank” within the
meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of
the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the Code
or (z) in the case of a Lender providing a Form W-8IMY, certifying that such
Lender is not the beneficial owner of payments hereunder and providing such
information and forms as required by applicable law to establish the rate of
U.S. withholding tax (if any) with respect to such payments.  In addition to the
foregoing requirements of this Section 11.4(d)(i), each Lender shall, on or
prior to the date on which such Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of the Borrower or
the Administrative Agent), deliver to the Borrower and the Administrative Agent
(in such number of copies as shall be requested by the recipient) executed
originals of any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in U.S. Federal withholding tax, duly completed,
together with any required supplementary information.

 

Each Lender hereby agrees that if any form or certification such Lender
previously delivered pursuant to this Section 11.4(d)(i) expires or becomes
obsolete or inaccurate in any respect, such Lender shall update such form or
certification or notify the Borrower and the Administrative Agent in writing of
its legal inability to do so, in each case promptly after such form or
certification so expires or becomes obsolete.

 

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(ii)          If any payment made to a Lender or the Administrative Agent under
any Loan Document may be subject to U.S. Federal withholding tax imposed by
FATCA if such Lender or the Administrative Agent failed to comply with the
applicable reporting requirements of FATCA, such Lender or the Administrative
Agent, as applicable, shall deliver to the Borrower (with a copy to the
Administrative Agent, if applicable) a certification signed by the chief
financial officer, principal accounting officer, treasurer or controller and
other documentation reasonably requested by the Administrative Agent or the
Borrower sufficient for the Administrative Agent and the Borrower to comply with
their obligations under FATCA and to determine whether such Lender has complied
with such applicable reporting requirement and whether withholding is required
under FATCA.

 

(e)          If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 11.4, then such Lender will
change the jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such change,
in the sole judgment of such Lender, is not otherwise disadvantageous to such
Lender.

 

(f)           If a Lender determines, in its sole discretion exercised in good
faith, that it has received a refund of any Taxes or Other Taxes as to which it
has been indemnified under this Section 11.4, it shall pay to the Borrower, as
applicable, an amount equal to such refund (but only to the extent of indemnity
payments made under this Section 11.4 with respect to the Taxes giving rise to
such refund), net of all out-of-pocket expenses (including taxes) of such Lender
and without interest (other than any interest paid by the relevant governmental
authority with respect to such refund).  The Borrower, upon the request of such
Lender, shall repay to such Lender the amount paid over pursuant to this clause
(f) (plus any penalties, interest or other charges imposed by the relevant
governmental authority) in the event that such Lender is required to repay such
refund to such governmental authority.  Notwithstanding anything to the contrary
in this clause (f), in no event will a Lender be required to pay an amount to
the Borrower pursuant to this clause (f) the payment of which would place the
Lender in a less favorable net after-tax position than the Lender would have
been in if the indemnification payments or additional amounts giving rise to
such refund had never been paid.  This clause (f) shall not be construed to
require any Lender to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other
Person.

 

(g)          Notwithstanding anything to contrary contained in this
Section 11.4, all payments made pursuant to this Section 11.4 shall only be made
to the extent funds are available in accordance with the Priority of Payments.

 

(h)          Each party’s obligations under this Section 11.4 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitment
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.

 

Section 11.5      Replacement of Lenders; Downgraded Lenders; Defaulting
Lenders.

 

(a)          (x) If and for so long as any Lender is (1) a Downgraded Lender
(subject to clauses (b) and (c) below), (2) a Defaulting Lender, (3) requesting
compensation under Section 11.3 or (4) unable to make Loans under Section 11.2
or (y) if the Borrower is required to pay any additional amount to such Lender
or any authority for the account of such Lender pursuant to Section 11.4, then
the Borrower may, at its sole expense and effort, upon notice to such Lender,
the Agents and DBRS, direct such Lender to assign and delegate (and such Lender
shall comply with such direction but shall have no obligation to search for,
seek, designate or otherwise try to find, an assignee), without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 12.6), all of its interests, rights and obligations under
this Agreement and the Notes to a financial institution that is (I)

 

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an Approved Lender (and is not otherwise a Defaulting Lender), (II) eligible to
purchase the replaced Lender’s Loans under the terms hereof and (III) not
prohibited by any applicable law from making such purchase (such purchaser, an
“Approved Purchaser”), which shall assume such obligations (and which may be
another Lender, if such other Lender accepts such assignment); provided that:

 

(i)           such assigning Lender shall have received payment of an amount
equal to the aggregate outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
its Note (including any amounts under Section 2.9) from such Approved Purchaser
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrower (in the case of all other amounts);

 

(ii)          in the case of any such assignment or delegation resulting from a
claim for compensation under Section 11.3 or payments required to be made
pursuant to Section 11.4, such assignment or delegation will result in a
reduction in such compensation or payments thereafter; and

 

(iii)         such assignment or delegation does not conflict with any
applicable law.

 

(b)          If and for so long as any Lender is a Downgraded Lender or a
Defaulting Lender hereunder:

 

(i)           in the case of a Downgraded Lender, it holds any portion of the
Commitments that remain in effect, then, as soon as practicable and in any event
within 30 days after becoming a Downgraded Lender, (x) it shall deposit an
amount equal to its undrawn Commitments at such time into the Lender Collateral
Account and (y) all principal payments in respect of the Loans which would
otherwise be made to such Downgraded Lender shall be diverted to the Lender
Collateral Subaccount of such Downgraded Lender in accordance with
Section 8.3(d), and any amounts in such Lender Collateral Subaccount shall be
applied to any future funding obligations of such Downgraded Lender; and

 

(ii)          in the case of a Defaulting Lender, (x) the Commitment and Loans
of any such Defaulting Lender shall not be included in determining whether the
Majority Lenders have taken or may take any action hereunder (including any
consent to any amendment, waiver or other modification pursuant to
Section 12.5); provided that a Defaulting Lender’s vote shall be included with
respect to any action hereunder relating to any change that would require the
consent of each Lender or each affected Lender under Section 12.5 (to the extent
such Defaulting Lender is such an affected Lender) and (y) no Defaulting Lender
shall be entitled to receive any Commitment Fee for any period during which time
that Lender is a Defaulting Lender (and the Borrower shall not be required to
pay any such fee that otherwise would have been required to have been paid to
that Defaulting Lender during such time).

 

(c)          Notwithstanding anything in Section 11.5(a) to the contrary, (i) a
Lender shall not be required to make any assignment or delegation referred to in
Section 11.5(a) if, prior thereto, as a result of a waiver by such Lender or the
Borrower or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply and such Lender gives notice thereof to
the Borrower and (ii) the Borrower may not require a Downgraded Lender to make
any such assignment or delegation during the 60-day period referred to in clause
(b)(i) above or at any time that a Downgraded Lender is in compliance with
clause (b)(i)(x) above.

 

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(d)          Each of the Administrative Agent and any replaced Lender will agree
to cooperate with all reasonable requests of the Borrower for the purpose of
effecting a transfer in compliance with this Section 11.5.

 

(e)          Nothing in this Section 11.5 shall be deemed to release a
Defaulting Lender or Downgraded Lender from any liability arising from its
failure to fund any Loans it is required to make hereunder.

 

ARTICLE XII

 

MISCELLANEOUS

 

Section 12.1      Notices.  All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile,
facsimile transmission or similar writing) and shall be given to such party: 
(w) in the case of the Borrower, the Collateral Manager, the Administrative
Agent or the Collateral Agent, at its address, facsimile number and/or email
address set forth on the signature pages hereof, (x) (1) in the case of the
initial Lender, at its address, facsimile number and/or email address set forth
on the signature pages hereof, and (2) in the case of any other Lender, at its
address, facsimile number and/or email address set forth in its Administrative
Questionnaire (which notices shall be solely by facsimile or email if so
indicated therein), (y) in the case of DBRS, at its address, facsimile number
and/or email address set forth on Schedule F (provided that all notices to DBRS
shall be sent by email, whether or not also sent by physical address and/or
facsimile) or (z) in the case of any party, such other address, facsimile number
and/or email address as such party may hereafter specify for such purpose by
notice to the Administrative Agent, the Collateral Agent and the Borrower.  Each
such notice, request or other communication shall be effective (i) if given by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section and the appropriate answerback is received, (ii) if given by
mail, three Business Days after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid, (iii) if given by
recognized courier guaranteeing overnight delivery, one Business Day after such
communication is delivered to such courier or (iv) if given by any other means,
when delivered at the address or email address specified in this Section;
provided that notices to the Administrative Agent under Article XI or to the
Collateral Agent under Article VIII shall not be effective until received.

 

The Collateral Agent agrees to accept and act upon instructions or directions
pursuant to this Agreement sent by unsecured email, facsimile transmission or
other similar unsecured electronic methods, provided that any person providing
such instructions or directions shall provide to the Collateral Agent an
incumbency certificate listing persons designated to provide such instructions
or directions, which incumbency certificate shall be amended whenever a person
is added or deleted from the listing.  If such person elects to give the
Collateral Agent email or facsimile instructions (or instructions by a similar
electronic method) and the Collateral Agent in its discretion elects to act upon
such instructions, the Collateral Agent’s reasonable understanding of such
instructions shall be deemed controlling.  The Collateral Agent shall not be
liable for any losses, costs or expenses arising directly or indirectly from the
Collateral Agent’s reliance upon and compliance with such instructions
notwithstanding such instructions conflicting with or being inconsistent with a
subsequent written instruction.  Any person providing such instructions
acknowledges and agrees that there may be more secure methods of transmitting
such instructions than the method(s) selected by it and agrees that the security
procedures (if any) to be followed in connection with its transmission of such
instructions provide to it a commercially reasonable degree of protection in
light of its particular needs and circumstances.

 

Section 12.2      No Waivers.  No failure or delay by either Agent or any Lender
or the Borrower in exercising any right, power or privilege hereunder or under
any Note shall operate as a

 

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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 herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.

 

Section 12.3      Expenses; Indemnification

 

(a)          The Borrower shall pay (i) all reasonable and documented
out-of-pocket expenses of the Agents, including, without limitation, reasonable
and documented fees and disbursements of counsel in connection with the
preparation, syndications and administration of this Agreement, the Loan
Documents and any documents and instruments referred to therein, and further
modifications or syndications of the Loans in connection therewith, the
administration of the Loans, any Increased Commitment or Additional Loan, any
waiver or consent hereunder or any amendment or modification hereof or any
Default hereunder; provided that such reimbursement under this subclause
(a)(i) of expenses incurred up to and including the Closing Date shall be
limited to the amounts set forth in the Engagement Letter and as otherwise
agreed by the parties hereto and (ii) all reasonable and documented
out-of-pocket expenses incurred by any Agent, including reasonable and
documented fees and disbursements of one counsel for the Administrative Agent
and the initial Lender and one New York counsel and one local counsel for Wells
Fargo, as Collateral Agent, Custodian and Securities Intermediary (provided that
(1) the Administrative Agent and the initial Lender shall be entitled to
reimbursement for a single counsel and (2) Wells Fargo as Collateral Agent,
Custodian and Securities Intermediary shall be entitled to reimbursement for a
single New York counsel and a single local counsel), in connection with the
enforcement of the Loan Documents and the instruments referred to therein and
such collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom.

 

(b)          The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent, the Custodian, Wells Fargo as Securities Intermediary and each
Lender, their respective affiliates and the respective directors, officers,
agents and employees of the foregoing (each an “Indemnitee”) and hold each
Indemnitee harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind (but excluding the fees and expenses of its
internal legal counsel and all ordinary internal costs, consisting of overhead
and employee costs and expenses incurred by such Indemnitee in connection with
its obligations under the Loan Documents), including, without limitation, the
reasonable and documented fees and disbursements of counsel (provided that
(1) the Administrative Agent and the initial Lender shall be entitled to
reimbursement for a single counsel and (2) Wells Fargo as Collateral Agent,
Custodian and Securities Intermediary shall be entitled to reimbursement for a
single New York counsel and a single local counsel), which may be incurred by
such Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
that may at any time (including, without limitation, at any time following the
payment of the Obligations) be imposed on, asserted against or incurred by any
Indemnitee as a result of, or arising out of, or in any way related to or by
reason of, (i) any of the transactions contemplated by the Loan Documents or the
execution, delivery or performance of any Loan Document, (ii) the grant to the
Collateral Agent and the Lenders of any Lien, on the Collateral, (iii) the
exercise by the Administrative Agent, the Collateral Agent or the Lenders of
their rights and remedies (including, without limitation, foreclosure) under any
agreements creating any such Lien, (iv) the failure of the Collateral Agent to
have a valid and perfected Lien on any Collateral, (v) a breach by the Borrower
of any representation, warranty or covenant contained in any Loan Document or
any document relating to any Collateral or (vi) any loss arising from any action
or inaction of the Borrower or any of its Affiliates regarding the
administration of any Collateral or otherwise relating to such Collateral (other
than an Obligor’s financial inability to make payments with respect to any such
Collateral) but excluding, as to any Indemnitee, any such losses, liabilities,
damages, expenses or costs incurred by reason of the gross negligence or willful
misconduct of such Indemnitee as finally determined by a court of competent
jurisdiction.  The Borrower’s obligations

 

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under this Section shall survive the termination of this Agreement and the
payment of the Obligations.  For the sake of clarity, this Section 12.3(b) shall
not impose any indemnification or similar obligation on the Borrower with
respect to taxes, which obligation shall be addressed solely by Section 11.4.

 

(c)          The Borrower shall pay, and hold the Agents and each of the Lenders
harmless from and against, any and all present and future U.S. stamp, recording,
transfer and other similar foreclosure related taxes with respect to the
foregoing matters in this Section 12.3 and hold the Agents and each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes.  For the avoidance of doubt, any amounts paid
pursuant to this Section 12.3(c) shall not be duplicative of amounts paid
pursuant to Section 11.4.

 

Section 12.4      Sharing of Set-Offs.  In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to the
Borrower or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) and any other Indebtedness at any
time held or owing by such Lender (including, without limitation, by branches
and agencies of such Lender wherever located) to or for the credit or the
account of the Borrower against and on account of the Obligations of the
Borrower then due and payable to such Lender under this Agreement or under any
of the other Loan Documents, including, without limitation, all interests in
Obligations purchased by such Lender.

 

Each Lender agrees that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal, interest, fees and other amounts due with respect to any
Loan held by it which is greater than the proportion received by any other
Lender in respect of the aggregate amount of principal, interest, fees and other
amounts due with respect to the Loans held by such other Lender, the Lender
receiving such proportionately greater payment shall purchase such
participations in the Loans held by the other Lenders, and such other
adjustments shall be made, as may be required so that all such payments of
principal, interest, fees and other amounts with respect to the Loans held by
the Lenders shall be shared by the Lenders pro rata; provided that nothing in
this Section 12.4 shall impair the right of any Lender to exercise any right of
set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of Indebtedness of the Borrower other than its
Indebtedness under the Loans.  The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Loan, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.  Notwithstanding
anything to the contrary contained herein, any Lender may, by separate agreement
with the Borrower, waive its right to set off contained herein or granted by law
and any such written waiver shall be effective against such Lender under this
Section 12.4.  For the avoidance of doubt, for purposes of this Section 12.4 a
pro rata allocation will mean an allocation of the amount received by such
set-off or counterclaim and other rights as if such amount had been applied as a
prepayment of the Loans under Section 2.7.

 

Section 12.5      Amendments and Waivers.  (a) Any provision of this Agreement,
the Notes or any other Loan Document may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the Borrower and the
Majority Lenders (and, if the rights or duties of the Administrative Agent
and/or the Collateral Agent are affected thereby, by the Administrative Agent
and/or the Collateral Agent, as the case may be); provided that:

 

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(i)           no such amendment or waiver shall, unless signed by all the
Lenders, (1) extend the Stated Maturity; (2) increase or decrease the Commitment
of any Lender (except for a ratable decrease in the Commitments of all Lenders)
or subject any Lender to any additional obligation; (3) change the Percentage
Share of the Commitments allocable to any Lender or of the aggregate unpaid
principal amount of the Loans, or the number of Lenders, which shall be required
for the Lenders or any of them to take any action under this Section or any
other provision of this Agreement; (4) release any Collateral except as provided
in this Agreement or the other Loan Documents; or (5) alter the terms of
Section 6.4, Section 9.1 or this Section 12.5 (or any defined term as it is used
therein) in a manner materially adverse to the interests of any Lender;

 

(ii)          no such amendment or waiver shall, unless signed by all Lenders
affected thereby, postpone the date fixed for any payment of principal of or
interest on any Loan or any fees or other amounts hereunder or for any reduction
or termination of any Commitment;

 

(iii)         no such amendment or waiver shall, unless signed by a Lender,
reduce the principal of or rate of interest on any Loan held by such Lender or
any fees or indemnities payable for the account of such Lender; provided that
the foregoing shall not apply to the rescission of interest accruing at the
Post-Default Rate, which may be rescinded by the Majority Lenders;

 

(iv)         no amendment or waiver of any provision under this Agreement or any
other Loan Document that governs the rights and obligations of CP Lenders or
their Conduit Support Providers (including this Section 12.5(a)(iv)) (other than
amendments and waivers that apply generally to Lenders) or that specifically
relates to CP Conduits shall be effective without the written consent of each CP
Lender;

 

(v)          [reserved];

 

(vi)         subject to Section 12.5(c), the terms and provisions of the
Collateral Management Agreement and the Master Transfer Agreement may not be
amended or waived by the parties thereto without the consent of the Majority
Lenders; and

 

(vii)       an amendment or waiver of the Investment Advisory Agreement or the
Sub-Advisory Agreement shall not require the consent of any Lender if (1) the
Administrative Agent is provided not less than three Business Days’ notice prior
to the execution of such proposed amendment or waiver and (2) such notice
includes a written certification that the Borrower or Collateral Manager
believes such amendment or waiver would not have a material adverse effect on
any Lender.

 

(b) In connection with any proposed amendment or waiver of this Agreement or any
other Loan Document pursuant to this Section 12.5, either (1) such proposed
amendment or waiver will be effective only upon satisfaction of the Rating
Condition or (2) if, in the Borrower’s reasonable determination, such proposed
amendment or waiver does not have a reasonable likelihood of being adverse to
the interests of any Lender, then the Borrower shall, not later than 10 Business
Days prior to the execution of such proposed amendment or waiver, deliver to
each of the Lenders a copy of such proposed amendment or waiver; provided, in
the case of the foregoing clause (2), if any Lender notifies the Borrower prior
to execution of such proposed amendment or waiver that, based on its reasonable
determination, such proposed amendment or waiver could adversely affect the
interests of any Lender, such proposed amendment or waiver will not be effective
without the satisfaction of the Rating Condition.

 

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(c) In connection with any proposed amendment or waiver of the Collateral
Management Agreement or the Master Transfer Agreement, either (1) such proposed
amendment or waiver will be effective only upon receipt by the Borrower of the
written consent of the Majority Lenders or (2) if, in the Borrower’s reasonable
determination, such proposed amendment or waiver does not have a reasonable
likelihood of being adverse to the interests of any Lender, then the Borrower
shall, not later than 15 Business Days prior to the execution of such proposed
amendment or waiver, deliver to each of the Lenders and to DBRS a copy of such
proposed amendment or waiver; provided, in the case of the foregoing clause (2),
if any Lender notifies the Borrower prior to execution of such proposed
amendment or waiver that, based on its reasonable determination, such proposed
amendment or waiver could adversely affect the interests of any Lender, such
proposed amendment or waiver will not be effective without the written consent
of the Majority Lenders.

 

(d) The Borrower shall, promptly following the execution of any amendment,
waiver or supplement to any Loan Document, provide copies thereof to each
Lender, the Administrative Agent, the Collateral Agent and DBRS.

 

Section 12.6      Successors and Assigns.

 

(a)          The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any of its rights
or obligations under this Agreement or the other Loan Documents without the
prior written consent of each of the Lenders except as permitted by this
Agreement.

 

(b)          (i) Any Lender may at any time grant to one or more banks,
commercial paper conduits or other institutions (each, a “Participant”)
participating interests in its Commitment or any or all of its Loans.  In the
event of any such grant by a Lender of a participating interest to a
Participant, whether or not upon notice to the Borrower and the Administrative
Agent, such Lender shall remain responsible for the performance of its
obligations hereunder, and the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.  An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).

 

(ii)          In the event that any Lender sells participations in its
Commitment or any or all of its Loans hereunder, such Lender shall, acting
solely for this purposes as a non-fiduciary agent of the Borrower, maintain a
register on which it enters the name of all Participants in the Commitments or
Loans held by it and the principal amount (and stated interest thereon) of the
portion of the Commitments or Loans which is the subject of the participation
(the “Participant Register”).  A Commitment or Loan may be participated in whole
or in part only by registration of such participation on the Participant
Register.  Any participation of such Commitment or Loan may be effected only by
the registration of such participation on the Participant Register.  No Lender
shall have any obligation to disclose all or any portion of the Participant
Register (including the identity of any Participant or any information relating
to a Participant’s interest in any Commitments, Loans or its other obligations
under any Loan Document) to any Person except to the extent that such disclosure
is necessary to establish that such Commitment, Loan or other obligation is in
registered form under Section 5f.103-1(c) of the United States Treasury
Regulations.  The entries in the Participant Register shall be conclusive absent
manifest error, and such Lender shall treat each Person whose name is recorded
in the Participant Register as the owner of such participation for all purposes
of this Agreement notwithstanding any notice to the contrary.  For the avoidance
of doubt, the Administrative Agent (in its capacity as Administrative Agent)
shall have no responsibility for maintaining a Participant Register.

 

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(c)          (i) Any Lender may at any time assign to one or more banks, CP
Conduits or other financial institutions (each, an “Assignee”) all or any
portion of its rights and obligations under this Agreement, the Notes and the
other Loan Documents, and such Assignee shall assume such rights and
obligations, pursuant to an Assignment and Assumption executed by such Assignee
and such transferor Lender, with (and subject to) the consent of the Borrower
and the Administrative Agent, which consent in each case shall not be
unreasonably withheld; provided that (1) such assignment is in an amount which
is at least $5,000,000 or a multiple of $1,000,000 in excess thereof (or the
remainder of such Lender’s Loans or Commitments); and (2) no such consent of the
Borrower or the Administrative Agent shall be required in the case of an
assignment that is made (v) during the continuance of an Event of Default;
(w) after the Commitment Period; (x) during the Commitment Period, if such
Assignee is a Lender or an Affiliate of a Lender; (y) if the Loans have been
downgraded from the Initial Rating; or (z) by (I) a CP Lender to a Conduit
Assignee or (II) Natixis to any Natixis Conduit; provided further that, so long
as no Event of Default exists at such time, no such assignment shall be made to
a Competitor without the prior consent of the Borrower.

 

(ii)          Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Lender of an amount equal to the purchase price
agreed between such transferor Lender and such Assignee, such Assignee (and if
the Assignee is a Conduit Assignee, any Related CP Issuer, if such Conduit
Assignee does not itself issue commercial paper) shall be a party to this
Agreement and shall have all the rights, protections and obligations of a Lender
with Commitments as set forth in such instrument of assumption, and the
transferor Lender shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required.  Upon the consummation of any assignment pursuant to this subsection
(c), the transferor Lender, the Administrative Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Assignee.  In connection with any such assignment, the transferor Lender shall
pay to the Administrative Agent an administrative fee for processing such
assignment in the amount of $2,500 (unless such fee is waived by the
Administrative Agent).  Each Assignee shall deliver to the Borrower and the
Administrative Agent the relevant form or certification in accordance with
Section 11.4(d).

 

(d)          Any Lender may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank.  No such assignment
shall release the transferor Lender from its obligations hereunder.  Promptly
upon being notified in writing of such transfer, the Administrative Agent shall
notify the Borrower thereof.

 

(e)          No Assignee, Participant or other transferee of any Lender’s rights
shall be entitled to receive any greater payment under Section 11.3 or 11.4 than
such Lender would have been entitled to receive with respect to the rights
transferred, unless such transfer is made by reason of the provisions of
Section 11.2, 11.3 or 11.4 requiring such Lender to designate a different
Applicable Lending Office under certain circumstances or  the circumstances
giving rise to such greater payment did not exist at the time of the transfer.

 

(f)           The Administrative Agent, acting as non-fiduciary agent (solely
for this purpose) of the Borrower, shall maintain a copy of each Assignment and
Assumption delivered to it and a register (the “Register”) for the recordation
of the names and addresses of the Lenders and the principal amount (and stated
interest thereon) of the Loans owing to each Lender from time to time.  The
entries in the Register shall be prima facie evidence of the accuracy thereof,
and the Borrower, the Agents and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of a Loan or Note hereunder as the
owner thereof for all purposes of this Agreement, notwithstanding any notice to
the contrary.  Any assignment of any Loan or Note hereunder shall be effective
only upon appropriate entries with respect thereto being made in the Register. 
If any assignment or transfer of all or any part of a Loan that is then
evidenced by a Note is made, such assignment or transfer shall be registered on
the Register

 

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only upon surrender for registration of assignment or transfer of the related
Note, duly endorsed by (or accompanied by a written instrument of assignment or
transfer duly executed by) the holder thereof, and thereupon one or more new
Note(s) in the same aggregate principal amount shall be issued to the designated
Assignee(s) (and, if applicable, assignor) and the old Note shall be returned to
the Borrower marked “cancelled”.  The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

 

Section 12.7      Collateral.  Each of the Lenders represents to the
Administrative Agent and each of the other Lenders that it in good faith (and in
reliance on the accuracy of the representations contained in the first two
sentences of Section 4.10) is not relying upon any “margin stock” (as defined in
Regulation U) as collateral in the extension or maintenance of the credit
provided for in this Agreement.

 

Section 12.8      Governing Law; Submission to Jurisdiction.

 

(a)          THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

 

(b)          Any legal action or proceeding with respect to this Agreement or
any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, each party hereto hereby accepts for
itself and in respect of its property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and appellate courts from any
thereof.  Each party hereto irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the hand
delivery, or mailing of copies thereof by registered or certified mail, postage
prepaid, to each party hereto at its respective address on the signature
pages hereto.  Each party hereto hereby irrevocably waives, to the extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Loan Document brought in
the courts referred to above and hereby further irrevocably waives, to the
extent permitted by applicable law, 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
either Agent, any Lender or any holder of a Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.

 

Section 12.9      Marshalling; Recapture.  Neither the Administrative Agent, the
Collateral Agent nor any Lender shall be under any obligation to marshal any
assets in favor of the Borrower or any other party or against or in payment of
any or all of the Obligations.  To the extent any Lender receives any payment by
or on behalf of the Borrower, which payment or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to the Borrower or its estate, trustee, receiver, custodian or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the Obligation
or part thereof which has been paid, reduced or satisfied by the amount so
repaid shall be reinstated by the amount so repaid and shall be included within
the liabilities of the Borrower to such Lender as of the date such initial
payment, reduction or satisfaction occurred.

 

Section 12.10   Counterparts; Integration; Effectiveness.  This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.  This Agreement constitutes the entire

 

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agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.  This Agreement shall become effective upon receipt by the
Administrative Agent of counterparts hereof signed by each of the parties hereto
(which counterparts may be delivered by facsimile or email transmission).

 

Section 12.11   WAIVER OF JURY TRIAL.  EACH OF THE BORROWER, THE ADMINISTRATIVE
AGENT, THE COLLATERAL AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 12.12   Survival.  All indemnities set forth herein shall survive the
execution and delivery of this Agreement and the other Loan Documents, any
assignment pursuant to Section 12.6 and the making and repayment of the Loans
hereunder.

 

Section 12.13   Domicile of Loans.  Each Lender may transfer and carry its Loans
at, to or for the account of any domestic or foreign branch office, subsidiary
or affiliate of such Lender.

 

Section 12.14   Limitation of Liability.  No claim may be made by the Borrower,
the Collateral Manager or any other Person against the Administrative Agent, the
Collateral Agent or any Lender or the affiliates, directors, officers,
employees, attorneys or agents of any of them for any consequential or punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement or by the other Loan Documents, or any act, omission or event
occurring in connection therewith; and each of the Borrower and the Collateral
Manager hereby waives, releases and agrees not to sue upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.

 

Section 12.15   Recourse; Non-Petition.                           (a)         
All obligations, covenants and agreements of Borrower contained in or evidenced
by this Agreement, the Notes and any Loan Document shall be fully recourse to
the Borrower and each and every asset of Borrower.  Notwithstanding the
foregoing, no recourse under or upon any obligation, covenant, or agreement
contained in this Agreement or the Note or any Loan Document shall be had
against any officer, director, limited liability company manager, limited
partner, member or employee (solely by virtue of such capacity) of the Borrower
(a “Non-Recourse Party”) and no such Non-Recourse Party shall be personally
liable for payment of the Loans or other amounts due in respect thereof (all
such liability being expressly waived and released by each Lender and the
Agents).

 

(b)          Each Lender and each Agent hereby agrees that it will not institute
against the Borrower any proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors’ rights, present a petition for the winding-up
or liquidation of the Borrower or seek the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian or other
similar official for the Borrower or for all or substantially all of the assets
of the Borrower prior to the date that is one year and one day (or, if longer,
the applicable preference period then in effect) after the payment in full of
all Obligations.  In the event that, notwithstanding the provisions of this
Agreement and the other Loan Documents relating to “non-petition” of the
Borrower, the Borrower becomes a debtor in a bankruptcy case by the involuntary
petition of any other Person, the Borrower hereby covenants to contest any such
petition to the fullest extent permitted by law.  The obligations under this
Section 12.15(b) shall survive the termination of this Agreement and the payment
of the Obligations.

 

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Section 12.16   Confidentiality.(a)      Each of the Lenders and the Agents
agrees that it shall maintain confidentiality with regard to nonpublic
information concerning the Borrower obtained from the Borrower pursuant to or in
connection with this Agreement or any other Loan Document, provided that the
Lenders and the Agents shall not be precluded from making disclosure regarding
such information:  (i) to the Lenders’ and Agents’ counsel, accountants and
other professional advisors (who are, in each case, subject to this
confidentiality agreement); (ii) to officers, directors, employees, examiners,
agents and partners of each Lender and its Affiliates and the Agents and their
Affiliates who need to know such information in accordance with customary
practices for Lenders of such type; (iii) in response to a subpoena or order of
a court or governmental agency or regulatory authority; (iv) to any entity
participating or considering participating in any credit made under this
Agreement, (provided, the Lenders and Agents shall require that any such entity
agree in writing to be subject to this Section 12.16, however, Lenders and
Agents shall have no duty to monitor any participating entity and shall have no
liability in the event that any participating entity violates this
Section 12.16); (v) as required by law or legal process, GAAP or applicable
regulation; (vi) as reasonably necessary in connection with the exercise of any
remedy hereunder or under any other Loan Document to the extent the Person that
receives such information agrees in writing to be subject to this Section 12.16;
(vii) to any Rating Agency then rating the Loans or any Conduit Rating Agency
(provided however that any such Rating Agency or Conduit Rating Agency to which
disclosure is to be made shall have been identified to the Borrower); or
(viii) to any Program Manager, Conduit Support Provider or administrator of a CP
Lender or Affiliate thereof who needs to know such information (provided that
each such Person referred to in this clause (viii) agrees to be bound by the
terms of this confidentiality agreement).  In connection with enforcing its
rights pursuant to this Section 12.16, the Borrower shall be entitled to the
equitable remedies of specific performance and injunctive relief against the
Agents, any Lender or any subsequent party that agrees to be bound hereto which
shall breach the confidentiality provisions of this Section 12.16.

 

(b)          Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, each of the parties hereto acknowledges and agrees
that each CP Lender (or its Program Manager or its Funding Agent, as applicable)
may post to a secured password-protected internet website maintained by such CP
Lender (or its Program Manager or its Funding Agent, as applicable) and required
by any Conduit Rating Agency in connection with Rule 17g-5 of the Exchange Act,
the following information: (i) its Liquidity Facility or Credit Facility, (ii) a
copy of this Agreement (including any amendments hereto, but excluding the
Schedules and Exhibits hereto), (iii) its monthly transaction surveillance
reports (substantially in the form provided to the Borrower on or before the
Closing Date), and (iv) such other information as may be requested by such
rating agency and consented to in writing by the Borrower; provided that such CP
Lender (or its Program Manager or its Funding Agent, as applicable) shall take
such actions as are necessary to maintain the confidential nature of the
documents and information so posted (it being understood that any rating agency
viewing such posted information on such website shall not constitute a breach of
this proviso so long as it is informed of the confidential nature of such
information on such website or otherwise by such CP Lender (or its Program
Manager or its Funding Agent, as applicable) prior to or concurrently with
making such information available).

 

Section 12.17   Special Provisions Applicable to CP
Lenders.                               (a)          Each of the parties hereto
(each, a “Restricted Person”) hereby agrees that it will not institute against
any CP Lender, or encourage, cooperate with or join any other Person in
instituting against any CP Lender, any proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors’ rights, present a petition for the
winding up or liquidation of any CP Lender or seek the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for any CP Lender or for all or substantially all of
its assets prior to the date that is two years and a day (or, if longer, the
applicable preference period then in effect) after the last day on which any
Commercial Paper Notes shall have been

 

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outstanding.  The obligations under this Section 12.17(a) shall survive the
termination of this Agreement and the payment of the Obligations.

 

(b)          Nothing in clause (a) above shall limit the right of any Restricted
Person to file any claim in or otherwise take any action with respect to any
proceeding of the type described in clause (a) above that was instituted against
any CP Lender by any person other than such Restricted Person.

 

(c)          Notwithstanding anything to the contrary contained herein, the
obligations of any CP Lender under this Agreement are solely the corporate
obligations of such CP Lender and, in the case of obligations of any CP Lender
other than Commercial Paper Notes, shall be payable at such time as funds are
received by or are available to such CP Lender in excess of funds necessary to
pay in full all outstanding Commercial Paper Notes or other short-term funding
backing its Commercial Paper Notes and, to the extent funds are not available to
pay such obligations, the claims relating thereto shall not constitute a claim
against such CP Lender but shall continue to accrue.  Each party hereto agrees
that the payment of any claim (as defined in Section 101 of the Bankruptcy Code)
of any such party shall be subordinated to the payment in full of all Commercial
Paper Notes.

 

(d)          No recourse under any obligation, covenant or agreement of any
CP Lender contained in this Agreement shall be had against any incorporator,
stockholder, officer, director, employee or agent of such CP Lender or any agent
of such CP Lender or any of their Affiliates (solely by virtue of such capacity)
by the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise; it being expressly agreed and understood
that this Agreement is solely a corporate obligation of any such CP Lender
individually, and that no personal liability whatever shall attach to or be
incurred by any incorporator, stockholder, officer, director, employee or agent
of such CP Lender or any agent thereof or any of their Affiliates (solely by
virtue of such capacity) or any of them under or by reason of any of the
obligations, covenants or agreements of such CP Lender contained in this
Agreement, or implied therefrom, and that any and all personal liability for
breaches by any CP Lender of any of such obligations, covenants or agreements,
either at common law or at equity, or by statute, rule or regulation, of every
such incorporator, stockholder, officer, director, employee or agent is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement, provided that the foregoing shall not relieve any such Person
from any liability it might otherwise have as a result of fraudulent actions
taken or omissions made by them.  The provisions of this Section 12.17(d) shall
survive termination of this Agreement.

 

(e)          Each CP Lender may act hereunder by and through its Program
Manager, its administrator or its Funding Agent, as applicable.

 

(f)           Each of the parties hereto waives any right to set-off and to
appropriate and apply any and all deposits and any other indebtedness at any
time held or owing thereby to or for the credit or the account of any CP Lender
against and on account of the obligations and liabilities of such CP Lender to
such party under this Agreement.

 

(g)          Notwithstanding anything to the contrary herein, but subject in all
respects to the confidentiality provisions herein, each CP Lender may disclose
to its respective Conduit Support Providers, any Affiliates of any such party
and governmental authorities having jurisdiction over such CP Lender, Conduit
Support Provider, any Affiliate of such party and any Conduit Rating Agency
(including its professional advisors), the identities of (and other material
information regarding) the Borrower, any other obligor on, or in respect of, a
Loan made by such CP Lender, Collateral for such Loan and any of the terms and
provisions of the Loan Documents that it may deem necessary or advisable.

 

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(h)          No pledge and/or collateral assignment by any CP Lender to a
Conduit Support Provider of an interest in the rights of such CP Lender in any
Loan made by such CP Lender and the Obligations shall constitute an assignment
and/or assumption of such CP Lender’s obligations under this Agreement, such
obligations in all cases remaining with such CP Lender.  Moreover, any such
pledge and/or collateral assignment of the rights of such CP Lender shall be
permitted hereunder without further action or consent and any such pledgee may
foreclose on any such pledge and perfect an assignment of such interest and
enforce such CP Lender’s right hereunder notwithstanding anything to the
contrary in this Agreement.

 

Section 12.18            Direction of Collateral Agent.  By executing this
Agreement, each Lender hereby consents to the terms of this Agreement and to the
Collateral Agent’s execution and delivery of this Agreement, and acknowledges
and agrees that the Collateral Agent shall be fully protected in relying upon
the foregoing consent and direction and hereby releases the Collateral Agent and
its respective officers, directors, agents, employees and shareholders, as
applicable, from any liability for complying with such direction, except as a
result of the bad faith, gross negligence or willful misconduct of the
Collateral Agent.

 

Section 12.19            Borrowings/Loans Made in the Ordinary Course of
Business.  The Borrower and each Lender, each as to itself only, represents,
warrants and covenants that each payment by the Borrower to such Lender under
this Agreement will have been made (i) in payment of a debt incurred by the
Borrower or a loan made by such Lender, respectively, in the ordinary course of
business or financial affairs of the Borrower and each Lender and (ii) in the
ordinary course of business or financial affairs of the Borrower and each
Lender.

 

ARTICLE XIII

 

THE FUNDING AGENT

 

Section 13.1      Appointment.  To the extent that any Natixis Conduit becomes a
Lender, (in such capacity, a “Natixis Conduit Lender”), such Natixis Conduit
Lender, by its execution of an Assignment and Assumption, thereupon irrevocably
designates and appoints its Funding Agent as specified in the relevant Joinder
Agreement as Funding Agent on its behalf under this Agreement.  In furtherance
of the foregoing, such Natixis Conduit Lender, by its execution of an Assignment
and Assumption, thereupon authorizes its Funding Agent to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to such Funding Agent by the terms of this Agreement and the Loan Documents,
together with such other powers as are reasonably incidental hereto or thereto. 
Notwithstanding any provision to the contrary elsewhere in this Agreement or the
other Loan Documents, such Funding Agent shall not have any duties or
responsibilities, except those expressly set forth herein or therein, or any
fiduciary relationship with its CP Conduit, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of such Funding
Agent shall be read into this Agreement or any other Loan Document or shall
otherwise exist against such Funding Agent.  In performing its functions and
duties solely under this Agreement, each Funding Agent shall act solely as the
agent of its CP Conduit and does not assume, nor shall be deemed to have
assumed, any obligation or relationship of trust or agency with or for such
CP Conduit.

 

Section 13.2      Delegation of Duties.  Each Funding Agent may execute any of
its duties under this Agreement by or through its subsidiaries, affiliates,
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.  No Funding Agent shall be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.

 

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Section 13.3      Exculpatory Provisions.  Neither any Funding Agent nor any of
its directors, officers, agents or employees shall be (a) liable for any action
lawfully taken or omitted to be taken by it or them or any Person described in
Section 13.2 under or in connection with this Agreement or the other Loan
Documents (except for its, their or such Person’s own gross negligence or
willful misconduct), or (b) responsible in any manner to its CP Conduit for any
recitals, statements, representations or warranties contained in this Agreement
or the other Loan Documents or in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, such agreements or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Loans, this Agreement or the other Loan
Documents, or any other document furnished in connection therewith or herewith,
or for any failure of its CP Conduit to perform its obligations under this
Agreement or any other Loan Document or for the satisfaction of any condition
specified in this Agreement or the other Loan Documents.  No Funding Agent shall
be under any obligation to its CP Conduit to ascertain or to inquire as to the
observance or performance of any of the agreements or covenants contained in, or
conditions of, this Agreement or the other Loan Documents, or to inspect the
properties, books or records of the Borrower.

 

Section 13.4      Reliance by Funding Agent.  Each Funding Agent shall in all
cases be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to its
CP Conduit), independent accountants and other experts selected by such Funding
Agent.  Each Funding Agent shall in all cases be fully justified in failing or
refusing to take any action under this Agreement, the other Loan Documents or
any other document furnished in connection herewith or therewith unless such
action is expressly provided for herein or therein or such Funding Agent shall
first receive such advice or concurrence of its CP Conduit as it deems
appropriate, or it shall first be indemnified to its satisfaction by such
CP Conduit against any and all liability, cost and expense which may be incurred
by it by reason of taking or continuing to take any such action.  Each Funding
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document or any other document
furnished in connection herewith or therewith in accordance with a request of
its CP Conduit and such request and any action taken or failure to act pursuant
thereto shall be binding upon such CP Conduit.

 

Section 13.5      Non-reliance on Funding Agent.  Each Natixis Conduit Lender,
if any, by its execution of an Assignment and Assumption, thereupon expressly
acknowledges that neither its Funding Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates have made any representations
or warranties to it and that no act by such Funding Agent hereafter taken,
including, without limitation, any review of the affairs of its CP Conduit, or
the Borrower, shall be deemed to constitute any representation or warranty by
such Funding Agent.  No Funding Agent shall have any duty or responsibility to
provide its CP Conduit with any credit or other information concerning the
business, operations, property, prospects, financial and other condition or
creditworthiness of the Borrower which may come into the possession of such
Funding Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.

 

Section 13.6      Funding Agent in Its Individual Capacity.  Each Funding Agent
and its Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with its CP Conduit or the Borrower or any Affiliate of
such Persons as though such Funding Agent were not a Funding Agent hereunder.

 

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Section 13.7      Conflict Waiver.  Natixis and any of its Affiliates may act as
administrative agent for a CP Lender, as provider of backup facilities for a
CP Lender, and may provide other services or facilities from time to time (the
“Multiple Roles”).  Each Natixis Conduit Lender, if any, by its execution of an
Assignment and Assumption, thereupon acknowledges and consents to any and all
Multiple Roles, waives any objections it may have to any actual or potential
conflict of interest caused by Natixis’ (or any of its Affiliates’) acting as a
Funding Agent hereunder and acting as or maintaining any of the Multiple Roles,
and agrees that in connection with any Multiple Role, Natixis (and any of its
Affiliates, as applicable) may take, or refrain from taking, any action which it
in its discretion deems appropriate.

 

ARTICLE XIV

 

ASSIGNMENT OF COLLATERAL MANAGEMENT AGREEMENT

 

Section 14.1      Assignment of Collateral Management Agreement.

 

(a)          The Borrower hereby acknowledges that its Grant pursuant to the
Granting Clause hereof includes all of the Borrower’s estate, right, title and
interest in, to and under the Collateral Management Agreement including (i) the
right to give all notices, consents and releases thereunder, (ii) the right to
take any legal action upon the breach of an obligation of the Collateral Manager
thereunder, including the commencement, conduct and consummation of proceedings
at law or in equity, (iii) the right to receive all notices, accountings,
consents, releases and statements thereunder and (iv) the right to do any and
all other things whatsoever that the Borrower is or may be entitled to do
thereunder; provided, the foregoing shall not in any event include any
assignment of the Borrower’s right to terminate the Collateral Management
Agreement or to terminate the Collateral Manager’s rights and responsibilities
thereunder or to remove the Collateral Manager; provided, further, that
notwithstanding anything herein to the contrary, the Agents shall not have the
authority to exercise any of the rights set forth in (i) through (iv) above or
that may otherwise arise as a result of the Grant until the occurrence of an
Event of Default hereunder and such authority shall terminate at such time, if
any, as such Event of Default is cured or waived (so long as the exercise of
remedies has not commenced or such Event of Default has been waived following
the commencement of the exercise of remedies).

 

(b)          The assignment made hereby is executed as collateral security, and
the execution and delivery hereby shall not in any way impair or diminish the
obligations of the Borrower under the provisions of the Collateral Management
Agreement or the other documents referred to in paragraph (a) above, nor shall
any of the obligations contained in the Collateral Management Agreement or such
other documents be imposed on the Agents.

 

(c)          Upon the occurrence of the Stated Maturity (or, if earlier, the
payment in full of all of the Obligations and the termination of all of the
Commitments), the payment of all amounts required to be paid pursuant to the
Priority of Payments and the release of the Collateral from the lien of this
Agreement, this assignment and all rights herein assigned to the Collateral
Agent for the benefit of the Lenders shall cease and terminate and all the
estate, right, title and interest of the Collateral Agent in, to and under the
Collateral Management Agreement and the other documents referred to in this
Section 14.1 shall revert to the Borrower and no further instrument or act shall
be necessary to evidence such termination and reversion.

 

(d)          The Borrower represents that the Borrower has not executed any
other assignment of the Collateral Management Agreement.

 

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(e)          The Borrower agrees that this assignment is irrevocable until the
Obligations have been repaid in full and all Commitments have terminated, and
that it will not take any action which is inconsistent with this assignment or
make any other assignment inconsistent herewith.  The Borrower will, from time
to time, execute all instruments of further assurance and all such supplemental
instruments with respect to this assignment as may be necessary to continue and
maintain the effectiveness of such assignment.

 

(f)           The Borrower hereby agrees, and hereby undertakes to obtain the
agreement and consent of the Collateral Manager in the Collateral Management
Agreement, to the following:

 

(i)           The Collateral Manager shall consent to the provisions of this
assignment and agree to perform any provisions of this Agreement applicable to
the Collateral Manager subject to the terms of the Collateral Management
Agreement.

 

(ii)          The Collateral Manager shall acknowledge that the Borrower is
collaterally assigning all of its right, title and interest in, to and under the
Collateral Management Agreement to the Collateral Agent for the benefit of the
Secured Parties, subject to both provisos in Section 14.1(a).

 

(iii)         The Collateral Manager shall deliver to the Agents copies of all
notices, statements, communications and instruments delivered or required to be
delivered by the Collateral Manager to the Borrower pursuant to the Collateral
Management Agreement.

 

(iv)         Neither the Borrower nor the Collateral Manager will enter into any
agreement amending, modifying or terminating the Collateral Management Agreement
without complying with the applicable terms thereof.

 

(v)          Except as otherwise set forth herein and therein (including
pursuant to Section 11 of the Collateral Management Agreement), the Collateral
Manager shall continue to serve as Collateral Manager under the Collateral
Management Agreement notwithstanding that the Collateral Manager shall not have
received amounts due it under the Collateral Management Agreement because
sufficient funds were not then available hereunder to pay such amounts in
accordance with the Priority of Payments set forth under Section 9.1.  The
Collateral Manager agrees not to cause the filing of a petition in bankruptcy
against the Borrower for the nonpayment of the fees or other amounts payable by
the Borrower to the Collateral Manager under the Collateral Management Agreement
until the payment in full of all of the Obligations and the termination of all
of the Commitments and the expiration of a period equal to one year and a day,
or, if longer, the applicable preference period, following such payment. 
Nothing in this Section 14.1 shall preclude, or be deemed to stop, the
Collateral Manager (i) from taking any action prior to the expiration of the
aforementioned period in (A) any case or Proceeding voluntarily filed or
commenced by the Borrower or (B) any involuntary insolvency Proceeding filed or
commenced by a Person other than the Collateral Manager, or (ii) from commencing
against the Borrower or any of  its properties any legal action which is not a
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceeding.

 

- 125 -

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

 

 

 

ENERGY FUNDING LLC,

 

 

as Borrower

 

 

 

 

 

 

 

 

 

 

 

By:

   /s/ Gerald F. Stahlecker

 

 

 

Name:    Gerald F. Stahlecker

 

 

Title:      Executive Vice President

 

 

 

 

 

 

 

 

Address for notices:

 

 

 

 

 

c/o FS Energy and Power Fund

 

 

Cira Centre

 

 

2929 Arch Street, Suite 675

 

 

Philadelphia, Pennsylvania 19104

 

 

Attention: Chief Financial Officer

 

 

Telephone No.: 215-495-1150

 

 

Facsimile No.: 215-222-4649

 

 

Email: ted.gallivan@franklinsquare.com

 

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Agents:

 

 

 

 

 

NATIXIS, NEW YORK BRANCH,

 

 

as Administrative Agent

 

 

 

 

 

 

 

 

By:

     /s/ David Duncan

 

 

 

Name:   David Duncan

 

 

Title:     Managing Director

 

 

 

 

 

By:

     /s/ Michael E. Hopson

 

 

 

Name:   Michael E. Hopson

 

 

Title:     Managing Director

 

 

 

 

 

 

 

 

Address for notices:

 

 

 

 

 

Natixis, New York Branch

 

 

1251 Avenue of the Americas

 

 

New York, New York 10020

 

 

Attention: Evelyn Clarke

 

 

Telephone No.: 212-891-5879

 

 

Facsimile No.: 646-282-2361

 

 

Email: gscs_support@us.natixis.com and agent_group@us.natixis.com

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

 

as Collateral Agent and Custodian

 

 

 

 

 

 

 

 

By:

   /s/ José Rodriguez

 

 

 

Name:   José Rodriguez

 

 

Title:     Vice President

 

 

 

 

 

Address for notices:

 

 

 

 

 

Wells Fargo Bank, N.A.

 

 

9062 Old Annapolis Rd.

 

 

Columbia, Maryland 21045

 

 

Attention: CDO Trust Services—Energy Funding LLC

 

 

Telephone No.: 410-884-2000

 

 

Facsimile No.: 410-715-3748

 

 

 

 

 

For delivering physical securities:

 

 

 

 

 

Wells Fargo Bank, N.A.

 

 

1055 10th Avenue S.E.

 

 

Minneapolis, MN 55414

 

 

Attention: ABS Custody Vault

 

 

Telephone No.: 612-667-8058

 

 

Facsimile No.: 612-667-1080

 

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NATIXIS, NEW YORK BRANCH,

 

 

as Lender

 

 

 

 

 

COMMITMENT AMOUNT: $150,000,000

 

 

 

 

 

 

 

 

 

 

 

By:

   /s/ David Duncan

 

 

 

Name:   David Duncan

 

 

Title:     Managing Director

 

 

 

 

 

By:

   /s/ Michael E. Hopson

 

 

 

Name:   Michael E. Hopson

 

 

Title:     Managing Director

 

 

 

 

 

 

 

 

Address for notices:

 

 

 

 

 

Natixis, New York Branch

 

 

1251 Avenue of the Americas

 

 

New York, New York 10020

 

 

Attention: Evelyn Clarke

 

 

Telephone No.: 212-891-5879

 

 

Facsimile No.: 646-282-2361

 

 

Email: gscs_support@us.natixis.com and agent_group@us.natixis.com

 

 

 

 

 

Lending Office: New York

 

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