Exhibit 10.8

 

Execution Version

 

 

Master Repurchase

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Agreement
September 1996 Version

 

Dated as of

September 11, 2014

 

 

 

 

Between:

Goldman Sachs Bank USA

(“Party A”)

 

 

 

and

Strafford Funding LLC

(“Party B”)

 

1.                                      Applicability

 

From time to time the parties hereto may enter into transactions in which one
party (“Seller”) agrees to transfer to the other (“Buyer”) securities or other
assets (“Securities”) against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Securities at a date
certain or on demand, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a “Transaction” and, unless otherwise
agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in Annex I hereto and in any other
annexes identified herein or therein as applicable hereunder.

 

2.                                      Definitions

 

(a)         “Act of Insolvency”, with respect to any party, (i) the commencement
by such party as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, moratorium, dissolution, delinquency or
similar law, or such party seeking the appointment or election of a receiver,
conservator, trustee, custodian or similar official for such party or any
substantial part of its property, or the convening of any meeting of creditors
for purposes of commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or election, or the
filing against a party of an application for a protective decree under the
provisions of the Securities Investor Protection Act of 1970, which (A) is
consented to or not timely contested by such party, (B) results in the entry of
an order for relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by such party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by
such party of such party’s inability to pay such party’s debts as they become
due;

 

(b)         “Additional Purchased Securities”, Securities provided by Seller to
Buyer pursuant to Paragraph 4 (a) hereof,

 

(c)          “Buyer’s Margin Amount”, with respect to any Transaction as of any
date, the amount obtained by application of the Buyer’s Margin Percentage to the
Repurchase Price for such Transaction as of such date;

 

(d)         “Buyer’s Margin Percentage”, with respect to any Transaction as of
any date, a percentage (which may be equal to the Seller’s Margin Percentage)
agreed to by Buyer and Seller or, in the absence of

 

STRAFFORD FUNDING LLC

 

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any such agreement, the percentage obtained by dividing the Market Value of the
Purchased Securities on the Purchase Date by the Purchase Price on the Purchase
Date for such Transaction;

 

(e)          “Confirmation”, the meaning specified in Paragraph 3(b) hereof;

 

(f)           “Income”, with respect to any Security at any time, any principal
thereof and all interest, dividends or other distributions thereon;

 

(g)          “Margin Deficit”, the meaning specified in Paragraph 4(a) hereof;

 

(h)         “Margin Excess”, the meaning specified in Paragraph 4(b) hereof;

 

(i)             “Margin Notice Deadline”, the time agreed to by the parties in
the relevant Confirmation, Annex I hereto or otherwise as the deadline for
giving notice requiring same-day satisfaction of margin maintenance obligations
as provided in Paragraph 4 hereof (or, in the absence of any such agreement, the
deadline for such purposes established in accordance with market practice);

 

(j)            “Market Value”, with respect to any Securities as of any date,
the price for such Securities on such date obtained from a generally recognized
source agreed to by the parties or the most recent closing bid quotation from
such a source, plus accrued Income to the extent not included therein (other
than any Income credited or transferred to, or applied to the obligations of,
Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to
market practice for such Securities);

 

(k)         “Price Differential”, with respect to any Transaction as of any
date, the aggregate amount obtained by daily application of the Pricing Rate for
such Transaction to the Purchase Price for such Transaction on a 360 day per
year basis for the actual number of days during the period commencing on (and
including) the Purchase Date for such Transaction and ending on (but excluding)
the date of determination (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction);

 

(1)         “Pricing Rate”, the per annum percentage rate for determination of
the Price Differential;

 

(m)     “Prime Rate”, the prime rate of U.S. commercial banks as published in
The Wall Street Journal (or, if more than one such rate is published, the
average of such rates);

 

(n)         “Purchase Date”, the date on which Purchased Securities are to be
transferred by Seller to Buyer;

 

(o)         “Purchase Price”, (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter,
except where Buyer and Seller agree otherwise, such price increased by the
amount of any cash transferred by Buyer to Seller pursuant to Paragraph
4(b) hereof and decreased by the amount of any cash transferred by Seller to
Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s
obligations under clause (ii) of Paragraph 5 hereof;

 

(p)         “Purchased Securities”, the Securities transferred by Seller to
Buyer in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term “Purchased Securities” with respect
to any Transaction at any time also shall include Additional

 

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Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall
exclude Securities returned pursuant to Paragraph 4(b) hereof;

 

(q)         “Repurchase Date”, the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by application of
the provisions of Paragraph 3(c) or 11 hereof;

 

(r)            “Repurchase Price”, the price at which Purchased Securities are
to be transferred from Buyer to Seller upon termination of a Transaction, which
will be determined in each case (including Transactions terminable upon demand)
as the sum of the Purchase Price and the Price Differential as of the date of
such determination;

 

(s)           “Seller’s Margin Amount”, with respect to any Transaction as of
any date, the amount obtained by application of the Seller’s Margin Percentage
to the Repurchase Price for such Transaction as of such date;

 

(t)            “Seller’s Margin Percentage”, with respect to any Transaction as
of any date, a percentage (which may be equal to the Buyer’s Margin Percentage)
agreed to by Buyer and Seller or, in the absence of any such agreement, the
percentage obtained by dividing the Market Value of the Purchased Securities on
the Purchase Date by the Purchase Price on the Purchase Date for such
Transaction.

 

3.                                      Initiation; Confirmation; Termination

 

(a)         An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller. On the Purchase Date for
the Transaction, the Purchased Securities shall be transferred to Buyer or its
agent against the transfer of the Purchase Price to an account of Seller.

 

(b)         Upon agreeing to enter into a Transaction hereunder, Buyer or Seller
(or both), as shall be agreed, shall promptly deliver to the other party a
written confirmation of each Transaction (a “Confirmation”). The Confirmation
shall describe the Purchased Securities (including CUSIP number, if any),
identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase
Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on
demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction,
and (v) any additional terms or conditions of the Transaction not inconsistent
with this Agreement. The Confirmation, together with this Agreement, shall
constitute conclusive evidence of the terms agreed between Buyer and Seller with
respect to the Transaction to which the Confirmation relates, unless with
respect to the Confirmation specific objection is made promptly after receipt
thereof. In the event of any conflict between the terms of such Confirmation and
this Agreement, this Agreement shall prevail.

 

(c)          In the case of Transactions terminable upon demand, such demand
shall be made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior to the
business day on which such termination will be effective. On the date specified
in such demand, or on the date fixed for termination in the case of Transactions
having a fixed term, termination of the Transaction will be effected by transfer
to Seller or its agent of the Purchased Securities and any Income in respect
thereof received by Buyer (and not previously credited or transferred to, or
applied to the

 

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obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of
the Repurchase Price to an account of Buyer.

 

4.                                      Margin Maintenance

 

(a)         If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular party hereto is
acting as Buyer is less than the aggregate Buyer’s Margin Amount for all such
Transactions (a “Margin Deficit”), then Buyer may by notice to Seller require
Seller in such Transactions, at Seller’s option, to transfer to Buyer cash or
additional Securities reasonably acceptable to Buyer (“Additional Purchased
Securities”), so that the cash and aggregate Market Value of the Purchased
Securities, including any such Additional Purchased Securities, will thereupon
equal or exceed such aggregate Buyer’s Margin Amount (decreased by the amount of
any Margin Deficit as of such date arising from any Transactions in which such
Buyer is acting as Seller).

 

(b)         If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular party hereto is
acting as Seller exceeds the aggregate Seller’s Margin Amount for all such
Transactions at such time (a “Margin Excess”), then Seller may by notice to
Buyer require Buyer in such Transactions, at Buyer’s option, to transfer cash or
Purchased Securities to Seller, so that the aggregate Market Value of the
Purchased Securities, after deduction of any such cash or any Purchased
Securities so transferred, will thereupon not exceed such aggregate Seller’s
Margin Amount (increased by the amount of any Margin Excess as of such date
arising from any Transactions in which such Seller is acting as Buyer).

 

(c)          If any notice is given by Buyer or Seller under subparagraph (a) or
(b) of this Paragraph at or before the Margin Notice Deadline on any business
day, the party receiving such notice shall transfer cash or Additional Purchased
Securities as provided in such subparagraph no later than the close of business
in the relevant market on such day. If any such notice is given after the Margin
Notice Deadline, the party receiving such notice shall transfer such cash or
Securities no later than the close of business in the relevant market on the
next business day following such notice.

 

(d)         Any cash transferred pursuant to this Paragraph shall be attributed
to such Transactions as shall be agreed upon by Buyer and Seller.

 

(e)          Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both) under
subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin
Deficit or Margin Excess, as the case may be, exceeds a specified dollar amount
or a specified percentage of the Repurchase Prices for such Transactions (which
amount or percentage shall be agreed to by Buyer and Seller prior to entering
into any such Transactions).

 

(f)           Seller and Buyer may agree, with respect to any or all
Transactions hereunder, that the respective rights of Buyer and Seller under
subparagraphs (a) and (b) of this Paragraph to require the elimination of a
Margin Deficit or a Margin Excess, as the case may be, may be exercised whenever
such a Margin Deficit or Margin Excess exists with respect to any single
Transaction hereunder (calculated without regard to any other Transaction
outstanding under this Agreement).

 

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5.                                      Income Payments

 

Seller shall be entitled to receive an amount equal to all Income paid or
distributed on or in respect of the Securities that is not otherwise received by
Seller, to the full extent it would be so entitled if the Securities had not
been sold to Buyer. Buyer shall, as the parties may agree with respect to any
Transaction (or, in the absence of any such agreement, as Buyer shall reasonably
determine in its discretion), on the date such Income is paid or distributed
either (i) transfer to or credit to the account of Seller such Income with
respect to any Purchased Securities subject to such Transaction or (ii) with
respect to Income paid in cash, apply the Income payment or payments to reduce
the amount, if any, to be transferred to Buyer by Seller upon termination of
such Transaction. Buyer shall not be obligated to take any action pursuant to
the preceding sentence (A) to the extent that such action would result in the
creation of a Margin Deficit, unless prior thereto or simultaneously therewith
Seller transfers to Buyer cash or Additional Purchased Securities sufficient to
eliminate such Margin Deficit, or (B) if an Event of Default with respect to
Seller has occurred and is then continuing at the time such Income is paid or
distributed.

 

6.                                      Security Interest

 

Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and shall
be deemed to have granted to Buyer a security interest in, all of the Purchased
Securities with respect to all Transactions hereunder and all Income thereon and
other proceeds thereof.

 

7.                                      Payment and Transfer

 

Unless otherwise mutually agreed, all transfers of funds hereunder shall be in
immediately available funds. All Securities transferred by one party hereto to
the other party (i) shall be in suitable form for transfer or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of a Federal Reserve
Bank, or (iii) shall be transferred by any other method mutually acceptable to
Seller and Buyer.

 

8.                                      Segregation of Purchased Securities

 

To the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its possession
and shall be identified as subject to this Agreement. Segregation may be
accomplished by appropriate identification on the books and records of the
holder, including a financial or securities intermediary or a clearing
corporation. All of Seller’s interest in the Purchased Securities shall pass to
Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller,
nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Securities or otherwise selling, transferring,
pledging or hypothecating the Purchased Securities, but no such transaction
shall relieve Buyer of its obligations to transfer Purchased Securities to
Seller pursuant to Paragraph 3, 4

 

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or 11 hereof, or of Buyer’s obligation to credit or pay Income to, or apply
Income to the obligations of, Seller pursuant to Paragraph 5 hereof.

 

Required Disclosure for Transactions in Which the Seller Retains Custody of the
Purchased Securities

 

Seller is not permitted to substitute other securities for those subject to this
Agreement and therefore must keep Buyer’s securities segregated at all times
unless in this Agreement Buyer grants Seller the right to substitute other
securities. If Buyer grants the right to substitute, this means that Buyer’s
securities will likely be commingled with Seller’s own securities during the
trading day. Buyer is advised that during any trading day that Buyer’s
securities are commingled with Seller’s securities, they [will]* [may]** be
subject to liens granted by Seller to [its clearing bank]* [third parties] **
and may be used by Seller for deliveries on other securities transactions.
Whenever the securities are commingled, Seller’s ability to resegregate
substitute securities for Buyer will be subject to Seller’s ability to satisfy
[the clearing] * [any]** lien or to obtain substitute securities.

 

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*                      Language to be used under 17 C.F.R, §403.4 (e) if Seller
is a government securities broker or dealer other than a financial institution.

 

**                                  Language to be used under 17 C.F.R. §403.5
(d) if Seller is a financial institution.

 

9.                                      Substitution

 

(a)         Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such substitution
shall be made by transfer to Buyer of such other Securities and transfer to
Seller of such Purchased Securities. After substitution, the substituted
Securities shall be deemed to be Purchased Securities.

 

(b)         In Transactions in which Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed, for purposes
of subparagraph (a) of this Paragraph, to have agreed to and accepted in this
Agreement substitution by Seller of other Securities for Purchased Securities;
provided, however, that such other Securities shall have a Market Value at least
equal to the Market Value of the Purchased Securities for which they are
substituted.

 

10. Representations

 

Each of Buyer and Seller represents and warrants to the other that (i) it is
duly authorized to execute and deliver this Agreement, to enter into
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) it will engage in such Transactions as principal (or, if
agreed in writing, in the form of an annex hereto or otherwise, in advance of
any Transaction by the other party hereto, as agent for a disclosed principal),
(iii) the person signing this Agreement on its behalf is duly authorized to do
so on its behalf (or on behalf of any such disclosed principal), (iv) it has
obtained all authorizations of any governmental body required in

 

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connection with this Agreement and the Transactions hereunder and such
authorizations are in full force and effect and (v) the execution, delivery and
performance of this Agreement and the Transactions hereunder will not violate
any law, ordinance, charter, bylaw or rule applicable to it or any agreement by
which it is bound or by which any of its assets are affected. On the Purchase
Date for any Transaction Buyer and Seller shall each be deemed to repeat all the
foregoing representations made by it.

 

11. Events of Default

 

In the event that (i) Seller fails to transfer or Buyer fails to purchase
Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to
repurchase or Buyer fails to transfer Purchased Securities upon the applicable
Repurchase Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof,
(iv) Buyer fails, after one business day’s notice, to comply with Paragraph 5
hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer,
(vi) any representation made by Seller or Buyer shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have been made
or repeated, or (vii) Seller or Buyer shall admit to the other its inability to,
or its intention not to, perform any of its obligations hereunder (each an
“Event of Default”):

 

(a)         The nondefaulting party may, at its option (which option shall be
deemed to have been exercised immediately upon the occurrence of an Act of
Insolvency), declare an Event of Default to have occurred hereunder and, upon
the exercise or deemed exercise of such option, the Repurchase Date for each
Transaction hereunder shall, if it has not already occurred, be deemed
immediately to occur (except that, in the event that the Purchase Date for any
Transaction has not yet occurred as of the date of such exercise or deemed
exercise, such Transaction shall be deemed immediately canceled). The
nondefaulting party shall (except upon the occurrence of an Act of Insolvency)
give notice to the defaulting party of the exercise of such option as promptly
as practicable.

 

(b)         In all Transactions in which the defaulting party is acting as
Seller, if the nondefaulting party exercises or is deemed to have exercised the
option referred to in subparagraph (a) of this Paragraph, (i) the defaulting
party’s obligations in such Transactions to repurchase all Purchased Securities,
at the Repurchase Price therefor on the Repurchase Date determined in accordance
with subparagraph (a) of this Paragraph, shall thereupon become immediately due
and payable, (ii) all Income paid after such exercise or deemed exercise shall
be retained by the nondefaulting party and applied to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party hereunder,
and (iii) the defaulting party shall immediately deliver to the nondefaulting
party any Purchased Securities subject to such Transactions then in the
defaulting party’s possession or control.

 

(c)          In all Transactions in which the defaulting party is acting as
Buyer, upon tender by the nondefaulting party of payment of the aggregate
Repurchase Prices for all such Transactions, all right, title and interest in
and entitlement to all Purchased Securities subject to such Transactions shall
be deemed transferred to the nondefaulting party, and the defaulting party shall
deliver all such Purchased Securities to the nondefaulting party.

 

(d)         If the nondefaulting party exercises or is deemed to have exercised
the option referred to in subparagraph (a) of this Paragraph, the nondefaulting
party, without prior notice to the defaulting party, may:

 

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(i)          as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market (or otherwise in a
commercially reasonable manner) at such price or prices as the nondefaulting
party may reasonably deem satisfactory, any or all Purchased Securities subject
to such Transactions and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party hereunder
or (B) in its sole discretion elect, in lieu of selling all or a portion of such
Purchased Securities, to give the defaulting party credit for such Purchased
Securities in an amount equal to the price therefor on such date, obtained from
a generally recognized source or the most recent closing bid quotation from such
a source, against the aggregate unpaid Repurchase Prices and any other amounts
owing by the defaulting party hereunder; and

 

(ii)       as to Transactions in which the defaulting party is acting as Buyer,
(A) immediately purchase, in a recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the nondefaulting party may
reasonably deem satisfactory, securities (“Replacement Securities”) of the same
class and amount as any Purchased Securities that are not delivered by the
defaulting party to the nondefaulting party as required hereunder or (B) in its
sole discretion elect, in lieu of purchasing Replacement Securities, to be
deemed to have purchased Replacement Securities at the price therefor on such
date, obtained from a generally recognized source or the most recent closing
offer quotation from such a source.

 

Unless otherwise provided in Annex I, the parties acknowledge and agree that
(1) the Securities subject to any Transaction hereunder are instruments traded
in a recognized market, (2) in the absence of a generally recognized source for
prices or bid or offer quotations for any Security, the nondefaulting party may
establish the source therefor in its sole discretion and (3) all prices, bids
and offers shall be determined together with accrued Income (except to the
extent contrary to market practice with respect to the relevant Securities).

 

(e)          As to Transactions in which the defaulting party is acting as
Buyer, the defaulting party shall be liable to the nondefaulting party for any
excess of the price paid (or deemed paid) by the nondefaulting party for
Replacement Securities over the Repurchase Price for the Purchased Securities
replaced thereby and for any amounts payable by the defaulting party under
Paragraph 5 hereof or otherwise hereunder.

 

(f)           For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is acting as
Buyer shall not increase above the amount of such Repurchase Price for such
Transaction determined as of the date of the exercise or deemed exercise by the
nondefaulting party of the option referred to in subparagraph (a) of this
Paragraph.

 

(g)          The defaulting party shall be liable to the nondefaulting party for
(i) the amount of all reasonable legal or other expenses incurred by the
nondefaulting party in connection with or as a result of an Event of Default,
(ii) damages in an amount equal to the cost (including all fees, expenses and
commissions) of entering into replacement transactions and entering into or
terminating hedge transactions in connection with or as a result of an Event of
Default, and (iii) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default in respect of a
Transaction.

 

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(h)         To the extent permitted by applicable law, the defaulting party
shall be liable to the nondefaulting party for interest on any amounts owing by
the defaulting party hereunder, from the date the defaulting party becomes
liable for such amounts hereunder until such amounts are (i) paid in full by the
defaulting party or (ii) satisfied in full by the exercise of the nondefaulting
party’s rights hereunder. Interest on any sum payable by the defaulting party to
the nondefaulting party under this Paragraph 11(h) shall be at a rate equal to
the greater of the Pricing Rate for the relevant Transaction or the Prime Rate.

 

(i)             The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other agreement or
applicable law.

 

12. Single Agreement

 

Buyer and Seller acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly,
each of Buyer and Seller agrees (i) to perform all of its obligations in respect
of each Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against obligations owing to
them in respect of any other Transactions hereunder and (iii) that payments,
deliveries and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.

 

13. Notices and Other Communications

 

Any and all notices, statements, demands or other communications hereunder may
be given by a party to the other by mail, facsimile, telegraph, messenger or
otherwise to the address specified in Annex II hereto, or so sent to such party
at any other place specified in a notice of change of address hereafter received
by the other. All notices, demands and requests hereunder may be made orally, to
be confirmed promptly in writing, or by other communication as specified in the
preceding sentence.

 

14. Entire Agreement; Severability

 

This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.

 

15. Non-assignability; Termination

 

(a)         The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by either party without the prior
written consent of the other party, and

 

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any such assignment without the prior written consent of the other party shall
be null and void. Subject to the foregoing, this Agreement and any Transactions
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns. This Agreement may be terminated by either
party upon giving written notice to the other, except that this Agreement shall,
notwithstanding such notice, remain applicable to any Transactions then
outstanding.

 

(b)         Subparagraph (a) of this Paragraph 15 shall not preclude a party
from assigning, charging or otherwise dealing with all or any part of its
interest in any sum payable to it under Paragraph 11 hereof.

 

16. Governing Law

 

This Agreement shall be governed by the laws of the State of New York without
giving effect to the conflict of law principles thereof.

 

17. No Waivers, Etc.

 

No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure here-from shall be
effective unless and until such shall be in writing and duly executed by both of
the parties hereto. Without limitation on any of the foregoing, the failure to
give a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a
waiver of any right to do so at a later date.

 

18. Use of Employee Plan Assets

 

(a)         If assets of an employee benefit plan subject to any provision of
the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be
used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party
shall so notify the other party prior to the Transaction. The Plan Party shall
represent in writing to the other party that the Transaction does not constitute
a prohibited transaction under ERISA or is otherwise exempt therefrom, and the
other party may proceed in reliance thereon but shall not be required so to
proceed.

 

(b)         Subject to the last sentence of subparagraph (a) of this Paragraph,
any such Transaction shall proceed only if Seller furnishes or has furnished to
Buyer its most recent available audited statement of its financial condition and
its most recent subsequent unaudited statement of its financial condition.

 

(c)          By entering into a Transaction pursuant to this Paragraph, Seller
shall be deemed (i) to represent to Buyer that since the date of Seller’s latest
such financial statements, there has been no material adverse change in Seller’s
financial condition which Seller has not disclosed to Buyer, and (ii) to agree
to provide Buyer with future audited and unaudited statements of its financial
condition as they are issued, so long as it is a Seller in any outstanding
Transaction involving a Plan Party.

 

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19. Intent

 

(a)         The parties recognize that each Transaction is a “repurchase
agreement” as that term is defined in Section 101 of Title 11 of the United
States Code, as amended (except insofar as the type of Securities subject to
such Transaction or the term of such Transaction would render such definition
inapplicable), and a “securities contract” as that term is defined in
Section 741 of Title 11 of the United States Code, as amended (except insofar as
the type of assets subject to such Transaction would render such definition
inapplicable).

 

(b)         It is understood that either party’s right to liquidate Securities
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Paragraph 11 hereof is a contractual right to
liquidate such Transaction as described in Sections 555 and 559 of Title 11 of
the United States Code, as amended.

 

(c)          The parties agree and acknowledge that if a party hereto is an
“insured depository institution,” as such term is defined in the Federal Deposit
Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a
“qualified financial contract,” as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition inapplicable).

 

(d)         It is understood that this Agreement constitutes a “netting
contract” as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation”,
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a “financial institution” as that term is defined in
FDICIA).

 

20. Disclosure Relating to Certain Federal Protections

 

The parties acknowledge that they have been advised that:

 

(a)         in the case of Transactions in which one of the parties is a broker
or dealer registered with the Securities and Exchange Commission (“SEC”) under
Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities
Investor Protection Corporation has taken the position that the provisions of
the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other
party with respect to any Transaction hereunder;

 

(b)         in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer registered with
the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to
the other party with respect to any Transaction hereunder; and

 

(c)          in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured by the
Federal Deposit Insurance Corporation or the National Credit Union Share
Insurance Fund, as applicable.

 

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GOLDMAN SACHS BANK USA

 

STRAFFORD FUNDING LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/ Meera Bhutta

 

By:

/s/ Gerald F. Stahlecker

Title:

Managing Director

 

Name:

Gerald F. Stahlecker

Date:

9/11/2014

 

Title:

Executive Vice President

 

 

 

Date:

9/11/2014

 

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Annex I

 

Supplemental Terms and Conditions

 

This Annex I forms a part of the Master Repurchase Agreement dated as of
September 11, 2014 (the “Agreement”) between Goldman Sachs Bank USA (“Party A”
or “Buyer”) and Strafford Funding LLC (“Party B” or “Seller”).  Capitalized
terms used but not defined in this Annex I shall have the meanings ascribed to
them in the Agreement.

 

1.                                      Other Applicable Annexes.  In addition
to this Annex I the following Annexes and any Schedules thereto shall form a
part of this Agreement and shall be applicable thereunder:

 

 

 

Applicable if checked and initialed below:

 

 

 

 

 

 

 

Party A

 

Party B

Annex II (Names and Addresses)

 

x

 

 

 

 

Annex III (International Transactions)

 

o

 

 

 

 

Annex IV (Party Acting as Agent)

 

o

 

 

 

 

Annex VII (Transactions Involving Registered Investment Companies)

 

o

 

 

 

 

Annex VIII (Transactions in Equity Securities)

 

o

 

 

 

 

Annex IX (Transactions Involving Certain Japanese Financial Institutions)

 

o

 

 

 

 

Annex XI (Tri-Party Transactions)

 

o

 

 

 

 

 

2.                                      Confirmations; Etc.

 

Confirmations in accordance with Paragraph 3(b) of the Agreement are in all
cases to be furnished by Party A.  Notwithstanding anything set forth in
Paragraph 3(b) of the Agreement to the contrary, to the extent of any conflict
between the terms of this Agreement (including, without limitation, each annex
thereto) and the letter agreement between Buyer and Seller dated as of
September 11, 2014 (together with the annexes thereto and as amended and
supplemented from time to time, the “Master Confirmation”), the terms set forth
in the Master Confirmation shall prevail.  Each Transaction governed by the
Agreement shall be a Transaction that has been entered into pursuant to the
terms of the Master Confirmation, and no other Transactions shall be entered
into hereunder.

 

3.                                      Definitions.

 

(a)                                 Paragraph 2 of the Agreement shall be
amended by:

 

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(i)                                     in clause (iv) of the definition of “Act
of Insolvency” in Paragraph 2(a), inserting the words “an Authorized
Representative of” immediately after the words “admission in writing by”, and

 

(ii)                                  deleting the definition of “Buyer’s Margin
Percentage” in its entirety and replacing it with the following:

 

“Buyer’s Margin Percentage”, with respect to any Transaction as of any date,
177.77777778%;

 

(iii)                               deleting the definition of “Income” in its
entirety and replacing it with the following:

 

“Income”, with respect to any Security at any time, all interest or other
distributions thereon excluding Cash Principal Payments;

 

(iv)                              deleting the definition of “Margin Notice
Deadline” in its entirety and replacing it with the following:

 

“Margin Notice Deadline”, 10:00 A.M. New York time;

 

(v)                                 deleting the definition of “Market Value” in
its entirety and replacing it with the following:

 

“Market Value”, the meaning assigned to such term in the Master Confirmation;

 

(vi)                              deleting the definition of “Pricing Rate” in
its entirety and replacing it with the following:

 

“Pricing Rate”, the per annum percentage rate for determination of the Financing
Fee Payments;

 

(vii)                           deleting the definition of “Purchased
Securities” in its entirety and replacing it with the following:

 

“Purchased Securities”, the Securities transferred by Seller to Buyer in a
Transaction hereunder, and any Securities substituted therefor in accordance
with Paragraph 9 hereof;

 

(viii)                        deleting the definition of “Repurchase Price” in
its entirety and replacing it with the following:

 

“Repurchase Price”, the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of (i) the Purchase Price for such Transaction plus (ii) the ratable
share of the accrued and unpaid Financing Fee Payments allocated to such
Transaction by the Calculation Agent for such Transaction, as of the date of
such determination, minus

 

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(iii) the aggregate Repurchase Price Reduction Amount for such Transaction, as
of the date of such determination and any other amounts applied to reduce the
Purchase Price in accordance with this Agreement;

 

(ix)                              deleting the definition of “Seller’s Margin
Amount” in its entirety.

 

(x)                                 deleting the definition of “Seller’s Margin
Percentage” in its entirety.

 

(b)                                  Paragraph 2 of the Agreement shall be
amended by the addition of the following definitions:

 

(u)                                 “Affiliate”, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person.  For this purpose, “control” of
any entity or person means ownership of a majority of the voting power of the
entity or person;

 

(v)                                 “Authorized Representative”, President,
Executive Vice President, Vice President or Chief Financial Officer of Party B;
or the Investment Manager or Investment Advisor of Party B;

 

(w)                               “Cash Principal Payments”, the meaning
assigned to such term in the Master Confirmation;

 

(x)                                 “Counterparty Application Amount”, the
meaning assigned to such term in the Master Confirmation;

 

(y)                                 “Financing Fee Payments”, the meaning
assigned to such term in the Master Confirmation;

 

(z)                                  “Indebtedness”, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money;

 

(aa)                          “Independent Director”, a natural person who,
(A) for the five-year period prior to his or her appointment as Independent
Director, has not been, and during the continuation of his or her service as
Independent Director is not: (i) an employee, director, stockholder, member,
manager, partner or officer of Party B or any of its Affiliates (other than his
or her service as an Independent Director of Affiliates of Party B that are
structured to be “bankruptcy remote” in a manner substantially similar to Party
B); (ii) a customer or supplier of Party B or any of its Affiliates (other than
a supplier of his or her service as an Independent Director of Party B or such
Affiliate); or (iii) any member of the immediate family of a person described in
(i) or (ii), and (B) has (i) prior experience as an Independent Director for a
corporation or limited liability company whose charter documents required the
unanimous consent of all Independent Directors thereof before such corporation
or limited liability company could consent to the institution of bankruptcy or
insolvency proceedings against it or could file a petition seeking relief under
any applicable federal or state law relating to bankruptcy and (ii) at least

 

3

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three years of employment experience with one or more entities that provide, in
the ordinary course of their respective businesses, advisory, management or
placement services to issuers of securitization or structured finance
instruments, agreements or securities;

 

(bb)                          “Lien”, 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;

 

(cc)                            “Prospective Make-Whole Event”, at any date:

 

(1)                                 an Event of Default with respect to Party B
that has occurred and is continuing; or

 

(2)                                 the Repurchase Date of all Transactions has
occurred (other than due to a Regulatory Change); or

 

(3)                                 the sum of the Repurchase Prices of all
Purchased Securities on such date is less than or equal to U.S.$50,000,000;

 

(dd)                          “Prospective Make-Whole Payment Amount”, at any
date, the Make-Whole Amount (as defined in the Master Confirmation) that would
be calculated on such date;

 

(ee)                            “Material Action”, to:

 

(i)                                     file or consent to the filing of any
bankruptcy, insolvency or reorganization petition under any applicable federal,
state or other law relating to a bankruptcy naming Party B as debtor or other
initiation of bankruptcy or insolvency proceedings by or against Party B, or
otherwise seek, with respect to Party B, relief under any laws relating to the
relief from debts or the protection of debtors generally;

 

(ii)                                  seek or consent to the appointment of a
receiver, liquidator, conservator, assignee, trustee, sequestrator, custodian or
any similar official for Party B or all or any portion of its properties;

 

(iii)                               make or consent to any assignment for the
benefit of Party B’s creditors generally;

 

(iv)                              admit in writing the inability of Party B to
pay its debts generally as they become due;

 

(v)                                 petition for or consent to substantive
consolidation of Party B with any other person;

 

4

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(vi)                              amend or alter or otherwise modify or remove
all or any part of Section 9(j) of Party B’s Limited Liability Company
Agreement; or

 

(vii)                           amend, alter or otherwise modify or remove all
or any part of the definition of “Independent Director” or the definition of
“Material Action” in Party B’s Limited Liability Company Agreement;

 

(ff)                              “Organizational Documents”, the meaning
specified in subparagraph (xi) of Paragraph 11(a) hereof;

 

(gg)                            “Regulatory Change”, the meaning assigned to
such term in the Master Confirmation;

 

(hh)                          “Repurchase Price Reduction Amount”, the meaning
assigned to such term in the Master Confirmation;

 

(ii)                                  “Specified Transaction” means (a) any
transaction (including an agreement with respect to any such transaction) now
existing or hereafter entered into between Party A (or any of its Affiliates)
and Party B which is not a Transaction under this Agreement but (i) which is a
rate swap transaction, swap option, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option, credit
protection transaction, credit swap, credit default swap, credit default option,
total return swap, credit spread transaction, repurchase transaction, reverse
repurchase transaction, buy/sell-back transaction, securities lending
transaction, weather index transaction or forward purchase or sale of a
security, commodity or other financial instrument or interest (including any
option with respect to any of these transactions) or (ii) which is a type of
transaction that is similar to any transaction referred to in clause (i) above
that is currently, or in the future becomes, recurrently entered into in the
financial markets (including terms and conditions incorporated by reference in
such agreement) and which is a forward, swap, future, option or other derivative
on one or more rates, currencies, commodities, equity securities or other equity
instruments, debt securities or other debt instruments, economic indices or
measures of economic risk or value, or other benchmarks against which payments
or deliveries are to be made, (b) any combination of these transactions and
(c) any other transaction identified as a Specified Transaction in this
Agreement or the Master Confirmation;

 

(jj)                                “Master Confirmation”, the meaning assigned
to such term in Annex I;

 

(kk)                          “Facility End Date”, the meaning assigned to such
term in the Master Confirmation.

 

5

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(c)                                        Paragraph 2 of the Agreement shall be
amended by deleting the definitions of “Price Differential” and the Agreement
shall be construed as if the term “Price Differential” does not exist.

 

4.                                      Margin Maintenance.

 

(a)                                 Paragraph 4 of the Agreement is amended by
replacing subparagraph (a) thereof with the following:

 

“(a)                           If at any time the Market Value is less than the
Buyer’s Required Amount for all Transactions outstanding hereunder at such time
(a “Margin Deficit”), then Buyer may by notice (a “Margin Call Notice”) to
Seller require Seller in such Transactions to transfer to Buyer cash in U.S.
dollars, so that the cash and such Market Value will thereupon equal or exceed
such Buyer’s Required Amount.

 

For purposes hereof, the “Buyer’s Required Amount” at any time is equal to
(i) the Buyer’s Margin Amount for all Transactions at such time plus (ii) if a
Prospective Make-Whole Event has occurred and is then continuing, the
Prospective Make-Whole Payment Amount at such time.”

 

(b)                                 Paragraph 4(b) of the Agreement shall not
apply to any Transaction hereunder and the Agreement shall be construed as if
the concept of “Margin Excess” does not exist.

 

(c)                                  Paragraph 4 of the Agreement is amended by
replacing subparagraph (c) thereof with the following:

 

“(c)                            If any Margin Call Notice is given by Buyer at
or before the Margin Notice Deadline on any business day, Seller shall transfer
cash in U.S. dollars to Buyer no later than 6:00 P.M. New York time on the next
business day following such notice.  If any Margin Call Notice is given by Buyer
after the Margin Notice Deadline, Seller shall transfer such cash to Buyer no
later than 6:00 P.M. New York time on the second business day following such
notice.”

 

(d)                                 Paragraph 4(d) of the Agreement shall not
apply to any Transaction hereunder.

 

(e)                                  Pursuant to Paragraph 4(e) of the
Agreement, Party A and Party B acknowledge and agree that the rights of Party B
under Paragraph 4(a) of the Agreement may be exercised only where a Margin
Deficit exceeds $1,000,000 on such date of determination.

 

(f)                                   Paragraph 4 of the Agreement is amended by
adding the following paragraph at the end thereto:

 

“(g)                            In the event that (i) upon the issuance of any
Margin Call Notice pursuant to Paragraph 4(a) of the Agreement, Seller transfers
to Buyer cash in U.S. dollars to cure the related Margin Deficit (such cash, the

 

6

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“Margin Deficit Cure Collateral”; the amount of such cash, the “Margin Deficit
Cure Collateral Amount”; such cure of the Margin Deficit by Seller, a “Margin
Deficit Cure Event”) and (ii) after such Margin Deficit Cure Event, the Market
Value plus the Margin Deficit Cure Collateral Amount equals or exceeds Buyer’s
Required Amount for all such Transactions then, so long as immediately before
and after giving effect thereto (A) no Event of Default shall have occurred with
respect to Seller, (B) no event has occurred and is continuing that, with notice
or lapse of time or both, would constitute an Event of Default with respect to
Seller and (C) no Margin Deficit shall have occurred and remain unsatisfied,

 

(1)                                 upon written notice to Buyer (such notice, a
“Market Value Re-determination Request Notice”), Seller may request that Buyer
return an amount (such amount, the “Excess Cure Collateral Refund Amount”) equal
to (x) the Margin Deficit Cure Collateral Amount less (y) an amount equal to the
Buyer’s Required Amount less the Market Value (which amount under this clause
(y) cannot be less than zero); and

 

(2)                                 if (x) Buyer receives the Market Value
Re-determination Request Notice prior to 10:00 A.M. New York time on any
business day, Buyer shall return such Excess Cure Collateral Refund Amount to
Seller no later than 6:00 P.M. New York time on the next business day following
such notice and (y) Buyer receives the Market Value Re-determination Request
Notice after 10:00 A.M. New York time on any business day, Buyer shall return
such Excess Cure Collateral Refund Amount to Seller no later than 6:00 P.M. New
York time on the second business day following such notice, so long as, in the
case of each of the foregoing clauses (x) and (y), Buyer shall be satisfied in
its sole and absolute discretion exercised in good faith that at such time of
determination the Market Value plus the Remaining Margin Deficit Cure Collateral
Amount as of such time of determination is equal to or exceeds Buyer’s Required
Amount for all Transactions.

 

As used herein the “Remaining Margin Deficit Cure Collateral” means, as at any
time of determination, an amount (which may be zero) equal to (a) the Margin
Deficit Cure Collateral Amount at such time less (b) the Excess Cure Collateral
Refund Amount at such time.”

 

5.                                      Representations and Covenants. 
Paragraph 10 of the Agreement is hereby amended by adding an “(a)” before the
first word of the first paragraph and add the following new paragraphs at the
end thereof:

 

(b)                                 Each of Buyer and Seller further represents
and warrants that, with respect to each Transaction under the Agreement:

 

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Non-Reliance.  It has made its own determinations regarding the tax and
accounting treatment of all aspects of the Transaction including, without
limitation, the tax and accounting treatment of any Income paid with respect to
the Securities.  It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction. It has evaluated for
itself whether that Transaction is appropriate or proper for it based upon its
own judgment and upon advice from such advisers as it has deemed necessary.  It
is not relying on any communication (written or oral) of the other party as
investment advice or as a recommendation to enter into that Transaction; it
being understood that information and explanations related to the terms and
conditions of a Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction.  No communication (written or
oral) received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Transaction.

 

Assessment and Understanding.  It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice),
and understands and accepts, the terms, conditions and risks of that
Transaction.  It is also capable of assuming, and assumes, the risks of that
Transaction.

 

Status of Parties.  The other party is not acting as a fiduciary for or an
adviser to it in respect of that Transaction.

 

(c)                                  Seller hereby represents and covenants for
so long as any Transaction is outstanding hereunder that Seller has since its
formation, and shall at all times, abide by the following requirements, the
compliance with which it acknowledges that Buyer is relying upon in entering
into this Agreement:

 

(1)                                 maintains at least one Independent Director;

 

(2)                                 has a board of directors separate from that
of any other person (although members of the board of directors of Seller may
serve as directors of one or more Affiliates of Seller);

 

(3)                                 file its own tax returns, if any, as may be
required under applicable law, to the extent (1) not part of a consolidated
group filing a consolidated return or returns or (2) not treated as a division
for tax purposes of another taxpayer, and pay any taxes so required to be paid
under applicable law;

 

(4)                                 not commingle its assets with assets of any
other person;

 

(5)                                 conduct its business in its own name and
strictly comply with all organizational formalities necessary to maintain its
separate existence (and all such formalities have been complied with since the
Seller’s formation);

 

(6)                                 maintain separate financial statements (it
being understood that, if Party B’s financial statements are part of a
consolidated group with its Affiliates, then any such consolidated statements
shall contain a note

 

8

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indicating Party B’s separateness from any such Affiliates and that its assets
are not available to pay the debts of such Affiliate);

 

(7)                                 pay its own liabilities only out of its own
funds;

 

(8)                                 maintain an arm’s-length relationship with
its Affiliates;

 

(9)                                 pay the salaries of its own employees, if
any;

 

(10)                          not hold out its credit or assets as being
available to satisfy the obligations of others;

 

(11)                          pay its fair and reasonable share of overhead for
shared office space, if any;

 

(12)                          use separate stationery, invoices and checks and
not of any other entity (unless such entity is clearly designated as being Party
B’s agent);

 

(13)                          not pledge its assets as security for the
obligations of any other person;

 

(14)                          correct any known misunderstanding regarding its
separate identity;

 

(15)                          maintain adequate capital in light of its
contemplated business purpose, transactions and liabilities and pay its
operating expenses and liabilities from its own assets;

 

(16)                          not take any Material Action without the unanimous
affirmative vote of each member of its board of directors, including, in all
cases, the Independent Director;

 

(17)                          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;

 

(18)                          at all times since its formation has been, and
will continue to be, a duly formed and existing limited liability company
organized under the laws of the State of Delaware; and Seller’s member 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;

 

(19)                          has complied, and will continue to comply, with
the provisions of its Organizational Documents and the laws of the jurisdiction
of its formation relating to limited liability companies;

 

(20)                          has not any time since its formation assumed or
guaranteed, and will not assume or guarantee, the liabilities of its member, any
Affiliate of its member, or any other persons;

 

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(21)                          not sell, exchange, lease or otherwise transfer
all or substantially all of the assets of Party B or consolidate or merge Party
B with another person whether by means of a single transaction or a series of
related transactions; and

 

(22)                      comply with all assumptions as to Seller set forth in
all legal opinions delivered with respect to bankruptcy non-consolidation
matters in connection with this Agreement.

 

On the Purchase Date for each Transaction Buyer and Seller shall each be deemed
to repeat all the foregoing representations made by it.

 

6.                                     Agreement to Deliver Information.

 

Party B agrees to deliver the following documents/information:

 

Form/Document/ Certificate

 

Date by which
to be delivered

Evidence reasonably satisfactory to Party A of the signing authority and
specimen signature of any individual executing this Agreement

 

Upon or promptly following execution of this Agreement

 

 

 

Audited consolidated annual financial statements of Party B’s parent, FS Energy
and Power Fund (“FSEP”)

 

Within 120 days of the end of FSEP’s fiscal year

 

 

 

Unaudited quarterly financial statements of FSEP

 

Within 45 days after the end of each fiscal quarter of FSEP (other than the last
fiscal quarter of each fiscal year of FSEP)

 

 

 

Such other financial or other information with respect to Party B as Party A may
reasonably request from time to time

 

Within five (5) Business Days after request by Party A

 

 

 

For each Non-Private Underlying Asset (as defined in the Master Confirmation),
all financial information (other than material non-public information) relating
to the obligors on such Underlying Asset and made available by such obligors to
the lenders of record of such Underlying Asset in accordance with the documents
governing such Underlying Asset.

 

Within five (5) Business Days of such information being made available to Party
B, FSEP or FSEP’s affiliates. Such information shall be made available in an
electronic data room that is at all times available to Party A.

 

 

 

For each Private Underlying Asset (as defined in the Master Confirmation), all
bank syndicate information

 

Within five (5) Business Days of such information

 

10

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Form/Document/ Certificate

 

Date by which
to be delivered

relating to the obligors on such Underlying Asset and made available by such
obligors to the lenders of record of such Underlying Asset in accordance with
the documents governing such Underlying Asset (but subject to satisfaction of
applicable confidentiality requirements under the documents governing such
Underlying Asset). For purposes of the foregoing, “bank syndicate information”
shall not include any material non-public information relating to the obligors
on a Private Underlying Asset that not been made available to all of the
private-side lenders of record under the documents governing such Underlying
Asset.

 

being made available to Party B, FSEP or FSEP’s affiliates. Such information
shall be made available in an electronic data room that is at all times
available to Party A.

 

 

 

A copy of each Commitment to purchase or sell an Underlying Asset entered into
by the Security Issuer from time to time (with terms used in this paragraph
without definition having the meanings assigned to them in the Master
Confirmation).

 

Within two Business Days

 

 

 

Investment management agreement or other evidence of investment management
authority.

 

Upon request by Party A

 

 

 

Favorable written opinions (addressed to Party A) of Dechert LLP as to New York,
Delaware and U.S. federal law, and covering such matters relating to Party B,
this Agreement, the Master Confirmation and the Transactions as Party A shall
reasonably request.

 

Within 10 business days of the execution of this Agreement

 

7.                                      Purchase Price Maintenance.

 

(a)                                 The parties agree that in any Transaction
hereunder whose term extends over an Income payment date for the Securities
subject to such Transaction, if Income is paid to Buyer then Buyer shall
promptly transfer to Seller an amount equal to such Income payment or payments
pursuant to Paragraph 5(i) of the Agreement; and Buyer shall not apply the
Income payment or payments to reduce the amount to be transferred to Buyer or
Seller upon termination of the Transaction pursuant to Paragraph 5(ii) of the
Agreement.

 

(b)                                 Notwithstanding the definition of “Purchase
Price” in Paragraph 2 of the Agreement and the provisions of Paragraph 4 of the
Agreement, the parties agree that the Purchase Price will not be increased or
decreased by the amount of any cash transferred by one party to the other
pursuant to Paragraph 4 of the Agreement.

 

11

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8.                                      Events of Default.

 

(a)                                 Paragraph 11 shall be amended by deleting
the word “or” immediately before subparagraph (vii) and by adding the following
before the words “(each an “Event of Default”)” at the end of subparagraph
(vii) thereof:

 

“(viii)                  Party B fails to comply with any obligation to deliver
information under Paragraph 6 of this Annex I (Agreement to Deliver Information)
within the time specified;

 

(ix)                              Party B fails to pay any Financing Fee Payment
or any Make-Whole Amount when and as the same shall become due payable and such
failure shall continue unremedied for five business days after written notice
thereof from Party A to Party B;

 

(x)                                 Party B fails to notify Party A as to a
change in legal structure that would have the effect of Party B ceasing to exist
as a Delaware LLC (as defined below);

 

(xi)                              Party B incurs or suffers to exist any
Indebtedness or enters into any transaction that would be a Specified
Transaction if such transaction were between Party A and Party B (except
pursuant to this Agreement);

 

(xii)                           Party B directly or indirectly creates, incurs,
assumes or permits to exist any Lien on any of its property (except pursuant to
this Agreement);

 

(xiii)                        Party B engages in any business activity or incurs
any material liabilities (other than the sales, repurchases and maintenance of
and margining related to the Purchased Securities in compliance with the terms
of this Agreement and the other Transaction Documents and activities incidental
to the foregoing);

 

(xiv)                       Party B fails to observe or perform any covenant set
forth in Paragraph 10(c) of this Agreement or any representation set forth
therein fails to be true and correct;

 

(xv)                          Party B fails to observe or perform any covenant,
agreement or obligation contained in the Agreement or the Master Confirmation
(other than the matters referred to in the preceding clauses (i), (ii), (iii),
(iv), (viii), (ix) (x), (xi), (xii) and (xiii)) and such failure, if capable of
remedy, shall continue unremedied for a period of thirty (30) or more days after
the earlier of Party B’s knowledge thereof and notice thereof from Party A to
Party B;

 

(xvi)                       the limited liability company agreement or any other
organizational document of Party B (collectively, the “Organizational
Documents”), or any provision thereof, shall be amended, modified, changed,
waived, terminated, cease to be

 

12

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effective or cease to be the legally valid, binding and enforceable obligation,
if the effect of such amendment, modification, change, termination or other
action would have a material adverse effect on (1) the ability of Party B to
perform its obligations under the Agreement, the Master Confirmation or any
Transaction or (2) the validity or enforceability of the Agreement or the Master
Confirmation against Party B by Party A or the rights and remedies of Party A
against Party B under the Agreement or the Master Confirmation;

 

(xvii)                    Party B shall default or breach of any provision under
any Organizational Document, if the effect of such default or breach, would have
a material adverse effect on (1) the ability of Party B to perform its
obligations under the Agreement, the Master Confirmation or any Transaction or
(2) the validity or enforceability of the Agreement or the Master Confirmation
against Party B by Party A or the rights and remedies of Party A against Party B
under the Agreement or the Master Confirmation; or

 

(xviii)                 Party B:

 

(A)                               defaults (other than by failing to make a
delivery) under a Specified Transaction or any credit support arrangement
relating to a Specified Transaction and, after giving effect to any applicable
notice requirement or grace period, such default results in a liquidation of, an
acceleration of obligations under, or an early termination of, that Specified
Transaction;

 

(B)                               defaults, after giving effect to any
applicable notice requirement or grace period, in making any payment due on the
last payment or exchange date of, or any payment on early termination of, a
Specified Transaction (or, if there is no applicable notice requirement or grace
period, such default continues for at least one business day);

 

(C)                               defaults in making any delivery due under
(including any delivery due on the last delivery or exchange date of) a
Specified Transaction or any credit support arrangement relating to a Specified
Transaction and, after giving effect to any applicable notice requirement or
grace period, such default results in a liquidation of, an acceleration of
obligations under, or an early termination of, all transactions outstanding
under the documentation applicable to that Specified Transaction; or

 

(D)                               disaffirms, disclaims, repudiates or rejects,
in whole or in part, or challenges the validity of, a Specified

 

13

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Transaction or any credit support arrangement relating to a Specified
Transaction that is, in either case, confirmed or evidenced by a document or
other confirming evidence executed and delivered by that party (or such action
is taken by any person or entity appointed or empowered to operate it or act on
its behalf).”

 

(b)                                 Paragraph 11 of the Agreement is hereby
amended by replacing subparagraph (a) thereof with the following:

 

“(a)                           The nondefaulting party may, at its option,
declare an Event of Default to have occurred hereunder and, upon the exercise or
deemed exercise of such option, the Repurchase Date for each Transaction
hereunder shall, if it has not already occurred, be deemed immediately to occur
(except that, in the event that the Purchase Date for any Transaction has not
yet occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The nondefaulting party shall
give notice to the defaulting party of the exercise of such option as promptly
as practicable.”

 

(c)                                  Notwithstanding clauses (i) and (ii) of the
introductory paragraph to Paragraph 11 of the Agreement, it will not be an Event
of Default if:

 

(A)                               Seller fails to transfer Purchased Securities
on the applicable Purchase Date for a Transaction, but Buyer may, by written
notice to Seller, (1) if Buyer has paid the Purchase Price to Seller, require
Seller to immediately repay the sum so paid; (2) if there exists a Margin
Deficit in respect of such Transaction, require Seller to deliver (in accordance
with the notice and delivery requirements of Paragraph 4 of the Agreement)
margin in an amount equal to such Margin Deficit; and (3) at any time while such
failure continues, terminate such Transaction (but only such Transaction)
(“Buyer Mini Close-out”) and upon such termination, the provisions of Paragraph
11 of the Agreement shall apply with respect to the terminated Transaction (but
only such Transaction).

 

(B)                               Buyer fails to transfer Purchased Securities
on the applicable Repurchase Date for a Transaction, but Seller may, by written
notice to Buyer, (1) if Seller has paid the Repurchase Price to Buyer, require
Buyer to immediately repay the sum so paid; and (2) at any time while such
failure continues, terminate such Transaction (but only such Transaction)
(“Seller Mini Close-out”, and together with Buyer Mini Close-out, “Mini
Close-out”) and upon such termination, the provisions of Paragraph 11 of the
Agreement shall apply with respect to the terminated Transaction (but only such
Transaction).

 

Any transfer of margin pursuant to Clauses (A)(2) above, shall be due and
payable within the time period specified in Paragraph 4(c) of the Agreement with
respect to cash (as if such notice from Buyer were a notice requesting the
delivery of margin), and any failure to make any such transfer or payment shall
be an event that will be an Event of Default under paragraph 11(iii).

 

14

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For the avoidance of doubt, it shall be an Event of Default under the Agreement
if, with respect to any amount due and payable under Paragraph 11 following any
Mini Close-out, such amount is not paid by the defaulting party before the end
of the Business Day on which the defaulting party receives notice of such due
and payable amount from the non-defaulting party, if the defaulting party
receives such notice before the Margin Notice Deadline. If any such notice is
given after the Margin Notice Deadline on a Business Day, the party receiving
such notice shall transfer such amount due and payable no later than the close
of business in the relevant market on the next Business Day following receipt of
such notice.

 

9.                                      Notices.  Paragraph 13 of the Agreement
shall be amended by replacing the last sentence thereof with the following:

 

“All notices, demands and requests hereunder shall be made in writing (which may
include, without limitation, email notifications) to the address (or email
address) set forth in Annex II.”

 

10.                               Qualified Institutional Buyers.  It is agreed
that with respect to Transactions in Purchased Securities which are eligible for
resale under Rule 144A under the Securities Act of 1933, as amended (“Rule 144A
Securities”), the following representations shall apply:

 

(a)         on the Purchase Date for any Transaction, (i) Buyer represents and
warrants that Buyer is familiar with the provisions of Rule 144A, (ii) Buyer
represents and warrants that Buyer is a “Qualified Institutional Buyer” as such
term is defined in Rule 144A, (iii) Seller represents and warrants that Seller
is not, and within the preceding three months has not been, an “affiliate,” as
that term is used in Rule 144 under the Securities Act, of the issuer of any
Purchased Securities, and (iv) Seller represents and warrants that any Purchased
Securities transferred to Buyer are not subject to any legal or regulatory
restrictions on transfer other than those applicable to “restricted securities”
within the meaning of Rule 144; and

 

(b)         on the Repurchase Date for any Transaction, (i) Seller represents
and warrants that Seller is familiar with the provisions of Rule 144A,
(ii) Seller represents and warrants that Seller is a “Qualified Institutional
Buyer” as such term is defined in Rule 144A, (iii) Buyer represents and warrants
that Buyer is not, and within the preceding three months has not been, an
“affiliate,” as that term is used in Rule 144, of the issuer of any Purchased
Securities, and (iv) assuming the accuracy and completeness of Seller’s
representations under subparagraph (a) of this Paragraph, Buyer represents and
warrants that any Purchased Securities transferred to Seller are not subject to
any legal or regulatory restrictions on transfer other than those applicable to
“restricted securities” within the meaning of Rule 144.

 

11.                               Assignment.  Paragraph 15 of the Agreement is
hereby amended by inserting the following between the first and second sentences
of subparagraph 15(a):

 

“Notwithstanding the foregoing, Party A may not assign its rights nor delegate
its obligations under this Agreement, in whole or in part, without the prior
written consent of the other party to this Agreement, and any purported
assignment or delegation absent such consent is void, except for an assignment
or delegation of all of the Party A’s rights

 

15

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and obligations hereunder in whatever form Party A determines may be appropriate
to (i) Goldman Sachs & Co. or any other Affiliate of Party A (other than Goldman
Sachs BDC, Inc. or any other business development company that is an Affiliate
of Party A) or (ii) any other third party organized under the laws of the United
States of America, any state thereof or the District of Columbia (a “Third
Party”); provided that, with respect to an assignment by Party A under the
foregoing clause (ii), Party B shall have the right to cause the Repurchase Date
of all (but not less than all) of the Transactions then outstanding to occur
simultaneously (an “Assignment-Related Repurchase Date Acceleration”, and the
date thereof the related “Assignment-Related Repurchase Date”) on not less than
two Business Days’ notice to Party A if neither such Third Party nor any credit
support provider of such Third Party has a long-term unsubordinated credit
rating of at least Baa3 by Moody’s Investor Services, Inc. or at least BBB- by
Standard & Poor’s Rating Group immediately prior to the assignment.  For the
avoidance of doubt, no Make-Whole Amount (as defined in the Master Confirmation)
will be owing by Party B in connection with any Assignment-Related Repurchase
Date Acceleration.  Upon any such delegation and assumption of obligations, so
long as Goldman Sachs & Co., such other Affiliate of Party A or the Third Party,
as the case may be, shall be responsible for all such obligations, Party A shall
be relieved of and fully discharged from all future obligations hereunder from
and after such delegation and assumption.”

 

12.                               Termination.  Paragraph 15 of the Agreement
shall be amended by replacing the last sentence of subparagraph (a) thereof with
the following:

 

“This Agreement shall terminate and be of no further force and effect (except
with respect to any obligations of Party A and Party B that are otherwise
expressly stated in the Agreement or the Master Confirmation as surviving
termination, which shall, as so specified, survive without prejudice and remain
in full force and effect) on the first date after all obligations under all
Transactions have been paid in full.”

 

13.                               Operational Error.  Notwithstanding any other
provision contained herein, no Event of Default under subparagraphs (i), (ii),
(iii), (iv) or (ix) of paragraph 11 of the Agreement shall have occurred if
(i) the relevant failure to pay or transfer is caused solely by an error or
omission of an operational nature or by the failure of the defaulting party or a
custodian of the defaulting party to make any payment or delivery to the
nondefaulting party after the defaulting party has issued instructions;
(ii) assets were available to such party to make the relevant payment or
transfer when due; and (iii) the defaulting party has upon the non-defaulting
party’s request, provided to the nondefaulting party, written verification of
clauses (i) and (ii) above that is reasonably satisfactory to the nondefaulting
party and (iv) such payment or transfer is made by the close of business on the
day after notice of the relevant failure to pay or transfer is given to the
defaulting party.

 

14.                               Set-off.  Upon the occurrence of an Event of
Default with respect to a party (“X”), the other party (“Y”) will have the right
(but not be obliged) without prior notice to X or any other person to set-off or
apply any obligation of X owed to Y (or any Affiliate of Y) (whether or not
matured or continent and whether or not arising under this Agreement, and
regardless of the currency, place of payment or booking office of the
obligation) against any obligation of Y (or any Affiliate of Y) owed to X
(whether or not matured or contingent and whether or not arising under this
Agreement, and regardless of the currency, place of payment or booking office of
the obligation).  Y will give notice to the

 

16

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other party of any set off effected under this paragraph 14 to Annex I, provided
that any failure to give such notice shall not invalidate the relevant set off.

 

Amounts (or the relevant portion of such amounts) subject to set-off may be
converted by Y into the currency in which the other is denominated at the rate
of exchange at which such party would be able, acting in a reasonable manner and
in good faith, to purchase the relevant amount of such currency.

 

If an obligation is unascertained, Y may in good faith estimate that obligation
and set off in respect of the estimate, subject to such party accounting to
(and, if the set off in respect of the estimate exceeds the ascertained
obligation, settling with and reimbursing) the other when the obligation is
ascertained.

 

Nothing in this paragraph 14 to Annex I will be effective to create a charge or
other security interest.  This paragraph 14 to Annex I will be without prejudice
and in addition to any right of set-off, combination of accounts, lien or other
right to which any party is at any time otherwise entitled (whether by operation
of law, contract or otherwise).

 

15.                               Additional Representation.  Party B represents
that it is a limited liability company formed under the Limited Liability
Company Act of the State of Delaware (a “Delaware LLC”) and agrees to notify
Party A prior to a change in legal structure which would have the effect of
Party B ceasing to exist as a Delaware LLC.

 

17

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This Agreement may be signed in any number of counterparts, each of which shall
be considered an original.

 

 

GOLDMAN SACHS BANK USA

 

STRAFFORD FUNDING LLC

 

 

 

 

 

 

By:

/s/ Meera Bhutta

 

By:

/s/ Gerald F. Stahlecker

Title: Managing Director

 

Name: Gerald F. Stahlecker

Date: 9/11/2014

 

Title: Executive Vice President 

Date: 9/11/2014

 

18

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Annex II

 

Names and Addresses for Communications Between Parties

 

Party A:  Goldman Sachs Bank USA

 

Goldman Sachs Bank USA

Facsimile:

+1 212 428 4534

Email:

gs-sctabs-reporting@ny.email.gs.com

 

 

With a copy to:

 

 

Attention:

Managing Director of PFI Desk

Address:

200 West Street, 6th Floor

 

New York, NY 10282

 

 

Attention:

PFI Middle Office

Address:

200 West Street, 16th Floor

 

New York, NY 10282

 

 

All correspondence shall include the GS Reference Number: SDB4064875388

 

Party B:  Strafford Funding LLC

 

Address: Strafford Funding LLC

 

c/o FS Energy and Power Fund

 

2929 Arch Street, Suite 675

 

Philadelphia, PA 19104

 

 

Attention:

Gerald F. Stahlecker, Executive Vice President

 

 

Phone No.:

(215) 495-1169

Facsimile No.:

(215) 222-4649

Email:

jerry.stahlecker@franklinsquare.com

 

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Goldman Sachs Bank USA | 200 West Street | New York, New York 10282-2198 | Tel:
+1 212 902 1000 | Fax: +1 212 428 9189

 

MASTER CONFIRMATION

 

DATE:

September 11, 2014

 

 

TO:

Strafford Funding LLC (“Counterparty”)

 

 

FROM:

Goldman Sachs Bank USA (“GS”)

 

 

SUBJECT:

Repurchase Facility

 

 

REF. NO.:

SDB4064875388

 

The purpose of this  communication (this “Confirmation”) is to set forth the
terms and conditions of the above-referenced Repurchase Facility entered into on
the Trade Date specified below between GS and Counterparty (the “Facility”). 
This communication constitutes a “Confirmation” as referred to in the Master
Repurchase Agreement specified below.  This communication supersedes and
replaces all prior communications between the parties hereto with respect to the
Facility and Transactions described below.

 

This Confirmation shall supplement, form a part of, and be subject to, the
Master Repurchase Agreement (including the Annexes thereto) dated as of 
September 11, 2014, each as  amended or replaced from time to time
(collectively, the “Master Repurchase Agreement”), between GS and Counterparty. 
This Confirmation shall be read and construed as one with the executed Master
Repurchase Agreement and all other outstanding confirmations between the
parties, so that all such confirmations, this Confirmation and the executed
Master Repurchase Agreement constitute a single Agreement between the parties. 
Except as expressly modified hereby, all provisions contained in, or
incorporated by reference into, the Master Repurchase Agreement shall govern
each Transaction hereunder.  In the event of any inconsistencies between the
Master Repurchase Agreement and this Confirmation, this Confirmation will govern
with respect to the Transactions covered hereby (and the last sentence of
Paragraph 3(b) of the Master Repurchase Agreement shall not apply to any such
Transaction).  In the event of any inconsistencies between Annex A hereto and
this Confirmation with respect to any Transaction, the terms of Annex A with
respect to such Transaction will govern.  System-generated confirmations of
trade may be generated by GS that set forth the trade terms of the individual
repurchase transactions described in this Confirmation; and, if any such
system-generated confirmation of trade are generated and there is any
inconsistency between such system-generated confirmations of trade and this
Confirmation or the Master Repurchase Agreement, then the terms of this
Confirmation or the Master Repurchase Agreement, as the case may be, shall
prevail.  Capitalized terms not defined herein have the meaning ascribed to them
in the Master Repurchase Agreement.

 

This Confirmation evidences a separate transaction with respect to each
Purchased Security specified in Annex A from time to time (each, a
“Transaction”) as if the details specified in Annex A with respect to that
Purchased Security were set out in the Confirmation in full.  Each such
Transaction will have a unique Transaction Number as is set out in Annex A.  The
terms of the Facility and each particular Transaction to which this Confirmation
relates are as follows:

 

(A)                               Terms Related to the Facility

 

1.                                      Basic Terms

 

Buyer

 

GS

 

 

 

Seller

 

Counterparty

 

1

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Trade Date

 

September 11, 2014

 

 

 

Facility Commencement Date

 

September 15, 2014

 

 

 

Ramp-up Period End Date

 

December 15, 2014

 

 

 

Facility End Date

 

September 15, 2017

 

 

 

Maximum Purchased Security Notional Amount

 

USD 400,000,000.00

 

 

 

Aggregate Purchased Security Notional Amount

 

At any time, the sum of the Purchased Security Notional Amounts under all
Transactions for which a Purchase Date has occurred at or prior to such time.

 

 

 

Maximum Aggregate Facility Size

 

USD 225,000,000.00

 

 

 

Eligible Security

 

Gladwyne Funding LLC Floating Rate Notes due December 1, 2024

 

CUSIP No. 376769 AA3

 

For the avoidance of doubt, the Purchased Security for each Transaction under
this Master Confirmation shall be the Eligible Security identified above.

 

 

 

Security Issuer

 

Gladwyne Funding LLC

 

 

 

Haircut Percentage

 

43.75%

 

 

 

Business Days

 

London and New York.

 

 

 

Business Day Convention

 

Modified Following

 

 

 

Calculation Agent

 

GS

 

Unless otherwise expressly stated herein, all determinations by the Calculation
Agent hereunder shall be made in its sole and absolute discretion exercised in
good faith and in a manner generally consistent with its then-current practices.

 

 

 

2.                                      Conditions Precedent to Effectiveness of
the Facility

 

 

 

Conditions

 

It shall be a condition to the effectiveness of this Confirmation, and to the
entry of the first Transaction hereunder, that the following conditions shall
have been satisfied (or waived by GS), in form and substance satisfactory to GS
in its sole and absolute discretion:

 

(a)                                 GS shall have received the documents and
certificates referred to in paragraph 6 to Annex I to the Master Repurchase
Agreement, all in form and substance satisfactory to GS and its counsel in its
sole discretion;

 

(b)                                 GS shall have received the Master Repurchase
Agreement and this Confirmation duly executed by Counterparty, and shall have
received executed copies of the Security Indenture (including the schedules and
exhibits thereto) and all documents, certificates and

 

2

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opinions delivered pursuant thereto, all in form and substance satisfactory to
GS in its sole discretion; and

 

(c)                                  no default or event of default with respect
to Counterparty has occurred under the Master Repurchase Agreement and is then
continuing.

 

 

 

3.                                      Additions of Transactions; Post-Ramp-up
Period Transaction Combination

 

 

 

Additions

 

Subject to the satisfaction of the conditions precedent set forth herein, on any
Business Day during the period from and including the Facility Commencement Date
to but excluding the Ramp-Up Period End Date, Counterparty may, by delivery to
GS of an Addition Notice with a Notice Date not less than five Business Days
prior to the proposed Purchase Date for such Transaction, elect to enter into a
Transaction (an “Addition”) with GS with respect to the Eligible Security (and
GS agrees to enter into such Transaction on the terms and conditions specified
herein), provided in each case that:

 

(a)                                 after giving effect to such Transaction, the
sum of the Initial Purchase Prices of all Transactions for which a Purchase Date
shall have occurred shall not exceed the Maximum Aggregate Facility Size;

 

(b)                                 the terms of such Transaction are in
compliance with the terms and conditions set forth in this Confirmation and the
Master Repurchase Agreement; and

 

(c)                                  the Conditions to Effectiveness with
respect to such Transaction are satisfied.

 

In connection with each Transaction, GS shall notify Counterparty of the
Purchase Date (which shall be a Business Day) and the related Purchase Price.

 

 

 

Addition Notice

 

A notice in substantially the form attached as Annex B duly completed and
executed by Counterparty and setting forth (among other information) the
proposed Purchase Date and the proposed Purchased Security Notional Amount, or a
notice otherwise in form and substance satisfactory to GS.

 

 

 

Notice Date

 

With respect to any Addition Notice, the date on which such Addition Notice is
received by GS (or, if any such day is not a Business Day, the next succeeding
Business Day).

 

 

 

Combination of Transactions

 

On the Business Day immediately following the Ramp-up Period End Date, all
Transactions hereunder shall (automatically and without action by any Person) be
deemed combined into a single Transaction hereunder having (for the avoidance of
doubt):

 

(a)                                 a Purchased Security Notional Amount equal
to the sum of the Purchased Security Notional Amounts of each individual
Transaction hereunder immediately prior to such combination; and

 

3

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(b)                                 a Purchase Price (and an Initial Purchase
Price) equal to the sum of the Purchase Prices (or Initial Purchase Prices) of
each individual Transaction hereunder immediately prior to such combination.

 

GS shall prepare and deliver to Counterparty a revised Annex A (or another form
setting forth information corresponding to that set forth on Annex A),
reflecting the terms of the Transaction after giving effect to such combination,
reasonably promptly following the occurrence thereof.

 

 

 

(B)                               Terms Relating to Each Transaction

 

 

 

1.                                      General Terms

 

 

 

Terms Specified in Annex A

 

The following terms in relation to each Transaction will be specified in Annex A
(by the Calculation Agent):

 

·                                          Transaction Number (to be assigned by
the Calculation Agent)

 

·                                          Security Issuer (which shall be
Gladwyne Funding LLC)

 

·                                          Purchased Security (which shall be
the Eligible Security)

 

·                                          Purchase Date (which shall be the
Business Day on which the Conditions to Effectiveness for such Transaction are
satisfied)

 

·                                          Initial Purchase Price

 

·                                          Purchased Security Notional Amount

 

 

 

Purchased Security Notional Amount

 

For each Transaction, the original par amount of the Eligible Security that is
purchased hereunder in such Transaction (determined without regard to paydowns
on the Eligible Security occurring at any time).

 

 

 

Purchase Price

 

For each Transaction, an amount equal to the product of:

 

(a)                                 the Purchased Security Notional Amount for
such Transaction; and

 

(b)                                 one minus the Haircut Percentage.

 

 

 

Initial Purchase Price

 

For each Transaction, the Purchase Price for such Transaction on the Purchase
Date for such Transaction.

 

 

 

Repurchase Date

 

In relation to the Purchased Security in each Transaction, the earliest to occur
of:

 

(a)                                 the Scheduled Repurchase Date for such
Purchased Security;

 

(b)                                 the date on which the non-defaulting party
exercises its

 

4

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option to declare an Event of Default pursuant to Section 11 of the Master
Repurchase Agreement;

 

(c)                                  the date (if any) on or following the
occurrence of a Credit Event with respect to such Purchased Security specified
in writing by GS to Counterparty;

 

(d)                                 the date (if any) on or following the
occurrence of a Regulatory Change specified in writing by GS to Counterparty;

 

(e)                                  the Assignment-Related Repurchase Date (if
any) specified in writing by Counterparty to GS; and

 

(f)                                   the date (if any) specified in writing by
Counterparty to GS, provided that a Dispute-Related Repurchase Right has
occurred and is continuing on the date of such notice from Counterparty (the
occurrence of the Repurchase Date under this clause (f), a “Dispute-Related
Repurchase Date Acceleration”).

 

 

 

Scheduled Repurchase Date

 

For each Transaction, the Facility End Date.

 

 

 

Regulatory Change

 

Any enactment or establishment of or supplement or amendment to, or change in
any law, regulation, rule, policy or guideline (including any accord or standard
of the Basel Committee on Banking Supervision, the Federal Reserve Board or any
state banking regulatory) or in the application or official interpretation of
any such law, regulation, rule, policy or guideline that, in each case, becomes
effective on or after the Facility Commencement Date and is binding on or
otherwise has an effect on GS and, as a result of which, in the reasonable
determination of GS, for reasons outside GS’s control, GS will (either by
voluntary submission or by applicable law) no longer be permitted to enter into
or maintain any Transaction hereunder or be subject to materially less favorable
regulatory capital treatment with respect to the Transactions by comparison to
the regulatory capital treatment applicable as a result of the entry into this
Facility on the Facility Commencement Date.

 

Before declaring a Repurchase Date due to the occurrence of a Regulatory Change,
GS agrees to take commercially reasonable measures to eliminate or mitigate the
impact of such Regulatory Change (which, for the avoidance of doubt, includes
but is not limited to GS using commercially reasonable efforts to restructure
the Transactions under this Confirmation with Counterparty to make them
compliant (in the case of any such changes that would restrict entry into or
maintenance of Transactions) or more efficient from a regulatory perspective (in
the case of any such changes that would result in less favorable regulatory
capital treatment), provided that Counterparty is under no obligation to agree
to any such restructuring or any other changes to the terms of this Confirmation
or the Master Repurchase Agreement.

 

 

 

Market Value

 

With respect to the Purchased Security (in its entirety) as of any date, an
amount equal to lesser of (a) the Look-Through Market

 

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Value of the Purchased Security at such date and (b) the Maximum Purchased
Security Notional Amount.

 

If on any date the sum of the Purchased Security Notional Amounts for all
Transactions hereunder at such time is for any reason less than the full par
amount of the Purchased Security that has been issued under the Security
Indenture (determined without regard to paydowns on the Purchased Security),
then the Calculation Agent will pro-rate the Look-Through Market Value to
reflect the portion of the Purchased Security that is then the subject of
Transactions hereunder.

 

 

 

Look-Through Market Value

 

With respect to the Eligible Security (in its entirety) as of any date, the sum
of:

 

(a)                                the aggregate Asset Market Related Amounts in
respect of all Underlying Assets and Unsettled Purchase Assets in the Underlying
Portfolio on such date; plus

 

(b)                                 the Cash Value as at such date.

 

 

 

Asset Market Related Amount

 

As of any date:

 

(a)                                 in respect of an Underlying Asset in the
Underlying Portfolio as of such date or an Unsettled Purchase Asset as of such
date (but excluding all Unsettled Sale Assets and all Zero Value Assets), the
product of:

 

(1)                                 the Asset Amortized Amount therefor as of
such date; and

 

(2)                                 the Asset Current Price (expressed as a
percentage) therefor as of such date;

 

(b)                                 in respect of an Unsettled Sale Asset in the
Underlying Portfolio as of such date that is not a Zero Value Asset, the
Settlement Value of such Unsettled Sale Asset as of such date; and

 

(c)                                  in respect of a Zero Value Asset in the
Underlying Portfolio as of such date, zero.

 

 

 

Asset Amortized Amount

 

In respect of an Underlying Asset or Unsettled Purchase Asset on any day, an
amount equal to the principal amount outstanding under such Underlying Asset or
Unsettled Purchase Asset on such day (after giving effect on a pro-rata basis to
any repurchase, repayment or tender offer in respect of that Underlying Asset or
Unsettled Purchase Asset).

 

 

 

Asset Current Price

 

In respect of an Underlying Asset or Unsettled Purchase Asset on any date, the
bid side market value of that Underlying Asset or Unsettled Purchase Asset
(expressed as a percentage of par of the Underlying Asset Notional Amount) but
excluding any accrued interest, as determined by the Calculation Agent and
notified to the parties by the Calculation Agent on each Business Day.

 

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Underlying Asset Notional Amount

 

In respect of any Underlying Asset or any Unsettled Purchase Asset, the full
principal amount of the Underlying Asset or Unsettled Purchase Asset, as
applicable, owned by the Security Issuer or Committed to be owned by the
Security Issuer, as the case may be.

 

 

 

Cash Value

 

As of any date, an amount, determined by the Calculation Agent, equal to:

 

(a)                                 the aggregate amount of cash standing to the
credit of the Security Issuer Account (excluding any accrued and unpaid
interest); minus

 

(b)                                 the aggregate Settlement Value for all
Unsettled Purchase Assets as at such date (if any).

 

 

 

Security Issuer Account

 

The “Principal Collection Account”, as defined in the Security Indenture.

 

 

 

Underlying Asset

 

Each loan or bond that is owned by the Security Issuer from time to time and is
identified in the Schedule of Collateral Obligations (as defined in the Security
Indenture) set forth on Schedule A to the Security Indenture and amended from
time to time.

 

 

 

Private Underlying Asset

 

Each Underlying Asset or Proposed Underlying Asset that has been designated a
“Private Collateral Obligation” pursuant to Section 12.2(a)(ii) of the Security
Indenture.

 

 

 

Non-Private Underlying Asset

 

Each Underlying Asset and Proposed Underlying Asset that is not a Private
Underlying Asset.

 

 

 

Underlying Portfolio

 

The portfolio of Underlying Assets or Unsettled Purchase Assets, as applicable,
owned by the Security Issuer or Committed to be owned by the Security Issuer
from time to time.

 

 

 

Collateral Manager

 

The Collateral Manager as defined in the Security Indenture.

 

 

 

Proposed Underlying Asset

 

A loan or bond that the Collateral Manager has proposed to be acquired by the
Security Issuer that satisfies the Reinvestment Criteria at the time of such
proposal.

 

 

 

Unsettled Purchase Asset

 

As of any date, an asset that the Security Issuer has Committed to acquire and
in respect of which the purchase by the Security Issuer has not yet settled.

 

 

 

Unsettled Sale Asset

 

As of any date, an Underlying Asset that the Security Issuer has Committed to
sell and in respect of which the sale by the Security Issuer has not yet
settled.

 

 

 

Zero Value Asset

 

An Underlying Asset at any time:

 

(a)                                 in respect of which there has occurred a
Zero Value Event;

 

(b)                                 that did not satisfy the Reinvestment
Criteria at the time the Security Issuer Committed to acquire such Underlying
Asset (unless such Underlying Asset, after such date, subsequently satisfies the
Reinvestment Criteria);

 

7

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(c)                                  that has been the subject of a
Restructuring or a Material Modification if, in either case:

 

(1)                                 immediately following such Restructuring or
Material Modification, such Underlying Asset fails to satisfy the Reinvestment
Criteria (unless such Underlying Asset, after such date, subsequently satisfies
the Reinvestment Criteria); or

 

(2)                                 the GS Consent Condition is not satisfied
with respect to such Restructuring or Material Modification.

 

 

 

Restructuring

 

With respect to an Underlying Asset:

 

(a)                                 if such Underlying Asset is a Non-Private
Underlying Asset, a “Restructuring” (as defined in Section 4.7 of the Credit
Definitions) has occurred in respect of the Underlying Asset; and

 

(b)                                 if such Underlying Asset is a Private
Underlying Asset, a “Restructuring” (as defined in Section 4.7 of the Credit
Definitions) has occurred in respect of the Underlying Asset (except that, for
such purposes, Section 4.7(a)(iv) of the Credit Definitions shall be amended to
include the following at the end thereof “; or a release of liens or other
credit support for the Obligation; or any other change that materially reduces
the level of subordination enhancing the Obligation”).

 

For purposes of this Confirmation, “Multiple Holder Obligation” will not be
applicable in determining whether any such Restructuring occurs.

 

 

 

Material Modification

 

A “Specified Change” (as defined in the Security Indenture) to an Underlying
Asset.

 

 

 

Settlement Value

 

As of any date:

 

(a)                                 in respect of any Unsettled Purchase Asset,
the aggregate consideration to be paid by the Security Issuer to acquire such
Unsettled Purchase Asset; and

 

(b)                                 in respect of any Unsettled Sale Asset, the
contractual sale price for such Unsettled Sale Asset (expressed in USD) to be
received by the Security Issuer from the purchaser of such Underlying Asset;
provided that:

 

(1)                                 if the sale of such Unsettled Sale Asset
remains unsettled for more than 30 calendar days, then:

 

(x)                                 from time to time upon request from GS
Counterparty shall provide to GS all information known to Counterparty
concerning the facts and circumstances causing such delay in settlement and

 

8

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cooperate with GS in discussing with the Security Issuer and the Collateral
Manager strategies for accelerating settlement of such sale; and

 

(y)                                 if the purchaser of such Unsettled Sale
Asset is an affiliate of Counterparty and such delay in settlement is not solely
a result of operational or logistical issues, Counterparty and GS shall work
together in good faith to determine the Settlement Value for such Unsettled
Purchase Asset; and

 

(2)                                 if the sale of such Unsettled Sale Asset
continues to remain unsettled for more than 90 calendar days, then the
Settlement Value for such Unsettled Sale Asset will be determined by the
Calculation Agent.

 

 

 

Credit Event

 

Defaulted Asset Sale Failure

 

Security Event of Default

 

As used herein:

 

“Defaulted Asset Sale Failure” shall mean the Security Issuer’s failure to
Commit to sell any Defaulted Obligation  (as defined in the Security Indenture)
within 30 days of such Underlying Asset becoming a Defaulted Obligation,
provided that the failure to Commit to sell any Defaulted Obligation within 30
days of such Underlying Asset becoming a Defaulted Obligation shall not result
in a Defaulted Asset Sale Failure for so long as the Security Issuer continues
to use commercially reasonable efforts to continue to sell such Defaulted
Obligation after such 30 day period.

 

“Security Event of Default” shall mean, with respect to any Purchased Security,
an event of default (however designated) in the Security Indenture.

 

“Security Indenture” shall mean the indenture or other underlying instruments
governing the Purchased Security.

 

 

 

Zero Value Event

 

In respect of any Underlying Asset, the occurrence of any one or more of the
following:

 

Bankruptcy

 

Failure to Pay

 

As used herein:

 

“Bankruptcy” with respect to an Underlying Asset shall mean a “Bankruptcy” (as
defined in the 2003 ISDA Credit Derivatives Definitions as published by the
International Swap and Derivatives Association, Inc. (the “Credit Definitions”))
with respect to the

 

9

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related obligor.

 

“Failure to Pay” with respect to an Underlying Asset shall mean, after the
expiration of any applicable grace period (however defined under the terms of
the Underlying Asset), the occurrence of a non-payment of a payment of interest
Scheduled to be Due or principal on the Underlying Asset when due, in accordance
with the terms of the Underlying Asset at the time of such failure.

 

“Scheduled to be Due” shall mean, in the case of an interest payment, that such
interest payment would accrue during the related calculation period for the
Underlying Asset.

 

 

 

Commitment

 

A binding commitment pursuant to FSEP’s and/or the Collateral Manager’s then
current policies and procedures to purchase or sell an Underlying Asset between
the buyer and seller of such Underlying Asset entered into pursuant to customary
documents in the relevant market.  The terms “Commit” and “Committed” have
correlative meanings.

 

 

 

Reinvestment Criteria

 

The criteria set forth in the Security Indenture (including, without limitation,
the criteria set forth in the definition of “Collateral Obligation” set forth
therein) that, pursuant to the terms set forth in the Security Indenture are
required to be satisfied as a condition to the purchase of an Underlying Asset
(other than any consent of one or more holders of the Eligible Security).

 

 

 

GS Consent Condition

 

For any Underlying Asset proposed to be acquired by the Security Issuer or any
Underlying Asset subject to a Restructuring or Material Modification after it
was acquired by the Security Issuer, a condition satisfied if GS consents to
such acquisition, Restructuring or Material Modification, as applicable (which
GS may withhold in its sole and absolute discretion).

 

 

 

2.                                      Conditions to Effectiveness

 

 

 

Conditions to Effectiveness

 

The effectiveness of each Transaction shall be subject to the satisfaction of
each of the conditions precedent for such Transaction specified in the Master
Repurchase Agreement and the satisfaction of each of the following additional
conditions:

 

(a)                                 a valid Addition Notice has been timely
delivered to GS;

 

(b)                                 in the case of the first Transaction
hereunder:

 

(1)                                 the “Closing Date” under and as defined in
the Security Indenture shall have occurred, and the Seller shall have acquired a
portion of the Eligible Security in an amount equal to the Purchased Security
Notional Amount for such Transaction; and

 

(2)                                 Counterparty shall have initiated the
transfer to GS of a par amount of the Eligible Securities equal to the Purchased
Security Notional Amount

 

10

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for such Transaction pursuant to Paragraph 3(a) of the Master Repurchase
Agreement for scheduled settlement substantially in accordance with the
then-current market practice in the principal market for such Security;

 

(c)                                  in the case of each subsequent Transaction
hereunder, the related “Increase” under the Security Indenture shall have
occurred, and Counterparty shall have initiated the transfer to GS of a par
amount of the Eligible Securities equal to the Purchased Security Notional
Amount for such Transaction pursuant to Paragraph 3(a) of the Master Repurchase
Agreement for scheduled settlement substantially in accordance with the
then-current market practice in the principal market for such Security;

 

(d)                                 no default or event of default with respect
to Counterparty has occurred under the Master Repurchase Agreement and is then
continuing; and

 

(e)                                  no Margin Deficit exists under the Master
Repurchase Agreement.

 

GS shall prepare and deliver to Counterparty a revised Annex A (or another form
setting forth information corresponding to that set forth on Annex A),
reflecting the terms of such Transaction, reasonably promptly following the
satisfaction of the Conditions to Effectiveness for such Transaction.

 

 

 

3.                                      Financing Fees

 

 

 

Ramp-Up Period Financing Fee Payments

 

In lieu of accrual and payment of Pricing Differential in respect of the
Transactions, on the initial Financing Fee Payment Date, Counterparty shall pay
to GS an amount in USD (the initial “Financing Fee Payments”) equal to:

 

(a)                                 the Initial Purchase Price for each
Transaction; multiplied by

 

(b)                                 the sum of (1) the Floating Rate as of the
Financing Fee Reset Date for such Financing Fee Period for such Transaction plus
(2) the Spread; multiplied by

 

(c)                                  the Financing Fee Day Count Fraction.

 

 

 

Spread

 

2.75% per annum.

 

 

 

Post-Ramp-Up Period Financing Fee Payments

 

In lieu of accrual and payment of Pricing Differential in respect of all of the
Transactions collectively (and without duplication of any Financing Fees
theretofore paid as part of the Repurchase Price of any Purchased Securities),
on each Financing Fee Payment Date (other than the initial Financing Fee Payment
Date), Counterparty shall pay to GS an amount in USD (the subsequent “Financing
Fee Payments”) equal to:

 

11

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(a)                                 the Maximum Aggregate Facility Size;
multiplied by

 

(b)                                 the sum of (1) the Floating Rate as of the
Financing Fee Reset Date for such Financing Fee Period plus (2) the Average
Applicable Margin for such Financing Fee Period; multiplied by

 

(c)                                  the Financing Fee Day Count Fraction.

 

 

 

Financing Fee Payment Dates

 

Each date that is 2 Business Days after each Financing Fee Period End Date.

 

 

 

Financing Fee Period End Dates

 

(a)                                 Each three-month anniversary of the Facility
Commencement Date to, but excluding, the Repurchase Date; and

 

(b)                                 the Repurchase Date.

 

 

 

Financing Fee Period

 

(a)                                 For each Transaction having a Purchase Date
prior to the Ramp-Up Period End Date, initially, the period from, and including,
the Purchase Date for such Transaction to, but excluding, the initial Financing
Fee Period End Date; and

 

(b)                                 for each Transaction (including those having
an initial Financing Fee Period under clause (a) above), each period from, and
including, the prior Financing Fee Period End Date to, but excluding, the
current Financing Fee Period End Date.

 

 

 

Floating Rate

 

For any Financing Fee Period, three-month USD LIBOR, except that linear
interpolation will apply for Financing Fee Periods commencing prior to the
Ramp-Up Period End Date.

 

“USD LIBOR” for any Financing Fee Period shall be the rate for deposits in U.S.
Dollars which appears on the Reuters Screen LIBOR01 (or a successor page) at
11:00 a.m. London time on the date that is two London Business Days prior to the
first day of such Financing Fee Period (or, if such rate does not appear
thereon, the arithmetic mean of the offered quotations of four major banks in
London designated by the Buyer to prime banks in the London interbank market for
U.S. Dollar deposits in Europe) having a maturity of three months.

 

 

 

London Business Day

 

Any day on which commercial banks are open for general business in London.

 

 

 

New York Business Day

 

Any day on which commercial banks are open for general business in New York.

 

 

 

Average Applicable Margin

 

For any Financing Fee Period, the sum of the Applicable Margin for each day in
such Financing Fee Period divided by the number of days in such Financing Fee
Period.

 

 

 

Applicable Margin

 

For any day, the product of:

 

(a)                                 the Spread; and

 

(b)                                 the ratio on such day of:

 

12

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(1)                                 the Aggregate Purchased Security Notional
Amount minus the Adjusted Aggregate Reduction Amount as of such day; to

 

(2)                                 the Aggregate Purchased Security Notional
Amount as of such day.

 

 

 

Financing Fee Day Count Fraction

 

Actual/360

 

 

 

Financing Fee Reset Dates

 

For each Transaction, the first day of each Financing Fee Period for such
Transaction

 

 

 

Adjusted Aggregate Reduction Amount

 

For any day, the lesser of:

 

(a)                                 the Aggregate Reduction Amount in effect on
such day; and

 

(b)                                 the Cash Value as of such day.

 

 

 

Reduction Amounts

 

If after the Ramp-Up Period End Date the Collateral Manager proposes a Proposed
Underlying Asset for which at least two Pricing Sources are available and GS
notifies Counterparty (including by telephone or email) that:

 

(x)                                 GS has determined (in its sole and absolute
discretion) that such Proposed Underlying Asset is a Non-Private Underlying
Asset; and

 

(y)                                 the GS Consent Condition is not satisfied
with respect to such Proposed Underlying Asset,

 

such event will constitute a “Rejection Event” and the Proposed Underlying Asset
will constitute a “Rejected Underlying Asset” unless the GS Consent Condition is
subsequently satisfied with respect to such Proposed Underlying Asset within
three Business Days after GS receives a Reduction Notice for the related
Reduction Event as described below.

 

If the GS Consent Condition is not satisfied with respect to any Restructuring
or any Material Modification of an Underlying Asset, such event will constitute
a “Rejection Event” and the Underlying Asset will also constitute a “Rejected
Underlying Asset” unless the GS Consent Condition is subsequently satisfied with
respect to such Restructuring or Material Modification within three Business
Days after GS receives a Reduction Notice for the related Reduction Event as
described below.

 

Each time three unique and consecutive Rejection Events occur (each with respect
to Underlying Assets or Proposed Underlying Assets issued by obligors
unaffiliated with one another), such occurrence will constitute a “Reduction
Event”, whereupon Counterparty may, by written notice to GS (each such notice, a
“Reduction Notice”), declare a “Reduction Amount” (with effect from the date of
such Reduction Notice, each such date a “Reduction Date”) with respect to such
Reduction Event equal to

 

13

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the average of the Reduction Calculation Amounts of the Rejected Underlying
Assets relating to such Reduction Event (determined, for the avoidance of doubt,
taking into account the portion of such Rejected Underlying Asset that is or
would have been acquired by the Security Issuer), provided that the Reduction
Amount related to such Reduction Event shall be deemed reduced to zero (with
effect from the date of the related Reduction Notice) if, within three Business
Days following the related Reduction Date, the GS Consent Condition is
subsequently satisfied with respect to one or more of the Rejected Underlying
Assets related to such Reduction Event.

 

For the avoidance of doubt, multiple Reduction Events may occur during the term
of this Agreement entitling Counterparty to declare Reduction Amounts with
respect to each such Reduction Event (the sum of all Reduction Amounts at any
time, the “Aggregate Reduction Amount” at such time).

 

If (at any time after any Reduction Event) the Collateral Manager proposes a
Proposed Underlying Asset and GS notifies Counterparty (including by telephone
or email) that the GS Consent Condition is satisfied with respect to such
Proposed Underlying Asset (each such date, an “Acceptance Date”), or the GS
Consent Condition is satisfied with respect to a related Restructuring or
Material Modification, the Aggregate Reduction Amount will be reduced (but not
below zero) (with effect from such Acceptance Date) by an amount equal to the
Reduction Calculation Amount of such Proposed Underlying Asset or Underlying
Asset (determined, for the avoidance of doubt, taking into account the portion
of such Proposed Underlying Asset or Underlying Asset, as the case may be, that
is or would have been acquired by the Security Issuer).

 

 

 

Reduction Calculation Amount

 

For any Rejection Event relating to a Proposed Underlying Asset that is a
Rejected Underlying Asset, the proposed purchase price of such Rejected
Underlying Asset.

 

For any Rejection Event relating to a Restructuring or Material Modifications,
the then-prevailing market value of the related Rejected Underlying Asset.

 

 

 

Pricing Source

 

For any Underlying Asset or Proposed Underlying Asset, a market maker in the
relevant market, LoanX or other pricing sources reasonably acceptable to GS.

 

 

 

4.                                      Make-Whole Payment

 

 

 

Make-Whole Payment Requirement

 

If the Repurchase Date for the Transactions is accelerated for any reason (other
than the occurrence of a Regulatory Change, the occurrence of an
Assignment-Related Repurchase Date Acceleration or the occurrence of a
Dispute-Related Repurchase Date Acceleration) (a “Repurchase Date
Acceleration”), then Counterparty shall pay to GS, within five Business Days of
the date on which such acceleration occurs, an amount equal to the Make-Whole
Amount.

 

14

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Make-Whole Amount

 

In connection with a Repurchase Date Acceleration (if any), an amount equal to
the aggregate amount of Financing Fee Payments that would be payable to GS
hereunder during the period from and including the date on which such Repurchase
Date Acceleration occurs to but excluding the Scheduled Repurchase Date
(determined as if the Floating Rate were equal to zero), discounted to present
value, all as calculated by the Calculation Agent.

 

 

 

5.                                      Application of Principal Payments.

 

 

 

Cash Principal Payment Provisions

 

On each date on which GS receives a payment (other than a payment of interest)
on the Purchased Security in cash and in immediately available funds (each, a
“Cash Principal Payment”), GS shall reduce the Repurchase Price for such
Purchased Security by an amount equal to the related Repurchase Price Reduction
Amount.

 

On or reasonably promptly following the second Business Day after GS’s receipt
of a Cash Principal Payment GS shall use commercially reasonable efforts to
remit to Counterparty an amount equal to the related Counterparty Application
Amount.

 

 

 

Repurchase Price Reduction Amount

 

With respect to any Cash Principal Payment, an amount equal to the product of:

 

(a)                                 such Cash Principal Payment; and

 

(b)                                 one minus the Haircut Percentage.

 

 

 

Counterparty Application Amount

 

With respect to any Cash Principal Payment, an amount equal to the product of:

 

(a)                                 such Cash Principal Payment; minus

 

(b)                                 the Repurchase Price Reduction Amount for
such Cash Principal Payment.

 

 

 

6.                                      Dispute Resolution, Etc.

 

 

 

Dispute Resolution

 

If Counterparty in good faith disputes the Asset Market Related Amounts of one
or more Underlying Assets as determined by the Calculation Agent as of any
Business Day and, accordingly, Counterparty wishes to dispute the calculation of
a Margin Deficit or an Excess Cure Collateral Refund Amount (each, a “Dispute”),
then for so long as such Dispute is continuing (and provided that no Event of
Default, Monetary Default or Other Material Default with respect to Counterparty
occurs or is then continuing), upon the request of Counterparty, GS and
Counterparty will work together in good faith to resolve such Dispute, it being
understood that Counterparty shall at all times during the pendency of each
Dispute be required to comply with its obligations under Paragraph 4 of the
Master Repurchase Agreement based upon the determinations of the Asset Market
Related Amounts of the Underlying Assets as determined by the Calculation Agent.

 

15

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GS agrees that, if any Dispute continues unresolved for more than five Business
Days, a “Dispute-Related Repurchase Right” shall be deemed to exist until the
earlier to occur (if any) of (a) the resolution of such Dispute by the parties
and (b) the occurrence of an Event of Default, a Monetary Default or an Other
Material Default  with respect to Counterparty.

 

The provisions set forth in this Dispute Resolution section supersede all
inconsistent provisions in the Master Repurchase Agreement.

 

 

 

Monetary Default

 

A default by a party in the payment of money hereunder or under the Master
Repurchase Agreement when due (determined without regard to any grace period
otherwise specified), or a default by such party in the performance or
observance of any other obligation hereunder or under the Master Repurchase
Agreement (determined without regard to any grace period otherwise specified)
that by its terms can be cured solely by the payment of money.

 

 

 

Other Material Default

 

A default by a party in the performance or observance of any material obligation
of that party hereunder or under the Master Repurchase Agreement that, with the
giving of notice or lapse of time or both, would become an Event of Default with
respect to such party.

 

 

 

7.                                      Additional Provisions

 

 

 

Restriking Terms

 

If for any period of five or more consecutive Business Days the net amount of
cash margin held by GS under Paragraph 4 of the Master Repurchase Agreement
exceeds 10% of the sum of the then-current Repurchase Prices hereunder, then for
so long as such condition is continuing (and provided that no Event of Default
or event that, with the giving of notice or lapse of time or both, would become
an Event of Default with respect to Counterparty occurs or is then continuing),
upon the request of Counterparty, GS and Counterparty will work together in good
faith to restrike one or more of the economic terms of the Transactions under
the Master Repurchase Agreement with a view to reducing or eliminating the
amount of cash margin then required to be posted to GS thereunder, it being
understood that, in connection with any such restriking, GS may require that
changes to other economic terms of the Transactions be made, and that changes to
the terms of the Purchased Securities be made, in order to preserve the overall
economic effect of the Transactions for GS.

 

 

 

Limit on Optional Redemptions

 

GS agrees that, for so long as any Transaction is outstanding under this
Confirmation (unless an Event of Default with respect to Counterparty has
occurred and is then continuing), it will not give the Security Issuer or the
Trustee under the Security Indenture any direction to effect a redemption (in
whole or in part) of the Purchased Securities.

 

 

 

Counterparty Note Restriction

 

Counterparty agrees that, for so long as any Transaction is outstanding under
this Confirmation, it shall not at any time (1) hold any portion of the
Purchased Securities or (2) transfer any

 

16

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portion of the Purchased Securities (other than pursuant to the provisions
hereof and of the Master Repurchase Agreement).

 

 

 

No Substitution Rights

 

Seller may not substitute other Securities for the Purchased Security, unless
otherwise agreed to by Purchaser in writing in its sole and absolute
discretion. 

 

 

 

Indemnity

 

Counterparty shall indemnify GS and each Related Party (as defined below) (each
such person being referred to herein as an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees and reasonable out-of-pocket
expenses of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Master Repurchase Agreement, this Confirmation or
any agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or thereunder or the
consummation of the Transaction or any other transactions contemplated hereby or
thereby or (ii) any claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses have resulted from the
bad faith, gross negligence or willful misconduct of any Indemnitee or a breach
of the Master Repurchase Agreement or this Confirmation by GS.

 

Notwithstanding the foregoing, in no event shall Counterparty be liable for any
indirect, consequential, incidental, exemplary or punitive damages, opportunity
cost or lost profits (other than as set forth in Paragraph 11 of the Master
Repurchase Agreement).

 

The obligations of Counterparty in this Indemnity section shall survive
termination of the Transaction and any termination of the Master Repurchase
Agreement.

 

As used herein “Related Party” means GS’s affiliates and the respective
directors, officers, employees, agents and advisors of GS and GS’s affiliates.

 

 

 

Taxes

 

Each of the parties hereto intends and agrees to treat the Transaction, for
United States income tax purposes, as a secured loan made by Buyer to Seller. 
Consistent with the Transaction being treated for U.S. federal income tax
purposes as a secured loan made by Buyer to Seller, Buyer agrees to provide
Seller with a Form 1099-INT (or any successor form) with respect to interest
paid to Buyer and passed on to Seller pursuant to Paragraph 5 of the Master
Repurchase Agreement.

 

 

 

Certain Voting Rights

 

If GS has the right to exercise any Specified Voting Right in relation to any
consent, vote, direction proposal or resolution arising at any time while this
Transaction is outstanding, then:

 

(a)                                 GS shall notify Counterparty thereof in
writing after its

 

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receipt of notice thereof or GS otherwise becomes aware thereof;

 

(b)                                 GS shall not exercise such Specified Voting
Right unless and until directed to do so by Counterparty; and

 

(c)                                  GS shall either (x) follow Counterparty’s
written instructions as to the manner and timing of exercising such Specified
Voting Right or (y) procure that Counterparty may exercise such Specified Voting
Right directly,

 

provided that, without prejudice to clause (b), GS shall have no obligation to
take any action in relation to any direction from Counterparty with respect to
the exercise of any Specified Voting Right if doing so could expose GS to
liability, could violate any rule or regulation applicable to GS or any
interpretation thereof (whether or not having the force of law), could cause
reputational damage to GS or otherwise cause GS to otherwise incur any expenses
not paid by Counterparty in a manner satisfactory to GS.

 

Notwithstanding the foregoing, GS may exercise at any time and from time to time
all other rights given to it as a holder of the Purchased Security as if this
Transaction were not outstanding (including, without limitation, all rights to
exercise remedies upon the occurrence of an event of default or an acceleration
event, all rights to give or refrain from giving consents to amendments,
modifications, supplements and waivers to the Security Indenture and the other
documents executed and delivered thereunder or in connection therewith, all
rights to consent or refrain from giving consent to changes to the assets
purchased or sold by the Security Issuer, and all rights to otherwise give
directions or refrain from giving directions under the Purchased Security), in
each case other than the Specified Voting Rights.

 

 

 

Specified Voting Right

 

The right of a holder of the Purchased Security (in its capacity as such) to
participate in the selection or removal of a general partner, managing member,
member of the board of directors or trustees, investment manager, investment
adviser, or commodity trading advisor of the Security Issuer (excluding the
rights of a creditor to exercise remedies upon the occurrence of an event of
default or an acceleration event).

 

 

 

Expense Reimbursement

 

GS agrees to reimburse Counterparty for payment of out-of-pocket costs incurred
by Counterparty in connection with Additions hereunder through the Ramp-up
Period End Date, promptly following presentation of an invoice therefor, in an
amount up to the lesser of:

 

(a)                                 the product of (1) USD 10,000; and (2) the
number of Additions that occurred from the Facility Commencement Date through
the Ramp-up Period End Date; and

 

(b)                                 USD 50,000.

 

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8.                                      Payment Details, Etc.

 

 

 

Payments to GS

 

In accordance with GS’s prior written instructions as set forth below or as
otherwise delivered to Counterparty. 

 

 

 

GS Payment Details

 

In accordance with GS’s written instructions as delivered to Counterparty.

 

 

 

GS Inquiries

 

Goldman Sachs Bank USA

Facsimile:                                +1 212 428 4534

Email:                                                  
gs-sctabs-reporting@ny.email.gs.com

 

 

 

GS Notices

 

Goldman Sachs Bank USA

Facsimile:                                +1 212 428 4534

Email:                                                  
gs-pfi-mo-confidential@gs.com

 

With a copy to:

 

Attention:                                Managing Director of PFI Desk

Address:                                        200 West Street, 6th Floor

                                                                                      
New York, NY 10282

 

Attention:                                PFI Middle Office

Address:                                        200 West Street, 16th Floor

                                                                                      
New York, NY 10282

 

All correspondence shall include the GS Reference Number:

SDB4064875388

 

 

 

Payments to Counterparty

 

In accordance with Counterparty’s written instructions as set forth below or
otherwise delivered to GS.  GS shall make no payments (and have no obligation to
make any payment hereunder) without having received (i) such written
instructions and (ii) a fully executed facsimile copy of this Confirmation or
other written acceptance of the terms hereof.

 

 

 

Counterparty Payment Details

 

In accordance with Counterparty’s written instructions as delivered to GS. 

 

 

 

Counterparty Inquiries

 

In accordance with Counterparty’s written instructions as delivered to GS

 

(C)                               Miscellaneous.

 

1.                                      Amendments, Etc.  Except as otherwise
expressly stated herein, this Confirmation may not be amended except in writing
signed by both parties.

 

2.                                      Execution.  This Confirmation may be
executed in counterparts (including by facsimile or electronic transmission),
each of which counterpart, when so executed and delivered, shall be deemed to be
an original and all of which counterparts, taken together, shall constitute one
and the same agreement.

 

3.                                      Legal Requirements.  Buyer shall not be
required to purchase the Purchased Security if any such purchase shall result in
any violation of applicable rules or regulations, including, but not limited to,
rules applicable to new issuances of securities.

 

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(D)                               Additional Acknowledgements, Representations
and Agreements:

 

1.                                      Counterparty hereby represents to and
acknowledges and agrees with GS that:

 

(i)                                     It has consulted with its own tax
advisors to the extent that it has deemed necessary, and it has made its own
decisions regarding entering into the Facility based upon its own judgment and
upon any advice from such advisors as it has deemed necessary and not upon any
view expressed by GS or any of its affiliates or agents.

 

(ii)                                  The fair value of the assets of
Counterparty will exceed the debt and liabilities, subordinated, contingent and
otherwise of Counterparty, and Counterparty will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.

 

2.                                      Each party acknowledges and agrees that:

 

(i)                                     Unless identified as an underwriter or
arranger in an offering document relating to a Purchased Security, Underlying
Asset or Unsettled Purchase Asset (each, an “Instrument”), GS and its affiliates
have played no role in structuring or arranging any Instrument or in negotiating
or establishing the terms of such Instrument.  Whether or not GS or its
affiliates are identified as an underwriter or arranger in any offering document
relating to an Instrument, any and all information that may have been or is in
the future provided by GS to Counterparty with respect to any Instrument is not
being furnished by GS in the capacity of an underwriter or arranger in relation
to the Instrument in connection with the relevant Transaction, and GS accepts no
responsibility or liability therefor.

 

(ii)                                  The contents of this Confirmation and the
other agreements relating to the Facility are confidential and shall not be
disclosed to any third party, and neither party shall make any public
announcement relating to the Facility without consent of the other party; except
that disclosure of this Confirmation and the terms of the Facility is permitted
(A) where required or appropriate in response to any summons, subpoena, or
otherwise in connection with any litigation or regulatory inquiry or to comply
with any applicable law, order, regulation, ruling, or disclosure requirement,
including without limitation, any requirement of any regulatory body or stock
exchange where the shares of such disclosing party are listed, as determined by
the disclosing party in good faith following consultation with the other party
hereto, (B) to officers, directors, employees, attorneys, accountants and
advisors of the parties or their affiliates who are subject to a duty of
confidentiality to the disclosing party or such affiliate and otherwise have a
need to know such information, (C) to rating agencies and (D) where the
information has otherwise become public (other than as a result of a breach of
this subparagraph). Notwithstanding the foregoing or any other provision in this
Confirmation or any other document, GS and Counterparty (and each employee,
representative, or other agent of GS or Counterparty) may each disclose to any
and all persons, without limitation of any kind, the U.S. tax treatment and U.S.
tax structure of the transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to them relating to such U.S.
tax treatment and U.S. tax structure (as those terms are used in Treasury
Regulations under Sections 6011, 6111 and 6112 of the U.S. Internal Revenue Code
of 1986, as amended (the “Code”)), other than any information for which
nondisclosure is reasonably necessary in order to comply with applicable
securities laws.

 

(iii)                               As of the Facility Commencement Date and so
long as either party has or may have any obligation under any Transaction, it is
not and will not be an “employee benefit plan” (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)),
subject to Title I of ERISA, a “plan” (as defined in Section 4975(e) of the
Code), subject to Section 4975 of the Code or an entity whose underlying assets
include the assets of any such plan by reason of 29 CFR 2510.3-101, Section
3(42) of ERISA or otherwise.

 

20

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(iv)                              GS and any of its affiliates may deal in any
Instrument and may accept deposits from, make loans or otherwise extend credit
to, and generally engage in any kind of commercial or investment banking or
other business with any issuer of or obligor on any Instrument, any affiliate
thereof, any other person or entity having obligations relating to any Security
Issuer or any such issuer or obligor and may act with respect to such business
in the same manner as if any Transaction did not exist and may originate,
purchase, sell, hold or trade, and may exercise consensual or remedial rights in
respect of, obligations, securities or other financial instruments of, issued by
or linked to the Security Issuer or any such issuer or obligor, regardless of
whether any such action might have an adverse effect on such Security Issuer,
such issuer or such obligor, the value of the related Instrument or the position
of the other party to such Transaction or otherwise.

 

(v)                                 Except as otherwise expressly provided
herein, each party and its affiliates and the Calculation Agent may, whether by
virtue of the types of relationships described herein or otherwise, at the date
hereof or at any time hereafter, be in possession of information regarding any
Security Issuer or any issuer of or obligor on any Instrument, or any affiliate
thereof, that is or may be material in the context of such Transaction and that
may or may not be publicly available or known to the other party.  In addition,
except as expressly provided herein, this Confirmation does not create any
obligation on the part of such party and its affiliates to disclose to the other
party any such relationship or information (whether or not confidential).

 

[remainder of page intentionally blank]

 

21

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Counterparty hereby agrees (a) to check this Confirmation (Reference No.:
SDB4064875388) carefully upon receipt so that errors or discrepancies can be
promptly identified and rectified and (b) to confirm that the foregoing
correctly sets forth the terms of the agreement between the parties with respect
to the particular Transaction to which this Confirmation relates, by manually
signing this Confirmation and providing the other information requested herein
and returning an executed copy to PFI Middle Office, facsimile No. +1 212 428
4534.

 

 

 

Very truly yours,

 

 

 

 

 

GOLDMAN SACHS BANK USA

 

 

 

 

 

 

 

 

 

By:

/s/ Meera Bhutta

 

 

 

Name: Meera Bhutta

 

 

 

Title: Managing Director

 

 

 

 

 

 

AGREED AND ACCEPTED BY:

 

 

 

 

 

STRAFFORD FUNDING LLC

 

 

 

 

 

 

 

 

 

By:

/s/ Gerald F. Stahlecker

 

 

 

Name: Geralf F. Stahlecker

 

 

 

Title: Executive Vice President

 

 

 

22

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Annex A

 

Repurchase Transactions

 

Transaction
Number

 

Security
Issuer

 

Purchased
Security

 

Purchase
Date

 

Initial
Purchase
Price

 

Purchased
Security
Notional
Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective as of                     ,         :

 

GOLDMAN SACHS BANK USA

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

STRAFFORD FUNDING LLC

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

23

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Annex B

 

Form of Addition Notice

 

To:

Goldman Sachs Bank USA

 

Facsimile:

+1 212 428 4534

 

Email:

gs-sctabs-reporting@ny.email.gs.com

 

 

 

 

With a copy to:

 

 

 

 

 

Attention:

Managing Director of PFI Desk

 

Address:

200 West Street, 6th Floor

 

 

New York, NY 10282

 

 

 

 

Attention:

PFI Middle Office

 

Address:

200 West Street, 16th Floor

 

 

New York, NY 10282

 

GS Reference Number: SDB4064875388

 

Date:                  [                         ], 20

 

Ladies and Gentlemen:

 

We refer to the Confirmation, dated as of September 11, 2014 (the
“Confirmation”) to the Master Repurchase Agreement (including the Annexes
thereto) dated as of September 11, 2014, each as amended or replaced from time
to time, between Goldman Sachs Bank USA and Strafford Funding LLC.  Terms
defined therein shall have the same respective meanings herein.

 

This notice is an Addition Notice for the purposes of the Confirmation.  For the
proposed Transaction:

 

(i)                                     the proposed Purchase Date is
[                        ];

 

(ii)                                  the proposed Purchased Security Notional
Amount is USD [                        ];

 

(iii)                               the Security Issuer is Security Issuer
Gladwyne Funding LLC; and

 

(iv)                              the Purchased Security is:  Gladwyne Funding
LLC Floating Rate Note due December 1, 2024, CUSIP No. 376769 AA3.

 

 

Yours faithfully,

 

 

 

STRAFFORD FUNDING LLC

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

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