EXECUTION VERSION

 

 

 

CREDIT AND SECURITY AGREEMENT

 

among

 

BDCA-CB Funding, LLC,

as Borrower,

 

THE LENDERS FROM TIME TO TIME PARTIES HERETO,

 

CITIBANK, N.A.,

as Administrative Agent,

 

U.S. Bank National Association,

as Collateral Agent and as Custodian

 

and

 

Business Development Corporation of America,

as Collateral Manager

 

 

 

Dated as of June 27, 2014

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION; COMPUTATIONS 1    
  Section 1.01. Definitions 1 Section 1.02. Rules of Construction 43 Section
1.03. Computation of Time Periods 43 Section 1.04. Collateral Value Calculation
Procedures 43       ARTICLE II ADVANCES 45       Section 2.01. Revolving Credit
Facility; Approval Requests 45 Section 2.02. Making of the Advances 45 Section
2.03. Evidence of Indebtedness; Notes 46 Section 2.04. Payment of Principal and
Interest 46 Section 2.05. Prepayment of Advances 47 Section 2.06. Changes of
Commitments 48 Section 2.07. Maximum Lawful Rate 48 Section 2.08. Several
Obligations 48 Section 2.09. Increased Costs 49 Section 2.10. Compensation;
Breakage Payments 50 Section 2.11. Illegality; Inability to Determine Rates 50
Section 2.12. Fees 51 Section 2.13. Rescission or Return of Payment 51 Section
2.14. Post-Default Interest 51 Section 2.15. Payments Generally 51 Section 2.16.
Replacement of Lenders 52 Section 2.17. Defaulting Lenders 53       ARTICLE III
CONDITIONS PRECEDENT 54       Section 3.01. Conditions Precedent to Initial
Advances 54 Section 3.02. Conditions Precedent to Each Borrowing 56      
ARTICLE IV REPRESENTATIONS AND WARRANTIES 56       Section 4.01. Representations
and Warranties of the Borrower 56 Section 4.02. Representations and Warranties
of the Collateral Manager 60       ARTICLE V COVENANTS 61       Section 5.01.
Affirmative Covenants of the Borrower 61 Section 5.02. Negative Covenants of the
Borrower 65 Section 5.03. Affirmative Covenants of the Collateral Manager 68
Section 5.04. Negative Covenant of the Collateral  Manager 68 Section 5.05.
Certain Undertakings Relating to Separateness 68       ARTICLE VI EVENTS OF
DEFAULT 70       Section 6.01. Events of Default 70       ARTICLE VII PLEDGE OF
COLLATERAL; RIGHTS OF THE COLLATERAL AGENT 73       Section 7.01. Grant of
Security 73 Section 7.02. Release of Security Interest 74 Section 7.03. Rights
and Remedies 74

 

i

 

 

TABLE OF CONTENTS

(continued)

 

    Page       Section 7.04. Remedies Cumulative 75 Section 7.05. Related
Documents 75 Section 7.06. Borrower Remains Liable 75 Section 7.07. Protection
of Collateral 75       ARTICLE VIII ACCOUNTS, ACCOUNTINGS AND RELEASES 76      
Section 8.01. Collection of Money 76 Section 8.02. Collection Account 77 Section
8.03. Payment Account 77 Section 8.04. The Unfunded Reserve Account; Fundings 77
Section 8.05. [Reserved] 79 Section 8.06. Reinvestment of Funds in Covered
Accounts; Reports by Collateral Agent 79 Section 8.07. Accountings 79 Section
8.08. Release of Collateral 80 Section 8.09. Reports by Independent Accountants
81       ARTICLE IX APPLICATION OF MONIES 82       Section 9.01. Disbursements
of Monies from Payment Account 82       ARTICLE X SALE OF COLLATERAL LOANS;
PURCHASE OF ADDITIONAL COLLATERAL LOANS 84       Section 10.01. Sales of
Collateral Loans 84 Section 10.02. Purchase of Additional Collateral Loans 85
Section 10.03. Conditions Applicable to All Sale and Purchase Transactions 86
Section 10.04. Additional Equity Contributions 86       ARTICLE XI THE AGENTS 86
      Section 11.01. Authorization and Action 86 Section 11.02. Delegation of
Duties 87 Section 11.03. Agents’ Reliance, Etc. 88 Section 11.04.
Indemnification 89 Section 11.05. Successor Agents 90       ARTICLE XII
MISCELLANEOUS 91       Section 12.01. No Waiver; Modifications in Writing 91
Section 12.02. Notices, Etc. 91 Section 12.03. Taxes 91 Section 12.04. Costs and
Expenses; Indemnification 94 Section 12.05. Execution in Counterparts 95 Section
12.06. Assignability 95 Section 12.07. Governing Law 97 Section 12.08.
Severability of Provisions 98 Section 12.09. Confidentiality 98 Section 12.10.
Merger 98 Section 12.11. Survival 99 Section 12.12. Submission to Jurisdiction;
Waivers; Etc. 99 Section 12.13. IMPORTANT WAIVERS 99 Section 12.14. PATRIOT Act
Notice 100

 

ii

 

 

TABLE OF CONTENTS

(continued)

 

    Page       Section 12.15. Legal Holidays 101 Section 12.16. Non-Petition 101
Section 12.17. Waiver of Setoff 101 Section 12.18. Option to Acquire Rating 101
      ARTICLE XIII CUSTODIAN 101       Section 13.01. Appointment of Custodian
101 Section 13.02. Duties of Custodian 102 Section 13.03. Delivery of Collateral
Loans to Custodian 102 Section 13.04. Release of Documents/Control By Agents 103
Section 13.05. Records 103 Section 13.06. Reporting 103 Section 13.07. Certain
General Terms 104 Section 13.08. Compensation of Custodian 105 Section 13.09.
Responsibility of Custodian 106             ARTICLE XIV COLLATERAL MANAGEMENT
109       Section 14.01. Designation of the Collateral Manager 109 Section
14.02. Duties of the Collateral Manager 110 Section 14.03. Authorization of the
Collateral Manager 111 Section 14.04. Realization Upon Defaulted Collateral
Loans 111 Section 14.05. Compensation 111 Section 14.06. Expense Reimbursement;
Indemnification 112 Section 14.07. The Collateral Manager Not to Resign;
Assignment 113 Section 14.08. Appointment of Successor Collateral Manager 113

 

iii

 

 

SCHEDULES     Schedule 1 Initial Commitments and Percentages Schedule 2 Contents
of Monthly Report Schedule 3 Contents of Payment Date Report Schedule 4 Initial
Collateral Loans Schedule 5 Moody’s Industry Classifications Schedule 6 Notice
Information Schedule 7 Authorized Persons Schedule 8 Valuation Firms    
EXHIBITS     Exhibit A Form of Approval Request Exhibit B Form of Notice of
Borrowing (with attached form of Borrowing Base Calculation) Exhibit C Form of
Notice of Prepayment Exhibit D Form of Assignment and Acceptance Exhibit E Form
of Note

 

iv

 

 

CREDIT AND SECURITY AGREEMENT

 

CREDIT AND SECURITY AGREEMENT, dated as of June 27, 2014, among BDCA-CB Funding,
LLC, a Delaware limited liability company, as borrower (the “Borrower”), the
LENDERS from time to time party hereto, CITIBANK, N.A. (“Citibank”), as
administrative agent for the Secured Parties (as hereinafter defined) (in such
capacity, the “Administrative Agent”), U.S. Bank National Association (“U.S.
Bank”), as collateral agent for the Secured Parties (as hereinafter defined) (in
such capacity, the “Collateral Agent”) and as collateral custodian for the
Secured Parties (in such capacity, the “Custodian”), and Business Development
Corporation of America, a Maryland corporation (“BDCA”), as collateral manager
(in such capacity, the “Collateral Manager”).

 

WITNESSETH:

 

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

 

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

 

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

 

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION; COMPUTATIONS

 

Section 1.01.         Definitions

 

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

 

“Account Control Agreement” means the Account Control Agreement, dated as of the
date hereof, among the Borrower, the Collateral Agent and U.S. Bank National
Association, as the Securities Intermediary, as the same may be amended,
modified, waived, supplemented or restated from time to time.

 

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

 

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

 

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

 

“Administrative Expense Cap” means, for any Payment Date, an amount equal (when
taken together with any Administrative Expenses paid during the period since the
preceding Payment Date or, in the case of the first Payment Date, the Closing
Date) to $200,000 per annum.

 

 

 

 

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

 

(a)          first, to the Collateral Agent, the Collateral Administrator and
the Custodian, any amounts and indemnities payable to such entities pursuant to
the Facility Documents;

 

(b)          second, to the Administrative Agent for fees and accrued expenses;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

provided that, for the avoidance of doubt, (1) amounts that are expressly
payable to any Person under the Priority of Payments in respect of an amount
that is stated to be payable as an amount other than as Administrative Expenses
(including Interest and principal and other amounts owing in respect of the
Advances and the Commitments and any Collateral Management Fee) shall not
constitute Administrative Expenses and (2) expenses paid for on the Closing Date
with proceeds of the Advances comprising the initial Borrowing shall not
constitute Administrative Expenses.

 

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

 

“Advance Rate” means, as of any date of determination, (x) for any Standard
Collateral Loan, 70%, (y) for any Unquoted / Single-Bid Collateral Loan, 60%,
and (z) for any other Collateral Loan, a rate to be determined by the
Administrative Agent on a case-by-case basis in its sole discretion.

 

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

 

2

 

 

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

 

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

 

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

 

“Aggregate Asset Cost” means, at any date of determination, the sum of the Asset
Costs of all Collateral Loans included in the Collateral that are not Ineligible
Collateral Loans at such date.

 

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

 

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

 

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

 

“Aggregate Indebtedness” means, with respect to any Collateral Loan and any date
of determination, the aggregate amount of indebtedness (determined on a
consolidated basis) of the relevant Obligor and its subsidiaries used in the
calculation of any financial covenants under the Related Documents reported as
of the most recent applicable period pursuant to the Related Documents; provided
that (i) the relevant Obligor referred to above in this definition shall be the
Obligor for which consolidated financial statements are required to be delivered
under the Related Documents (and, if there is more than one such Obligor, for
the Obligor with the greatest Aggregate Indebtedness as of such date of
determination) and (ii) if the Administrative Agent determines on a commercially
reasonable basis that “Aggregate Indebtedness” as reported for such date of
determination pursuant to the Related Documents is not computed in accordance
with generally accepted financial practice for similar transactions, then
“Aggregate Indebtedness” shall mean the aggregate amount of Indebtedness
(determined on a consolidated basis based upon the Administrative Agent's
selection in good faith of a definition of “Indebtedness” that accords with
generally accepted financial practice) of the relevant Obligor and its
subsidiaries as of such date of determination.

 

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

 

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

 

3

 

 

“Agreement” means this Credit and Security Agreement.

 

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

 

“Applicable Margin” means (a) during the Reinvestment Period, 1.70% per annum;
and (b) after the Reinvestment Period, 2.00% per annum.

 

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

 

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

 

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

 

“Asset Coverage Ratio” means the ratio, determined on a consolidated basis,
without duplication, in accordance with GAAP, of (a) the fair value of the total
assets of BDCA and its subsidiaries as required by, and in accordance with, the
Investment Company Act and any orders of the SEC issued, or exemptive relief
granted by the SEC, in each case to BDCA to be determined by the Board of
Directors of BDCA and reviewed by its auditors, less all liabilities (other than
indebtedness, including indebtedness hereunder) of BDCA and its subsidiaries, to
(b) the aggregate amount of indebtedness of BDCA and its subsidiaries; provided
that the calculation of the Asset Coverage Ratio shall not include subsidiaries
that are not required to be included by the Investment Company Act as affected
by such orders of the SEC issued, or exemptive relief granted by the SEC, in
each case to BDCA including, if set forth in any such order or exemptive relief,
any subsidiary which is a small business investment company which is licensed by
the Small Business Administration to operate under the Small Business Investment
Act of 1958.

 

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

 

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

 

“Bankruptcy Code” means the United States Bankruptcy Code.

 

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

 

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

 

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

 

4

 

 

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

 

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

 

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

 

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

 

(a)          the Facility Amount at such time; and

 

(b)          the sum of:

 

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

 

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

 

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

 

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

 

“Borrowing Date” means the date of a Borrowing.

 

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

 

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

 

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

 

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

 

5

 

 

“Change in Yield” means, with respect to any Collateral Loan on any date of
determination, an amount equal to (a) the Published Yield reported at the
opening of business on the “settlement date” for the purchase or other
acquisition by the Borrower of such Collateral Loan minus (b) the Published
Yield reported at the opening of business on such date of determination (and, if
such date of determination is not a Business Day, as so reported at the opening
of business on the most recent Business Day prior to such date of
determination).

 

“Change of Control” means, at any time, the occurrence of one of the following
events: (a) if an Affiliate of BDCA is the Collateral Manager, such Person shall
cease to be an Affiliate of the Equityholder; (b) the dissolution, termination
or liquidation in whole or in part, transfer or other disposition, in each case,
of all or substantially all of the assets of, BDCA; (c) the Management Agreement
shall fail to be in full force and effect; or (d) the Borrower ceases to be 100%
owned by the Equityholder.

 

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

 

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

 

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

 

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

 

“Closing Date” means June 27, 2014.

 

“Closing Date Participation Agreement” means the Participation Agreement, dated
as of the Closing Date, between the Borrower and 405 II Loan Funding LLC
relating to the Closing Date Participation Interest.

 

“Closing Date Participation Interest” means an undivided 100% participation
interest granted by 405 II Loan Funding LLC to the Borrower in and to each
Collateral Loan identified on the schedule attached to the Closing Date
Participation Agreement and in which a Lien is granted therein by the Borrower
to the Collateral Agent pursuant to this Agreement.

 

“Code” means the Internal Revenue Code of 1986.

 

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

 

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

 

6

 

 

“Collateral Administrator” means U.S. Bank National Association, and any
successor thereto under the Collateral Administration Agreement.

 

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

 

“Collateral Agent Fee Letter” means the fee letter, dated June 12, 2014, by U.S.
Bank National Association and acknowledged by the Borrower as of the Closing
Date, setting forth the amounts payable by the Borrower to the Collateral Agent,
Custodian, Securities Intermediary and Collateral Administrator in connection
with the transactions contemplated by this Agreement.

 

“Collateral Interest Amount” means, as of any date of determination, without
duplication, the aggregate amount of Interest Proceeds that has been received or
that is expected to be received (other than Interest Proceeds expected to be
received from Ineligible Collateral Loans, in each case unless actually
received), in each case during the Collection Period (and, if such Collection
Period does not end on a Business Day, the next succeeding Business Day) in
which such date of determination occurs.

 

“Collateral Loan” means a commercial loan owned or acquired by the Borrower
that, solely for purposes of the definitions of “Borrowing Base,” “Equity
Coverage Ratio,” “Equity Percentage,” “Excess Concentration Amount” and any
component thereof, and subject to Section 1.04, (A) has been approved by the
Administrative Agent, in its sole discretion, prior to the date on which the
Borrower commits to acquire such loan, and (B) satisfies each of the following
eligibility requirements on any date of determination (unless the Administrative
Agent in its sole discretion agrees to waive any such eligibility requirement
with respect to such loan); provided that, that for purposes of determining
whether a Collateral Loan constitutes an Ineligible Collateral Loan at any time
after the acquisition thereof by the Borrower (or its binding commitment to do
the same), the criteria set forth in clauses (h), (k)(ii), (v) and (aa) shall be
evaluated solely as of the date the Borrower commits to acquire such loan:

 

(a)          is (i) a First Lien Obligation, (ii) a Second Lien Obligation or
(iii) the Closing Date Participation Interest;

 

(b)          permits the purchase thereof by or assignment thereof to the
Borrower and the pledge to the Collateral Agent;

 

(c)          [reserved];

 

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

 

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

 

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

 

(g)          [reserved];

 

(h)          is not the subject of an offer or called for redemption;

 

(i)           does not constitute Margin Stock;

 

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

 

7

 

 

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

 

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

 

(m)         is not a PIK Loan;

 

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

 

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

 

(p)          [reserved];

 

(q)          (i) if the original aggregate loan facility amount corresponding to
the applicable loan tranche is (x) at least $200,000,000, such commercial loan
is priced on each date by at least one independent source (as evidenced by data
from Loan X, Inc., Loan Pricing Corporation, MarkIt Partners or any other
nationally recognized loan pricing service selected by the Administrative Agent)
or (y) less than $200,000,000, such commercial loan is priced on each date by at
least two independent sources (as evidenced by data from Loan X, Inc., Loan
Pricing Corporation, MarkIt Partners or any other nationally recognized loan
pricing service selected by the Administrative Agent);

 

(r)          has an original term to maturity of not more than seven and
one-half (7.5) years;

 

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

 

(t)          bears interest at a floating rate;

 

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

 

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

 

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

 

(x)          is not a participation interest (other than the Closing Date
Participation Interest);

 

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

 

8

 

 

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

 

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

 

(bb)        is not a letter of credit;

 

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

 

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

 

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

 

(ff)         the transfer thereof is effected pursuant to an LSTA Par/Near Par
Trade Confirmation, subject to Standard Terms and Condition for Par/Near Par
Trade Confirmations, as published by The Loan Syndications and Trading
Association, Inc., or the equivalent thereof as published by the Loan Market
Association; and

 

(gg)         is not subject to any Lien other than Permitted Liens.

 

Any loan that does not satisfy the eligibility requirements set forth in the
definition of “Standard Collateral Loan” as of the acquisition date of such
loan, if the Collateral Manager represents in writing (e-mail shall be
sufficient for this purpose) to the Administrative Agent that it expects such
loan will satisfy such eligibility requirements within 30 days of such
acquisition, the loan shall be deemed to constitute a Collateral Loan for
purposes of this Agreement for a period of up to 30 days; provided that if such
loan fails to satisfy such eligibility requirements within 30 days of the
Borrower’s acquisition thereof, the Administrative Agent in its sole discretion
may modify the Advance Rate (including a reduction to 0%) with respect to such
loan. Any loan satisfying the requirements set forth in the definition of
“Unquoted / Single-Bid Collateral Loan” shall constitute a Collateral Loan for
purposes of this Agreement notwithstanding the failure of such loan to satisfy
the eligibility requirement set forth in clause (q) of this definition.

 

“Collateral Management Fee” means the fee payable to the Collateral Manager in
arrears on each Payment Date (prorated for the related Interest Accrual Period)
pursuant to Section 9.01 of this Agreement, in an amount equal to 0.35% per
annum (calculated on the basis of a 360-day year and the actual number of days
elapsed during the applicable Interest Accrual Period) of the Quarterly Asset
Amount at the beginning of the Collection Period relating to such Payment Date.

 

“Collateral Management Standard” means, with respect to any Collateral Loan
included in the Collateral, to service and administer such Collateral Loan in
accordance with the Related Documents and all customary and usual servicing
practices (a) which are consistent with the same care, skill, prudence and
diligence with which the Collateral Manager services and administers loans for
its own account or for the account of others; (b) to the extent not inconsistent
with clause (a), with a view to maximize the value of the Collateral Loans; and
(c) without regard to: (i) any relationship that the Collateral Manager or any
Affiliate of the Collateral Manager may have with any Obligor or any Affiliate
of any Obligor, (ii) the Collateral Manager’s obligations to incur servicing and
administrative expenses with respect to a Collateral Loan, (iii) the Collateral
Manager’s right to receive compensation for its services hereunder or with
respect to any particular transaction, (iv) the ownership by the Collateral
Manager or any Affiliate thereof of any retained interest or one or more loans
of the same class as any Collateral Loan, (v) the ownership, servicing or
management for others by the Collateral Manager of any other loans or property
by the Collateral Manager or (vi) any relationship that the Collateral Manager
or any Affiliate of the Collateral Manager may have with any holder of other
loans of the Obligor with respect to such Collateral Loans.

 

9

 

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)          the rendering of one or more final judgments, decrees or orders by
a court or arbitrator of competent jurisdiction for the payment of money in
excess individually or in the aggregate of $5,000,000 against the Collateral
Manager (exclusive of judgment amounts fully covered by insurance), and the
Collateral Manager shall not have either (i) discharged or provided for the
discharge of any such judgment, decree or order in accordance with its terms or
(ii) perfected a timely appeal of such judgment, decree or order and caused the
execution of same to be stayed during the pendency of the appeal, in each case,
within forty-five (45) days from the date of entry thereof;

 

(f)          the failure of the Collateral Manager to make any payment when due
(after giving effect to any related grace period) under one or more agreements
for recourse indebtedness to which it is a party in an aggregate amount in
excess of $5,000,000, individually or in the aggregate, or the occurrence of any
event or condition that has resulted in the acceleration of such recourse
indebtedness in excess of $5,000,000, or the occurrence and continuation for at
least sixty (60) days of any event or condition that permits the acceleration of
such amount of recourse indebtedness, whether or not waived;

 

(g)          (i) the Collateral Manager commits any act that constitutes fraud
or criminal activity in the performance of its obligations hereunder (as
determined pursuant to a final adjudication by a court of competent
jurisdiction) or (ii) any Responsible Officer of the Collateral Manager
primarily responsible for the performance by the Collateral Manager of its
obligations hereunder (in the performance of his or her investment management
duties) is indicted for a criminal offense materially related to the business of
the Collateral Manager providing management services and continues to have
responsibility for the performance by the Collateral Manager hereunder for a
period of thirty (30) days after such indictment;

 

10

 

 

(h)          so long as the Collateral Manager is the Equityholder or an
Affiliate thereof, any three (3) Key People (or replacements reasonably
acceptable to the Administrative Agent) shall (i) not be officers, employees or
partners of the Equityholder or AR Capital, LLC. (“ARC”), as applicable, or (ii)
not be actively involved in the management of the Equityholder or ARC,
including, but not limited to, general management, management of the Collateral
portfolio, underwriting, the credit approval process and credit monitoring
activities, other than due to temporary absences for family leave, and such
persons are not replaced with other individuals reasonably acceptable to the
Administrative Agent within 60 days;

 

(i)          the Collateral Manager shall assign any of its rights or
obligations under any Facility Document to any Person (other than an Affiliate
thereof that is reasonably acceptable to the Administrative Agent) or BDCA (or
an Affiliate thereof that is reasonably acceptable to the Administrative Agent)
otherwise ceases to be the Collateral Manager hereunder;

 

(j)           at the end of any fiscal quarter of BDCA, BDCA fails to maintain
the Asset Coverage Ratio at greater than or equal to 2.0 : 1.0; or

 

(k)          BDCA permits its shareholders’ equity (as reflected in its most
recently posted 10-Q or 10-K and without any deductions) as of the last day of
any of its fiscal quarters to be less than the sum of (x) $466,527,000 plus (y)
80% of the net proceeds of any equity issuance by BDCA after March 31, 2014.

 

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

 

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

 

(b)          the Minimum Weighted Average Spread Test; and

 

(c)          the Maximum Weighted Average Life Test.

 

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

 

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

 

“Collections” means all cash collections, distributions, payments or other
amounts received, or to be received, by the Borrower from any Person in respect
of any Collateral Loan constituting Collateral, including all principal,
interest, fees, distributions, recoveries and redemption and withdrawal proceeds
payable to the Borrower under or in connection with any such Collateral Loans
and all Proceeds from any sale or disposition of any such Collateral Loans.

 

11

 

 

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

 

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

 

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

 

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

 

(a)          not more than 3.00% consists of obligations of any one Obligor
(and Affiliates thereof), except that the obligations of up to three Obligors
may each constitute up to 3.5%; of the Aggregate Principal Balance;

 

(b)          not more than 10.00% consists of Collateral Loans with Obligors in
any one Moody’s Industry Classification, except that Collateral Loans with
Obligors in up to three Moody’s Industry Classifications may each constitute up
to 15% of the Aggregate Principal Balance;

 

(c)          not less than 70.00% consists of Standard Collateral Loans;

 

(d)          not more than 10.00% consists of Second Lien Obligations;

 

(e)          not more than 10.00% consists of Unquoted / Single-Bid Collateral
Loans;

 

(f)          not more than 10.00% consists of Collateral Loans with a Moody’s
Rating of less than “B3” and an S&P Rating less than “B-”;

 

(g)          not more than 5.00% consists of Partial PIK Loans;

 

(h)          not more than 65.00% consists of Covenant Lite Loans;

 

(i)          not more than 10.00% consists of Collateral Loans that provides for
payment of interest less frequently than quarterly;

 

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

 

(k)          not more than 5% consists of Delayed Drawdown Collateral Loans.

 

12

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

 

(c)          a Material Modification (subject to the proviso contained in the
definition thereof) with respect to such loan has occurred; or

 

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

 

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

 

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

 

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

 

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

 

14

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“DIP Collateral Loan” means an obligation:

 

15

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

 

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

 

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

 

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

 

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

 

(d)          money market funds that have, at all times, credit ratings of “Aaa”
and “MR1+” by Moody’s and “AAAm” or “AAAm-G” by S&P, respectively;

 

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

 

17

 

 

“Equity Advance Rate” means, with respect to any Collateral Loan on any date of
determination, 100% minus the Advance Rate with respect to such Collateral Loan
on such date of determination.

 

“Equity Amount” means, on any date of determination, the sum, for all Collateral
Loans held by the Borrower on such date of determination (determined, for this
purpose, on a “settlement date” basis), of the products of (a) the Equity
Advance Rate in effect on such date with respect to such Collateral Loan
multiplied by (b) the Asset Cost of such Collateral Loan on such date of
determination; provided that for purposes of clause (b) of this definition, in
determining the Asset Cost of any Delayed Drawdown Collateral Loan, any unfunded
commitments in respect of such Delayed Drawdown Collateral Loan shall be assumed
to have been fully funded as of such date of determination.

 

“Equity Coverage Percentage” means, on any date of determination, the excess, if
any, of (a) the Equity Percentage on such date of determination over (b) 5%.

 

“Equity Coverage Ratio” means, on any date of determination, (a) the sum of (i)
the aggregate amount of Eligible Investments held by the Borrower on such date
of determination plus (ii) the sum, for all Collateral Loans held by the
Borrower on such date of determination, of the Market Values of such Collateral
Loans on such date of determination minus (iii) the aggregate Advances
Outstanding on such date of determination divided by (b) the Aggregate Asset
Cost of all Collateral Loans held by the Borrower on such date of determination;
provided that for purposes of clause (b) of this definition, in determining the
Asset Cost of any Delayed Drawdown Collateral Loan, any unfunded commitments in
respect of such Delayed Drawdown Collateral Loans shall be assumed to have been
fully funded as of such date of determination.

 

“Equity Coverage Test” means a test that is satisfied if, as of any date of
determination, the Equity Coverage Ratio (including after giving effect to the
making of any Advance on such date and the application of the proceeds thereof)
is equal to or greater than the Equity Coverage Percentage.

 

“Equity Percentage” means, on any date of determination, (a) the Equity Amount
on such date of determination divided by (b) the Aggregate Asset Cost of all
Collateral Loans held by the Borrower on such date of determination; provided
that for purposes of clause (b) of this definition, in determining the Asset
Cost of any Delayed Drawdown Collateral Loan, any unfunded commitments in
respect of such Delayed Drawdown Collateral Loans shall be assumed to have been
fully funded as of such date of determination.

 

“Equityholder” means BDCA.

 

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

 

18

 

 

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

 

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

 

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

 

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

 

“Eurodollar Reserve Percentage” means, for any period, the percentage, if any,
applicable during such period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such period
during which any such percentage shall be so applicable) under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement (including
any basic, emergency, supplemental, marginal or other reserve requirements) with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term of one month.

 

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

 

“Excess Concentration Amount” means, at any time in respect of which any one or
more of the Concentration Limitations are exceeded, the portions (calculated
without duplication) of each Collateral Loan that cause such Concentration
Limitations to be exceeded.

 

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

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Secured Party or required to be withheld or deducted from a payment to a
Secured Party (a) Taxes imposed on or measured by net income, net profits, or
capital (however denominated), or that are franchise Taxes or branch profits
Taxes, in each case, (i) imposed by the jurisdiction (or any political
subdivision thereof) under the laws of which such Secured Party is organized or
in which its principal office is located, or in the case of any Lender, in which
its applicable lending office is located or (ii) that are Other Connection Taxes
and (b) Taxes on any “withholdable payment” payable to such Secured Party as a
result of the failure of such Secured Party to satisfy the applicable
requirements of FATCA.

 

19

 

 

“Facility Amount” means (a) on or prior to the Commitment Termination Date,
$400,000,000 (as such amount may be reduced from time to time pursuant to
Section 2.06) and (b) following the Commitment Termination Date, the outstanding
principal balance of all the Advances.

 

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

 

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

 

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

 

“Final Maturity Date” means June 27, 2017.

 

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

 

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

 

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

 

20

 

 

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

 

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

 

(ii)         is secured by a valid first priority perfected Lien in, to or on
specified collateral securing the obligor’s obligations under such loan (whether
or not such loan is also secured by any lower priority Lien on other
collateral);

 

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

 

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

 

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

 

“Floor Obligation” means, as of any date:

 

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

 

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

 

21

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Independent Manager” means a natural person who, (A) for the three-year period
prior to his or her appointment as Independent Manager, has not been, and during
the continuation of his or her service as Independent Manager is not: (i) an
employee, director, stockholder, member, manager, partner or officer of the
Borrower or any of its Affiliates (other than his or her service as an
Independent Manager of the Borrower or other Affiliates that are structured to
be “bankruptcy remote”); (ii) a customer or supplier of the Borrower or any of
its Affiliates (other than his or her service as an Independent Manager of the
Borrower); 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 Manager for a
corporation or limited liability company whose charter documents required the
unanimous consent of all Independent Managers 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
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.

 

22

 

 

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

 

“Insolvency Event” means, with respect to a specified Person, (a) the filing of
a decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary
case under the Bankruptcy Code or any other applicable insolvency law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of its property, or ordering the winding-up or liquidation of such Person’s
affairs, and such decree or order shall remain unstayed and in effect for a
period of sixty (60) consecutive days; or (b) the commencement by such Person of
a voluntary case under the Bankruptcy Code or any other applicable insolvency
law now or hereafter in effect, or the consent by such Person to the entry of an
order for relief in an involuntary case under any such law, or the consent by
such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due, or the taking
of action by such Person in furtherance of any of the foregoing.

 

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

 

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

 

[tequ.jpg]

 

where:

 

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

 

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

 

D            =          360 days.

 

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

 

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

 

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

 

23

 

 

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

 

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

 

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

 

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

 

provided that:

 

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

 

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

 

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

 

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

 

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

 

“Key People” means Peter Budko, Robert Grunewald, William Kahane, Nick Radesca
and Nicholas S. Schorsch (and any replacements reasonably acceptable to the
Administrative Agent).

 

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

 

24

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Management Agreement” means the Amended and Restated Investment Advisory and
Management Services Agreement, dated as of June 23, 2011, between BDCA and BDCA
Adviser, LLC.

 

25

 

 

“Mandatory Amortization Amount” means, with respect to the applicable Payment
Dates set forth below, an amount sufficient to reduce Advances Outstanding as of
such Payment Date (i) on the first Payment Date during the Amortization Period,
to 87.5% of Advances Outstanding as of the last day of the Reinvestment Period,
(ii) on the second Payment Date during the Amortization Period, to 75.0% of
Advances Outstanding as of the last day of the Reinvestment Period, and (iii) on
the third Payment Date during the Amortization Period, to 50.0% of Advances
Outstanding as of the last day of the Reinvestment Period.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, financial condition or operations of the Borrower or the Collateral
Manager both individually or taken as a whole, (b) the validity or
enforceability of this Agreement or any other Facility Document or the validity,
enforceability or collectability of any material portion of the Collateral Loans
or the Related Documents, (c) the rights and remedies of the Administrative
Agent, the Lenders and the other Secured Parties with respect to matters arising
under this Agreement or any other Facility Document, or (d) the ability of each
of the Borrower or the Collateral Manager to perform its obligations under any
Facility Document to which it is a party.

 

26

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Maximum Moody’s Weighted Average Rating Factor Test” means a test that will be
satisfied on any date of determination if the Weighted Average Moody’s Rating
Factor of the Collateral Loans is, during the Reinvestment Period, less than or
equal to 3000 or, following the termination of the Reinvestment Period, 3490.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

27

 

 

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

 

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

 

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

 

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

 

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

 

Collateral Loan   Relevant Rating       The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate   The
rating by Moody’s that is one rating subcategory above such corporate family
rating       The Collateral Loan is an unsecured obligation or is a Second Lien
Obligation, but is not subordinate   The rating by Moody’s that is one rating
subcategory below such corporate family rating       The Collateral Loan is
subordinate   The rating by Moody’s that is two rating subcategories below such
corporate family rating

 

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

 

Collateral Loan   Relevant Rating       The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate   The
rating assigned by Moody’s to the other obligation       The Collateral Loan is
an unsecured obligation or is a Second Lien Obligation, but is not subordinate  
The rating by Moody’s that is one rating subcategory below the rating assigned
by Moody’s to the other obligation       The Collateral Loan is subordinate  
The rating by Moody’s that is two rating subcategories below the rating assigned
by Moody’s to the other obligation

 

28

 

 

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

 

Collateral Loan   Relevant Rating       The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate   The
rating by Moody’s that is one rating subcategory above the rating assigned by
Moody’s to the other obligation       The Collateral Loan is an unsecured
obligation or is a Second Lien Obligation, but is not subordinate   The rating
assigned by Moody’s to the other obligation       The Collateral Loan is
subordinate   The rating by Moody’s that is one rating subcategory below the
rating assigned by Moody’s to the other obligation

 

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

 

Collateral Loan   Relevant Rating       The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate   The
rating by Moody’s that is two rating subcategories above the rating assigned by
Moody’s to the other obligation       The Collateral Loan is an unsecured
obligation or is a Second Lien Obligation, but is not subordinate   The rating
by Moody’s that is one rating subcategory above the rating assigned by Moody’s
to the other obligation       The Collateral Loan is subordinate   The rating
assigned by Moody’s to the other obligation

 

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

 

29

 

 

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

 

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

 

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

 

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

 

Moody’s Rating  

Moody’s Rating

Factor

  Moody’s Rating  

Moody’s Rating

Factor

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

 

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

 

30

 

 

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

 

“New Lending Office” has the meaning assigned to such term in Section 12.03(d).

 

“Non-Excluded Taxes” mean all Taxes other than Excluded Taxes.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

 

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

 

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

 

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

 

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

 

“Payment Date” means the 15th day of January, April, July and October in each
year, the first of which shall be October 15, 2014; provided that, if any such
day is not a Business Day, then such Payment Date shall be the next succeeding
Business Day. The Final Maturity Date shall also be a Payment Date.

 

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

 

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

 

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

 

“Permitted Agent” means:

 

(a)          in connection with the Facility Documents, the Collateral Manager,
the Custodian, the Agents, the Independent Accountants and any such party’s
sub-agents; and

 

(b)          in connection with the Collateral Loans, (i) administrative agents,
collateral agents, arrangers, trustees and similar agents (and any sub-agents)
appointed under the Related Documents, (ii) financial and restructuring
advisors, appraisers and evaluators, (iii) foreign agents retained for foreign
perfection purposes or other local law requirements, (iv) back-office operations
and administrative services providers and (v) legal counsel, in each case,
consistent with the Collateral Manager’s past practice and in the ordinary
course of business.

 

“Permitted Assignee” means (a) a Lender or any of its Affiliates or (b) any
Person managed by a Lender or any of its Affiliates.

 

“Permitted Liens” means any of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens created in favor of the Collateral Agent hereunder or under the other
Facility Documents for the benefit of the Secured Parties; (b) Liens for state,
municipal or other local Taxes if such Taxes shall not at the time be due and
payable or if a Person shall currently be contesting the validity thereof in
good faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of such Person; and (c)
Liens imposed by law, such as materialmen’s, warehousemen’s, mechanics’,
carriers’, workmen’s and repairmen’s Liens and other similar Liens, arising by
operation of law in the ordinary course of business for sums that are not
overdue or are being contested in good faith and with respect to which reserves
in accordance with GAAP have been provided on the books of such Person.

 

32

 

 

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

 

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

 

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

 

“Post-Default Rate” means a rate per annum equal to the rate of interest
otherwise in effect pursuant to this Agreement (or, if no such rate is
specified, the Base Rate) plus 2.00% per annum.

 

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

 

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

 

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

 

“Prime Rate” means the rate announced by Citibank from time to time as its prime
rate in the United States, such rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of interest
charged by Citibank in connection with extensions of credit to debtors.

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

 

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

 

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

 

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

 

“Published Yield” means, on any date of determination, the average yield to
maturity for single “B”-rated bank loans as published on such date of
determination by MarkIt Partners; provided that, if (a) such average yield to
maturity ceases to be published by MarkIt Partners or a successor sponsor
acceptable to the Administrative Agent or (b) the Administrative Agent
determines in good faith that such average yield to maturity as so published is
no longer representative of actual market data, “Published Yield” shall mean
such average yield to maturity as determined by the Administrative Agent (or any
Person designated by the Administrative Agent) using the same or a substantially
similar method of calculation as that used by MarkIt Partners on the date
hereof.

 

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

 

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

 

“Qualified Institution” means a depository institution or trust company
organized under the laws of the United States of America or any one of the
States thereof or the District of Columbia (or any domestic branch of a foreign
bank), (a)(i) that has either (A) a long-term unsecured debt rating of “A” or
better by S&P and “A2” or better by Moody’s or (B) a short-term unsecured debt
rating or certificate of deposit rating of “A-1” or better by S&P or “P-1”
or better by Moody’s, (ii) the parent corporation of which has either (A) a
long-term unsecured debt rating of “A” or better by S&P and “A2” or better by
Moody’s or (B) a short-term unsecured debt rating or certificate of deposit
rating of “A-1” or better by S&P and “P-1” or better by Moody’s or (iii) is
otherwise acceptable to the Administrative Agent and (b) the deposits of which
are insured by the Federal Deposit Insurance Corporation.

 

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

 

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

 

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

 

34

 

 

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

 

“Reinvestment Period” means the period from and including the Closing Date to
and including the earliest of (a) the date that is two (2) years after the
Closing Date and (b) the date of the termination of the Commitments pursuant to
Section 6.01.

 

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

 

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

 

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

 

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

 

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

 

(a)an executed copy of the assignment for such Collateral Loan;

 

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

 

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

 

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

 

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

 

(f)a Document Checklist; and

 

(g)for the Closing Date Participation Interest, the fully executed Closing Date
Participation Agreement.

 

35

 

 

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

 

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

 

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

 

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

 

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

 

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

 

Collateral Loan   Relevant Rating       The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate   The
rating by S&P that is one rating subcategory above such corporate issuer rating
      The Collateral Loan is an unsecured obligation or is a Second Lien
Obligation, but is not subordinate   The rating by S&P that is one rating
subcategory below such corporate issuer rating       The Collateral Loan is
subordinate   The rating by S&P that is two rating subcategories below such
corporate issuer rating

 

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

 

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Collateral Loan   Relevant Rating       The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate   The
rating assigned by S&P to the other obligation       The Collateral Loan is an
unsecured obligation or is a Second Lien Obligation, but is not subordinate  
The rating by S&P that is one rating subcategory below the rating assigned by
S&P to the other obligation       The Collateral Loan is subordinate   The
rating by S&P that is two rating subcategories below the rating assigned by S&P
to the other obligation

 

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

 

Collateral Loan   Relevant Rating       The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate   The
rating by S&P that is one rating subcategory above the rating assigned by S&P to
the other obligation       The Collateral Loan is an unsecured obligation or is
a Second Lien Obligation, but is not subordinate   The rating assigned by S&P to
the other obligation       The Collateral Loan is subordinate   The rating by
S&P that is one rating subcategory below the rating assigned by S&P to the other
obligation

 

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

 

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Collateral Loan   Relevant Rating       The Collateral Loan is a secured
obligation, but is not a Second Lien Obligation and is not subordinate   The
rating by S&P that is two rating subcategories above the rating assigned by S&P
to the other obligation       The Collateral Loan is an unsecured obligation or
is a Second Lien Obligation, but is not subordinate   The rating by S&P that is
one rating subcategory above the rating assigned by S&P to the other obligation
      The Collateral Loan is subordinate   The rating assigned by S&P to the
other obligation

 

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

 

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

 

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

 

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

 

(i)          is not (and is not expressly permitted by its terms to become)
subordinate in right of payment to any other obligation for borrowed money of
the obligor of such loan other than “First Lien Debt” (as defined below) with
respect to the liquidation of such obligor or the collateral for such loan;

 

(ii)         is secured by a valid second priority perfected Lien in, to or on
specified collateral securing the obligor’s obligations under such loan (whether
or not such loan is also secured by any higher or lower priority Lien on other
collateral); but as to which the beneficiary or beneficiaries of such collateral
security agree for the benefit of the holder or holders of other indebtedness
secured by the same collateral (“First Lien Debt”) as to one or more of the
following: (1) to defer their right to enforce such collateral security either
permanently or for a specified period of time while First Lien Debt is
outstanding, (2) to permit a holder or holders of First Lien Debt to sell such
collateral free and clear of the security in favor of such beneficiary or
beneficiaries, (3) not to object to sales of assets by the obligor on such
obligation following the commencement of a bankruptcy or other insolvency
proceeding with respect to such obligor or to an application by the holder or
holders of First Lien Debt to obtain adequate protection in any such proceeding
and (4) not to contest the creation, validity, perfection or priority of First
Lien Debt;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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“Standard Collateral Loan” means a debt obligation that satisfies the additional
eligibility requirements set forth below:

 

(a)   is a First Lien Loan;

 

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

 

(c)   as of any date of determination has a Moody’s Rating of at least “B3” and
an S&P Rating of at least “B-”; provided that, if such loan does not have a
Moody’s Rating and an S&P Rating when acquired by the Borrower, but such ratings
have been applied for, the Collateral Manager shall furnish to the
Administrative Agent evidence of such ratings within 60 days of such acquisition
by the Borrower and failure to do so shall result in such loan being ineligible
under this clause (c);

 

(d)   such Collateral Loan is on the date of purchase or other acquisition
thereof by the Borrower part of an applicable loan tranche (having the same
initial borrowing date and economic terms) of at least $150,000,000; and

 

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

 

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

 

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

 

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

 

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

 

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

 

“Termination Percentage” means, on any date of determination, the excess, if
any, of (a) the Equity Percentage on such date of determination over (b) 7.5%.

 

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

 

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“TRS Agreement” means the Total Return Swap, dated July 31, 2012 (as amended and
restated as of May 6, 2014), between 405 TRS I, LLC and Citibank.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Unquoted / Single-Bid Collateral Loan” means a commercial loan that (A) that
has been approved by the Administrative Agent, in its sole discretion, prior to
the date on which the Borrower commits to acquire such loan, (B) satisfies the
eligibility requirements set forth in the definition of “Collateral Loan” (other
than clause (q) thereof) on any date of determination and (C) satisfies the
following additional requirements:

 

(a) is not a Covenant-Lite Loan;

 

(b) is not a DIP Collateral Loan;

 

(c) on the date of purchase or other acquisition thereof by the Borrower, and
thereafter, as of the last day of the most recent fiscal quarter for which
financial information is available in relation to the relevant Obligor (i) the
ratio of (A) Aggregate Indebtedness in relation to such Collateral Loan as of
the last day of the most recent fiscal quarter for which financial information
is available in relation to the relevant Obligor to (B) EBITDA in relation to
such Collateral Loan for the most recent period of four consecutive fiscal
quarters for which financial information is available in relation to the
relevant Obligor is less than 4.25 and (ii) EBITDA of such Obligor is greater
than $20,000,000; and

 

(d) if the original aggregate loan facility amount corresponding to the
applicable loan tranche as of the date the Borrower commits to acquire such loan
is (x) greater than or equal to $200,000,000, such commercial loan is not quoted
by any nationally recognized pricing or quotation service and (y) less than
$200,000,000, such commercial loan is quoted by at least one independent source
(as evidenced by data from Loan X, Inc., Loan Pricing Corporation, MarkIt
Partners or any other nationally recognized loan pricing service satisfactory to
the Administrative Agent in its sole discretion.

 

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

 

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“U.S. Bank” has the meaning assigned to such term in the introduction to this
Agreement.

 

“Valuation Price” means, with respect to any Collateral Loan for which the
Market Value thereof is not determined pursuant to clause (i) or (ii) of the
definition of “Market Value” on any date of determination, the lower of (a) the
most recent valuation of such Collateral Loan provided to the Borrower (with a
copy to the Administrative Agent) by any one of the valuation firms set forth on
Schedule 8 or any other nationally recognized valuation firm acceptable to the
Administrative Agent and (b) the sum of (i) the Purchase Price plus (or minus
the absolute value of such product if negative) (ii) the product of (x) the
Change in Yield with respect to such Collateral Loan on such date of
determination multiplied by (y) the lesser of (A) 1,620 and (B) the number of
days during the period from and including such date of determination to but
excluding the stated maturity of such Collateral Loan divided by (z) 360.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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Section 1.02.         Rules of Construction

 

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

 

Section 1.03.         Computation of Time Periods

 

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

 

Section 1.04.         Collateral Value Calculation Procedures

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)          For purposes of calculating all Concentration Limitations, in both
the numerator and the denominator of any component of the Concentration
Limitations, Ineligible Collateral Loans will be treated as having an Aggregate
Asset Cost equal to zero.

 

(g)          Except as otherwise provided herein, Ineligible Collateral Loans
will not be included in the calculation of the Collateral Quality Tests (or any
component thereof).

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE II

ADVANCES

 

Section 2.01.         Revolving Credit Facility; Approval Requests

 

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

 

(b)          The Administrative Agent shall have the right to approve or reject
any Approval Request in its sole discretion and to request additional
information regarding any proposed Collateral Loan. The Administrative Agent
shall promptly notify the Collateral Manager and the Borrower (with a copy to
the Collateral Agent) in writing (including via electronic mail) whether each
Approval Request has been approved or rejected. Any approval may be withdrawn at
any time prior to the time at which the Borrower actually becomes obligated to
purchase or enter into documents governing such proposed Collateral Loan by
written notice (including via e-mail) of such withdrawal from the Administrative
Agent to the Collateral Manager. If the Administrative Agent has rejected an
Approval Request, or withdrawn or withheld its approval of any such request,
then the Borrower shall not be authorized to purchase such proposed Collateral
Loan unless, in the case of a withdrawn approval, the Administrative Agent has
not withdrawn its approval prior to the time at which the Borrower enters into a
commitment to purchase such proposed Collateral Loan.

 

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

 

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

 

Section 2.02.         Making of the Advances

 

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

 

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Each Notice of Borrowing shall be substantially in the form of Exhibit B hereto,
dated the date the request for the related Borrowing is being made, signed by a
Responsible Officer of the Borrower, shall attach a Borrowing Base Calculation
Statement, and shall otherwise be appropriately completed. The proposed
Borrowing Date specified in each Notice of Borrowing shall be a Business Day
falling on or prior to the Commitment Termination Date, and the amount of the
Borrowing requested in such Notice of Borrowing (the “Requested Amount”) shall
be equal to at least $500,000 or an integral multiple of $500,000 in excess
thereof (or, if less, the remaining unfunded Commitments hereunder or, in the
case of Delayed Drawdown Collateral Loans, such lesser amount required to be
funded by the Borrower in respect thereof).

 

(b)          Each Lender shall, not later than 12:00 noon on each Borrowing Date
in respect of Advances, make its Percentage of the applicable Requested Amount
available to the Borrower by disbursing such funds in Dollars to the Principal
Collection Subaccount.

 

Section 2.03.         Evidence of Indebtedness; Notes

 

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

 

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

 

Section 2.04.         Payment of Principal and Interest

 

The Borrower shall pay principal and Interest on the Advances as follows:

 

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

 

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

 

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

 

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(d)          Subject in all cases to Section 2.04(f), the obligation of the
Borrower to pay the Obligations, including the obligation of the Borrower to pay
the Lenders the outstanding principal amount of the Advances and accrued
interest thereon, shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms hereof (including Section 2.14),
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower or any other Person may have or have had
against any Secured Party or any other Person.

 

(e)          As a condition to the payment of principal of and Interest on any
Advance without the imposition of withholding tax, the Borrower or either Agent
may require certification acceptable to it to enable the Borrower and the Agents
to determine their duties and liabilities with respect to any taxes or other
charges that they may be required to deduct or withhold from payments in respect
of such Advance under any present or future law or regulation of the United
States and any other applicable jurisdiction, or any present or future law or
regulation of any political subdivision thereof or taxing authority therein or
to comply with any reporting or other requirements under any such law or
regulation.

 

(f)          Notwithstanding any other provision of this Agreement, the
obligations of the Borrower under this Agreement are limited recourse
obligations of the Borrower payable solely from the Collateral in accordance
with the Priority of Payments and, following realization of the Collateral, and
application of the proceeds thereof in accordance with the Priority of Payments
and, subject to Section 2.12, all obligations of and any claims against the
Borrower hereunder or in connection herewith after such realization shall be
extinguished and shall not thereafter revive. No recourse shall be had against
any officer, director, employee, shareholder, Affiliate, member, manager, agent,
partner, principal or incorporator of the Borrower or their respective
successors or assigns for any amounts payable under this Agreement. It is
understood that the foregoing provisions of this clause (f) shall not (i)
prevent recourse to the Collateral for the sums due or to become due under any
security, instrument or agreement which is part of the Collateral or
(ii) constitute a waiver, release or discharge of any indebtedness or obligation
evidenced by this Agreement until such Collateral has been realized. It is
further understood that the foregoing provisions of this clause (f) shall not
limit the right of any Person to name the Borrower as a party defendant in any
proceeding or in the exercise of any other remedy under this Agreement, so long
as no judgment in the nature of a deficiency judgment or seeking personal
liability shall be asked for or (if obtained) enforced against the Borrower.

 

Section 2.05.         Prepayment of Advances

 

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

 

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

 

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

 

Section 2.06.         Changes of Commitments

 

(a)          Automatic Reduction and Termination. The Commitments of all Lenders
shall be automatically reduced to zero at 5:00 p.m. on the Commitment
Termination Date.

 

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

 

(c)          Effect of Termination or Reduction. The Commitments of the Lenders
once terminated or reduced may not be reinstated. Each reduction of the Facility
Amount pursuant to this Section 2.06 shall be applied ratably among the Lenders
in accordance with their respective Commitments.

 

Section 2.07.         Maximum Lawful Rate

 

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

 

Section 2.08.         Several Obligations

 

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

 

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Section 2.09.         Increased Costs

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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Section 2.10.         Compensation; Breakage Payments

 

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

 

Section 2.11.         Illegality; Inability to Determine Rates

 

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

 

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

 

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

 

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Section 2.12.         Fees

 

(a)          Commitment Fee. On each Payment Date, the Borrower shall pay to the
Collateral Agent (for the account of the Lenders on a pro rata basis) a
commitment fee (a “Commitment Fee”) in an amount equal to the sum, for each day
during the related Interest Accrual Period and before the last day of the
Reinvestment Period, of the product of (i) 0.50% per annum, divided by 360 and
(ii) the Unused Amount, in each case for each such day during the related
Interest Accrual Period.

 

(b)          Prepayment Fee. If, during the Reinvestment Period, the Facility
Amount is reduced in whole or in part at the option or election of the Borrower,
the Borrower shall pay to the Collateral Agent (for the account of the Lenders
on a pro rata basis), a prepayment fee (a “Prepayment Fee”) equal to the product
of (i) 0.50% of the Facility Amount (in the event the Commitments are terminated
or the Facility Amount is reduced in whole) or the amount of such reduction of
the Facility Amount (in the event the Facility Amount is reduced in part) and
(ii) the actual number of days remaining in the Reinvestment Period, divided by
360. Such Prepayment Fee shall be payable on the date of the termination of this
Agreement (in the event this Agreement is terminated in whole) or on the first
Payment Date immediately succeeding the reduction of the Facility Amount (in the
event the Facility Amount is reduced in part).

 

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

 

Section 2.13.         Rescission or Return of Payment

 

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

 

Section 2.14.         Post-Default Interest

 

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

 

Section 2.15.         Payments Generally

 

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

 

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

 

Section 2.16.         Replacement of Lenders

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 2.17.         Defaulting Lenders.

 

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

 

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

 

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

 

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

 

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

 

ARTICLE III

CONDITIONS PRECEDENT

 

Section 3.01.         Conditions Precedent to Initial Advances

 

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

 

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

 

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

 

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

 

(d)          proper financing statements, duly filed on or before the Closing
Date, under the UCC with the Delaware Secretary of State in order to perfect the
interests in the Collateral contemplated by this Agreement;

 

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

 

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

 

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

 

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

 

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

 

(j)          a certificate of a Responsible Officer of the Borrower, dated as of
the Closing Date, certifying to the effect that, in the case of each item of
Collateral pledged to the Collateral Agent, on the Closing Date and, in the case
of clause (i) through (iv) below, after giving effect to the transactions
contemplated on the Closing Date, including the merger of 405 Loan Funding LLC
with and into the Borrower, the acquisition of Collateral Loans contemplated to
occur on the Closing Date and the Advances made on the Closing Date:

 

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

 

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

 

(iii)        the Borrower has not assigned, pledged or otherwise encumbered any
interest in such Collateral (or, if any such interest has been assigned, pledged
or otherwise encumbered, it has been released) other than interests granted
pursuant to this Agreement;

 

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

 

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

 

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

 

(l)           evidence reasonably satisfactory to it that the TRS Agreement has
been terminated;

 

(m)         the Closing Date Participation Agreement, duly executed and
delivered by the parties thereto, which shall be in full force and effect; and

 

55

 

 

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

 

Section 3.02.         Conditions Precedent to Each Borrowing

 

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

 

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

 

(b)          immediately after the making of such Advance on the applicable
Borrowing Date, each Coverage Test and Collateral Quality Test shall be
satisfied (as demonstrated on the Borrowing Base Calculation Statement attached
to such Notice of Borrowing);

 

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

 

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

 

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

 

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

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Section 4.01.         Representations and Warranties of the Borrower

 

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

 

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

 

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

 

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

 

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

 

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

 

57

 

 

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

 

(g)          Location. The Borrower’s office in which the Borrower maintains its
corporate books and records is located in the State of New York. The Borrower’s
registered office and jurisdiction of organization of the Borrower is the
jurisdiction referred to in Section 4.01(a).

 

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

 

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

 

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

 

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

 

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

 

(m)        Representations Relating to the Collateral.

 

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

 

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

 

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

 

(iv)        all Covered Accounts constitute “securities accounts” under Section
8-501(a) of the UCC;

 

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

 

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

 

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

 

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

 

(n)          Prior Activities of the Borrower. The Borrower has not conducted
any business or other activities other than entry into and performance under the
TRS Agreement and activities incidental thereto, including in connection with
the termination of the TRS Agreement and the merger of 405 Loan Funding LLC with
and into the Borrower on the Closing Date. As of the Closing Date, the TRS
Agreement has been terminated. As of the Closing Date, the Borrower has no
creditors other than the Lenders under this Agreement or arising out of
activities incidental to or contemplated by the Facility Documents or its
Constituent Documents.

 

(o)          Prior Name of the Borrower. The Borrower was previously known as
“405 TRS I, LLC” and “CB Funding I, LLC.” The Borrower’s name was changed to (i)
“CB Funding I, LLC” pursuant to a Certificate of Amendment filed on June 10,
2014 with the Office of the Secretary of State of Delaware and to (ii) “BDCA-CB
Funding, LLC” pursuant to a Certificate of Amendment filed on June 19, 2014 with
the Office of the Secretary of State of Delaware.

 

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Section 4.02.         Representations and Warranties of the Collateral Manager

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)          Investment Company Act, Investment Advisers Act of 1940, Etc. The
Collateral Manager is an externally managed, non-diversified closed-end
investment company that has elected to be treated as a business development
company under the Investment Company Act. The Collateral Manager has elected to
be treated for U.S. federal income tax purposes as, and qualifies as, a
regulated investment company under Subchapter M of the Code. The Collateral
Manager is managed by BDCA Adviser, LLC, a private investment firm that is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended.

 

ARTICLE V

COVENANTS

 

Section 5.01.         Affirmative Covenants of the Borrower

 

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

 

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

 

(b)          Enforcement.

 

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

 

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

 

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

 

(d)          Financial Statements; Other Information. It shall provide to the
Administrative Agent or cause to be provided to the Administrative Agent (with
enough additional copies for each Lender):

 

(i)          within 120 days after the end of each fiscal year of BDCA, an
annual report containing an audited consolidated statement of assets,
liabilities, and capital as of the end of such fiscal year, and audited
consolidated statements of operations and cash flows, for the year then ended,
prepared in accordance with GAAP, each reported on by independent public
accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of BDCA and its consolidated subsidiaries on a consolidated basis;

 

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

 

(iii)        within three Business Days after a Responsible Officer of the
Borrower obtains actual knowledge of the occurrence and continuance of any (A)
Default or (B) Event of Default, a certificate of a Responsible Officer of the
Borrower setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;

 

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

 

(v)         to the extent received by the Collateral Manager (on behalf of the
Borrower) pursuant to the Related Documents, the complete financial reporting
package with respect to each Obligor and with respect to each Collateral Loan
for such Obligor (including any financial statements, management discussion and
analysis, executed covenant compliance certificates and related covenant
calculations with respect to such Obligor and with respect to each Collateral
Loan for such Obligor) provided to the Collateral Manager (on behalf of the
Borrower) for the periods required by the Related Documents, which delivery
shall be made within ten (10) Business Days after receipt by the Borrower or the
Collateral Manager (on behalf of the Borrower) as specified in the Related
Documents;

 

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

 

(vii)       copies of any material amendment, restatement, supplement, waiver or
other modification to the Related Documents of any Loan (along with any internal
documents prepared by the Collateral Manager and provided to its investment
committee in connection with such amendment, restatement, supplement, waiver or
other modification) within ten (10) Business Days of the effectiveness of such
amendment, restatement, supplement, waiver or other modification; and

 

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

 

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

 

(e)          Access to Records and Documents. It shall permit the Administrative
Agent (or any Person designated by the Administrative Agent, subject to delivery
of standard confidentiality agreements) to, upon reasonable advance notice and
during normal business hours, visit and inspect and make copies thereof at
reasonable intervals (i) its books, records and accounts relating to its
business, financial condition, operations, assets and its performance under the
Facility Documents and the Related Documents and to discuss the foregoing with
its and such Person’s officers, partners, employees and accountants, and (ii)
all of its Related Documents, in each case all as often as the Administrative
Agent may reasonably request; provided that so long as no Event of Default has
occurred, the Borrower shall be responsible for all costs and expenses for only
one such visit per fiscal year by the Administrative Agent or its designee;
provided, further, however, that so long as no Event of Default has occurred,
the Administrative Agent shall not make more than one visit or inspection per
calendar quarter and no Lender (that is not the Administrative Agent) shall make
more than one visit or inspection per calendar year. The Administrative Agent
shall be permitted to schedule such visits on behalf of the Lenders and shall
(1) coordinate in good faith with the Lenders to determine dates which are
acceptable to a majority of the Lenders and (2) provide 10 days’ prior notice to
the Lenders of any such visit and any Lender shall be permitted to accompany the
Administrative Agent in such visit.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(m)          Certificate of Assignment for Closing Date Participation Interest.
As soon as practicable, but in no event later than the date that is ninety (90)
days after the Closing Date (or such longer period to which the Administrative
Agent may agree), the Borrower shall use its commercially reasonable efforts
deliver to the Custodian and the Administrative Agent a copy of the fully
executed assignment agreement assigning the Collateral Loan related to the
Closing Date Participation Interest directly to the Borrower, certified by an
officer of the Borrower (or the Collateral Manager on behalf of the Borrower)
and written evidence satisfactory to the Administrative Agent that the Borrower
is recognized as the owner of record by the related administrative agent in
respect of the Related Documents.

 

Section 5.02.         Negative Covenants of the Borrower

 

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

 

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

 

(b)          Liquidation; Merger; Sale of Collateral. It shall not consummate
any plan of liquidation, dissolution, partial liquidation, merger (other than
the merger of 405 Loan Funding LLC with and into the Borrower on the Closing
Date) or consolidation (or suffer any liquidation, dissolution or partial
liquidation) nor sell, transfer, exchange or otherwise dispose of any of its
assets, or enter into an agreement or commitment to do so or enter into or
engage in any business with respect to any part of its assets, except as
expressly permitted by this Agreement and the other Facility Documents
(including in connection with the repayment in full of the Obligations).

 

(c)          Amendments to Constituent Documents, Etc. Without the consent of
the Administrative Agent (such consent not to be unreasonably withheld or
delayed), (i) it shall not, in any material respect, amend, modify or take any
action inconsistent with its Constituent Documents (provided, however, in the
event of any amendment or other modification to its Constituent Documents
required by Law, the Borrower shall only be required to give the Administrative
Agent prior written notice of such amendment or other modification) and (ii) it
will not amend, modify or waive in any material respect any term or provision in
any Facility Document (other than in accordance with any provision thereof
requiring the consent of the Administrative Agent or all or a specified
percentage of the Lenders).

 

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

 

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

 

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

 

(g)          Transactions with Affiliates. It shall not sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates (including sales of Defaulted Collateral Loans and other
Collateral Loans), unless such transaction is upon terms no less favorable to
the Borrower than it would obtain in a comparable arm’s length transaction with
a Person that is not an Affiliate (it being agreed that any purchase or sale at
par shall be deemed to comply with this provision).

 

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

 

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

 

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

 

(k)          Validity of this Agreement. It shall not (i) permit the validity or
effectiveness of this Agreement or any grant of Collateral hereunder to be
impaired, or permit the Lien of this Agreement to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenant or obligation with respect to this Agreement and (ii) except as
permitted by this Agreement, take any action that would permit the Lien of this
Agreement not to constitute a valid first priority perfected security interest
in the Collateral (other than Collateral with an aggregate fair market value at
any time not greater than $100,000).

 

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(l)          Subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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Section 5.03.         Affirmative Covenants of the Collateral Manager

 

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

 

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

 

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

 

(c)          Notice of Default. Within three Business Days after a Responsible
Officer of the Collateral Manager obtains actual knowledge of the occurrence and
continuance of any (A) Default or (B) Event of Default, a certificate of a
Responsible Officer of the Collateral Manager setting forth the details thereof
and the action which the Collateral Manager is taking or proposes to take with
respect thereto.

 

Section 5.04.         Negative Covenant of the Collateral Manager

 

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

 

Section 5.05.         Certain Undertakings Relating to Separateness

 

Without limiting any, and subject to all, other covenants of the Borrower
contained in this Agreement, the Borrower shall conduct its business and
operations separate and apart from that any other Person (including BDCA and any
of its Affiliates) and in furtherance of the foregoing:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)          The Borrower shall maintain an arm’s length relationship with its
Affiliates.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE VI

EVENTS OF DEFAULT

 

Section 6.01.         Events of Default

 

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

 

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

 

(b)          (i) the Borrower fails to repay the Obligations (other than
contingent indemnification and reimbursement obligations for which no claim
giving rise thereto has been asserted) in full on the Final Maturity Date or
(ii) the failure to make payment of the Mandatory Amortization Amount on the
applicable Payment Date and such default has not been cured within two (2)
Business Days after the due date of such payment; or

 

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

 

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

 

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

 

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(f)          the Borrower shall have made payments totaling more than $500,000
in the aggregate to settle any litigation, claim or dispute (excluding the
amount of any payment made from insurance proceeds); or

 

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

 

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

 

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

 

(j)          a Change of Control occurs; or

 

(k)          a Collateral Manager Default occurs; or

 

(l)          during the Reinvestment Period, the Collateral Quality Tests are
out of compliance on any date of determination and such non-compliance is not
cured within thirty (30) Business Days; or

 

(m)          the Borrowing Base Test shall not be satisfied and such failure
shall continue for two (2) Business Days; or

 

(n)          the Equity Coverage Ratio is less than the Termination Percentage
and such deficiency shall continue for one (1) Business Day; or

 

(o)          the Equityholder fails to maintain unencumbered liquidity
(calculated as the sum of (i) unrestricted cash or cash equivalents and (ii)
undrawn available liquidity under committed credit facilities of the
Equityholder and its Subsidiaries (other than the Borrower)) in an amount at
least equal to the cumulative amount of principal payments owed by the
Equityholder in the subsequent thirty day period; or

 

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

 

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

 

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

 

In addition, upon the occurrence and during the continuation of an Event of
Default, following written notice by the Administrative Agent (provided in its
sole discretion or at the direction of the Required Lenders) to the Collateral
Manager of the exercise of control rights with respect to the Collateral, the
Administrative Agent may exercise such rights, including: (v) the exercise of
the Collateral Manager’s rights and obligations under the Facility Documents,
including its unilateral power to (A) consent to modifications to Collateral
Loans, (B) take any discretionary action with respect to Collateral Loans and
(C) direct the acquisition, sales and other dispositions of Collateral Loans may
be immediately terminated; (w) the transfer of the Collateral Manager’s rights
and obligations under the Facility Documents to a successor Collateral Manager;
(x) if the Collateral Manager is not terminated or otherwise replaced in
accordance with this Agreement, to require the Collateral Manager to obtain the
consent of the Administrative Agent before agreeing to any modification of any
Collateral Loan, taking any discretionary action with respect to any Collateral
Loan or causing the Borrower to sell or otherwise dispose of any Collateral
Loan; (y) if the Collateral Manager is not terminated or otherwise replaced in
accordance with this Agreement, to require the Collateral Manager to cause the
Borrower to sell or otherwise dispose of any Collateral Loan as directed by the
Administrative Agent pursuant to Section 7.03, and (z) with respect to any
specific Collateral Loan, to require the Collateral Manager to take such
discretionary action with respect to such Collateral Loan as directed by the
Administrative Agent. In connection with any sale or proposed sale of the
Collateral during the continuance of an Event of Default (whether pursuant to
the Facility Documents or applicable law), BDCA (or any Affiliate or designee
thereof) shall have the exclusive right to purchase all Collateral Loans (but
not in part) so long as (1) BDCA provides notice to the Administrative Agent of
its intent to acquire and/or refinance the entire Collateral portfolio within
three (3) days of receipt of notice by the Collateral Manager of the intent to
liquidate the Collateral, (2) the Proceeds of such acquisition and/or
refinancing are sufficient to extinguish all Obligations under the Facility
Documents (other than unasserted contingent obligations) and (3) such
acquisition and/or refinancing is completed within ten (10) Business Days of the
date of the Administrative Agent’s notice of intent to liquidate the Collateral.

 

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ARTICLE VII

PLEDGE OF COLLATERAL;

RIGHTS OF THE COLLATERAL AGENT

 

Section 7.01.         Grant of Security

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 7.02.         Release of Security Interest

 

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

 

Section 7.03.         Rights and Remedies

 

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

 

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

 

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Section 7.04.         Remedies Cumulative

 

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

 

Section 7.05.         Related Documents

 

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

 

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

 

Section 7.06.         Borrower Remains Liable

 

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

 

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

 

Section 7.07.         Protection of Collateral

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE VIII

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

Section 8.01.         Collection of Money

 

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

 

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Section 8.02.         Collection Account

 

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

 

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

 

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

 

Section 8.03.         Payment Account

 

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

 

Section 8.04.         The Unfunded Reserve Account; Fundings

 

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

 

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

 

(b)          at all times during the Reinvestment Period:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 8.05.         [Reserved]

  

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

 

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

 

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

 

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

 

Section 8.07.         Accountings

 

(a)          Monthly. Not later than two (2) Business Days prior to the 15th
calendar day of each calendar month (other than January, April, July, and
October in each year) such date (the “Monthly Reporting Date”), the Borrower
shall compile and provide (or cause to be compiled and provided) to the Agents,
the Collateral Manager, and the Lenders, a monthly report (which includes a
Borrowing Base Calculation Statement prepared by the Collateral Manager and
provided to the Collateral Agent for inclusion in the Monthly Report) (each, a
“Monthly Report”) in accordance with this Section 8.07. The Borrower shall
compile and provide (or cause to be compiled and provided) to the Administrative
Agent a loan data file (the “Data File”) for the previous monthly period ending
on the Monthly Report Determination Date (containing such information agreed
upon by the Borrower (or the Collateral Manager on its behalf), and the
Administrative Agent). The Borrower shall provide (or cause to be provided) the
Data File at least two (2) Business Days prior to the Monthly Reporting Date. As
used herein, the “Monthly Report Determination Date” with respect to any
calendar month will be the last day of the prior calendar month. For the
avoidance of doubt, the first Monthly Report shall be delivered on August 15,
2014 and shall be determined with respect to the Monthly Report Determination
Date that is July 31, 2014. The Monthly Report for a calendar month shall be in
a form reasonably acceptable to the Borrower, the Collateral Agent, the
Collateral Manager and the Administrative Agent and shall contain the
information with respect to the Collateral Loans and Eligible Investments
included in the Collateral set forth in Schedule 2 hereto, and shall be
determined as of the Monthly Report Determination Date for such calendar month.

 

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

 

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

 

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

 

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

 

Section 8.08.         Release of Collateral

 

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

 

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

 

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

 

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

 

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

 

Section 8.09.         Reports by Independent Accountants

 

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

 

(b)          The Collateral Manager will cause the Independent Accountants to
furnish to the Administrative Agent and each Lender (with a copy to the
Collateral Agent), within 120 days of the each of each fiscal year of the
Borrower, to the effect that (i) such firm has applied certain agreed-upon
procedures approved by the Administrative Agent (as such agreed-upon procedures
may be updated from time to time in response to requests of the Administrative
Agent) with respect to a selection of Monthly Reports and/or Payment Date
Reports from the related fiscal year and with respect to the Collateral
Manager’s performance hereunder, and (ii) based on such examination, such firm
is of the opinion that the Monthly Reports and Payment Date Reports for the
related fiscal year were prepared in compliance with this Agreement, except for
such exceptions as it believes to be immaterial and such other exceptions as
will be set forth in such firm’s report (including, with respect to any such
exceptions, an explanation of how each such exception arose and reflecting the
input/explanation of the Collateral Manager thereto). Such reports pursuant to
this clause (b) shall be at the expense of the Borrower.

 

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

 

ARTICLE IX

APPLICATION OF MONIES

 

Section 9.01.         Disbursements of Monies from Payment Account

 

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

 

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

 

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

 

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

 

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

 

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

 

(E)         (1) prior to the occurrence of an Event of Default, (x) if the
Borrowing Base Test is not satisfied as of the relevant Determination Date, to
pay principal of the Advances of each Lender (pro rata, based on each Lender’s
Percentage) until the Borrowing Base Test is satisfied (on a pro forma basis as
at such Determination Date) and (y) if the Equity Coverage Test is not satisfied
as of the relevant Determination Date, to pay principal of the Advances of each
Lender (pro rata, based on each Lender’s Percentage) until the Equity Coverage
Test is satisfied (on a pro forma basis as at such Determination Date) and (2)
after the occurrence and during the continuance of an Event of Default, to pay
the principal of the Advances of each Lender (pro rata, based on each Lender’s
Percentage) until paid in full;

 

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

 

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

 

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

 

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

 

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

 

(K)         after the Reinvestment Period, to be allocated at the discretion of
the Collateral Manager (in written notice to the Agents delivered on or prior to
the related Determination Date) to any one or more of the following payments:
(1) to prepay the Advances, (2) for deposit into the Unfunded Reserve Account or
(3) to the Borrower or its designee.

 

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

 

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

 

(B)         during the Reinvestment Period, at the discretion of the Collateral
Manager, all remaining amounts shall be allocated to any one or more of the
following payments: (1) to the Principal Collection Subaccount for the purchase
of additional Collateral Loans and the funding of Delayed Drawdown Collateral
Loans, (2) to prepay the Advances or (3) for deposit into the Unfunded Reserve
Account;

 

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

 

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

 

(E)         to the Borrower or its designee.

 

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

 

ARTICLE X

SALE OF COLLATERAL LOANS;

PURCHASE OF ADDITIONAL COLLATERAL LOANS

 

Section 10.01.         Sales of Collateral Loans

 

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

 

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

 

(ii)         upon giving effect thereto and the application of the proceeds
thereof, the Borrowing Base Test is satisfied;

 

(iii)        upon giving effect thereto and the application of the proceeds
thereof, each other Coverage Test is satisfied and each Collateral Quality Test
is satisfied (or, if any such other Coverage Test or any Collateral Quality Test
is not satisfied, such test is maintained or improved after giving effect to
such sale); and

 

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(iv)        such sale is made for Cash.

 

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

 

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

 

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

 

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

 

Section 10.02.         Purchase of Additional Collateral Loans

 

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

 

(i)          such obligation is a Collateral Loan;

 

(ii)         each Collateral Quality Test is satisfied (or, if not satisfied
immediately prior to such investment, compliance with such Collateral Quality
Test is maintained or improved); and

 

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(iii)        each Coverage Test is satisfied.

 

Section 10.03.         Conditions Applicable to All Sale and Purchase
Transactions

 

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

 

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

 

Section 10.04.         Additional Equity Contributions

 

The Equityholder may, but shall have no obligation to, at any time or from time
to time make a capital contribution to the Borrower for any purpose, including
for the purpose of curing any Default, satisfying any Coverage Test, enabling
the acquisition or sale of any Collateral Loan or satisfying any conditions
under Section 3.02. Each contribution shall either be made (a) in Cash, (b) by
assignment and contribution of an Eligible Investment and/or (c) by assignment
of a Collateral Loan that is not an Ineligible Collateral Loan. All Cash
contributed or loaned to the Borrower shall be treated as Principal Proceeds,
except to the extent that the Collateral Manager specifies that such Cash shall
constitute Interest Proceeds and shall be deposited into a Collection Account in
accordance with Section 8.02 as designated by the Collateral Manager.

 

ARTICLE XI

THE AGENTS

 

Section 11.01.         Authorization and Action

 

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

 

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

 

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

 

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

 

Section 11.02.         Delegation of Duties

 

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

 

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Section 11.03.         Agents’ Reliance, Etc.

 

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

 

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

 

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

 

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

 

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

 

Section 11.04.         Indemnification

 

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

 

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Section 11.05.         Successor Agents

 

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

 

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

 

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

 

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ARTICLE XII

MISCELLANEOUS

 

Section 12.01.      No Waiver; Modifications in Writing

 

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

 

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

 

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

 

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

 

Section 12.02.      Notices, Etc.

 

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

 

Section 12.03.         Taxes

 

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

 

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

 

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

 

(d)          The Borrower shall not be required to indemnify any Secured Party,
or pay any additional amounts to any Secured Party, in respect of U.S. federal
withholding Tax or U.S. federal backup withholding Tax to the extent that (i)
the obligation to withhold amounts with respect to U.S. federal withholding or
backup withholding Tax existed on the date such Lender became a party to this
Agreement or, with respect to payments to a new lending office so designated by
a Lender (a “New Lending Office”), the date such Lender designated such New
Lending Office with respect to an Advance; provided that this clause (i) shall
not apply to the extent the indemnity payment or additional amounts any Secured
Party would be entitled to receive (without regard to this clause (i)) do not
exceed the indemnity payment or additional amounts that the transferor Lender or
the Lender making the designation of such New Lending Office would have been
entitled to receive in the absence of such transfer or designation, or (ii) the
obligation to pay such additional amounts would not have arisen but for a
failure by such Secured Party to comply with clauses (g) or (i) below.

 

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

 

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

 

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(g)          Each Secured Party and each Participant that is a U.S. person as
that term is defined in Section 7701(a)(30) of the Code hereby agrees that it
shall, no later than the Closing Date or, in the case of a Secured Party or a
Participant which becomes a party hereto pursuant to Section 12.06, the date
upon which such Secured Party becomes a party hereto or Participant herein,
deliver to the Borrower and each Agent, if applicable, two accurate, complete
and signed copies of U.S. Internal Revenue Service Form W-9 or any successor
form, certifying that such Secured Party or Participant is on the date of
delivery thereof entitled to an exemption from U.S. backup withholding Tax. Each
Secured Party or Participant that is organized under the laws of a jurisdiction
outside than the United States (a “Non-U.S. Lender”) shall, no later than the
date on which such Secured Party becomes a party hereto or a Participant herein
pursuant to Section 12.06, deliver to the Borrower and each Agent two properly
completed and duly executed copies of either U.S. Internal Revenue Service Form
W-8BEN, W-8ECI or W-8IMY or any subsequent versions thereof or successors
thereto, in each case (a) claiming a complete exemption from U.S. federal
withholding Tax, or (b) if, due to a change in law occurring after the date of
this Agreement, such Non-U.S. Lender is not entitled to a complete exemption
from U.S. federal withholding Tax, to the extent that such Non-U.S. Lender is
legally entitled to do so, claiming a reduced rate of U.S. federal withholding
Tax, in each case, with respect to payments of interest hereunder. In addition,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding Tax under Section 871(h) or 881(c) of the Code, such Non-U.S. Lender
hereby represents that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code), and such Non-U.S. Lender agrees that it shall promptly
notify the Borrower and each Agent in the event any such representation is no
longer accurate. Such forms shall be delivered by each Non-U.S. Lender on or
before the date it becomes a party to this Agreement or Participant herein and
on or before the date, if any, such Non-U.S. Lender designates a New Lending
Office. In addition, each Non-U.S. Lender agrees that, from time to time after
the Closing Date, such Non-U.S. Lender shall deliver the forms described above,
as applicable, as promptly as practicable after (i) receipt of a reasonable
written request therefor from the Borrower or an Agent or (ii) when a lapse in
time or change in circumstance renders a previously provided form or certificate
obsolete or inaccurate. Notwithstanding any other provision of this Section
12.03, a Non-U.S. Lender shall not be required to deliver any form after the
Closing Date pursuant to this Section 12.03(g) that such Non-U.S. Lender is not
legally able to deliver.

 

(h)          If any Secured Party requires the Borrower to pay any additional
amount to such Secured Party or any Governmental Authority for the account of
such Secured Party or to indemnify such Secured Party pursuant to this Section
12.03, then such Secured Party shall use reasonable efforts to designate a
different lending office for funding or booking its Advances hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if such Secured Party determines, in its sole discretion that
such designation or assignment (i) would eliminate or reduce amounts payable
pursuant to this Section 12.03 in the future and (ii) would not subject such
Secured Party to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Secured Party. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Secured Party in connection with
any such designation or assignment.

 

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(i)          If a payment made to a Secured Party under this Agreement or any
Note would be subject to U.S. federal withholding Tax imposed by FATCA if such
Secured Party were to fail to comply with the applicable reporting requirements
of FATCA, such Secured Party shall deliver to the Borrower and each Agent such
documentation prescribed by Law or as is reasonably requested by the Borrower
and the Agent sufficient for the Borrower and the Agent to comply with their
obligations under FATCA and to determine that such Secured Party has complied
with such applicable reporting requirements. Solely for purposes of this
paragraph (i), “FATCA” shall include any amendments made to FATCA after the date
of this Agreement.

 

(j)          Nothing in this Section 12.03 shall be construed to require any
Secured Party to make available its Tax returns (or any other information
relating to its Taxes that it deems confidential) to the Borrower or any other
Person.

 

Section 12.04.         Costs and Expenses; Indemnification

 

(a)          The Borrower agrees to promptly pay on demand all reasonable and
documented out-of-pocket costs and expenses of the Agents in connection with the
preparation, review, negotiation, reproduction, execution and delivery of this
Agreement and the other Facility Documents, including the reasonable and
documented fees and disbursements of one outside counsel for the Administrative
Agent and one outside counsel for the Collateral Agent, costs and expenses of
creating, perfecting, releasing or enforcing the Collateral Agent’s security
interests in the Collateral, including filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, UCC filing fees and all other
related fees and expenses in connection therewith; and in connection with the
administration and any modification or amendment of this Agreement, the Notes or
any other Facility Document and advising the Agents as to their respective
rights, remedies and responsibilities. The Borrower agrees to promptly pay on
demand all reasonable and documented costs and expenses of each of the Secured
Parties in connection with the enforcement of this Agreement, the Notes or any
other Facility Document, including all reasonable and documented costs and
expenses incurred by the Collateral Agent in connection with the preservation,
collection, foreclosure or enforcement of the Collateral subject to the Facility
Documents or any interest, right, power or remedy of the Collateral Agent or in
connection with the collection or enforcement of any of the Obligations or the
proof, protection, administration or resolution of any claim based upon the
Obligations in any insolvency proceeding, including all reasonable fees and
disbursements of attorneys, accountants, auditors, consultants, appraisers and
other professionals engaged by the Collateral Agent. Without prejudice to its
rights hereunder, the expenses and the compensation for the services of the
Secured Parties are intended to constitute expenses of administration under any
applicable bankruptcy law.

 

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(b)          The Borrower agrees to indemnify and hold harmless each Secured
Party and each of their Affiliates and the respective officers, directors,
employees, agents, managers of, and any Person controlling any of, the foregoing
(each, an “Indemnified Party”) from and against any and all Liabilities that may
be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of the execution,
delivery, enforcement, performance, administration of or otherwise arising out
of or incurred in connection with this Agreement, any other Facility Document,
any Related Document or any transaction contemplated hereby or thereby (and
regardless of whether or not any such transactions are consummated), including
any such Liability that is incurred or arises out of or in connection with, or
by reason of any one or more of the following: (i) preparation for a defense of
any investigation, litigation or proceeding arising out of, related to or in
connection with this Agreement, any other Facility Document, any Related
Document or any of the transactions contemplated hereby or thereby; (ii) any
breach or alleged breach of any covenant by the Borrower contained in any
Facility Document; (iii) any representation or warranty made or deemed made by
the Borrower contained in any Facility Document or in any certificate, statement
or report delivered in connection therewith is, or is alleged to be, false or
misleading in any material respect; (iv) any failure by the Borrower to comply
with any Applicable Law or contractual obligation binding upon it; (v) any
failure to vest, or delay in vesting, in the Collateral Agent (for the benefit
of the Secured Parties) a perfected security interest in all of the Collateral
free and clear of all Liens (other than Permitted Liens); (vi) any action or
omission, not expressly authorized by the Facility Documents, by the Borrower or
any Affiliate of the Borrower which has the effect of impairing the validity or
enforceability of the Collateral or the rights of the Agents or the other
Secured Parties with respect thereto; (vii) the failure to file, or any delay in
filing, financing statements, continuation statements or the equivalent thereof
in any foreign jurisdiction or other similar instruments or documents under the
UCC of any applicable jurisdiction or other Applicable Law with respect to any
Collateral, whether at the time of any Advance or at any subsequent time; (viii)
any dispute, claim, offset or defense (other than the discharge in bankruptcy of
an Obligor) of an Obligor to the payment with respect to any Collateral
(including a defense based on any Collateral Loan (or the Related Documents
evidencing such Collateral Loan) not being a legal, valid and binding obligation
of such Obligor enforceable against it in accordance with its terms, except to
the extent such unenforceability due to the bankruptcy of such Obligor), or any
other claim resulting from any related property securing such Collateral Loan;
(ix) the commingling of Collections on the Collateral at any time with other
funds; (x) any failure by the Borrower to give reasonably equivalent value to
the applicable seller, in consideration for the transfer by such seller to the
Borrower of any item of Collateral or any attempt by any Person to void or
otherwise avoid any such transfer under any statutory provision or common law or
equitable action, including any provision of the Bankruptcy Code; (xi) the
failure of the Borrower, the Collateral Manager or any of their respective
agents or representatives to remit to the Collection Account, within two (2)
Business Days of receipt, Collections on the Collateral Loans remitted to the
Borrower, the Collateral Manager or any such agent or representative as provided
in this Agreement; and (xii) any Default or Event of Default; except to the
extent any such Liability is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted solely from such Indemnified
Party’s bad faith, gross negligence or willful misconduct. In the case of an
investigation, litigation or proceeding to which the indemnity in this paragraph
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by the Borrower, any of the Borrower’s
equityholders or creditors, an Indemnified Party or any other Person, whether or
not an Indemnified Party is otherwise a party hereto. The Borrower shall not
have any liability hereunder to any Indemnified Party to the extent an
Indemnified Party affects any settlement of a matter that is (or could be)
subject to indemnification hereunder without the prior written consent of the
Borrower. In no case shall the Borrower be responsible for any Indemnified
Party’s lost revenues or lost profits or for any indirect, special, punitive or
consequential damages. This Section 12.04(b) shall not apply with respect to
Taxes other than any Taxes that represent losses, claims, damages, etc. arising
from any non-Tax claim.

 

Section 12.05.         Execution in Counterparts

 

This Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.
Delivery of an executed signature page of this Agreement by facsimile or other
electronic transmission shall be effective as delivery of a manually executed
counterpart hereof.

 

Section 12.06.         Assignability

 

(a)          Subject to the conditions set forth in this Section 12.06, each
Lender may, with the consent of the Administrative Agent and the Borrower,
assign to an assignee all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Advances Outstanding or interests
therein owned by it, together with ratable portions of its Commitment); provided
that such consent shall be deemed to have been granted by the Borrower if the
Borrower shall not have objected in writing within five (5) Business Days of
receipt of any such request for consent; and provided, further, that:

 

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(i)          each of the Borrower’s and the Administrative Agent’s consent to
any such assignment (A) shall not be unreasonably withheld or delayed and (B)
shall not be required if the assignee is a Permitted Assignee with respect to
such assignor; and

 

(ii)         the Borrower’s consent to any such assignment pursuant to this
Section 12.06(a) shall not be required if an Event of Default shall have
occurred (and not been waived by the Lenders in accordance with Section 12.01).

 

The parties to each such assignment shall execute and deliver to the
Administrative Agent (with a copy to the Collateral Agent) an Assignment and
Acceptance and the applicable tax forms required by Section 12.03(g).
Notwithstanding any other provision of this Section 12.06, no assignment by any
Lender to the Borrower or any of its Affiliates shall be permitted unless each
Lender has been offered the opportunity to participate in any such assignment on
a pro rata basis on the same terms.

 

(b)          The Borrower may not assign its rights or obligations hereunder or
any interest herein without the prior written consent of the Administrative
Agent and the Lenders.

 

(c)          (i)          Any Lender may, without the consent of the Borrower,
sell participations to Participants in all or a portion of such Lender’s rights
and obligations under this Agreement; provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (C) such Borrower, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement, and (D) each Participant
shall have agreed to be bound by this Section 12.06(c), Section 12.06(e),
Section 12.09 and Section 12.17. Any agreement pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such agreement may provide
that such Lender will not, without the consent of the Participant, agree to any
Fundamental Amendment. Sections 2.09, 2.10, and 12.03 shall apply to each
Participant as if it were a Lender and had acquired its interest by assignment
pursuant to clause (a) of this Section; provided that no Participant shall be
entitled to any amount under Section 2.09, 2.10, or 12.03 which is greater than
the amount the related Lender would have been entitled to under any such
Sections or provisions if the applicable participation had not occurred.

 

(ii)         In the event that any Lender sells participations in any portion of
its rights and obligations hereunder, such Lender as nonfiduciary agent for the
Borrower shall maintain a register on which it enters the name of all
participants in the Advances held by it and the principal amount (and stated
interest thereon) of the portion of the Advance which is the subject of the
participation (the “Participant Register”). An Advance may be participated in
whole or in part only by registration of such participation on the Participant
Register (and each Note, if any, shall expressly so provide). The Participant
Register shall be available for inspection by the Borrower to the extent
necessary for the Borrower to establish that such commitment, loan or other
obligation is in registered form under Section 5f.103-1 of the United States
Treasury Regulations.

 

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(d)          The Collateral Agent, on behalf of and acting solely for this
purpose as the nonfiduciary agent of the Borrower, shall maintain at its address
specified in Section 12.02 or such other address as the Collateral Agent shall
designate in writing to the Lenders, a copy of this Agreement and each signature
page hereto and each Assignment and Acceptance delivered to and accepted by it
and a register (the “Register”) for the recordation of the names and addresses
of the Lenders and the aggregate outstanding principal amount of the Advances
Outstanding maintained by each Lender under this Agreement (and any stated
interest thereon). The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrower, the Agents and the
Lenders shall treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice. An Advance (and a Note, if
any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Note, if any,
shall expressly so provide) and compliance with this Section 12.06.

 

(e)          Notwithstanding anything to the contrary set forth herein or in any
other Facility Document, each Lender hereunder, and each Participant, must at
all times be a “qualified purchaser” as defined in the Investment Company Act (a
“Qualified Purchaser”) and a “qualified institutional buyer” as defined in Rule
144A under the Securities Act (a “QIB”). Each Lender represents to the Borrower,
(i) on the date that it becomes a party to this Agreement (whether by being a
signatory hereto or by entering into an Assignment and Acceptance) and (ii) on
each date on which it makes an Advance hereunder, that it is a Qualified
Purchaser and a QIB. Each Lender further agrees that it shall not assign, or
grant any participations in, any of its Advances or its Commitment to any Person
unless such Person is a Qualified Purchaser and a QIB.

 

(f)          Notwithstanding any other provision of this Section 12.06, any
Lender may at any time pledge or grant a security interest in all or any portion
of its rights (including rights to payment of principal and interest) under this
Agreement to secure obligations of such Lender, including any pledge or security
interest granted to a Federal Reserve Bank, without notice to or consent of the
Borrower or the Administrative Agent; provided that no such pledge or grant of a
security interest shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or grantee for such Lender as a party
hereto.

 

(g)          In the event that any Lender makes a claim for any payment,
reimbursement, compensation, indemnity or other amount pursuant to Section 2.09
or 12.03, the Borrower may, upon not less than five (5) days prior written
notice to such Lender, the Administrative Agent and the Collateral Agent,
require that any such Lender transfer all of its rights and obligations
hereunder and under the other Facility Documents either to (i) the Borrower so
long as no Default or Event of Default exists or would result from such transfer
(which transfer shall be effected through prepayment of all Advances Outstanding
of the affected Lender), (ii) any other then existing Lender (with the consent
of such existing Lender in its sole discretion) or (iii) to any assignee
selected by the Borrower who would not then be entitled to any payment,
reimbursement, compensation indemnity or other amount pursuant to Section 2.09
or 12.03, at a price equal to such transferring Lender’s Advances Outstanding
plus accrued and unpaid Interest thereon and its ratable portion of the accrued
and unpaid Commitment Fees. Any such transfer (other than to the Borrower) will
be effected in accordance with the procedures described in Section 12.06(a). At
the time of any such transfer, the Borrower shall pay the transferring Lender
any other Obligations then owed to such Lender.

 

Section 12.07.         Governing Law

 

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN
CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER FACILITY DOCUMENT (EXCEPT, AS TO ANY OTHER FACILITY
DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK.

 

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Section 12.08.         Severability of Provisions

 

Any provision of this Agreement or any other Facility Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

Section 12.09.         Confidentiality

 

Each Secured Party agrees to keep confidential all information provided to it by
the Borrower or the Collateral Manager with respect to the Borrower, its
Affiliates, the Collateral, the Related Documents, the Obligors, the Collateral
Manager or any other information furnished to such Secured Party under or in
connection with this Agreement (collectively, the “Borrower Information”);
provided that nothing herein shall prevent any Secured Party from disclosing any
Borrower Information (a) in connection with this Agreement and the other
Facility Documents and not for any other purpose, (i) to any Secured Party or
any Affiliate of a Secured Party, or (ii) any of their respective Affiliates,
employees, directors, agents, attorneys, accountants and other professional
advisors (collectively, the “Secured Party Representatives”), it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Borrower Information and instructed to keep such
Borrower Information confidential, (b) subject to an agreement to comply with
the provisions of this Section and to use the Borrower Information only in
connection with this Agreement and the other Facility Documents and not for any
other purpose, to any actual or bone fide prospective permitted assignees and
Participants in any of the Secured Parties’ interests under or in connection
with this Agreement or any actual or prospective party (or its Secured Party
Representatives) to any swap, derivative or other transaction under which
payments are to be made by reference to the Borrower and its obligations, this
Agreement or payments hereunder, (c) to any Governmental Authority with
jurisdiction over any Secured Party or any of its Affiliates or any Secured
Party Representative, (d) in response to any order of any court or other
Governmental Authority or as may otherwise be required to be disclosed pursuant
to any Applicable Law (provided that such Secured Party will, to the extent
permitted by law, endeavor to promptly notify the Borrower and the Collateral
Manager in advance of such pending disclosure), (e) that is a matter of general
public knowledge or that has heretofore been made available to the public by any
Person other than any Secured Party or any Secured Party Representative, (f) in
connection with the exercise of any remedy hereunder or under any other Facility
Document or any action or proceeding relating to this Agreement or any other
Facility Document or the enforcement of rights hereunder or thereunder, (g) to
the extent required or requested by any regulatory authority purporting to have
jurisdiction over such Person or its Secured Party Representatives (including
any self-regulatory authority, such as the National Association of Insurance
Commissioners), (h) on a confidential basis to (i) any rating agency in
connection with rating the Borrower or the credit facilities provided hereunder
or (ii) the CUSIP Service Bureau or any similar agency in connection with the
issuance and monitoring of CUSIP numbers or other market identifiers with
respect to the credit facilities provided hereunder, or (i) with the consent of
the Borrower or the Collateral Manager.

 

Section 12.10.         Merger

 

This Agreement and the other Facility Documents executed by the Administrative
Agent or the Lenders taken as a whole incorporate the entire agreement between
the parties hereto and thereto concerning the subject matter hereof and thereof
and this Agreement and such other Facility Documents supersede any prior
agreements among the parties relating to the subject matter thereof.

 

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Section 12.11.         Survival

 

All representations and warranties made hereunder, in the other Facility
Documents and in any certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery of
this Agreement and the making of the Advances hereunder. The agreements in
Sections 2.04(f), 2.09, 2.10, 2.12, 12.03, 12.04, 12.09, 12.15 and 12.17
and this Section 12.11 shall survive the termination of this Agreement in whole
or in part, the payment in full of the principal of and interest on the
Advances, any foreclosure under, or modification, release or discharge of, any
or all of the Related Documents and the resignation or replacement of any Agent.

 

Section 12.12.         Submission to Jurisdiction; Waivers; Etc.

 

Each party hereto hereby irrevocably and unconditionally:

 

(a)          submits for itself and its property in any legal action or
proceeding relating to this Agreement or the other Facility Documents to which
it is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York in the Borough of Manhattan, the courts of the United States of America
for the Southern District of New York, and the appellate courts of any of them;

 

(b)          consents that any such action or proceeding may be brought in any
court described in Section 12.12(a) and waives to the fullest extent permitted
by Applicable Law any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

 

(c)          agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address set forth in Section 12.02 or at such other address as may be permitted
thereunder;

 

(d)          agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law; and

 

(e)          waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding against any
Secured Party arising out of or relating to this Agreement or any other Facility
Document any special, exemplary, punitive or consequential damages.

 

Section 12.13.         IMPORTANT WAIVERS

 

(a)          EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER FACILITY DOCUMENT OR FOR ANY COUNTERCLAIM HEREIN OR THEREIN OR
RELATING HERETO OR THERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE EQUITYHOLDER, THE
BORROWER, THE COLLATERAL MANAGER, THE AGENTS OR ANY OTHER AFFECTED PERSON. EACH
PARTY HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER
FACILITY DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR ITS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER FACILITY
DOCUMENT.

 

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(b)          TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES
ANY RIGHT TO CLAIM OR RECOVER IN ANY LITIGATION WHATSOEVER INVOLVING ANY
INDEMNIFIED PARTY, ANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES, WHETHER SUCH WAIVED DAMAGES ARE BASED
ON STATUTE, CONTRACT, TORT, COMMON LAW OR ANY OTHER LEGAL THEORY, WHETHER THE
LIKELIHOOD OF SUCH DAMAGES WAS KNOWN AND REGARDLESS OF THE FORM OF THE CLAIM OF
ACTION. NO PARTY OR INDEMNIFIED PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING
FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS
DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION
TRANSMISSION SYSTEMS IN CONNECTION WITH ANY FACILITY DOCUMENT OR THE
TRANSACTIONS.

 

(c)          EACH PARTY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE OTHER PARTY OR AN INDEMNIFIED PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY OR AN INDEMNIFIED PARTY WOULD NOT SEEK TO ENFORCE ANY OF
THE WAIVERS IN THIS SECTION 12.13 IN THE EVENT OF LITIGATION OR OTHER
CIRCUMSTANCES. THE SCOPE OF SUCH WAIVERS IS INTENDED TO BE ALL–ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THE FACILITY DOCUMENTS, REGARDLESS OF THEIR LEGAL THEORY.

 

(d)          EACH PARTY ACKNOWLEDGES THAT THE WAIVERS IN THIS SECTION 12.13 ARE
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SUCH PARTY HAS
ALREADY RELIED ON SUCH WAIVERS IN ENTERING INTO THE FACILITY DOCUMENTS, AND THAT
SUCH PARTY WILL CONTINUE TO RELY ON SUCH WAIVERS IN THEIR RELATED FUTURE
DEALINGS UNDER THE FACILITY DOCUMENTS. EACH PARTY FURTHER REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED SUCH WAIVERS WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHT TO A JURY TRIAL AND OTHER RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

(e)          THE WAIVERS IN THIS SECTION 12.13 ARE IRREVOCABLE, MEANING THAT
THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL APPLY TO ANY
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY OF THE FACILITY
DOCUMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

 

(f)          THE PROVISIONS OF THIS SECTION 12.13 SHALL SURVIVE TERMINATION OF
THE FACILITY DOCUMENTS AND THE INDEFEASIBLE PAYMENT IN FULL OF THE OBLIGATIONS.

 

Section 12.14.          PATRIOT Act Notice

 

Each Agent and Lender hereby notifies the Borrower that, pursuant to the
requirements of the PATRIOT Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Agent or
Lender to identify the Borrower in accordance with the PATRIOT Act. The Borrower
shall provide, to the extent commercially reasonable, such information and take
such actions as are reasonably requested by any Lender or Agent in order to
assist such Lender or Agent, as applicable, in maintaining compliance with the
PATRIOT Act.

 

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Section 12.15.         Legal Holidays

 

In the event that the date of prepayment of Advances or the Final Maturity Date
shall not be a Business Day, then notwithstanding any other provision of this
Agreement or any other Facility Document, payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the nominal date of any such date of prepayment or Final
Maturity Date, as the case may be, and interest shall accrue on such payment for
the period from and after any such nominal date to but excluding such next
succeeding Business Day.

 

Section 12.16.         Non-Petition

 

Each of the Collateral Manager and each Secured Party hereby agrees not to
institute against, or join, cooperate with or encourage any other Person in
instituting against, the Borrower any bankruptcy, reorganization, receivership,
arrangement, insolvency, moratorium or liquidation proceeding or other
proceeding under federal or state bankruptcy or similar laws until at least one
year and one day, or, if longer, the applicable preference period then in effect
plus one day, after the payment in full of all outstanding Obligations and the
termination of all Commitments; provided that nothing in this Section 12.17
shall preclude, or be deemed to prevent, any Secured Party (a) from taking any
action prior to the expiration of the aforementioned one year and one day
period, or, if longer, the applicable preference period then in effect, in (i)
any case or proceeding voluntarily filed or commenced by the Borrower or
(ii) any involuntary insolvency proceeding filed or commenced against the
Borrower by a Person other than any such Secured Party, or (b) from commencing
against the Borrower or any properties of the Borrower any legal action which is
not a bankruptcy, reorganization, receivership, arrangement, insolvency,
moratorium or liquidation proceeding or other proceeding under federal or state
bankruptcy or similar laws.

 

Section 12.17.         Waiver of Setoff

 

Each of the Borrower and the Collateral Manager hereby waives any right of
setoff it may have or to which it may be entitled under this Agreement or any
Applicable Law from time to time against the Administrative Agent, any Lender or
its respective assets.

 

Section 12.18.         Option to Acquire Rating

 

Each party hereto hereby acknowledges and agrees that the Administrative Agent
(at the expense of the Borrower) may, at any time and in its sole discretion,
obtain a public rating for the loan facility evidenced by this Agreement. The
Borrower and the Collateral Manager hereby agree to use commercially reasonable
efforts, at the request of the Administrative Agent, to cooperate with the
acquisition and maintenance of any such rating.

 

ARTICLE XIII

 

CUSTODIAN

 

Section 13.01.         Appointment of Custodian

 

(a)          Appointment and Acceptance. The Borrower and the Agents each hereby
appoints the Custodian as document custodian of the Loan Files delivered to it
for all Collateral Loans owned by the Borrower at any time during the term of
this Agreement, on the terms and conditions set forth in this Agreement (which
shall include any addendum hereto which is hereby incorporated herein and made a
part of this Agreement), and the Custodian hereby accepts such appointment and
agrees to perform the services and duties set forth in this Agreement with
respect to it, subject to and in accordance with the provisions hereof.

 

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(b)          Instructions. The Borrower agrees that it shall from time to time
provide, or cause to be provided, to the Custodian all necessary instructions
and information, and shall respond promptly to all inquiries and requests of the
Custodian as may reasonably be necessary to enable the Custodian to perform its
duties hereunder.

 

(c)          Collateral Agent. The Custodian shall take and retain custody of
the Loan Files delivered by the Borrower hereunder in accordance with the terms
and conditions of this Agreement, all for the benefit of the Collateral Agent
and the other Secured Parties, in order to perfect under the UCC the Collateral
Agent’s security interest therein for the benefit of the Secured Parties. In
taking and retaining custody of the Loan Files, the Custodian shall be deemed to
be acting as the agent of Collateral Agent for the benefit of the Secured
Parties; provided that the Custodian makes (a) no warranty or representation and
shall have no responsibility for the enforceability, completeness, validity,
sufficiency, value, genuineness, ownership or transferability of the Collateral
Loans and (b) no representation as to the existence, perfection or priority of
any lien on the Collateral Loans or the Required Loan Documents. It is expressly
agreed and acknowledged that the Custodian is not guaranteeing performance of or
assuming any liability for the obligations of the other parties hereto or any
parties to the Collateral Loans.

 

Section 13.02.         Duties of Custodian

 

(a)          Segregation. All Loan Files held by the Custodian for the account
of the Borrower hereunder shall be (a) subject to the lien of the Collateral
Agent on behalf of the Secured Parties, (b) physically segregated from other
loans and non-cash property in the possession of the Custodian and (c)
identified by the Custodian as subject to this Agreement.

 

(b)          Register. The Custodian shall maintain a register (in book-entry
form or in such other form as it shall deem necessary or desirable) of the
Collateral Loans for which it holds Loan Files under this Agreement containing
such information as the Borrower and the Custodian may reasonably agree;
provided that, with respect to such Collateral Loans, all Loan Files shall be
held in safekeeping by the Custodian, individually segregated from the
securities and investments of any other Person and marked so as to clearly
identify such Loan Files as the property of the Borrower as set forth in this
Agreement.

 

Section 13.03.         Delivery of Collateral Loans to Custodian.

 

(a)          The Collateral Manager (on behalf of the Borrower) shall deliver,
or cause to be delivered (which may be via email) on or before the applicable
Borrowing Date or acquisition date (but no more than five (5) Business Days
after such Borrowing Date or acquisition date) to the Custodian all of the Loan
Files for each Collateral Loan owned by the Borrower at any time during the term
of this Agreement at the address identified herein. The Custodian shall not be
responsible for any Collateral Loan or related Loan File until actually received
by it. In connection with each delivery of a Loan File to the Custodian, the
Collateral Manager shall represent and warrant that the Loan Files delivered to
the Custodian include all of the documents listed in the related Document
Checklist and all of such documents and the information contained in the Trade
Confirmation are complete in all material respects.

 

(b)          (i)          Promptly after the acquisition of any Collateral Loan,
the Collateral Manager (on behalf of the Borrower) shall deliver or cause to be
delivered (which may be via email) to the Collateral Agent with a copy to the
Custodian and the Administrative Agent a properly completed Trade Confirmation,
if any, on which the Custodian may conclusively rely without further inquiry or
investigation, and shall deliver to the Custodian the Loan Files for all
Collateral Loans.

 

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(ii)         Notwithstanding anything herein to the contrary, delivery of the
Collateral Loans acquired by the Borrower which constitute Noteless Loans or
which are otherwise not evidenced by a “security” or “instrument” as defined in
Section 8-102 and Section 9-102(a)(47) of the UCC, respectively, shall be made
by delivery to the Custodian of a copy of the loan register with respect to such
Noteless Loan evidencing registration of such Collateral Loan on the books and
records of the applicable Obligor or bank agent to the name of the Borrower (or
its nominee) or a copy (which may be a facsimile copy) of an assignment
agreement in favor of the Borrower as assignee. Any duty on the part of the
Custodian with respect to the custody of such Collateral Loans shall be limited
to the exercise of reasonable care by the Custodian in the physical custody of
the related Loan Files delivered to it.

 

(iii)        The Custodian may assume the genuineness of any document in a Loan
File it may receive and the genuineness and due authority of any signatures
appearing thereon, and shall be entitled to assume that each document it may
receive is what it purports to be. If an original “security” or “instrument” as
defined in Section 8-102 and Section 9-102(a)(47) of the UCC, respectively, is
or shall be or become available with respect to any Collateral Loan to be held
by the Custodian under this Agreement, it shall be the sole responsibility of
the Borrower to make or cause delivery thereof to the Custodian, and the
Custodian shall not be under any obligation at any time to determine whether any
such original “security” or “instrument” has been or is required to be issued or
made available in respect of any Collateral Loan or to compel or cause delivery
thereof to the Custodian.

 

Section 13.04.         Release of Documents/Control By Agents.

 

(a)          The Custodian shall release and ship for delivery, or direct its
agents or sub-custodians to release and ship for delivery, as the case may be,
Loan Files of the Borrower held by the Custodian, its agents or its
sub-custodians from time to time upon receipt of Proper Instructions
(specifying, among other things, the Collateral Loans and Loan Files to be
released and delivery instructions and other information as may be necessary to
enable the Custodian to release and ship such Loan Files), which may be standing
instructions (in a form acceptable to the Custodian) in accordance with this
Agreement.

 

(b)          Upon receipt by the Custodian from the Administrative Agent or the
Collateral Agent, of written notice of the occurrence of an Event of Default
indicating the Administrative Agent’s intent to prohibit the Custodian from
accepting instructions from or on behalf of the Borrower (each such notice, a
“Block Notice”), the Custodian shall no longer accept or act upon Proper
Instructions or other instructions from the Borrower (or the Collateral Manager
on its behalf) hereunder with respect to the Collateral Loans or the Loan Files.
From and after its receipt of a Block Notice, the Custodian shall only comply
with Proper Instructions from the Collateral Agent or Administrative Agent.

 

Section 13.05.         Records.

 

The Custodian shall create and maintain complete and accurate records relating
to its activities under this Agreement with respect to the Collateral Loans or
other property of the Borrower held for the benefit of the Collateral Agent and
the other Secured Parties under this Agreement. All such records shall be the
property of the Borrower and, upon reasonable advance notice, shall at all times
during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Borrower, the Collateral
Agent and the Administrative Agent.

 

Section 13.06.         Reporting

 

(a)          If requested by the Borrower, the Collateral Agent or the
Administrative Agent, the Custodian shall render an itemized report of the Loan
Files held pursuant to this Agreement as of the end of each month and such other
matters as the parties may agree from time to time in form and substance
reasonably satisfactory to the Collateral Agent and the Administrative Agent.

 

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(b)          The Custodian shall have no duty or obligation to undertake any
market valuation of the Collateral Loans under any circumstance.

 

Section 13.07.         Certain General Terms

 

(a)          No Duty to Examine Underlying Instruments. Nothing herein shall
obligate the Custodian to review or examine the terms of any underlying
instrument, certificate, credit agreement, indenture, loan agreement, promissory
note or any other document contained in the Loan Files evidencing or governing
any Collateral Loan to determine the validity, sufficiency, marketability or
enforceability of any Collateral Loan (and shall have no responsibility for the
genuineness or completeness thereof) or otherwise.

 

(b)          Resolution of Discrepancies. In the event of any discrepancy
between the information set forth in any report provided by the Custodian to the
Borrower and any information contained in the books or records of the Borrower,
the Borrower (or the Collateral Manager, on behalf of the Borrower) shall
promptly notify the Custodian thereof and the parties shall cooperate to
diligently resolve the discrepancy.

 

(c)          Improper Instructions. Notwithstanding anything herein to the
contrary, the Custodian shall not be obligated to take any action (or forebear
from taking any action), which it reasonably determines to be contrary to the
terms of this Agreement or Applicable Law. In no instance shall the Custodian be
obligated to provide services on any day that is not a Business Day.

 

(d)          Proper Instructions.

 

(i)          Each of the Collateral Agent, Administrative Agent, the Collateral
Manager and the Borrower will give a notice to the Custodian, in a form
acceptable to the Custodian, specifying the names and specimen signatures of
Persons authorized to give Proper Instructions (collectively, “Authorized
Persons” and each, an “Authorized Person”) which notice shall be signed by an
Authorized Person set forth on Schedule 7 or otherwise previously certified to
the Custodian. The Custodian shall be entitled to rely upon the identity and
authority of such Persons until it receives written notice from an Authorized
Person of the Borrower, the Administrative Agent, the Collateral Manager or the
Collateral Agent, as applicable, to the contrary. The initial Authorized Persons
are set forth on Schedule 7 attached hereto and made a part hereof (as such
Schedule 7 may be modified from time to time by written notice from the
Borrower, the Administrative Agent, the Collateral Manager or the Collateral
Agent, as applicable, to the Custodian); and

 

(ii)         The Custodian shall have no responsibility or liability to the
Borrower (or any other Person) and shall be indemnified and held harmless by the
Borrower in the event that a subsequent written confirmation of an oral
instruction fails to conform to the oral instructions received by the Custodian.
The Custodian shall not have an obligation to act in accordance with purported
instructions to the extent that they conflict with Applicable Law or
regulations. The Custodian shall not be liable for any loss resulting from a
delay while it obtains clarification of any Proper Instruction.

 

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(e)          Actions Permitted Without Express Authority. The Custodian may, at
its discretion, without express authority from the Borrower, the Collateral
Agent or any other Person, attend to all nondiscretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with the Collateral Loans.

 

(f)          Evidence of Authority. The Custodian shall be protected in acting
upon any instruction, notice, request, consent, certificate instrument or paper
reasonably believed by it to be genuine and to have been properly executed or
otherwise given by or on behalf of the Borrower, the Collateral Agent or
Administrative Agent, as applicable, by an Authorized Person thereof. The
Custodian may receive and accept a certificate signed by any Authorized Person
as conclusive evidence of:

 

(i)          the authority of any Person to act in accordance with such
certificate; or

 

(ii)         any determination or of any action by such Person as described in
such certificate,

 

and such certificate may be considered as in full force and effect until receipt
by the Custodian of written notice to the contrary from an Authorized Person of
the Borrower, the Collateral Agent or Administrative Agent, as applicable.

 

(g)          Receipt of Communications. Any communication received by the
Custodian on a day which is not a Business Day or after 3:30 p.m. (Eastern time)
(or such other time as is agreed by the Borrower and the Custodian from time to
time) on a Business Day will be deemed to have been received on the next
Business Day; provided that in the case of communications so received after 3:30
p.m. (Eastern time) on a Business Day the Custodian will use its commercially
reasonable efforts to process such communications as soon as possible after
receipt.

 

(h)          In the event that (i) the Borrower, the Administrative Agent, the
Collateral Manager, the Custodian or the Collateral Agent shall be served by a
third party with any type of levy, attachment, writ or court order with respect
to any Loan File or a document included within a Loan File or (ii) a third party
shall institute any court proceeding by which any Loan File or a document
included within a Loan File shall be required to be delivered other than in
accordance with the provisions of this Agreement, the party receiving such
service shall promptly deliver or cause to be delivered to the other parties to
this Agreement (to the extent not prohibited by Applicable Law) copies of all
court papers, orders, documents and other materials concerning such proceedings.
The Custodian shall, to the extent permitted by law, continue to hold and
maintain all the Loan Files that are the subject of such proceedings pending a
final, nonappealable order of a court of competent jurisdiction permitting or
directing disposition thereof. Upon final determination of such court, the
Custodian shall dispose of such Loan File or a document included within such
Loan File as directed by the Administrative Agent, which shall give a direction
consistent with such determination. Expenses of the Custodian incurred as a
result of such proceedings shall be borne by the Borrower.

 

Section 13.08.         Compensation of Custodian

 

(a)          Fees. The Custodian shall be entitled to compensation for its
services in accordance with the terms of the Collateral Agent Fee Letter, a copy
of which has been furnished to the Administrative Agent.

 

(b)          Expenses. The Borrower agrees to pay or reimburse to the Custodian
upon its request from time to time all costs, disbursements, advances, and
expenses (including reasonable fees and expenses of legal counsel) incurred in
connection with the preparation or execution of this Agreement, or in connection
with the transactions contemplated hereby or the administration of this
Agreement or performance by the Custodian of its duties and services under this
Agreement (including costs and expenses of any action deemed necessary by the
Custodian to collect any amounts owing to it under this Agreement).

 

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(c)          Priority of Payments. Amounts owing to the Custodian hereunder
shall be payable in accordance with the Priority of Payments.

 

Section 13.09.         Responsibility of Custodian

 

(a)          General Duties. The Custodian shall have no duties, obligations or
responsibilities under this Agreement or with respect to the Collateral Loans,
except for such duties as are expressly and specifically set forth in this
Agreement, and the duties and obligations of the Custodian shall be determined
solely by the express provisions of this Agreement. No implied duties,
obligations or responsibilities shall be read into this Agreement against, or on
the part of, the Custodian.

 

(b)          Instructions.

 

(i)          The Custodian shall be entitled to refrain from taking any action
unless it has such instruction (in the form of Proper Instructions) from the
Borrower (or the Collateral Manager on the Borrower’s behalf), the
Administrative Agent or the Collateral Agent, as applicable, as it reasonably
deems necessary, and shall be entitled to require, upon notice to the Borrower,
the Administrative Agent or the Collateral Agent, as applicable, that Proper
Instructions to it be in writing. The Custodian shall have no liability for any
action (or forbearance from action) taken pursuant to any Proper Instruction of
the Borrower, the Administrative Agent or the Collateral Agent, as applicable.

 

(ii)         Whenever the Custodian is entitled or required to receive or obtain
any communications or information pursuant to or as contemplated by this
Agreement, it shall be entitled to receive the same in writing, in form, content
and medium reasonably acceptable to it and otherwise in accordance with any
applicable term of this Agreement; and whenever any report or other information
is required to be produced or distributed by the Custodian it shall be in form,
content and medium reasonably acceptable to it and the Borrower, and otherwise
in accordance with any applicable term of this Agreement.

 

(iii)        In case any reasonable question arises as to its duties hereunder,
the Custodian may, prior to the occurrence of an Event of Default, request
instructions from the Collateral Manager and may, after the occurrence of an
Event of Default, request instructions from the Administrative Agent, and shall
be entitled at all times to refrain from taking any action unless it has
received instructions from the Collateral Manager or the Administrative Agent,
as applicable. The Custodian shall in all events have no liability, risk or cost
for any action taken pursuant to and in compliance with the instruction of the
Administrative Agent.

 

(c)          General Standards of Care. Notwithstanding any terms herein
contained to the contrary, the acceptance by the Custodian of its appointment
hereunder is expressly subject to the following terms, which shall govern and
apply to each of the terms and provisions of this Agreement (whether or not so
stated therein):

 

106

 

 

(i)          The Custodian may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction, statement,
certificate, request, waiver, consent, opinion, report, receipt or other paper
or document furnished to it (including any of the foregoing provided to it by
telecopier or electronic means), not only as to its due execution and validity,
but also as to the truth and accuracy of any information therein contained,
which it in good faith believes to be genuine and signed or presented by the
proper person (which in the case of any instruction from or on behalf of the
Borrower shall be an Authorized Person); and the Custodian shall be entitled to
presume the genuineness and due authority of any signature appearing thereon.
The Custodian shall not be bound to make any independent investigation into the
facts or matters stated in any such notice, instruction, statement, certificate,
request, waiver, consent, opinion, report, receipt or other paper or document;
provided that if the form thereof is specifically prescribed by the terms of
this Agreement, the Custodian shall examine the same to determine whether it
substantially conforms on its face to such requirements hereof.

 

(ii)         Neither the Custodian nor any of its directors, officers or
employees shall be liable to anyone for any error of judgment, or for any act
done or step taken or omitted to be taken by it (or any of its directors,
officers of employees), or for any mistake of fact or law, or for anything which
it may do or refrain from doing in connection herewith, unless such action
constitutes gross negligence, willful misconduct or bad faith on its part and in
breach of the terms of this Agreement. The Custodian shall not be liable for any
action taken by it in good faith and reasonably believed by it to be within
powers conferred upon it, or taken by it pursuant to any direction or
instruction by which it is governed hereunder, or omitted to be taken by it by
reason of the lack of direction or instruction required hereby for such action.

 

(iii)        In no event shall the Custodian be liable for any indirect,
special, punitive or consequential damages (including lost profits) whether or
not it has been advised of the likelihood of such damages.

 

(iv)        The Custodian may consult with, and obtain advice from, legal
counsel selected in good faith with respect to any question as to any of the
provisions hereof or its duties hereunder, or any matter relating hereto, and
the written opinion or advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by the Custodian in good faith in accordance with the opinion and directions of
such counsel; the reasonable cost of such services shall be reimbursed pursuant
to Section 6.2 above.

 

(v)         The Custodian shall not be deemed to have notice of any fact, claim
or demand with respect hereto unless actually known by an officer charged with
responsibility for administering this Agreement or unless (and then only to the
extent) received in writing by the Custodian and specifically referencing this
Agreement.

 

(vi)        No provision of this Agreement shall require the Custodian to expend
or risk its own funds, or to take any action (or forbear from action) hereunder
which might in its judgment involve any expense or any financial or other
liability unless it shall be furnished with acceptable indemnification. Nothing
herein shall obligate the Custodian to commence, prosecute or defend legal
proceedings in any instance, whether on behalf of the Borrower or on its own
behalf or otherwise, with respect to any matter arising hereunder, or relating
to this Agreement or the services contemplated hereby.

 

(vii)       The permissive right of the Custodian to take any action hereunder
shall not be construed as a duty.

 

(viii)      The Custodian may act or exercise its duties or powers hereunder
through agents or attorneys, and the Custodian shall not be liable or
responsible for the actions or omissions of any such agent or attorney appointed
and maintained with reasonable due care.

 

107

 

 

(ix)         The Custodian shall not be responsible or liable for delays or
failures in performance resulting from acts beyond its control. Such acts shall
include acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations imposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other disasters.

 

(x)          All indemnifications contained in this Agreement in favor of the
Custodian shall survive the termination of this Agreement.

 

(xi)         Each of the protections, reliances, indemnities and immunities
offered to the Collateral Agent in Article XI shall be afforded to the
Custodian.

 

(d)          Indemnification; Collateral Agent’s Lien.

 

(i)          The Borrower shall and does hereby indemnify and hold harmless the
Custodian for and from any and all costs and expenses (including reasonable
attorney’s fees and expenses), and any and all losses, damages, claims and
liabilities (collectively, “Losses”), that may arise, be brought against or
incurred by the Custodian, as a result of, relating to, or arising out of this
Agreement, or the administration or performance of the Custodian’s duties
hereunder, or the relationship between the Borrower and the Custodian created
hereby, other than such liabilities, losses, damages, claims, costs and expenses
as are directly caused by the Custodian’s own actions constituting bad faith,
gross negligence or willful misconduct. Without limiting the foregoing, after
the receipt of a Block Notice, the parties hereto agree that the Lenders shall
indemnify and hold harmless the Custodian and its directors, officers, employees
and agents from and against any and all Losses incurred as a result of the
Custodian’s compliance with the Collateral Agent’s or Administrative Agent’s
(each acting at the direction of the Lenders) direction or instruction in
connection with this Agreement (except to the extent due to the Custodian’s bad
faith, willful misconduct or gross negligence) solely to the extent that such
Losses shall not have been reimbursed by the Borrower.

 

(ii)         Each of the Borrower, the Collateral Agent and the Custodian hereby
agrees that the Loan Files in respect of the Collateral Loans are being held by
the Custodian hereunder to perfect the lien of the Collateral Agent, on behalf
of the Secured Parties, in the Collateral Loans in accordance with this
Agreement.

 

(e)          In the event that (a) the Borrower, the Collateral Agent, the
Collateral Manager, the Administrative Agent, the Lenders or the Custodian shall
be served by a third party with any type of levy, attachment, writ or court
order with respect to any Loan File or a document included within a Loan File or
(b) a third party shall institute any court proceeding by which any Loan File or
a document included within a Loan File shall be required to be delivered
otherwise than in accordance with the provisions of this Agreement, the party
receiving such service shall promptly deliver, or cause to be delivered, to the
other parties to this Agreement and the Administrative Agent copies of all court
papers, orders, documents and other materials concerning such proceedings. The
Custodian shall, to the extent permitted by Law, continue to hold and maintain
all the Loan Files that are the subject of such proceedings pending a final,
nonappealable order of a court of competent jurisdiction permitting or directing
disposition thereof. Upon final determination of such court, the Custodian shall
dispose of such Loan File or any document included within such Loan File as
directed by the Collateral Agent or the Administrative Agent, which shall give a
direction consistent with such determination. Expenses of the Custodian incurred
as a result of such proceedings shall be borne by the Borrower and paid as an
Administrative Expense.

 

108

 

 

(f)          Miscellaneous.

 

(i)          Resignation. The Custodian may, at any time, resign under this
Agreement by giving not less than ninety (90) days advance written notice
thereof to the Borrower, the Collateral Manager, the Collateral Agent and the
Administrative Agent.

 

(ii)         Payment of Fees, Etc. Upon termination of this Agreement or
resignation of the Custodian, the Borrower shall pay to the Custodian such
compensation, and shall likewise reimburse the Custodian for its costs, expenses
and disbursements, as may be due as of the date of such termination or
resignation (or removal, as the case may be) all in accordance with the Priority
of Payments. All indemnifications in favor of the Custodian under this Agreement
shall survive the termination of this Agreement, or any resignation or removal
of the Custodian.

 

(iii)        Final Report. In the event of any resignation or removal of the
Custodian, the Custodian shall provide to the Borrower a complete final report
or data file transfer of any Confidential Information as of the date of such
resignation or removal.

 

(g)          Representations of the Custodian. The Custodian hereby represents
and warrants to the Borrower that:

 

(i)          it is qualified to act as a custodian pursuant to Section 26(a)(1)
of the Investment Company Act;

 

(ii)         it has the power and authority to enter into and perform its
obligations under this Agreement;

 

(iii)        it has duly authorized and executed this Agreement so as to
constitute its valid and binding obligations; and

 

(iv)        it maintains business continuity policies and standards that include
data file backup and recovery procedures that comply with all applicable
regulatory requirements.]

 

ARTICLE XIV

 

COLLATERAL MANAGEMENT

 

Section 14.01.         Designation of the Collateral Manager

 

(a)          Initial Collateral Manager. The servicing, administering and
collection of the Collateral shall be conducted by the Person designated as the
Collateral Manager hereunder in accordance with this Section 14.01. Business
Development Corporation of America is hereby appointed as, and hereby accepts
such appointment and agrees to perform the duties and responsibilities, of
Collateral Manager pursuant to the terms hereof.

 

(b)          Subcontracts. The Collateral Manager may, with the prior written
consent of the Administrative Agent, subcontract with any other Person for
servicing, administering or collecting the Collateral; provided that (i) the
Collateral Manager shall select any such Person with reasonable care and shall
be solely responsible for the fees and expenses payable to such Person, (ii) the
Collateral Manager shall not be relieved of, and shall remain liable for, the
performance of the duties and obligations of the Collateral Manager pursuant to
the terms hereof without regard to any subcontracting arrangement and (iii) any
such subcontract shall be subject to the provisions hereof.

 

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Section 14.02.         Duties of the Collateral Manager

 

(a)          Duties. The Collateral Manager shall take or cause to be taken all
such actions as may be necessary or advisable to service, administer and collect
on the Collateral from time to time, all in accordance with Applicable Law and
the Collateral Management Standard. Without limiting the foregoing, the duties
of the Collateral Manager shall include the following:

 

(i)          directing the acquisition, sale or substitution of Collateral in
accordance with Article X;

 

(ii)         supervising the Collateral, including communicating with Obligors,
executing amendments, providing consents and waivers, exercising voting rights,
enforcing and collecting on the Collateral and otherwise managing the Collateral
on behalf of the Borrower;

 

(iii)        preparing and submitting claims to Obligors on each Collateral
Loan;

 

(iv)        maintaining appropriate books of account and servicing records with
respect to the Collateral (including copies of the Related Documents) reasonably
necessary or advisable for the services to be performed hereunder;

 

(v)         promptly delivering to the Administrative Agent, each Lender or the
Collateral Agent, from time to time, such information and servicing records
(including information relating to its performance under this Agreement) as the
Administrative Agent, each Lender or the Collateral may from time to time
reasonably request;

 

(vi)        notifying the Administrative Agent and each Lender of any material
action, suit, proceeding, dispute, offset, deduction, defense or counterclaim
(A) that is or is threatened to be asserted by an Obligor with respect to any
Collateral Loan (or portion thereof) of which it has actual knowledge or has
received notice; or (B) that could reasonably be expected to have a Material
Adverse Effect;

 

(vii)       maintaining the perfected security interest of the Collateral Agent,
for the benefit of the Secured Parties, in the Collateral;

 

(viii)      instructing the Obligors and the administrative agents on the
Collateral Loans to make payments directly into the Collection Account; and

 

(ix)         complying with such other duties and responsibilities as required
of the Collateral Manager by this Agreement.

 

It is acknowledged and agreed that the Borrower possesses only such rights with
respect to the enforcement of rights and remedies with respect to the Collateral
Loans and the underlying assets securing such Collateral Loans under the Related
Documents as have been transferred to the Borrower with respect to the related
Collateral Loan, and therefore, for all purposes under this Agreement, the
Collateral Manager shall perform its administrative and management duties
hereunder only to the extent that, as a lender under the Related Documents, the
Borrower has the right to do so.

 

(b)          The Administrative Agent, each Lender, the Collateral Agent and the
other Secured Parties shall not have any obligation or liability with respect to
any Collateral, nor shall any of them be obligated to perform any of the
obligations of the Collateral Manager hereunder.

 

110

 

 

Section 14.03.         Authorization of the Collateral Manager

 

The Borrower hereby authorizes the Collateral Manager to take any and all
reasonable steps in its name and on its behalf necessary or desirable in the
determination of the Collateral Manager and not inconsistent with the pledge of
the Collateral by the Borrower to the Collateral Agent, on behalf of the Secured
Parties hereunder, to collect all amounts due under any and all Collateral,
including endorsing its name on checks and other instruments representing
Collections, executing and delivering any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Collateral and, after the
delinquency of any Collateral and to the extent permitted under and in
compliance with Applicable Law, to commence proceedings with respect to
enforcing payment thereof, to the same extent as the Collateral Manager could
have done if it owned such Collateral. The Borrower shall furnish the Collateral
Manager (and any successors thereto) with any powers of attorney and other
documents necessary or appropriate to enable the Collateral Manager to carry out
its collateral management duties hereunder, and shall cooperate with the
Collateral Manager to the fullest extent in order to ensure the collectability
of the Collateral. In no event shall the Collateral Manager be entitled to make
the Collateral Agent, the Administrative Agent, any Lender or any other Secured
Party a party to any litigation without such party’s express prior written
consent, or to make the Borrower a party to any litigation (other than any
foreclosure or similar collection procedure) without the Administrative Agent’s
consent. Following the occurrence of an Event of Default (unless otherwise
waived by the Lenders in accordance with Section 13.01), the Administrative
Agent (acting in its sole discretion or at the direction of the Required
Lenders) may provide notice to the Collateral Manager (with a copy to the
Collateral Agent) that the Secured Parties are exercising their control rights
with respect to the Collateral in accordance with the last paragraph of Section
6.01.

 

Section 14.04.         Realization Upon Defaulted Collateral Loans

 

The Collateral Manager will use reasonable efforts consistent with the
Collateral Management Standard, this Agreement and the Related Documents to
exercise (on behalf of the Borrower) available remedies (which may include
liquidating, foreclosing upon or repossessing, as applicable, or otherwise
comparably converting the ownership of any related property) with respect to any
Defaulted Collateral Loan. The Collateral Manager will comply with the
Collateral Management Standard, this Agreement, the Related Documents and
Applicable Law in realizing upon such related property, and employ practices and
procedures, including reasonable efforts, consistent with the Collateral
Management Standard, this Agreement and the Related Documents, to enforce all
obligations of Obligors. The Collateral Manager will remit to the Collection
Account the recoveries received in connection with the sale or disposition of
related property relating to any Defaulted Collateral Loan hereunder.

 

Section 14.05.         Compensation

 

As compensation for its administrative and management activities hereunder, the
Collateral Manager or its designee shall be entitled to receive the Collateral
Management Fee pursuant to the Priority of Payments.

 

The Collateral Manager may, in its sole discretion, elect to irrevocably waive
payment of any or all of any Collateral Management Fee otherwise due on any
Payment Date by notice to the Borrower, the Collateral Administrator and the
Collateral Agent no later than the Determination Date immediately prior to such
Payment Date. Any such Collateral Management Fee, once waived, shall not
thereafter become due and payable and any claim of the Collateral Manager
therein shall be extinguished.

 

111

 

 

The Collateral Manager may, in its sole discretion, elect to defer payment of
all or a portion of the Collateral Management Fee on any Payment Date by
providing written notice to the Collateral Agent of such election no later than
the Determination Date immediately prior to such Payment Date. The Collateral
Manager may elect to receive payment of all or any portion of the deferred
Collateral Management Fee on any Payment Date to the extent of funds available
to pay such amounts in accordance with Section 9.01(a) by providing notice to
the Collateral Agent and the Administrative Agent of such election and the
amount of such fees to be paid on or before three (3) Business Days preceding
such Payment Date.

 

If and to the extent that there are insufficient funds to pay any Collateral
Management Fee in full on any Payment Date or if any Collateral Management Fee
has accrued but is not yet due and payable, the amount due or accrued and unpaid
will be deferred and will be payable on such later Payment Date on which funds
are available in accordance with the Priority of Payments.

 

Section 14.06.         Expense Reimbursement; Indemnification

 

(a)          The Collateral Manager shall be responsible for the ordinary
expenses incurred by it in the performance of its obligations under this
Agreement; provided, however, that any extraordinary expenses incurred by the
Collateral Manager in the performance of such obligations (including, but not
limited to, (i) any reasonable expenses incurred by it (whether for its own
account or advanced by the Collateral Manager on behalf of the Borrower) to
employ outside lawyers, consultants or other advisors reasonably necessary in
connection with the evaluation, transfer, acquisition, disposition, retention,
workout or restructuring of any Collateral Loan (or other asset held by the
Borrower) or any reasonable expenses incurred by it in connection with obtaining
advice from counsel with respect to its obligations under this Agreement and
(ii) any other reasonable out-of-pocket fees and expenses incurred in connection
with the evaluation, transfer, acquisition, disposition, retention, workout or
restructuring of any Collateral Loan (or other asset held by the Borrower)
(including, without limitation, travel and due diligence expenses and the
Borrower’s pro rata share of software and services costs for record keeping and
fund administration)) shall be reimbursed by the Borrower. To the extent that
such expenses are incurred in connection with obligations that are also held by
any Affiliate of the Borrower or any other account managed by the Collateral
Manager, the Collateral Manager shall allocate the expenses among the accounts
in a fair and equitable manner. Any amounts payable pursuant to this Section
14.06 shall constitute “Administrative Expenses” hereunder and shall be
reimbursed by the Borrower to the extent funds are available therefor in
accordance with the Priority of Payments. Other than as stated above, the
Borrower shall bear, and shall pay directly in accordance with this Agreement,
all costs and expenses incurred by it in connection with its organization,
operation or liquidation.

 

112

 

 

(b)          The Collateral Manager agrees to indemnify and hold harmless each
Indemnified Party from and against any and all Liabilities that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with any acts or omissions of the Collateral Manager in
connection with this Agreement, any other Facility Document, any Related
Document or any transaction contemplated hereby or thereby (and regardless of
whether or not any such transactions are consummated), including any such
Liability that is incurred or arises out of or in connection with, or by reason
of any one or more of the following: (i) any breach or alleged breach of any
covenant by the Collateral Manager contained in any Facility Document; (ii) any
representation or warranty made or deemed made by the Collateral Manager
contained in any Facility Document or in any certificate, statement or report
delivered in connection therewith is, or is alleged to be, false or misleading
in any material respect; (iii) any failure by the Collateral Manager to comply
with any Applicable Law or contractual obligation binding upon it; (iv) any
action or omission, not expressly authorized by the Facility Documents, by the
Collateral Manager which has the effect of impairing the validity or
enforceability of the Collateral or the rights of the Agents or the other
Secured Parties with respect thereto; (v) the commingling by the Collateral
Manager of Collections on the Collateral at any time with other funds; (vi) the
failure of the Collateral Manager or any of its agents or representatives to
remit to the Collection Account, within two (2) Business Days of receipt,
Collections on the Collateral Loans remitted to the Collateral Manager or any
such agent or representative as provided in this Agreement; (vii) the treatment
or representation, in any computations made by it in connection with any Monthly
Report, Payment Date Report, Borrowing Base Calculation Statement or other
report prepared by it hereunder of any commercial loans as Collateral Loans,
which were Ineligible Collateral Loans as of the date of any such computation;
(viii) any litigation, proceedings or investigation against the Collateral
Manager in connection with this Agreement or the other Facility Documents or its
role as Collateral Manager hereunder or thereunder; and (ix) any failure or
delay in assisting a successor Collateral Manager in assuming each and all of
the Collateral Manager’s obligations to service and administer the Collateral,
or failure or delay in complying with instructions from the Agents with respect
thereto; except to the extent any such Liability is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
solely from such Indemnified Party’s bad faith, gross negligence or willful
misconduct. In the case of an investigation, litigation or proceeding to which
the indemnity in this paragraph applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by the
Collateral Manager, any of the Collateral Manager’s equityholders or creditors,
an Indemnified Party or any other Person, whether or not an Indemnified Party is
otherwise a party hereto. The Collateral Manager shall not have any liability
hereunder to any Indemnified Party to the extent an Indemnified Party affects
any settlement of a matter that is (or could be) subject to indemnification
hereunder without the prior written consent of the Collateral Manager. In no
case shall the Collateral Manager be responsible for any Indemnified Party’s
lost revenues or lost profits or for any indirect, special, punitive or
consequential damages. This Section 14.06(b) shall not apply with respect to
Taxes other than any Taxes that represent losses, claims, damages, etc. arising
from any non-Tax claim.

 

Section 14.07.         The Collateral Manager Not to Resign; Assignment

 

(a)          The Collateral Manager shall not resign from the obligations and
duties hereby imposed on it except upon the Collateral Manager’s determination
that the performance of its duties hereunder is or becomes impermissible under
Applicable Law. Any such determination permitting the resignation of the
Collateral Manager shall be evidenced by an opinion of counsel to such effect
delivered to the Administrative Agent and each Lender. No such resignation shall
become effective until a Successor Collateral Manager shall have assumed the
responsibilities and obligations of the Collateral Manager in accordance with
Section 14.08.

 

(b)          The Collateral Manager may not assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Administrative Agent.

 

Section 14.08.         Appointment of Successor Collateral Manager

 

(a)          Upon resignation of the Collateral Manager pursuant to Section
14.07, the Borrower may (with the consent of the Administrative Agent and the
Required Lenders) at any time appoint a successor collateral manager (the
“Successor Collateral Manager”), which, for the avoidance of doubt may be the
Administrative Agent or any Lender, and such Successor Collateral Manager shall
accept its appointment by a written assumption in a form acceptable to the
Borrower and the Administrative Agent.

 

(b)          Upon its appointment, the Successor Collateral Manager shall be the
successor in all respects to the Collateral Manager with respect to collateral
management functions under this Agreement and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Collateral Manager by the terms and provisions hereof, and all references in
this Agreement to the Collateral Manager shall be deemed to refer to the
Successor Collateral Manager; provided that the Successor Collateral Manager
shall have (i) no liability with respect to any action performed by the
terminated Collateral Manager prior to the date that the Successor Collateral
Manager becomes the successor to the Collateral Manager or any claim of a third
party based on any alleged action or inaction of the terminated Collateral
Manager, (ii) no obligation to pay any taxes required to be paid by the
Collateral Manager; provided that the Successor Collateral Manager shall pay any
income taxes for which it is liable, (iii) no obligation to pay any of the fees
and expenses of any other party to the transactions contemplated hereby, and
(iv) no liability or obligation with respect to any Collateral Manager
indemnification obligations of any prior Collateral Manager, including the
original Collateral Manager.

 

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(c)          Notwithstanding anything contained in this Agreement to the
contrary, a Successor Collateral Manager is authorized to accept and rely on all
of the accounting, records (including computer records) and work of the prior
Collateral Manager relating to the Collateral Loans (collectively, the
“Predecessor Collateral Manager Work Product”) without any audit or other
examination thereof, and such Successor Collateral Manager shall have no duty,
responsibility, obligation or liability for the acts and omissions of the prior
Collateral Manager. If any error, inaccuracy, omission or incorrect or
non-standard practice or procedure (collectively, “Errors”) exist in any
Predecessor Collateral Manager Work Product and such Errors make it materially
more difficult to service or should cause or materially contribute to the
Successor Collateral Manager making or continuing any Errors (collectively,
“Continued Errors”), such Successor Collateral Manager shall have no duty,
responsibility, obligation or liability for such Continued Errors; provided that
such Successor Collateral Manager agrees to use its best efforts to prevent
further Continued Errors. In the event that the Successor Collateral Manager
becomes aware of Errors or Continued Errors, it shall, with the prior consent of
the Administrative Agent, use its best efforts to reconstruct and reconcile such
data as is commercially reasonable to correct such Errors and Continued Errors
and to prevent future Continued Errors.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

114

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

  BDCA-CB FUNDING, LLC, as Borrower         By: Business Development Corporation
of America, its sole member         By: /s/ Robert K. Grunewald     Name: Robert
K. Grunewald     Title: Chief Investment Officer         BUSINESS DEVELOPMENT
CORPORATION OF AMERICA,   as Collateral Manager         By: /s/ Robert K.
Grunewald     Name: Robert K. Grunewald     Title: Chief Investment Officer

 

[Signature Page to Credit and Security Agreement]

 

 

 

 

  CITIBANK, N.A., as Administrative Agent and a Lender         By: /s/ Vincent
Nocerino     Name: Vincent Nocerino     Title: Vice President

 

[Signature Page to Credit and Security Agreement]

 

 

 

 

  U.S. Bank National Association,   as Collateral Agent and Custodian        
By: /s/ Jeffrey B. Stone     Name: Jeffrey B. Stone     Title: Vice President

 

[Signature Page to Credit and Security Agreement]