EXECUTION
COPY

     

    FORBEARANCE
AND SETTLEMENT AGREEMENT

     

    This
FORBEARANCE AND SETTLEMENT
AGREEMENT (this “Agreement”), dated as of
September 20, 2010, is entered into by and among Kohlberg Capital Funding LLC I
(“Kohlberg Funding” or
the “Borrower”), as
Borrower, Kohlberg Capital Corporation (“Kohlberg” or the “Servicer” and, together with
Kohlberg Funding, the “Borrower
Parties”), as Servicer, BMO Capital Markets Corp. (the “Agent”), as Agent, and Bank of
Montreal (“BMO”),
Fairway Finance Company LLC (“Fairway”), Deutsche Bank AG,
New York Branch (“DB”),
and Riverside Funding LLC (“Riverside”, and together with
BMO, Fairway, and DB, the “Lenders”), as Lenders. Each
Borrower Party, the Agent, and each Lender is sometimes referred to herein
individually as a “Party” and collectively, as
the “Parties.”

     

    RECITALS

     

    A.          The
Borrower, the Servicer, the Agent, Fairway and Riverside are parties to that
certain Loan Funding and Servicing Agreement dated as of February 14, 2007 (as
modified, supplemented or amended from time to time, the “LFSA”), and related
Transaction Documents, pursuant to which Fairway and Riverside have made certain
loans and financial accommodations available to the Borrower. Terms used herein
without definition shall have the meanings ascribed to them in the
LFSA.

     

    B.          As
of September 14, 2010, the principal amount of the Advances Outstanding under
the LFSA was $137,159,148.52. As of September 16, 2010, there was aggregate
accrued and unpaid interest with respect to the Advances Outstanding of
$200,332.76.

     

    C.          The
Agent and the Lenders assert that (i) on September 29, 2008, the Termination
Date under the LFSA occurred, and (ii) the occurrence of the Termination Date
commenced the two-year Amortization Period and all Advances Outstanding under
the LFSA will become due and payable on September 29, 2010 (the “Alleged Maturity
Date”).

     

    D.          In
addition, the Agent has previously given notice to the Borrower Parties that the
following Termination Events, Servicer Termination Events, and potential
Termination Events and Servicer Termination Events occurred under the LFSA
(together with assertions relating to the Alleged Maturity Date and any alleged
Termination Events, Servicer Termination Events, Unmatured Termination Events or
Unmatured Servicer Termination Events relating thereto or to Borrower’s failure
to repay all Advances Outstanding and all other amounts payable under the LFSA
and the Transaction Documents on the Alleged Maturity Date, the “Alleged Termination
Events”):

     

    i.           Termination
Events pursuant to Sections 9.1(a), (g) and (h) of the LFSA as a result of the
Servicer’s failure to properly calculate the Moody’s Ratings of certain
Loans;

     

    ii.          a
Termination Event pursuant to Section 9.1(b) of the LFSA as a result the
Borrower’s failure to comply with the corporate separateness requirements of
Section 4.1(t)(xxv) and (xxix) and 5.1(m)(i) and (ii) of the
LFSA;


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    iii.         a
Termination Event pursuant to Section 9.1(m) of the LFSA as a result of the
Rolling Three-Month Default Ratio exceeding 7 percent for more than 15
days;

     

    iv.         a
Servicer Termination Event pursuant to Section 7.25(b) of the LFSA (resulting in
a Termination Event under Section 9.1(d) of the LFSA) as a result of the
Servicer’s failure to provide timely annual audited consolidated financial
statements for the period ending December 31, 2009;

     

    v.          a
Termination Event pursuant to Section 9.1(g) as a result of the existence and
continuance of an Overcollateralization Shortfall for a period in excess of
three business days;

     

    vi.         a
Servicer Termination Event pursuant to Section 7.25(g) of the LFSA (resulting in
a Termination Event under Section 9.1(d) of the LFSA) as a result of the
Servicer’s failure to maintain the required minimum Net Worth set forth therein;
and

     

    vii.        potential
Servicer Termination Events pursuant to Sections 7.25(g), (i) and/or (k) and
potential Termination Events under Sections 9.1(d), (e), (f) and/or (g) of the
LFSA as a result of the possible existence of material misstatements in the
Servicer’s audited financial statements for the year ended December 31,
2008.

     

    E.           The
Borrower Parties disagree with and have contested the Alleged Termination Events
(including, without limitation, the Alleged Maturity Date) and on or about
August 28, 2009, the Borrower Parties filed an action in the Supreme Court of
the State of New York (the “Court”) and pending as Case
No. 602688/09 asserting various causes of action against Fairway, Agent,
Riverside and DB relating to, among other things, the assertion by the Agent and
the Lenders of the Alleged Maturity Date and certain of the other Alleged
Termination Events (the “Litigation”).

     

    F.           On
June 23, 2010, Fairway, Agent, Riverside and DB filed a summary judgment motion
regarding the Borrower Parties’ claims relating to the occurrence of a
Termination Date under the LFSA (the “Initial SJ Motion”). On July
28, 2010, the Borrower Parties opposed the Initial SJ Motion and cross-moved for
summary judgment on the same issue (the “Cross Motion”). The briefing
on the Initial SJ Motion is complete and is now pending before the Court.
Fairway, Agent, Riverside and DB filed their response to the Cross Motion on
August 31, 2010. The Borrower Parties’ reply brief with respect thereto has not
yet been filed.

     

    G.           On
September 10, 2010, the Borrower, Servicer and the Lenders executed that certain
Settlement and Forbearance Term Sheet (the “Settlement Term Sheet”)
pursuant to which the parties agreed, on a summary basis and subject to final
documentation, to settle all claims that were or could have been asserted in the
Litigation and to enter into this Agreement.

     

    H.           Kohlberg
is currently contemplating various strategic alternatives, including a possible
sale of a controlling equity interest in Kohlberg or a sale by Kohlberg of
substantially all of its assets pursuant to a strategic process initiated by
Kohlberg (the “Kohlberg
Strategic Process”).


    
      
         


      

      
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    I.           Each
Party is entering into this Agreement with the understanding and agreement that,
except as specifically provided herein, none of the other Parties’ rights or
remedies as set forth in the LFSA is being waived or modified by the terms of
this Agreement.

     

    AGREEMENT

     

    NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

     

    1.           Incorporation of Recitals. Each of the
above recitals is expressly incorporated herein and is represented by the
Parties to be true and correct.

     

    2.           Reaffirmation of Obligations. The
Parties hereby agree and acknowledge as follows:

     

    (a)              The
Advances Outstanding and all other amounts payable by the Borrower under the
LFSA (as modified hereby) constitute valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with the LFSA, and the
Borrower Parties hereby reaffirm their respective obligations under the
LFSA.

     

    (b)         
    The Agent’s and any Lender’s entry into this Agreement
or any of the documents referenced herein, the Agent’s and any Lender’s
negotiations with any party with respect to any Transaction Document, the
Agent’s and any Lender’s conduct of any analysis or investigation of any
collateral, Agent’s and any Lender’s acceptance of any payment from the Borrower
prior to the date hereof, or any other action or failure to act on the part of
the Agent or any Lender shall not constitute (i) a modification of the LFSA or
any Transaction Document (except as specifically provided herein) or (ii) a
waiver of any Forbearance Termination Event (as defined herein), Servicer
Termination Event or Termination Event or a waiver of any term or provision of
any Transaction Document.

     

    3.           Payment in Full of Advances
Outstanding. The Advances Outstanding and all other amounts payable by
the Borrower under the LFSA (as modified hereby) shall be paid in full by the
Borrower on or before the earlier of (i) the closing date of a Disposition
Transaction and (ii) February 28, 2011.

     

    4.           Agreement to Forbear. For and during
the Forbearance Term (as defined below), the Agent and the Lenders each agree to
not take any action or commence any proceedings with respect to the enforcement
of any right or remedy under the Transaction Documents held by any of them as a
result of any Alleged Termination Event or any other Termination Event, Servicer
Termination Event, Unmatured Termination Event, or Unmatured Servicer
Termination Event that resulted from or otherwise relates to an event that
occurred or a condition that existed prior to the date hereof and that was known
or reasonably should have been known to the Agent or the Lenders prior to the
date hereof (collectively, the “Existing Termination Events”).
As used herein, “Forbearance
Term” shall mean the period commencing upon the date hereof and
continuing until the earliest to occur of: (x) any Forbearance Termination
Event, or (y) February 28, 2011.


    
      
         


      

      
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    5.           Right to Exercise Remedies Upon Termination
of Agreement to Forbear. Each of the Borrower and the Servicer
acknowledges and agrees that upon the termination of the Forbearance Term and
without any further action on the part of the Agent or the Lenders, all Advances
Outstanding and other amounts payable under the LFSA (as modified hereby) shall
be immediately due and payable and the Agent and the applicable Lenders shall be
entitled to exercise any or all of their remedies under the LFSA and applicable
law, including, without limitation, the appointment of a receiver and the
enforcement under the UCC of any liens or security interests held by the Agent
or any applicable Lender.

     

    6.           Modification of Certain LFSA
Provisions. Solely during the Forbearance Term, the Borrower Parties’
failure to comply with Sections 7.25(g), 9.1(f), (g), (h), (k), and (m), and
Sections 5.1(m), 5.1(bb), and 5.1(cc) of the LFSA shall not give rise to the
occurrence of a Forbearance Termination Event, Termination Event or Servicer
Termination Event, as applicable. Notwithstanding the provisions of this Section 6, the Borrower Parties shall
continue to deliver to Agent all Required Reports in the form and substance
required by the LFSA and the Transaction Documents.

     

    7.           Forbearance Termination Events. The
occurrence of any of the following events shall constitute a “Forbearance Termination
Event”:

     

    (a)              Borrower
or Servicer fails to observe or perform any term, covenant, or agreement binding
on them contained in Section 10 of this Agreement.

     

    (b)              The
occurrence of any Termination Event or Servicer Termination Event under the LFSA
other than (i) the Existing Termination Events or (ii) any Termination Event,
Servicer Termination Event, Unmatured Termination Event or Unmatured Servicer
Termination Event arising as a result of the Borrower Parties’ failure to comply
with the provisions of the LFSA set forth in Section 6 hereof.

     

    (c)              The
Overcollateralization Ratio, calculated as of any Determination Date, is less
than 115 percent. For purposes of this Section 7(c) the
“Overcollateralization Ratio” shall be defined as (i) the Purchased Loan Balance
(excluding any amounts related to Defaulted Loans other than those set forth on
Schedule A hereto) divided by (ii) the Advances Outstanding.

     

    (d)              On
any date during the Forbearance Term, the Servicer fails to maintain a minimum
Net Worth of at least $150,000,000.

     

    (e)              Any
representation or warranty made by the Borrower or Servicer in this Agreement is
untrue or misleading in any material respect when made.

     

    (f)              The
Borrower, the Servicer, or any other person brings any action in any judicial,
administrative or other proceeding disputing (i) the legality, validity or
enforceability of (A) this Agreement or any agreement executed in connection
herewith, (B) the LFSA or any other Transaction Documents, or (C) the Borrower’s
obligation to repay the Advances Outstanding in accordance with the terms of
this Agreement or (ii) the validity, priority, enforceability or extent of
Agent’s or any Lender’s liens and security interests in or against any item of
Collateral or (iii) the existence or amount of the Advances Outstanding;
provided, however, that the foregoing shall not limit or restrict the right of
the Borrower and the Servicer to enforce their respective rights under this
Agreement.


    
      
         


      

      
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    (g)              The
Servicer and/or Borrower (as applicable) has neither (i) on or before September
30, 2010, (A) entered into a merger agreement, purchase and sale agreement or
other agreement with an entity (the “Purchaser”) selected by the
Servicer (in its discretion) pursuant to the Kohlberg Strategic Process,
pursuant to which the Servicer agrees to sell and convey to Purchaser a
controlling equity interest in the Servicer or substantially all of its assets
(a “Disposition
Transaction”) and (B) provided the Agent and the Lenders with written
notice thereof nor (ii) made payments to the applicable Lenders on or before
September 30, 2010 sufficient to reduce the Advances Outstanding to $125,000,000
(or less).

     

    (h)              The
Servicer and/or Borrower (as applicable) has neither (i) on or before October
31, 2010, (A) filed with the Securities and Exchange Commission a preliminary
proxy statement with respect to a Disposition Transaction and the actions
required to be taken by the Servicer to obtain all requisite approvals from the
shareholders of Kohlberg in respect of such Disposition Transaction and (B)
provided the Agent and the Lenders with written notice thereof nor (ii) made
payments to the Lenders sufficient to reduce the Advances Outstanding as of each
of the following dates to the following amounts:

     

    
      
        
          	
                  Payment Date

                	 
      	
                  Balance of Advances
    Outstanding

                
	 
      	 
      	 
      
	
                  11/3/2010

                	 
      	
                  $115,000,000
      (or less)

                
	
                  12/1/2010

                	 
      	
                  $105,000,000
      (or less)

                
	
                  1/3/2011

                	 
      	
                  $95,000,000
      (or less)

                
	
                  2/1/2011

                	 
      	
                  $85,000,000
      (or less)

                


        

      

    

     

    (i)              The
Servicer and/or Borrower (as applicable) has neither (i) on or before February
15, 2011, (A) received any requisite approvals from the shareholders of Kohlberg
in respect of a Disposition Transaction and (B) provided the Agent and the
Lenders with written notice thereof, nor (ii) made payments to the Lenders on or
before February 15, 2011 sufficient to reduce Advances Outstanding to
$85,000,000 (or less).

     

    Solely
for purposes of determining whether Advances Outstanding have been reduced for
the purposes of, and by the payment dates set forth in, subsections (g), (h),
and (i) of this Section 7, the
amount of Advances Outstanding as of an applicable payment date will be deemed
reduced by (i) the aggregate amount of loan proceeds, settlement proceeds and
sale proceeds received by the Lenders or deposited into the Collection Account
in respect of any Loans since the preceding Payment Date, less interest due on
the subsequent Payment Date and (ii) the proceeds due from the sale of any Loan
which have not yet been received as of the applicable payment date, provided
that the trade date with respect to such Loan sale is a date within thirty (30)
days prior to the applicable payment date and provided further that the Lenders
shall have received, on or before the applicable payment date, documentation
evidencing the Borrower’s agreement to sell any such Loan. The Parties agree
that for purposes of the preceding sentence, a trade ticket or trade
confirmation of a pending sale shall satisfy the requirement for
documentation.


    
      
         


      

      
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    (j)              The
Borrower fails to repay all Advances Outstanding and all other amounts due (as
modified hereby) and owing to the Lenders in accordance with Section 3 hereof.

     

    8.           Interest Rate During the Forbearance
Term. During the period commencing as of the date of the Term Sheet and
continuing throughout the entire Forbearance Term, interest shall accrue and be
paid on the Advances Outstanding owed to each Lender at the rates applicable to
such Lender and on the applicable dates under the LFSA prior to the occurrence
of a Termination Event.

     

    9.           Discretionary Loan Sales During the
Forbearance Term. During the Forbearance Term, the Borrower Parties may,
without further consent or authorization from the Agent or the Lenders, make
discretionary sales of Loans included in the Collateral only on the following
terms:

     

    (a)              for
the sale of any Loans set forth on Schedule B hereto, so long as the sale
proceeds equal or exceed 90 percent of such Loan’s mark-to-market value
reflected on Schedule B, (and
for the avoidance of doubt, mark-to-market value will not be adjusted for
purposes of this Section) without the Lenders’ written consent;

     

    (b)              in
the case of a Discount Loan, so long as the proceeds for such sale are at least
equal to 90 percent of such Discount Loan’s purchase price; and

     

    (c)              for
all other Loans, so long as the proceeds from any such sale equal or exceed 90
percent of the par value of such Loan;

     

    Provided however, that neither the
Servicer nor the Borrower shall, without the prior written consent of the Agent
and each of the Lenders, make a discretionary sale of a Loan if the proceeds
from such a sale are expected to be less than the amounts set forth in this
Section 9.

     

    10.         Discontinuance of
Litigation.

     

    (a)              Within
two (2) business days of the Parties’ execution of this Agreement, the Parties
shall jointly file a Stipulation of the Discontinuance of the Litigation with
prejudice in the form attached hereto as Exhibit A, with each party to bear its
own legal fees and costs in connection therewith.

     

    (b)              Provided
that all Advances Outstanding and, subject to Section 10(c), all other amounts
due and owing to the Lenders (the “Loan Amounts”) are paid by the
Borrower in full on or before February 28, 2011, BMO, on the one hand, and
Riverside or DB on the other hand shall each make a payment to Kohlberg Funding
in the amount of $1,000,000.00 (for a total aggregate payment of $2,000,000.00)
which payment shall, in the discretion of each Lender, (a) be made as a
settlement payment contemporaneously with the payment in full by the Borrower of
the Loan Amounts due such Lender or (b) be credited, as of the time the Borrower
pays the Loan Amounts in full, against the Loan Amounts owed and to be paid to
such Lender.


    
      
         


      

      
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    (c)              Provided
that the Loan Amounts are paid by the Borrower in full on or before February 28,
2011, the Loan Amounts shall not include any fees or expenses, including
attorneys’ fees and any other Indemnified Amounts incurred by the Agent or the
Lenders (or their respective Affiliates, officers, directors, employees or
agents) in or in connection with or on account of, the Litigation, or any other
fees and expenses payable to the Agent or the Lenders under the LFSA or the
Transaction Documents; provided however, the Loan
Amounts shall include any fees and expenses, including, without limitation,
reasonably attorneys fees, incurred by the Agent and/or Lenders in connection
with or related to the exercise of remedies under this Agreement, the LFSA
and/or the other Transactions Documents following the occurrence of a
Forbearance Termination Event.

     

    11.         Releases.

     

    (a)              Kohlberg
and Kohlberg Funding, for themselves and all of their respective past, present
or future parents, subsidiaries, divisions, affiliates, predecessors,
successors, joint venturers, partners, partnerships, corporations, companies,
organizations, associations, principals, members, associates, employees,
officers, directors, shareholders, servants, advisors, attorneys and agents, and
all of those persons’ (be they individuals or entities) past, present or future
heirs, beneficiaries, trustees, representatives, executors, distributees,
administrators, assigns, guardians, officers, directors, shareholders and others
acting on their behalf (any and all of the foregoing being referred to herein as
the “Kohlberg Parties”), do
hereby release and forever discharge each of the Lenders and the Agent and any
of their respective past, present or future parents, subsidiaries, divisions,
affiliates, predecessors, successors, joint venturers, partners, partnerships,
corporations, companies, organizations, associations, principals, members,
associates, employees, officers, directors, shareholders, servants, advisors,
attorneys and agents, and all of those persons’ (be they individuals or
entities) past, present or future heirs, beneficiaries, trustees,
representatives, executors, distributees, administrators, assigns, guardians,
officers, directors, shareholders and others acting on their behalf (any and all
of the foregoing being referred to herein as the “Lender Parties”), of and from any and
all, and all manner of, action and actions, cause and causes of action, claims,
suits, demands, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, incidents, executions, obligations, damages, liabilities,
judgments, and all other claims or demands of any kind whatsoever, whether in
law or in equity, whether known or unknown, which any of the Kohlberg Parties
ever had, now has or hereafter can, shall or may have, from the beginning of the
world to the date of this Agreement, against any of the Lender Parties arising
from or relating to the LFSA, the Transaction Documents, or the Litigation;
provided, however, that no Lender Party is released from any obligation under
this Agreement.

     

    (b)              Upon
payment in full of the Loan Amounts in accordance with this Agreement, each of
the Lenders and the Agent shall execute and deliver a release to Kohlberg and
Kohlberg Funding from any and all claims in connection with the LFSA, the
Transaction Documents or the Litigation, in the form set forth in Exhibits B and
C.

     

    12.         Information Access. Subject to the
confidentiality provisions set forth in the LFSA, the Borrower Parties shall
provide the Lenders and their representatives, upon reasonable notice and during
normal business hours, with full and complete access to their books and records
respecting their actions and activities respecting the sale, collection, or
administration of the Loans and the tracking of any and all payments received on
account of such Loans, including the sale of such Loans.


    
      
         


      

      
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    13.         Representations and Warranties. Each
Party represents and warrants as follows:

     

    (a)              Authority. Such Party has the
requisite corporate power and authority to execute and deliver this Agreement,
and to perform its obligations hereunder and under the LFSA and other
Transaction Documents (as modified hereby) to which it is a party. The
execution, delivery and performance by such Party of this Agreement have been
duly approved by all necessary corporate action, have received all necessary
governmental approval, if any, and do not contravene any applicable law. No
other corporate proceedings by such Party are necessary to consummate any
actions contemplated by this Agreement.

     

    (b)              Enforceability. This Agreement has
been duly executed and delivered by such Party. This Agreement and the LFSA and
other Transaction Documents (as modified hereby) are legal, valid and binding
obligations of such Party, enforceable against such Party in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally, and are in full force
and effect.

     

    (c)              LFSA Representations and Warranties.
The Borrower and the Servicer represent that, except for the existence of the
Existing Termination Events, the representations and warranties contained in the
LFSA and other Transaction Documents are true and correct in all respects on and
as of the date hereof as though made on and as of the date hereof (other than
any such representations or warranties that, by their terms, are specifically
made as of a date other than the date hereof).

     

    (d)              No Duress. This Agreement has been
entered into without force or duress, of the free will of such Party. Such
Party’s decision to enter into this Agreement is a fully informed decision and
such Party is aware of all legal and other ramifications of such
decision.

     

    (e)              Counsel. Such Party has read and
understands this Agreement, has consulted with and been represented by legal
counsel of its own choosing in connection herewith and has been advised by its
counsel of its rights and obligations hereunder.

     

    (f)              No Unknown Termination Events. Except
for the existence of the Existing Termination Events, the Borrower Parties are
not aware of any event that has occurred and is continuing that constitutes a
Termination Event, Servicer Termination Event, Unmatured Termination Event, or
Unmatured Servicer Termination Event

     

    (g)              No Assignment. In the case of the
Borrower and the Servicer, such Party has not assigned, transferred, conveyed or
released and discharged, voluntarily or involuntarily, or by operation of law,
to any other person (whether an individual or entity), any claim or portion
thereof or interest therein relating to the LFSA or any of the matters that are
the subject of this Agreement.

     

    14.         No Third Party Beneficiaries. Nothing
contained in this Agreement, express or implied, is intended to confer any
rights or benefits upon any party other than the Borrower Parties, each Lender,
and the Agent, and their respective successors and assigns.


    
      
         


      

      
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    15.         Choice of Law, Jurisdiction and Venue.
This Agreement shall be governed by and construed in accordance with the
internal laws (without regard to the conflict of laws provisions) of the State
of New York. Any action or proceeding that may be commenced with respect to this
Agreement shall be commenced in the Supreme Court of the State of New York,
County of New York or the United States District Court for the Southern District
of New York, and each of the parties hereto submits to the in personam
jurisdiction of said courts for purposes of such action or proceeding, and
waives any claim of improper venue or inconvenient forum in said
courts.

     

    16.         Waiver of Jury Trial. EACH OF THE
AGENT, THE LENDERS, THE BORROWER, AND THE SERVICER IRREVOCABLY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE LFSA OR ANY
OTHER TRANSACTION DOCUMENT.

     

    17.         Waiver of Bond. Each of the Borrower
and the Servicer waives the posting of any bond otherwise required of the Agent
or the Lenders in connection with any judicial process or proceeding to enforce
any judgment or other court order entered in favor of the Agent or the Lenders
or to enforce by specific performance, temporary restraining order, preliminary
or permanent injunction, this Agreement.

     

    18.         Time of the Essence. Time is of the
essence with respect to the provisions of this Agreement. This Agreement shall
not be effective until it is fully executed by all of the Parties.

     

    19.         Counterparts. This Agreement may be
executed in any number of counterparts and by different Parties on separate
counterparts. Each of such counterparts shall be deemed to be an original, and
all of such counterparts, taken together, shall constitute but one and the same
agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or electronic transmission of a “pdf” (or other such viewable,
printable data file) shall be equally effective as delivery of a manually
executed original counterpart.

     

    20.         Status of LFSA and Transactions
Documents.

     

    (a)              Except
as specifically set forth in this Agreement, the LFSA and all other Transaction
Documents, are and shall continue to be in full force and effect and are hereby
in all respects ratified and confirmed and shall constitute the legal, valid,
binding and enforceable obligations of each of the Parties.

     

    (b)              The
execution, delivery and performance of this Agreement shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Party under the LFSA (as modified hereby) or any other Transaction
Documents, nor constitute a waiver of any provision of any of the LFSA (as
modified hereby).

     

    21.         Ratification. Each of the Parties
hereby restates, ratifies and reaffirms each and every term and condition set
forth in the LFSA, as amended hereby, and the other Transaction Documents
effective as of the date hereof.

     

    22.         Estoppel. To induce Agent and the
Lenders to enter into this Agreement, each of the Borrower and the Servicer
hereby acknowledges and agrees that, subject to Section 10(b) as of the date
hereof, there exists no right of offset, defense, counterclaim or objection in
favor of the Borrower or the Servicer as against the Agent or any Lender with
respect to the Advances Outstanding.


    
      
         


      

      
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    23.         Amendments. No amendment or
modification of any provision of this Agreement shall be effective without the
written agreement of the Agent, the Lenders and the Borrower Parties, and no
termination or waiver of any provision of this Agreement, or consent to any
departure by the Agent, the Lenders or the Borrower Parties therefrom, shall in
any event be effective without the written concurrence of each of the other
Parties. Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No notice to or demand upon
the Borrower Parties in any case shall entitle the Borrower Parties to any other
or further notice or demand in similar or other circumstances.

     

    24.         No Waiver. The Agent’s and/or Lenders’
failure, at any time or times hereafter, to require strict performance by the
Borrower Parties of any provision or term of this Agreement shall not waive,
affect or diminish any right of the Agent and/or the Lenders thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
the Agent and/or Lenders of a Forbearance Termination Event, Servicer
Termination Event or Termination Event shall not, except as may be expressly set
forth herein, suspend, waive or affect any other Forbearance Termination Event,
Servicer Termination Event or Termination Event whether the same is prior or
subsequent thereto and whether of the same or of a different kind or character.
None of the undertakings, agreements, warranties, covenants and representations
of the Borrower Parties contained in this Agreement, the LFSA or in any of the
other Transaction Documents, and no Forbearance Termination Event, Servicer
Termination Event or Termination Event shall be deemed to have been suspended
(except as expressly provided herein) or waived by the Agent and/or the Lenders
unless such suspension or waiver is (a) in writing and signed by the Agent and
the Lenders, and (b) actually delivered to the Borrower Parties.

     

    25.         Section Headings. Section headings are
solely for the convenience of the Parties and do not affect the meaning or
construction of any provision in this Agreement.

     

    26.         Integration. This Agreement, together
with the LFSA (as modified hereby), the other Transaction Documents,
incorporates all negotiations of the parties hereto with respect to the subject
matter hereof and is the final expression and agreement of the Parties hereto
with respect to the subject matter hereof.

     

    27.         Severability. In case any provision in
this Agreement shall be invalid, illegal or unenforceable, such provision shall
be severable from the remainder of this Agreement and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    28.         Notices. All notice and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex communication and communication by facsimile copy)
and mailed, telexed, transmitted or hand delivered, as to each party hereto, at
its address set forth below:

     

    (a)              The
Agent:

     

    BMO
Capital Markets Corp.

    115 South
LaSalle Street

    12th
Floor West

    Chicago,
Illinois 60603 

    Attn:
Jack Kane 

    Telephone:
(312) 461-7900 

    Facsimile:
(312) 461-7958

     

    with a
copy to:

     

    Mayer
Brown LLP

    71 South
Wacker Drive 

    Chicago,
Illinois 60606 

    Attn:
Stuart M. Rozen, Esq. 

    Telephone:
(312) 701-7302 

    Facsimile:
(312) 706-8237

     

    (b)              The
Lenders:

     

    Fairway
Financing Company, LLC 

    c/o Lord
Securities Corporation 

    48 Wall
Street, 27th Floor 

    New York,
New York 10005 

    Telephone:
(212) 346-9000 

    Facsimile:
(212) 346-9000

     

    and

     

    BMO
Capital Markets Corp. 

    115 South
LaSalle Street 

    12th
Floor West 

    Chicago, Illinois
60603 

    Attn:
Jack Kane 

    Telephone:
(312) 461-7900 

    Facsimile:
(312) 461-7958

     

    with a
copy to:

     

    Mayer
Brown LLP 

    71 South
Wacker Drive 

    Chicago,
Illinois 60606 

    Attn:
Stuart M. Rozen, Esq. 

    Telephone:
(312) 701-7302 

    Facsimile:
(312) 706-8237

     

    and


    
      
         


      

      
        11

        
          

        

      

      
         


      

    


    Riverside
Funding, LLC 

    c/o
Global Securitization Services, LLC 

    445 Broad
Hollow Road, Suite 239 

    Melville,
NY 11747 

    Attn:
Jill Russo 

    Telephone:
(212) 295-5731 

    Facsimile:
(212) 797-5150

     

    and

     

    Deutsche
Bank Securities Inc. 

    60 Wall
Street, 19th Floor 

    New York,
New York 10005 

    Attn:
Mary Conners 

    Telephone:
(212) 250-4731 

    Facsimile:
(212) 797-5150

     

    With a
copy to:

     

    Bingham
McCutchen LLP 

    399 Park
Avenue 

    New York,
NY 10022 

    Attn:
Susan F. DiCicco, Esq. 

    Telephone:
(212) 705-7421 

    Facsimile:
(212) 593-6012

     

    (c)              The
Borrower:

     

    Kohlberg
Capital Funding LLC I 

    c/o
Kohlberg Capital Corporation 

    295
Madison Avenue, 6th Floor 

    New York,
New York 10017 

    Attention:
Dayl W. Pearson 

    Telephone:
(212) 455-8366 

    Facsimile:
(212) 983-7654

     

    with a
copy to:

     

    Dickstein
Shapiro LLP 

    1633
Broadway 

    New York,
NY 10019-6708 

    Attn:
Howard Graff, Esq. 

    Telephone:
(212) 277-6560 

    Facsimile:
(212) 277-6501


    
      
         


      

      
        12

        
          

        

      

      
         


      

    


    (d)              The
Servicer:

     

    Kohlberg
Capital Corporation 

    295
Madison Avenue, 6th Floor 

    New York,
New York 10017 

    Attention:
Dayl W. Pearson 

    Telephone:
(212) 455-8366 

    Facsimile:
(212) 983-7654

     

    with a
copy to:

     

    Dickstein
Shapiro LLP 

    1633
Broadway 

    New York,
NY 10019-6708 

    Attn:
Howard Graff, Esq. 

    Telephone:
(212) 277-6560 

    Facsimile:
(212) 277-6501

     

    All such
notices and communications shall be effective upon receipt, or, in the case of
(a) notice by mail, five days after being deposited in the United States mail,
first class postage prepaid, (b) notice by telex, when telexed against receipt
of answer back, or (c) notice by facsimile copy, when verbal communication of
receipt is obtained.

     

    29.         Limitation on Relationship Between
Parties. The relationship of the Agent and the Lenders, on the one hand,
and the Borrower and the Servicer, on the other hand, has been and shall
continue to be, at all times, that of creditor and debtor. Nothing contained in
this Agreement, any instrument, document or agreement delivered in connection
therewith or in the LFSA or any of the other Transaction Documents shall be
deemed or construed to create a fiduciary relationship between the
parties.

     

    30.         No Assignment. This Agreement shall
not be assignable by either the Borrower or the Servicer without the express
written consent of the Agent and the Lenders. Pursuant to Section 12.17 of the
LFSA, each Lender may assign to one or more Persons all or any part of, or any
participation interest in, such Lender’s rights and benefits
hereunder.

     

    31.         Successors. The terms of this
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors or permitted assigns and no other Person
shall have any right, benefit or interest under or because of the existence of
this Agreement.


    
      
         


      

      
        13

        
          

        

      

      
         


      

    

     

    IN
WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.

    


    
      
        
          
            
              
                
                  
                    	 
      	
                            KOHLBERG
      CAPITAL CORPORATION

                          
	 
      	 
      	 
      
	 
      	
                            By: 

                          	
                            /s/
      Dayl W. Pearson

                          
	 
      	 
      	
                            Its: 

                          	
                            Dayl
      W. Pearson

                          
	 
      	 
      	 
      	
                            Chief
      Executive Officer

                          
	 
      	 
      	 
      	
                            Kohlberg
      Capital
Corporation

                          


                  

                

              

            

          

        

      

    

    


    
      
        
          
            	 
      	
                    KOHLBERG
      CAPITAL FUNDING LLC I

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                          
                      /s/
      Dayl W. Pearson

                    

                  
	 
      	 
      	
                    Its: 

                  	
                    Authorized
      Representative

                  


          

        

      

    

    


    
      
        
          
            	 
      	
                    BMO
      CAPITAL MARKETS CORP., as Agent

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	/s/
      Jack J. Kane
	 
      	 
      	
                    Its: 

                  	      
                    Managing
      Director

                  


          

        

      

    

    


    
      
        
          
            	 
      	
                    FAIRWAY
      FINANCE COMPANY LLC, as

                  
	 
      	
                    Conduit
      Lender

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	/s/
      Philip A. Martone
	 
      	 
      	
                    Its: 

                  	      
                    Vice
      President

                  


          

        

      

    

    


    
      
        
          
            
              
                	 
      	
                        RIVERSIDE
      FUNDING LLC, as Conduit

                      
	 
      	
                        Lender

                      
	 
      	 
      	 
      
	 
      	
                        By: 

                      	/s/
      Jill A. Russo
	 
      	 
      	
                        Its: 

                      	      
                        Vice
      President

                      


              

            

          

        

      

    

    


    
      
        
          
            	 
      	
                    BANK
      OF MONTREAL, as Liquidity Bank

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	/s/
      Jack J. Kane
	 
      	 
      	
                    Its: 

                  	      
                    Managing
      Director

                  


          

        

      

    

     

    
      
         


      

      
        14

        
          

        

      

      
         


      

    


     

    
      
        
          
            	 
      	
                    DEUTSCHE
      BANK AG, NEW YORK

                    BRANCH,
      as Liquidity Bank

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                    /s/
      Kevin Tanzer

                  
	 
      	 
      	
                    Its: 

                  	
                    Kevin
      Tanzer

                  
	 
      	 
      	 
      	
                    Director

                  


          

        

      

    

     

    
      
        
          
            	 
      	
                    By: 

                  	
                    /s/
      Sergey Moiseyenko

                  
	 
      	 
      	
                    Its: 

                  	
                    Sergey
      Moiseyenko

                  
	 
      	 
      	 
      	
                    Vice
      President

                  


          

        

      

    

     

    
      
         


      

      
        15

        
          

        

      

      
         


      

    

     

    SCHEDULE
A

     

    
      
        	
                Kohlberg
      Capital Funding LLC I

              	
                CoActive
      Technologies, Inc.

              	
                Term
      Loan (Second Lien)

              


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      SCHEDULE
B

       

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Portfolio_Name

                                  	
                                    Issuer_Name

                                  	
                                    Asset_Name

                                  	 	
                                    9-10-2010
      Par

                                  	 	 	
                                    6-30-10
      MV

                                  	 	 	
                                    Par
      * 6-30 MV

                                  	 	 	
                                    Par
      *90% of MV

                                  	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Advanced
      Lighting Technologies, Inc.

                                  	
                                    Deferred
      Draw Term Loan (First Lien)

                                  	 	$	321,948.21	 	 	 	97.1000	%	 	$	312,611.71	 	 	$	281,350.54	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Advanced
      Lighting Technologies, Inc.

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	1,572,449.70	 	 	 	97.1000	%	 	$	1,526,848.66	 	 	$	1,374,163.80	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Aero
      Products International, Inc.

                                  	
                                    Term
      Loan

                                  	 	$	3,118,560.00	 	 	 	62.5000	%	 	$	1,949,100.00	 	 	$	1,754,190.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    AGA
      Medical Corporation

                                  	
                                    Tranche
      B Term Loan

                                  	 	$	1,832,209.30	 	 	 	96.2000	%	 	$	1,762,585.35	 	 	$	1,586,326.81	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    AGS
      LLC

                                  	
                                    Delayed
      Draw Term Loan

                                  	 	$	405,264.24	 	 	 	91.5000	%	 	$	370,816.78	 	 	$	333,735.10	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    AGS
      LLC

                                  	
                                    Initial
      Term Loan

                                  	 	$	2,896,645.42	 	 	 	91.5000	%	 	$	2,650,430.56	 	 	$	2,385,387.50	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Astoria
      Generating Company Acquisitions, L.L.C.

                                  	
                                    Term
      C

                                  	 	$	4,000,000.00	 	 	 	95.7000	%	 	$	3,828,000.00	 	 	$	3,445,200.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Awesome
      Acquisition Company (CiCi's Pizza)

                                  	
                                    Term
      Loan (Second Lien)

                                  	 	$	4,000,000.00	 	 	 	93.3000	%	 	$	3,732,000.00	 	 	$	3,358,800.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Bankruptcy
      Management Solutions, Inc.

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	1,870,496.50	 	 	 	80.9000	%	 	$	1,513,231.67	 	 	$	1,361,908.50	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Bicent
      Power LLC

                                  	
                                    Advance
      (Second Lien)

                                  	 	$	4,000,000.00	 	 	 	78.3000	%	 	$	3,132,000.00	 	 	$	2,818,800.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Caribe
      Information Investments Incorporated

                                  	
                                    Term
      Loan

                                  	 	$	1,611,044.80	 	 	 	88.8000	%	 	$	1,430,607.79	 	 	$	1,287,547.01	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Cast
      & Crew Payroll, LLC (Payroll Acquisition)

                                  	
                                    Initial
      Term Loan

                                  	 	$	6,373,290.00	 	 	 	98.6000	%	 	$	6,284,063.94	 	 	$	5,655,657.55	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    CoActive
      Technologies, Inc.

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	3,893,443.58	 	 	 	83.0000	%	 	$	3,231,558.17	 	 	$	2,908,402.35	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    eInstruction
      Corporation

                                  	
                                    Initial
      Term Loan

                                  	 	$	3,237,985.88	 	 	 	97.8000	%	 	$	3,166,750.19	 	 	$	2,850,075.17	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Harland
      Clarke Holdings Corp. (fka Clarke American Corp.)

                                  	
                                    Tranche
      B Term Loan

                                  	 	$	2,910,000.00	 	 	 	86.2500	%	 	$	2,509,875.00	 	 	$	2,258,887.50	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    HMSC
      Corporation (aka Swett and Crawford)

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	5,000,000.00	 	 	 	74.7000	%	 	$	3,735,000.00	 	 	$	3,361,500.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Hunter
      Fan Company

                                  	
                                    Initial
      Term Loan (First Lien)

                                  	 	$	3,690,442.85	 	 	 	87.9000	%	 	$	3,243,899.27	 	 	$	2,919,509.34	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Inmar,
      Inc.

                                  	
                                    Term
      Loan

                                  	 	$	3,363,853.77	 	 	 	97.1000	%	 	$	3,266,302.01	 	 	$	2,939,671.81	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    KIK
      Custom Products Inc.

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	5,000,000.00	 	 	 	61.2000	%	 	$	3,060,000.00	 	 	$	2,754,000.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    La
      Paloma Generating Company, LLC

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	2,000,000.00	 	 	 	79.8000	%	 	$	1,596,000.00	 	 	$	1,436,400.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Primus
      International Inc.

                                  	
                                    Term
      Loan

                                  	 	$	1,080,675.87	 	 	 	96.4000	%	 	$	1,041,771.54	 	 	$	937,594.39	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    San
      Juan Cable, LLC

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	3,000,000.00	 	 	 	98.1000	%	 	$	2,943,000.00	 	 	$	2,648,700.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Schneller
      LLC

                                  	
                                    Term
      Loan

                                  	 	$	4,091,034.67	 	 	 	97.4500	%	 	$	3,986,713.28	 	 	$	3,588,041.95	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Seismic
      Micro-Technology, Inc. (SMT)

                                  	
                                    Term
      Loan

                                  	 	$	780,480.34	 	 	 	97.6000	%	 	$	761,748.81	 	 	$	685,573.93	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Seismic
      Micro-Technology, Inc. (SMT)

                                  	
                                    Term
      Loan

                                  	 	$	1,170,720.51	 	 	 	97.6000	%	 	$	1,142,623.22	 	 	$	1,028,360.89	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Specialized
      Technology Resources, Inc.

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	3,543,235.78	 	 	 	97.7000	%	 	$	3,461,741.35	 	 	$	3,115,567.22	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    TPF
      Generation Holdings, LLC

                                  	
                                    Loan
      (Second Lien)

                                  	 	$	2,000,000.00	 	 	 	98.0000	%	 	$	1,960,000.00	 	 	$	1,764,000.00	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    TUI
      University, LLC

                                  	
                                    Term
      Loan (First Lien)

                                  	 	$	3,119,818.45	 	 	 	97.6000	%	 	$	3,044,942.80	 	 	$	2,740,448.52	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Wolf
      Hollow I, LP

                                  	
                                    Acquisition
      Term Loan

                                  	 	$	763,091.67	 	 	 	96.0000	%	 	$	732,568.01	 	 	$	659,311.21	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Wolf
      Hollow I, LP

                                  	
                                    Synthetic
      Letter of Credit

                                  	 	$	668,411.79	 	 	 	96.0000	%	 	$	641,675.32	 	 	$	577,507.79	 
	
                                    Kohlberg
      Capital Funding LLC I

                                  	
                                    Wolf
      Hollow I, LP

                                  	
                                    Synthetic
      Revolver Deposit

                                  	 	$	167,102.95	 	 	 	96.0000	%	 	$	160,418.83	 	 	$	144,376.95	 
	 
      	 
      	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 
      	 
      	 	$	81,482,206.28	 	 	 	88.5824	%	 	$	72,178,884.26	 	 	$	64,960,995.83	 


                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

    


    
      
        
          	
                  SUPREME
      COURT OF THE STATE OF NEW YORK

                	 
      	 
      
	
                  COUNTY
      OF NEW YORK

                	 
      	 
      
	
                  – –
      – – – – – – – – – – – – – – – – – – – – – – – – –

                	
                  x

                	 
      
	 
      	 
      	 
      
	
                  KOHLBERG
      CAPITAL FUNDING LLC I, et al.,

                	
                  :

                	
                  Index
      No. 602688/2009

                
	 
      	 
      	
                  IAS
      Part 60

                
	
                  Plaintiffs,

                	
                  :

                	
                  (Fried,
      J.)

                
	 
      	 
      	 
      
	 
      	
                  :

                	
                  STIPULATION
      OF

                
	
                           –
      against –

                	 
      	
                  DISCONTINUANCE

                
	 
      	
                  :

                	 
      
	 
      	 
      	 
      
	
                  FAIRWAY
      FINANCE COMPANY LLC, et al.,

                	
                  :

                	 
      
	 
      	 
      	 
      
	
                  Defendants.

                	
                  :

                	 
      
	 
      	 
      	 
      
	
                  – –
      – – – – – – – – – – – – – – – – – – – – – – – – –

                	
                  x

                	 
      


        

      

    

    


    IT IS
HEREBY STIPULATED AND AGREED by and between Plaintiffs Kohlberg Capital Funding
LLC I and Kohlberg Capital Corporation, and Defendants Riverside Funding, LLC,
Deutsche Bank AG, New York Branch, Fairway Finance Company, LLC and BMO Capital
Markets Corporation, by their undersigned attorneys, pursuant to Rule 3217 of
the New York Civil Practice Law and Rules, that no party being an infant,
incompetent person for whom a committee has been appointed or conservatee, and
there being no person not a party who has an interest in the subject matter of
the action, that this action be and hereby is discontinued with prejudice, with
each party to bear its own costs.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                	
                        Dated:

                      	
                        New
      York, New York

                      	 
      	 
      	 
      
	 
      	
                        September
      __, 2010

                      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        DICKSTEIN
      SHAPIRO LLP

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        By:

                      	 
      
	 
      	 
      	 
      	 
      	
                        Howard
      Graff

                      
	 
      	 
      	 
      	 
      	
                        Judith
      R. Cohen

                      
	 
      	 
      	 
      	 
      	
                        Jessica
      E. Elliott

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                        1633
      Broadway

                      
	 
      	 
      	 
      	 
      	
                        New
      York, New York 10019

                      
	 
      	 
      	 
      	 
      	
                        (212)
      277-6500

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        Attorneys
      for Plaintiffs Kohlberg Capital

                      
	 
      	 
      	 
      	 
      	
                        Funding
      LLC I and Kohlberg Capital

                      
	 
      	 
      	 
      	 
      	
                        Corporation.

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        MAYER
      BROWN LLP

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        By:

                      	 
      
	 
      	 
      	 
      	 
      	
                        Michael
      O. Ware

                      
	 
      	 
      	 
      	 
      	
                        Megan
      A. Sramek

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                        1675
      Broadway

                      
	 
      	 
      	 
      	 
      	
                        New
      York, NY 10019

                      
	 
      	 
      	 
      	 
      	
                        (212)
      506-2500

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        Attorneys
      for Defendants Fairway Finance

                      
	 
      	 
      	 
      	 
      	
                        Company
      LLC and BMO Capital Markets

                      
	 
      	 
      	 
      	 
      	
                        Corp.

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        BINGHAM
      McCUTCHEN LLP

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        By:

                      	 
      
	 
      	 
      	 
      	 
      	
                        Robert
      M. Dombroff

                      
	 
      	 
      	 
      	 
      	
                        Susan
      F. DiCicco

                      
	 
      	 
      	 
      	 
      	
                        Stephen
      Scotch-Marmo

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                        399
      Park Avenue

                      
	 
      	 
      	 
      	 
      	
                        New
      York, NY 10022

                      
	 
      	 
      	 
      	 
      	
                        (212)
      705-7000

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	Attorneys
      for Defendants Riverside Funding, LLC
	 
      	 
      	 
      	 
      	
                        and
      Deutsche Bank AG, New York
Branch

                      


              

            

          

        

      

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

     

    RELEASE

     

    WHEREAS, Riverside Funding LLC
(“Riverside”); Deutsche Bank AG,
New York Branch (“DB”); Fairway
Finance Company LLC (“Fairway”);
BMO Capital Markets Corp. the “Agent”); Bank of Montreal (“BMO”); Kohlberg Capital Funding LLC I
(“Kohlberg Funding”); and,
Kohlberg Capital Corporation (“Kohlberg”) (collectively, the “Parties”) have entered into a
Forbearance and Settlement Agreement dated September __, 2010 (the “Agreement”), resolving certain claims
and differences existing among them.

     

    WHEREAS, Riverside, Fairway,
Kohlberg, Kohlberg Funding, the Agent, and others entered into a Loan Funding
and Servicing Agreement dated as of February 14, 2007 (as modified, supplemented
or amended from time to time, the “LFSA”), pursuant to which, among other
things, Riverside and Fairway agreed to provide Funding with a credit
facility.

     

    WHEREAS, as of ______, 20__,
Kohlberg Funding has paid all Advances Outstanding and other amounts payable
under the terms of the LFSA and Transaction Documents, in accordance with the
Agreement.

     

    NOW, THEREFORE, in
consideration of the foregoing, Riverside and Deutsche Bank, for themselves and
all of their respective past, present or future parents, subsidiaries,
divisions, affiliates, predecessors, successors, joint venturers, partners,
partnerships, corporations, companies, organizations, associations, principals,
members, associates, employees, officers, directors, shareholders, servants,
advisors, attorneys and agents, and all of those persons’ (be they individuals
or entities) past, present or future heirs, beneficiaries, trustees,
representatives, executors, distributees, administrators, assigns, guardians,
officers, directors, shareholders and others acting on their behalf (any and all
of the foregoing being referred to herein as the “Deutsche Bank Parties”), do hereby
release and forever discharge Kohlberg and Kohlberg Funding and any of their
past, present or future parents, subsidiaries, divisions, affiliates,
predecessors, successors, joint venturers, partners, partnerships, corporations,
companies, organizations, associations, principals, members, associates,
employees, officers, directors, shareholders, servants, advisors, attorneys and
agents, and all of those persons’ (be they individuals or entities) past,
present or future heirs, beneficiaries, trustees, representatives, executors,
distributees, administrators, assigns, guardians, officers, directors,
shareholders and others acting on their behalf (any and all of the foregoing
being referred to herein as the “Kohlberg Parties”), of and from any
and all, and all manner of, action and actions, cause and causes of action,
claims, suits, demands, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, incidents, executions, obligations, damages, liabilities,
judgments, and all other claims or demands of any kind whatsoever, whether in
law or in equity, whether known or unknown, which any of the Deutsche Bank
Parties ever had, now has or hereafter can, shall or may have, from the
beginning of the world to the date of this Release, against any of the Kohlberg
Parties arising from or relating to the LFSA, the Transaction Documents or the
Litigation (as defined in the Agreement).

     

    [SIGNATURES
ON NEXT PAGE]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    RIVERSIDE
FUNDING LLC

     

    
      
        
          
            
              
                	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      


              

            

          

        

      

    

     

    DEUTSCHE
BANK AG, NEW YORK BRANCH

     

    
      
        
          
            
              
                	
                        By:

                      	 
	
                        Name:

                      	 
	
                        Title:

                      	 


              

            

          

        

      

    

    


    
      
        
          
            
              
                	
                        By:

                      	 
	
                        Name:

                      	 
	
                        Title:

                      	 


              

            

          

        

      

    

     

    
      Sworn to
before me this

      ____ day
of _____, 20__.

      


    

    
      
        
          
            	 
      
	
                    Notary
      Public

                  


          

        

      

    

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C

     

    RELEASE

     

    WHEREAS, Riverside Funding LLC
(“Riverside”); Deutsche Bank AG,
New York Branch (“DB”); Fairway
Finance Company LLC (“Fairway”);
BMO Capital Markets Corp. the “Agent”); Bank of Montreal (“BMO”); Kohlberg Capital Funding LLC I
(“Kohlberg Funding”); and,
Kohlberg Capital Corporation (“Kohlberg”) (collectively, the “Parties”) have entered into a
Forbearance and Settlement Agreement dated September __, 2010 (the “Agreement”), resolving certain claims
and differences existing among them.

     

    WHEREAS, Riverside, Fairway,
Kohlberg, Kohlberg Funding, the Agent, and others entered into a Loan Funding
and Servicing Agreement dated as of February 14, 2007 (as modified, supplemented
or amended from time to time, the “LFSA”), pursuant to which, among other
things, Riverside and Fairway agreed to provide Funding with a credit
facility.

     

    WHEREAS, as of ______, 20__,
Kohlberg Funding has paid all Advances Outstanding and other amounts payable
under the terms of the LFSA and Transaction Documents, in accordance with the
Agreement.

     

    NOW, THEREFORE, in
consideration of the foregoing, Fairway, BMO and the Agent shall, for themselves
and all of their respective past, present or future parents, subsidiaries,
divisions, affiliates, predecessors, successors, joint venturers, partners,
partnerships, corporations, companies, organizations, associations, principals,
members, associates, employees, officers, directors, shareholders, servants,
advisors, attorneys and agents, and all of those persons’ (be they individuals
or entities) past, present or future heirs, beneficiaries, trustees,
representatives, executors, distributees, administrators, assigns, guardians,
officers, directors, shareholders and others acting on their behalf (any and all
of the foregoing being referred to herein as the “BMO Parties”), shall and do hereby
release and forever discharge Kohlberg and Kohlberg Funding and any of their
past, present or future parents, subsidiaries, divisions, affiliates,
predecessors, successors, joint venturers, partners, partnerships, corporations,
companies, organizations, associations, principals, members, associates,
employees, officers, directors, shareholders, servants, advisors, attorneys and
agents, and all of those persons’ (be they individuals or entities) past,
present or future heirs, beneficiaries, trustees, representatives, executors,
distributees, administrators, assigns, guardians, officers, directors,
shareholders and others acting on their behalf (any and all of the foregoing
being referred to herein as the “Kohlberg Parties”), of and from any
and all, and all manner of, action and actions, cause and causes of action,
claims, suits, demands, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, incidents, executions, obligations, damages, liabilities,
judgments, and all other claims or demands of any kind whatsoever, whether in
law or in equity, whether known or unknown, which any of the BMO Parties ever
had, now has or hereafter can, shall or may have, from the beginning of the
world to the date of this Release, against any of the Kohlberg Parties arising
from or relating to the LFSA, Transaction Documents or the Litigation (as
defined in the Agreement).

     

    [SIGNATURES
ON NEXT PAGE]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    BMO
CAPITAL MARKETS CORP.

     

    
      
        
          
            
              
                	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      


              

            

          

        

      

    

     

    FAIRWAY
FINANCE COMPANY LLC

     

    
      
        
          
            
              
                	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      


              

            

          

        

      

    

     

    BANK OF
MONTREAL

     

    
      
        
          
            
              
                	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      


              

            

          

        

      

    

    


    Sworn to
before me this

    ____ day
of ______, 20__.

     

    
      
        
          	 
      
	
                  Notary
      Public

                


        

      

    

    


    
      
        
        

      

      
        2