**Exhibit 10.30**

 

AMENDMENT NO. 5, CONSENT ANDWAIVERTOCREDIT AGREEMENT

 

THIS AMENDMENT NO. 5, CONSENTAND WAIVER TO CREDIT AGREEMENT (this “Amendment”) dated as of May 27,2005, is entered into among GLADSTONE BUSINESS LOAN, LLC, as the Borrower,TAHOE FUNDING CORP., LLC and PUBLIC SQUARE FUNDING LLC, as CP Lenders(collectively, the “CP Lenders”), DEUTSCHE BANK AG, NEW YORK BRANCH (“DeutscheBank”) and KEYBANK, NATIONAL ASSOCIATION (“KeyBank”), as CommittedLenders (collectively, the “Committed Lenders”), Deutsche Bank andKeyBank as Managing Agents (in such capacity, collectively the “ManagingAgents”) and Deutsche Bank as Administrative Agent (in such capacity, the “AdministrativeAgent”).  Capitalized terms usedherein without definition shall have the meanings ascribed thereto in the “CreditAgreement” referred to below.

 

PRELIMINARY STATEMENTS

 

A.            Reference ismade to that certain Credit Agreement dated as of May 19, 2003 among theBorrower, Gladstone Advisers, Inc., as Servicer, the CP Lenders, the CommittedLenders, the Managing Agents and the Administrative Agent (as amended, modifiedor supplemented from time to time, including, without limitation, by thatcertain Resignation, Appointment and Consent dated as of September 28, 2004,and as further amended, restated, supplemented or modified from time to time,the “Credit Agreement”).

 

B.            The partieshereto have agreed to (i) amend certain provisions of the Credit Agreement uponthe terms and conditions set forth herein and (ii) consent to the modificationby the Borrower and the Servicer of the Credit and Collection Policy.

 

SECTION 1.  Amendment.  Subject to the satisfaction of the conditionsprecedent set forth in Section 4 hereof, the parties hereto herebyagree:

 

#### (i)            to amendSection 1.1 by adding the following new definitions in alphabetical order, asfollows:

####  

Post-TerminationRevolver Loan Fundings: means an advance by the Committed Lenders,made on or following the Revolver Loan Funding Date, which may be used for thesole purpose of funding advances requested by Obligors under the Revolver Loans.

 

RevolverLoan:  means each Loan with respectto which the Borrower has a revolving credit commitment to advance amounts tothe applicable Obligor during a specified term.

 

RevolverLoan Funding:  has themeaning given to such term in Section 2.14.

 

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RevolverLoan Funding Account: has the meaning given to such term in Section2.14.

 

RevolverLoan Funding Account Shortfall: means, on any date, theamount, if any, by which the Revolver Loan Funding Amount at such time exceedsthe aggregate amount on deposit in the Revolver Loan Funding Accounts.

 

RevolverLoan Funding Account Surplus:  means, on any date, the amount, if any, bywhich the amount on deposit in the Revolver Loan Funding Accounts exceeds the RevolverLoan Funding Amount at such time.

 

RevolverLoan Funding Amount: has the meaning given to such term in Section2.14.

 

RevolverLoan Funding Date:  means theTermination Date, if Revolver Loans are outstanding on such date.

 

ServicingFee Limit Amount:  means, foreach Payment Date, an amount equal to 50% of the Servicing Fee for the relatedSettlement Period.

 

#### (ii)           to delete thedefinition of “Commitment Termination Date” in its entirety, andsubstitute the following therefor:

####  

CommitmentTermination Date: means May 26, 2006, or such later date to whichthe Commitment Termination Date may be extended (if extended) in the solediscretion of the Lenders in accordance with the terms of Section 2.1(b).

 

#### (iii)          to amend thedefinition of “Credit and Collection Policy” to delete the reference to “Section7.8(g)” set forth therein and substitute a reference to “Section 7.9(g)”therefor.

####  

#### (iv)          to deleteclause (viii) of the definition of “Eligible Loan” and substitute the followingtherefor:

####  

(viii)        the Loan bearsinterest, which is due and payable no less frequently than quarterly, exceptfor (i) Loans which bear interest which is due and payable no less frequentlythan semi-annually, provided that the aggregate Outstanding Loan Balances ofsuch Loans do not exceed 10% of the Aggregate Outstanding Loan Balance and (ii)PIK Loans,

 

#### (v)           to add thefollowing clauses (xxii) and (xxiii) to the definition of “Eligible Loan”in appropriate numeric order therein:

 

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(xxii)        if such Loan isa Revolver Loan, it shall be secured by a first priority, perfected securityinterest on certain assets of the Obligor which shall include, withoutlimitation, accounts receivable and inventory; and

 

(xxiii)       if such Loan is a Revolver Loan, therevolving credit commitment of the Borrower to the applicable Obligorthereunder (A) is between $500,000 and $5,000,000, (B) shall have a term tomaturity of one year or less and (C) shall permit borrowings thereunder notmore frequently than once per week.

 

#### (vi)          to delete thedefinition of “Excess Concentration Amount” and substitute the followingtherefor:

####  

Excess Concentration Amount:  On any date ofdetermination, the sum of, without duplication, (a) the aggregate amount bywhich the Outstanding Loan Balances of Eligible Loans included as part of theCollateral, the Obligors of which are residents of any one state, exceeds 40%of the Aggregate Outstanding Loan Balance, (b) the aggregate amount by whichthe Outstanding Loan Balances of Eligible Loans included as part of theCollateral, the Obligors of which are in the same Industry, exceeds 25% of theAggregate Outstanding Loan Balance, (c) the aggregate amount by which theOutstanding Loan Balance of each Eligible Loan included as part of the Collateralexceeds the Large Loan Limit applicable to such Eligible Loan, (d) theaggregate amount by which the Outstanding Loan Balances of all Eligible Loansincluded as part of the Collateral whose interest payments are due and payableless frequently than monthly exceeds 66 2/3% of the Aggregate Outstanding LoanBalance, (e) the aggregate amount by which theOutstanding Loan Balances of all Eligible Loans included as part of theCollateral which are PIK Loans exceeds 40% ofthe Aggregate Outstanding Loan Balance, (f) the aggregate amount by which theOutstanding Loan Balances of all Eligible Loans included as part of theCollateral which are PIK Loans having a PIKaccrual component greater than 3.0% exceeds 25% of the Aggregate OutstandingLoan Balance, (g) the aggregate amount by which the Outstanding Loan Balancesof all Eligible Loans that have original terms to maturity greater than 84months exceeds 10% of the Aggregate Outstanding Loan Balance, (h) theaggregate amount by which the Outstanding Loan Balances of QualifyingSyndicated Loans included as part of the Collateral, for which no SubsequentDelivery Trust Receipt 

 

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(asdefined in the Custody Agreement) has been received exceeds $30,000,000, (i) theaggregate Outstanding Loan Balances of all Loans which (A) do not have along-term credit rating from either S&P or Moody’s and (B) are not pricedby Standard & Poor’s Securities Evaluations, Inc. on a quarterly basis andhave not been so priced by Standard & Poor’s Securities Evaluations, Inc.for a period in excess of (x) with respect to the Loans described in Annex III tothat certain Amendment No. 4 hereto dated as of September 28, 2004, 45 daysfrom September 28, 2004 or (y) otherwise, 135 days from the date such Loanbecomes a Transferred Loan, provided, however, that the requirements ofthis clause (i) shall not apply to the Marcal RE Loan, (j) the aggregateamount by which the Outstanding Loan Balances of all Eligible Loans included aspart of the Collateral which are Revolver Loans exceeds $20,000,000 and (k) theaggregate amount by which the Outstanding Loan Balances of all Eligible Loansthat are unsecured exceeds 10% of the Aggregate Outstanding Loan Balance.

 

#### (vii)         to delete thedefinition of “Payment Date” in its entirety, and substitute thefollowing therefor:

####  

PaymentDate: means the seventh (7th) day of each calendar month or, if such day isnot a Business Day, the next succeeding Business Day; provided that forpurposes of distributions required pursuant to Section 2.8(a)(vii) only,“Payment Date” shall mean any Business Day.

 

#### (viii)        to amendSection 2.1(a) to delete the sentences “Such Funding Request shall be deliverednot later than 5:00 p.m. (New York City time) on the date which is four (4)Business Days prior to the requested Funding Date.  Following receipt by the Administrative Agentof a Funding Request, the Administrative Agent shall forward such FundingRequest to each Managing Agent not later than 12:00 p.m. (New York City time)on the date which is three (3) Business Days prior to the requested FundingDate.” and substitute the following therefor:

####  

SuchFunding Request shall be delivered not later than 10:00 a.m. (New York Citytime) on the date which is one (1) Business Day prior to the requested FundingDate.  Following receipt by theAdministrative Agent of a Funding Request, the Administrative Agent shallforward such Funding Request to each Managing Agent not later than 11:00 a.m.(New York City time) that day.

 

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#### (ix)           to amendSection 2.2(c) to insert the phrase, “provided that the requirements ofthis Section 2.2(c) shall apply only with respect to the first Advanceto be made with respect to a Revolver Loan” at the end of the first sentencethereof;

####  

#### (x)            to amendSection 2.2(e) to delete the phrase “at least $3,000,000” and substitute thephrase “at least $3,000,000, or, if such Advance is to be made with respect toa Revolver Loan, at least $100,000” therefor;

####  

#### (xi)           to amendSection 2.3(b) to delete the phrase “at least three (3) Business Days prior tothe proposed Funding Date (or such shorter period of time or later date as maybe agreed to by the Required Committed Lenders)” and substitute the phrase “atleast one (1) Business Day prior to the date of such repayment” therefor

####  

#### (xii)          to furtheramend Section 2.3(b) to delete the phrase “$1,000,000 with integral multiplesof $100,000 above such amount” and substitute the phrase “$1,000,000 withintegral multiples of $100,000 above such amount, or, with respect to anypartial prepayment made in connection with payments received in respect of a RevolverLoan, $100,000 with integral multiples of $100,000 above such amount” therefor;

####  

#### (xiii)         to delete “Section2.8   Settlement Procedures” in itsentirety and substitute the section set forth in Annex I therefor;

####  

#### (xiv)        to amendArticle II to add the following Section 2.14 in numeric order therein:

####  

**Section 2.14****        ****Revolver Loan Funding****. **(a)  Upon the occurrence of a Revolver Loan FundingDate (i) each CP Lender shall make an assignment to its related CommittedLenders of its Advances Outstanding in respect of Revolver Loans at such timeand (ii) each Committed Lender shall make an advance (each, a “Revolver LoanFunding”) in an amount equal to such Committed Lender’s ratable share ofthe aggregate outstanding unfunded commitments under the Revolver Loans (collectively,the “Revolver Loan Funding Amount”). Upon receipt of the proceeds of such Revolver Loan Funding, theAdministrative Agent shall deposit such funds into segregated accounts (each, a“Revolver Loan Funding Account”), in its name, referencing the name ofsuch Committed Lender, and maintained at a Qualified Institution.  Each Committed Lender hereby grants to theAdministrative Agent full power and authority, on its behalf, to withdraw fundsfrom the applicable Revolver Loan Funding Account at the time of, and inconnection with, the funding of any Post-Termination Revolver Loan Fundings to 

 

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bemade by the Borrower, and to deposit to the related Revolver Loan FundingAccount any funds received in respect of each relevant Committed Lender’sratable share of principal payments under Section 2.8 hereof, all inaccordance with the terms of and for the purposes set forth in thisAgreement.  The deposit of monies in suchRevolver Loan Funding Account by any Committed Lender shall not constitute anAdvance (and such Committed Lender shall not be entitled to interest on suchmonies except as provided in clause (d) below) unless and until (and then onlyto the extent that) such monies are used to make Post-Termination Revolver LoanFundings pursuant to the first sentence of clause (b) below).  On each Payment Date, the Borrower shall paythe Administrative Agent, for the benefit of the Committed Lenders, a fee (the “RevolverLoan Funding Fee”) equal to 0.30%, multiplied by the weighted averageamount on deposit in the Revolver Loan Funding Accounts during the applicableSettlement Period, calculated on the basis of a year of 360 days for the actualnumber of days elapsed.

 

(b)           From and afterthe establishment of a Revolver Loan Funding Account with respect to any CommittedLender, and until the earlier of (i) the reduction to zero of all outstandingcommitments in respect of Revolver Loans and (ii) one year following the RevolverLoan Funding Date, all Post-Termination Revolver Loan Fundings to be made bysuch Committed Lender hereunder shall be made by withdrawing funds from theapplicable Revolver Loan Funding Account. On each Business Day during such time, the Administrative Agent shall,(i) if a Revolver Loan Funding Account Shortfall exists, deposit the lesser of(A) the amount allocable to the repayment of principal to the Committed Lendersand (B) the Revolver Loan Funding Account Shortfall and (ii) if a Revolver LoanFunding Account Surplus exists, pay to the applicable Managing Agent, on behalfof each Committed Lender, such Committed Lender’s ratable share of the RevolverLoan Funding Account Surplus.  Until theearlier of (i) the reduction to zero of all outstanding commitments in respectof Revolver Loans and (ii) one year following the Revolver Loan Funding Date,all remaining funds then held in such Revolver Loan Funding Account (aftergiving effect to any Post-Termination Revolver Loan Fundings to be made on suchdate) shall be paid by the Administrative Agent to the applicable ManagingAgent, on behalf of such Committed Lender, and thereafter all payments made inrespect of the 

 

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Loans(whether or not originally funded from such Committed Lender’s Revolver LoanFunding Account) shall be paid directly to the applicable Managing Agent, onbehalf of such Committed Lender, in accordance with the terms of Section 2.8.

 

(c)           The ProgramAgent may, its sole discretion, advance funds withdrawn from the Revolver LoanFunding Accounts to (i) the Borrower or (ii) the applicable Obligor directly,on behalf of the Borrower, and in either case, such funds shall be used solelyfor the purpose of funding advances requested by an Obligor under a RevolverLoan.

 

(d)           Proceeds in a RevolverLoan Funding Account shall be invested, at the written direction of theapplicable Committed Lender (or the applicable Managing Agent on its behalf) tothe applicable Revolver Loan Funding Account bank, only in investments whichconstitute Permitted Investments.  Theinvestment earnings with respect to a Revolver Loan Funding Account shallaccrue as the Committed Lender and Revolver Loan Funding Account bank shallagree.  The Administrative Agent shalldirect the Revolver Loan Funding Account bank to pay all such investmentearnings from the relevant account directly to the applicable Managing Agent,for the account of the applicable Committed Lender.

 

(e)           Notwithstandinganything herein to the contrary, none of the Administrative Agent, the otherManaging Agents, the other Purchasers nor the Revolver Loan Funding Accountbank shall have any liability for any loss arising from any investment orreinvestment made by it with respect to a Revolver Loan Funding Account inaccordance with, and pursuant to, the provisions hereof.

 

#### (xv)         to delete “Section5.2   Hedging Agreement” in its entiretyand substitute the section set forth in Annex II therefor;

####  

#### (xvi)        to amend “Section12.1 Amendments and Waivers” to delete the following language in its entirety:

####  

(x) written notice to Concord delivered two(2) Business Days prior to effectiveness, which notice requirement may be waivedin Concord’s sole discretion and (y)

 

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#### (xvii)       to delete the form of Monthly Report setforth on Exhibit E to the Credit Agreement in its entirety, and substitute theform of Monthly Report set forth on Exhibit A hereto therefor.

####  

SECTION 2.  Waiver.  Each of the Managing Agents and theAdministrative Agent hereby agrees to waive any Early Termination Event arisingsolely as a result of the Borrower’s failure to comply with the requirementsunder Section 5.2 of the Credit Agreement prior to its amendment hereunder.

 

SECTION 3.  Consent.  Each of the Managing Agents and theAdministrative Agent hereby waives the notice and timing requirements set forthin Sections 5.1(r) and 7.9(g) of the Credit Agreement and consents to theamendment to the Credit and Collection Policy, as set forth on Exhibit Bhereto.

 

SECTION 4.  Representationsand Warranties.  The Borrower herebyrepresents and warrants to each of the other parties hereto, that:

 

### (a)           this Amendmentconstitutes its legal, valid and binding obligation, enforceable against it inaccordance with its terms; and

###  

### (b)           on the datehereof, before and after giving effect to this Amendment, other than as amendedor waived pursuant to this Amendment, no Early Termination Event or UnmaturedTermination Event has occurred and is continuing.

###  

SECTION 5.  ConditionsPrecedent.  This Amendment shallbecome effective on the first Business Day (the “Effective Date”) onwhich the Administrative Agent or its counsel has received counterpartsignature pages of this Amendment, executed by each of the parties hereto.

 

SECTION 6.  Referenceto and Effect on the Transaction Documents.

 

### (a)           Upon theeffectiveness of this Amendment, (i) each reference in the Credit Agreement to “thisCredit Agreement”, “this Agreement”, “hereunder”, “hereof”, “herein” or wordsof like import shall mean and be a reference to the Credit Agreement as amendedor otherwise modified hereby, and (ii) each reference to the Credit Agreementin any other Transaction Document or any other document, instrument oragreement executed and/or delivered in connection therewith, shall mean and bea reference to the Credit Agreement as amended or otherwise modified hereby.

###  

### (b)           Except asspecifically amended, terminated or otherwise modified above, the terms andconditions of the Credit Agreement, of all other Transaction Documents and anyother documents, instruments and agreements executed and/or delivered inconnection therewith, shall remain in full force and effect and are herebyratified and confirmed.

###  

### (c)           The execution,delivery and effectiveness of this Amendment shall not operate as a waiver ofany right, power or remedy of the Administrative Agent, any Managing Agent orany Lender under the Credit Agreement or any other Transaction Document or anyother document, instrument or agreement executed in connection 

 

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### therewith, nor constitute awaiver of any provision contained therein, in each case except as specificallyset forth herein.

###  

SECTION 7.  Executionin Counterparts.  This Amendment maybe executed in any number of counterparts and by different parties hereto inseparate counterparts, each of which when so executed and delivered shall bedeemed to be an original and all of which taken together shall constitute butone and the same instrument.  Delivery ofan executed counterpart of a signature page to this Amendment by telecopiershall be effective as delivery of a manually executed counterpart of this Amendment.

 

SECTION 8.  GoverningLaw.  This Amendment shall begoverned by and construed in accordance with the laws of the State of New York.

 

SECTION 9.  Headings.  Section headings in this Amendment areincluded herein for convenience of reference only and shall not constitute apart of this Amendment for any other purpose.

 

SECTION 10.  Feesand Expenses.   Seller herebyconfirms its agreement to pay on demand all reasonable costs and expenses ofthe Administrative Agent, Managing Agents or Lenders in connection with thepreparation, execution and delivery of this Amendment and any of the otherinstruments, documents and agreements to be executed and/or delivered inconnection herewith, including, without limitation, the reasonable fees andout-of-pocket expenses of counsel to the Administrative Agent, Managing Agentsor Lenders with respect thereto.

 

[Remainder of PageDeliberately Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have causedthis Amendment to be duly executed by their respective officers as of the datefirst above written.

 
|   | GLADSTONE BUSINESS LOAN,  LLC |
|--------|-------------------------------|
|   |                          |
|   |                          |
|   | By:                           | /s/ George Stelljes, III |   |
|   |                          | Name: George Stelljes, III |
|   |                          | Title: President and Chief Investment   Officer |

 

 

Signature Page toAmendment No.5

 

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|   | TAHOE FUNDING CORP., LLC                                                                             |
|--------|------------------------------------------------------------------------------------------------------|
|   |                                                                                                 |
|   |                                                                                                 |
|   | By:                                                                                                  | /s/ Andrew L. Stidd |   |
|   |                                                                                                 | Name: Andrew L. Stidd |
|   |                                                                                                 | Title: President |
|   |                                                                                                 |
|   |                                                                                                 |
|   | DEUTSCHE  BANK AG, NEW YORK BRANCH, as a  Committed Lender, Managing Agent and Administrative  Agent |
|   |                                                                                                 |
|   |                                                                                                 |
|   | By:                                                                                                  | /s/ Mark D. O’Keefe |   |
|   |                                                                                                 | Name: Mark D. O’Keefe |
|   |                                                                                                 | Title: Director |
|   |                                                                                                 |
|   |                                                                                                 |
|   | By:                                                                                                  | /s/ Tina Gu |   |
|   |                                                                                                 | Name: Tina Gu |
|   |                                                                                                 | Title: Vice President |
|        |                                                                                                      |  |  |  |  |

 

 

Signature Page toAmendment No.5

 

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|   | PUBLIC SQUARE FUNDING LLC                                                 |
|--------|---------------------------------------------------------------------------|
|   |                                                                      |   |
|   |                                                                      |   |
|   | By:                                                                       | /s/ Evelyn Echevarria |   |
|   |                                                                      | Name: Evelyn Echevarria |
|   |                                                                      | Title: Vice President |
|   |                                                                      |   |
|   |                                                                      |   |
|   | KEYBANK,  NATIONAL ASSOCIATION, as a  Committed Lender and Managing Agent |
|   |                                                                      |   |
|   |                                                                      |   |
|   | By:                                                                       | /s/ Paul E. Henson |   |
|   |                                                                      | Name: Paul E. Henson |
|   |                                                                      | Title: Executive Vice President |
|        |                                                                           |  |  |  |

 

 

Signature Page toAmendment No.5

 

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Annex I

 

Section2.8      SettlementProcedures.

 

On each Payment Date, theServicer on behalf of the Borrower shall pay for receipt by the applicableLender no later than 11:00 a.m. (New York City time) to the following Persons,from (i) the Collection Account, to the extent of available funds, (ii)Servicer Advances, and (iii) amounts received in respect of any Hedge Agreementduring such Settlement Period (the sum of such amounts described in clauses(i), (ii) and (iii), minus any amounts required to be deposited to the RevolverLoan Funding Accounts in accordance with Section 2.14 below being the “*Available Collections*”)the following amounts in the following order of priority

 

#### (i)            FIRST, to each Hedge Counterparty, any amounts owing thatHedge Counterparty under its respective Hedging Agreement in respect of anyHedge Transaction(s), for the payment thereof, but excluding, to the extent theHedge Counterparty is not the same Person as the Administrative Agent, any SwapBreakage and Indemnity Amounts;

####  

#### (ii)           SECOND, to the Servicer, in an amount equal to anyUnreimbursed Servicer Advances, for the payment thereof;

####  

#### (iii)          THIRD, to the extent not paid by the Servicer, to theBackup Servicer and any Successor Servicer, as applicable, in amount equal toany accrued and unpaid Backup Servicing Fee and, if any, accrued and unpaidTransition Costs, Backup Servicer Expenses and Market Servicing FeeDifferential, each for the payment thereof;

####  

#### (iv)          FOURTH, to the extent not paid by the Servicer, tothe Collateral Custodian in an amount equal to any accrued and unpaidCollateral Custodian Fee and Collateral Custodian Expenses, if any, for thepayment thereof;

####  

#### (v)           FIFTH, to the Servicer, in an amount equal to (A) if theServicer is Gladstone Advisers, Inc. or any of its Affiliates, its accrued andunpaid Servicing Fees to the end of the preceding Settlement Period, up to theServicing Fee Limit Amount for such Settlement Period, for the payment thereofand (B) otherwise, its accrued and unpaid Servicing Fees to the end of thepreceding Settlement Period for the payment thereof;

####  

#### (vi)          SIXTH, to the Administrative Agent for payment to eachManaging Agent, on behalf of the related Lenders, in an amount equal to anyaccrued and unpaid Interest, Program Fee and Liquidity Commitment Fee for suchPayment Date;

####  

#### (vii)         SEVENTH, to theAdministrative Agent for payment to each Managing Agent, on behalf of therelated Lenders, an amount equal to the excess, if any, of Advances Outstandingover the lesser of (i) the Borrowing Base or (ii) the Facility Amount, togetherwith the amount of Breakage Costs incurred by the 

 

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#### applicable Lenders inconnection with any such payment (as such Breakage Costs are notified to theBorrower by the applicable Lender(s));

####  

#### (viii)        EIGHTH, following theoccurrence of the Termination Date resulting from an Early Termination Event,to the Administrative Agent for ratable payment to each Managing Agent, onbehalf of the related Lenders, in an amount to reduce Advances Outstanding tozero and to pay any other Obligations in full;

####  

#### (ix)           NINTH, to each HedgeCounterparty, any Swap Breakage and Indemnity Amounts owing that HedgeCounterparty.

####  

#### (x)            TENTH, to theAdministrative Agent for payment to each Managing Agent, on behalf of therelated Lenders, in the amount of unpaid Breakage Costs (other than BreakageCosts covered in clause (vii) above) with respect to any prepayments made onsuch Payment Date, Increased Costs and/or Taxes (if any);

####  

#### (xi)           ELEVENTH, to the Administrative Agent, all otheramounts then due under this Agreement to the Administrative Agent, the Lenders,the Affected Parties or Indemnified Parties, each for the payment thereof;

 

(xii)          TWELFTH, to the Servicer, in anamount equal to (A) if the Servicer is Gladstone Advisers, Inc. or any of itsAffiliates, its accrued and unpaid Servicing Fees to the end of the precedingSettlement Period not otherwise paid pursuant to priority FIFTH above; and

 

#### (xiii)         THIRTEENTH, all remaining amounts to the Borrower.

 

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Annex II

 

Section 5.2                                      HedgingAgreement.

 

 

### (a)           The Borrower shall, on or before theinitial Advance hereunder, enter into a Hedge Transaction with a HedgeCounterparty, which shall: (i) be in the form of interest rate caps or swapshaving a notional amount equal to (A) on the Closing Date, the RequiredNotional Amount and (B) thereafter, an amount reflecting amortization at a rateto be determined by the Managing Agents upon consultation with the Borrower and(ii) shall provide for payments to the Borrower to the extent that the LIBORate shall exceed a rate agreed upon between the Managing Agents and theBorrower.  From and after May 27, 2005,prior to acquiring a fixed-rate Loan, the Borrower will consult with theManaging Agents to determine whether an additional cap or swap will be requiredin respect of such Loan to maintain compliance with the requirements set forthin the preceding sentence.

###  

### (b)           As additional security hereunder, theBorrower hereby assigns to the Administrative Agent, as agent for the SecuredParties, all right, title and interest of the Borrower in each HedgingAgreement, each Hedge Transaction, and all present and future amounts payableby a Hedge Counterparty to the Borrower under or in connection with therespective Hedging Agreement and Hedge Transaction(s) with that HedgeCounterparty (“*HedgeCollateral”*),and grants a security interest to the Administrative Agent, as agent for theSecured Parties, in the Hedge Collateral. The Borrower acknowledges that, as a result of that assignment, theBorrower may not, without the prior written consent of the AdministrativeAgent, exercise any rights under any Hedging Agreement or Hedge Transaction,except for the Borrower’s right under any Hedging Agreement to enter into HedgeTransactions in order to meet the Borrower’s obligations under Section 5.2(a) hereof. Nothing herein shall have the effect of releasing the Borrower from anyof its obligations under any Hedging Agreement or any Hedge Transaction, nor beconstrued as requiring the consent of the Administrative Agent or any SecuredParty for the performance by the Borrower of any such obligations.

 

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Exhibit A

 

Form of Monthly Report

 

Please see attached.

 

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Exhibit B

 

Credit and Collection Policy

 

On file with Agent.

 

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