Exhibit 10.1


 




 





 


$100,000,000


 


AMENDED AND RESTATED


 


CREDIT AGREEMENT


 


Dated as of May 26, 2006


 


Among


 


GLADSTONE BUSINESS LOAN, LLC


 


as the Borrower


 


GLADSTONE MANAGEMENT CORPORATION


 


as the Servicer


 


THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY
HERETO


 


as Committed Lenders


 


THE COMMERCIAL PAPER LENDERS FROM TIME TO TIME PARTY
HERETO


 


as CP Lenders


 


THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY
HERETO


 


as Managing Agents


 


and


 


DEUTSCHE BANK AG, NEW YORK BRANCH


 


as the Administrative
Agent


 




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
  Section 1.1

  	
  Certain Defined Terms

  	
  1

  
	
  Section 1.2

  	
  Other Terms

  	
  27

  
	
  Section 1.3

  	
  Computation of Time Periods

  	
  27

  
	
  Section 1.4

  	
  Interpretation

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE II ADVANCES

  	
  28

  
	
  Section 2.1

  	
  Advances

  	
  28

  
	
  Section 2.2

  	
  Procedures for Advances

  	
  29

  
	
  Section 2.3

  	
  Optional Changes in Facility
  Amount; Prepayments

  	
  30

  
	
  Section 2.4

  	
  Principal Repayments

  	
  31

  
	
  Section 2.5

  	
  The Notes

  	
  31

  
	
  Section 2.6

  	
  Interest Payments

  	
  32

  
	
  Section 2.7

  	
  Fees

  	
  33

  
	
  Section 2.8

  	
  Settlement Procedures

  	
  33

  
	
  Section 2.9

  	
  Collections and Allocations

  	
  35

  
	
  Section 2.10

  	
  Payments, Computations, Etc.

  	
  35

  
	
  Section 2.11

  	
  Breakage Costs

  	
  35

  
	
  Section 2.12

  	
  Increased Costs; Capital Adequacy;
  Illegality

  	
  36

  
	
  Section 2.13

  	
  Taxes

  	
  37

  
	
  Section 2.14

  	
  Revolver Loan Funding

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE III CONDITIONS OF
  EFFECTIVENESS AND ADVANCES

  	
  40

  
	
  Section 3.1

  	
  Conditions to Effectiveness and
  Advances

  	
  40

  
	
  Section 3.2

  	
  Additional Conditions Precedent to
  All Advances

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND
  WARRANTIES

  	
  42

  
	
  Section 4.1

  	
  Representations and Warranties of
  the Borrower

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE V GENERAL COVENANTS OF THE
  BORROWER

  	
  45

  
	
  Section 5.1

  	
  Covenants of the Borrower

  	
  45

  
	
  Section 5.2

  	
  Hedging Agreement

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI SECURITY INTEREST

  	
  50

  
	
  Section 6.1

  	
  Security Interest

  	
  50

  
	
  Section 6.2

  	
  Remedies

  	
  51

  
	
  Section 6.3

  	
  Release of Liens

  	
  51

  
	
  Section 6.4

  	
  Assignment of the Purchase
  Agreement

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII ADMINISTRATION AND
  SERVICING OF LOANS

  	
  53

  
	
  Section 7.1

  	
  Appointment of the Servicer

  	
  53

  
	
  Section 7.2

  	
  Duties and Responsibilities of the
  Servicer

  	
  53

  
	
  Section 7.3

  	
  Authorization of the Servicer

  	
  54

  



 


i

















 


	
  Section 7.4

  	
  Collection of Payments

  	
  55

  
	
  Section 7.5

  	
  Servicer Advances

  	
  56

  
	
  Section 7.6

  	
  Realization Upon Defaulted Loans or
  Charged-Off Loans

  	
  57

  
	
  Section 7.7

  	
  Optional Repurchase of Transferred
  Loans

  	
  57

  
	
  Section 7.8

  	
  Representations and Warranties of
  the Servicer

  	
  58

  
	
  Section 7.9

  	
  Covenants of the Servicer

  	
  59

  
	
  Section 7.10

  	
  Payment of Certain Expenses by
  Servicer

  	
  61

  
	
  Section 7.11

  	
  Reports

  	
  61

  
	
  Section 7.12

  	
  Annual Statement as to Compliance

  	
  61

  
	
  Section 7.13

  	
  Limitation on Liability of the
  Servicer and Others

  	
  62

  
	
  Section 7.14

  	
  The Servicer Not to Resign

  	
  62

  
	
  Section 7.15

  	
  Access to Certain Documentation and
  Information Regarding the Loans

  	
  62

  
	
  Section 7.16

  	
  Merger or Consolidation of the Servicer

  	
  63

  
	
  Section 7.17

  	
  Identification of Records

  	
  63

  
	
  Section 7.18

  	
  Servicer Termination Events

  	
  64

  
	
  Section 7.19

  	
  Appointment of Successor Servicer

  	
  65

  
	
  Section 7.20

  	
  Market Servicing Fee

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII EARLY TERMINATION
  EVENTS

  	
  66

  
	
  Section 8.1

  	
  Early Termination Events

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX INDEMNIFICATION

  	
  68

  
	
  Section 9.1

  	
  Indemnities by the Borrower

  	
  68

  
	
  Section 9.2

  	
  Indemnities by the Servicer

  	
  70

  
	
   

  	
   

  	
   

  
	
  ARTICLE X THE ADMINISTRATIVE AGENT
  AND THE MANAGING AGENTS

  	
  71

  
	
  Section 10.1

  	
  Authorization and Action

  	
  71

  
	
  Section 10.2

  	
  Delegation of Duties

  	
  72

  
	
  Section 10.3

  	
  Exculpatory Provisions

  	
  72

  
	
  Section 10.4

  	
  Reliance

  	
  73

  
	
  Section 10.5

  	
  Non-Reliance on Administrative
  Agent, Managing Agents and Other Lenders

  	
  74

  
	
  Section 10.6

  	
  Reimbursement and Indemnification

  	
  74

  
	
  Section 10.7

  	
  Administrative Agent and Managing
  Agents in their Individual Capacities

  	
  75

  
	
  Section 10.8

  	
  Successor Administrative Agent or
  Managing Agent

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI ASSIGNMENTS;
  PARTICIPATIONS

  	
  76

  
	
  Section 11.1

  	
  Assignments and Participations

  	
  76

  
	
  Section 11.2

  	
  Additional Lender Groups

  	
  78

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII MISCELLANEOUS

  	
  79

  
	
  Section 12.1

  	
  Amendments and Waivers

  	
  79

  
	
  Section 12.2

  	
  Notices, Etc.

  	
  80

  
	
  Section 12.3

  	
  No Waiver, Rights and Remedies

  	
  80

  
	
  Section 12.4

  	
  Binding Effect

  	
  80

  



 


ii

















 


	
  Section 12.5

  	
  Term of this Agreement

  	
  80

  
	
  Section 12.6

  	
  GOVERNING LAW; CONSENT TO
  JURISDICTION; WAIVER OF OBJECTION TO VENUE

  	
  81

  
	
  Section 12.7

  	
  WAIVER OF JURY TRIAL

  	
  81

  
	
  Section 12.8

  	
  Costs, Expenses and Taxes

  	
  81

  
	
  Section 12.9

  	
  No Proceedings

  	
  82

  
	
  Section 12.10

  	
  Recourse Against Certain Parties

  	
  82

  
	
  Section 12.11

  	
  Protection of Security Interest;
  Appointment of Administrative Agent as Attorney-in-Fact

  	
  83

  
	
  Section 12.12

  	
  Confidentiality

  	
  84

  
	
  Section 12.13

  	
  Execution in Counterparts;
  Severability; Integration

  	
  85

  



 


EXHIBITS


 


	
  EXHIBIT A

  	
   

  	
  Form of Borrower Notice

  
	
  EXHIBIT B

  	
   

  	
  Form of Note

  
	
  EXHIBIT C

  	
   

  	
  Form of Assignment and
  Acceptance

  
	
  EXHIBIT D

  	
   

  	
  Form of Joinder
  Agreement

  
	
  EXHIBIT E

  	
   

  	
  Form of Monthly Report

  
	
  EXHIBIT F

  	
   

  	
  Form of Servicer’s
  Certificate

  
	
  EXHIBIT G

  	
   

  	
  [Reserved]

  
	
  EXHIBIT H

  	
   

  	
  Form of Primary
  Document Trust Receipt

  
	
  EXHIBIT I

  	
   

  	
  Form of Assignment of
  Mortgage

  
	
  EXHIBIT J

  	
   

  	
  [Reserved]

  
	
  EXHIBIT K

  	
   

  	
  [Reserved]

  
	
  EXHIBIT L

  	
   

  	
  Form of Lock-Box
  Agreement

  
	
  EXHIBIT M

  	
   

  	
  Credit Report and
  Transaction Summary

  
	
   

  	
   

  	
   

  
	
  EXHIBIT N

  	
   

  	
  Moody’s Industry Classifications

  



 


SCHEDULES


 


	
  SCHEDULE I

  	
   

  	
  Schedule of Documents

  
	
  SCHEDULE II

  	
   

  	
  List of Lock-Box Banks,
  Lock-Box Accounts, Collection Account and Securities Accounts

  
	
  SCHEDULE III

  	
   

  	
  Loan List

  
	
  SCHEDULE IV

  	
   

  	
  Form of Loans

  



 


iii

















 


THIS AMENDED AND RESTATED CREDIT AGREEMENT is
made as of May 26, 2006, among:


 


(1)                                  GLADSTONE
BUSINESS LOAN, LLC, a Delaware limited liability company, as borrower (the “Borrower”);


 


(2)                                  GLADSTONE
MANAGEMENT CORPORATION, a Delaware corporation, as servicer (the “Servicer”);


 


(3)                                  Each
financial institution from time to time party hereto as a “Committed Lender”
and their respective successors and assigns (collectively, the “Committed Lenders”);


 


(4)                                  Each
commercial paper issuer from time to time party hereto as a “CP Lender” and
their respective successors and assigns (collectively, the “CP Lenders”);


 


(5)                                  Each
financial institution from time to time party hereto as a “Managing Agent” and
their respective successors and assigns (collectively, the “Managing Agents”);
and


 


(6)                                  DEUTSCHE
BANK AG, NEW YORK BRANCH, as “Administrative Agent” and its respective
successors and assigns (the “Administrative Agent”).


 


IT IS AGREED as follows:


 


ARTICLE I


 


DEFINITIONS


 


Section
1.1                                   Certain
Defined Terms.


 


(a)                                  Certain
capitalized terms used throughout this Agreement are defined above or in this Section 1.1.


 


(b)                                 As
used in this Agreement and its exhibits, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined).


 


Additional Amount:  Defined in Section 2.13.


 


Adjusted
Eurodollar Rate: 
For any Settlement Period, an interest rate per annum equal to the
quotient, expressed as a percentage and rounded upwards (if necessary), to the
nearest 1/100 of 1%, (i) the numerator of which is equal to the LIBO Rate for
such Settlement Period and (ii) the denominator of which is equal to 100% minus the Eurodollar Reserve Percentage for such
Settlement Period.


 


Administrative
Agent:  Defined
in the preamble hereto.


 


Advance:  Defined in Section
2.1(a).


 

















 


Advances
Outstanding:  On
any day, the aggregate principal amount of Advances outstanding on such day,
after giving effect to all repayments of Advances and makings of new Advances
on such day.


 


Adverse Claim:  A lien, security interest, pledge, charge,
encumbrance or other right or claim of any Person.


 


Affected Committed
Lender:  Defined in Section
11.1(c).


 


Affected Party:  Defined in Section
2.12(a).


 


Affiliate:  With respect to a Person means any other
Person controlling, controlled by or under common control with such Person. For
purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms “controlling” or “controlled” have
meanings correlative to the foregoing.


 


Agent’s Account:  Account number 10-554121-0008 at Deutsche
Bank AG, New York Branch.


 


Aggregate
Outstanding Loan Balance:  On any day, the sum of the Outstanding Loan
Balances of all Eligible Loans included as part of the Collateral on such date.


 


Aggregate
Purchased Loan Balance:  On any day, (a) the sum of the Purchased Loan
Balances of all Eligible Loans included as part of the Collateral on such date minus
(b) the Excess Concentration Amount as of such date.


 


Agreement or Credit
Agreement:  This Amended and
Restated Credit Agreement, dated as of May 26, 2006, as hereafter amended,
modified, supplemented or restated from time to time.


 


Alternative Rate:  An interest rate per annum equal to the
Adjusted Eurodollar Rate; provided, however, that the Alternative Rate shall be the
Base Rate if a Eurodollar Disruption Event occurs; and, provided,
further, that the Alternative Rate for the
first two (2) Business Days following any Advance made by a Committed Lender
shall be the Base Rate unless such Committed Lender has received at least two
(2) Business Days’ prior notice of such Advance.


 


Amortization
Period:  The
period beginning on the Termination Date and ending on the Collection Date.


 


Applicable Law:  For any Person, all existing and future
applicable laws, rules, regulations (including proposed, temporary and final
income tax regulations), statutes, treaties, codes, ordinances, permits,
certificates, orders and licenses of and interpretations by any Governmental
Authority (including, without limitation, usury laws, the Federal Truth in
Lending Act, and Regulation Z, Regulation W and Regulation B of the Federal
Reserve Board), and applicable judgments, decrees, injunctions, writs, orders,
or line action of any court, arbitrator or other administrative, judicial, or
quasi-judicial tribunal or agency of competent jurisdiction.


 


2

















 


Assignment and
Acceptance: 
Defined in Section 11.1(b).


 


Assignment of
Mortgage:  As to
each Loan secured by an interest in real property, one or more assignments,
notices of transfer or equivalent instruments, each in recordable form and
sufficient under the laws of the relevant jurisdiction to reflect the transfer
of the related mortgage, deed of trust, security deed or similar security
instrument and all other documents related to such Loan and to the Borrower and
to grant a perfected lien thereon by the Borrower in favor of the
Administrative Agent on behalf of the Secured Parties, each such Assignment of
Mortgage to be substantially in the form of Exhibit I
hereto.


 


Availability:  On any day, the lesser of (i) the amount by
which the Borrowing Base exceeds the sum of (A) Advances Outstanding and (B)
the aggregate outstanding unfunded
commitments under the Revolver Loans on such day and (ii) the amount by
which the Facility Amount exceeds the sum of (A) Advances Outstanding and (B)
the aggregate outstanding unfunded
commitments under the Revolver Loans on such day; provided, however,
during the Amortization Period, the Availability shall be zero.


 


Available Collections:  Defined in Section 2.8(a).


 


Backup Servicer:  The Bank of New York, in its capacity as
Backup Servicer under the Backup Servicing Agreement, together with its
successors and assigns.


 


Backup Servicer
Expenses:  The
out-of-pocket expenses to be paid to the Backup Servicer under the Backup Servicing
Agreement.


 


Backup Servicer
Fee:  The fee to be
paid to the Backup Servicer as set forth in the Backup Servicing Agreement.


 


Backup Servicing
Agreement:  The Backup
Servicing Agreement, dated as of the date hereof among the Borrower, the
Servicer, the Administrative Agent and the Backup Servicer, as the same may
from time to time be amended, supplemented, waived or modified.


 


Bankruptcy Code:  The United States Bankruptcy Reform Act of
1978 (11 U.S.C. §§ 101, et  seq.), as amended from time to time.


 


Base Rate:  On any date, a fluctuating rate of interest
per annum equal to the higher of (a) the Prime Rate or (b) the Federal Funds
Rate plus 1.0%.


 


Benefit Plan:  Any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which the Borrower or any ERISA Affiliate
of the Borrower is, or at any time during the immediately preceding six years
was, an “employer” as defined in Section 3(5) of ERISA.


 


Borrower:  Gladstone Business Loan, LLC, a Delaware
limited liability company, or any permitted successor thereto.


 


Borrowing Base:  On any date of determination, the lesser of
(a) (i) the Aggregate Purchased Loan Balance minus (ii) the Required
Equity Investment or (b) an amount equal to 50% of the Aggregate Purchased Loan
Balance.


 


3

















 


Borrowing Base Test:  As of any date, a determination that the
Borrowing Base shall be equal to or greater than the Advances Outstanding.


 


Borrower Notice:  A written notice, in the form of Exhibit A, to be used for each borrowing,
repayment of each Advance or termination or reduction of the Facility Amount or
Prepayments of Advances.


 


Breakage Costs:  Defined in Section
2.11.


 


Business Day:  Any day of the year other than a Saturday or
a Sunday on which (a) (i) banks are not required or authorized to be closed in
New York, New York, and Virginia or (ii) which is not a day on which the Bond
Market Association recommends a closed day for the U.S. Bond Market, and (b) if
the term “Business Day” is used in connection with the Adjusted Eurodollar
Rate, means the foregoing only if such day is also a day of year on which
dealings in United States dollar deposits are carried on in the London
interbank market.


 


Change-in-Control:  With respect to any entity, the date on which
(i) any Person or “group” acquires any “beneficial ownership” (as such terms
are defined under Rule 13d-3 of, and Regulation 13D under, the Securities
Exchange Act of 1934, as amended), either directly or indirectly, of membership
interests or other equity interests or any interest convertible into any such
interest in such entity having more than fifty percent (50%) of the voting
power for the election of managers of such entity, if any, under ordinary
circumstances, or (ii) (except in connection with any Securitization) an entity
sells, transfers, conveys, assigns or otherwise disposes of all or
substantially all of the assets of such entity.


 


Charged-Off Loan:  Any Loan (i) that is 120 days past due with
respect to any interest or principal payment, (ii) for which an Insolvency
Event has occurred with respect to the related Obligor or (iii) that is or
should be written off as uncollectible by the Servicer in accordance with the
Credit and Collection Policy.


 


Charged-Off Ratio:  With respect to any Settlement Period, the
percentage equivalent of a fraction, calculated as of the Determination Date
for such Settlement Period, (i) the numerator of which is equal to the
aggregate Outstanding Loan Balance of all Loans that became Charged-Off Loans
during such Settlement Period and (ii) the denominator of which is equal to the
sum of (A) the Aggregate Outstanding Loan Balance as of the first day of such
Settlement Period and (B) the Aggregate Outstanding Loan Balance as of the last
day of such Settlement Period divided by 2.


 


Closing Date:  May 19, 2003.


 


Code:  The Internal Revenue Code of 1986, as
amended.


 


Collateral:  All right, title and interest, whether now
owned or hereafter acquired or arising, and wherever located, of the Borrower
in, to and under any and all of the following:


 


(i)                                     the
Transferred Loans, and all monies due or to become due in payment of such Loans
on and after the related Purchase Date;


 


4

















 


(ii)                                  any
Related Property securing the Transferred Loans including all proceeds from any
sale or other disposition of such Related Property;


 


(iii)                               the Loan Documents
relating to the Transferred Loans;


 


(iv)                              all
Supplemental Interests related to any Transferred Loans;


 


(v)                                 the
Collection Account, all funds held in such account, and all certificates and
instruments, if any, from time to time representing or evidencing the
Collection Account or such funds;


 


(vi)                              all
Collections and all other payments made or to be made in the future with
respect to the Transferred Loans, including such payments under any guarantee
or similar credit enhancement with respect to such Loans;


 


(vii)                           all Hedge Collateral;


 


(viii)                        all income and Proceeds of the
foregoing;


 


Collateral
Custodian:  BNY
Midwest Trust Company, in its capacity as Collateral Custodian under the
Custody Agreement, together with its successors and assigns.


 


Collateral
Custodian Expenses: 
The out-of-pocket expenses to be paid to the Collateral Custodian under
the Custody Agreement.


 


Collateral
Custodian Fee: 
The fee to be paid to the Collateral Custodian as set forth in the
Custody Agreement.


 


Collection Account:  Defined in Section
7.4(e).


 


Collection Date:  The date following the Termination Date on
which all Advances Outstanding have been reduced to zero, the Lenders have
received all accrued Interest, fees, and all other amounts owing to them under
this Agreement and the Hedging Agreement, the Hedge Counterparties have
received all amounts due and owing hereunder and under the Hedge Transactions,
and each of the Backup Servicer, the Collateral Custodian, the Administrative
Agent and the Managing Agents have each received all amounts due to them in
connection with the Transaction Documents.


 


Collections:  (a) All cash collections or other cash
proceeds of a Transferred Loan received by or on behalf of the Borrower by the
Servicer or Originator from or on behalf of any Obligor in payment of any
amounts owed in respect of such Transferred Loan, including, without
limitation, Interest Collections, Principal Collections, Deemed Collections,
Insurance Proceeds, and all Recoveries, (b) all amounts received by the Buyer
in connection with the repurchase of an Ineligible Loan pursuant to Section
6.1 of the Purchase Agreement, (c) all amounts received by the
Administrative Agent in connection with the purchase of a Transferred Loan
pursuant to Section 7.7, (d) all payments
received pursuant to any Hedging Agreement or Hedge Transaction, and (e)
interest earnings in the Collection Account.


 


5

















 


Commercial Paper
Notes:  On any
day, any short-term promissory notes issued by any CP Lender with respect to
financing any Advance hereunder that are allocated, in whole or in part, by
such CP Lender to fund or maintain the Advances Outstanding.


 


Commitment:  (a) For each Committed Lender, the commitment
of such Committed Lender to fund any Advance to the Borrower in an amount not
to exceed the amount set forth opposite such Committed Lender’s name on the
signature pages of this Agreement, as such amount may be modified in accordance
with the terms hereof and (b) with respect to any Person who becomes a
Committed Lender pursuant to an Assignment and Acceptance or a Joinder
Agreement, the commitment of such Person to fund any Advance to the Borrower in
an amount not to exceed the amount set forth in such Assignment and Acceptance
or Joinder Agreement, as such amount may be modified in accordance with the
terms hereof.


 


Commitment
Termination Date: 
May 25, 2007, or such later date
to which the Commitment Termination Date may be extended (if extended) in the
sole discretion of the Lenders in accordance with the terms of Section
2.1(b).


 


Committed Lenders:  Defined in the preamble hereto.


 


Contractual
Obligation: 
With respect to any Person, means any provision of any securities issued
by such Person or any indenture, mortgage, deed of trust, contract,
undertaking, agreement, instrument or other document to which such Person is a
party or by which it or any of its property is bound or is subject.


 


CP Lenders:  Defined in the preamble hereto.


 


CP Rate:  For any Settlement Period for any Advances
made by a CP Lender, the per annum rate equivalent to the weighted average of
the per annum rates paid or payable by such CP Lender from time to time as interest
on or otherwise (by means of interest rate hedges or otherwise taking into
consideration any incremental carrying costs associated with short-term
promissory notes issued by such CP Lender maturing on dates other than those
certain dates on which such CP Lender is to receive funds) in respect of the
Commercial Paper Notes issued by such CP Lender during such period, as
determined by such CP Lender and reported to the Borrower and the Servicer,
which rates shall reflect and give effect to the commissions of placement
agents and dealers in respect of such promissory notes, to the extent such
commissions are allocated, in whole or in part, to such promissory notes by
such CP Lender, provided, however, that if any component of such rate is a
discount rate, in calculating the CP Rate, such CP Lender shall for such
component use the rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum.


 


Credit and Collection Policy:  Those credit, collection, customer relation
and service policies (i) determined by the Borrower, the Originator and the
initial Servicer as of the date hereof relating to the Transferred Loans and
related Loan Documents, as on file with the Administrative Agent and as the
same may be amended or modified from time to time in accordance with Sections 5.1(r) and 7.9(g);
and (ii) with respect to any Successor Servicer, the collection procedures and
policies of such person (as approved by the Administrative Agent) at the time
such Person becomes Successor Servicer.


 


6

















 


Current Pay Loan:  Any Transferred Loan (a) in respect of which
the Servicer or Originator shall have taken any of the following actions:
charging a default rate of interest, restricting Obligor’s right to make
subordinated payments (other than payments in respect of owner’s debts and
seller financings), acceleration of the Transferred Loan, foreclosure on
collateral for the Loan, increasing its representation on the Obligor’s Board
of Directors or similar governing body, or increasing the frequency of its
inspection rights to permit inspection on demand, (b) that is not more than thirty
(30) days past due with respect to any interest or principal payments and (c)
in respect of which the Servicer shall have certified (which certification may
be in the form of an e-mail or other written electronic communication) to the
Administrative Agent that the Servicer does not believe, in its reasonable judgment,
that a failure to pay interest or ultimate principal will occur. A Transferred
Loan shall cease to be a Current Pay Loan if it (i) becomes a Defaulted Loan
through failure to satisfy the requirements set forth in this definition or
(ii) becomes an Eligible Loan, which shall occur upon receipt of a certification
from the Servicer (which certification may be in the form of an e-mail or other
written electronic communication) to the Administrative Agent that, as of the
date of the certification (x) the applicable circumstances enumerated in clause
(a) above which caused the Loan to be a Current Pay Loan shall no longer
exist and (y) such Loan is an Eligible Loan.


 


Custody Agreement:  The Custodial Agreement, dated as of the date
hereof among the Borrower, the Servicer, the Originator, the Administrative
Agent and the Collateral Custodian, as the same may from time to time be
amended, supplemented, waived or modified.


 


DB:  Deutsche Bank AG, New York Branch, in its
individual capacity, and its successors or assigns.


 


Deemed Collections:  On any day, the aggregate of all amounts
Borrower shall have been deemed to have received as a Collection of a
Transferred Loan. Borrower shall be deemed to have received a Collection in an
amount equal to the unpaid balance (including any accrued interest thereon) of
a Transferred Loan if at any time the Outstanding Loan Balance of any such Loan
is either (i) reduced as a result of any discount or any adjustment or
otherwise by Borrower (other than receipt of cash Collections) or (ii) reduced
or canceled as a result of a setoff in respect of any claim by any Person
(whether such claim arises out of the same or a related transaction or an
unrelated transaction).


 


Defaulted Loan:  Any Transferred Loan (i) that is 60 days past
due with respect to any interest or principal payments or (ii) in respect of
which the Servicer or Originator shall have taken any of the following actions:
charging a default rate of interest, restricting Obligor’s right to make
subordinated payments (other than payments in respect of owner’s debts and
seller financings), acceleration of the Transferred Loan, foreclosure on
collateral for the Loan, increasing its representation on the Obligor’s Board
of Directors or similar governing body, or increasing the frequency of its
inspection rights to permit inspection on demand and is not a Current Pay Loan.


 


Default Ratio:  With respect to any Settlement Period, the
percentage equivalent of a fraction, calculated as of the Determination Date
for such Settlement Period, (a) the numerator of which is equal to the aggregate
Outstanding Loan Balance of all Transferred Loans (excluding Charged-Off Loans)
included as part of the Collateral that became Defaulted Loans during such 


 


7

















 


Settlement Period and (b)
the denominator of which is equal to (i) the sum of (x) the Aggregate
Outstanding Loan Balance as of the first day of such Settlement Period and (y)
the Aggregate Outstanding Loan Balance as of the last day of such Settlement
Period divided by (ii) two.


 


Derivatives:  Any exchange-traded or over-the-counter (i)
forward, future, option, swap, cap, collar, floor, foreign exchange contract,
any combination thereof, whether for physical delivery or cash settlement,
relating to any interest rate, interest rate index, currency, currency exchange
rate, currency exchange rate index, debt instrument, debt price, debt index,
depository instrument, depository price, depository index, equity instrument,
equity price, equity index, commodity, commodity price or commodity index, (ii)
any similar transaction, contract, instrument, undertaking or security, or
(iii) any transaction, contract, instrument, undertaking or security containing
any of the foregoing.


 


Determination Date:  The last day of each Settlement Period.


 


Early Termination
Event:  Defined
in Section 8.1.


 


Effective Date:  May 26, 2006.


 


Eligible Assignee:  A Person (a) whose short-term rating is at
least A-1 from S&P and P-1 from Moody’s, or whose obligations under this
Agreement are guaranteed by a Person whose short-term rating is at least A-1
from S&P and P-1 from Moody’s and (b) who is approved by the Administrative
Agent (such approval not to be unreasonably withheld) and, if such Person will
become a Liquidity Bank for a CP Lender, by such CP Lender.


 


Eligible Loan:  On any date of determination, each Loan which
satisfies each of the following requirements:


 


(i)                                     the
Loan is evidenced by a promissory note that has been duly authorized and that,
together with the related Loan Documents, is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor of such Loan
to pay the stated amount of the Loan and interest thereon, and the related Loan
Documents are enforceable against such Obligor in accordance with their
respective terms;


 


(ii)                                  the
Loan was originated in accordance with the terms of the Credit and Collection
Policy and arose in the ordinary course of the Originator’s business from the
lending of money to the Obligor thereof;


 


(iii)                               the Loan is not a
Defaulted Loan;


 


(iv)                              the
Obligor of such Loan has executed all appropriate documentation required by the
Originator;


 


(v)                                 the
Loan, together with the Loan Documents related thereto, is a “general
intangible”, an “instrument”, an “account”, or “chattel paper” within the
meaning of the UCC of all jurisdictions that govern the perfection of the
security interest granted therein;


 


8

















 


(vi)                              all
material consents, licenses, approvals or authorizations of, or registrations
or declarations with, any Governmental Authority required to be obtained,
effected or given in connection with the making of such Loan have been duly
obtained, effected or given and are in full force and effect;


 


(vii)                           the Loan is denominated and
payable only in United States dollars in the United States;


 


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


 


(ix)                                the
Loan, together with the Loan Documents related thereto, does not contravene in
any material respect any Applicable Laws (including, without limitation, laws,
rules and regulations relating to usury, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy) and with respect to which no party to the Loan Documents related
thereto is in material violation of any such Applicable Laws;


 


(x)                                   the
Loan, together with the related Loan Documents, is fully assignable, (and if
such Loan is secured by an interest in real property, an Assignment of Mortgage
executed in blank has been delivered to the Collateral Custodian);


 


(xi)                                the
Loan was documented and closed in accordance with the Credit and Collection
Policy, including the relevant opinions and assignments, and there is only one
current original promissory note;


 


(xii)                             the Loan and all Related
Property are free of any Liens except for Permitted Liens;


 


(xiii)                          the Loan has an original term
to maturity of no more than 120 months;


 


(xiv)                         no right of rescission, set
off, counterclaim, defense or other material dispute has been asserted with
respect to such Loan;


 


(xv)                            any
Related Property with respect to such Loan is insured in accordance with the
Credit and Collection Policy;


 


(xvi)                         the Obligor with respect to
such Loan is an Eligible Obligor;


 


(xvii)                      if such Loan is a PIK Loan, such
Loan shall pay a minimum of five percent (5.0%) per annum current interest, on
at least a quarterly basis;


 


(xviii)                   the addition of which to the
Transferred Loans will not cause (A) the remaining weighted average life of the
Transferred Loans to exceed 66 months, (B) the weighted average interest rate
in respect of Transferred Loans which accrue interest at a 


 


9

















 


fixed rate to be less
than 8.0%, (C) the weighted average interest rate in respect of Transferred
Loans which accrue interest at a floating rate to be less than the higher of (x)
the sum of the LIBO Rate plus 3.00% or (y) 6.0% or (D) the weighted average
risk rating of the portfolio to be less than 4 (or the equivalent of B-/B3 by
S&P and Moody’s respectively), as determined by the Servicer’s risk rating
model;


 


(xix)                           the Loan is not a loan or
extension of credit made by the Originator or one of its subsidiaries to an
Obligor for the purpose of making any principal, interest or other payment on
such Loan necessary in order to keep such Loan from becoming delinquent;


 


(xx)                              the
Loan has not been amended to (A) reduce the amount (other than by reason of the
repayment thereof) or extend the time for payment of principal or (B) reduce
the rate or extend the time of payment of interest (or any component thereof),
in each case without the consent of the Required Committed Lenders;


 


(xxi)                           if such Loan is a Qualifying
Syndicated Loan, (a) the Borrower has purchased an interest in such Loan from a
financial institution which (A) has a short-term debt rating equal to at least
A-1 from S&P and P-1 from Moody’s or (B) has been approved in writing by
the Required Committed Lenders prior to the related Funding Date and (b) such
Loan closed not more than thirty (30) days previously;


 


(xxii)                        if such Loan is a Revolver Loan, it shall be secured by a first
priority, perfected security interest on certain assets of the Obligor which
shall include, without limitation, accounts receivable and inventory;


 


(xxiii)                     if such Loan is a Revolver Loan, the revolving credit commitment of the
Borrower to the applicable Obligor thereunder (A) is between $500,000 and
$5,000,000 and (B) shall have a term to maturity of three years or less.; and


 


(xxiv)  if such Loan is (i) a Senior Syndicated Loan,
the interest rate charged on such Loan shall be equal to or greater than the
LIBO Rate plus 1.75%, (ii) a Senior Debt Loan which is not a Senior Syndicated
Loan, the interest rate charged on such Loan shall be equal to or greater than
the LIBO Rate plus 3.00%, (iii) a Qualifying Syndicated Loan which is not a
Senior Syndicated Loan, the interest rate charged on such Loan shall be equal
to or greater than the LIBO Rate plus 2.50% and (iv) any other Loan of a type
not enumerated above, the interest rate charged on such Loan shall be equal to
or greater than the LIBO Rate plus 4.00%.


 


Eligible Obligor:
On any day, any Obligor that satisfies each of the following requirements:


 


(i)                                     such
Obligor’s principal office and any Related Property are located in the United
States or any territory of the United States


 


(ii)                                  no
other Loan of such Obligor is a Defaulted Loan;


 


(iii)                               such Obligor is not the
subject of any Insolvency Event;


 


10

















 


(iv)                              such
Obligor is not a Governmental Authority; and


 


(v)                                 such
Obligor is in material compliance with all material terms and conditions of its
Loan Documents.


 


ERISA:  The U.S. Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.


 


ERISA Affiliate:  (a) Any corporation that is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as the Borrower; (b) a trade or business (whether or not incorporated)
under common control (within the meaning of Section 414(c) of the Code) with
the Borrower or (c) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as the Borrower, any corporation
described in clause (a) above or any trade or business described in clause (b)
above.


 


Eurodollar
Disruption Event: 
With respect to any Advance as to which Interest accrues or is to accrue
at a rate based upon the Adjusted Eurodollar Rate, any of the following:  (a) a determination by a Lender that it would
be contrary to law or to the directive of any central bank or other
governmental authority (whether or not having the force of law) to obtain
United States dollars in the London interbank market to make, fund or maintain
any Advance; (b) the inability of any Lender to obtain timely information for
purposes of determining the Adjusted Eurodollar Rate; (c) a determination by a
Lender that the rate at which deposits of United States dollars are being
offered to such Lender in the London interbank market does not accurately
reflect the cost to such Lender of making, funding or maintaining any Advance;
or (d) the inability of a Lender to obtain United States dollars in the London
interbank market to make, fund or maintain any Advance.


 


Eurodollar Reserve
Percentage:  On
any day, the then applicable percentage (expressed as a decimal) prescribed by
the Federal Reserve Board (or any successor) for determining reserve
requirements applicable to “Eurocurrency Liabilities” pursuant to Regulation D
or any other then applicable regulation of the Federal Reserve Board (or any
successor) that prescribes reserve requirements applicable to “Eurocurrency
Liabilities” as presently defined in Regulation D.


 


Excess
Concentration Amount: On any date of determination,
the sum of, without duplication, (a) the aggregate amount by which the
Outstanding Loan Balances of Eligible Loans included as part of the Collateral,
the Obligors of which are residents of any one state, exceeds 40% of the
Aggregate Outstanding Loan Balance, (b) the aggregate amount by which the
Outstanding Loan Balances of Eligible Loans included as part of the Collateral,
the Obligors of which are in the same Industry, exceeds 25% of the Aggregate
Outstanding Loan Balance, (c) the aggregate amount by which the Outstanding
Loan Balance of each Eligible Loan included as part of the Collateral exceeds
the Large Loan Limit applicable to such Eligible Loan, (d) the aggregate amount
by which the Outstanding Loan Balances of all Eligible Loans included as part
of the Collateral whose interest payments are due and payable less frequently
than monthly exceeds 66 2/3% of the Aggregate Outstanding Loan Balance, (e) the aggregate amount by which the Outstanding Loan
Balances of all Eligible Loans included as part of the Collateral which are PIK Loans exceeds 40% of the Aggregate
Outstanding Loan Balance, (f) the aggregate amount by which the Outstanding
Loan Balances of all Eligible Loans included as part of the 


 


11

















 


Collateral
which are PIK Loans having a PIK accrual
component greater than 3.0% exceeds 25% of the Aggregate Outstanding Loan
Balance, (g) the aggregate amount by which the Outstanding Loan Balances of all
Eligible Loans that have original terms to maturity greater than 84 months
exceeds 15% of the Aggregate Outstanding Loan Balance, (h) the aggregate
amount by which the Outstanding Loan Balances of Qualifying Syndicated Loans
included as part of the Collateral, for which no Subsequent Delivery Trust
Receipt (as defined in the Custody Agreement) has been received exceeds
$30,000,000, (i) the aggregate Outstanding Loan Balances of all Loans which (A)
do not have a long-term credit rating from either S&P or Moody’s and (B)
are not priced by Standard & Poor’s Securities Evaluations, Inc. on a
quarterly basis and have not been so priced by Standard & Poor’s Securities
Evaluations, Inc. for a period in excess of 135 days from the date such Loan
becomes a Transferred Loan, (j) the aggregate amount by which the Outstanding
Loan Balances of all Eligible Loans included as part of the Collateral which
are Revolver Loans exceeds 25% of the Facility Amount, (k) the aggregate amount
by which the Outstanding Loan Balances of all Eligible Loans that are unsecured
exceeds 10% of the Aggregate Outstanding Loan Balance, (l) the aggregate amount
by which the Outstanding Loan Balances of all Fixed Rate Loans which are not
subject to a Hedge Transaction exceeds 10% of the Aggregate Outstanding Loan
Balance and (m) the aggregate amount by which the Outstanding Loan Balances of
all Eligible Loans that are Current Pay Loans exceeds 10% of the Aggregate
Outstanding Loan Balance.


 


Facility Amount:  At any time, $100,000,000; provided, however,
that on or after the Termination Date, the Facility Amount shall be equal to
the amount of Advances outstanding.


 


Fair Market Value:  With respect to each Eligible Loan, (1) to
the extent that such Eligible Loan does not have a long term credit rating from
S&P or Moody’s, the least of (a) to the extent priced by Standard &
Poor’s Securities Evaluations, Inc., the product of (x) the remaining principal
amount of the Eligible Loan and (y) the pricing as determined by Standard &
Poor’s Securities Evaluations, Inc. in its most recent quarterly pricing, (b)
the remaining principal amount of such Eligible Loan and (c) if such Eligible
Loan has been reduced in value below the remaining principal amount thereof
(other than as a result of the allocation of a portion of the remaining principal
amount to warrants), the value of such Eligible Loan as required by, and in
accordance with, the 1940 Act, as amended, and any orders of the SEC issued to
the Originator, to be determined by the Board of Directors of the Originator
and reviewed by its auditors and (2) otherwise, the least of (a) (x) the
remaining principal amount of such Eligible Loan times (y) the price quoted to
the Borrower on such Eligible Loan from a financial institution rated at least
A-1/P-1 that makes a market in such Eligible Loan or from a pricing service
otherwise acceptable to the Managing Agents, (b) the remaining principal amount
of such Eligible Loan and (c) if such Eligible Loan has been reduced in value
below the remaining principal amount thereof (other than as a result of the
allocation of a portion of the remaining principal amount to warrants), the
value of such Eligible Loan as required by, and in accordance with, the 1940
Act, as amended, and any orders of the SEC issued to the Originator, to be
determined by the Board of Directors of the Originator and reviewed by its
auditors.


 


FASB:  Defined in Section 2.12(a).


 


Federal Funds Rate:  For any period, a fluctuating interest rate
per annum for each day during such period equal to (a) the weighted average of
the rates on overnight federal funds 


 


12

















 


transactions with members
of the Federal Reserve System arranged by federal funds brokers, as published
for such day (or, if such day is not a Business Day, for the preceding Business
Day) by the Federal Reserve Bank of New York; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (New York City time) for such day on such transactions
received by DB from three federal funds brokers of recognized standing selected
by it.


 


Federal Reserve
Board:  The
Board of Governors of the Federal Reserve System.


 


Fee Letter:  Any letter agreement in respect of fees among
the Borrower, the Originator and the Administrative Agent or any Managing
Agent, as it may be amended or modified and in effect from time to time.


 


Fixed Rate Loans:  Defined in Section 5.2.


 


Funding Date:  Any day on which an Advance is made in
accordance with and subject to the terms and conditions of this Agreement.


 


Funding Request:  A Borrower Notice requesting an Advance and
including the items required by Section 2.2.


 


GAAP:  Generally accepted accounting principles as
in effect from time to time in the United States.


 


Governmental
Authority:  With
respect to any Person, any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
court or arbitrator having jurisdiction over such Person.


 


Group Advance
Limit:  For
each Lender Group, the sum of the Commitments of the Committed Lenders in such
Lender Group.


 


Guarantor Event of Default:  The occurrence of any “Event of Default”
under and as defined in the Performance Guaranty.


 


Hedge Breakage
Costs:  For any
Hedge Transaction, any amount payable by the Borrower for the early termination
of that Hedge Transaction or any portion thereof.


 


Hedge Collateral:  Defined in Section
5.2(b).


 


Hedge Counterparty:  DB or any entity that (a) on the date of
entering into any Hedge Transaction (i) is an interest rate swap dealer that is
either a Lender or an Affiliate of a Lender, or has been approved in writing by
the Administrative Agent (which approval shall not be unreasonably withheld),
and (ii) has a short-term unsecured debt rating of not less than A-1 by S&P
and not less than P-1 by Moody’s, and (b) in a Hedging Agreement (i) consents
to the assignment of the Borrower’s rights under the Hedging Agreement to the
Administrative Agent pursuant to Section 5.2(b)
and (ii) agrees that in the event that S&P or Moody’s reduces its short-


 


13

















 


term unsecured debt
rating below A-1 or P-1, respectively, it shall transfer its rights and
obligations under each Hedging Transaction to another entity that meets the
requirements of clause (a) and (b) hereof or make other arrangements acceptable
to the Administrative Agent and the Rating Agencies.


 


Hedge Notional
Amount:  The
aggregate notional amount in effect on any day under all Hedge Transactions
entered into pursuant to Section 5.2 which
have not matured, been terminated or cancelled.


 


Hedge Transaction:  Each interest rate cap transaction between
the Borrower and a Hedge Counterparty that is entered into pursuant to Section 5.2 and is governed by a Hedging
Agreement.


 


Hedging Agreement:  Each agreement between the Borrower and a
Hedge Counterparty that governs one or more Hedge Transactions entered into
pursuant to Section 5.2, which agreement
shall consist of a “Master Agreement” in a form published by the International
Swaps and Derivatives Association, Inc., together with a “Schedule” thereto
substantially in a form as the Administrative Agent shall approve in writing,
and each “Confirmation” thereunder confirming the specific terms of each such
Hedge Transaction.


 


Increased Costs:  Any amounts required to be paid by the
Borrower to an Affected Party pursuant to Section 2.12.


 


Indebtedness:  With respect to the Borrower or the initial
Servicer at any date, (a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services (other than current
liabilities incurred in the ordinary course of business and payable in
accordance with customary trade practices) or that is evidenced by a note,
bond, debenture or similar instrument, (b) all obligations of such Person under
capital leases, (c) all obligations of such Person in respect of acceptances
issued or created for the account of such Person, (d) all liabilities secured
by any Adverse Claims on any property owned by such Person even though such
Person has not assumed or otherwise become liable for the payment thereof, and
(e) all indebtedness, obligations or liabilities of that Person in respect of
Derivatives, and (f) obligations under direct or indirect guaranties in respect
of obligations (contingent or otherwise) to purchase or otherwise acquire, or
to otherwise assure a creditor against loss in respect of, clauses (a) through (e)
above.


 


Indemnified
Amounts: 
Defined in Section 9.1.


 


Indemnified Party:  Defined in Section
9.1.


 


Industry:  The industry of an Obligor as determined by
reference to the Moody’s Industry Classifications.


 


Ineligible Loan:  Defined in the Purchase Agreement.


 


Insolvency Event:  With respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in
an involuntary case under any applicable Insolvency Law now 


 


14

















 


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


 


Insolvency Laws:  The Bankruptcy Code and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief laws from time to time in effect affecting the rights of
creditors generally.


 


Insolvency
Proceeding:  Any
case, action or proceeding before any court or Governmental Authority relating
to an Insolvency Event.


 


Insurance Policy:  With respect to any Loan included in the
Collateral, an insurance policy covering physical damage to or loss to any
assets or Related Property of the Obligor securing such Loan.


 


Insurance Proceeds:  Any amounts payable or any payments made, to
the Borrower or to the Servicer on its behalf under any Insurance Policy.


 


Interest:  For each Settlement Period and each Advance
outstanding during such Settlement Period, the product of:


 


	
  IR x P x

  	
   

  	
  AD

  
	
   

  	
   

  	
  360

  



 


where


 


	
  IR

  	
   

  	
  =

  	
   

  	
  the Interest
  Rate applicable to such Advance;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P

  	
   

  	
  =

  	
   

  	
  the principal
  amount of such Advance on the first day of such Settlement Period, or if such
  Advance was first made during such Settlement Period, the principal amount of
  such Advance on the day such Advance is made; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AD

  	
   

  	
  =

  	
   

  	
  the actual
  number of days in such Settlement Period, or if such Advance was first made
  during such Settlement Period, the actual number of days beginning on the day
  such Advance was first made through the end of such Settlement Period;

  



 


15

















 


provided,
however, that (i) no provision of this
Agreement shall require or permit the collection of Interest in excess of the
maximum permitted by Applicable Law and (ii) Interest shall not be considered
paid by any distribution if at any time such distribution is rescinded or must
otherwise be returned for any reason.


 


Interest
Collections: 
Any and all amounts received in respect of any interest, fees or other
similar charges on a Transferred Loan from or on behalf of any Obligors that
are deposited into the Collection Account, or received by the Borrower or on
behalf of the Borrower by the Servicer or Originator in respect of the
Transferred Loans, in the form of cash, checks, wire transfers, electronic
transfers or any other form of cash payment (net of any payment owed by the
Borrower to, and including any receipts from, any Hedge Counterparties) and, solely
for purposes of calculating the Portfolio Rate, any and all amounts accrued in
respect of any fees and interest (but only to the extent such fees or interest
were not received during the applicable Settlement Period) owed by any Obligor
in respect of any Transferred Loan.


 


Interest Coverage
Ratio:  With
respect to any Settlement Period, the percentage equivalent of a fraction,
calculated as of the Determination Date for such Settlement Period, (a) the
numerator of which is equal to the aggregate Interest Collections for such
Settlement Period and (b) the denominator of which is equal to the sum of (x) the
aggregate amount payable pursuant to Section 2.8(i), (iii), (iv)
and (vi) hereunder and (y) an amount equal to the sum of the products,
for each day during the related Settlement Period, of (i) the Advances
Outstanding, (ii) the weighted average of the Servicing Fee Rates used to
compute the Servicing Fee for such Settlement Period, and (iii) a fraction, the
numerator of which is 1 and the denominator of which is 360.


 


Interest Rate:  For any Settlement Period:


 


(a)                                  to
the extent the Lender is a CP Lender that is funding the applicable Advance or
portion thereof through the issuance of Commercial Paper Notes, a rate equal to
the CP Rate for such Settlement Period on such portion; or


 


(b)                                 to
the extent the relevant Lender is not funding the applicable Advance or portion
thereof through the issuance of Commercial Paper Notes, a rate equal to the
Alternative Rate on such portion.


 


Investment:  With respect to any Person, any direct or
indirect loan, advance or investment by such Person in any other Person,
whether by means of share purchase, capital contribution, loan or otherwise,
excluding the acquisition of assets pursuant to the Purchase Agreement and excluding
commission, travel and similar advances to officers, employees and directors
made in the ordinary course of business.


 


Joinder Agreement:  A joinder agreement substantially in the form
set forth in Exhibit D hereto pursuant to which a new Lender Group
becomes party to this Agreement.


 


Key Man Event:
Any two of (i) David Gladstone, (ii) Terry Brubaker and (iii) George Stelljes shall
cease to be employed by the Originator in the capacity as executive officers
thereof.


 


16

















 


Large Loan Limit:  For the
Eligible Loans of the six Obligors with the largest Outstanding Loan Balances,
$15,000,000, and for the Eligible Loans of each other Obligor, $10,000,000.


 


Lender Group:  Any CP Lender, its related Committed Lenders
and their related Managing Agent.


 


Lenders:  Collectively, the CP Lenders, the Committed
Lenders and any other Person that agrees, pursuant to the pertinent Joinder
Agreement or Assignment and Acceptance, as applicable, to fund Advances
pursuant to this Agreement.


 


LIBO Rate:  For any Settlement Period and any Advance, an
interest rate per annum equal to:


 


(i)                                     the
posted rate for 30-day deposits in United States dollars appearing on Telerate
page 3750 as of 11:00 a.m. (London time) on the Business Day that is the second
Business Day immediately preceding the applicable Funding Date (with respect to
the initial Settlement Period for such Advance) and as of the second Business
Day immediately preceding the first day of the applicable Settlement Period (with
respect to all subsequent Settlement Periods for such Advance); or


 


(ii)                                  if
no rate appears on Telerate page 3750 at such time and day, then the LIBO Rate
shall be determined by DB at its principal office in New York, New York as its
rate (each such determination, absent manifest error, to be conclusive and
binding on all parties hereto and their assignees) at which 30-day deposits in
United States dollars are being, have been, or would be offered or quoted by DB
to major banks in the applicable interbank market for Eurodollar deposits at or
about 11:00 a.m. (New York City time) on such day.


 


Lien:  With respect to any Collateral, (a) any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such Collateral, or (b) the interest of a vendor or lessor under any
conditional sale agreement, financing loan or other title retention agreement
relating to such Collateral.


 


Liquidation
Expenses:  With
respect to any Defaulted Loan or Charged-Off Loan, the aggregate amount of out-of-pocket
expenses reasonably incurred by the Borrower or on behalf of the Borrower by
the Servicer (including amounts paid to any subservicer) in connection with the
repossession, refurbishing and disposition of any related assets securing such
Loan including the attempted collection of any amount owing pursuant to such
Loan.


 


Liquidity
Agreement:  A
liquidity agreement entered into by a CP Lender with a group of financial
institutions in connection with this Agreement.


 


Liquidity Bank:  Each financial institution that is a party to
a Liquidity Agreement.


 


Liquidity
Commitment Fee: 
Defined in each Fee Letter.


 


17

















 


Loan:  Any senior or subordinate loan arising from
the extension of credit to an Obligor by the Originator in the ordinary course
of the Originator’s business.


 


Loan Documents:  With respect to any Loan, the related
promissory note and any related loan agreement, security agreement, mortgage,
assignment of Loans, all guarantees, and UCC financing statements and
continuation statements (including amendments or modifications thereof)
executed by the Obligor thereof or by another Person on the Obligor’s behalf in
respect of such Loan and related promissory note, including, without
limitation, general or limited guaranties and, for each Loan secured by real
property an Assignment of Mortgage.


 


Loan File:  With respect to any Loan, each of the Loan
Documents related thereto.


 


Loan List:  The Loan List provided by the Borrower to the
Administrative Agent and the Collateral Custodian, as set forth in Schedule III hereto (which shall include the
specific documents that should be included in each Loan File), as the same may
be changed from time to time in accordance with the provisions hereof.


 


Lock-Box:  A post office box to which Collections are
remitted for retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank
into a Lock-Box Account.


 


Lock-Box Account:  An account, subject to a Lock-Box Agreement,
maintained in the name of the Borrower for the purpose of receiving Collections
at a Lock-Box Bank.


 


Lock-Box Agreement:  A letter agreement, substantially in the form
of Exhibit L, among the Borrower, the
Administrative Agent and a Lock-Box Bank.


 


Lock-Box Bank:  Any of the banks or other financial institutions
holding one or more Lock-Box Accounts.


 


Managing Agent:
As to any CP Lender, the financial institution identified as such on the
signature pages hereof or in the applicable Assignment and Acceptance or
Joinder Agreement.


 


Mandatory Prepayment:  Defined in Section 2.4(a).


 


Market Servicing
Fee:  Defined in
Section 7.20.


 


Market Servicing
Fee Differential: 
On any date of determination, an amount equal to the positive difference
between the Market Servicing Fee and Servicing Fee.


 


Material Adverse
Change:  With
respect to any Person, any material adverse change in the business, condition
(financial or otherwise), operations, performance, properties or prospects of
such Person.


 


Material Adverse
Effect:  With
respect to any event or circumstance, means a material adverse effect on (a)
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Servicer or the Borrower, (b) the validity,
enforceability or collectibility of this Agreement or any other Transaction
Document or any Liquidity Agreement or the validity, enforceability or
collectibility of the Loans, (c) the rights and remedies of the 


 


18

















 


Administrative Agent or
any Secured Party under this Agreement or any Transaction Document or any
Liquidity Agreement or (d) the ability of the Borrower or the Servicer to
perform its obligations under this Agreement or any other Transaction Document,
or (e) the status, existence, perfection, priority, or enforceability of the
Administrative Agent’s or Secured Parties’ interest in the Collateral.


 


Maximum Lawful Rate:  Defined in Section 2.6(d).


 


Monthly Report:  Defined in Section
7.11(a).


 


Moody’s:  Moody’s Investors Service, Inc., and any
successor thereto.


 


Moody’s Industry
Classifications:  The
classifications as set forth in Exhibit N.


 


Multiemployer Plan:  A “multiemployer plan” as defined in Section
4001(a)(3) of ERISA that is or was at any time during the current year or the
immediately preceding five years contributed to by the Borrower or any ERISA
Affiliate on behalf of its employees.


 


1940 Act:  Defined in Section 4.1(x).


 


Non-Syndicated Loan:  Each Loan which is not a Qualifying
Syndicated Loan.


 


Notes:  Defined in Section
2.5(a).


 


Obligations:  All loans, advances, debts, liabilities and
obligations, for monetary amounts owing by the Borrower to the Lenders, the
Administrative Agent, the Managing Agents or any of their assigns, as the case
may be, whether due or to become due, matured or unmatured, liquidated or
unliquidated, contingent or non-contingent, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, arising under
or in respect of any of this Agreement, any other Transaction Document or any
Fee Letter delivered in connection with the transactions contemplated by this
Agreement, or any Hedging Agreement, as amended or supplemented from time to
time, whether or not evidenced by any separate note, agreement or other
instrument. This term includes, without limitation, all principal, interest
(including interest that accrues after the commencement against the Borrower of
any action under the Bankruptcy Code), Breakage Costs, Hedge Breakage Costs,
fees, including, without limitation, any and all arrangement fees, loan fees,
facility fees, and any and all other fees, expenses, costs or other sums
(including attorney costs) chargeable to the Borrower under any of the
Transaction Documents or under any Hedging Agreement.


 


Obligor:  With respect to any Loan, the Person or Persons
obligated to make payments pursuant to such Loan, including any guarantor
thereof. For purposes of calculating the Excess Concentration Amount, all Loans
included in the Collateral or to become part of the Collateral the Obligor of
which is an Affiliate of another Obligor shall be aggregated with all Loans of
such other Obligor.


 


Officer’s
Certificate:  A
certificate signed by any officer of the Borrower or the Servicer, as the case
may be, and delivered to the Administrative Agent.


 


19

















 


Opinion of Counsel:  A written opinion of counsel, who may be
counsel for the Borrower or the Servicer, as the case may be, and who shall be
reasonably acceptable to the Administrative Agent.


 


Originator:  Gladstone Capital Corporation, a Maryland
corporation.


 


Outstanding Loan
Balance: With respect to any Loan, the then
outstanding principal balance thereof, provided, however, that with
respect to Current Pay Loans, the “Outstanding Loan Balance” of such Loans
shall be equal to 70% of the outstanding principal balance thereof.


 


Participant:  Defined in Section 11.1(g).


 


Payment Date:  The
seventh (7th) day of each calendar month or, if such day is not a Business Day,
the next succeeding Business Day; provided that for purposes of
distributions required pursuant to Section 2.8(a)(vii) only, “Payment
Date” shall mean any Business Day.


 


Performance Guarantor:  Defined in the Performance Guaranty.


 


Performance
Guaranty:  The
Performance Guaranty dated as of the date hereof, by the Originator in favor of
the Borrower and the Administrative Agent, as amended, modified, supplemented
or restated from time to time.


 


Permitted
Investments: 
Any one or more of the following types of investments:


 


(a)                                  marketable
obligations of the United States, the full and timely payment of which are
backed by the full faith and credit of the United States and that have a
maturity of not more than 270 days from the date of acquisition;


 


(b)                                 marketable
obligations, the full and timely payment of which are directly and fully
guaranteed by the full faith and credit of the United States and that have a
maturity of not more than 270 days from the date of acquisition;


 


(c)                                  bankers’
acceptances and certificates of deposit and other interest-bearing obligations
(in each case having a maturity of not more than 270 days from the date of
acquisition) denominated in dollars and issued by any bank with capital,
surplus and undivided profits aggregating at least $100,000,000, the short-term
obligations of which are rated A-1 by S&P and P-1 by Moody’s;


 


(d)                                 repurchase
obligations with a term of not more than ten days for underlying securities of
the types described in clauses (a), (b) and (c) above entered into with any
bank of the type described in clause (c) above;


 


(e)                                  commercial
paper rated at least A-1 by S&P and P-1 by Moody’s; and


 


(f)                                    demand
deposits, time deposits or certificates of deposit (having original maturities
of no more than 365 days) of depository institutions or trust companies
incorporated under the laws of the United States or any state thereof (or
domestic branches of any foreign bank) and subject to supervision and
examination by federal or state banking or depository 


 


20

















 


institution authorities; provided, however
that at the time such investment, or the commitment to make such investment, is
entered into, the short-term debt rating of such depository institution or
trust company shall be at least A-1 by S&P and P-1 by Moody’s.


 


Permitted Liens:  Liens created pursuant to the Transaction
Documents in favor of the Administrative Agent, as agent for the Secured
Parties.


 


Person:  An individual, partnership, corporation
(including a statutory trust), limited liability company, joint stock company,
trust, unincorporated association, sole proprietorship, joint venture,
government (or any agency or political subdivision thereof) or other entity.


 


PIK Loan:  A Loan to an Obligor, which provides for a
portion of the interest that accrues thereon to be added to the principal
amount of such Loan for some period of the time prior to such Loan requiring
the cash payment of interest on a monthly or quarterly basis.


 


Portfolio Rate:  On any day, with respect to any Settlement
Period, the annualized percentage equivalent of a fraction, the numerator of
which is equal to all Interest Collections for such Settlement Period, and the
denominator of which is equal to the Advances Outstanding on the last day of
such Settlement Period.


 


Portfolio Yield:  On any day, the excess, if any, of (a) the
Portfolio Rate on such day over (b) the Interest Rate plus the Program Fee Rate
on such day.


 


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


 


Prime Rate:  The rate publicly announced by DB from time
to time on Reuters telerate page 3750 as its prime rate in the United States,
such rate to change as and when such designated rate changes. The Prime Rate is
not intended to be the lowest rate of interest charged by DB in connection with
extensions of credit to debtors.


 


Principal
Collections: 
Any and all amounts received in respect of any principal due and payable
under any Transferred Loan from or on behalf of Obligors that are deposited
into the Collection Account, or received by the Borrower or on behalf of the
Borrower by the Servicer or Originator in respect of the Transferred Loans, in
the form of cash, checks, wire transfers, electronic transfers or any other
form of cash payment.


 


Proceeds:  With respect to any Collateral, whatever is
receivable or received when such Collateral is sold, collected, liquidated,
foreclosed, exchanged, or otherwise disposed of, whether such disposition is
voluntary or involuntary, including all rights to payment with respect to any
insurance relating to such Collateral.


 


Program Fee:  For each Settlement Period and each Advance
Outstanding during such Settlement Period, the product of:


 


PFR x P x AD/360


 


21

















 


where


 


	
  PFR

  	
   

  	
  =

  	
   

  	
  the Program Fee
  Rate;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P

  	
   

  	
  =

  	
   

  	
  the principal
  amount of such Advance on the first day of such Settlement Period, or if such
  Advance was first made during such Settlement Period, the principal amount of
  such Advance on the day such Advance is made; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AD

  	
   

  	
  =

  	
   

  	
  the actual days
  comprising such Settlement Period, or if such Advance was first made during
  such Settlement Period, the actual number of days beginning on the day such Advance
  was first made through the end of such Settlement Period.

  



 


Program Fee Rate:  Defined in each Fee Letter.


 


Pro-Rata Share:  With respect to any Committed Lender on any
day, the percentage equivalent of a fraction the numerator of which is such Committed
Lender’s Commitment and the denominator of which is the Group Advance Limit of
the related CP Lender’s Lender Group.


 


Purchase Agreement:  The Purchase and Sale Agreement dated as of
the date hereof, between the Originator and the Borrower, as amended, modified,
supplemented or restated from time to time.


 


Purchase Date:  Defined in the Purchase Agreement.


 


Purchased Loan
Balance:  As of
any date of determination and any Transferred Loan, the lesser of (i) the
Outstanding Loan Balance of such Loan as of such date, (ii) the Fair Market
Value of such Loan, and (iii) the Outstanding Loan Balance of such Loan as of
the Purchase Date for such Loan.


 


Purchasing
Committed Lender: 
Defined in Section 11.1(b).


 


Qualified
Institution: 
Defined in Section 7.4(e).


 


Qualifying Syndicated
Loan:  Any Loan
designated by the Borrower as such in the Loan List.


 


Rating Agency:
Any rating agency that has been requested to issue a rating with respect to the
Commercial Paper Notes issued by a CP Lender.


 


Records:  With respect to any Transferred Loans, all
documents, books, records and other information (including without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) maintained with respect to any item of Collateral
and the related Obligors, other than the Loan Documents.


 


Recoveries:  With respect to any Defaulted Loan or
Charged-Off Loan, proceeds of the sale of any Related Property, proceeds of any
related Insurance Policy, and any other recoveries 


 


22

















 


with respect to such Loan
and Related Property, and amounts representing late fees and penalties, net of
Liquidation Expenses and amounts, if any, received that are required to be
refunded to the Obligor on such Loan.


 


Reference Bank:  Any bank that furnishes information for
purposes of determining the Adjusted Eurodollar Rate.


 


Register:  Defined in Section
11.1(e).


 


Regulatory Change:  Defined in Section
2.12(a).


 


Related Property:  With respect to a Loan, any property or other
assets of the Obligor thereunder pledged as collateral to the Originator to
secure the repayment of such Loan.


 


Reporting Date:  The date that is two (2) Business Days prior
to each Payment Date.


 


Repurchase Price:  For any Transferred Loan purchased by the
Servicer pursuant to Section 7.7, an amount equal to the outstanding
principal balance of such Loan as of the date of purchase, plus all accrued and
unpaid interest on such Loan.


 


Required Committed
Lenders:  At a
particular time, Committed Lenders with Commitments in excess of 66 2/3 % of
the Facility Amount.


 


Required Equity
Investment:  The
minimum amount of equity investment in the Borrower which shall be maintained by
the Originator, in the form of Eligible Loans and/or cash having an outstanding
principal balance on the Effective Date and at all times prior to the
Termination Date of an amount equal to the greater of (i) $50,000,000 or (ii)
the sum of the Outstanding Loan Balances of the five largest Eligible Loans
included as part of the Collateral.


 


Required Ratings:  With respect to any Committed Lender, the
short term ratings from S&P and Moody’s equal to or greater than the
ratings required in order to maintain the rating of the commercial paper issued
by the related CP Lender.


 


Required Reports:  Collectively, the Monthly Report, the
Servicer’s Certificate and the annual and quarterly financial statements of the
Originator required to be delivered to the Borrower, the Managing Agents, the
Administrative Agent and the Backup Servicer pursuant to Section
7.11 hereof.


 


Responsible
Officer:  As to
the Borrower, David Gladstone, Terry Brubaker, George Stelljes, Harry Brill,
Donya Kolcio or Gary Gerson, and as to any other Person, any officer of such
Person with direct responsibility for the administration of this Agreement and
also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer’s knowledge of and familiarity with
the particular subject. The Borrower may designate other Responsible Officers
from time to time by notice to the Administrative Agent.


 


Revolver
Loan:  Each Loan with respect to which the Borrower
has a revolving credit commitment to advance amounts to the applicable Obligor
during a specified term.


 


23

















 


Revolver Loan Funding:  Defined in Section 2.14.


 


Revolver Loan Funding
Account: Defined in Section 2.14.


 


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


 


Revolver Loan Funding
Account Surplus:  On
any date, the amount, if any, by which the amount on deposit in the Revolver
Loan Funding Accounts exceeds the Revolver Loan Funding Amount at such time.


 


Revolver Loan Funding
Amount: Defined in Section 2.14.


 


Revolver
Loan Funding Date:  The Termination Date, if Revolver Loans are
outstanding on such date.


 


Revolving Period:  The period commencing on the Closing Date and
ending on the day immediately preceding the Termination Date.


 


Rolling
Three-Month Charged-Off Ratio:  For any day, beginning after the end of the
third Settlement Period following the Closing Date, the rolling three period
average Charged-Off Ratio for the three immediately preceding Settlement
Periods.


 


Rolling
Three-Month Default Ratio:  For any day, beginning after the end of the
third Settlement Period following the Closing Date, the rolling three period
average Default Ratio for the three immediately preceding Settlement Periods.


 


S&P:  Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc. and any successor thereto.


 


Scheduled Payment:  On any Determination Date, with respect to
any Loan, each monthly payment (whether principal, interest or principal and
interest) scheduled to be made by the Obligor thereof after such Determination
Date under the terms of such Loan.


 


Secured Party:  (i) Each Lender, (ii) each Managing Agent,
(iii) each Liquidity Bank and (iv) each Hedge Counterparty that is either a
Lender or an Affiliate of a Lender if that Affiliate executes a counterpart of
this Agreement agreeing to be bound by the terms of this Agreement applicable
to a Secured Party.


 


Securitization:  A disposition of Transferred Loans in one or
a series of structured finance securitization transactions.


 


Senior Debt Loan:  A Loan which (a) has a risk rating equal to
or greater than 5.5 (or the equivalent of a rating greater than B/B2 by S&P
and Moody’s respectively), as determined by the Servicer’s risk rating model
and (b) is not subordinated to any other indebtedness of the applicable
Obligor.


 


24

















 


Senior Syndicated
Loan:  Any Senior Debt
Loan which is a Qualifying Syndicated Loan.


 


Servicer:  Gladstone Management Corporation, a Delaware
corporation, and its permitted successors and assigns.


 


Servicer Advance:  An advance of Scheduled Payments made by the
Servicer pursuant to Section 7.5.


 


Servicer
Termination Event: 
Defined in Section 7.18.


 


Servicer’s
Certificate: 
Defined in Section 7.11(b).


 


Servicing Duties:  Those duties of the Servicer which are
enumerated in Section 7.2.


 


Servicing Fee:  For each Payment Date, an amount equal to the
sum of the products, for each day during the related Settlement Period, of (i) the
Outstanding Loan Balance of each Loan as of the preceding Determination Date,
(ii) the applicable Servicing Fee Rate, and (iii) a fraction, the numerator of
which is 1 and the denominator of which is 360.


 


Servicing
Fee Limit Amount:  For each Payment Date, an amount equal to 50%
of the Servicing Fee for the related Settlement Period.


 


Servicing Fee Rate:  With respect to each Senior Syndicated Loan,
a rate equal to 0.5% per annum, and with respect to all other Loans, a rate
equal to 1.5% per annum.


 


Servicing Records:  All documents, books, records and other
information (including, without limitation, computer programs, tapes, disks,
data processing software and related property rights) prepared and maintained
by the Servicer with respect to the Transferred Loans and the related Obligors.


 


Settlement Period:  Each period from and including a Payment Date
to but excluding the following Payment Date.


 


Solvent:  As to any Person at any time, having a state
of affairs such that all of the following conditions are met:  (a) the fair value of the property owned by
such Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy
Code; (b) the present fair salable value of the property owned by such Person
in an orderly liquidation of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed,
contingent and unliquidated liabilities) as they mature in the normal course of
business; (d) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature; and (e) such Person is not engaged in business or
a transaction, and is not about to engage in a business or a transaction, for
which such Person’s property would constitute unreasonably small capital.


 


Successor Servicer:  Defined in Section
7.19(a).


 


25

















 


Supplemental
Interests:  With
respect to any Transferred Loan, any warrants, equity or other equity interests
or interests convertible into or exchangeable for any such interests received
by the Originator from the Obligor in connection with such Transferred Loan.


 


Swap Breakage and
Indemnity Amounts:  Any
early termination payments, taxes, indemnification payments and any other
amounts owed to a Hedge Counterparty under a Hedging Agreement that do not
constitute monthly payments.


 


Taxes:  Any present or future taxes, levies, imposts,
duties, charges, assessments or fees of any nature (including interest,
penalties, and additions thereto) that are imposed by any Government Authority.


 


Termination Date:  The earliest to occur of (a) the date
declared by the Administrative Agent or occurring automatically in respect of
the occurrence of an Early Termination Event pursuant to Section 8.1,
(b) a date selected by the Borrower upon at least 30 days’ prior written notice
to the Administrative Agent and each Managing Agent, (c) the Commitment
Termination Date and (d) the date designated by the Administrative Agent
following the occurrence of a Key Man Event.


 


Termination Notice:  Defined in Section
7.18.


 


Transaction
Documents:  This
Agreement, the Purchase Agreement, all Hedging Agreements, the Custody
Agreement, the Backup Servicing Agreement, the Performance Guaranty and any
additional document, letter, fee letter, certificate, opinion, agreement or
writing the execution of which is necessary or incidental to carrying out the
terms of the foregoing documents.


 


Transferred Loans:  Each Loan that is acquired by the Borrower
under the Purchase Agreement and all Loans received by the Borrower in respect
of the Required Equity Investment. Any Transferred Loan that is (i) repurchased
or reacquired by the Originator pursuant to the terms of Section 6.1 of the
Purchase Agreement, (ii) purchased by the Servicer pursuant to the terms of Section
7.7 or (iii) otherwise released from the lien of this Agreement pursuant to
Section 6.3 shall not be treated as a Transferred Loan for purposes of
this Agreement (provided, that the purchase or repurchase of any
Defaulted Loan or Charged-Off Loan shall not alter such Transferred Loan’s
status as a Defaulted Loan or Charged-Off Loan for purposes of calculating
ratios for periods occurring prior to the purchase or repurchase of such
Transferred Loan).


 


Transition Costs:  The reasonable costs and expenses incurred by
the Backup Servicer in transitioning to Servicer; provided,
however, that the Administrative Agent’s
consent shall be required if such Transition Costs exceed $50,000.00 in the
aggregate.


 


UCC:  The Uniform Commercial Code as from time to
time in effect in the specified jurisdiction or, if no jurisdiction is
specified, the State of New York.


 


United States:  The United States of America.


 


Unmatured
Termination Event: 
An event that, with the giving of notice or lapse of time, or both,
would become an Early Termination Event.


 


26

















 


Unreimbursed
Servicer Advances: 
At any time, the amount of all previous Servicer Advances (or portions
thereof) as to which the Servicer has not been reimbursed as of such time
pursuant to Section 2.8 and that the
Servicer has determined in its sole discretion will not be recoverable from
Collections with respect to the related Transferred Loan.


 


Williams Mullen Opinion:  The “non-consolidation” opinion letter of
Williams Mullen delivered on the Closing Date, as such opinion letter may be
modified, supplemented or replaced in any subsequent opinion letter covering
such subject matter delivered to the Administrative Agent.


 


Section
1.2                                   Other
Terms.


 


All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. All terms used in Article 9 of the
UCC in the State of New York, and not specifically defined herein, are used
herein as defined in such Article 9.


 


Section
1.3                                   Computation
of Time Periods.


 


Unless otherwise stated in this Agreement, in the
computation of a period of time from a specified date to a later specified
date, the word “from” means “from and including” and the words “to” and “until”
each mean “to but excluding.”


 


Section
1.4                                   Interpretation.


 


In each Transaction Document, unless a contrary
intention appears:


 


(i)                                     the
singular number includes the plural number and vice versa;


 


(ii)                                  reference
to any Person includes such Person’s successors and assigns but, if applicable,
only if such successors and assigns are permitted by the Transaction Document;


 


(iii)                               reference to any gender
includes each other gender;


 


(iv)                              reference
to any agreement (including any Transaction Document), document or instrument
means such agreement, document or instrument as amended, supplemented or
modified and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms of the other Transaction Documents and reference
to any promissory note includes any promissory note that is an extension or
renewal thereof or a substitute or replacement therefor; and


 


(v)                                 reference
to any Applicable Law means such Applicable Law as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder and reference to any
section or other provision of any Applicable Law means that provision of such
Applicable Law from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such
section or other provision.


 


27

















 


ARTICLE II


 


ADVANCES


 


Section
2.1                                   Advances.


 


(a)                                  On
the terms and conditions hereinafter set forth, the Borrower may, by delivery
of a Funding Request to the Administrative Agent, from time to time on any
Business Day during the Revolving Period, at its option, request that the
Lenders make advances (each, an “Advance”) to it in an amount which, at any time, shall not
exceed the Availability in effect on the related Funding Date. Such Funding Request shall be delivered not
later than 10:00 a.m. (New York City time) on the date which is one (1)
Business Day prior to the requested Funding Date. Following receipt by the
Administrative Agent of a Funding Request, the Administrative Agent shall
forward such Funding Request to each Managing Agent not later than 11:00 a.m.
(New York City time) that day. Upon receipt of such Funding Request,
each Managing Agent shall request the CP Lender in its Lender Group to make the
Advance, and such CP Lender may from time to time during the Revolving Period,
in its sole discretion, agree or decline to make the Advance. If any CP Lender
declines to make all or any part of a proposed Advance, it shall so notify the
Committed Lenders and the applicable portion of the Advance will be made by the
Committed Lenders in such CP Lender’s Lender Group in accordance with their
Pro-Rata Shares. Notwithstanding anything contained in this Section 2.1
or elsewhere in this Agreement to the contrary, no Committed Lender shall be
obligated to make any Advance in an amount that would result in the aggregate
Advances then funded by such Committed Lender exceeding its Commitment then in
effect (minus the unrecovered principal amount of such Committed Lender’s
advances made, downgrade draws funded or purchase prices paid pursuant to any
applicable Liquidity Agreement to which it is a party). The obligation of each
Committed Lender to remit its Pro-Rata Share of any such Investment shall be
several from that of each other Committed Lender, and the failure of any
Committed Lender to so make such amount available to the Borrower shall not
relieve any other Committed Lender of its obligation hereunder. Each Advance to
be made hereunder shall be made ratably among the Lender Groups in accordance
with their Group Advance Limits.


 


(b)                                 The
Borrower may, within 60 days, but no later than 45 days, prior to the then
current Commitment Termination Date, by written notice to the Administrative
Agent, make written requests for the Lenders to extend the Commitment
Termination Date for an additional revolving period of 364 days. The
Administrative Agent will give prompt notice to each Managing Agent of its
receipt of such request, and each Managing Agent shall give prompt notice to
each of the Lenders in its related Lender Group of its receipt of such request
for extension of the Commitment Termination Date. Each Lender shall make a
determination, in its sole discretion and after a full credit review, not less
than fifteen (15) days prior to the then applicable Commitment Termination Date
as to whether or not it will agree to extend the Commitment Termination Date; provided, however,
that the failure of any Lender to make a timely response to the Borrower’s
request for extension of the Commitment Termination Date shall be deemed to
constitute a refusal by such Lender to extend the Commitment Termination Date. In
the event that at least one Committed Lender agrees to extend the Commitment
Termination Date, the Borrower, the Servicer, the Administrative Agent and the
extending Committed Lenders and, if such extension is approved by a CP Lender
in its sole discretion, such 


 


28

















 


CP Lender shall enter into such documents as such
extending Committed Lenders and CP Lenders may deem necessary or appropriate to
reflect such extension, and all reasonable costs and expenses incurred by such
CP Lenders, such Committed Lenders and the Administrative Agent (including
reasonable attorneys’ fees) shall be paid by the Borrower. In the event that
any Committed Lender declines the request to extend the Commitment Termination
Date (each such Committed Lender being referred to herein as a “Non-Renewing
Committed Lender”), and the Commitment of such Non-Renewing Committed
Lender is not assigned to another Person in accordance with the terms of Article
XI prior to the then current Commitment Termination Date, (i) the Facility
Amount shall be reduced by an amount equal to each such Non-Renewing Committed
Lender’s Commitment on the then current Commitment Termination Date, and (ii)
the Group Advance Limits of the applicable Lender Groups shall be reduced by an
amount equal to the applicable Non-Renewing Committed Lender’s Commitment on
the then current Commitment Termination Date.


 


Section
2.2                                   Procedures
for Advances.


 


(a)                                  In
the case of the making of any Advance, the repayment of any Advance, or any
termination, increase or reduction of the Facility Amount and prepayments of
Advances, the Borrower shall give the Administrative Agent a Borrower Notice. Each
Borrower Notice shall specify the amount (subject to Section
2.1 hereof) of Advances to be borrowed or repaid and the Funding
Date or repayment date (which, in all cases, shall be a Business Day).


 


(b)                                 Subject
to the conditions described in Section 2.1,
the Borrower may request an Advance from the Lenders by delivering to the
Administrative Agent at certain times the information and documents set forth
in this Section 2.2.


 


(c)                                  No
later than 10:00 a.m. (New York City time) five (5) Business Days prior to the
proposed Funding Date (or such shorter period of time or later date as may be
agreed to by the Required Committed Lenders), the Borrower shall notify (i) the
Collateral Custodian by delivery to the Collateral Custodian of written notice
of such proposed Funding Date, and (ii) the Administrative Agent by delivery to
the Administrative Agent of a credit report and transaction summary for each
Loan that is the subject of the proposed Advance setting forth the credit
underwriting by the Originator of such Loan, including without limitation a
description of the Obligor and the proposed loan transaction in the form of Exhibit M hereto; provided that the
requirements of this Section 2.2(c) shall apply only with respect to the
first Advance to be made with respect to a Revolver Loan. By 5:00 p.m.
(New York City time) on the next Business Day, the Administrative Agent shall
use its best efforts to confirm to the Borrower the receipt of such items and
whether it has reviewed such items and found them to be complete and in proper
form. If the Administrative Agent makes a determination that the items are
incomplete or not in proper form, it will communicate such determination to the
Borrower. Failure by the Administrative Agent to respond to the Borrower by
5:00 on the day the related Funding Request is delivered by the Borrower shall
constitute an implied determination that the items are incomplete or not in
proper form. The Borrower will take such steps requested by the Administrative
Agent to correct the problem(s). In the event of a delay in the actual Funding
Date due to the need to correct any such problems, the Funding Date shall be no
earlier than three (3) Business Days after the day on which the Administrative
Agent confirms to the Borrower that the problems have been corrected.


 


29

















 


(d)                                 No
later than 11:00 a.m. (New York City time) one (1) Business Day prior to the
proposed Funding Date (or such shorter period of time or later date as may be
agreed to by the Required Committed Lenders), the Administrative Agent, each
Managing Agent and the Collateral Custodian, as applicable, shall receive or
shall have previously received the following:


 


(i)                                     a
Funding Request in the form of Exhibit A;


 


(ii)                                  a
wire disbursement and authorization form shall be delivered to the
Administrative Agent; and


 


(iii)                               a certification
substantially in the form of Exhibit H
concerning the Collateral Custodian’s receipt of certain documentation relating
to the Eligible Loan(s) related to such Advance shall be delivered to the
Administrative Agent.


 


(e)                                  Each
Funding Request shall specify the aggregate amount of the requested Advance,
which shall be in an amount equal to at
least $500,000. Each Funding Request shall be accompanied by (i) a
Borrower Notice, depicting the outstanding amount of Advances under this
Agreement and representing that all conditions precedent for a funding have
been met, including a representation by the Borrower that the requested Advance
shall not, on the Funding Date thereof, exceed the Availability on such day,
(ii) a calculation of the Borrowing Base as of the date the Advance is
requested, (iii) an updated Loan List including each Loan that is subject to
the requested Advance, (iv) the proposed Funding Date, and (v) wire transfer
instructions for the Advance. A Funding Request shall be irrevocable when
delivered.


 


(f)                                    On
the Funding Date following the satisfaction of the applicable conditions set
forth in this Section 2.2 and Article III, each CP Lender may, or the related
Committed Lenders, as applicable, shall, make available to the Administrative
Agent at its address listed beneath its signature on its signature page to this
Agreement (or on the signature page to the Joinder Agreement pursuant to which
it became a party hereto), for deposit to the account of the Borrower or its
designee in same day funds, at the account specified in the Funding Request, an
amount equal to such Lender’s ratable share of the Advance then being made. Each
wire transfer of an Advance to the Borrower shall be initiated by the
applicable Lender no later than 3:00 p.m. (New York city time) on the
applicable Funding Date.


 


Section
2.3                                   Optional
Changes in Facility Amount; Prepayments.


 


(a)                                  The
Borrower shall be entitled at its option, at any time prior to the occurrence
of an Early Termination Event, to reduce the Facility Amount in whole or in
part; provided that the Borrower shall give
prior written notice of such reduction to the Administrative Agent and each
Managing Agent as provided in paragraph (b) of this Section
2.3 and that any partial reduction of the Facility Amount shall be
in an amount equal to $3,000,000 with integral multiples of $500,000 above such
amount. Unless otherwise agreed by the Committed Lenders, the Commitment of
each Committed Lender shall be reduced ratably in proportion to such reduction
in the Facility Amount. Any request for a reduction or termination pursuant to
this Section 2.3 shall be irrevocable.


 


(b)                                 From
time to time during the Revolving Period the Borrower may prepay any portion or
all of the Advances Outstanding, other than with respect to Mandatory
Prepayments, 


 


30

















 


by delivering to the Administrative Agent and each
Managing Agent a Borrower Notice at least (i) in the case of any partial
prepayment (other than a partial prepayment during the month of December), at least one (1) Business Day prior to the
date of such repayment, (ii) in the case of any partial prepayment
during the month of December, at least five (5) Business Days prior to the
Payment Date occurring in November, and (iii) in the case of any prepayment in
full, at least thirty (30) Business Days prior to the date of such prepayment
(or, in each case, such later time as the applicable Lender, in its sole
discretion, may agree), specifying the date and amount of the prepayment and
certifying that, following such prepayment, the Borrower will be in compliance
with the terms of this Agreement; provided,
that no such reduction shall be given effect unless the Borrower has complied
with the terms of any Hedging Agreement requiring that one or more Hedge
Transactions be terminated in whole or in part as the result of any such
prepayment of the Advances Outstanding, and the Borrower has paid all Hedge
Breakage Costs owing to the relevant Hedge Counterparty for any such
termination. If any Borrower Notice relating to any prepayment is given, the
amount specified in such Borrower Notice shall be due and payable on the date
specified therein, together with accrued Interest to the payment date on the
amount prepaid and any Breakage Costs (including Hedge Breakage Costs) related
thereto. Any partial prepayment by the Borrower of Advances hereunder, other
than with respect to Mandatory Prepayments, shall be in a minimum amount of $500,000 with integral multiples of $100,000
above such amount. Any amount so prepaid may, subject to the terms and
conditions hereof, be reborrowed during the Revolving Period. A Borrower Notice
relating to any such prepayment shall be irrevocable when delivered.


 


Section
2.4                                   Principal
Repayments.


 


(a)                                  The
Advances Outstanding shall be due and payable in accordance with Section 2.8
on the Termination Date. In addition, Advances Outstanding shall be repaid as
and when necessary to cause the Borrowing Base Test to be met, in accordance
with Section 2.8 (each such payment, a “Mandatory
Prepayment”), and any amount so repaid may, subject to the terms and
conditions hereof, be reborrowed hereunder during the Revolving Period.


 


(b)                                 All
repayments of any Advance or any portion thereof shall be made together with
payment of (i) all Interest accrued and unpaid on the amount repaid to (but
excluding) the date of such repayment, (ii) any and all Breakage Costs, and
(iii) all Hedge Breakage Costs and any other amounts payable by the Borrower
under or with respect to any Hedging Agreement.


 


Section
2.5                                   The
Notes.


 


(a)                                  The
Advances made by the Lenders hereunder shall be evidenced by a duly executed
promissory note of the Borrower payable to each Managing Agent, on behalf of
the applicable Lenders in the related Lender Group, in substantially the form
of Exhibit B hereto (collectively, the “Notes”). The
Notes shall be dated the Effective Date and shall be in a maximum principal
amount equal to the applicable Lender Group’s Group Advance Limit, and shall
otherwise be duly completed.


 


(b)                                 Each
Managing Agent is hereby authorized to enter on a schedule attached to its
Notes the following notations (which may be computer generated) with respect to
each Advance made by each Lender in the applicable Lender Group:  (i) the date and principal amount thereof 


 


31

















 


and (ii) each payment and repayment of principal
thereof, and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded. The failure of a Managing Agent to make any
such notation on the schedule attached to the applicable Note shall not limit
or otherwise affect the obligation of the Borrower to repay the Advances in
accordance with their respective terms as set forth herein.


 


Section
2.6                                   Interest
Payments.


 


(a)                                  Interest
shall accrue on each Advance during each Settlement Period at the applicable
Interest Rate. The Borrower shall pay Interest on the unpaid principal amount
of each Advance for the period commencing on and including the Funding Date of
such Advance until but excluding the date that such Advance shall be paid in
full. Interest shall accrue during each Settlement Period and be payable on the
Advances Outstanding on each Payment Date, unless earlier paid pursuant to (i)
a prepayment in accordance with Section 2.3(b)
or (ii) a repayment in accordance with Section 2.4(b).


 


(b)                                 Each
Managing Agent shall determine (in accordance with information provided by the
relevant CP Lender and/or Committed Lenders in the related Lender Group, as
applicable) its estimate of the Interest (including unpaid Interest, if any due
and payable on a prior Payment Date) to be paid to the Lenders in the
applicable Lender Group on each Payment Date for the related Settlement Period
and shall advise the Administrative Agent and the Servicer, on behalf of the
Borrower, thereof three (3) Business Days prior to each Payment Date. In the
event that any Managing Agent’s, CP Lender’s or Committed Lender’s, as applicable,
estimate of the Interest payable for a related Settlement Period is different
from the actual amount of Interest for such Settlement Period, the Managing
Agent shall increase or decrease its estimate of Interest for the next
succeeding Settlement Period by the amount of such difference, plus Interest
thereon, if applicable. Failure to set aside any amount so accrued shall not
relieve the Borrower or the Servicer on behalf of the Borrower of its
obligation to remit or cause the Servicer to remit Collections to the
Administrative Agent with respect to such accrued amount as and to the extent
provided in Section 2.8.


 


(c)                                  If
any Managing Agent, on behalf of the applicable Lenders, shall notify the
Administrative Agent that a Eurodollar Disruption Event as described in clause
(a) of the definition of “Eurodollar Disruption Event” has occurred, the
Administrative Agent shall in turn so notify the Borrower, whereupon all
Advances in respect of which Interest accrues at the LIBO Rate shall
immediately be converted into Advances in respect of which Interest accrues at
the Base Rate.


 


(d)                                 Anything
in this Agreement or the other Transaction Documents to the contrary
notwithstanding, if at any time the rate of interest payable by any Person
under this Agreement and the Transaction Documents exceeds the highest rate of
interest permissible under Applicable Law (the “Maximum Lawful Rate”), then, so
long as the Maximum Lawful Rate would be exceeded, the rate of interest under
this Agreement and the Transaction Documents shall be equal to the Maximum
Lawful Rate. If at any time thereafter the rate of interest payable under this
Agreement and the Transaction Documents is less than the Maximum Lawful Rate,
such Person shall continue to pay interest under this Agreement and the
Transaction Documents at the Maximum Lawful Rate until such time as the total
interest received from such Person is equal to 


 


32

















 


the total interest that would have been received had
Applicable Law not limited the interest rate payable under this Agreement and
the Transaction Documents. In no event shall the total interest received by a
Lender under this Agreement and the Transaction Documents exceed the amount
that such Lender could lawfully have received, had the interest due under this
Agreement and the Transaction Documents been calculated since the Closing Date
at the Maximum Lawful Rate.


 


Section
2.7                                   Fees.


 


(a)                                  The
Borrower shall pay to the Administrative Agent from the Collection Account on
each Payment Date, monthly in arrears in accordance with Section
2.8, the Program Fee and Liquidity Commitment Fee.


 


(b)                                 The
Borrower shall pay to the Servicer from the Collection Account on each Payment
Date, monthly in arrears in accordance with Section
2.8, the Servicing Fee.


 


(c)                                  The
Backup Servicer shall be entitled to receive from the Collection Account on
each Payment Date, monthly in arrears in accordance with Section
2.8, the Backup Servicing Fee.


 


(d)                                 The
Collateral Custodian shall be entitled to receive from the Collection Account
on each Payment Date, monthly in arrears in accordance with Section 2.8, the Collateral Custodian Fee.


 


(e)                                  The
Borrower shall pay to each Managing Agent, on the Effective Date, the renewal
fee agreed to between the Borrower and such Managing Agent (net of any amounts
previously paid) in immediately available funds.


 


Section
2.8                                   Settlement
Procedures.


 


On each Payment Date, the
Servicer on behalf of the Borrower shall pay for receipt by the applicable
Lender 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 Agreement
during such Settlement Period (the sum of such amounts described in clauses
(i), (ii) and (iii), minus any amounts required to be deposited to the Revolver
Loan 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 that Hedge Counterparty under its
respective Hedging Agreement in respect of any Hedge Transaction(s), for the
payment thereof, but excluding, to the extent the Hedge Counterparty is not the
same Person as the Administrative Agent, any Swap Breakage and Indemnity
Amounts;


 


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


 


33

















 


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


 


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


 


(v)                                 FIFTH,
to the Servicer, in an amount equal to (A) if the Servicer is Gladstone
Management Corporation or any of its Affiliates, its accrued and unpaid
Servicing Fees to the end of the preceding Settlement Period, up to the Servicing
Fee Limit Amount for such Settlement Period, for the payment thereof and (B)
otherwise, its accrued and unpaid Servicing Fees to the end of the preceding
Settlement Period for the payment thereof;


 


(vi)                              SIXTH,
to the Administrative Agent for payment to each Managing Agent, on behalf of
the related Lenders, in an amount equal to any accrued and unpaid Interest,
Program Fee and Liquidity Commitment Fee for such Payment Date;


 


(vii)                           SEVENTH, to the
Administrative Agent for payment to each Managing Agent, on behalf of the
related Lenders, an amount equal to the excess, if any, of Advances Outstanding
over the lesser of (i) the Borrowing Base or (ii) the Facility Amount, together
with the amount of Breakage Costs incurred by the applicable Lenders in connection
with any such payment (as such Breakage Costs are notified to the Borrower by
the applicable Lender(s));


 


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


 


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


 


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


 


(xi)                                ELEVENTH,
to the Administrative Agent, all other amounts 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 an amount equal to (A) if the Servicer is Gladstone
Management Corporation or any of its Affiliates, its accrued and unpaid
Servicing Fees to the end of the preceding Settlement Period not otherwise paid
pursuant to priority FIFTH above; and


 


34

















 


(xiii)                          THIRTEENTH, all remaining
amounts to the Borrower


 


Section
2.9                                   Collections
and Allocations.


 


(a)                                  The
Borrower or the Servicer on behalf of the Borrower shall promptly (but in no
event later than two (2) Business Days after the receipt thereof) identify any
Collections received by it as being on account of Interest Collections or
Principal Collections and deposit all such Interest Collections or Principal Collections
received directly by it into the Collection Account. The Servicer on behalf of
the Borrower shall make such deposits or payments on the date indicated by wire
transfer, in immediately available funds.


 


(b)                                 Until
the occurrence of an Early Termination Event, to the extent there are
uninvested amounts deposited in the Collection Account, all amounts shall be
invested in Permitted Investments selected by the Servicer on behalf of the
Borrower that mature no later than the Business Day immediately preceding the
next Payment Date; from and after the occurrence of an Early Termination Event,
to the extent there are uninvested amounts deposited in the Collection Account,
all amounts may be invested in Permitted Investments selected by the
Administrative Agent that mature no later than the next Business Day. Any
earnings (and losses) thereon shall be for the account of the Servicer on
behalf of the Borrower.


 


Section
2.10                            Payments,
Computations, Etc.


 


(a)                                  Unless
otherwise expressly provided herein, all amounts to be paid or deposited by the
Borrower or the Servicer on behalf of the Borrower hereunder shall be paid or
deposited in accordance with the terms hereof no later than 10:00 a.m. (New
York City time) on the day when due in lawful money of the United States in
immediately available funds to the Agent’s Account. The Borrower shall, to the
extent permitted by law, pay to the Secured Parties interest on all amounts not
paid or deposited when due hereunder at 2.0% per annum above the Base Rate,
payable on demand; provided, however, that such interest rate shall not at any
time exceed the Maximum Lawful Rate. All computations of interest and all
computations of the Interest Rate and other fees hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
but excluding the last day) elapsed.


 


(b)                                 Whenever
any payment hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of Interest, other interest or any fee payable hereunder, as the case may be.


 


(c)                                  All
payments hereunder shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all such payments shall not be less
than the amounts otherwise specified to be paid under this Agreement (after
withholding for or on account of any Taxes).


 


Section
2.11                            Breakage
Costs.


 


The Borrower shall pay to the Administrative Agent for
the account of the applicable Managing Agent, on behalf of the related Lenders,
upon the request of any Managing Agent, any Lender or the Administrative Agent
on each Payment Date on which a prepayment is made, such 


 


35

















 


amount or amounts as
shall, without duplication, compensate the Lenders for any loss, cost or
expense (the “Breakage
Costs”) incurred by the Lenders (as reasonably determined by the
applicable Lender) as a result of any prepayment of an Advance (and interest
thereon) arising under this Agreement and the Liquidity Agreements. The
determination by any Managing Agent, on behalf of the related Lenders, of the
amount of any such loss or expense shall be set forth in a written notice to the
Borrower delivered by the applicable Lender prior to the date of such
prepayment in the case where notice of such prepayment is delivered to such
Lender in accordance with Section 2.3(b) or within two (2) Business Days
following such prepayment in the case where no such notice is delivered (in
which case, Breakage Costs shall include interest thereon from the date of such
prepayment) and shall be conclusive absent manifest error. No Breakage Costs
shall be payable to any CP Lender to the extent that (a) notice of such
prepayment shall have been delivered to such CP Lender in accordance with the
provisions of Section 2.3(b) or 7.7(c), (b) such prepayment is
made on a Payment Date, and (c) such prepayment does not exceed the lesser of
(i) 20% of the Advances made by such CP Lender and (ii) $20,000,000.


 


Section
2.12                            Increased
Costs; Capital Adequacy; Illegality.


 


(a)                                  If
after the date hereof, any Managing Agent, Lender, Liquidity Bank or any
Affiliate thereof (each of which, an “Affected Party”) shall be charged any fee, expense or
increased cost on account of the adoption of any applicable law, rule or
regulation (including any applicable law, rule or regulation regarding capital
adequacy), any accounting principles or any change in any of the foregoing, or
any change in the interpretation or administration thereof by any governmental
authority, the Financial Accounting Standards Board (“FASB”),
any central bank or any comparable agency charged with the interpretation or
administration thereof, or compliance with any request or directive (whether or
not having the force of law) of any such authority or agency (a “Regulatory Change”): 
(i) that subjects any Affected Party to any charge or withholding on or
with respect to any Transaction Document or an Affected Party’s obligations
under a Transaction Document, or on or with respect to the Advances, or changes
the basis of taxation of payments to any Affected Party of any amounts payable
under any Transaction Document (except for changes in the rate of tax on the overall
net income of an Affected Party or taxes excluded by Section 2.13) or
(ii) that imposes, modifies or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of an Affected Party, or credit extended by an
Affected Party pursuant to a Transaction Document or (iii) that imposes any
other condition the result of which is to increase the cost to an Affected
Party of performing its obligations under a Transaction Document, or to reduce
the rate of return on an Affected Party’s capital as a consequence of its
obligations under a Transaction Document, or to reduce the amount of any sum
received or receivable by an Affected Party under a Transaction Document or to
require any payment calculated by reference to the amount of interests or loans
held or interest received by it, then, upon demand by the applicable Managing
Agent, Borrower shall pay to the Administrative Agent, for payment to the
applicable Managing Agent for the benefit of the relevant Affected Party, such
amounts charged to such Affected Party or such amounts to otherwise compensate
such Affected Party for such increased cost or such reduction.


 


(b)                                 If
as a result of any event or circumstance similar to those described in clause (a) of this Section
2.12, an Affected Party is required to compensate a bank or other
financial 


 


36

















 


institution providing liquidity support, credit
enhancement or other similar support to such Affected Party in connection with
this Agreement or the funding or maintenance of Advances hereunder, then within
ten days after demand by such Affected Party, the Borrower shall pay to such
Affected Party such additional amount or amounts as may be necessary to
reimburse such Affected Party for any such amounts paid by it.


 


(c)                                  In
determining any amount provided for in this section, the Affected Party may use
any reasonable averaging and attribution methods. Any Affected Party making a
claim under this section shall submit to the Borrower a certificate as to such
additional or increased cost or reduction, which certificate shall calculate in
reasonable detail any such charges and shall be conclusive absent demonstrable
error.


 


Section
2.13                            Taxes.


 


(a)                                  All
payments made by the Borrower in respect of any Advance and all payments made
by the Borrower under this Agreement will be made free and clear of and without
deduction or withholding for or on account of any Taxes, unless such
withholding or deduction is required by law. In such event, the Borrower shall
pay to the appropriate taxing authority any such Taxes required to be deducted
or withheld and the amount payable to each Lender or the Administrative Agent
(as the case may be) will be increased (such increase, the “Additional Amount”)
such that every net payment made under this Agreement after deduction or
withholding for or on account of any Taxes (including, without limitation, any
Taxes on such increase) is not less than the amount that would have been paid
had no such deduction or withholding been deducted or withheld. The foregoing
obligation to pay Additional Amounts, however, will not apply with respect to,
and the term “Additional Amount” shall be deemed not to include net income or
franchise taxes imposed on a Lender, any Managing Agent or the Administrative
Agent, respectively, with respect to payments required to be made by the
Borrower or Servicer on behalf of the Borrower under this Agreement, by a
taxing jurisdiction in which such Lender, such Managing Agent or the
Administrative Agent is organized, conducts business or is paying taxes as of
the Effective Date (as the case may be). If a Lender, any Managing Agent or the
Administrative Agent pays any Taxes in respect of which the Borrower is
obligated to pay Additional Amounts under this Section
2.13(a), the Borrower shall promptly reimburse such Lender or
Administrative Agent in full.


 


(b)                                 The
Borrower will indemnify each Lender, each Managing Agent and the Administrative
Agent for the full amount of Taxes in respect of which the Borrower is required
to pay Additional Amounts (including, without limitation, any Taxes imposed by
any jurisdiction on such Additional Amounts) paid by such Lender, Managing
Agent or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto; provided, however,
that such Lender, Managing Agent or the Administrative Agent, as appropriate,
making a demand for indemnity payment, shall provide the Borrower, at its
address set forth under its name on the signature pages hereof, with a
certificate from the relevant taxing authority or from a Responsible Officer of
such Lender, Managing Agent or the Administrative Agent stating or otherwise
evidencing that such Lender, Managing Agent or the Administrative Agent has
made payment of such Taxes and will provide a copy of or extract from
documentation, if available, furnished by such taxing authority evidencing
assertion or payment of such Taxes. This indemnification shall be made within
ten 


 


37

















 


days from the date such Lender, Managing Agent or the
Administrative Agent (as the case may be) makes written demand therefor.


 


(c)                                  Within
30 days after the date of any payment by the Borrower of any Taxes, the
Borrower will furnish to the Administrative Agent, the Managing Agent or the
Lender, as applicable, at its address set forth under its name on the signature
pages hereof, appropriate evidence of payment thereof.


 


(d)                                 If
a Lender is not created or organized under the laws of the United States or a
political subdivision thereof, such Lender shall, to the extent that it may
then do so under Applicable Laws, deliver to the Borrower with a copy to the
Administrative Agent (i) within 15 days after the date hereof, or, if later,
the date on which such Lender becomes a Lender hereof two (or such other number
as may from time to time be prescribed by Applicable Laws) duly completed
copies of IRS Form W-8EC1 or Form W-8BEN for any successor forms or other
certificates or statements that may be required from time to time by the
relevant United States taxing authorities or Applicable Laws), as appropriate,
to permit the Borrower to make payments hereunder for the account of such
Lender, as the case may be, without deduction or withholding of United States
federal income or similar Taxes and (ii) upon the obsolescence of or after the
occurrence of any event requiring a change in, any form or certificate previously
delivered pursuant to this Section 2.13(d),
two copies (or such other number as may from time to time be prescribed by
Applicable Laws) of such additional, amended or successor forms, certificates
or statements as may be required under Applicable Laws to permit the Borrower
to make payments hereunder for the account of such Lender, without deduction or
withholding of United States federal income or similar Taxes.


 


(e)                                  For
any period with respect to which a Lender has failed to provide the Borrower
with the appropriate form, certificate or statement described in clause (d)
of this section (other than if such failure is due to a change in law occurring
after the date of this Agreement), such Lender, as the case may be, shall not
be entitled to indemnification under clauses (a) or (b) of this
section with respect to any Taxes.


 


(f)                                    Within
30 days of the written request of the Borrower therefor, the Administrative
Agent, the Managing Agent or the Lender, as appropriate, shall execute and
deliver to the Borrower such certificates, forms or other documents that can be
furnished consistent with the facts and that are reasonably necessary to assist
the Borrower in applying for refunds of Taxes remitted hereunder; provided, however,
that the Administrative Agent, the Managing Agent and the Lender shall not be
required to deliver such certificates forms or other documents if in their
respective sole discretion it is determined that the delivery of such
certificate, form or other document would have a material adverse effect on the
Administrative Agent, the Managing Agent or the Lender and provided  further,
however, that the Borrower shall reimburse
the Administrative Agent, the Managing Agent or the Lender for any reasonable
expenses incurred in the delivery of such certificate, form or other document.


 


(g)                                 If,
in connection with an agreement or other document providing liquidity support,
credit enhancement or other similar support to the Lenders in connection with
this Agreement or the funding or maintenance of Advances hereunder, the Lenders
are required to compensate a bank or other financial institution in respect of
Taxes under circumstances similar 


 


38

















 


to those described in this section then within ten
days after demand by the Lenders, the Borrower shall pay to the Lenders such
additional amount or amounts as may be necessary to reimburse the Lenders for
any amounts paid by them.


 


Section
2.14                            Revolver
Loan Funding.


 


(a)                                  Upon
the occurrence of a Revolver Loan Funding Date (i) each CP Lender shall make an
assignment to its related Committed Lenders of its Advances Outstanding in
respect of Revolver Loans at such time and (ii) each Committed Lender shall
make an advance (each, a “Revolver Loan Funding”) in an amount equal to
such Committed Lender’s ratable share of the aggregate outstanding unfunded
commitments under the Revolver Loans (collectively, the “Revolver Loan
Funding Amount”). Upon receipt of the proceeds of such Revolver Loan
Funding, the Administrative Agent shall deposit such funds into segregated
accounts (each, a “Revolver Loan Funding Account”), in its name,
referencing the name of such Committed Lender, and maintained at a Qualified
Institution. Each Committed Lender hereby grants to the Administrative Agent
full power and authority, on its behalf, to withdraw funds from the applicable
Revolver Loan Funding Account at the time of, and in connection with, the
funding of any Post-Termination Revolver Loan Fundings to be made by the
Borrower, and to deposit to the related Revolver Loan Funding Account any funds
received in respect of each relevant Committed Lender’s ratable share of
principal payments under Section 2.8 hereof, all in accordance with the
terms of and for the purposes set forth in this Agreement. The deposit of
monies in such Revolver Loan Funding Account by any Committed Lender shall not
constitute an Advance (and such Committed Lender shall not be entitled to
interest on such monies except as provided in clause (d) below) unless and until
(and then only to the extent that) such monies are used to make
Post-Termination Revolver Loan Fundings pursuant to the first sentence of
clause (b) below). On each Payment Date from and after the Revolver Loan
Funding Date, the Borrower shall pay the Administrative Agent, for the benefit
of the Committed Lenders, a fee (the “Revolver Loan Funding Fee”) equal
to 0.80%, multiplied by the weighted average amount on deposit in the Revolver
Loan Funding Accounts during the applicable Settlement Period, calculated on
the basis of a year of 360 days for the actual number of days elapsed.


 


(b)                                 From
and after the establishment of a Revolver Loan Funding Account with respect to
any Committed Lender, and until the earlier of (i) the reduction to zero of all
outstanding commitments in respect of Revolver Loans and (ii) three years
following the Revolver Loan Funding Date, all Post-Termination Revolver Loan
Fundings to be made by such Committed Lender hereunder shall be made by
withdrawing funds from the applicable 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 Lenders and (B)
the Revolver Loan Funding Account Shortfall and (ii) if a Revolver Loan Funding
Account Surplus exists, pay to the applicable Managing Agent, on behalf of each
Committed Lender, such Committed Lender’s ratable share of the Revolver Loan
Funding Account Surplus. Until the earlier of (i) the reduction to zero of all
outstanding commitments in respect of Revolver Loans and (ii) three years
following the Revolver Loan Funding Date, all remaining funds then held in such
Revolver Loan Funding Account (after giving effect to any Post-Termination
Revolver Loan Fundings to be made on such date) shall be paid by the
Administrative Agent to the applicable Managing Agent, on behalf of such
Committed Lender, and thereafter all payments made in respect of the 


 


39

















 


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


 


(c)                                  The
Administrative Agent may, its sole discretion, advance funds withdrawn from the
Revolver Loan Funding 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 solely for the purpose of funding advances requested by an
Obligor under a Revolver Loan.


 


(d)                                 Proceeds
in a Revolver Loan Funding Account shall be invested, at the written direction
of the applicable Committed Lender (or the applicable Managing Agent on its
behalf) to the applicable Revolver Loan Funding Account bank, only in
investments which constitute Permitted Investments. The investment earnings
with respect to a Revolver Loan Funding Account shall accrue as the Committed
Lender and Revolver Loan Funding Account bank shall agree. The Administrative
Agent shall direct the Revolver Loan Funding Account bank to pay all such
investment earnings from the relevant account directly to the applicable
Managing Agent, for the account of the applicable Committed Lender.


 


(e)                                  Notwithstanding anything herein to the
contrary, none of the Administrative Agent, the other Managing Agents, the
other Purchasers nor the Revolver Loan Funding Account bank shall have any
liability for any loss arising from any investment or reinvestment made by it
with respect to a Revolver Loan Funding Account in accordance with, and
pursuant to, the provisions hereof.


 


ARTICLE III


 


CONDITIONS OF EFFECTIVENESS
AND ADVANCES


 


Section
3.1                                   Conditions
to Effectiveness and Advances.


 


No Lender shall be obligated to make any Advance
hereunder from and after the Effective Date, nor shall any Lender, the
Administrative Agent or the Managing Agents be obligated to take, fulfill or
perform any other action hereunder, until the following conditions have been
satisfied, in the sole discretion of, or waived in writing by, the Managing
Agents:


 


(a)                                  This
Agreement and all other Transaction Documents and each Liquidity Agreement or
counterparts hereof or thereof shall have been duly executed by, and delivered
to, the parties hereto and thereto and the Administrative Agent shall have
received such other documents, instruments, agreements and legal opinions as
any Managing Agent shall reasonably request in connection with the transactions
contemplated by this Agreement, on or prior to the Effective Date, each in form
and substance satisfactory to the Administrative Agent.


 


(b)                                 The
Borrower shall have paid all fees required to be paid by it on the Effective Date,
including all fees required hereunder and under the Fee Letters to be paid as
of such date, and shall have reimbursed each Lender and the Administrative
Agent for all fees, costs and expenses related to the transactions contemplated
hereunder and under the other Transaction Documents and each Liquidity
Agreement, including the legal and other document preparation costs incurred by
any Lender and/or the Administrative Agent.


 


40

















 


(c)                                  Each
CP Lender whose commercial paper is being rated by one or more Rating Agency
shall have received, to the extent required under the terms of such CP Lender’s
program documents, the written confirmation of each such Rating Agency that the
execution and delivery of this Agreement will not result in a withdrawal or
downgrading of the then-current rating of such commercial paper by such Rating
Agency.


 


(d)                                 The
Required Equity Investment shall be maintained.


 


The Administrative Agent shall promptly notify each
Lender of the satisfaction or waiver of the conditions set forth above.


 


Section
3.2                                   Additional
Conditions Precedent to All Advances.


 


Each Advance shall be subject to the further
conditions precedent that:


 


(a)                                  On
the related Funding Date, the Borrower or the Servicer, as the case may be,
shall have certified in the related Borrower Notice that:


 


(i)                                     The
representations and warranties set forth in Sections
4.1 and 7.8 are true and correct
on and as of such date, before and after giving effect to such borrowing and to
the application of the proceeds therefrom, as though made on and as of such
date; and


 


(ii)                                  No
event has occurred, or would result from such Advance or from the application
of the proceeds therefrom, that constitutes an Early Termination Event.


 


(b)                                 The
Termination Date shall not have occurred;


 


(c)                                  Before
and after giving effect to such borrowing and to the application of proceeds
therefrom the Borrowing Base Test shall be satisfied, as calculated on such
date;


 


(d)                                 No
claim has been asserted or proceeding commenced challenging enforceability or
validity of any of the Loan Documents, excluding any instruments, certificates
or other documents relating to Loans that were the subject of prior Advances;


 


(e)                                  There
shall have been no Material Adverse Change with respect to the Borrower or the Servicer
since the preceding Advance; and


 


(f)                                    The
Servicer and Borrower shall have taken such other action, including delivery of
approvals, consents, opinions, documents, and instruments to the Managing
Agents as each may reasonably request.


 


41

















 


ARTICLE IV


 


REPRESENTATIONS AND
WARRANTIES


 


Section
4.1                                   Representations
and Warranties of the Borrower.


 


The Borrower represents and warrants as follows:


 


(a)                                  Organization and Good Standing. The Borrower is a
Delaware limited liability company duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its formation, and has full
power, authority and legal right to own or lease its properties and conduct its
business as such business is presently conducted.


 


(b)                                 Due Qualification. The Borrower is qualified to
do business as a limited liability company, is in good standing, and has
obtained all licenses and approvals as required under the laws of all
jurisdictions in which the ownership or lease of its property and or the
conduct of its business (other than the performance of its obligations
hereunder) requires such qualification, standing, license or approval, except
to the extent that the failure to so qualify, maintain such standing or be so
licensed or approved would not have an adverse effect on the interests of the
Lenders. The Borrower is qualified to do business as a limited liability
company, is in good standing, and has obtained all licenses and approvals as
required under the laws of all states in which the performance of its
obligations pursuant to this Agreement requires such qualification, standing,
license or approval and where the failure to qualify or obtain such license or
approval would have material adverse effect on its ability to perform
hereunder.


 


(c)                                  Due Authorization. The execution and delivery of
this Agreement and each Transaction Document to which the Borrower is a party
and the consummation of the transactions provided for herein and therein have
been duly authorized by the Borrower by all necessary action on the part of the
Borrower.


 


(d)                                 No Conflict. The execution and delivery of this
Agreement and each Transaction Document to which the Borrower is a party, the
performance by the Borrower of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof will not conflict with or
result in any breach of any of the terms and provisions of, and will not
constitute (with or without notice or lapse of time or both) a default under,
the Borrower’s limited liability company agreement or any material Contractual
Obligation of the Borrower.


 


(e)                                  No Violation. The execution and delivery of this
Agreement and each Transaction Document to which the Borrower is a party, the
performance of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof will not conflict with or violate,
in any material respect, any Applicable Law.


 


(f)                                    No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Borrower, threatened
against the Borrower, before any Governmental Authority (i) asserting the
invalidity of this Agreement or any Transaction Document to which the Borrower
is a party, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any Transaction Document to which the
Borrower is a party 


 


42

















 


or (iii) seeking any determination or ruling that
could reasonably be expected to have a Material Adverse Effect.


 


(g)                                 All Consents Required. All material approvals,
authorizations, consents, orders or other actions of any Person or of any
Governmental Authority (if any) required in connection with the due execution,
delivery and performance by the Borrower of this Agreement and any Transaction
Document to which the Borrower is a party, have been obtained.


 


(h)                                 Reports Accurate. All Monthly Reports (if
prepared by the Borrower, or to the extent that information contained therein
is supplied by the Borrower), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by the Borrower
to the Administrative Agent or a Lender in connection with this Agreement are
true, complete and accurate in all material respects.


 


(i)                                     Solvency. The transactions contemplated under
this Agreement and each Transaction Document to which the Borrower is a party
do not and will not render the Borrower not Solvent.


 


(j)                                     Selection
Procedures. No procedures believed by the Borrower to be materially adverse
to the interests of the Secured Parties were utilized by the Borrower in
identifying and/or selecting the Loans that are part of the Collateral.


 


(k)                                  Taxes. The Borrower has filed or caused to be
filed all Tax returns required to be filed by it. The Borrower has paid all
Taxes and all assessments made against it or any of its property (other than
any amount of Tax the validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrower), and no
Tax lien has been filed and, to the Borrower’s knowledge, no claim is being
asserted, with respect to any such Tax, fee or other charge.


 


(l)                                     Agreements Enforceable. This Agreement and each
Transaction Document to which the Borrower is a party constitute the legal,
valid and binding obligation of the Borrower enforceable against the Borrower
in accordance with their respective terms, except as such enforceability may be
limited by Insolvency Laws and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity).


 


(m)                               No Liens. The Collateral is owned by the Borrower
free and clear of any Liens except for Permitted Liens as provided herein, and
the Administrative Agent, as agent for the Secured Parties, has a valid and
perfected first priority security interest in the Collateral then existing or
thereafter arising, free and clear of any Liens except for Permitted Liens. No
effective financing statement or other instrument similar in effect covering
any Collateral is on file in any recording office except such as may be filed
in favor of the Administrative Agent relating to this Agreement or reflecting
the transfer of the Collateral from the Originator to the Borrower.


 


(n)                                 Security Interest. The Borrower has granted a
security interest (as defined in the UCC) to the Administrative Agent, as agent
for the Secured Parties, in the Collateral, which is enforceable in accordance
with Applicable Law. All filings (including, without limitation, such 


 


43

















 


UCC filings) as are necessary in any jurisdiction to
perfect the interest of the Administrative Agent as agent for the Secured
Parties, in the Collateral have been made.


 


(o)                                 Location of Offices. The Borrower’s jurisdiction
of organization, principal place of business and chief executive office and the
office where the Borrower keeps all the Records is located at the address of
the Borrower referred to in Section 12.2
hereof (or at such other locations as to which the notice and other
requirements specified in Section 5.1(m)
shall have been satisfied).


 


(p)                                 Tradenames. The Borrower has no trade names,
fictitious names, assumed names or “doing business as” names or other names
under which it has done or is doing business.


 


(q)                                 Purchase Agreement. The Purchase Agreement is the
only agreement pursuant to which the Borrower acquires Collateral (other than
the Hedge Collateral).


 


(r)                                    Value Given. The Borrower gave reasonably
equivalent value to the Originator in consideration for the transfer to the
Borrower of the Transferred Loans under the Purchase Agreement, no such
transfer was made for or on account of an antecedent debt owed by the
Originator to the Borrower, and no such transfer is voidable or subject to
avoidance under any Insolvency Law.


 


(s)                                  Accounting. The Borrower accounts for the
transfers to it from the Originator of interests in the Loans under the Purchase
Agreement as sales of such Loans in its books, records and financial
statements, in each case consistent with GAAP.


 


(t)                                    Separate Entity. The Borrower is operated as an
entity with assets and liabilities distinct from those of the Originator and
any Affiliates thereof (other than the Borrower), and the Borrower hereby
acknowledges that the Administrative Agent and the Lenders are entering into
the transactions contemplated by this Agreement in reliance upon the Borrower’s
identity as a separate legal entity from the Originator and from each such
other Affiliate of the Originator.


 


(u)                                 Investments. Except for Supplemental Interests or
Supplemental Interests that convert into an equity interest in any Person, the
Borrower does not own or hold directly or indirectly, any capital stock or
equity security of, or any equity interest in, any Person.


 


(v)                                 Business. Since its formation, the Borrower has
conducted no business other than the purchase and receipt of Loans and Related
Property from the Originator under the Purchase Agreement, the borrowing of
funds under this Agreement and such other activities as are incidental to the
foregoing.


 


(w)                               ERISA. The Borrower is in compliance with ERISA
and has not incurred and does not expect to incur any liabilities (except for
premium payments arising in the ordinary course of business) payable to the
Pension Benefit Guaranty Corporation under ERISA.


 


44

















 


(x)            Investment Company
Act.


 


(i)            The Borrower
represents and warrants that the Borrower is exempt and will remain exempt from
registration as an “investment company” within the meaning of the Investment
Company Act of 1940, as amended (the “1940
Act”).


 


(ii)           The business
and other activities of the Borrower, including but not limited to, the making
of the Advances by the Lenders, the application of the proceeds and repayment
thereof by the Borrower and the consummation of the transactions contemplated
by the Transaction Documents to which the Borrower is a party do not now and
will not at any time result in any violations, with respect to the Borrower, of
the provisions of the 1940 Act or any rules, regulations or orders issued by
the SEC thereunder.


 


(y)           Government
Regulations. The Borrower is not engaged in the business of
extending credit for the purpose of “purchasing” or “carrying” any “margin
security,” as such terms are defined in Regulation U of the Federal Reserve
Board as now and from time to time hereafter in effect (such securities being
referred to herein as “Margin Stock”).
The Borrower owns no Margin Stock, and no portion of the proceeds of any
Advance hereunder will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or
retiring any Indebtedness that was originally incurred to purchase or carry any
Margin Stock or for any other purpose that might cause any portion of such
proceeds to be considered a “purpose credit” within the meaning of Regulation
T, U or X of the Federal Reserve Board. The Borrower will not take or permit to
be taken any action that might cause any Related Document to violate any
regulation of the Federal Reserve Board.


 


(z)            Eligibility of
Loans. As of the Effective Date, (i) the Loan List and the information
contained in the Borrower Notice delivered pursuant to Sections 2.1 and 2.2
is an accurate and complete listing in all material respects of all the Loans
that are part of the Collateral as of the Effective Date, and the information
contained therein with respect to the identity of such Loans and the amounts
owing thereunder is true and correct in all material respects as of such date
and (ii) each such Loan is an Eligible Loan. On each Funding Date, the Borrower
shall be deemed to represent and warrant that any additional Loan referenced on
the related Borrower Notice delivered pursuant to Sections 2.1 and 2.2
is an Eligible Loan.


 


ARTICLE V


 


GENERAL COVENANTS OF THE BORROWER


 


Section 5.1            Covenants of the Borrower.


 


The Borrower hereby covenants that:


 


(a)           Compliance with
Laws. The Borrower will comply in all material respects with all Applicable
Laws, including those with respect to the Loans in the Collateral and any
Related Property.


 


(b)           Preservation of
Corporate Existence. The Borrower will preserve and maintain its
existence, rights, franchises and privileges in the jurisdiction of its
formation, and qualify and remain qualified in good standing in each
jurisdiction where the failure to maintain such


 


45

















 


existence, rights,
franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.


 


(c)           Security
Interests. Except as contemplated in this Agreement, the
Borrower will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Loan or Related
Property that is part of the Collateral, whether now existing or hereafter
transferred hereunder, or any interest therein. The Borrower will promptly
notify the Administrative Agent of the existence of any Lien on any Loan or
Related Property that is part of the Collateral and the Borrower shall defend
the right, title and interest of the Administrative Agent as agent for the
Secured Parties in, to and under any Loan and the Related Property that is part
of the Collateral, against all claims of third parties; provided, however,
that nothing in this Section 5.1(c) shall prevent or be deemed to prohibit
the Borrower from suffering to exist Permitted Liens upon any Loan or any
Related Property that is part of the Collateral.


 


(d)           Delivery of
Collections. The Borrower agrees to cause the delivery to the
Servicer promptly (but in no event later than two (2) Business Days after
receipt) all Collections (including any Deemed Collections) received by
Borrower in respect of the Loans that are part of the Collateral.


 


(e)           Activities of
Borrower. The Borrower shall not engage in any business or
activity of any kind, or enter into any transaction or indenture, mortgage,
instrument, agreement, contract, Loan or other undertaking, which is not
incidental to the transactions contemplated and authorized by this Agreement or
the Purchase Agreement.


 


(f)            Indebtedness. The Borrower
shall not create, incur, assume or suffer to exist any Indebtedness or other
liability whatsoever, except (i) obligations incurred under this Agreement,
under any Hedging Agreement required by Section 5.2(a), or the Purchase
Agreement, or (ii) liabilities incident to the maintenance of its existence in
good standing.


 


(g)           Guarantees. The Borrower
shall not become or remain liable, directly or indirectly, in connection with
any Indebtedness or other liability of any other Person, whether by guarantee,
endorsement (other than endorsements of negotiable instruments for deposit or
collection in the ordinary course of business), agreement to purchase or
repurchase, agreement to supply or advance funds, or otherwise.


 


(h)           Investments. The Borrower
shall not make or suffer to exist any loans or advances to, or extend any
credit to, or make any investments (by way of transfer of property,
contributions to capital, purchase of stock or securities or evidences of
indebtedness, acquisition of the business or assets, or otherwise) in, any
Person except for purchases of Loans and Supplemental Interests pursuant to the
Purchase Agreement, or for investments in Permitted Investments in accordance
with the terms of this Agreement.


 


(i)            Merger; Sales. The Borrower
shall not enter into any transaction of merger or consolidation, or liquidate
or dissolve itself (or suffer any liquidation or dissolution), or acquire or be
acquired by any Person, or convey, sell, loan or otherwise dispose of all or
substantially all of its property or business, except as provided for in this
Agreement.


 


46

















 


(j)            Distributions. The Borrower
may not declare or pay or make, directly or indirectly, any distribution
(whether in cash or other property) with respect to any Person’s equity
interest in the Borrower (collectively, a “Distribution”);
provided, however, if no Early Termination Event has occurred or
will occur as a result thereof, the Borrower may make Distributions.


 


(k)           Agreements. The Borrower
shall not amend or modify (i) the provisions of its limited liability company
agreement or (ii) the Purchase Agreement without the consent of the
Administrative Agent and prior written notice to each Managing Agent, or issue
any power of attorney except to the Administrative Agent or the Servicer.


 


(l)            Separate
Existence. The Borrower shall:


 


(i)            Maintain its
own deposit account or accounts, separate from those of any Affiliate, with
commercial banking institutions. The funds of the Borrower will not be diverted
to any other Person or for other than corporate uses of the Borrower.


 


(ii)           Ensure that, to
the extent that it shares the same persons as officers or other employees as
any of its Affiliates, the salaries of and the expenses related to providing
benefits to such officers or employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary and
benefit costs associated with all such common officers and employees.


 


(iii)          Ensure that, to
the extent that it jointly contracts with any of its Affiliates to do business
with vendors or service providers or to share overhead expenses, the costs
incurred in so doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs. To the extent that the
Borrower contracts or does business with vendors or service providers when the
goods and services provided are partially for the benefit of any other Person,
the costs incurred in so doing shall be fairly allocated to or among such
entities for whose benefit the goods and services are provided, and each such
entity shall bear its fair share of such costs. All material transactions
between Borrower and any of its Affiliates shall be only on an arm’s length
basis.


 


(iv)          Maintain a
principal executive and administrative office through which its business is
conducted separate from those of its Affiliates. To the extent that Borrower
and any of its Affiliates have offices in the same location, there shall be a
fair and appropriate allocation of overhead costs among them, and each such
entity shall bear its fair share of such expenses.


 


(v)           Conduct its
affairs strictly in accordance with its limited liability company agreement and
observe all necessary, appropriate and customary legal formalities, including,
but not limited to, holding all regular and special director’s meetings
appropriate to authorize all action, keeping separate and accurate records of
such meetings, passing all resolutions or consents necessary to authorize
actions taken or to be taken, and maintaining accurate and separate books,
records and accounts, including, but not limited to, payroll and transaction
accounts.


 


47

















 


(vi)          Take or refrain
from taking, as applicable, each of the activities specified or assumed in the
Williams Mullen Opinion, upon which the conclusions expressed therein are
based.


 


(vii)         Maintain the
effectiveness of, and continue to perform under the Purchase Agreement and the
Performance Guaranty, such that it does not amend, restate, supplement, cancel,
terminate or otherwise modify the Purchase Agreement or the Performance
Guaranty, or give any consent, waiver, directive or approval thereunder or
waive any default, action, omission or breach under the Purchase Agreement or
the Performance Guaranty or otherwise grant any indulgence thereunder, without
(in each case) the prior written consent of the Administrative Agent and each
Managing Agent.


 


(m)          Change of Name
or Jurisdiction of Borrower; Records. The Borrower (x) shall not
change its name or jurisdiction of organization, without 30 days’ prior written
notice to the Administrative Agent and (y) shall not move, or consent to the
Servicer or Collateral Custodian moving, the Loan Documents without 30 days’
prior written notice to the Administrative Agent and (z) will promptly take all
actions required of each relevant jurisdiction in order to continue the first
priority perfected security interest of the Administrative Agent as agent for the
Secured Parties (except for Permitted Liens) in all Collateral, and such other
actions as the Administrative Agent may reasonably request, including but not
limited to delivery of an Opinion of Counsel.


 


(n)           ERISA Matters. The Borrower
will not (a) engage or permit any ERISA Affiliate to engage in any prohibited
transaction for which an exemption is not available or has not previously been
obtained from the United States Department of Labor; (b) permit to exist any
accumulated funding deficiency, as defined in Section 302(a) of ERISA and
Section 412(a) of the Code, or funding deficiency with respect to any Benefit
Plan other than a Multiemployer Plan; (c) fail to make any payments to a
Multiemployer Plan that the Borrower or any ERISA Affiliate may be required to
make under the agreement relating to such Multiemployer Plan or any law
pertaining thereto; (d) terminate any Benefit Plan so as to result in any
liability; or (e) permit to exist any occurrence of any reportable event
described in Title IV of ERISA.


 


(o)           Originator
Collateral. With respect to each item of Collateral acquired
by the Borrower, the Borrower will (i) acquire such Collateral pursuant to and
in accordance with the terms of the Purchase Agreement, (ii) take all action
necessary to perfect, protect and more fully evidence the Borrower’s ownership
of such Collateral, including, without limitation, (A) filing and maintaining,
effective financing statements (Form UCC-1) naming the Originator as
seller/debtor and the Borrower as purchaser/creditor in all necessary or
appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices and (B) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate, including, without limitation, Assignments of Mortgage, and (iii)
take all additional action that the Administrative Agent may reasonably request
to perfect, protect and more fully evidence the respective interests of the
parties to this Agreement in the Collateral.


 


(p)           Transactions
with Affiliates. The Borrower will not enter into, or be a party
to, any transaction with any of its Affiliates, except (i) the transactions
permitted or contemplated by this Agreement, the Purchase Agreement and any
Hedging Agreements and (ii) other


 


48

















 


transactions (including,
without limitation, transactions related to the use of office space or computer
equipment or software by the Borrower to or from an Affiliate) (A) in the
ordinary course of business, (B) pursuant to the reasonable requirements of the
Borrower’s business, (C) upon fair and reasonable terms that are no less
favorable to the Borrower than could be obtained in a comparable arm’s-length
transaction with a Person not an Affiliate of the Borrower, and (D) not
inconsistent with the factual assumptions set forth in the Williams Mullen
Opinion, as such assumptions may be modified in any subsequent opinion letters
delivered to the Administrative Agent pursuant to Section 3.2 or
otherwise. It is understood that any compensation arrangement for any officer
or employee shall be permitted under clause (ii)(A) through (C)
above if such arrangement has been expressly approved by the managers of the
Borrower in accordance with the Borrower’s limited liability company agreement.


 


(q)           Change in the
Transaction Documents. The Borrower will not amend, modify, waive
or terminate any terms or conditions of any of the Transaction Documents to
which it is a party, without the prior written consent of Administrative Agent.


 


(r)            Credit and
Collection Policy. The Borrower will (a) comply in all material
respects with the Credit and Collection Policy in regard to each Loan and the
Related Property included in the Collateral, and (b) furnish to the
Administrative Agent and each Managing Agent, at least 20 days prior to its
proposed effective date, prompt notice of any material changes in the Credit
and Collection Policy. The Borrower will not agree or otherwise permit to occur
any material change in the Credit and Collection Policy, which change would
impair the collectibility of any Loan or otherwise adversely affect the
interests or remedies of the Administrative Agent or the Secured Parties under
this Agreement or any other Transaction Document, without the prior written
consent of the Administrative Agent (in its sole discretion).


 


(s)           Extension or
Amendment of Loans. The Borrower will not, except as otherwise
permitted in Section 7.4(a) extend, amend or otherwise modify, or permit
the Servicer on its behalf to extend, amend or otherwise modify, the terms of
any Loan.


 


(t)            Reporting. The Borrower
will furnish to the Administrative Agent and each Managing Agent:


 


(i)            as soon as
possible and in any event within two (2) Business Days after the occurrence of
each Early Termination Event and each Unmatured Termination Event, a written
statement, signed by a Responsible Officer, setting forth the details of such
event and the action that the Borrower proposes to take with respect thereto;


 


(ii)           promptly upon
request, such other information, documents, records or reports respecting the
Transferred Loans or the condition or operations, financial or otherwise, of
the Borrower or Originator as the Administrative Agent may from time to time
reasonably request in order to protect the interests of the Administrative
Agent or the Secured Parties under or as contemplated by this Agreement; and


 


(iii)          promptly, but
in no event later than two (2) Business Days after its receipt thereof, copies of
any and all notices, certificates, documents, or reports delivered to it by the
Originator under the Purchase Agreement.


 


49

















 


Section 5.2            Hedging Agreement.


 


(a)           If at any time
the aggregate Outstanding Loan Balances of Loans bearing fixed rates of
interest (“Fixed Rate Loans”)
exceeds 10% of the Aggregate Outstanding Loan Balance, the Borrower may, and
shall at the request of the Managing Agents, with respect only to such
Outstanding Loan Balance of Fixed Rate Loans aggregating in excess of 10% of
the Aggregate Outstanding Loan Balance, enter into and maintain a Hedge
Transaction with a Hedge Counterparty which Hedge Transaction shall: (i) be in
the form of interest rate caps or swaps having a notional amount and
amortization schedule as shall 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 LIBO Rate shall exceed a rate agreed upon
between the Managing Agents and the Borrower.


 


(b)           As additional
security hereunder, the Borrower hereby assigns to the Administrative Agent, as
agent for the Secured Parties, all right, title and interest of the Borrower in
any and all Hedging Agreements, any and all Hedge Transactions, and any and all
present and future amounts payable by a Hedge Counterparty to the Borrower
under or in connection with its respective Hedging Agreement and Hedge
Transaction(s) (collectively, the “Hedge
Collateral”), and grants a security interest to the Administrative
Agent, as agent for the Secured Parties, in the Hedge Collateral. The Borrower
acknowledges that, as a result of that assignment, the Borrower may not,
without the prior written consent of the Administrative Agent, exercise any
rights under any Hedging Agreement or Hedge Transaction, except for the
Borrower’s right under any Hedging Agreement to enter into Hedge Transactions
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 any of its
obligations under any Hedging Agreement or any Hedge Transaction, nor be
construed as requiring the consent of the Administrative Agent or any Secured
Party for the performance by the Borrower of any such obligations.


 


ARTICLE VI


 


SECURITY INTEREST


 


Section 6.1            Security Interest.


 


As collateral security for the prompt, complete and indefeasible
payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Obligations, the Borrower hereby assigns,
pledges and grants to the Administrative Agent, as agent for the Secured
Parties, a lien on and security interest in all of the Borrower’s right, title
and interest in, to and under (but none of its obligations under) the
Collateral, whether now existing or owned or hereafter arising or acquired by
the Borrower, and wherever located. The assignment under this Section 6.1
does not constitute and is not intended to result in a creation or an
assumption by the Administrative Agent, the Managing Agents or any of the
Secured Parties of any obligation of the Borrower or any other Person in
connection with any or all of the Collateral or under any agreement or
instrument relating thereto. Anything herein to the contrary notwithstanding,
(a) the Borrower shall remain liable under the Transferred Loans to the extent
set forth therein to perform all of its duties and obligations thereunder to
the same extent as if this Agreement had not been executed, (b) the exercise by
the Administrative Agent, as agent for


 


50

















 


the Secured Parties, of any of its rights in the Collateral shall not
release the Borrower from any of its duties or obligations under the
Collateral, and (c) none of the Administrative Agent, the Managing Agents or
any Secured Party shall have any obligations or liability under the Collateral
by reason of this Agreement, nor shall the Administrative Agent, the Managing
Agents or any Secured Party be obligated to perform any of the obligations or duties
of the Borrower thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.


 


Section 6.2            Remedies.


 


The Administrative Agent (for itself and on behalf of the other Secured
Parties) shall have all of the rights and remedies of a secured party under the
UCC and other Applicable Law. Upon the occurrence and during the continuance of
an Early Termination Event, the Administrative Agent or its designees may (i)
deliver a notice of exclusive control to the Collateral Custodian; (ii)
instruct the Collateral Custodian to deliver any or all of the Collateral to
the Administrative Agent or its designees and otherwise give all instructions
and entitlement orders to the Collateral Custodian regarding the Collateral;
(iii) require that the Borrower or the Collateral Custodian immediately take
action to liquidate the Collateral to pay amounts due and payable in respect of
the Obligations; (iv) sell or otherwise dispose of the Collateral in a
commercially reasonable manner, all without judicial process or proceedings;
(v) take control of the Proceeds of any such Collateral; (vi) exercise any
consensual or voting rights in respect of the Collateral; (vii) release, make
extensions, discharges, exchanges or substitutions for, or surrender all or any
part of the Collateral; (viii) enforce the Borrower’s rights and remedies under
the Custody Agreement with respect to the Collateral; (ix) institute and
prosecute legal and equitable proceedings to enforce collection of, or realize
upon, any of the Collateral; (x) remove from the Borrower’s, the Servicer’s,
the Collateral Custodian’s and their respective agents’ place of business all
books, records and documents relating to the Collateral; and/or (xi) endorse
the name of the Borrower upon any items of payment relating to the Collateral
or upon any proof of claim in bankruptcy against an account debtor. For
purposes of taking the actions described in subsections (i) through (xi)
of this Section 6.2 the Borrower hereby irrevocably appoints the Administrative
Agent as its attorney-in-fact (which appointment being coupled with an interest
is irrevocable while any of the Obligations remain unpaid), with power of
substitution, in the name of the Administrative Agent or in the name of the
Borrower or otherwise, for the use and benefit of the Administrative Agent, but
at the cost and expense of the Borrower and without notice to the Borrower;
provided that the Administrative Agent hereby agrees to exercise such power
only so long as an Early Termination Event shall be continuing.


 


Section 6.3            Release of Liens.


 


(a)           If (i) the
Borrowing Base Test is met, and (ii) no Early Termination Event or Unmatured
Termination Event has occurred and is continuing, at the same time as any Loan
that is part of the Collateral expires by its terms and all amounts in respect
thereof have been paid by the related Obligor and deposited in the Collection
Account, the Administrative Agent as agent for the Secured Parties will, to the
extent requested by the Borrower or the Servicer on behalf of the Borrower,
release its interest in such Loan and any Supplemental Interests related
thereto. In connection with any such release on or after the occurrence of the
above, the Administrative Agent, as agent for the Secured Parties, will execute
and deliver to the Borrower or the Servicer


 


51

















 


on behalf of the Borrower
any termination statements and any other releases and instruments as the
Borrower or the Servicer on behalf of the Borrower may reasonably request in
order to effect the release of such Loan and Supplemental Interest; provided,
that, the Administrative Agent as agent for the Secured Parties will
make no representation or warranty, express or implied, with respect to any
such Loan or Supplemental Interest in connection with such sale or transfer and
assignment.


 


(b)           Upon receipt by
the Administrative Agent of the proceeds of a repurchase of an Ineligible Loan
(as such term is defined in the Purchase Agreement) by the Originator pursuant
to the terms of Section 6.1 of the Purchase Agreement, the Administrative
Agent, as agent for the Secured Parties, shall be deemed to have automatically
released its interest in such Ineligible Loan and any Supplemental Interests
related thereto without any further action on its part. In connection with any
such release on or after the occurrence of such repurchase, the Administrative
Agent, as agent for the Secured Parties, will execute and deliver to the
Borrower or the Servicer on behalf of the Borrower any releases and instruments
as the Borrower or the Servicer on behalf of the Borrower may reasonably
request in order to effect the release of such Ineligible Loan and Supplemental
Interest.


 


(c)           Upon receipt by
the Administrative Agent of the proceeds of a purchase of a Transferred Loan by
the Servicer pursuant to the terms of Section 7.7, the Administrative
Agent, as agent for the Secured Parties, shall be deemed to have automatically
released its interest in such Transferred Loan and any Supplemental Interests
related thereto without any further action on its part. In connection with any
such release on or after the occurrence of such purchase, the Administrative
Agent, as agent for the Secured Parties, will execute and deliver to the
Borrower or the Servicer on behalf of the Borrower any releases and instruments
as the Borrower or the Servicer on behalf of the Borrower may reasonably
request in order to effect the release of such Transferred Loan and
Supplemental Interest.


 


Section 6.4            Assignment of the Purchase Agreement.


 


The Borrower hereby represents, warrants and confirms to the
Administrative Agent that the Borrower has assigned to the Administrative
Agent, for the ratable benefit of the Secured Parties hereunder, all of the
Borrower’s right and title to and interest in the Purchase Agreement. The
Borrower confirms that following an Early Termination Event the Administrative
Agent shall have the sole right to enforce the Borrower’s rights and remedies
under the Purchase Agreement for the benefit of the Secured Parties, but
without any obligation on the part of the Administrative Agent, the Secured
Parties or any of their respective Affiliates to perform any of the obligations
of the Borrower under the Purchase Agreement. The Borrower further confirms and
agrees that such assignment to the Administrative Agent shall terminate upon
the Collection Date; provided, however, that the rights of the
Administrative Agent and the Secured Parties pursuant to such assignment with
respect to rights and remedies in connection with any indemnities and any
breach of any representation, warranty or covenants made by the Originator
pursuant to the Purchase Agreement, which rights and remedies survive the
Termination of the Purchase Agreement, shall be continuing and shall survive
any termination of such assignment.


 


52

















 


ARTICLE VII


 


ADMINISTRATION AND SERVICING OF LOANS


 


Section 7.1            Appointment of the Servicer.


 


The Borrower hereby appoints the Servicer to service the Transferred
Loans and enforce its respective rights and interests in and under each
Transferred Loan in accordance with the terms and conditions of this Article
VII and to serve in such capacity until the termination of its
responsibilities pursuant to Section 7.18. The Servicer hereby agrees to
perform the duties and obligations with respect thereto set forth herein. The
Servicer and the Borrower hereby acknowledge that the Administrative Agent and
the Secured Parties are third party beneficiaries of the obligations undertaken
by the Servicer hereunder.


 


Section 7.2            Duties and Responsibilities of the Servicer.


 


(a)           The Servicer
shall conduct the servicing, administration and collection of the Transferred
Loans and shall take, or cause to be taken, all such actions as may be
necessary or advisable to service, administer and collect Transferred Loans
from time to time on behalf of the Borrower and as the Borrower’s agent.


 


(b)           The duties of
the Servicer, as the Borrower’s agent, shall include, without limitation:


 


(i)            preparing and
submitting of claims to, and post-billing liaison with, Obligors on Transferred
Loans;


 


(ii)           maintaining all
necessary Servicing Records with respect to the Transferred Loans and providing
such reports to the Borrower, the Managing Agents and the Administrative Agent
in respect of the servicing of the Transferred Loans (including information
relating to its performance under this Agreement) as may be required hereunder
or as the Borrower, any Managing Agent or the Administrative Agent may
reasonably request;


 


(iii)          maintaining and
implementing administrative and operating procedures (including, without
limitation, an ability to recreate Servicing Records evidencing the Transferred
Loans in the event of the destruction of the originals thereof) and keeping and
maintaining all documents, books, records and other information reasonably
necessary or advisable for the collection of the Transferred Loans (including,
without limitation, records adequate to permit the identification of each new
Transferred Loan and all Collections of and adjustments to each existing
Transferred Loan); provided, however, that any Successor Servicer
shall only be required to recreate the Servicing Records of each prior Servicer
to the extent such records have been delivered to it in a format reasonably
acceptable to such Successor Servicer;


 


(iv)          promptly
delivering to the Borrower, any Managing Agent or the Administrative Agent,
from time to time, such information and Servicing Records (including
information relating to its performance under this Agreement) as the


 


53

















 


Borrower,
such Managing Agent or the Administrative Agent from time to time reasonably
request;


 


(v)           identifying
each Transferred Loan clearly and unambiguously in its Servicing Records to
reflect that such Transferred Loan is owned by the Borrower and pledged to the
Administrative Agent;


 


(vi)          complying in
all material respects with the Credit and Collection Policy in regard to each
Transferred Loan;


 


(vii)         complying in
all material respects with all Applicable Laws with respect to it, its business
and properties and all Transferred Loans and Collections with respect thereto;


 


(viii)        preserving and
maintaining its existence, rights, licenses, franchises and privileges as a
corporation in the jurisdiction of its organization, and qualifying and
remaining qualified in good standing as a foreign corporation and qualifying to
and remaining authorized and licensed to perform obligations as Servicer
(including enforcement of collection of Transferred Loans on behalf of the
Borrower, Lenders, each Hedge Counterparty and the Collateral Custodian) in
each jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualification would materially adversely
affect (A) the rights or interests of the Borrower, Lenders, each Hedge
Counterparty and the Collateral Custodian in the Transferred Loans, (B) the
collectibility of any Transferred Loan, or (C) the ability of the Servicer to
perform its obligations hereunder; and


 


(ix)           notifying the
Borrower, each Managing Agent and the Administrative Agent of any material
action, suit, proceeding, dispute, offset deduction, defense or counterclaim
that is or is threatened to be (1) asserted by an Obligor with respect to any
Transferred Loan; or (2) reasonably expected to have a Material Adverse Effect;
and


 


(c)           The Borrower
and Servicer hereby acknowledge that the Secured Parties, the Administrative
Agent and the Collateral Custodian shall not have any obligation or liability
with respect to any Transferred Loans, nor shall any of them be obligated to
perform any of the obligations of the Servicer hereunder.


 


Section 7.3            Authorization of the Servicer.


 


(a)           Each of the
Borrower, each Managing Agent, on behalf of itself and the related Lenders, the
Administrative Agent and each Hedge Counterparty hereby authorizes the Servicer
(including any successor thereto) to take any and all reasonable steps in its
name and on its behalf necessary or desirable and not inconsistent with the
pledge of the Transferred Loans to the Lender, each Hedge Counterparty, and the
Collateral Custodian, in the determination of the Servicer, to collect all
amounts due under any and all Transferred Loans, including, without limitation,
endorsing any of their names on checks and other instruments representing
Collections, executing and delivering any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Transferred Loans and, after the
delinquency of any Transferred Loan and to the extent permitted


 


54

















 


under and in compliance with
Applicable Law, to commence proceedings with respect to enforcing payment
thereof, to the same extent as the Originator could have done if it had
continued to own such Loan. The Borrower shall furnish the Servicer (and any
successors thereto) with any powers of attorney and other documents necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder, and shall cooperate with the Servicer to the
fullest extent in order to ensure the collectibility of the Transferred Loans. In
no event shall the Servicer be entitled to make the Borrower, any Lender, any
Managing Agent, any Hedge Counterparty, the Collateral Custodian or the
Administrative Agent a party to any litigation without such party’s express
prior written consent, or to make the Borrower a party to any litigation (other
than any routine foreclosure or similar collection procedure) without the
Administrative Agent’s consent.


 


(b)           After an Early
Termination Event has occurred and is continuing, at the Administrative Agent’s
direction, the Servicer shall take such action as the Administrative Agent may
deem necessary or advisable to enforce collection of the Transferred Loans; provided,
however, that the Administrative Agent may, at any time that an Early
Termination Event has occurred and is continuing, notify any Obligor with
respect to any Transferred Loans of the assignment of such Transferred Loans to
the Administrative Agent and direct that payments of all amounts due or to
become due to the Borrower thereunder be made directly to the Administrative
Agent or any servicer, collection agent or lock-box or other account designated
by the Administrative Agent and, upon such notification and at the expense of
the Borrower, the Administrative Agent may enforce collection of any such
Transferred Loans and adjust, settle or compromise the amount or payment
thereof. The Administrative Agent shall give written notice to any Successor
Servicer of the Administrative Agent’s actions or directions pursuant to this Section
7.3(b), and no Successor Servicer shall take any actions pursuant to this Section
7.3(b) that are outside of its Credit and Collection Policy.


 


Section 7.4            Collection of Payments.


 


(a)           Collection
Efforts, Modification of Loans. The Servicer will make
reasonable efforts to collect all payments called for under the terms and
provisions of the Transferred Loans as and when the same become due, and will
follow those collection procedures which it follows with respect to all
comparable Loans that it services for itself or others. The Servicer may not waive,
modify or otherwise vary any provision of a Transferred Loan, except as may be
in accordance with the provisions of the Credit and Collection Policy,
including the waiver of any late payment charge or any other fees that may be
collected in the ordinary course of servicing any Loan included in the
Collateral.


 


(b)           Acceleration. The Servicer
shall accelerate the maturity of all or any Scheduled Payments under any
Transferred Loan under which a default under the terms thereof has occurred and
is continuing (after the lapse of any applicable grace period) promptly after
such Loan becomes a Defaulted Loan or such earlier or later time as is
consistent with the Credit and Collection Policy.


 


(c)           Taxes and other
Amounts. To the extent provided for in any Transferred Loan, the Servicer will
use its best efforts to collect all payments with respect to amounts due for
taxes, assessments and insurance premiums relating to such Transferred Loans or
the Related Property


 


55

















 


and remit such amounts to
the appropriate Governmental Authority or insurer on or prior to the date such
payments are due.


 


(d)           Payments to
Lock-Box Account: On or before the Closing Date, the Servicer shall
have instructed all Obligors to make all payments in respect of Loans included
in the Collateral to a Lock-Box or directly to a Lock-Box Account or the
Collection Account.


 


(e)           Establishment
of the Collection Account. The Borrower or the Servicer on its behalf
shall cause to be established, on or before the Closing Date, and maintained in
the name of the Borrower and assigned to the Administrative Agent as agent for
the Secured Parties, with an office or branch of a depository institution or
trust company organized under the laws of the United States or any one of the
States thereof or the District of Columbia (or any domestic branch of a foreign
bank) a segregated corporate trust account (the “Collection Account”) for the purpose of receiving
Collections from the Collateral; provided, however, that at all
times such depository institution or trust company shall be a depository
institution organized under the laws of the United States or any one of the
States thereof or the District of Columbia (or any domestic branch of a foreign
bank), (i) (A) that has either (1) a long-term unsecured debt rating of A- or
better by S&P and A-3 or better by Moody’s or (2) a short-term unsecured
debt rating or certificate of deposit rating of A-1 or better by S&P or P-1
or better by Moody’s, (B) the parent corporation of which has either (1) a
long-term unsecured debt rating of A- or better by S&P and A-3 or better by
Moody’s or (2) a short-term unsecured debt rating or certificate of deposit
rating of A-1 or better by S&P and P-1 or better by Moody’s or (C) is otherwise
acceptable to the Administrative Agent and (ii) whose deposits are insured by
the Federal Deposit Insurance Corporation (any such depository institution or
trust company, a “Qualified Institution”).


 


(f)            Adjustments. If (i) the
Servicer makes a deposit into the Collection Account in respect of a Collection
of a Loan in the Collateral and such Collection was received by the Servicer in
the form of a check that is not honored for any reason or (ii) the Servicer
makes a mistake with respect to the amount of any Collection and deposits an
amount that is less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount subsequently deposited into the
Collection Account to reflect such dishonored check or mistake. Any Scheduled
Payment in respect of which a dishonored check is received shall be deemed not
to have been paid.


 


Section 7.5            Servicer Advances.


 


For each Settlement Period, if the Servicer determines that any
Scheduled Payment (or portion thereof) that was due and payable pursuant to a
Loan included in the Collateral during such Settlement Period was not received
prior to the end of such Settlement Period, the Servicer may, but shall not be
obligated to, make an advance in an amount up to the amount of such delinquent
Scheduled Payment (or portion thereof) to the extent that the Servicer
reasonably expects to be reimbursed for such advance; in addition, if on any
day there are not sufficient funds on deposit in the Collection Account to pay
accrued Interest on any Advance the Settlement Period of which ends on such
day, the Servicer may make an advance in the amount necessary to pay such
Interest (in either case, any such advance, a “Servicer
Advance”). Notwithstanding the preceding sentence, any Successor Servicer
will not be obligated to make any Servicer Advances. The Servicer will deposit
any Servicer Advances into the Collection


 


56

















 


Account on or prior to 11:00 a.m. (New York City time) on the related
Payment Date, in immediately available funds.


 


Section 7.6            Realization Upon Defaulted Loans or Charged-Off Loans.


 


The Servicer will use reasonable efforts to repossess or otherwise
comparably convert the ownership of any Related Property with respect to a Defaulted
Loan or Charged-Off Loan and will act as sales and processing agent for Related
Property that it repossesses. The Servicer will follow the practices and
procedures set forth in the Credit and Collection Policy in order to realize
upon such Related Property. Without limiting the foregoing, the Servicer may
sell any such Related Property with respect any Defaulted Loan or Charged-Off
Loan to the Servicer or its Affiliates for a purchase price equal to the then
fair market value thereof; any such sale to be evidenced by a certificate of a
Responsible Officer of the Servicer delivered to the Administrative Agent
identifying the Defaulted Loan or Charged-Off Loan and the Related Property,
setting forth the sale price of the Related Property and certifying that such
sale price is the fair market value of such Related Property. In any case in
which any such Related Property has suffered damage, the Servicer will not
expend funds in connection with any repair or toward the repossession of such
Related Property unless it reasonably determines that such repair and/or
repossession will increase the Recoveries by an amount greater than the amount
of such expenses. The Servicer will remit to the Collection Account the
Recoveries received in connection with the sale or disposition of Related
Property with respect to a Defaulted Loan or Charged-Off Loan.


 


Section 7.7            Optional Repurchase of Transferred Loans.


 


(a)           The Servicer
may, at any time, notify the Borrower and the Administrative Agent that it is
requesting to purchase any Transferred Loan with respect to which the Borrower
or any Affiliate of the Borrower has received notice of the related Obligor’s
intention to prepay such Transferred Loan in full within a period of not more
than 60 days from the date of such notification.


 


(b)           The Servicer
may, at its sole option, with respect to any Transferred Loan that it
determines, in the exercise of its reasonable discretion, will likely become a
Defaulted Loan or a Charged-Off Loan, or that has become a Defaulted Loan or a
Charged-Off Loan, notify the Borrower and the Administrative Agent that it is
requesting to purchase each such Transferred Loan; provided, however, that the
Servicer shall not purchase more than six Transferred Loans pursuant to this paragraph
(b) during the term of this Agreement.


 


(c)           The Servicer
may request purchase of a Transferred Loan pursuant to paragraph (a) or (b)
above by providing five Business Days’ prior written notice to Borrower and the
Administrative Agent. The Borrower may agree to such purchase with the consent
of the Administrative Agent (which consent shall not be unreasonably withheld).
With respect to any such purchase of a Transferred Loan, the Servicer shall, on
the date of purchase, remit to the Borrower in immediately available funds an
amount equal to the Repurchase Price therefor. Upon each purchase of a
Transferred Loan by the Servicer pursuant to this Section 7.7, the
Borrower shall automatically and without further action be deemed to transfer,
assign and set-over to the Servicer all the right, title and interest of the
Borrower in, to and under such


 


57

















 


Transferred Loan and all
monies due or to become due with respect thereto, all proceeds thereof and all
rights to security for any such Transferred Loan, and all proceeds and products
of the foregoing, free and clear of any Lien created pursuant to this
Agreement, all of the Borrower’s right, title and interest in such Transferred
Loan, including any related Supplemental Interests. Each Lender shall receive
five Business Days’ notice of any repurchase that results in a prepayment of
all or a portion of any Advance.


 


(d)           The Borrower
shall, at the sole expense of the Servicer, execute such documents and
instruments of transfer as may be prepared by the Servicer and take such other
actions as shall reasonably be requested by the Servicer to effect the transfer
of a Transferred Loan pursuant to this Section 7.7.


 


Section 7.8            Representations and Warranties of the Servicer.


 


The initial Servicer, and any Successor Servicer (mutatis mutandis),
hereby represents and warrants as follows:


 


(a)           Organization
and Good Standing. The Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation with all requisite corporate power and authority to own its
properties and to conduct its business as presently conducted and to enter into
and perform its obligations pursuant to this Agreement.


 


(b)           Due
Qualification. The Servicer is qualified to do business as a
corporation, is in good standing, and has obtained all licenses and approvals
as required under the laws of all jurisdictions in which the ownership or lease
of its property and or the conduct of its business (other than the performance
of its obligations hereunder) requires such qualification, standing, license or
approval, except to the extent that the failure to so qualify, maintain such
standing or be so licensed or approved would not have an adverse effect on the
interests of the Borrower or of the Lenders. The Servicer is qualified to do
business as a corporation, is in good standing, and has obtained all licenses
and approvals as required under the laws of all states in which the performance
of its obligations pursuant to this Agreement requires such qualification,
standing, license or approval and where the failure to qualify or obtain such
license or approval would have material adverse effect on its ability to
perform hereunder.


 


(c)           Power and
Authority. The Servicer has the corporate power and authority
to execute and deliver this Agreement and to carry out its terms. The Servicer
has duly authorized the execution, delivery and performance of this Agreement
by all requisite corporate action.


 


(d)           No Violation. The consummation
of the transactions contemplated by, and the fulfillment of the terms of, this
Agreement by the Servicer (with or without notice or lapse of time) will not
(i) conflict with, result in any breach of any of the terms or provisions of,
or constitute a default under, the articles of incorporation or by-laws of the
Servicer, or any Contractual Obligation to which the Servicer is a party or by
which it or any of its property is bound, (ii) result in the creation or
imposition of any Adverse Claim upon any of its properties pursuant to the
terms of any such Contractual Obligation (other than this Agreement), or (iii)
violate any Applicable Law.


 


58

















 


(e)           No Consent. No consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any Governmental Authority having jurisdiction over the
Servicer or any of its properties is required to be obtained by or with respect
to the Servicer in order for the Servicer to enter into this Agreement or
perform its obligations hereunder.


 


(f)            Binding
Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, except as such enforceability may be limited by (i)
applicable Insolvency Laws and (ii) general principles of equity (whether
considered in a suit at law or in equity).


 


(g)           No Proceeding. There are no
proceedings or investigations pending or threatened against the Servicer,
before any Governmental Authority (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (iii) seeking any determination or ruling
that might (in the reasonable judgment of the Servicer) have a Material Adverse
Effect.


 


(h)           Reports
Accurate. All Servicer Certificates, Monthly Reports,
information, exhibits, financial statements, documents, books, Servicer Records
or other reports furnished or to be furnished by the Servicer to the
Administrative Agent or a Lender in connection with this Agreement are and will
be accurate, true and correct in all material respects.


 


Section 7.9            Covenants of the Servicer.


 


The Servicer hereby covenants that:


 


(a)           Compliance with
Law. The Servicer will comply in all material respects with all Applicable
Laws, including those with respect to the Transferred Loans and Related
Property and Loan Documents or any part thereof.


 


(b)           Preservation of
Corporate Existence. The Servicer will preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its formation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to maintain such existence,
rights, franchises, privileges and qualification has had, or could reasonably
be expected to have, a Material Adverse Effect.


 


(c)           Obligations
with Respect to Loans. The Servicer will duly fulfill and comply
with all material obligations on the part of the Borrower to be fulfilled or
complied with under or in connection with each Loan and will do nothing to
impair the rights of the Borrower or the Administrative Agent as agent for the
Secured Parties or of the Secured Parties in, to and under the Collateral.


 


(d)           Preservation of
Security Interest. The Servicer on behalf of the Borrower will
execute and file (or cause the execution and filing of) such financing and
continuation statements and any other documents that may be required by any law
or regulation of any Governmental Authority to preserve and protect fully the
interest of the Administrative Agent as agent for the Secured Parties in, to
and under the Collateral.


 


59

















 


(e)           No Bankruptcy
Petition. With respect to any CP Lender, prior to the date
that is one year and one day after the payment in full of all amounts owing in
respect of all outstanding commercial paper issued by such CP Lender and, with
respect to the Borrower, prior to the date that is one year and one day after
the Collection Date, the Servicer will not institute against the Borrower or
such CP Lender, or join any other Person in instituting against the Borrower or
such CP Lender, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 7.9(e)
will survive the termination of this Agreement.


 


(f)            Change of Name
or Jurisdiction; Records. The Servicer (i) shall not change its name
or jurisdiction of incorporation, without 30 days’ prior written notice to the
Borrower and the Administrative Agent, and (ii) shall not move, or consent to
the Collateral Custodian moving, the Loan Documents relating to the Transferred
Loans without 30 days’ prior written notice to the Borrower and the
Administrative Agent and, in either case, will promptly take all actions
required of each relevant jurisdiction in order to continue the first priority
perfected security interest of the Administrative Agent as agent for the
Secured Parties on all collateral, and such other actions as the Administrative
Agent may reasonably request, including but not limited to delivery of an
Opinion of Counsel.


 


(g)           Credit and
Collection Policy. The Servicer will (i) comply in all material
respects with the Credit and Collection Policy in regard to each Transferred
Loan and (ii) furnish to each Managing Agent and the Administrative Agent, at
least 20 days prior to its proposed effective date, prompt notice of any
material change in the Credit and Collection Policy. The Servicer will not
agree or otherwise permit to occur any material change in the Credit and
Collection Policy, which change would impair the collectibility of any
Transferred Loan or otherwise adversely affect the interests or remedies of the
Administrative Agent or the Secured Parties under this Agreement or any other
Transaction Document, without the prior written consent of the Administrative
Agent (in its sole discretion).


 


(h)           Early
Termination Events. The Servicer will furnish to each Managing Agent
and the Administrative Agent, as soon as possible and in any event within three
(3) Business Days after the occurrence of each Early Termination Event or
Unmatured Termination Event, a written statement setting forth the details of
such event and the action that the Servicer proposes to take with respect
thereto.


 


(i)            Extension or
Amendment of Loans. The Servicer will not, except as otherwise
permitted in Section 7.4(a), extend, amend or otherwise modify the terms
of any Transferred Loan.


 


(j)            Other. The Servicer
will furnish to the Borrower, any Managing Agent and the Administrative Agent
such other information, documents records or reports respecting the Transferred
Loans or the condition or operations, financial or otherwise of the Servicer as
the Borrower, such Managing Agent or the Administrative Agent may from time to
time reasonably request in order to protect the respective interests of the
Borrower, such Managing Agent, the Administrative Agent or the Secured Parties
under or as contemplated by this Agreement.


 


60

















 


Section 7.10         Payment of Certain Expenses by Servicer.


 


The Servicer will be required to pay all expenses incurred by it in
connection with its activities under this Agreement, including fees and
disbursements of legal counsel and independent accountants, Taxes imposed on
the Servicer, expenses incurred in connection with payments and reports
pursuant to this Agreement, and all other fees and expenses not expressly
stated under this Agreement for the account of the Borrower. In consideration
for the payment by the Borrower of the Servicing Fee, the Servicer will be
required to pay all reasonable fees and expenses owing to any bank or trust company
in connection with the maintenance of the Collection Account and the Backup
Servicer Fee pursuant to the Backup Servicing Agreement and the Collateral
Custodian Fee pursuant to the Custody Agreement. The Servicer shall be required
to pay such expenses for its own account and shall not be entitled to any
payment therefor other than the Servicing Fee.


 


Section 7.11         Reports.


 


(a)           Monthly Report. With respect
to each Determination Date and the related Settlement Period, the Servicer will
provide to the Borrower, the Backup Servicer, each Managing Agent and the
Administrative Agent, on the related Reporting Date, a monthly statement (a “Monthly Report”) signed by a Responsible
Officer of the Servicer and substantially in the form of Exhibit E. Except
as otherwise set forth in the Backup Servicing Agreement, the Backup Servicer
shall have no obligation to review any information in the Monthly Report.


 


(b)           Servicer
Certificate. Together with each Monthly Report, the Servicer
shall submit to the Borrower, the Backup Servicer, each Managing Agent and the
Administrative Agent a certificate (a “Servicer’s
Certificate”), signed by a Responsible Officer of the Servicer and
substantially in the form of Exhibit F. Except as otherwise set forth in
the Backup Servicing Agreement, the Backup Servicer shall have no obligation to
review any information in the Servicer Certificate.


 


(c)           Financial
Statements. The Borrower will submit to the Backup Servicer,
each Managing Agent and the Administrative Agent, promptly upon receipt
thereof, the quarterly and annual financial statements received from the
Originator pursuant to Section 5.1(a) of the Purchase Agreement. Except as
otherwise set forth in the Backup Servicing Agreement, the Backup Servicer
shall have no duty to review any of the financial information set forth in such
financial statements.


 


Section 7.12         Annual Statement as to Compliance.


 


The Servicer will provide to the Borrower, each Managing Agent, the
Administrative Agent, and the Backup Servicer, within 90 days following the end
of each fiscal year of the Servicer, commencing with the fiscal year ending on
September 30, 2003, an annual report signed by a Responsible Officer of the
Servicer certifying that (a) a review of the activities of the Servicer, and
the Servicer’s performance pursuant to this Agreement, for the period ending on
the last day of such fiscal year has been made under such Person’s supervision
and (b) the Servicer has performed or has caused to be performed in all
material respects all of its obligations under this Agreement throughout such
year and no Servicer Termination Event has


 


61

















 


occurred and is continuing (or if a Servicer Termination Event has so
occurred and is continuing, specifying each such event, the nature and status
thereof and the steps necessary to remedy such event, and, if a Servicer
Termination Event occurred during such year and no notice thereof has been
given to the Administrative Agent, specifying such Servicer Termination Event
and the steps taken to remedy such event).


 


Section 7.13         Limitation on Liability of the Servicer and Others.


 


Except as provided herein, neither the Servicer (including any
Successor Servicer) nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Borrower, the
Administrative Agent, the Lenders or any other Person for any action taken or
for refraining from the taking of any action expressly provided for in this
Agreement; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability that would
otherwise be imposed by reason of its willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of its willful misconduct
hereunder.


 


The Servicer shall not be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to its duties to service the
Transferred Loans in accordance with this Agreement that in its reasonable
opinion may involve it in any expense or liability. The Servicer may, in its
sole discretion, undertake any legal action relating to the servicing,
collection or administration of Transferred Loans and the Related Property that
it may reasonably deem necessary or appropriate for the benefit of the Borrower
and the Secured Parties with respect to this Agreement and the rights and
duties of the parties hereto and the respective interests of the Borrower and
the Secured Parties hereunder.


 


Section 7.14         The Servicer Not to Resign.


 


The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon its determination that (i) the performance of its
duties hereunder is or becomes impermissible under Applicable Law and (ii)
there is no reasonable action that it could take to make the performance of its
duties hereunder permissible under Applicable Law. Any such determination
permitting the resignation of the Servicer shall be evidenced as to clause
(i) above by an Opinion of Counsel to such effect delivered to the Borrower
and the Administrative Agent. No such resignation shall become effective until
a successor shall have assumed the responsibilities and obligations of the
Servicer in according with the terms of this Agreement.


 


Section 7.15         Access to Certain Documentation and Information Regarding the Loans.


 


The Borrower or the Servicer, as applicable, shall provide to the
Administrative Agent and each Managing Agent access to the Loan Documents and
all other documentation regarding the Loans included as part of the Collateral
and the Related Property, such access being afforded without charge but only
(i) upon reasonable prior notice, (ii) during normal business hours and (iii)
subject to the Servicer’s normal security and confidentiality procedures. From
and after (x) the Effective Date and periodically thereafter at the discretion
of the Administrative Agent (but in no event limited to fewer than twice per
calendar year), the Administrative Agent, on behalf of and with the input of
each Managing Agent, may review the Borrower’s and the Servicer’s


 


62

















 


collection and administration of the Loans in order to assess
compliance by the Servicer with the Servicer’s written policies and procedures,
as well as with this Agreement and may conduct an audit of the Transferred
Loans, Loan Documents and Records in conjunction with such a review, which
audit shall be reasonable in scope and shall be completed in a reasonable
period of time and (y) the occurrence, and during the continuation of an Early
Termination Event, the Administrative Agent and each Managing Agent may review
the Borrower’s and the Servicer’s collection and administration of the
Transferred Loans in order to assess compliance by the Servicer with the
Servicer’s written policies and procedures, as well as with this Agreement,
which review shall not be limited in scope or frequency, nor restricted in
period. The Administrative Agent may also conduct an audit (as such term is
used in clause (x) of this Section 7.15) of the Transferred
Loans, Loan Documents and Records in conjunction with such a review. The
Borrower shall bear the cost of such reviews and audits.


 


Section 7.16         Merger or Consolidation of the Servicer.


 


The Servicer shall not consolidate with or merge into any other Person
or convey or transfer its properties and assets substantially as an entirety to
any Person and unless:


 


(i)            the Person
formed by such consolidation or into which the Servicer is merged or the Person
that acquires by conveyance or transfer the properties and assets of the
Servicer substantially as an entirety shall be, if the Servicer is not the
surviving entity, organized and existing under the laws of the United States or
any State or the District of Columbia and shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Borrower and the
Administrative Agent in form satisfactory to the Borrower and the
Administrative Agent, the performance of every covenant and obligation of the
Servicer hereunder (to the extent that any right, covenant or obligation of the
Servicer, as applicable hereunder, is inapplicable to the successor entity,
such successor entity shall be subject to such covenant or obligation, or
benefit from such right, as would apply, to the extent practicable, to such
successor entity);


 


(ii)           the Servicer
shall have delivered to the Borrower and the Administrative Agent an Officer’s
Certificate that such consolidation, merger, conveyance or transfer and such
supplemental agreement comply with this Section 7.16 and that all
conditions precedent herein provided for relating to such transaction have been
complied with and an Opinion of Counsel that such supplemental agreement is
legal, valid and binding with respect to the successor entity and that the
entity surviving such consolidation, conveyance or transfer is organized and
existing under the laws of the United States or any State or the District of
Columbia. The Borrower and the Administrative Agent shall receive prompt
written notice of such merger or consolidation of the Servicer; and


 


(iii)          after giving
effect thereto, no Early Termination Event, Unmatured Termination Event or
Servicer Termination Event shall have occurred.


 


Section 7.17         Identification of Records.


 


The Servicer shall clearly and unambiguously identify each Loan that is
part of the Collateral and the Related Property in its computer or other
records to reflect that the interest in


 


63

















 


such Loans and Related Property have been transferred to and are owned
by the Borrower and that the Administrative Agent has the interest therein
granted by Borrower pursuant to this Agreement.


 


Section 7.18         Servicer Termination Events.


 


(a)           If any one of
the following events (a “Servicer Termination
Event”) shall occur and be continuing on any day:


 


(i)            any failure by
the Servicer to make any payment, transfer or deposit as required by this
Agreement;


 


(ii)           any failure by
the Servicer to give instructions or notice to the Borrower, any Managing Agent
and/or the Administrative Agent as required by this Agreement or to deliver any
Required Reports hereunder on or before the date occurring two Business Days
after the date such instructions, notice or report is required to be made or
given, as the case may be, under the terms of this Agreement;


 


(iii)          any failure on
the part of the Servicer duly to observe or perform in any material respect any
other covenants or agreements of the Servicer set forth in this Agreement or
any other Transaction Document to which it is a party as Servicer that
continues unremedied for a period of five (5) days after the first to occur of
(i) the date on which written notice of such failure requiring the same to be
remedied shall have been given to the Servicer by the Administrative Agent, any
Managing Agent or the Borrower and (ii) the date on which the Servicer becomes
or should have become aware thereof;


 


(iv)          any
representation, warranty or certification made by the Servicer in this
Agreement or in any certificate delivered pursuant to this Agreement shall
prove to have been false or incorrect in any material respect when made;


 


(v)           the Servicer
shall fail to service the Transferred Loans in accordance with the Credit and
Collection Policy;


 


(vi)          an Insolvency
Event shall occur with respect to the Servicer;


 


(vii)         the Servicer
agrees to materially alter the Credit and Collection Policy without the prior
written consent of the Administrative Agent;


 


(viii)        any financial
or asset information reasonably requested by the Administrative Agent or any
Managing Agent as provided herein is not provided as requested within five (5)
Business Days (or such longer period as the Administrative Agent or such
Managing Agent may consent to) of the receipt by the Servicer of such request;


 


(ix)           the rendering
against the Servicer of a final judgment, decree or order for the payment of
money in excess of U.S. $5,000,000 (individually or in the aggregate) and the
continuance of such judgment, decree or order unsatisfied and in effect for any
period of 30 consecutive days without a stay of execution;


 


64

















 


(x)            the failure of
the Performance Guarantor to make any payment due with respect to aggregate
recourse debt or other obligations with an aggregate principal amount exceeding
U.S. $1,000,000 or the occurrence of any event or condition that would permit
acceleration of such recourse debt or other obligations if such event or
condition has not been waived;


 


(xi)           any Guarantor
Event of Default shall occur;


 


(xii)          any Material
Adverse Change occurs in the financial condition of the Servicer or the
collectibility of the Transferred Loans; or


 


(xiii)         any
Change-in-Control of the Servicer is made without the prior written consent of
the Borrower and the Administrative Agent;


 


then, notwithstanding anything herein to the contrary, so long as any
such Servicer Termination Events shall not have been remedied at the expiration
of any applicable cure period, the Administrative Agent may, or at the
direction of the Required Lenders shall, by written notice to the Servicer and
the Backup Servicer (a “Termination Notice”),
subject to the provisions of Section 7.19, terminate all of the rights
and obligations of the Servicer as Servicer under this Agreement. The Borrower
shall pay all reasonable set-up and conversion costs associated with the
transfer of servicing rights to the Successor Servicer.


 


Section 7.19         Appointment of Successor Servicer.


 


(a)           On and after
the receipt by the Servicer of a Termination Notice pursuant to Section 7.18,
the Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Termination Notice or otherwise
specified by the Administrative Agent, to the Servicer and the Backup Servicer
in writing. The Administrative Agent may at the time described in the
immediately preceding sentence in its sole discretion, appoint the Backup
Servicer as the Servicer hereunder, and the Backup Servicer shall within seven
(7) days assume all obligations of the Servicer hereunder, and all authority
and power of the Servicer under this Agreement shall pass to and be vested in
the Backup Servicer; provided, however, that any Successor
Servicer (including, without limitation, the Backup Servicer) shall not (i) be
responsible or liable for any past actions or omissions of the outgoing
Servicer or (ii) be obligated to make Servicer Advances. The Administrative
Agent may appoint (i) the Backup Servicer as successor servicer, or (ii) if the
Administrative Agent does not so appoint the Backup Servicer, there is no
Backup Servicer or the Backup Servicer is unwilling or unable to assume such
obligations on such date, the Administrative Agent shall as promptly as
possible appoint an alternate successor servicer to act as Servicer (in each
such case, the “Successor Servicer”),
and such Successor Servicer shall accept its appointment by a written
assumption in a form acceptable to the Administrative Agent.


 


(b)           Upon its
appointment as Successor Servicer, the Backup Servicer (subject to Section
7.19(a)) or the alternate successor servicer, as applicable, shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement, shall assume all Servicing Duties hereunder and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof, and all references
in


 


65

















 


this Agreement to the
Servicer shall be deemed to refer to the Backup Servicer or the Successor
Servicer, as applicable. Any Successor Servicer shall be entitled, with the
prior consent of the Administrative Agent, to appoint agents to provide some or
all of its duties hereunder, provided that no such appointment shall relieve
such Successor Servicer of the duties and obligations of the Successor Servicer
pursuant to the terms hereof and that any such subcontract may be terminated
upon the occurrence of a Servicer Termination Event.


 


(c)           All authority
and power granted to the Servicer under this Agreement shall automatically
cease and terminate upon termination of the Servicer under this Agreement and
shall pass to and be vested in the Successor Servicer, and, without limitation,
the Successor Servicer is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Servicer agrees to cooperate with the Successor Servicer
in effecting the termination of the responsibilities and rights of the Servicer
to conduct servicing on the Collateral.


 


(d)           Upon the Backup
Servicer receiving notice that it is required to serve as the Servicer
hereunder pursuant to the foregoing provisions of this Section 7.19, the
Backup Servicer will promptly begin the transition to its role as Servicer.


 


(e)           The Backup
Servicer shall be entitled to receive its Transition Costs incurred in
transitioning to Servicer.


 


Section 7.20         Market Servicing Fee.


 


Notwithstanding anything to the contrary herein, in the event that a
Successor Servicer is appointed Servicer, the Servicing Fee shall equal the
market rate for comparable servicing duties to be fixed upon the date of such
appointment by such Successor Servicer with the consent of the Administrative
Agent (the “Market Servicing Fee”).


 


ARTICLE VIII


 


EARLY TERMINATION EVENTS


 


Section 8.1            Early Termination Events.


 


If any of the following events (each, an “Early Termination Event”) shall occur and be continuing:


 


(a)           the Borrower
shall default in the payment of any amount required to be made under the terms
of this Agreement; or


 


(b)           the Borrowing
Base Test shall not be met, and such failure shall continue for more than two
(2) Business Days; or


 


(c)           (i) the
Borrower shall fail to perform or observe in any material respect any other
covenant or other agreement of the Borrower set forth in this Agreement and any
other


 


66

















 


Transaction Document to
which it is a party, or (ii) the Originator shall fail to perform or observe in
any material respect any term, covenant or agreement of such Originator set
forth in any other Transaction Document to which it is a party, in each case
when such failure continues unremedied for more than five (5) days after the
first to occur of (i) the date on which written notice of such failure
requiring the same to be remedied shall have been given to such Person by the
Administrative Agent, any Managing Agent or the Collateral Custodian and (ii)
the date on which such Person becomes or should have become aware thereof; or


 


(d)           any
representation or warranty made or deemed made hereunder shall prove to be incorrect
in any material respect as of the time when the same shall have been made; or


 


(e)           an Insolvency
Event shall occur with respect to the Borrower or the Originator; or


 


(f)            a Servicer
Termination Event occurs; or


 


(g)           any
Change-in-Control of the Borrower or Originator occurs; or


 


(h)           the Borrower or
the Servicer defaults in making any payment required to be made under any
material agreement for borrowed money to which either is a party and such
default is not cured within the relevant cure period; or


 


(i)            the
Administrative Agent, as agent for the Secured Parties, shall fail for any
reason to have a valid and perfected first priority security interest in any of
the Collateral; or


 


(j)            (i) a final
judgment for the payment of money in excess of (A) $5,000,000 shall have been
rendered against the Originator or (B) $100,000 against the Borrower by a court
of competent jurisdiction and, if such judgment relates to the Originator, such
judgment, decree or order shall continue unsatisfied and in effect for any
period of 30 consecutive days without a stay of execution, or (ii) the
Originator or the Borrower, as the case may be, shall have made payments of
amounts in excess of $5,000,000 or $50,000, respectively, in settlement of any
litigation; or


 


(k)           the Borrower or
the Servicer agrees or consents to, or otherwise permits to occur, any
amendment, modification, change, supplement or recession of or to the Credit
and Collection Policy in whole or in part that could have a material adverse
effect upon the Transferred Loans or interest of any Lender, without the prior
written consent of the Administrative Agent; or


 


(l)            [Reserved]; or


 


(m)          on any
Determination Date, the Portfolio Yield does not equal or exceed 7.0% on and
such failure continues on the next succeeding Determination Date; or


 


(n)           the Rolling
Three-Month Default Ratio shall exceed 7.5%; or


 


(o)           the Rolling
Three-Month Charged-Off Ratio shall exceed 5.0%; or


 


(p)           the Borrower
shall become an “investment company” subject to registration under the 1940 Act;


 


67

















 


(q)           the business
and other activities of the Borrower or the Originator, including but not
limited to, the acceptance of the Advances by the Borrower made by the Lenders,
the application and use of the proceeds thereof by the Borrower and the
consummation and conduct of the transactions contemplated by the Transaction
Documents to which the Borrower or the Originator is a party result in a
violation by the Originator, the Borrower, or any other person or entity of the
1940 Act or the rules and regulations promulgated thereunder; or


 


(r)            on any
Determination Date, the Interest Coverage Ratio does not equal or exceed 150.0%
and such failure continues on the next succeeding Determination Date;


 


then, and in any such event, the Administrative Agent shall, at the
request, or may with the consent, of the Required Committed Lenders, by notice
to the Borrower declare the Termination Date to have occurred, without demand,
protest or future notice of any kind, all of which are hereby expressly waived
by the Borrower, and all Advances Outstanding and all other amounts owing by
the Borrower under this Agreement shall be accelerated and become immediately
due and payable, provided, that in the event that the Early Termination
Event described in subsection (e) herein has occurred, the Termination
Date shall automatically occur, without demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower. Upon its
receipt of written notice thereof, the Administrative Agent shall promptly
notify each Lender of the occurrence of any Early Termination Event.


 


ARTICLE IX


 


INDEMNIFICATION


 


Section 9.1            Indemnities by the Borrower.


 


(a)           Without
limiting any other rights that any such Person may have hereunder or under
Applicable Law, the Borrower hereby agrees to indemnify the Administrative
Agent, the Managing Agents, the Backup Servicer, any Successor Servicer, the
Collateral Custodian, any Secured Party or its assignee and each of their
respective Affiliates and officers, directors, employees, members and agents
thereof (collectively, the “Indemnified
Parties”), forthwith on demand, from and against any and all
damages, losses, claims, liabilities and related costs and expenses, including
reasonable attorneys’ fees and disbursements (all of the foregoing being
collectively referred to as “Indemnified
Amounts”) awarded against or incurred by, any such Indemnified Party
or other non-monetary damages of any such Indemnified Party any of them arising
out of or as a result of this Agreement, excluding, however, Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of any Indemnified Party. Without limiting the foregoing, the Borrower
shall indemnify the Indemnified Parties for Indemnified Amounts relating to or
resulting from:


 


(i)            any Loan
treated as or represented by the Borrower to be an Eligible Loan that is not at
the applicable time an Eligible Loan;


 


(ii)           reliance on any
representation or warranty made or deemed made by the Borrower, the Servicer
(or one of its Affiliates) or any of their respective officers under


 


68

















 


or
in connection with this Agreement, which shall have been false or incorrect in
any material respect when made or deemed made or delivered;


 


(iii)          the failure by
the Borrower or the Servicer (or one of its Affiliates) to comply with any
term, provision or covenant contained in this Agreement or any agreement
executed in connection with this Agreement, or with any Applicable Law with
respect to any Loan comprising a portion of the Collateral, or the
nonconformity of any Loan, the Related Property with any such Applicable Law or
any failure by the Originator, the Borrower or any Affiliate thereof to perform
its respective duties under the Loans included as a part of the Collateral;


 


(iv)          the failure to
vest and maintain vested in the Administrative Agent a first priority perfected
security interest in the Collateral;


 


(v)           the failure to
file, or any delay in filing, financing statements or other similar instruments
or documents under the UCC of any applicable jurisdiction or other Applicable
Laws with respect to any Collateral whether at the time of any Advance or at
any subsequent time and as required by the Transaction Documents;


 


(vi)          any dispute,
claim, offset or defense (other than the discharge in bankruptcy of the
Obligor) of the Obligor to the payment of any Loan included as part of the
Collateral that is, or is purported to be, an Eligible Loan (including, without
limitation, a defense based on the Loan not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its
terms);


 


(vii)         any failure of
the Borrower or the Servicer (if the Originator or one of its Affiliates) to
perform its duties or obligations in accordance with the provisions of this
Agreement or any failure by the Originator, the Borrower or any Affiliate
thereof to perform its respective duties under the Transferred Loans;


 


(viii)        any products
liability claim or personal injury or property damage suit or other similar or
related claim or action of whatever sort arising out of or in connection with
merchandise or services that are the subject of any Loan included as part of
the Collateral or the Related Property included as part of the Collateral;


 


(ix)           the failure by
Borrower to pay when due any Taxes for which the Borrower is liable, including
without limitation, sales, excise or personal property taxes payable in
connection with the Collateral;


 


(x)            any repayment
by the Administrative Agent, any Managing Agent or a Secured Party of any
amount previously distributed in reduction of Advances Outstanding or payment
of Interest or any other amount due hereunder or under any Hedging Agreement,
in each case which amount the Administrative Agent, such Managing Agent or a
Secured Party believes in good faith is required to be repaid.


 


(xi)           any
investigation, litigation or proceeding related to this Agreement or the use of
proceeds of Advances or in respect of any Loan included as part of the
Collateral or the Related Property included as part of the Collateral;


 


69

















 


(xii)          any failure by
the Borrower to give reasonably equivalent value to the Originator in
consideration for the transfer by the Originator to the Borrower of any
Transferred Loan or the Related Property or any attempt by any Person to void
or otherwise avoid any such transfer under any statutory provision or common
law or equitable action, including, without limitation, any provision of the
Bankruptcy Code, or


 


(xiii)         the failure of
the Borrower, the Originator or any of their respective agents or representatives
to remit to the Servicer or the Administrative Agent, Collections on the
Collateral remitted to the Borrower or any such agent or representative in
accordance with the terms hereof or the commingling by the Borrower or any
Affiliate of any collections.


 


(b)           Any amounts
subject to the indemnification provisions of this Section 9.1 shall be
paid by the Borrower to the applicable Indemnified Party within two (2)
Business Days following the Administrative Agent’s demand therefor.


 


(c)           If for any
reason the indemnification provided above in this Section 9.1 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then the Borrower, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and the Borrower,
on the other hand but also the relative fault of such Indemnified Party as well
as any other relevant equitable considerations.


 


(d)           The obligations
of the Borrower under this Section 9.1 shall survive the removal of the
Administrative Agent or any Managing Agent and the termination of this
Agreement.


 


(e)           The parties hereto
agree that the provisions of Section 9.1 shall not be interpreted to
provide recourse to the Borrower against loss by reason of the bankruptcy or
insolvency (or other credit condition) of, or default by, an Obligor on, any
Transferred Loan.


 


Section 9.2            Indemnities by the Servicer.


 


(a)           Without
limiting any other rights that any such Person may have hereunder or under
Applicable Law, the Servicer hereby agrees to indemnify each Indemnified Party,
forthwith on demand, from and against any and all Indemnified Amounts
(calculated without duplication of Indemnified Amounts paid by the Borrower
pursuant to Section 9.1 above) awarded against or incurred by any such
Indemnified Party by reason of any acts, omissions or alleged acts or omissions
of the Servicer, including, but not limited to (i) any representation or
warranty made by the Servicer under or in connection with any Transaction
Documents to which it is a party, any Monthly Report, Servicer’s Certificate or
any other information or report delivered by or on behalf of the Servicer
pursuant hereto, which shall have been false, incorrect or misleading in any
material respect when made or deemed made, (ii) the failure by the Servicer to
comply with any Applicable Law, (iii) the failure of the Servicer to comply
with its duties or obligations in accordance with the Agreement, or (iv) any
litigation, proceedings or investigation against the Servicer, excluding,
however, (a) Indemnified Amounts to the extent resulting from gross negligence
or willful misconduct on the part of such Indemnified Party, and (b) under any


 


70

















 


Federal, state or local
income or franchise taxes or any other Tax imposed on or measured by income (or
any interest or penalties with respect thereto or arising from a failure to
comply therewith) required to be paid by such Indemnified Party in connection
herewith to any taxing authority. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof. If the Servicer has made any indemnity payment pursuant to this Section
9.2 and such payment fully indemnified the recipient thereof and the
recipient thereafter collects any payments from others in respect of such
Indemnified Amounts, the recipient shall repay to the Servicer an amount equal
to the amount it has collected from others in respect of such indemnified
amounts.


 


(b)           If for any
reason the indemnification provided above in this Section 9.2 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then Servicer shall contribute to the amount paid or payable to
such Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party on the one hand and Servicer on the other
hand but also the relative fault of such Indemnified Party as well as any other
relevant equitable considerations.


 


(c)           The obligations
of the Servicer under this Section 9.2 shall survive the resignation or
removal of the Administrative Agent or any Managing Agents and the termination
of this Agreement.


 


(d)           The parties
hereto agree that the provisions of this Section 9.2 shall not be
interpreted to provide recourse to the Servicer against loss by reason of the
bankruptcy or insolvency (or other credit condition) of, or default by, related
Obligor on, any Transferred Loan.


 


(e)           Any
indemnification pursuant to this Section 9.2 shall not be payable from
the Collateral.


 


ARTICLE X


 


THE ADMINISTRATIVE AGENT AND THE MANAGING AGENTS


 


Section 10.1         Authorization and Action.


 


(a)           Each Secured
Party hereby designates and appoints DB as Administrative Agent hereunder, and
authorizes DB to take such actions as agent on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms of this
Agreement together with such powers as are reasonably incidental thereto. The
Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any
Secured Party, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities on the part of the Administrative Agent shall be
read into this Agreement or otherwise exist for the Administrative Agent. In
performing its functions and duties hereunder, the Administrative Agent shall
act solely as agent for the Secured Parties and does not assume nor shall be
deemed to have assumed any obligation or relationship of trust or agency with
or for the Borrower or any of its successors or assigns. The Administrative
Agent shall not be required to take any action that exposes the Administrative
Agent to personal


 


71

















 


liability or that is
contrary to this Agreement or Applicable Law. The appointment and authority of
the Administrative Agent hereunder shall terminate at the indefeasible payment
in full of the Obligations.


 


(b)           Each Lender
hereby designates and appoints the Managing Agent for such Lender’s Lender
Group as its Managing Agent hereunder, and authorizes such Managing Agent to
take such actions as agent on its behalf and to exercise such powers as are
delegated to the Managing Agents by the terms of this Agreement together with
such powers as are reasonably incidental thereto. No Managing Agent shall have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the
applicable Managing Agent shall be read into this Agreement or otherwise exist
for the applicable Managing Agent. In performing its functions and duties
hereunder, each Managing Agent shall act solely as agent for the Lenders in the
related Lender Group and does not assume nor shall be deemed to have assumed
any obligation or relationship of trust or agency with or for the Borrower or
any of its successors or assigns. No Managing Agent shall be required to take
any action that exposes it to personal liability or that is contrary to this
Agreement or Applicable Law. The appointment and authority of each Managing
Agent hereunder shall terminate at the indefeasible payment in full of the Obligations.


 


Section 10.2         Delegation of Duties.


 


(a)           The
Administrative Agent may execute any of its duties under this Agreement by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.


 


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


 


Section 10.3         Exculpatory Provisions.


 


(a)           Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or them under or in connection with this Agreement (except for its, their or
such Person’s own gross negligence or willful misconduct or, in the case of the
Administrative Agent, the breach of its obligations expressly set forth in this
Agreement), or (ii) responsible in any manner to any of the Secured Parties for
any recitals, statements, representations or warranties made by the Borrower
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received under or in connection with,
this Agreement for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other document furnished
in connection herewith, or for any failure of the Borrower to perform its
obligations hereunder, or for the satisfaction of any condition specified in Article
III. The Administrative Agent shall not be under any obligation to any
Secured Party to ascertain or to inquire as to the observance or performance of
any of the agreements or covenants contained in,


 


72

















 


or conditions of, this
Agreement, or to inspect the properties, books or records of the Borrower. The
Administrative Agent shall not be deemed to have knowledge of any Early
Termination Event unless the Administrative Agent has received notice of such
Early Termination Event, in a document or other written communication titled “Notice
of Early Termination Event” from the Borrower or a Secured Party.


 


(b)           Neither any
Managing Agent nor any of its respective directors, officers, agents or
employees shall be (i) liable for any action lawfully taken or omitted to be
taken by it or them under or in connection with this Agreement (except for its,
their or such Person’s own gross negligence or willful misconduct or, in the
case of a Managing Agent, the breach of its obligations expressly set forth in
this Agreement), or (ii) responsible in any manner to the Administrative Agent
or any of the Secured Parties for any recitals, statements, representations or
warranties made by the Borrower contained in this Agreement or in any
certificate, report, statement or other document referred to or provided for
in, or received under or in connection with, this Agreement or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other document furnished in connection herewith, or for any
failure of the Borrower to perform its obligations hereunder, or for the
satisfaction of any condition specified in Article III. No Managing Agent
shall be under any obligation to the Administrative Agent or any Secured Party
to ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement, or to
inspect the properties, books or records of the Borrower. No Managing Agent
shall be deemed to have knowledge of any Early Termination Event unless such
Managing Agent has received notice of such Early Termination Event, in a
document or other written communication titled “Notice of Early Termination
Event” from the Borrower, the Administrative Agent or a Secured Party.


 


Section 10.4         Reliance.


 


(a)           The
Administrative Agent shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent shall in all
cases be fully justified in failing or refusing to take any action under this
Agreement or any other document furnished in connection herewith unless it
shall first receive such advice or concurrence of the Required Committed
Lenders or all of the Secured Parties, as applicable, as it deems appropriate
or it shall first be indemnified to its satisfaction by the Lenders, provided,
that, unless and until the Administrative Agent shall have received such
advice, the Administrative Agent may take or refrain from taking any action, as
the Administrative Agent shall deem advisable and in the best interests of the
Secured Parties, The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, in accordance with a request of the
Required Committed Lenders or all of the Secured Parties, as applicable, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Secured Parties.


 


(b)           Each Managing
Agent shall in all cases be entitled to rely, and shall be fully protected in
relying, upon any document or conversation believed by it to be genuine and
correct


 


73

















 


and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by such Managing Agent. Each
Managing Agent shall in all cases be fully justified in failing or refusing to
take any action under this Agreement or any other document furnished in
connection herewith unless it shall first receive such advice or concurrence of
the Committed Lenders in its related Lender Group as it deems appropriate or it
shall first be indemnified to its satisfaction by the Committed Lenders in its
related Lender Group, provided that unless and until such Managing Agent shall
have received such advice, the Managing Agent may take or refrain from taking
any action, as the Managing Agent shall deem advisable and in the best
interests of the Lenders in its Lender Group. Each Managing Agent shall in all
cases be fully protected in acting, or in refraining from acting, in accordance
with a request of the Committed Lenders in such Managing Agent’s Lender Group
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders in such Managing Agent’s Lender Group.


 


Section 10.5         Non-Reliance on Administrative Agent, Managing Agents and Other Lenders.


 


Each Secured Party expressly acknowledges that neither the
Administrative Agent, any other Secured Party nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent or any other Secured Party hereafter taken, including,
without limitation, any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Administrative Agent or any
other Secured Party. Each Secured Party represents and warrants to the
Administrative Agent and to each other Secured Party that it has and will,
independently and without reliance upon the Administrative Agent or any other
Secured Party and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Borrower and made its own decision to enter into this
Agreement


 


Section 10.6         Reimbursement and Indemnification.


 


The Committed Lenders agree to reimburse and indemnify the
Administrative Agent, and the Committed Lenders in each Lender Group agree to
reimburse the Managing Agent for such Lender Group, and their respective
officers, directors, employees, representatives and agents ratably according to
their Commitments, as applicable, to the extent not paid or reimbursed by the
Borrower (i) for any amounts for which the Administrative Agent, acting in its
capacity as Administrative Agent, or any Managing Agent, acting in its capacity
as a Managing Agent, is entitled to reimbursement by the Borrower hereunder and
(ii) for any other expenses incurred by the Administrative Agent, in its
capacity as Administrative Agent, or any Managing Agent, acting in its capacity
as a Managing Agent, and acting on behalf of the related Lenders, in connection
with the administration and enforcement of this Agreement and the other
Transaction Documents.


 


74

















 


Section 10.7         Administrative Agent and Managing Agents in their Individual Capacities.


 


The Administrative Agent, each Managing Agent and each of their
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower or any Affiliate of the
Borrower as though the Administrative Agent or such Managing Agent, as the case
may be, were not the Administrative Agent or a Managing Agent, as the case may
be, hereunder. With respect to the acquisition of Advances pursuant to this
Agreement, the Administrative Agent, each Managing Agent and each of their
respective Affiliates shall have the same rights and powers under this
Agreement as any Lender and may exercise the same as though it were not the
Administrative Agent or a Managing Agent, as the case may be, and the terms “Committed
Lender” “Lender” “Committed Lenders” and “Lenders” shall include the Administrative
Agent or a Managing Agent, as the case may be, in its individual capacity.


 


Section 10.8         Successor Administrative Agent or Managing Agent.


 


(a)           The
Administrative Agent may, upon 5 days’ notice to the Borrower and the Secured
Parties, and the Administrative Agent will, upon the direction of all of the
Lenders resign as Administrative Agent. If the Administrative Agent shall
resign, then the Required Committed Lenders during such 5-day period shall
appoint from among the Secured Parties a successor agent. If for any reason no
successor Administrative Agent is appointed by the Required Committed Lenders
during such 5-day period, then effective upon the expiration of such 5-day
period, the Secured Parties shall perform all of the duties of the Administrative
Agent hereunder and the Borrower shall make all payments in respect of the
Obligations or under any Fee Letter delivered by the Borrower to the
Administrative Agent and the Secured Parties directly to the applicable
Managing Agents, on behalf of the Lenders in the applicable Lender Group and
for all purposes shall deal directly with the Secured Parties. After any
retiring Administrative Agent’s resignation hereunder as Administrative Agent,
the provisions of Article IX and Article X shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.


 


(b)           Any Managing
Agent may, upon 5 days’ notice to the Borrower, the Administrative Agent and
the related Lenders, and any Managing Agent will, upon the direction of all of
the related Committed Lenders resign as a Managing Agent. If a Managing Agent
shall resign, then the related Committed Lenders during such 5-day period shall
appoint from among the related Committed Lenders a successor Managing Agent. If
for any reason no successor Managing Agent is appointed by such Committed
Lenders during such 5-day period, then effective upon the expiration of such
5-day period, such Committed Lenders shall perform all of the duties of the
related Managing Agent hereunder. After any retiring Managing Agent’s
resignation hereunder as a Managing Agent, the provisions of Article IX
and Article X shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was a Managing Agent under this Agreement.


 


75

















 


ARTICLE XI


 


ASSIGNMENTS; PARTICIPATIONS


 


Section 11.1         Assignments and Participations.


 


(a)           Borrower and
each Committed Lender hereby agree and consent to the complete or partial
assignment by each CP Lender of all or any portion of its rights under,
interest in, title to and obligations under this Agreement (i) to its Liquidity
Banks pursuant to a Liquidity Agreement, (ii) (A) to any other issuer of
commercial paper notes sponsored or administered by the Managing Agent of such
CP Lender’s Lender Group or (B) to any Lender or any Affiliate of a Lender
hereunder, or (iii) to any other Person; provided that, prior to the occurrence
of an Early Termination Event, such CP Lender may not make any such assignment
pursuant to this clause (iii), except in the event that the circumstances
described in Section 11.1(c) occur, without the consent of the Borrower
(which consent shall not be unreasonably withheld or delayed). Upon such
assignment, such CP Lender shall be released from its obligations so assigned. Further,
Borrower and each Committed Lender hereby agree that any assignee of any CP
Lender of this Agreement or all or any of the outstanding Advances of such CP
Lender shall have all of the rights and benefits under this Agreement as if the
term “CP Lender” explicitly referred to such party, and no such assignment
shall in any way impair the rights and benefits of such CP Lender hereunder. Neither
Borrower nor the Servicer shall have the right to assign its rights or
obligations under this Agreement.


 


(b)           Any Committed
Lender may at any time and from time to time assign to one or more Persons (“Purchasing Committed Lenders”) all or any
part of its rights and obligations under this Agreement pursuant to an
assignment agreement, substantially in the form set forth in Exhibit C
hereto (the “Assignment and Acceptance”)
executed by such Purchasing Committed Lender and such selling Committed Lender.
The consent of the CP Lender or CP Lenders in such Committed Lender’s Lender
Group shall be required prior to the effectiveness of any such assignment. In
addition, so long as no Early Termination Event or Unmatured Termination Event
has occurred and is continuing at such time, the consent of the Borrower (such
consent not to be unreasonably withheld or delayed) shall be required prior to
the effectiveness of any such assignment. Each assignee of a Committed Lender
must be an Eligible Assignee and must agree to deliver to the Administrative
Agent, promptly following any request therefor by the Managing Agent for its
Lender Group or the affected CP Lender or CP Lenders, an enforceability opinion
in form and substance satisfactory to such Managing Agent and such CP Lender or
CP Lenders. Upon delivery of the executed Assignment and Acceptance to the
Administrative Agent, such selling Committed Lender shall be released from its
obligations hereunder to the extent of such assignment. Thereafter the
Purchasing Committed Lender shall for all purposes be a Committed Lender party
to this Agreement and shall have all the rights and obligations of a Committed
Lender under this Agreement to the same extent as if it were an original party
hereto and no further consent or action by Borrower, the Lenders or the Administrative
Agent shall be required.


 


(c)           Each of the
Committed Lenders agrees that in the event that it shall cease to have the
Required Ratings (an “Affected Committed
Lender”), such Affected Committed Lender shall be obliged, at the
request of the CP Lenders in such Committed Lender’s Lender Group or the
applicable Managing Agent, to assign all of its rights and obligations
hereunder to (x) another


 


76

















 


Committed Lender or (y)
another funding entity nominated by such Managing Agent and acceptable to such
affected CP Lenders, and willing to participate in this Agreement through the
Termination Date in the place of such Affected Committed Lender; provided
that the Affected Committed Lender receives payment in full, pursuant to an
Assignment Agreement, of an amount equal to such Committed Lender’s Pro Rata
Share of the outstanding Advances and Interest owing to the Committed Lenders
and all accrued but unpaid fees and other costs and expenses payable in respect
of its Pro Rata Share of the outstanding Advances of the Committed Lenders.


 


(d)           By executing
and delivering an Assignment and Acceptance, the Purchasing Committed Lender
thereunder and the selling Committed Lender thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such selling Committed Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such selling Committed Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the related CP Lender or the performance or observance
by such CP Lender of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such Purchasing
Committed Lender confirms that it has received a copy of this Agreement,
together with copies of such financial statements and other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Purchasing
Committed Lender will, independently and without reliance upon the
Administrative Agent or any Managing Agent, the selling Committed Lender or any
other Committed Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such Purchasing Committed
Lender and such selling Committed Lender confirm that such Purchasing Committed
Lender is an Eligible Assignee; (vi) such Purchasing Committed Lender appoints
and authorizes each of the Administrative Agent and the applicable Managing
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to such agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vii) such
Purchasing Committed Lender agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Committed Lender.


 


(e)           The
Administrative Agent shall maintain at its address referred to herein a copy of
each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Committed Lenders and the
Commitment of, and principal amount of, each Advance owned by each Committed
Lender from time to time (the “Register”).
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Lenders, the Borrower and the Managing Agents
may treat each Person whose name is recorded in the Register as a Committed
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Lenders, any Managing Agent or the Borrower at
any reasonable time and from time to time upon reasonable prior notice.


 


77

















 


(f)            Subject to the
provisions of this Section 11.1, upon their receipt of an Assignment and
Acceptance executed by an selling Committed Lender and an Purchasing Committed
Lender, the Administrative Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit C hereto,
accept such Assignment and Acceptance, and the Administrative Agent shall then
(i) record the information contained therein in the Register and (ii) give
prompt notice thereof to each Managing Agent.


 


(g)           Any Committed
Lender may, in the ordinary course of its business at any time sell to one or
more Persons (each a “Participant”)
participating interests in its Pro-Rata Share of the Advances of the Committed
Lenders or any other interest of such Committed Lender hereunder. Notwithstanding
any such sale by a Committed Lender of a participating interest to a
Participant, such Committed Lender’s rights and obligations under this
Agreement shall remain unchanged, such Committed Lender shall remain solely
responsible for the performance of its obligations hereunder, and the Borrower,
the CP Lenders, the Managing Agents and the Administrative Agent shall continue
to deal solely and directly with such Committed Lender in connection with such
Committed Lender’s rights and obligations under this Agreement. Each Committed
Lender agrees that any agreement between such Committed Lender and any such
Participant in respect of such participating interest shall not restrict such
Committed Lender’s right to agree to any amendment, supplement, waiver or
modification to this Agreement, except for any amendment, supplement, waiver or
modification set forth in Section 12.1 of this Agreement.


 


(h)           Each Committed
Lender may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 11.1, disclose to the assignee
or participant or proposed assignee or participant any information relating to
the Borrower or Servicer furnished to such Committed Lender by or on behalf of
the Borrower or the Servicer.


 


(i)            Nothing herein
shall prohibit any Committed Lender from pledging or assigning as collateral
any of its rights under this Agreement to any Federal Reserve Bank in
accordance with Applicable Law and any such pledge or collateral assignment may
be made without compliance with Section 11.1(a) or Section 11.1(b).


 


(j)            In the event
any Committed Lender causes increased costs, expenses or taxes to be incurred
by the Administrative Agent, Managing Agents or the related CP Lender in
connection with the assignment or participation of such Committed Lender’s
rights and obligations under this Agreement to an Eligible Assignee then such
Committed Lender agrees that it will make reasonable efforts to assign such
increased costs, expenses or taxes to such Eligible Assignee in accordance with
the provisions of this Agreement.


 


Section 11.2         Additional Lender Groups.


 


Upon the Borrower’s request, with the consent of the Administrative
Agent, an additional Lender Group may be added to this Agreement at any time by
the execution and delivery of a Joinder Agreement by the members of such
proposed additional Lender Group, the Borrower, the Servicer and the
Administrative Agent, which execution and delivery shall not be unreasonably
refused by such parties. Upon the effective date of such Joinder Agreement, (i)
each Person specified therein as a “CP Lender” shall become a party hereto as a
CP Lender,


 


78

















 


entitled to the rights and subject to the obligations of a CP Lender
hereunder, (ii) each Person specified therein as a “Committed Lender” shall
become a party hereto as a Committed Lender, entitled to the rights and subject
to the obligations of a Committed Lender hereunder, (iii) each Person specified
therein as a “Managing Agent” shall become a party hereto as a Managing Agent,
entitled to the rights and subject to the obligations of a Managing Agent
hereunder and (iv) the Facility Amount shall be increased by an amount equal to
the aggregate Commitments of the Committed Lenders party to such Joinder
Agreement. On or prior to the effective date of such Joinder Agreement, the
Borrower, the Servicer and the new Managing Agent shall enter into a fee letter
for purposes of setting forth the fees payable to the members of such Lender
Group in connection with this Agreement, which fee letter shall be considered a
“Fee Letter” for all purposes of this Agreement. The Administrative Agent shall
give each Lender prompt notice of the addition of any Lender Group.


 


ARTICLE XII


 


MISCELLANEOUS


 


Section 12.1         Amendments and Waivers.


 


Except as provided in this Section 12.1, no amendment, waiver or
other modification of any provision of this Agreement shall be effective
without the written agreement of the Borrower, the Administrative Agent, the
Managing Agents and the Required Committed Lenders; provided, however,
that (i) without the consent of the Committed Lenders in any Lender Group
(other than the Lender Group to which such Committed Lenders are being added),
the Administrative Agent and the applicable Managing Agent may, with the
consent of Borrower, amend this Agreement solely to add additional Persons as
Committed Lenders hereunder, (ii) any amendment of this Agreement that is
solely for the purpose of increasing the Commitment of a specific Committed
Lender may be effected with the written consent of the Borrower, the
Administrative Agent and the affected Committed Lender, (iii) any amendment
waiver or other modification, the effect of which is to create a commitment by
any CP Lender to fund Advances hereunder, shall not be effective without the
consent of such CP Lender, and (iv) the consent of each affected Lender shall
be required to: (A) extend the Commitment Termination Date or the date of any
payment or deposit of Collections by the Borrower or the Servicer, (B) reduce
the amount (other than by reason of the repayment thereof) or extend the time
of payment of Advances Outstanding or reduce the rate or extend the time of
payment of Interest (or any component thereof) or increase the Group Advance
Limit of the related Lender Group, (C) reduce any fee payable to the
Administrative Agent or any Managing Agent for the benefit of the Lenders, (D)
amend, modify or waive any provision of the definition of Required Committed
Lenders or Sections 2.11, 11.1(a), 12.1, 12.9, or 12.10,
(E) consent to or permit the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement, (F) amend or waive any
Servicer Termination Event or Early Termination Event, (G) change the
definition of “Borrowing Base,” “Charged-Off Ratio,” “Default Ratio,” “Eligible
Loan” or “Settlement Date,” or (H) amend or modify any defined term (or any
defined term used directly or indirectly in such defined term) used in clauses
(A) through (G) above in a manner that would circumvent the intention of the
restrictions set forth in such clauses. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.


 


79

















 


No amendment, waiver or other modification (i) affecting the rights or
obligations of any Hedge Counterparty or (ii) having a material affect on the
rights or obligations of the Collateral Custodian or the Backup Servicer
(including any duties of the Servicer that the Backup Servicer would have to
assume as Successor Servicer) shall be effective against such Person without
the written agreement of such Person. The Borrower or the Servicer on its
behalf will deliver a copy of all waivers and amendments to the Collateral
Custodian and the Backup Servicer.


 


Section 12.2         Notices, Etc.


 


All notices 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 under its name on
the signature pages hereof or specified in such party’s Assignment and
Acceptance or Joinder Agreement or at such other address as shall be designated
by such party in a written notice to the other parties hereto. 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, except that notices and communications pursuant to this Article
XII shall not be effective until received with respect to any notice sent
by mail or telex.


 


Section 12.3         No Waiver, Rights and Remedies.


 


No failure on the part of the Administrative Agent or any Secured Party
or any assignee of any Secured Party to exercise, and no delay in exercising,
any right or remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right. The rights and
remedies herein provided are cumulative and not exclusive of any rights and
remedies provided by law.


 


Section 12.4         Binding Effect.


 


This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent, the Secured Parties and their respective
successors and permitted assigns and, in addition, the provisions of Section
2.8 shall inure to the benefit of each Hedge Counterparty, whether or not
that Hedge Counterparty is a Secured Party, and the provisions relating to the
Backup Servicer, including Sections 2.8, 7.18, 9.1 and 9.2
shall inure to the benefit of the Backup Servicer.


 


Section 12.5         Term of this Agreement.


 


This Agreement, including, without limitation, the Borrower’s
obligation to observe its covenants set forth in Article V, and the
Servicer’s obligation to observe its covenants set forth in Article VII,
shall remain in full force and effect until the Collection Date; provided,
however, that the rights and remedies with respect to any breach of any
representation and warranty made or deemed made by the Borrower pursuant to Articles
III and IV and the indemnification and payment provisions of Article
IX and Article X and the provisions of Section 12.9 and Section
12.10 shall be continuing and shall survive any termination of this
Agreement.


 


80

















 


Section 12.6         GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE.


 


THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. EACH OF THE SECURED PARTIES, THE BORROWER
AND THE ADMINISTRATIVE AGENT HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF
ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES
HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN
ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.


 


Section 12.7         WAIVER OF JURY TRIAL.


 


TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE SECURED PARTIES,
THE BORROWER AND THE ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH
DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.


 


Section 12.8         Costs, Expenses and Taxes.


 


(a)           In addition to
the rights of indemnification granted to the Administrative Agent, the Managing
Agents, the other Secured Parties and its or their Affiliates and officers,
directors, employees and agents thereof under Article IX hereof, the
Borrower agrees to pay on demand all reasonable costs and expenses of the
Administrative Agent, the Managing Agents and the other Secured Parties
incurred in connection with the preparation, execution, delivery,
administration (including periodic auditing), amendment or modification of, or
any waiver or consent issued in connection with, this Agreement and the other
documents to be delivered hereunder or in connection herewith, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Administrative Agent, the Managing Agents and the other Secured Parties
with respect thereto and with respect to advising the Administrative Agent, the
Managing Agents and the other Secured Parties as to their respective rights and
remedies under this Agreement and the other documents to be delivered hereunder
or in connection herewith, and all costs and expenses, if any (including
reasonable counsel fees and expenses), incurred by the Administrative Agent,
the Managing Agents or the other Secured Parties in connection with the
enforcement of this Agreement and the other documents to be delivered hereunder
or in connection herewith (including any Hedge Agreement).


 


(b)           The Borrower
shall pay on demand any and all stamp, sales, excise and other taxes and fees
payable or determined to be payable in connection with the execution, delivery,


 


81

















 


filing and recording of this
Agreement, the other documents to be delivered hereunder or any agreement or
other document providing liquidity support, credit enhancement or other similar
Support to the Lender in connection with this Agreement or the funding or
maintenance of Advances hereunder.


 


(c)           The Borrower
shall pay on demand all other costs, expenses and taxes (excluding income
taxes) (“Other Costs”),
including, without limitation, all reasonable costs and expenses incurred by
the Administrative Agent or any Managing Agent in connection with periodic
audits of the Borrower’s or the Servicer’s books and records, which are
incurred as a result of the execution of this Agreement.


 


Section 12.9         No Proceedings.


 


Each party hereto (other than the applicable CP Lender) hereby covenants
and agrees that on behalf of itself and each of its affiliates, that prior to
the date which is one year and one day after the payment in full of all
indebtedness for borrowed money of a CP Lender, such party will not institute
against, or join any other Person in instituting against, such CP Lender any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States. The provisions of this Section 12.9 shall survive the
termination of this Agreement.


 


Each of the parties hereto (other than the Administrative Agent and the
Secured Parties) hereby agrees that it will not institute against, or join any
other Person in instituting against the Borrower any Insolvency Proceeding so
long as there shall not have elapsed one year and one day since the Collection
Date.


 


Section 12.10       Recourse Against Certain Parties.


 


(a)           No recourse
under or with respect to any obligation, covenant or agreement (including,
without limitation, the payment of any fees or any other obligations) of the
Administrative Agent, any Secured Party as contained in this Agreement or any
other agreement, instrument or document entered into by it pursuant hereto or
in connection herewith shall be had against any Person or any manager or
administrator of such Person or any incorporator, affiliate, stockholder,
officer, employee or director of such Person or of the Borrower or of any such
manager or administrator, as such, by the enforcement of any assessment or by
any legal or equitable proceeding, by virtue of any statute or otherwise.


 


(b)           Each of parties
hereto hereby acknowledges and agrees that any other transactions with a CP
Lender hereunder shall be without recourse of any kind to such CP Lender. A CP
Lender shall have no obligation to pay any amounts owing hereunder in excess of
any amount available to such CP Lender after paying or making provision for the
payment of any commercial paper notes of such CP Lender. In addition, each
party hereto agrees that a CP Lender shall have no obligation to pay any other
party, any amounts constituting fees, a reimbursement for expenses or
indemnities (collectively, “Expense Claims”), and such Expense Claims shall not
constitute a claim against such CP Lender (as defined in Section 101 of Title
11 of the United States Bankruptcy Code), unless or until such CP Lender has
received amounts


 


82

















 


sufficient to pay such
Expense Claims and such amounts are not required to pay the commercial paper of
such CP Lender.


 


(c)           The provisions
of this Section 12.10 shall survive the termination of this Agreement.


 


Section 12.11       Protection of Security Interest; Appointment of Administrative Agent as
Attorney-in-Fact.


 


(a)           The Borrower
shall, or shall cause the Servicer to, cause this Agreement, all amendments
hereto and/or all financing statements and continuation statements and any
other necessary documents covering the right, title and interest of the
Administrative Agent as agent for the Secured Parties and of the Secured
Parties to the Collateral to be promptly recorded, registered and filed, and at
all time to be kept recorded, registered and filed, all in such manner and in
such places as may be required by law fully to preserve and protect the right,
title and interest of the Administrative Agent as agent for the Secured Parties
hereunder to all property comprising the Collateral. The Borrower shall deliver
or, shall cause the Servicer to deliver, to the Administrative Agent
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Borrower and the Servicer shall
cooperate fully in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the intent of this
Section 12.11.


 


(b)           The Borrower
agrees that from time to time, at its expense, it will promptly execute and
deliver all instruments and documents, and take all actions, that may
reasonably be necessary or desirable, or that the Administrative Agent may
reasonably request, to perfect, protect or more fully evidence the security
interest granted to the Administrative Agent, as agent for the Secured Parties,
in the Collateral, or to enable the Administrative Agent or the Secured Parties
to exercise and enforce their rights and remedies hereunder.


 


(c)           If the Borrower
or the Servicer fails to perform any of its obligations hereunder after five
Business Days’ notice from the Administrative Agent, the Administrative Agent
or any Lender may (but shall not be required to) perform, or cause performance
of, such obligation; and the Administrative Agent’s or such Lender’s reasonable
costs and expenses incurred in connection therewith shall be payable by the
Borrower (if the Servicer that fails to so perform is the Borrower or an
Affiliate thereof) as provided in Article IX, as applicable. The
Borrower irrevocably authorizes the Administrative Agent and appoints the
Administrative Agent as its attorney-in-fact to act on behalf of the Borrower,
(i) to execute on behalf of the Borrower as debtor and to file financing
statements necessary or desirable in the Administrative Agent’s sole discretion
to perfect and to maintain the perfection and priority of the interest of the
Secured Parties in the Collateral and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to
the Collateral as a financing statement in such offices as the Administrative
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the interests of the Lenders in the
Collateral. This appointment is coupled with an interest and is irrevocable.


 


83

















 


(d)           Without
limiting the generality of the foregoing, Borrower will, not earlier than six
(6) months and not later than three (3) months prior to the fifth anniversary of
the date of filing of the financing statement referred to in Section 3.1
or any other financing statement filed pursuant to this Agreement or in
connection with any Advance hereunder, unless the Collection Date shall have
occurred:


 


(i)            execute and
deliver and file or cause to be filed an appropriate continuation statement
with respect to such financing statement; and


 


(ii)           deliver or
cause to be delivered to the Administrative Agent an opinion of the counsel for
Borrower, in form and substance reasonably satisfactory to the Administrative
Agent, confirming and updating the opinion delivered pursuant to Section 3.1
with respect to perfection and otherwise to the effect that the Collateral
hereunder continues to be subject to a perfected security interest in favor of
the Administrative Agent, as agent for the Secured Parties, subject to no other
Liens of record except as provided herein or otherwise permitted hereunder,
which opinion may contain usual and customary assumptions, limitations and
exceptions.


 


Section 12.12       Confidentiality.


 


(a)           Each of the
Administrative Agent, the Managing Agents, the other Secured Parties and the
Borrower shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of the Agreement and the other confidential
proprietary information with respect to the other parties hereto and their
respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that each such party and its officers and employees may (i) disclose
such information to its external accountants and attorneys and as required by
an Applicable Law, as required to be publicly filed with SEC, or as required by
an order of any judicial or administrative proceeding, (ii) disclose the
existence of this Agreement, but not the financial terms thereof and (iii)
disclose the Agreement and such information in any suit, action, proceeding or
investigation (whether in law or in equity or pursuant to arbitration)
involving and of the Loan Documents or any Hedging Agreement for the purpose of
defending itself, reducing itself, reducing its liability, or protecting or
exercising any of its claims, rights, remedies, or interests under or in
connection with any of the Loan Documents or any Hedging Agreement.


 


(b)           Anything herein
to the contrary notwithstanding, the Borrower hereby consents to the disclosure
of any nonpublic information with respect to it for use in connection with the
transactions contemplated herein and in the Transaction Documents (i) to the
Administrative Agent or the Secured Parties by each other, (ii) by the
Administrative Agent or the Secured Parties to any prospective or actual
Eligible Assignee or participant of any of them or (iii) by the Administrative
Agent or the Secured Parties to any Rating Agency, commercial paper dealer or
provider of a surety, guaranty or credit or liquidity enhancement to a Secured
Party and to any officers, directors, members, employees, outside accountants
and attorneys of any of the foregoing, provided each such Person is informed of
the confidential nature of such information and agree to be bound hereby. In
addition, the Secured Parties and the Administrative Agent may disclose any
such nonpublic information pursuant to any law, rule, regulation, direction,
request or order of any judicial, administrative or regulatory authority or
proceedings.


 


84

















 


(c)           The Borrower
and the Servicer each agrees that it shall not (and shall not permit any of its
Affiliates to) issue any news release or make any public announcement
pertaining to the transactions contemplated by this Agreement and the
Transaction Documents without the prior written consent of the Administrative
Agent (which consent shall not be unreasonably withheld) unless such news
release or public announcement is required by law, in which case the Borrower
or the Servicer shall consult with the Administrative Agent and each Managing
Agent prior to the issuance of such news release or public announcement. The
Borrower and the Servicer each may, however, disclose the general terms of the
transactions contemplated by this Agreement and the Transaction Documents to
trade creditors, suppliers and other similarly-situated Persons so long as such
disclosure is not in the form of a news release or public announcement.


 


Section 12.13       Execution in Counterparts; Severability; Integration.


 


This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This Agreement
contains the final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and shall constitute
the entire agreement among the parties hereto with respect to the subject
matter hereof, superseding all prior oral or written understandings other than
any Fee Letter.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 


85

















 


IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.


 


	
  BORROWER:

  	
  GLADSTONE BUSINESS LOAN, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title: President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Gladstone Business Loan, LLC

  1521 Westbranch Drive, Suite 200

  McLean, Virginia 22102

  Attention: President

  Facsimile No.: (703) 287-5801

  Confirmation No.: (703) 287-5800

  	
   

  
	
   

  	
   

  	
   

  
	
  SERVICER:

  	
  GLADSTONE MANAGEMENT

  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title: Chairman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Gladstone Management Corporation

  1521 Westbranch Drive, Suite 200

  McLean, Virginia 22102

  Attention: Chairman

  Facsimile No.: (703) 287-5801

  Confirmation No.: (703) 287-5800

  	
   

  
							



 


 


[SIGNATURES CONTINUED ON FOLLOWING PAGE]


 


Credit Agreement


 


S-1

















 


	
  COMMITTED LENDER:

  	
  DEUTSCHE BANK AG, NEW YORK BRANCH

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Commitment: $50,000,000

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  60 Wall Street

  18th Floor

  New York, New York 10005

  Attention: Tina Gu

  Phone: (212) 250-0357

  Facsimile: (212) 797-5150

  	
   

  
	
   

  	
   

  	
   

  
	
  CP LENDER:

  	
  TAHOE FUNDING CORP, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TAHOE FUNDING CORP, LLC.

  c/o Global Securitization Services, LLC

  445 Broad Hollow Road, Suite 239

  Melville, NY 11747

  Attention: Andrew Stidd

  Phone: (212) 930-7203

  Facsimile: (212) 302-8767

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  with copies to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK AG, NEW YORK BRANCH

  60 Wall Street

  18th Floor

  New York, New York 10005

  Attention: Tina Gu

  Phone: (212) 250-0357

  Facsimile: (212) 797-5150

  	
   

  
							



 


S-2

















 


 


	
  MANAGING AGENT for the Tahoe

  	
  DEUTSCHE BANK AG, NEW YORK BRANCH

  	
   

  
	
  Lender Group:

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  60 Wall Street

  18th Floor

  New York, New York 10005

  Attention:  Tina Gu

  Phone:   (212) 250-0357

  Facsimile:  (212) 797-5150

  	
   

  
	
   

  	
   

  	
   

  
	
  ADMINISTRATIVE AGENT

  	
  DEUTSCHE BANK AG, NEW YORK BRANCH

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  60 Wall Street

  18th Floor

  New York, New York 10005

  Attention:  Tina Gu

  Phone:   (212) 250-0357

  Facsimile:  (212) 797-5150

  	
   

  
							



 


S-3

















 


	
  COMMITTED LENDER:

  	
  KEYBANK, NATIONAL ASSOCIATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Commitment: $50,000,000

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  127 Public Square

  MC OH-01-27-0411

  Cleveland, Ohio 44113

  Attention: Tony Bulic

  Phone:        (216) 689-3842

  Facsimile:  (216) 689-5287

  	
   

  
	
   

  	
   

  	
   

  
	
  CP LENDER:

  	
  PUBLIC SQUARE FUNDING LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
					



 


S-4

















 


	
   

  	
  c/o KeyBank, National Association

  127 Public Square

  MC OH-01-27-0411

  Cleveland, Ohio 44113

  Attention: Tony Bulic

  Phone: (216) 689-3842

  Facsimile: (216) 689-5287

  
	
   

  	
   

  
	
   

  	
  with copies to:

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK AND TRUST COMPANY

  AMERICAS

  
	
   

  	
  Corporate Trust & Agency Services

  280 Park Avenue – MS-NYC03-0916

  New York, New York 10017

  Attention: Nigel Luke

  Phone: (212) 454-4331

  Facsimile: (212) 454-2350

  and

  
	
   

  	
   

  
	
   

  	
  KEY EQUIPMENT FINANCE

  Lease Advisory Services

  19100 Von Karman Ave., Suite 250

  Irvine, California 92612

  Attention: Rian Emmett

  Phone:        (949)
  757-8942

  Facsimile:  (949) 757-1312

  



 


S-5

















 


	
  MANAGING AGENT for the Public

  	
  KEYBANK, NATIONAL ASSOCIATION

  	
   

  
	
  Square Lender Group:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEYBANK, NATIONAL ASSOCIATION

  127 Public Square

  MC OH-01-27-0411

  Cleveland, Ohio 44113

  Attention: Tony Bulic

  Phone:        (216) 689-3842

  Facsimile:  (216) 689-5287

  	
   

  
					



 


S-6