exv10w6






Exhibit 10.6




EXECUTION COPY




 

 






U.S. Up to $100,000,000




LOAN AND SERVICING AGREEMENT




Dated as of November 16, 2009




Among




FIFTH STREET FUNDING, LLC,

as the Borrower




FIFTH STREET FINANCE CORP.,

as the Servicer and the Transferor




WELLS FARGO SECURITIES, LLC,

as the Administrative Agent




EACH OF THE CONDUIT LENDERS AND INSTITUTIONAL LENDERS FROM TIME TO

TIME PARTY HERETO,

as the Lenders




EACH OF THE LENDER AGENTS FROM TIME TO TIME PARTY HERETO,

as the Lender Agents

and




WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Collateral Agent, Account Bank and Collateral Custodian




 

 






 









 












TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.01 Certain Defined Terms
	 	 	1	 
	Section 1.02 Other Terms
	 	 	36	 
	Section 1.03 Computation of Time Periods
	 	 	36	 
	Section 1.04 Interpretation
	 	 	36	 
	 
	 	 	 	 
	ARTICLE II. THE FACILITY
	 	 	36	 
	 
	 	 	 	 
	Section 2.01 Variable Funding Note and Advances
	 	 	36	 
	Section 2.02 Procedure for Advances
	 	 	37	 
	Section 2.03 Determination of Yield
	 	 	39	 
	Section 2.04 Remittance Procedures
	 	 	39	 
	Section 2.05 Instructions to the Collateral Agent and the Account Bank
	 	 	44	 
	Section 2.06 Borrowing Base Deficiency Payments
	 	 	45	 
	Section 2.07 Substitution and Sale of Loan Assets; Affiliate Transactions
	 	 	45	 
	Section 2.08 Payments and Computations, Etc
	 	 	50	 
	Section 2.09 Non-Usage Fee
	 	 	50	 
	Section 2.10 Increased Costs; Capital Adequacy
	 	 	51	 
	Section 2.11 Taxes
	 	 	52	 
	Section 2.12 Collateral Assignment of Agreements
	 	 	54	 
	Section 2.13 Grant of a Security Interest
	 	 	54	 
	Section 2.14 Evidence of Debt
	 	 	55	 
	Section 2.15 Survival of Representations and Warranties
	 	 	55	 
	Section 2.16 Release of Loan Assets
	 	 	55	 
	Section 2.17 Treatment of Amounts Received by the Borrower
	 	 	56	 
	Section 2.18 Prepayment; Termination
	 	 	56	 
	Section 2.19 Extension of Stated Maturity Date and Reinvestment Period
	 	 	57	 
	Section 2.20 Collections and Allocations
	 	 	57	 
	Section 2.21 Reinvestment of Principal Collections
	 	 	58	 
	Section 2.22 Increase of Commitment; Maximum Facility Amount
	 	 	59	 
	 
	 	 	 	 
	ARTICLE III. CONDITIONS PRECEDENT
	 	 	60	 
	 
	 	 	 	 
	Section 3.01 Conditions Precedent to Effectiveness
	 	 	60	 






i









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	 	Page	 
	 
	 	 	 	 
	Section 3.02 Conditions Precedent to All Advances
	 	 	61	 
	Section 3.03 Advances Do Not Constitute a Waiver
	 	 	63	 
	Section 3.04 Conditions to Pledges of Loan Assets
	 	 	63	 
	 
	 	 	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES
	 	 	65	 
	 
	 	 	 	 
	Section 4.01 Representations and Warranties of the Borrower
	 	 	65	 
	
Section 4.02 Representations and Warranties of the Borrower Relating to the Agreement and the Collateral Portfolio
	 	 	73	 
	Section 4.03 Representations and Warranties of the Servicer
	 	 	73	 
	Section 4.04 Representations and Warranties of the Collateral Agent
	 	 	77	 
	Section 4.05 Representations and Warranties of each Lender
	 	 	78	 
	Section 4.06 Representations and Warranties of the Collateral Custodian
	 	 	78	 
	 
	 	 	 	 
	ARTICLE V. GENERAL COVENANTS
	 	 	79	 
	 
	 	 	 	 
	Section 5.01 Affirmative Covenants of the Borrower
	 	 	79	 
	Section 5.02 Negative Covenants of the Borrower
	 	 	85	 
	Section 5.03 Affirmative Covenants of the Servicer
	 	 	88	 
	Section 5.04 Negative Covenants of the Servicer
	 	 	92	 
	Section 5.05 Affirmative Covenants of the Collateral Agent
	 	 	94	 
	Section 5.06 Negative Covenants of the Collateral Agent
	 	 	94	 
	Section 5.07 Affirmative Covenants of the Collateral Custodian
	 	 	94	 
	Section 5.08 Negative Covenants of the Collateral Custodian
	 	 	95	 
	Section 5.09 Covenants of the Borrower Relating to Hedging of Loan Assets
	 	 	95	 
	 
	 	 	 	 
	ARTICLE VI. ADMINISTRATION AND SERVICING OF CONTRACTS
	 	 	96	 
	 
	 	 	 	 
	Section 6.01 Appointment and Designation of the Servicer
	 	 	96	 
	Section 6.02 Duties of the Servicer
	 	 	98	 
	Section 6.03 Authorization of the Servicer
	 	 	100	 
	Section 6.04 Collection of Payments; Accounts
	 	 	101	 
	Section 6.05 Realization Upon Loan Assets
	 	 	103	 
	Section 6.06 Servicing Compensation
	 	 	103	 
	Section 6.07 Payment of Certain Expenses by Servicer
	 	 	103	 
	Section 6.08 Reports to the Administrative Agent; Account Statements;
Servicing Information
	 	 	103	 






ii









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	 	Page	 
	 
	 	 	 	 
	Section 6.09 Annual Statement as to Compliance
	 	 	105	 
	Section 6.10 Annual Independent Public Accountant’s
Servicing Reports
	 	 	105	 
	Section 6.11 The Servicer Not to Resign
	 	 	106	 
	 
	 	 	 	 
	ARTICLE VII. EVENTS OF DEFAULT
	 	 	106	 
	 
	 	 	 	 
	Section 7.01 Events of Default
	 	 	106	 
	Section 7.02 Additional Remedies of the Administrative Agent
	 	 	109	 
	 
	 	 	 	 
	ARTICLE VIII. INDEMNIFICATION
	 	 	111	 
	 
	 	 	 	 
	Section 8.01 Indemnities by the Borrower
	 	 	111	 
	Section 8.02 Indemnities by Servicer
	 	 	115	 
	Section 8.03 Legal Proceedings
	 	 	117	 
	Section 8.04 After-Tax Basis
	 	 	117	 
	 
	 	 	 	 
	ARTICLE IX. THE ADMINISTRATIVE AGENT AND LENDER AGENTS
	 	 	117	 
	 
	 	 	 	 
	Section 9.01 The Administrative Agent
	 	 	117	 
	Section 9.02 The Lender Agents
	 	 	121	 
	 
	 	 	 	 
	ARTICLE X. COLLATERAL AGENT
	 	 	123	 
	 
	 	 	 	 
	Section 10.01 Designation of Collateral Agent
	 	 	123	 
	Section 10.02 Duties of Collateral Agent
	 	 	123	 
	Section 10.03 Merger or Consolidation
	 	 	126	 
	Section 10.04 Collateral Agent Compensation
	 	 	126	 
	Section 10.05 Collateral Agent Removal
	 	 	126	 
	Section 10.06 Limitation on Liability
	 	 	126	 
	Section 10.07 Collateral Agent Resignation
	 	 	128	 
	 
	 	 	 	 
	ARTICLE XI. MISCELLANEOUS
	 	 	128	 
	 
	 	 	 	 
	Section 11.01 Amendments and Waivers
	 	 	128	 
	Section 11.02 Notices, Etc
	 	 	129	 
	Section 11.03 No Waiver; Remedies
	 	 	129	 
	Section 11.04 Binding Effect; Assignability; Multiple Lenders
	 	 	129	 
	Section 11.05 Term of This Agreement
	 	 	130	 
	Section 11.06 GOVERNING LAW; JURY WAIVER
	 	 	130	 
	Section 11.07 Costs, Expenses and Taxes
	 	 	130	 






iii









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	 	Page	 
	 
	 	 	 	 
	Section 11.08 No Proceedings
	 	 	131	 
	Section 11.09 Recourse Against Certain Parties
	 	 	131	 
	Section 11.10 Execution in Counterparts; Severability; Integration
	 	 	133	 
	Section 11.11 Consent to Jurisdiction; Service of Process
	 	 	133	 
	Section 11.12 Characterization of Conveyances Pursuant to the Purchase and
Sale Agreement
	 	 	133	 
	Section 11.13 Confidentiality
	 	 	134	 
	Section 11.14 Non-Confidentiality of Tax Treatment
	 	 	136	 
	Section 11.15 Waiver of Set Off
	 	 	136	 
	Section 11.16 Headings and Exhibits
	 	 	136	 
	Section 11.17 Ratable Payments
	 	 	136	 
	Section 11.18 Failure of Borrower or Servicer to Perform Certain Obligations
	 	 	137	 
	Section 11.19 Power of Attorney
	 	 	137	 
	Section 11.20 Delivery of Termination Statements, Releases, etc
	 	 	137	 
	 
	 	 	 	 
	ARTICLE XII. COLLATERAL CUSTODIAN
	 	 	137	 
	 
	 	 	 	 
	Section 12.01 Designation of Collateral Custodian
	 	 	137	 
	Section 12.02 Duties of Collateral Custodian
	 	 	138	 
	Section 12.03 Merger or Consolidation
	 	 	141	 
	Section 12.04 Collateral Custodian Compensation
	 	 	141	 
	Section 12.05 Collateral Custodian Removal
	 	 	141	 
	Section 12.06 Limitation on Liability
	 	 	141	 
	Section 12.07 Collateral Custodian Resignation
	 	 	142	 
	Section 12.08 Release of Documents
	 	 	143	 
	Section 12.09 Return of Required Loan Documents
	 	 	143	 
	Section 12.10 Access to Certain Documentation and Information Regarding the
Collateral Portfolio; Audits of Servicer
	 	 	144	 
	Section 12.11 Bailment
	 	 	144	 







iv









 








LIST OF SCHEDULES AND EXHIBITS




SCHEDULES




	 	 	 
	SCHEDULE I

	 	Conditions Precedent Documents
	SCHEDULE II

	 	Prior Names, Tradenames, Fictitious Names and “Doing Business
As” Names
	SCHEDULE III

	 	Eligibility Criteria
	SCHEDULE IV

	 	Agreed-Upon Procedures For Independent Public Accountants
	SCHEDULE V

	 	Loan Asset Schedule






EXHIBITS




	 	 	 
	EXHIBIT A

	 	Form of Approval Notice
	EXHIBIT B

	 	Form of Assignment of Mortgage
	EXHIBIT C

	 	Form of Borrowing Base Certificate
	EXHIBIT D

	 	Form of Disbursement Request
	EXHIBIT E

	 	Form of Joinder Supplement
	EXHIBIT F

	 	Form of Notice of Borrowing
	EXHIBIT G

	 	Form of Notice of Reduction (Reduction of Advances Outstanding)
	EXHIBIT H

	 	[Reserved]
	EXHIBIT I

	 	Form of Variable Funding Note
	EXHIBIT J

	 	Form of Notice and Request for Consent
	EXHIBIT K

	 	Form of Certificate of Closing Attorneys
	EXHIBIT L

	 	Form of Servicing Report
	EXHIBIT M

	 	Form of Servicer’s Certificate (Servicing Report)
	EXHIBIT N

	 	Form of Release of Required Loan Documents
	EXHIBIT O

	 	Form of Transferee Letter
	EXHIBIT P

	 	Form of Power of Attorney for Servicer
	EXHIBIT Q

	 	Form of Power of Attorney for Borrower
	EXHIBIT R

	 	Form of Servicer’s Certificate (Loan Asset Register)






ANNEXES




	 	 	 
	ANNEX A

	 	Commitments







-v-











 





          This LOAN AND SERVICING AGREEMENT is made as of November 16, 2009, among:





     (1) FIFTH STREET FUNDING, LLC, a Delaware limited liability company (together with its
successors and assigns in such capacity, the “Borrower”);




     (2) FIFTH STREET FINANCE CORP., a Delaware corporation, as the Servicer (as defined
herein) and the Transferor (as defined herein);




     (3) EACH OF THE CONDUIT LENDERS FROM TIME TO TIME PARTY HERETO, as a Conduit Lender;




     (4) EACH OF THE INSTITUTIONAL LENDERS FROM TIME TO TIME PARTY HERETO, as an
Institutional Lender;




     (5) EACH OF THE LENDER AGENTS FROM TIME TO TIME PARTY HERETO, as a Lender Agent;




     (6) WELLS FARGO SECURITIES, LLC, as Administrative Agent (“Administrative
Agent”); and




     (7) WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), as the Collateral
Agent (together with its successors and assigns in such capacity, the “Collateral
Agent”), the Account Bank (as defined herein) and the Collateral Custodian (together
with its successors and assigns in such capacity, the “Collateral Custodian”).



PRELIMINARY STATEMENT




          The Lenders have agreed, on the terms and conditions set forth herein, to provide a secured
revolving credit facility which shall provide for Advances under the Variable Funding Note(s) from
time to time in an aggregate principal amount not to exceed the Borrowing Base. The proceeds of the
Advances will be used to finance the Borrower’s purchase, on a “true sale” basis, of Eligible Loan
Assets from the Transferor, approved by the Administrative Agent, pursuant to the Purchase and Sale
Agreement between the Borrower and the Transferor. Accordingly, the parties agree as follows:




ARTICLE I.




DEFINITIONS




     SECTION 1.01 Certain Defined Terms.



          (a) Certain capitalized terms used throughout this Agreement are defined above or in this
Section 1.01.




          (b) As used in this Agreement and the exhibits and schedules thereto (each of which is hereby
incorporated herein and made a part hereof), 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):




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




          “Account Bank” means Wells Fargo, in its capacity as the “Account Bank” pursuant to
each of the Collection Account Agreement and the Unfunded Exposure Account Agreement.




          “Action” has the meaning assigned to that term in Section 8.03.




          “Additional Amount” has the meaning assigned to that term in Section 2.11(a).




          “Adjusted Borrowing Value” means for any Loan Asset, for any date of determination, an
amount equal to the lowest of: (i) the Outstanding Balance of such Loan Asset at such time, and
(ii) the Assigned Value of such Loan Asset at such time multiplied by the Outstanding Balance of
such Loan Asset; provided that the parties hereby agree that the Adjusted Borrowing Value of any
Loan Asset that is no longer an Eligible Loan Asset shall be zero; provided further that the
aggregate Adjusted Borrowing Value for all Loan Assets with respect to a single Obligor and its
Affiliates shall not exceed $15,000,000 (for the avoidance of doubt, companies owned by the same
private equity sponsor shall not be considered “Affiliates” for purposes of this definition).




          “Administrative Agent” means Wells Fargo Securities, LLC, in its capacity as
administrative agent for the Lender Agents, together with its successors and assigns, including any
successor appointed pursuant to Article IX.




          “Advance” means each loan advanced by the Lenders to the Borrower on an Advance Date
pursuant to Article II.




          “Advance Date” means, with respect to any Advance, the date on which such Advance is
made.




          “Advance Date Assigned Value” means, with respect to any Loan Asset, the value
(expressed as a percentage of the Outstanding Balance of such Loan Asset) equal to the lower of (i)
the purchase price paid by the Borrower to acquire such Loan Asset from the Transferor (expressed
exclusive of accrued interest) or (ii) the value determined by the Administrative Agent, in its
sole reasonable discretion.




          “Advances Outstanding” means, at any time, the sum of the principal amounts of
Advances loaned to the Borrower for the initial and any subsequent borrowings pursuant to
Sections 2.01 and 2.02 as of such time, reduced by the aggregate Available Collections
received and distributed as repayment of principal amounts of Advances outstanding pursuant to
Section 2.04 at or prior to such time and any other amounts received by the Lenders to
repay the principal amounts of Advances outstanding pursuant to Section 2.18 or otherwise
at or prior to such time; provided that the principal amounts of Advances outstanding shall not be
reduced by




-2-









 







any Available Collections or other amounts if at any time such Available Collections or other
amounts are rescinded or must be returned for any reason.




          “Affected Party” has the meaning assigned to that term in Section 2.10.




          “Affiliate” when used with respect to a Person, means any other Person controlling,
controlled by or under common control with such Person. For the purposes of this definition,
“control,” when used with respect to any specified Person, means the power to vote 20% or more of
the voting securities of such Person or 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” and “controlled” have meanings correlative to the foregoing;
provided that for purposes of determining whether any Loan Asset is an Eligible Loan Asset or for
purposes of Section 5.01(b)(xix), the term Affiliate shall not include any Affiliate
relationship which may exist solely as a result of direct or indirect ownership of, or control by,
a common Financial Sponsor.




          “Agented Note” means any Loan Asset (i) originated as a part of a syndicated loan
transaction that has been closed (without regard to any contemporaneous or subsequent syndication
of such Loan Asset) prior to such Loan Asset becoming part of the Collateral Portfolio and (ii)
with respect to which, upon an assignment of the note under the Purchase and Sale Agreement to the
Borrower, the Borrower, as assignee of the note, will have all of the rights but none of the
obligations of the Transferor with respect to such note and the Underlying Collateral.




          “Agreement” means this Loan and Servicing Agreement, as the same may be amended,
restated, supplemented and/or otherwise modified from time to time hereafter.




          “Applicable Law” means for any Person all existing and future laws, rules, regulations
(including proposed, temporary and final income tax regulations), statutes, treaties, codes,
ordinances, permits, certificates, orders, licenses of and interpretations by any Governmental
Authority applicable to such Person (including, without limitation, predatory lending laws, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations “B” and
“Z”, the Servicemembers Civil Relief Act of 2003 and state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code and all other consumer credit laws and equal credit
opportunity and disclosure laws) and applicable judgments, decrees, injunctions, writs, awards or
orders of any court, arbitrator or other administrative, judicial, or quasi-judicial tribunal or
agency of competent jurisdiction.




          “Applicable Percentage” means, for each Eligible Loan Asset, the percentage assigned
by the Administrative Agent in its sole discretion on the Cut-Off Date and set forth on the
Approval Notice pertaining to such Loan Asset; provided that such percentage shall not be less than
50% or greater than 65%.




          “Applicable Spread” means 4.00% per annum; provided that, at any time after the
occurrence of an Event of Default, the Applicable Spread shall be 5.50%.




-3-









 








          “Approval Notice” means, with respect to any Eligible Loan Asset, the written notice,
in substantially the form attached hereto as Exhibit A, evidencing the approval by the
Administrative Agent, in its sole discretion, of the conveyance of such Eligible Loan Asset by the
Transferor to the Borrower pursuant to the terms of the Purchase and Sale Agreement and the Loan
Assignment by which the Transferor effects such conveyance.




          “Asset Coverage Ratio” means the ratio, determined on a consolidated basis, without
duplication, in accordance with GAAP, of (a) the fair value of the total assets of Fifth Street and
its Subsidiaries as required by, and in accordance with, the 1940 Act and any orders of the
Securities and Exchange Commission issued to Fifth Street, to be determined by the Board of
Directors of Fifth Street and reviewed by its auditors, less all liabilities (other than
Indebtedness, including Indebtedness hereunder) of Fifth Street and its Subsidiaries, to (b) the
aggregate amount of Indebtedness of Fifth Street and its Subsidiaries; provided that the
calculation of the Asset Coverage Ratio shall not include Subsidiaries that are not required to be
included by the 1940 Act as affected by such orders of the Securities and Exchange Commission
issued to Fifth Street, including, if set forth in any such order, any Subsidiary which is a small
business investment company which is licensed by the Small Business Administration to operate under
the Small Business Investment Act of 1958.




          “Assigned Documents” has the meaning assigned to that term in Section 2.12.




          “Assigned Value” means, with respect to each Loan Asset, as of any date of
determination and expressed as a percentage of the Outstanding Balance of such Loan Asset, the
Advance Date Assigned Value of such Loan Asset, subject to the following terms:




          (a) If a Value Adjustment Event of the type described in clauses (ii), (iv) or
(vi) of the definition thereof with respect to such Loan Asset occurs, the Assigned Value
of such Loan Asset will be zero.




          (b) If a Value Adjustment Event of the type described in clauses (i), (iii) or
(v) of the definition thereof with respect to such Loan Asset occurs, “Assigned Value” may
be amended by the Administrative Agent, in its sole discretion; provided that the Assigned Value of
any Priced Loan Asset shall not be less than the price quoted therefor (if any) by such nationally
recognized pricing service as selected by the Administrative Agent. In the event the Borrower
disagrees with the Administrative Agent’s determination of the Assigned Value of a Loan Asset, the
Borrower may (at its expense) retain any nationally recognized valuation firm reasonably acceptable
to the Administrative Agent to value such Loan Asset and if the value determined by such firm is
greater than the Administrative Agent’s determination of the Assigned Value, such firm’s valuation
shall become the Assigned Value of such Loan Asset; provided that the Assigned Value of such Loan
Asset shall be the value assigned by the Administrative Agent until such firm has determined its
value. The Assigned Value of any Loan Asset may be increased at the sole discretion of the
Administrative Agent upon improvement in the Net Leverage Ratio or the Interest Coverage Ratio of
such Loan Asset, as the case may be, as part of a Value Adjustment Event; provided that such
Assigned Value may not increase above the purchase price paid by the Borrower to acquire the Loan
Asset from the Transferor. The Administrative Agent shall promptly notify the Servicer of any
change effected by the Administrative Agent of the Assigned Value of any Loan Asset.




-4-









 








          “Assignment of Mortgage” means an assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form sufficient under the laws of the jurisdiction wherein the
related mortgaged property is located to effect the assignment of the Mortgage to the Collateral
Agent, which assignment, notice of transfer or equivalent instrument may be in the form of one or
more blanket assignments covering the Loan Assets secured by mortgaged properties located in the
same jurisdiction, if permitted by Applicable Law, substantially in the form of Exhibit B.




          “Available Collections” means, (a) all cash collections and other cash proceeds with
respect to any Loan Asset, including, without limitation, all Principal Collections, all Interest
Collections, all proceeds of any sale or disposition with respect to such Loan Asset, cash proceeds
or other funds received by the Borrower or the Servicer with respect to any Underlying Collateral
(including from any guarantors), all other amounts on deposit in the Collection Account from time
to time, and all proceeds of Permitted Investments with respect to the Controlled Accounts and (b)
all payments received pursuant to any Hedging Agreement or Hedge Transaction; provided that, for
the avoidance of doubt, “Available Collections” shall not include amounts on deposit in the
Unfunded Exposure Account which do not represent proceeds of Permitted Investments.




          “Average Life” means, as of any date of determination, the number obtained for each
Loan Asset by (i) summing the products of (A) the number of actual days divided by 360 from such
date of determination to the respective dates of each successive Scheduled Payment of principal of
a Loan Asset and (B) the related amounts of the principal of such Scheduled Payment of principal
and (ii) dividing such sum by the sum of all successive Scheduled Payment of principal of such Loan
Asset.




          “Bankruptcy Code” means Title 11, United States Code, 11 U.S.C. §§ 101 et seq., as
amended from time to time.




          “Bankruptcy Event” shall be deemed to have occurred with respect to a Person if
either:




          (i) a case or other proceeding shall be commenced, without the application or consent of such
Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution,
winding up, or composition or readjustment of debts of such Person, the appointment of a trustee,
receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or
substantially all of its assets, or any similar action with respect to such Person under any law
relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of
debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a
period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in
an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in
effect; or




          (ii) such Person shall commence a voluntary case or other proceeding under any Bankruptcy Laws
now or hereafter in effect, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for
such Person or all or substantially all of its assets, or shall make any general




-5-









 







assignment for the benefit of creditors, or shall fail to, or admit in writing its inability
to, pay its debts generally as they become due, or, if a corporation or similar entity, its board
of directors or members shall vote to implement any of the foregoing.




          “Bankruptcy Laws” means 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.




          “Bankruptcy Proceeding” means any case, action or proceeding before any court or other
Governmental Authority relating to any Bankruptcy Event.




          “Base Rate” means, on any date, a fluctuating per annum interest rate equal to the
higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1.5%.




          “Borrower” has the meaning assigned to that term in the preamble hereto.




          “Borrowing Base” means, as of any date of determination, an amount equal to the lesser
of:




          (a) (i) the aggregate sum of the products of (A) the Applicable Percentage for each Eligible
Loan Asset as of such date and (B) the Adjusted Borrowing Value of such Eligible Loan Asset as of
such date, plus (ii) the amount on deposit in the Principal Collection Account as of such date
plus (iii) the amount on deposit in the Unfunded Exposure Account minus the
Unfunded Exposure Equity Amount; or




          (b) (i) the aggregate Adjusted Borrowing Value of all Eligible Loan Assets as of such date
minus (ii) the Minimum Equity Amount, plus (iii) the amount on deposit in the Principal
Collection Account as of such date plus (iv) the amount on deposit in the Unfunded Exposure
Account minus the Unfunded Exposure Equity Amount; or




          (c) the Maximum Facility Amount minus the Unfunded Exposure Amount plus
amounts on deposit in the Unfunded Exposure Account;




provided that, for the avoidance of doubt, any Loan Asset which at any time is no longer an
Eligible Loan Asset shall not be included in the calculation of “Borrowing Base”.




          “Borrowing Base Certificate” means a certificate setting forth the calculation of the
Borrowing Base as of the applicable date of determination substantially in the form of Exhibit
C hereto, prepared by the Servicer.




          “Borrowing Base Deficiency” means, as of any date of determination, the extent to
which the aggregate Advances Outstanding on such date exceeds the Borrowing Base.




          “Breakage Fee” means, for Advances which are repaid (in whole or in part) on any date
other than a Payment Date, the breakage costs, if any, related to such repayment, based upon the
assumption that the Lender funded its loan commitment in the London Interbank Eurodollar market and
using any reasonable attribution or averaging methods which the Lender




-6-









 







deems appropriate and practical, it hereby being understood that the amount of any loss, costs
or expense payable by the Borrower to any Lender as Breakage Fee shall be determined in the
respective Lender Agent’s reasonable discretion and shall be conclusive absent manifest error.




          “Business Day” means a day of the year other than (i) Saturday or a Sunday or (ii) any
other day on which commercial banks in New York, New York or the city in which the offices of the
Collateral Agent are authorized or required by applicable law, regulation or executive order to
close; provided, that, if any determination of a Business Day shall relate to an Advance bearing
interest at LIBOR, the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market. For avoidance of doubt, if the
offices of the Collateral Agent are authorized by applicable law, regulation or executive order to
close but remain open, such day shall not be a “Business Day”.




          “Capital Lease Obligations” means, with respect to any entity, the obligations of such
entity to pay rent or other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such entity under GAAP, and
the amount of such obligations shall be the capitalized amount thereof determined in accordance
with GAAP.




          “Change of Control” shall be deemed to have occurred if any of the following occur:




          (a) the Management Agreement shall fail to be in full force and effect; provided that if,
pursuant to a Fifth Street Affiliate Merger Transaction, the services provided to Fifth Street
under the Management Agreement have been assumed by a Fifth Street Merger Party or by Fifth Street
for its own account, then the foregoing shall not be deemed a “Change of Control”;




          (b) the creation or imposition of any Lien on any limited liability company membership
interest in the Borrower (other than pursuant to the Pledge Agreement);




          (c) the failure by Fifth Street to own 100% of the limited liability company membership
interests in the Borrower; or




          (d) the dissolution, termination or liquidation in whole or in part, transfer or other
disposition, in each case, of all or substantially all of the assets of, Fifth Street.




          “Change of Tax Law” means any change in application or public announcement of an
official position under or any change in or amendment to the laws (or any regulations or rulings
promulgated thereunder) of any jurisdiction in which an Obligor is organized, or any political
subdivision or taxing authority of any of the foregoing, affecting taxation, or any proposed change
in such laws or change in the official application, enforcement or interpretation of such laws,
regulations or rulings (including a holding by a court of competent jurisdiction), or any other
action taken by a taxing authority or court of competent jurisdiction in the relevant jurisdiction,
or the official proposal of any such action.




          “Closing Date” means November 16, 2009




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          “Code” means the Internal Revenue Code of 1986, as amended.




          “Collateral Agent” has the meaning assigned to that term in the preamble hereto.




          “Collateral Agent Expenses” means the expenses set forth in the Wells Fargo Fee Letter
and any other accrued and unpaid expenses (including attorneys’ fees, costs and expenses) and
indemnity amounts payable by the Borrower to the Collateral Agent under the Transaction Documents.




          “Collateral Agent Fees” means the fees set forth in the Wells Fargo Fee Letter, as
such fee letter may be amended, restated, supplemented and/or otherwise modified from time to time.




          “Collateral Agent Termination Notice” has the meaning assigned to that term in
Section 10.05.




          “Collateral Custodian” means Wells Fargo, not in its individual capacity, but solely
as collateral custodian pursuant to the terms of this Agreement.




          “Collateral Custodian Expenses” means the expenses set forth in the Wells Fargo Fee
Letter and any other accrued and unpaid expenses (including attorneys’ fees, costs and expenses)
and indemnity amounts payable by the Borrower to the Collateral Custodian under the Transaction
Documents.




          “Collateral Custodian Fees” means the fees set forth in the Wells Fargo Fee Letter, as
such fee letter may be amended, restated, supplemented and/or otherwise modified from time to time.




          “Collateral Custodian Termination Notice” has the meaning assigned to that term in
Section 12.05.




          “Collateral Portfolio” means all right, title, and interest (whether now owned or
hereafter acquired or arising, and wherever located) of the Borrower in the property identified
below in clauses (i) through (iv) and all accounts, cash and currency, chattel
paper, tangible chattel paper, electronic chattel paper, copyrights, copyright licenses, equipment,
fixtures, contract rights, general intangibles, instruments, certificates of deposit, certificated
securities, uncertificated securities, financial assets, securities entitlements, commercial tort
claims, deposit accounts, inventory, investment property, letter-of-credit rights, software,
supporting obligations, accessions, or other property consisting of, arising out of, or related to
any of the following (in each case excluding the Retained Interest and the Excluded Amounts):




          (i) the Loan Assets, and all monies due or to become due in payment under such Loan Assets on
and after the related Cut-Off Date, including, but not limited to, all Available Collections;




          (ii) the Portfolio Assets with respect to the Loan Assets referred to in clause (i);




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          (iii) the Controlled Accounts and all Permitted Investments purchased with funds on deposit in
the Controlled Accounts; and




          (iv) all income and Proceeds of the foregoing.




          “Collection Account” means a trust account (account number 53237100 at the Account
Bank) in the name of the Borrower for the benefit of and under the sole dominion and control of the
Collateral Agent for the benefit of the Secured Parties; provided, that the funds deposited therein
(including any interest and earnings thereon) from time to time shall constitute the property and
assets of the Borrower, and the Borrower shall be solely liable for any Taxes payable with respect
to the Collection Account.




          “Collection Account Agreement” means that certain Collection Account Agreement, dated
the date of this Agreement, among the Borrower, the Servicer, the Account Bank, the Administrative
Agent and the Collateral Agent, which agreement relates to the Collection Account, as such
agreement may from time to time be amended, supplemented or otherwise modified in accordance with
the terms thereof.




          “Collection Date” means the date on which the aggregate outstanding principal amount
of the Advances have been repaid in full and all Yield and Fees and all other Obligations have been
paid in full, and the Borrower shall have no further right to request any additional Advances.




          “Commercial Paper Notes” means, any short-term promissory notes of any Conduit Lender
issued by such Conduit Lender in the commercial paper market.




          “Commitment” means, with respect to each Lender, (i) prior to the end of the
Reinvestment Period or for purposes of Advances made pursuant to Section 2.02(f), the
dollar amount set forth opposite such Lender’s name on Annex A hereto (as such amount may
be revised from time to time) or the amount set forth as such Lender’s “Commitment” on Schedule I
to the Joinder Supplement relating to such Lender, as applicable and (ii) on or after the
Reinvestment Period (other than for purposes of Advances made pursuant to Section 2.02(f)),
such Lender’s Pro Rata Share of the aggregate Advances Outstanding.




          “Commitment Increase Amount” means, in the event the aggregate Commitments are
increased after the Closing Date pursuant to Section 2.22, the amount by which such
increased aggregate Commitments exceed the aggregate Commitments in effect immediately prior to
giving effect to such increase.




          “Commitment Increase Closing Date” means, in the event the aggregate Commitments are
increased after the Closing Date pursuant to Section 2.22, the date such increase shall
become effective.




          “Conduit Lender” means each commercial paper conduit as may from time to time become
a Lender hereunder by executing and delivering a Joinder Supplement to the Administrative Agent and
the Borrower as contemplated by Section 2.22(b).




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          “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise.




          “Controlled Accounts” means the Collection Account and the Unfunded Exposure Account.




          “Cut-Off Date” means, with respect to each Loan Asset, the date such Loan Asset is
Pledged hereunder.




          “Delayed Draw Loan Asset” means a Loan Asset that is fully committed on the initial
funding date of such Loan Asset and is required to be fully funded in one or more installments on
draw dates to occur within one year of the initial funding of such Loan Asset but which, once all
such installments have been made, has the characteristics of a Term Loan Asset.




          “Determination Date” means the fifth Business Day after the end of each calendar
month.




          “Disbursement Request” means a disbursement request from the Borrower to the
Administrative Agent and the Collateral Agent in the form attached hereto as Exhibit D in
connection with a disbursement request from the Unfunded Exposure Account in accordance with
Section 2.04(e) or a disbursement request from the Principal Collection Account in
accordance with Section 2.21, as applicable.




          “EBITDA” means, with respect to any period and any Loan Asset, the meaning of
“EBITDA”, “Adjusted EBITDA” or any comparable definition in the Loan Agreement for each such Loan
Asset (together with all add-backs and exclusions as designated in such Loan Agreement), and in any
case that “EBITDA”, “Adjusted EBITDA” or such comparable definition is not defined in such Loan
Agreement, an amount, for the principal obligor on such Loan Asset and any of its parents or
Subsidiaries that are obligated pursuant to the Loan Agreement for such Loan Asset (determined on a
consolidated basis without duplication in accordance with GAAP) equal to earnings from continuing
operations for such period plus interest expense, income taxes and unallocated depreciation and
amortization for such period (to the extent deducted in determining earnings from continuing
operations for such period), and any other item the Borrower and the Administrative Agent mutually
deem to be appropriate.




          “Eligible Loan Asset” means, at any time, a Loan Asset in respect of which each of the
representations and warranties contained in Section 4.02 and Schedule III hereto is
true and correct.




          “Environmental Laws” means any and all foreign, federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders
of courts or Governmental Authorities, relating to the protection of human health or the
environment, including, but not limited to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials. Environmental Laws include,
without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. § 9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C. §




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331 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean
Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601
et seq.), the Safe Drinking Water Act (42 U.S.C. § 300, et seq.), the Environmental
Protection Agency’s regulations relating to underground storage tanks (40 C.F.R. Parts 280 and
281), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the rules
and regulations thereunder, each as amended or supplemented from time to time.




          “Equity Security” means (i) any equity security or any other security that is not
eligible for purchase by the Borrower as a Loan Asset, (ii) any security purchased as part of a
“unit” with a Loan Asset and that itself is not eligible for purchase by the Borrower as a Loan
Asset, and (iii) any obligation that, at the time of commitment to acquire such obligation, was
eligible for purchase by the Borrower as a Loan Asset but that, as of any subsequent date of
determination, no longer is eligible for purchase by the Borrower as a Loan Asset, for so long as
such obligation fails to satisfy such requirements.




          “ERISA” means the United States Employee Retirement Income Security Act of 1974, as
amended from time to time.




          “ERISA Affiliate” means (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” means the occurrence of any of the following: (a)
Wachovia shall have notified the Administrative Agent of a determination by Wachovia or any of its
assignees or participants 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 fund any Advance, (b) Wachovia shall have notified the
Administrative Agent of the inability, for any reason, of Wachovia or any of its respective
assignees or participants to determine LIBOR, (c) Wachovia shall have notified the Administrative
Agent of a determination by Wachovia or any of its respective assignees or participants that the
rate at which deposits of United States dollars are being offered to Wachovia or any of its
respective assignees or participants in the London interbank market does not accurately reflect the
cost to Wachovia or its assignee or participant of making, funding or maintaining any Advance or
(d) Wachovia shall have notified the Administrative Agent of the inability of Wachovia or any of
its respective assignees or participants to obtain United States dollars in the London interbank
market to make, fund or maintain any Advance.




          “Event of Default” has the meaning assigned to that term in Section 7.01.




          “Excepted Persons” has the meaning assigned to that term in Section 11.13(a).




          “Exchange Act” means the United States Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.




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          “Excluded Amounts” means (a) any amount received in the Collection Account with
respect to any Loan Asset included as part of the Collateral Portfolio, which amount is
attributable to the payment of any Tax, fee or other charge imposed by any Governmental Authority
on such Loan Asset or on any Underlying Collateral and (b) any amount received in the Collection
Account or other Controlled Account representing (i) any amount representing a reimbursement of
insurance premiums, (ii) any escrows relating to Taxes, insurance and other amounts in connection
with Loan Assets which are held in an escrow account for the benefit of the Obligor and the secured
party pursuant to escrow arrangements under a Loan Agreement and (iii) any amount received in the
Collection Account with respect to any Loan Asset retransferred or substituted for upon the
occurrence of a Warranty Event or that is otherwise replaced by a Substitute Eligible Loan Asset,
or that is otherwise sold or transferred by the Borrower pursuant to Section 2.07, to the
extent such amount is attributable to a time after the effective date of such replacement or sale.




          “Excluded Taxes” has the meaning assigned to that term in Section 2.11(a).




          “Facility Maturity Date” means the earliest to occur of (i) the Stated Maturity Date,
(ii) the date of the declaration, or automatic occurrence, of the Facility Maturity Date pursuant
to Section 7.01, (iii) the Collection Date and (iv) the occurrence of the termination of
this Agreement pursuant to Section 2.18(b) hereof.




          “FDIC” means the Federal Deposit Insurance Corporation, and any successor thereto.




          “Federal Funds Rate” means, for any period, a fluctuating interest per annum rate
equal, for each day during such period, to the weighted average of the overnight federal funds
rates as in Federal Reserve Board Statistical Release H.15(519) or any successor or substitute
publication selected by the Administrative Agent (or, if such day is not a Business Day, for the
next preceding Business Day), or, if for any reason such rate is not available on any day, the rate
determined, in the sole discretion of the Administrative Agent, to be the rate at which overnight
federal funds are being offered in the national federal funds market at 9:00 a.m. on such day.




          “Fees” means (i) the Non-Usage Fee and (ii) the fees payable to each Lender or Lender
Agent pursuant to the terms of any Lender Fee Letter.




          “Fifth Street” means Fifth Street Finance Corp.




          “Fifth Street Affiliate Merger Transaction” has the meaning specified in Section
5.04(a) hereof.




          “Fifth Street Competitor” means any specialty finance company which derives
substantially all of its revenue from lending to and providing investment in middle market
companies.




          “Fifth Street LIBOR Rate” means, with respect to any Loan Asset, the definition of
“LIBOR Rate” or any comparable definition in the Loan Agreement for each such Loan Asset, and in
any case that “LIBOR Rate” or such comparable definition is not defined in such Loan Agreement, the
rate per annum appearing on Reuters Screen LIBOR01 Page (or on any




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successor or substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on such page of such
service, as determined by the Administrative Agent from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time for such day, provided, if such day is not a Business Day,
the immediately preceding Business Day, as the rate for dollar deposits with a one-month, a
two-month or a three-month maturity, as applicable, as and when determined in accordance with the
applicable Loan Agreement.




          “Fifth Street Merger Party” shall mean any Person that (a) is an Affiliate of Fifth
Street (other than the Borrower) on the Closing Date or (b) becomes an Affiliate of Fifth Street
after the Closing Date and was either (i) a newly formed Person which (x) has not entered into any
merger, consolidation or acquisition prior to the applicable Fifth Street Affiliate Merger
Transaction and (y) since its inception has been an Affiliate of Fifth Street or (ii) an existing
Person when it became an Affiliate of Fifth Street but, immediately prior to such Fifth Street
Affiliate Merger Transaction, had been an Affiliate of Fifth Street for at least two years.




          “Fifth Street Prime Rate” means, with respect to any Loan Asset, the definition of
“Prime Rate” or any comparable definition in the Loan Agreement for each such Loan Asset, and in
any case that “Prime Rate” or such comparable definition is not defined in such Loan Agreement, the
rate designated by certain reference lenders in the applicable Loan Agreement from time to time as
its prime rate in the United States, such rate to change as and when the designated rate changes;
provided that the Fifth Street Prime Rate is not intended to be lowest rate of interest charged by
Fifth Street in connection with extensions of credit to debtors.




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




          “Financial Sponsor” means any Person, including any Subsidiary of such Person, whose
principal business activity is acquiring, holding, and selling investments (including controlling
interests) in otherwise unrelated companies that each are distinct legal entities with separate
management, books and records and bank accounts, whose operations are not integrated with one
another and whose financial condition and creditworthiness are independent of the other companies
so owned by such Person.




          “Fitch” means Fitch, Inc. or any successor thereto.




          “Fixed Rate Loan Asset” means a Loan Asset other than a Floating Rate Loan Asset.




          “Floating Rate Loan Asset” means a Loan Asset under which the interest rate payable by
the Obligor thereof is based on the Fifth Street Prime Rate or Fifth Street LIBOR Rate,
plus some specified interest percentage in addition thereto, and which provides that such
interest rate will reset immediately upon any change in the related Fifth Street Prime Rate or
Fifth Street LIBOR Rate.




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




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          “Governmental Authority” means, 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 body or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any court or arbitrator
having jurisdiction over such Person.




          “Hazardous Materials” means all materials subject to any Environmental Law, including,
without limitation, materials listed in 49 C.F.R. § 172.010, materials defined as hazardous
pursuant to § 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, flammable, explosive or radioactive materials, hazardous or toxic wastes or
substances, lead-based materials, petroleum or petroleum distillates or asbestos or material
containing asbestos, polychlorinated biphenyls, radon gas, urea formaldehyde and any substances
classified as being “in inventory”, “usable work in process” or similar classification that would,
if classified as unusable, be included in the foregoing definition.




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




          “Hedge Collateral” has the meaning assigned to that term in Section 5.09(b).




          “Hedge Counterparty” means any entity, approved in writing by the Administrative Agent
(in its sole discretion), which has entered into a Hedging Agreement in connection with this
Agreement.




          “Hedge Transaction” means each interest rate swap transaction, interest rate cap
transaction, interest rate floor transaction or other derivative transaction approved in writing by
the Administrative Agent, between the Borrower and a Hedge Counterparty that is entered into
pursuant to Section 5.09(a) and is governed by a Hedging Agreement.




          “Hedging Agreement” means each agreement between the Borrower and a Hedge Counterparty
that governs one or more Hedge Transactions entered into by the Borrower and such Hedge
Counterparty pursuant to Section 5.09(a), which agreement shall consist of a “Master
Agreement” in a form published by the International Swaps and Derivatives Association, Inc.,
together with a “Schedule” and each “Confirmation” thereunder confirming the specific terms of each
such Hedge Transaction; provided that the “Schedule” and the form of each “Confirmation” to any
Hedging Agreement shall be subject to the written approval of the Administrative Agent, in its sole
discretion.




          “Improvement Date” means, with respect to any Loan Asset, any date upon which the
Assigned Value of such Loan Asset is revised pursuant to clause (b) of the definition of
“Assigned Value” due to an improvement in the Interest Coverage Ratio or Net Leverage Ratio.




          “Indebtedness” means:




          (i) with respect to any Obligor under any Loan Asset, for the purposes of the definition of
the Interest Coverage Ratio and the Net Leverage Ratio, the meaning of “Indebtedness” or any
comparable definition in the Loan Agreement for each such Loan Asset, and in any case that
“Indebtedness” or such comparable definition is not defined in such Loan




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Agreement, without duplication, (a) all obligations of such entity for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such entity evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such entity under conditional sale
or other title retention agreements relating to property acquired by such entity, (d) all
obligations of such entity in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of business), (e) all
indebtedness of others secured by (or for which the holder of such indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such
entity, whether or not the indebtedness secured thereby has been assumed, (f) all guarantees by
such entity of indebtedness of others, (g) all Capital Lease Obligations of such entity, (h) all
obligations, contingent or otherwise, of such entity as an account party in respect of letters of
credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such entity in
respect of bankers’ acceptances; and




          (ii) for all other purposes, with respect to any Person 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 or
other evidence of indebtedness customary for indebtedness of that type, (b) all obligations of such
Person under leases that have been or should be, in accordance with GAAP, recorded as 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 Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable for the payment thereof,
(e) all indebtedness, obligations or liabilities of that Person in respect of derivatives, and (f)
all 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, indebtedness or obligations of others of the kind referred to in clauses (a)
through (e) of this clause (ii).




          “Indemnified Amounts” has the meaning assigned to that term in Section 8.01.




          “Indemnified Party” has the meaning assigned to that term in Section 8.01.




          “Indemnifying Party” has the meaning assigned to that term in Section 8.03.




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




-15-









 







applicable federal or state law relating to bankruptcy and (ii) at least three years of
employment experience with one or more entities that provide, in the ordinary course of their
respective businesses, advisory, management or placement services to issuers of securitization or
structured finance instruments, agreements or securities. The initial Independent Director of the
Borrower set forth in the Borrower’s operating agreement as of the Closing Date is hereby approved
by the Administrative Agent.




          “Indorsement” has the meaning specified in Section 8-102(a)(11) of the UCC, and
“Indorsed” has a corresponding meaning.




          “Initial Advance” means the first Advance made pursuant to Article II.




          “Initial Payment Date” means the 15th day of January (or if such day is not
a Business Day, the next succeeding Business Day).




          “Initial Reinvestment Period Extension” has the meaning assigned to that term in
Section 2.19(b).




          “Initial Stated Maturity Extension” has the meaning assigned to that term in
Section 2.19(a).




          “Institutional Lender” means (i) Wachovia and (ii) each financial institution other
than a Conduit Lender which may from time to time become a Lender hereunder by executing and
delivering a Joinder Supplement to the Administrative Agent and the Borrower as contemplated by
Section 2.22(b).




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




          “Insurance Policy” means, with respect to any Loan Asset, an insurance policy covering
liability and physical damage to, or loss of, the Underlying Collateral.




          “Insurance Proceeds” means any amounts received on or with respect to a Loan Asset
under any Insurance Policy or with respect to any condemnation proceeding or award in lieu of
condemnation, other than (i) any such amount received which is required to be used to restore,
improve or repair the related real estate or required to be paid to the Obligor under the Loan
Agreement or (ii) prior to an Event of Default hereunder and with prior notice to the
Administrative Agent, any such amount for which the Borrower has elected, in its reasonable
business discretion, to be used to restore, improve or repair the related real estate or otherwise
to be paid to the Obligor under the Loan Agreement.




          “Interest” means, with respect to any period and any Loan Asset, for the Obligor on
such Loan Asset and any of its parents or Subsidiaries that are obligated under the Loan Agreement
for such Loan Asset (determined on a consolidated basis without duplication in accordance with
GAAP), the meaning of “Interest” or any comparable definition in the Loan Agreement for each such
Loan Asset and in any case that “Interest” or such comparable definition is not defined in such
Loan Agreement, all interest in respect of Indebtedness (including the interest component of any
payments in respect of Capital Lease Obligations) accrued or capitalized during such period
(whether or not actually paid during such period).




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          “Interest Collection Account” means a sub-account (account number 53237102 at the
Account Bank) of the Collection Account into which Interest Collections shall be segregated.




          “Interest Collections” means, (i) with respect to any Loan Asset, all payments and
collections attributable to interest on such Loan Asset, including, without limitation, all
scheduled payments of interest and payments of interest relating to principal prepayments, all
guaranty payments attributable to interest and proceeds of any liquidations, sales, dispositions or
securitizations attributable to interest on such Loan Asset and (ii) amendment fees, late fees,
waiver fees, prepayment fees or other amounts received in respect of Loan Assets.




          “Interest Coverage Ratio” means, with respect to any Loan Asset for any Relevant Test
Period, the meaning of “Interest Coverage Ratio” or any comparable definition in the Loan Agreement
for each such Loan Asset, and in any case that “Interest Coverage Ratio” or such comparable
definition is not defined in such Loan Agreement, the ratio of (a) EBITDA to (b) Interest.




          “Joinder Supplement” means an agreement among the Borrower, a Lender, its Lender Agent
and the Administrative Agent in the form of Exhibit E to this Agreement (appropriately
completed) delivered in connection with a Person becoming a Lender hereunder after the Closing
Date.




          “Lender” means any Institutional Lender or Conduit Lender, and/or any other Person to
whom an Institutional Lender or Conduit Lender assigns any part of its rights and obligations under
this Agreement and the other Transaction Documents in accordance with the terms of Section
11.04.




          “Lender Agent” means, with respect to (i) Wachovia, Wachovia; (ii) each Conduit Lender
which may from time to time become party hereto, the Person designated as the “Lender Agent” with
respect to such Conduit Lender in the applicable Joinder Supplement and (iii) each Institutional
Lender which may from time to time become a party hereto, each shall be deemed to be its own Lender
Agent, and, in each case, each of their respective successors and assigns.




          “Lender Fee Letter” means each fee letter agreement that shall be entered into by and
among the Borrower, the Servicer, the applicable Lender and its related Lender Agent in connection
with the transactions contemplated by this Agreement, as amended, modified, waived, supplemented,
restated or replaced from time to time.




          “LIBOR” means, for any day during the Remittance Period, with respect to any Advance
(or portion thereof) (a) the rate per annum appearing on Reuters Screen LIBOR01 Page (or any
successor or substitute page) as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m., London time, for such day, provided, if such day is not a Business Day,
the immediately preceding Business Day, for a one-month maturity; and (b) if no rate specified in
clause (a) of this definition so appears on Reuters Screen LIBOR01 Page (or any successor
or substitute page), the interest rate per annum at which dollar deposits of $5,000,000 and for a
one-month maturity are offered by the principal London office of Wachovia in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time, for such day.




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          “Lien” means any mortgage or deed of trust, pledge, hypothecation, collateral
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, claim, preference,
priority or other security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale, lease or other title
retention agreement, sale subject to a repurchase obligation, any easement, right of way or other
encumbrance on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing) or the filing of or agreement to give any financing
statement perfecting a security interest under the UCC or comparable law of any jurisdiction.




          “Lien Release Dividend” has the meaning assigned to that term in Section
2.07(g).




          “Lien Release Dividend Date” means the date specified by the Borrower, which date may
be any Business Day, provided written notice is given in accordance with Section 2.07(g).




          “Liquidity Agreement” means any agreement entered into in connection with this
Agreement pursuant to which a Liquidity Bank agrees to make purchases from or advances to, or
purchase assets from, any Conduit Lender in order to provide liquidity support for such Conduit
Lender’s Advances hereunder.




          “Liquidity Bank” means the Person or Persons who provide liquidity support to any
Conduit Lender pursuant to a Liquidity Agreement in connection with the issuance by such Conduit
Lender of Commercial Paper Notes.




          “Loan Agreement” means the loan agreement, credit agreement or other agreement
pursuant to which a Loan Asset has been issued or created and each other agreement that governs the
terms of or secures the obligations represented by such Loan Asset or of which the holders of such
Loan Asset are the beneficiaries.




          “Loan Asset” means any loan originated or acquired by the Transferor in the ordinary
course of its business, which loan includes, without limitation, (i) the Required Loan Documents
and Loan Asset File, and (ii) all right, title and interest of the Transferor in and to the loan
and any Underlying Collateral, but excluding, in each case, the Retained Interest and Excluded
Amounts and which loan was acquired by the Borrower from the Transferor under the Purchase and Sale
Agreement and owned by the Borrower on the initial Advance Date (as set forth on the Loan Asset
Schedule delivered on the initial Advance Date) or acquired by the Borrower from the Transferor
under the Purchase and Sale Agreement after the initial Advance Date pursuant to the delivery of a
Loan Assignment and listed on Schedule I to the Loan Assignment.




          “Loan Asset Checklist” means an electronic or hard copy, as applicable, of a checklist
delivered by or on behalf of the Borrower to the Collateral Custodian, for each Loan Asset, of all
Required Loan Documents to be included within the respective Loan Asset File, which shall specify
whether such document is an original or a copy.




          “Loan Asset File” means, with respect to each Loan Asset, a file containing (a) each
of the documents and items as set forth on the Loan Asset Checklist with respect to such




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Loan Asset and (b) duly executed originals (to the extent required by the Servicing Standard)
and copies of any other Records relating to such Loan Assets and Portfolio Assets pertaining
thereto.




          “Loan Asset Register” has the meaning assigned to that term in Section
5.03(l).




          “Loan Asset Schedule” means the schedule of Loan Agreements evidencing Loan Assets
delivered by the Borrower to the Collateral Custodian and the Administrative Agent. Each such
schedule shall set forth, as to any Eligible Loan Asset to be Pledged hereunder, the applicable
information specified on Schedule V, which shall also be provided to the Collateral
Custodian in electronic format acceptable to the Collateral Custodian.




          “Loan Assignment” has the meaning set forth in the Purchase and Sale Agreement.




          “Make-Whole Premium” means an amount, payable pro rata to each Lender Agent (for the
account of the applicable Lender), equal to (i) to the extent the Agreement is terminated and the
Make-Whole Premium is required to be paid pursuant to Section 2.18(b) on or prior to the
date which is one year following the Closing Date, 3.00% of the Maximum Facility Amount and (ii)
to the extent the Agreement is terminated and the Make-Whole Premium is required to be paid
pursuant to Section 2.18(b) on or prior to the date which is 90 days prior to the date
which is two years following the Closing Date but after the first anniversary of the Closing Date,
1.00% of the Maximum Facility Amount; provided that, in the foregoing clauses (i) and
(ii), the Make-Whole Premium shall be calculated without giving effect to the proviso in
the definition of “Maximum Facility Amount”.




          “Management Agreement” means the Amended and Restated Investment Advisory Agreement,
dated as of April 30, 2008, between Fifth Street and Fifth Street Management LLC.




          “Margin Stock” means “margin stock” as such term is defined in Regulation T, U or X of
the Federal Reserve Board.




          “Material Adverse Effect” means, with respect to any event or circumstance, a material
adverse effect on (a) the business, condition (financial or otherwise), operations, performance or
properties of the Transferor, the Servicer or the Borrower, (b) the validity, enforceability or
collectability of this Agreement or any other Transaction Document or the validity, enforceability
or collectability of the Loan Assets generally or any material portion of the Loan Assets, (c) the
rights and remedies of the Collateral Agent, the Collateral Custodian, the Account Bank, the
Administrative Agent, any Lender, any Lender Agent and the Secured Parties with respect to matters
arising under this Agreement or any other Transaction Document, (d) the ability of each of the
Borrower and the Servicer, to perform their respective obligations under this Agreement or any
other Transaction Document, or (e) the status, existence, perfection, priority or enforceability of
the Collateral Agent’s, the Administrative Agent’s or the other Secured Parties’ lien on the
Collateral Portfolio.




          “Material Modification” means any amendment or waiver of, or modification or
supplement to, a Loan Agreement governing a Loan Asset executed or effected on or after the




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Cut-Off Date for such Loan Asset (or, solely in the case of clause (d)(ii)(y), a
change to any loan senior to a Loan Asset) which:




          (a) reduces or forgives any or all of the principal amount due under such Loan Asset;




          (b) (i) delays or extends the maturity date for such Loan Asset or (ii) delays or extends the
required or scheduled amortization in any way that increases the Average Life of such Loan Asset by
0.50 years or more; provided that the Average Life of such Loan Asset may be increased by not more
than 20% from its Average Life on the related Cut-Off Date if the Net Leverage Ratio of such Loan
Asset is not more than 85% of the maximum established in the Net Leverage Ratio covenant of such
Loan Asset;




          (c) waives one or more interest payments, permits any interest due in cash to be deferred or
capitalized and added to the principal amount of such Loan Asset (other than any deferral or
capitalization already allowed by the terms of the Loan Agreement of any PIK Loan Asset), or
reduces the spread or coupon with respect to such Loan Asset;




          (d) (i) in the case of a first lien loan, contractually or structurally subordinates such Loan
Asset by operation of a priority of payments, turnover provisions, the transfer of assets in order
to limit recourse to the related Obligor or the granting of Liens (other than Permitted Liens) on
any of the Underlying Collateral securing such Loan Asset or (ii) in the case of a second lien
loan, (x) contractually or structurally subordinates such Loan Asset to any obligation (other than
the first lien loan which existed at the Cut-Off Date for such Loan Asset) by operation of a
priority of payments, turnover provisions, the transfer of assets in order to limit recourse to the
related Obligor or the granting of Liens (other than Permitted Liens) on any of the Underlying
Collateral securing such Loan Asset or (y) the commitment amount of any loan senior to such second
lien loan is increased;




          (e) substitutes, alters or releases the Underlying Collateral securing such Loan Asset and
each such substitution, alteration or release, as determined in the sole discretion of the
Administrative Agent, materially and adversely affects the value of such Loan Asset; or




          (f) amends, waives, forbears, supplements or otherwise modifies (i) the meaning of “Net
Leverage Ratio”, “Interest Coverage Ratio” or “Permitted Liens” or any respective comparable
definitions in the Loan Agreement for such Loan Asset or (ii) any term or provision of such Loan
Agreement referenced in or utilized in the calculation of the “Net Leverage Ratio”, “Interest
Coverage Ratio” or “Permitted Liens” or any respective comparable definitions for such Loan Asset,
in either case in a manner that, in the reasonable judgment of the Administrative Agent, is
materially adverse to the Secured Parties.




          “Maximum Facility Amount” means the aggregate Commitments as then in effect, which
amount shall not exceed $100,000,000; provided that at all times after the Reinvestment Period, the
Maximum Facility Amount shall mean the aggregate Advances Outstanding at such time.




          “Minimum Equity Amount” means $100,000,000.




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          “Moody’s” means Moody’s Investors Service, Inc. (or its successors in interest).




          “Mortgage” means the mortgage, deed of trust or other instrument creating a Lien on an
interest in real property securing a Loan Asset, including the assignment of leases and rents
related thereto.




          “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA to which the Borrower or any ERISA Affiliate contributed or had any obligation to contribute
on behalf of its employees at any time during the current year or the preceding five years




          “Net Leverage Ratio” means, with respect to any Loan Asset for any Relevant Test
Period, the meaning of “Net Leverage Ratio” or any comparable definition in the Loan Agreement for
each such Loan Asset, and in any case that “Net Leverage Ratio” or such comparable definition is
not defined in such Loan Agreement, the ratio of (a) Indebtedness minus Unrestricted Cash
to (b) EBITDA.




          “Non-Usage Fee” has the meaning assigned to that term in Section 2.09(a).




          “Non-Usage Fee Rate” has the meaning assigned to that term in Section 2.09(a).




          “Noteless Loan Asset” means a Loan Asset with respect to which the Loan Agreements (i)
do not require the Obligor to execute and deliver a promissory note to evidence the indebtedness
created under such Loan Asset or (ii) require any holder of the indebtedness created under such
Loan Asset to affirmatively request a promissory note from the related Obligor.




          “Notice and Request for Consent” has the meaning assigned to that term in Section
2.07(g)(i).




          “Notice of Borrowing” means an irrevocable written notice of borrowing from the
Borrower to the Administrative Agent and each Lender Agent in the form attached hereto as
Exhibit F.




          “Notice of Reduction” means a notice of a reduction of the Advances Outstanding
pursuant to Section 2.18, in the form attached hereto as Exhibit G.




          “Obligations” means all present and future indebtedness and other liabilities and
obligations (howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, or due or to become due) of the Borrower to the Lenders, the Lender Agents, the
Administrative Agent, the Account Bank, any Hedge Counterparty, the Collateral Agent or the
Collateral Custodian arising under this Agreement and/or any other Transaction Document and shall
include, without limitation, all liability for principal of and interest on the Advances, Hedge
Breakage Costs, Breakage Fees, indemnifications and other amounts due or to become due by the
Borrower to the Lenders, the Lender Agents, the Administrative Agent, the Collateral Agent, the
Hedge Counterparty, the Collateral Custodian and the Account Bank under this Agreement and/or any
other Transaction Document, including, without limitation, any amounts payable under any Hedging
Agreement (including, without limitation, payments in respect of the





-21-









 







termination of any such Hedging Agreement), any Lender Fee Letter, any Make-Whole Premium and
costs and expenses payable by the Borrower to the Lenders, the Lender Agents, the Administrative
Agent, the Account Bank, the Collateral Agent or the Collateral Custodian, including attorneys’
fees, costs and expenses, including without limitation, interest, fees and other obligations that
accrue after the commencement of an insolvency proceeding (in each case whether or not allowed as a
claim in such insolvency proceeding).




          “Obligor” means, collectively, each Person obligated to make payments under a Loan
Agreement, including any guarantor thereof.




          “Officer’s Certificate” means a certificate signed by the president, the secretary, an
assistant secretary, the chief financial officer or any vice president, as an authorized officer,
of any Person.




          “Opinion of Counsel” means a written opinion of counsel, which opinion and counsel are
acceptable to the Administrative Agent in its sole discretion.




          “Outstanding Balance” means the principal balance of a Loan Asset, expressed exclusive
of PIK Interest and accrued interest; provided that amortization payments on a Loan Asset shall
first be applied to PIK Interest when determining the Outstanding Balance of such Loan Asset. For
the avoidance of doubt, the Outstanding Balance with respect to a Revolving Loan Asset or a Delayed
Draw Loan Asset shall be equal to the funded amount of such Revolving Loan Asset or Delayed Draw
Loan Asset.




          “Payment Date” means the 15th day of each calendar month or, if such day is
not a Business Day, the next succeeding Business Day, commencing on the 15th day of
January; provided, that the final Payment Date shall occur on the Collection Date.




          “Payment Duties” has the meaning assigned to that term in Section
10.02(b)(ii).




          “Pension Plan” has the meaning assigned to that term in Section 4.01(x).




          “Permitted Assignee” means any lender which (i) is not a Fifth Street Competitor and
(ii) has a long-term unsecured debt rating of not less than “A3” from Moody’s and not less than “A”
from S&P.




          “Permitted Investments” means any of (i) Wells Fargo Advantage Money Market Funds —
Government Money Market Fund, or (ii) Wells Fargo Money Market Deposit Account.




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




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          “Person” means an individual, partnership, corporation (including a statutory or
business 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 Interest” means interest accrued on a Loan Asset that is added to the principal
amount of such Loan Asset instead of being paid as interest as it accrues.




          “PIK Loan Asset” means a Loan Asset which provides for a portion of the interest that
accrues thereon to be added to the principal amount of such Loan Asset for some period of the time
prior to such Loan Asset requiring the current cash payment of such previously capitalized
interest, which cash payment shall be treated as an Interest Collection at the time it is received.




          “Pledge” means the pledge of any Eligible Loan Asset or other Portfolio Asset pursuant
to Article II.




          “Pledge Agreement” means that certain Pledge Agreement, dated as of the Closing Date,
between the Transferor, as pledgor, and the Collateral Agent, as pledgee, as such Pledge Agreement
may from time to time be amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof.




          “Portfolio Assets” means all Loan Assets owned by the Borrower, together with all
proceeds thereof and other assets or property related thereto, including all right, title and
interest of the Borrower in and to:




          (a) any amounts on deposit in any cash reserve, collection, custody or lockbox accounts
securing the Loan Assets;




          (b) all rights with respect to the Loan Assets to which the Transferor is entitled as lender
under the applicable Loan Agreement;




          (c) the Controlled Accounts, together with all cash and investments in each of the foregoing
other than amounts earned on investments therein;




          (d) any Underlying Collateral securing a Loan Asset and all Recoveries related thereto, all
payments paid in respect thereof and all monies due, to become due and paid in respect thereof
accruing after the applicable Cut-Off Date and all liquidation proceeds;




          (e) all Required Loan Documents, the Loan Asset Files related to any Loan Asset, any Records,
and the documents, agreements, and instruments included in the Loan Asset Files or Records;




          (f) all Insurance Policies with respect to any Loan Asset;




          (g) all Liens, guaranties, indemnities, warranties, letters of credit, accounts, bank accounts
and property subject thereto from time to time purporting to secure or support




-23-









 







payment of any Loan Asset, together with all UCC financing statements, mortgages or similar
filings signed or authorized by an Obligor relating thereto;




          (h) the Purchase and Sale Agreement (including, without limitation, rights of recovery of the
Borrower against the Transferor) and the assignment to the Collateral Agent, for the benefit of the
Secured Parties, of all UCC financing statements filed by the Borrower against the Transferor under
or in connection with the Purchase and Sale Agreement;




          (i) any Hedging Agreement and all payments from time to time due thereunder;




          (j) all records (including computer records) with respect to the foregoing; and




          (k) all collections, income, payments, proceeds and other benefits of each of the foregoing.




          “Priced Loan Asset” means any Loan Asset that has an observable quote from LoanX
Mark-It Partners or Loan Pricing Corporation, or from another pricing service selected by the
Administrative Agent in its sole discretion.




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




          “Principal Collection Account” means a sub-account (account number 53237103 at the
Account Bank) of the Collection Account into which Principal Collections shall be segregated.




          “Principal Collections” means (i) any amounts deposited by the Borrower in accordance
with Section 2.06(a)(i) or Section 2.07(c)(i), (ii) with respect to any Loan Asset,
all amounts received which are not Interest Collections, including, without limitation, all
Recoveries, all Insurance Proceeds, all scheduled payments of principal and principal prepayments
and all guaranty payments and proceeds of any liquidations, sales, dispositions or securitizations,
in each case, attributable to the principal of such Loan Asset and (iii) all payments received
pursuant to any Hedging Agreement or Hedge Transaction. For the avoidance of doubt, “Principal
Collections” shall not include amounts on deposit in the Unfunded Exposure Account.




          “Pro Rata Share” means, with respect to each Lender, the percentage obtained by
dividing the Commitment of such Lender (as determined under clause (i) of the definition of
“Commitment”), by the aggregate Commitments of all the Lenders (as determined under clause
(i) of the definition of “Commitment”).




          “Proceeds” means, with respect to any Collateral Portfolio, all property that is
receivable or received when such Collateral Portfolio is collected, sold, liquidated, foreclosed,
exchanged, or otherwise disposed of, whether such disposition is voluntary or involuntary, and
includes all rights to payment with respect to any insurance relating to such Collateral Portfolio.




-24-









 








          “Prohibited Transferee” means any hedge fund, any so-called vulture fund or
loan-to-own fund, any distressed debt fund or any other fund that is similar to any of the
foregoing.




          “Purchase and Sale Agreement” means that certain Purchase and Sale Agreement, dated as
of the date hereof, between the Transferor, as the seller, and the Borrower, as the purchaser, as
amended, modified, waived, supplemented, restated or replaced from time to time.




          “Records” means all documents relating to the Loan Assets, including books, records
and other information executed in connection with the origination or acquisition of the Collateral
Portfolio or maintained with respect to the Collateral Portfolio and the related Obligors that the
Borrower, the Transferor or the Servicer have generated, in which the Borrower or the Transferor
have acquired an interest pursuant to the Purchase and Sale Agreement or in which the Borrower or
the Transferor have otherwise obtained an interest.




          “Recoveries” means, as of the time any Underlying Collateral with respect to any Loan
Asset subject to clauses (ii) or (iv) of the definition of “Value Adjustment
Event”, as applicable, is sold, discarded or abandoned (after a determination by the Servicer that
such Underlying Collateral has little or no remaining value) or otherwise determined to be fully
liquidated by the Servicer in accordance with the Servicing Standard, the proceeds from the sale of
the Underlying Collateral, the proceeds of any related Insurance Policy, any other recoveries with
respect to such Loan Asset, as applicable, the Underlying Collateral, and amounts representing late
fees and penalties, net of any amounts received that are required under such Loan Asset, as
applicable, to be refunded to the related Obligor.




          “Register” has the meaning assigned to that term in Section 2.14.




          “Reinvestment Period” shall mean the date commencing on the Closing Date and ending on
the day preceding the earlier of (i) November 16, 2011 (or such later date as is agreed to in
writing by the Borrower, the Servicer, the Administrative Agent and the Lenders pursuant to
Section 2.19(b)), (ii) the occurrence of an Event of Default (past any applicable notice or
cure period provided in the definition thereof) and (iii) the date of any voluntary termination by
the Borrower pursuant to Section 2.18(b).




          “Release Date” has the meaning set forth in Section 2.07(c).




          “Relevant Test Period” means, with respect to any Loan Asset, the relevant test period
for the calculation of Net Leverage Ratio or Interest Coverage Ratio, as applicable, for such Loan
Asset in the Loan Agreements or, if no such period is provided for therein, for Obligors delivering
monthly financing statements, each period of the last 12 consecutive reported calendar months, and
for Obligors delivering quarterly financing statements, each period of the last four consecutive
reported fiscal quarters of the principal Obligor on such Loan Asset; provided that with respect to
any Loan Asset for which the relevant test period is not provided for in the Loan Agreement, if an
Obligor is a newly-formed entity as to which 12 consecutive calendar months have not yet elapsed,
“Relevant Test Period” shall initially include the period from the date of formation of such
Obligor to the end of the twelfth calendar month or fourth fiscal quarter (as the case may be) from
the date of formation, and shall subsequently




-25-









 







include each period of the last 12 consecutive reported calendar months or four consecutive
reported fiscal quarters (as the case may be) of such Obligor.




          “Remittance Period” means, (i) as to the Initial Payment Date, the period beginning on
the Closing Date and ending on, and including, the Determination Date immediately preceding such
Payment Date and (ii) as to any subsequent Payment Date, the period beginning on the first day
after the most recently ended Remittance Period and ending on, and including, the Determination
Date immediately preceding such Payment Date, or, with respect to the final Remittance Period, the
Collection Date.




          “Replacement Servicer” has the meaning assigned to that term in Section
6.01(c).




          “Reporting Date” means the date that is two Business Days prior to the Payment Date of
each calendar month, commencing December, 2009.




          “Required Lenders” means (i) Wachovia (as a Lender hereunder) and its successors and
assigns and (ii) the Lenders representing an aggregate of at least 51% of the aggregate Commitments
of the Lenders then in effect.




          “Required Loan Documents” means, for each Loan Asset, originals (except as otherwise
indicated) of the following documents or instruments, all as specified on the related Loan Asset
Checklist:




          (a) (i) other than in the case of a Noteless Loan Asset, the original or, if accompanied by an
original “lost note” affidavit and indemnity, a copy of, the underlying promissory note, endorsed
by the Borrower or the prior holder of record either in blank or to the Collateral Agent (and
evidencing an unbroken chain of endorsements from each prior holder thereof evidenced in the chain
of endorsements either in blank or to the Collateral Agent), with any endorsement to the Collateral
Agent to be in the following form: “Wells Fargo Bank, National Association, as Collateral Agent for
the Secured Parties”, and (ii) in the case of a Noteless Loan Asset (x) a copy of each transfer
document or instrument relating to such Noteless Loan Asset evidencing the assignment of such
Noteless Loan Asset to the Transferor and from the Transferor to the Borrower and from the Borrower
either to the Collateral Agent or in blank, and (y) a copy of the Loan Asset Register with respect
to such Noteless Loan Asset, as described in Section 5.03(l)(ii);




          (b) originals or copies of each of the following, to the extent applicable to the related Loan
Asset; any related loan agreement, credit agreement, note purchase agreement, security agreement
(if separate from any Mortgage), sale and servicing agreement, acquisition agreement, subordination
agreement, intercreditor agreement or similar instruments, guarantee, Insurance Policy, assumption
or substitution agreement or similar material operative document, in each case together with any
amendment or modification thereto, as set forth on the Loan Asset Checklist;




          (c) if any Loan Asset is secured by a Mortgage, in each case as set forth in the Loan Asset
Checklist:




-26-









 









          (i) either (i) the original Mortgage, the original assignment of leases and rents, if
any, and the originals of all intervening assignments, if any, of the Mortgage and
assignments of leases and rents with evidence of recording thereon, (ii) copies thereof
certified by the Servicer, by closing counsel or by a title company or escrow company to be
true and complete copies thereof where the originals have been transmitted for recording
until such time as the originals are returned by the public recording office; provided that,
solely for purposes of the Review Criteria, the Collateral Custodian shall have no duty to
ascertain whether any certification set forth in this subsection (c)(ii) has been received,
other than a certification which has been clearly delineated as being provided by the
Servicer or (iii) copies certified by the public recording offices where such documents were
recorded to be true and complete copies thereof in those instances where the public
recording offices retain the original or where the original recorded documents are lost; and




          (ii) other than with respect to any Agented Note, to the extent the Borrower is the
sole lender under the Loan Agreement, an Assignment of Mortgage and of any other material
recorded security documents (including any assignment of leases and rents) in recordable
form, executed by the Borrower or the prior holder of record, in blank or to the Collateral
Agent (and evidencing an unbroken chain of assignments from the prior holder of record to
the Collateral Agent), with any assignment to the Collateral Agent to be in the following
form: “Wells Fargo Bank, National Association, as Collateral Agent for the Secured Parties”;



          (d) with respect to any Loan Asset originated by the Transferor and with respect to which the
Transferor acts as administrative agent (or in a comparable capacity), either (i) copies of the
UCC-1 Financing Statements, if any, and any related continuation statements, each showing the
Obligor as debtor and the Collateral Agent as total assignee or showing the Obligor, as debtor and
the Transferor as secured party and each with evidence of filing thereon, or (ii) copies of any
such financing statements certified by the Servicer to be true and complete copies thereof in
instances where the original financing statements have been sent to the appropriate public filing
office for filing, in each case as set forth in the Loan Asset Checklist.




          “Required Reports” means, collectively, the Servicing Report required pursuant to
Section 6.08(b), the Servicer’s Certificate required pursuant to Section 6.08(c),
the financial statements of the Servicer required pursuant to Section 6.08(d), the tax
returns of the Borrower and the Servicer required pursuant to Section 6.08(e), the
financial statements and valuation reports of each Obligor required pursuant to Section
6.08(f), the annual statements as to compliance required pursuant to Section 6.09, and
the annual independent public accountant’s report required pursuant to Section 6.10.




          “Responsible Officer” means, with respect to any Person, any duly authorized officer
of such Person with direct responsibility for the administration of this Agreement and also, with
respect to a particular matter, any other duly authorized officer of such Person to whom such
matter is referred because of such officer’s knowledge of and familiarity with the particular
subject.




-27-









 








          “Restricted Junior Payment” means (i) any dividend or other distribution, direct or
indirect, on account of any class of membership interests of the Borrower now or hereafter
outstanding, except a dividend paid solely in interests of that class of membership interests or in
any junior class of membership interests of the Borrower; (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or indirect, of any class
of membership interests of the Borrower now or hereafter outstanding, (iii) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire membership interests of the Borrower now or hereafter
outstanding, and (iv) any payment of management fees by the Borrower. For the avoidance of doubt,
(x) payments and reimbursements due to the Servicer in accordance with this Agreement or any other
Transaction Document do not constitute Restricted Junior Payments, and (y) distributions by the
Borrower to holders of its membership interests of Loan Assets or of cash or other proceeds
relating thereto which have been substituted by the Borrower in accordance with this Agreement
shall not constitute Restricted Junior Payments.




          “Retained Interest” means, with respect to any Agented Note that is transferred to the
Borrower, (i) all of the obligations, if any, of the agent(s) under the documentation evidencing
such Agented Note and (ii) the applicable portion of the interests, rights and obligations under
the documentation evidencing such Agented Note that relate to such portion(s) of the indebtedness
that is owned by another lender.




          “Review Criteria” has the meaning assigned to that term in Section
12.02(b)(i).




          “Revolving Loan Asset” means a Loan Asset that is a line of credit or contains an
unfunded commitment arising from an extension of credit by the Transferor to an Obligor, pursuant
to the terms of which amounts borrowed may be repaid and subsequently reborrowed.




          “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies,
Inc. (or its successors in interest).




          “Same-Day Advance” means any Advance made on the same day such Advance is requested,
in accordance with the second sentence of Section 2.02(b).




          “Scheduled Payment” means each scheduled payment of principal and/or interest required
to be made by an Obligor on the related Loan Asset, as adjusted pursuant to the terms of the
related Loan Agreement.




          “Second Reinvestment Period Extension” has the meaning assigned to that term in
Section 2.19(b).




          “Second Stated Maturity Extension” has the meaning assigned to that term in
Section 2.19(a).




          “Secured Party” means each of the Administrative Agent, each Lender (together with its
successors and assigns), each Lender Agent, each Affected Party, each Indemnified Party, the
Collateral Custodian, the Collateral Agent, the Account Bank and each Hedge Counterparty.




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          “Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.




          “Servicer” means at any time the Person then authorized, pursuant to Section
6.01 to service, administer, and collect on the Loan Assets and exercise rights and remedies in
respect of the same.




          “Servicer Pension Plan” has the meaning set forth in Section 4.03(p).




          “Servicer Termination Event” means the occurrence of any one or more of the following
events:




          (a) any failure by the Servicer to make any payment, transfer or deposit into the Collection
Account (including, without limitation, with respect to bifurcation and remittance of Interest
Collections and Principal Collections) or the Unfunded Exposure Account, as required by this
Agreement or any Transaction Document which continues unremedied for a period of two Business Days;




          (b) any failure on the part of the Servicer duly to (i) observe or perform in any material
respect any other covenants or agreements of the Servicer set forth in this Agreement or the other
Transaction Documents to which the Servicer is a party (including, without limitation, any
delegation of the Servicer’s duties that is not permitted by Section 6.01 of this
Agreement) or (ii) comply in any material respect with the Servicing Standard regarding the
servicing of the Collateral Portfolio and in each case the same continues unremedied for a period
of 30 days (if such failure can be remedied) after the earlier to occur of (x) 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 or the Collateral Agent (at the direction of the
Administrative Agent) and (y) the date on which a Responsible Officer of the Servicer acquires
knowledge thereof;




          (c) the failure of the Servicer to make any payment when due (after giving effect to any
related grace period) under one or more agreements for borrowed money to which it is a party in an
aggregate amount in excess of United States $1,000,000, individually or in the aggregate, or the
occurrence of any event or condition that has resulted in the acceleration of such amount of
recourse debt whether or not waived;




          (d) a Bankruptcy Event shall occur with respect to the Servicer;




          (e) Fifth Street shall assign its rights or obligations as “Servicer” hereunder to any Person
without the consent of each Lender Agent and the Administrative Agent (as required in the last
sentence of Section 11.04(a));




          (f) at the end of any fiscal quarter, Fifth Street fails to maintain the Asset Coverage Ratio
at greater than or equal to 2:1;




          (g) Fifth Street permits Shareholders’ Equity (as reflected in its 10Q or 10K without any
deductions) at the last day of any of its fiscal quarter to be less than $200,000,000 plus 75% of
the net proceeds of the sale of equity interests by Fifth Street after the Closing Date;




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          (h) any change in the management of the Servicer (whether by resignation, termination,
disability, death or lack of day-to-day management) relating to (x) Leonard Tannenbaum or (y) any
two of Marc Goodman, Bernard Berman and Ivelin Dimitrov failing to provide active and material
participation in the Servicer’s or Transferor’s daily activities including, but not limited to,
general management, underwriting, and the credit approval process and credit monitoring activities,
and such persons are not replaced with other individuals reasonably acceptable to the
Administrative Agent within 30 days of such event;




          (i) any failure by the Servicer to deliver (i) any required Servicing Report on or before the
date occurring two Business Days after the date such report is required to be made or given, as the
case may be or (ii) any other Required Reports hereunder on or before the date occurring five
Business Days after the date such report is required to be made or given, as the case may be, in
each case under the terms of this Agreement;




          (j) any representation, warranty or certification made by the Servicer in any Transaction
Document or in any certificate delivered pursuant to any Transaction Document shall prove to have
been incorrect in any material respect when made and continues to be unremedied for a period of 30
days after the earlier to occur of (i) the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the Servicer by the Administrative Agent
or the Collateral Agent (at the direction of the Administrative Agent) and (ii) the date on which a
Responsible Officer of the Servicer acquires knowledge thereof;




          (k) any financial or other information reasonably requested by the Administrative Agent, a
Lender Agent or the Collateral Agent is not provided as requested within a reasonable amount of
time following such request;




          (l) the rendering against the Servicer of one or more final judgments, decrees or orders for
the payment of money in excess of United States $1,000,000, individually or in the aggregate, and
the continuance of such judgment, decree or order unsatisfied and in effect for any period of more
than 30 consecutive days without a stay of execution;




          (m) any change in the control of the Servicer that takes the form of either a merger or
consolidation that does not comply with the provisions of Section 5.04(a) of this
Agreement;




          (n) the occurrence of an Event of Default (past any applicable notice or cure period provided
in the definition thereof);




          (o) Fifth Street makes a capital contribution to an Affiliate other than the Borrower and
after accounting for such capital contribution, Fifth Street’s Shareholders’ Equity (provided that
equity in Affiliates other than the Borrower will not be included in this calculation) is not
greater than $250,000,000; or




          (p) any other event which has caused, or which may cause, a Material Adverse Effect on the
assets, liabilities, financial condition, business or operations of the Servicer or the ability of
the Servicer to meet its obligations under the Transaction Documents to which it is a party.




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          “Servicer Termination Notice” has the meaning assigned to that term in Section
6.01(b).




          “Servicer’s Certificate” has the meaning assigned to that term in Section
6.08(c).




          “Servicing Fees” means the fee payable to the Servicer on each Payment Date in arrears
in respect of each Remittance Period, which fee shall be equal to the product of (i) 0.50%, (ii)
the arithmetic mean of the aggregate Outstanding Balance of all Eligible Loan Assets on the first
day and on the last day of the related Remittance Period and (iii) the actual number of days in
such Remittance Period divided by 360; provided that the rate set forth in clause (i)
hereof may be increased up to 0.75% at the discretion of the Administrative Agent in the event that
a successor Servicer is appointed pursuant to Section 6.01(c).




          “Servicing File” means, for each Loan Asset, (a) copies of each of the Required Loan
Documents and (b) any other portion of the Loan Asset File which is not part of the Required Loan
Documents.




          “Servicing Report” has the meaning assigned to that term in Section 6.08(b).




          “Servicing Standard” means, with respect to any Loan Assets included in the Collateral
Portfolio, to service and administer such Loan Assets on behalf of the Secured Parties in
accordance with Applicable Law, the terms of this Agreement, the Loan Agreements, all customary and
usual servicing practices for loans like the Loan Assets and, to the extent consistent with the
foregoing, (a)(i) if the Servicer is the originator or an Affiliate thereof, the higher of: (A) the
customary and usual servicing practices that a prudent loan investor or lender would use in
servicing loans like the Loan Assets for its own account, and (B) the same care, skill, prudence
and diligence with which the Servicer services and administers loans for its own account or for the
account of others, and (ii) if the Servicer is not the originator or an Affiliate thereof, the same
care, skill, prudence and diligence with which the Servicer services and administers loans for its
own account or for the account of others; (b) with a view to maximize the value of the Loan Assets;
and (c) without regard to: (i) the Servicer’s obligations to incur servicing and administrative
expenses with respect to a Loan Asset, (ii) the Servicer’s right to receive compensation for its
services hereunder or with respect to any particular transaction, (iii) the ownership by the
Servicer or any Affiliate thereof of any Loan Assets, or (iv) the ownership, servicing or
management for others by the Servicer of any other loans or property by the Servicer.




          “Shareholders’ Equity” means, at any date, the amount determined on a consolidated
basis, without duplication, in accordance with GAAP, of shareholders equity for the Servicer at
such date.




          “Solvent” means, 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 of 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 saleable value of the property of such Person in an
orderly liquidation of such Person is not less than the amount that will be




-31-









 







required to pay the probable liability of such Person on its debts and other liabilities 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 a business or a transaction, and does not
propose to engage in a business or a transaction, for which such Person’s property assets would
constitute unreasonably small capital.




          “Spread Differential” means, for any date of determination, the (a) weighted average
fixed rate cash coupon of the Fixed Rate Loan Assets included in the Collateral Portfolio on such
date minus (b) the Yield Rate for such date.




          “State” means one of the fifty states of the United States or the District of
Columbia.




          “Stated Maturity Date” means November 16, 2012 or such later date as is agreed to in
writing by the Borrower, the Servicer, the Administrative Agent and the Lenders pursuant to
Section 2.19(a).




          “Subsidiary” means with respect to a person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both, by such person.




          “Substitute Eligible Loan Asset” means each Eligible Loan Asset Pledged by the
Borrower to the Collateral Agent, on behalf of the Secured Parties, pursuant to Section
2.07(a) or Section 2.07(c)(ii).




          “Taxes” means 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 Governmental Authority.




          “Term Loan Asset” means a Loan Asset that is a term loan that has been fully funded
and does not contain any unfunded commitment on the part of the Transferor arising from an
extension of credit by the Transferor to an Obligor.




          “Transaction Documents” means this Agreement, the Variable Funding Note(s), any
Hedging Agreement, any Joinder Supplement, the Purchase and Sale Agreement, the Collection Account
Agreement, the Unfunded Exposure Account Agreement, the Wells Fargo Fee Letter, each Lender Fee
Letter, the Pledge Agreement and each document, instrument or agreement related to any of the
foregoing.




          “Transferee Letter” has the meaning assigned to that term in Section 11.04(a).




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          “Transferor” means Fifth Street, in its capacity as the transferor hereunder and as
the seller under the Purchase and Sale Agreement, together with its successors and assigns in such
capacity.




          “UCC” means the Uniform Commercial Code as from time to time in effect in the
specified jurisdiction.




          “Underlying Collateral” means, with respect to a Loan Asset, any property or other
assets designated and pledged or mortgaged as collateral to secure repayment of such Loan Asset, as
applicable, including, without limitation, mortgaged property and/or a pledge of the stock,
membership or other ownership interests in the related Obligor and all proceeds from any sale or
other disposition of such property or other assets.




          “Unfunded Exposure Account” means a trust account (account number 53237101 at the
Account Bank) in the name of the Borrower and under the sole dominion and control of the Collateral
Agent for the benefit of the Secured Parties; provided, that the funds deposited therein (including
any interest and earnings thereon) from time to time shall constitute the property and assets of
the Borrower and the Borrower shall be solely liable for any Taxes payable with respect to the
Unfunded Exposure Account.




          “Unfunded Exposure Account Agreement” means that certain Unfunded Exposure Account
Agreement, dated the date of this Agreement, among the Borrower, the Servicer, the Account Bank,
the Administrative Agent, and the Collateral Agent, which agreement relates to the Unfunded
Exposure Account, as such agreement may from time to time be amended, supplemented or otherwise
modified in accordance with the terms thereof.




          “Unfunded Exposure Amount” means, as of any date of determination, an amount equal to
the aggregate amount of all unfunded commitments associated with Loan Assets owned by the Borrower.




          “Unfunded Exposure Amount Shortfall” has the meaning assigned to that term in
Section 2.02(f).




          “Unfunded Exposure Equity Amount” means, on any date of determination, an amount equal
to:




          (i) for each Loan Asset which has any unfunded commitments, the aggregate sum of the products
of (a) the Unfunded Exposure Amount for each such Loan Asset multiplied by (b) the
difference of (x) 100% minus (y) the Applicable Percentage for each such Loan Asset;




          plus




          (ii) for each Loan Asset which has any unfunded commitments, the aggregate sum of the products
of (a) (x) 100% minus the Assigned Value for each such Loan Asset multiplied by (y)
the Unfunded Exposure Amount of each such Loan Asset; multiplied by (b) the Applicable
Percentage for each such Loan Asset.




          “United States” means the United States of America.




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          “Unmatured Event of Default” means any event that, if it continues uncured, will, with
lapse of time, notice or lapse of time and notice, constitute an Event of Default.




          “Unrestricted Cash” the meaning of “Unrestricted Cash” or any comparable definition in
the Loan Agreements for each Loan Asset, and in any case that “Unrestricted Cash” or such
comparable definition is not defined in such Loan Agreement, all cash available for use for general
corporate purposes and not held in any reserve account or legally or contractually restricted for
any particular purposes or subject to any lien (other than blanket liens permitted under or granted
in accordance with such Loan Agreement).




          “Unused Portion” has the meaning assigned to that term in Section 2.09(a).




          “Value Adjustment Event” means, with respect to any Loan Asset, the occurrence of any
one or more of the following events after the related Cut-Off Date:




          (i) (x) The Interest Coverage Ratio for any Relevant Test Period with respect to such Loan
Asset is less than 90% of the Interest Coverage Ratio with respect to such Loan Asset as calculated
on (A) the applicable Cut-Off Date (if no Improvement Date has occurred) or (B) the most recent
Improvement Date (if an Improvement Date has occurred) or (y) the Net Leverage Ratio for any
Relevant Test Period of the related Obligor with respect to such Loan Asset is more than 0.50x
higher than such Net Leverage Ratio as calculated on (A) the applicable Cut-Off Date (if no
Improvement Date has occurred) or (B) the most recent Improvement Date (if an Improvement Date has
occurred);




          (ii) an Obligor payment default under any Loan Asset (after giving effect to any grace and/or
cure period set forth in the Loan Agreement, but not to exceed five days);




          (iii) any other Obligor default under any Loan Asset for which the Borrower (or agent or
required lenders pursuant to the Loan Agreement, as applicable) has elected to exercise any of its
rights and remedies under the applicable Loan Agreement in case of the default thereunder
(including, but not limited to, acceleration of the debt);




          (iv) a Bankruptcy Event with respect to the related Obligor;




          (v) the occurrence of a Material Modification (in accordance with clauses
(b)-(f) of the definition thereof) with respect to such Loan Asset; or




          (vi) the occurrence of a Material Modification (in accordance with clause (a) of the
definition thereof) with respect to such Loan Asset.




          “Variable Funding Note” has the meaning assigned to such term in Section
2.01(a).




          “Wachovia” means Wachovia Bank, National Association, a national banking association,
in its individual capacity, and its successors and assigns.




          “Warranty Event” means, as to any Loan Asset, the discovery that as of the related
Cut-Off Date for such Loan Asset there existed a breach of any representation or




-34-









 







warranty relating to such Loan Asset (other than any representation or warranty that the Loan
Asset satisfies the criteria of the definition of Eligible Loan Asset) and the failure of the
Borrower to cure such breach, or cause the same to be cured, within 10 days after the earlier to
occur of the Borrower’s receipt of notice thereof from the Administrative Agent or the Borrower
becoming aware thereof; provided that, any Loan Asset approved by the Administrative Agent in
accordance with Section 11 of Schedule III on the applicable Cut-Off Date shall not be a
Warranty Loan Asset due to the failure of such Loan Asset to satisfy the requirements of Section 11
of Schedule III on any date thereafter.




          “Warranty Loan Asset” means any Loan Asset that fails to satisfy any criteria of the
definition of Eligible Loan Asset as of the Cut-Off Date for such Loan Asset or a Loan Asset with
respect to which a Warranty Event has occurred.




          “Wells Fargo” has the meaning assigned to that term in the preamble hereto.




          “Wells Fargo Fee Letter” means the Wells Fargo Fee Letter, dated as of the date
hereof, between the Collateral Agent, the Collateral Custodian, the Account Bank, the Borrower and
the Administrative Agent, as such letter may be amended, modified, supplemented, restated or
replaced from time to time.




          “Yield” means with respect to any Remittance Period, the sum for each day in such
Remittance Period determined in accordance with the following formula:




YR x L

D




	 	 	 	 	 	 	 
	where:

	 	YR
	 	=
	 	the Yield Rate applicable on such day;
	 
	 	 	 	 	 	 
	 

	 	L
	 	=
	 	the Advances Outstanding on such day; and
	 
	 	 	 	 	 	 
	 

	 	D
	 	=
	 	360 or, to the extent
the Yield Rate is the Base Rate, 365 or 366 days, as
applicable;





provided that (i) no provision of this Agreement shall require the payment or permit the collection
of Yield in excess of the maximum permitted by Applicable Law and (ii) Yield shall not be
considered paid by any distribution if at any time such distribution is later required to be
rescinded by any Lender to the Borrower or any other Person for any reason including, without
limitation, such distribution becoming void or otherwise avoidable under any statutory provision or
common law or equitable action, including, without limitation, any provision of the Bankruptcy
Code.




          “Yield Rate” means, as of any date of determination, an interest rate per annum equal
to LIBOR for such date plus the Applicable Spread; provided that if Wachovia shall have
notified the Administrative Agent that a Eurodollar Disruption Event has occurred, the Yield Rate
shall be equal to the Base Rate plus the Applicable Spread until such Lender Agent shall
have notified the Administrative Agent that such Eurodollar Disruption Event has ceased, at which
time the Yield Rate shall again be equal to LIBOR for such date plus the Applicable Spread.




-35-









 








     SECTION 1.02 Other Terms. All accounting terms used but 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 used but not specifically defined herein, are used herein as defined in such
Article 9.



     SECTION 1.03 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 1.04 Interpretation.



          In each Transaction Document, unless a contrary intention appears:




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




          (b) 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 Documents;




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




          (d) reference to day or days without further qualification means calendar days;




          (e) reference to any time means New York, New York time;




          (f) reference to the words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”;




          (g) reference to any agreement (including any Transaction Document), document or instrument
means such agreement, document or instrument as amended, modified, waived, supplemented, restated
or replaced 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




          (h) 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.




ARTICLE II.




THE FACILITY




     SECTION 2.01 Variable Funding Note and Advances.



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          (a) Variable Funding Note. The Borrower has heretofore delivered or shall, on the date
hereof (and on the terms and subject to the conditions hereinafter set forth), deliver, to each
Lender Agent, at the address set forth on the signature pages of this Agreement, and on the
effective date of any Joinder Supplement, to each additional Lender Agent, at the address set forth
in the applicable Joinder Supplement, a duly executed variable funding note (the “Variable
Funding Note”), in substantially the form of Exhibit I, in an aggregate face amount
equal to the applicable Lender’s Commitment as of the Closing Date or the effective date of any
Joinder Supplement, as applicable, and otherwise duly completed. Interest shall accrue on the
Variable Funding Note, and the Variable Funding Note shall be payable, as described herein.




          (b) Advances. On the terms and conditions hereinafter set forth, from time to time
from the Closing Date until the end of the Reinvestment Period, the Lenders shall make Advances
under the Variable Funding Notes, secured by the Collateral Portfolio, (x) to the Borrower for the
purpose of purchasing Eligible Loan Assets or (y) to the Unfunded Exposure Account in an amount up
to the Unfunded Exposure Amount. Other than pursuant to Section 2.02(f), under no
circumstances shall any Lender be required to make any Advance if after giving effect to such
Advance and the addition to the Collateral Portfolio of the Eligible Loan Assets being acquired by
the Borrower using the proceeds of such Advance, (i) an Event of Default has occurred or would
result therefrom or an Unmatured Event of Default exists or would result therefrom or (ii) the
aggregate Advances Outstanding would exceed the Borrowing Base. Notwithstanding anything to the
contrary herein (other than pursuant to Section 2.02(f)), no Lender shall be obligated to
provide the Borrower (or to the Unfunded Exposure Account, if applicable) with aggregate funds in
connection with an Advance that would exceed the least of (x) such Lender’s unused Commitment then
in effect and (y) the aggregate unused Commitments then in effect.




          (c) Notations on Variable Funding Note. Each Lender Agent is hereby authorized to
enter on a schedule attached to the Variable Funding Note with respect to each Conduit Lender and
each Institutional Lender a notation (which may be computer generated) with respect to each Advance
under the Variable Funding Note made by the applicable Lender of: (i) the date and principal
amount thereof, and (ii) each repayment of principal thereof, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded. The failure of any
Lender Agent to make any such notation on the schedule attached to any Variable Funding 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 2.02 Procedure for Advances.



          (a) During the Reinvestment Period, the Lenders will make Advances on any Business Day at the
request of the Borrower, subject to and in accordance with the terms and conditions of Sections
2.01 and 2.02 and subject to the provisions of Article III hereof.




          (b) Each Advance shall be made on at least one Business Day’s irrevocable written notice
(other than in the case of a Same-Day Advance) from the Borrower to the Administrative Agent and
each Lender Agent, with a copy to the Collateral Agent and the Collateral Custodian, in the form of
a Notice of Borrowing; provided that such Notice of Borrowing shall be deemed to have been received
by the Administrative Agent and each Lender





-37-









 







Agent on a Business Day if delivered no later than 5:00 p.m. on such Business Day and if not
delivered by such time, shall be deemed to have been received on the following Business Day. For
each Same-Day Advance, the Borrower shall deliver an irrevocable written notice in the form of a
Notice of Borrowing to the Administrative Agent and each Lender Agent, with a copy to the
Collateral Agent and the Collateral Custodian no later than 2:00 p.m. on the proposed date of such
Same-Day Advance; provided that, the amount of any such Same-Day Advance shall not exceed
$20,000,000. The Borrower or the Servicer shall post all Loan Agreements and other loan documents
and information with respect to each proposed Eligible Loan Asset, if any, to an IntraLinks (or
other replacement) website to which the Administrative Agent and each Lender Agent has access. Each
Notice of Borrowing shall include a duly completed Borrowing Base Certificate (updated to the date
such Advance is requested and giving pro forma effect to the Advance requested and the use of the
proceeds thereof), and shall specify:





          (i) the aggregate amount of such Advance, which amount shall not cause the Advances
Outstanding to exceed the Borrowing Base; provided that, except with respect to an Advance
pursuant to Section 2.02(f), the amount of such Advance must be at least equal to
$500,000;




          (ii) the proposed date of such Advance;




          (iii) a representation that all conditions precedent for an Advance described in
Article III hereof have been satisfied;




          (iv) the amount of cash that will be funded by the Transferor into the Unfunded
Exposure Account in connection with any Revolving Loan Asset or Delayed Draw Loan Asset
funded by such Advance, if applicable; and




          (v) whether such Advance should be remitted to the Borrower or the Unfunded Exposure
Account.


On the date of each Advance, upon satisfaction of the applicable conditions set forth in
Article III, each Lender shall, in accordance with instructions received by the Borrower,
either (i) make available to the Borrower, in same day funds, an amount equal to such Lender’s Pro
Rata Share of such Advance, by payment into the account which the Borrower has designated in
writing or (ii) remit in same day funds an amount equal to such Lender’s Pro Rata Share of such
Advance into the Unfunded Exposure Account, as applicable; provided that, with respect to an
Advance funded pursuant to Section 2.02(f), each Lender shall remit the Advance equal to
such Lender’s Pro Rata Share of the Unfunded Exposure Amount Shortfall in same day funds to the
Unfunded Exposure Account.




          (c) The Advances shall bear interest at the Yield Rate.




          (d) Subject to Section 2.18 and the other terms, conditions, provisions and
limitations set forth herein (including, without limitation, the payment of the Make-Whole Premium,
as applicable), the Borrower may borrow, repay or prepay and reborrow Advances without any penalty,
fee or premium on and after the Closing Date and prior to the end of the Reinvestment Period.




-38-









 








          (e) A determination by Wachovia of the existence of any Eurodollar Disruption Event (any such
determination to be communicated to the Borrower by written notice from the Administrative Agent
promptly after the Administrative Agent learns of such event), or of the effect of any Eurodollar
Disruption Event on its making or maintaining Advances at LIBOR, shall be conclusive absent
manifest error.




          (f) Notwithstanding anything to the contrary herein (including, without limitation, the
occurrence of an Event of Default or the existence of an Unmatured Event of Default or a Borrowing
Base Deficiency), if, upon the occurrence of an Event of Default or on the last day of the
Reinvestment Period, the amount on deposit in the Unfunded Exposure Account is less than the
aggregate Unfunded Exposure Amount, the Borrower shall request an Advance in the amount of such
shortfall (the “Unfunded Exposure Amount Shortfall”). Following receipt of a Notice of
Borrowing (which shall specify the account details of the Unfunded Exposure Account where the funds
will be made available), each Lender shall fund such Unfunded Exposure Amount Shortfall in
accordance with Section 2.02(b), notwithstanding anything to the contrary herein
(including, without limitation, the Borrower’s failure to satisfy any of the conditions precedent
set forth in Section 3.02). For the avoidance of doubt, the Borrower shall not be required
to fund the Unfunded Exposure Account unless and until the occurrence of an Event of Default or the
last day of the Reinvestment Period.




          (g) The obligation of each Conduit Lender and each Institutional Lender to remit its Pro Rata
Share of any Advance shall be several from that of each other Lender and the failure of any Conduit
Lender or Institutional Lender to so make such amount available to the Borrower shall not relieve
any other Lender of its obligation hereunder.




     SECTION 2.03 Determination of Yield. Each applicable Lender Agent shall determine the
Yield for its portion of the Advances (including unpaid Yield related thereto, if any, due and
payable on a prior Payment Date) to be paid by the Borrower on each Payment Date for the related
Remittance Period and shall advise the Servicer thereof on the third Business Day prior to such
Payment Date.



     SECTION 2.04 Remittance Procedures. The Servicer, as agent for the Administrative
Agent and the Lender Agents, shall instruct the Collateral Agent and, if the Servicer fails to do
so, the Administrative Agent may instruct the Collateral Agent, to apply funds on deposit in the
Controlled Accounts as described in this Section 2.04; provided that, at any time after
delivery of Notice of Exclusive Control (as defined in the Collection Account Agreement), the
Administrative Agent shall instruct the Collateral Agent to apply funds on deposit in the
Controlled Accounts as described in this Section 2.04.



          (a) Payment Date Transfers During Reinvestment Period and Absent an Event of Default.
During the Reinvestment Period, so long as no Event of Default has occurred and, in any case, prior
to the declaration, or automatic occurrence, of the Facility Maturity Date, the Collateral Agent
shall (as directed pursuant to the first paragraph of this Section 2.04) transfer collected
funds held by the Account Bank in the Collection Account, in accordance with the Servicing Report,
to the following Persons in the following amounts, calculated as of the Determination Date, and
priority:




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          (i) pari passu to (a) the Collateral Agent, in payment in full of all accrued
Collateral Agent Fees and Collateral Agent Expenses, (b) the Collateral Custodian in payment
in full of all accrued Collateral Custodian Fees and Collateral Custodian Expenses and (c)
the Account Bank in payment in full of all accrued fees and expenses due under the Wells
Fargo Fee Letter; provided that amounts payable with respect to Collateral Agent Expenses,
Collateral Custodian Expenses and the Account Bank pursuant to this clause (i) (and
Section 2.04(b)(i), (c)(i) and (d)(i), if applicable) shall not, collectively,
exceed $170,000 per annum;




          (ii) to the Servicer, in payment in full of all accrued Servicing Fees;




          (iii) to the Hedge Counterparty, any amounts (other than any Hedge Breakage Costs)
owing to that Hedge Counterparty under its Hedging Agreement in respect of any Hedge
Transaction(s);




          (iv) pro rata, in accordance with the amounts due under this clause, to each Lender
Agent, for the account of the applicable Lender, all Yield and the Non-Usage Fee that is
accrued and unpaid as of the last day of the related Remittance Period;




          (v) pro rata, to each Lender Agent (for the account of the applicable Lender) and the
Administrative Agent, all accrued and unpaid fees, expenses (including attorneys’ fees,
costs and expenses) and indemnity amounts payable by the Borrower to the Administrative
Agent, any Lender Agent or any Lender under the Transaction Documents;




          (vi) to pay the Advances Outstanding to the extent required to satisfy any outstanding
Borrowing Base Deficiency;




          (vii) at the discretion of the Servicer, to fund the Unfunded Exposure Account (in an
amount up to the Unfunded Exposure Amount);




          (viii) pari passu to (a) the Collateral Agent, in payment in full of all accrued
Collateral Agent Expenses to the extent not previously paid, (b) the Collateral Custodian in
payment in full of all accrued Collateral Custodian Expenses to the extent not previously
paid, and (c) the Account Bank in payment in full of all accrued expenses to the extent not
previously paid;




          (ix) to pay the Advances Outstanding, together with any applicable Make-Whole Premium,
in connection with any complete refinancing or termination of this Agreement in accordance
with Section 2.18(b);




          (x) to the Hedge Counterparty, any Hedge Breakage Costs owing to the Hedge Counterparty
under its Hedging Agreement;




          (xi) to pay any other amounts due (other than with respect to the repayment of
Advances) under this Agreement and the other Transaction Documents (including any indemnity
amounts due from the Borrower hereunder and thereunder not previously paid pursuant to
Section 2.04(a)(v));




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          (xii) to the Servicer, in respect of all reasonable expenses (except allocated
overhead) incurred in connection with the performance of its duties hereunder; and




          (xiii) to the Borrower, any remaining amounts.



          (b) Interest Payments after the Reinvestment Period but Prior to an Event of Default.
After the Reinvestment Period but prior to the occurrence of an Event of Default or the Facility
Maturity Date, the Collateral Agent shall (as directed pursuant to the first paragraph of this
Section 2.04) transfer Interest Collections held by the Account Bank in the Collection
Account, in accordance with the Servicing Report, to the following Persons in the following
amounts, calculated as of the Determination Date, and priority:





          (i) pari passu to (a) the Collateral Agent, in payment in full of all accrued
Collateral Agent Fees and Collateral Agent Expenses, (b) the Collateral Custodian in payment
in full of all accrued Collateral Custodian Fees and Collateral Custodian Expenses and (c)
the Account Bank in payment in full of all accrued fees and expenses due under the Wells
Fargo Fee Letter; provided that amounts payable with respect to Collateral Agent Expenses,
Collateral Custodian Expenses and the Account Bank pursuant to this clause (i) (and
Section 2.04(a)(i), (c)(i) and (d)(i), if applicable) shall not, collectively,
exceed $170,000 per annum;




          (ii) to the Servicer, in payment in full of all accrued Servicing Fees;




          (iii) to the Hedge Counterparty, any amounts (other than any Hedge Breakage Costs)
owing to that Hedge Counterparty under its Hedging Agreement in respect of any Hedge
Transaction(s);




          (iv) pro rata, in accordance with the amounts due under this clause, to each Lender
Agent, for the account of the applicable Lender, all Yield and the Non-Usage Fee that is
accrued and unpaid as of the last day of the related Remittance Period;




          (v) pro rata, to each Lender Agent (for the account of the applicable Lender) and the
Administrative Agent, as applicable, all accrued and unpaid fees, expenses (including
attorneys’ fees, costs and expenses) and indemnity amounts payable by the Borrower to the
Administrative Agent, any Lender Agent or any Lender under the Transaction Documents;




          (vi) to pay the Advances Outstanding to the extent required to satisfy any outstanding
Borrowing Base Deficiency;




          (vii) pari passu to (a) the Collateral Agent, in payment in full of all accrued
Collateral Agent Expenses to the extent not previously paid, (b) the Collateral Custodian in
payment in full of all accrued Collateral Custodian Expenses to the extent not previously
paid, and (c) the Account Bank in payment in full of all accrued expenses to the extent not
previously paid;



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          (viii) to pay the Advances Outstanding, together with any applicable Make-Whole
Premium, in connection with any complete refinancing or termination of this Agreement in
accordance with Section 2.18(b);




          (ix) to the Hedge Counterparty, any Hedge Breakage Costs owing to the Hedge
Counterparty under its Hedging Agreement;




          (x) to pay any other amounts due (other than with respect to the repayment of Advances)
under this Agreement and the other Transaction Documents (including any indemnity amounts
due from the Borrower hereunder and thereunder not previously paid pursuant to Section
2.04(b)(v));




          (xi) to the Servicer, in respect of all reasonable expenses (except allocated overhead)
incurred in connection with the performance of its duties hereunder; and




          (xii) to the Borrower, any remaining amounts.



          (c) Principal Payments after the Reinvestment Period but Prior to an Event of Default.
After the Reinvestment Period but prior to an Event of Default or the Facility Maturity Date, the
Collateral Agent shall (as directed pursuant to the first paragraph of this Section 2.04)
transfer Principal Collections held by the Account Bank in the Collection Account, in accordance
with the Servicing Report, to the following Persons in the following amounts, calculated as of the
Determination Date, and priority:





          (i) to pay amounts due under Section 2.04(b)(i) through (vi), to the
extent not paid thereunder;




          (ii) to the Unfunded Exposure Account in an amount necessary to cause the amount on
deposit in the Unfunded Exposure Account to equal the Unfunded Exposure Amount;




          (iii) to pay the Advances Outstanding, including any applicable Make-Whole Premium,
until paid in full;




          (iv) pari passu to (a) the Collateral Agent, in payment in full of all accrued
Collateral Agent Expenses to the extent not previously paid, (b) the Collateral Custodian in
payment in full of all accrued Collateral Custodian Expenses to the extent not previously
paid, and (c) the Account Bank in payment in full of all accrued expenses to the extent not
previously paid;




          (v) to the Hedge Counterparty, any Hedge Breakage Costs owing to the Hedge Counterparty
under its Hedging Agreement, to the extent not paid pursuant to Section 2.04(b)(ix);




          (vi) to pay any other amounts due under this Agreement and the other Transaction
Documents (including any indemnity amounts due from the Borrower hereunder and thereunder
not previously paid pursuant to Section 2.04(b)(v));



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          (vii) to the Servicer, in respect of all reasonable expenses (except allocated
overhead) incurred in connection with the performance of its duties hereunder; and




          (viii) to the Borrower, any remaining amounts.



          (d) Payment Date Transfers Upon the Occurrence of an Event of Default. If an Event of
Default has occurred or, in any case, after the declaration, or automatic occurrence, of the
Facility Maturity Date, the Collateral Agent shall (as directed pursuant to the first paragraph of
this Section 2.04) transfer collected funds held by the Account Bank in the Collection
Account, in accordance with the Servicing Report, to the following Persons in the following
amounts, calculated as of the Determination Date, and priority:





          (i) pari passu to (a) the Collateral Agent, in payment in full of all accrued
Collateral Agent Fees and Collateral Agent Expenses, (b) the Collateral Custodian in payment
in full of all accrued Collateral Custodian Fees and Collateral Custodian Expenses and (c)
the Account Bank in payment in full of all accrued fees and expenses due under the Wells
Fargo Fee Letter; provided that amounts payable with respect to Collateral Agent Expenses,
Collateral Custodian Expenses and the Account Bank pursuant to this clause (i) (and
Section 2.04(a)(i), (b)(i) and (c)(i), if applicable) shall not, collectively,
exceed $170,000 per annum;




          (ii) to the Servicer, in payment in full of all accrued Servicing Fees;




          (iii) to the Hedge Counterparty, any amounts (other than any Hedge Breakage Costs)
owing to that Hedge Counterparty under its Hedging Agreement in respect of any Hedge
Transaction(s);




          (iv) pro rata, in accordance with the amounts due under this clause, to each Lender
Agent, for the account of the applicable Lender, all Yield and the Non-Usage Fee that is
accrued and unpaid as of the last day of the related Remittance Period;




          (v) pro rata, to each Lender Agent (for the account of the applicable Lender) and the
Administrative Agent, as applicable, all accrued and unpaid fees, expenses (including
attorneys’ fees, costs and expenses) and indemnity amounts payable by the Borrower to the
Administrative Agent, any Lender Agent or any Lender under the Transaction Documents;




          (vi) to the Unfunded Exposure Account in an amount necessary to cause the amount on
deposit in the Unfunded Exposure Account to equal the Unfunded Exposure Amount;




          (vii) to pay the Advances Outstanding, including any applicable Make-Whole Premium,
until paid in full;




          (viii) pari passu to (a) the Collateral Agent, in payment in full of all accrued
Collateral Agent Expenses to the extent not previously paid, (b) the Collateral Custodian in
payment in full of all accrued Collateral Custodian Expenses to the extent



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not previously paid, and (c) the Account Bank in payment in full of all accrued
expenses to the extent not previously paid;




          (ix) to the Hedge Counterparty, any Hedge Breakage Costs owing to the Hedge
Counterparty under its Hedging Agreement;




          (x) to pay any other amounts due under this Agreement and the other Transaction
Documents (including any indemnity amounts due from the Borrower hereunder and thereunder
not previously paid pursuant to Section 2.04(d)(v));




          (xi) to the Servicer, in respect of all reasonable expenses (except allocated overhead)
incurred in connection with the performance of its duties hereunder; and




          (xii) to the Borrower, any remaining amounts.



          (e) Unfunded Exposure Account. Funds on deposit in the Unfunded Exposure Account as of
any date of determination may be withdrawn to fund draw requests of the relevant Obligors under any
Revolving Loan Asset or Delayed Draw Loan Asset; provided that, until an Event of Default has
occurred, the amount withdrawn to fund such draw request shall not create any Borrowing Base
Deficiency. Any such draw request made by an Obligor, along with wiring instructions for the
applicable Obligor, shall be forwarded by the Borrower or the Servicer to the Collateral Agent
(with a copy to the Administrative Agent and each Lender Agent) in the form of a Disbursement
Request, and the Collateral Agent shall instruct the Account Bank to fund such draw request in
accordance with the Disbursement Request. At any time, the Servicer (or, after delivery of Notice
of Exclusive Control (as such term is defined in the Unfunded Exposure Account Agreement), the
Administrative Agent) may cause any amounts on deposit in the Unfunded Exposure Account which
exceed the Unfunded Exposure Amount as of any date of determination to be deposited into the
Principal Collection Account as Principal Collections.




          (f) Insufficiency of Funds. For the sake of clarity, the parties hereby agree that if
the funds on deposit in the Collection Account are insufficient to pay any amounts due and payable
on a Payment Date or otherwise, the Borrower shall nevertheless remain responsible for, and shall
pay when due, all amounts payable under this Agreement and the other Transaction Documents in
accordance with the terms of this Agreement and the other Transaction Documents.




     SECTION 2.05 Instructions to the Collateral Agent and the Account Bank. All
instructions and directions given to the Collateral Agent or the Account Bank by the Servicer, the
Borrower or the Administrative Agent pursuant to Section 2.04 shall be in writing
(including instructions and directions transmitted to the Collateral Agent or the Account Bank by
telecopy or e-mail), and such written instructions and directions shall be delivered with a written
certification that such instructions and directions are in compliance with the provisions of
Section 2.04. The Servicer and the Borrower shall immediately transmit to the
Administrative Agent by telecopy or e-mail a copy of all instructions and directions given to the
Collateral Agent or the Account Bank by such party pursuant to Section 2.04. The
Administrative Agent shall promptly transmit to the Servicer and the Borrower by telecopy or e-mail
a copy of all



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instructions and directions given to the Collateral Agent or the Account Bank by the
Administrative Agent, pursuant to Section 2.04. If either the Administrative Agent or
Collateral Agent disagrees with the computation of any amounts to be paid or deposited by the
Borrower or the Servicer under Section 2.04 or otherwise pursuant to this Agreement, or
upon their respective instructions, it shall so notify the Borrower, the Servicer and the
Collateral Agent in writing and in reasonable detail to identify the specific disagreement. If such
disagreement cannot be resolved within two Business Days, the determination of the Administrative
Agent as to such amounts shall be conclusive and binding on the parties hereto absent manifest
error. In the event the Collateral Agent or the Account Bank receives instructions from the
Servicer or the Borrower which conflict with any instructions received by the Administrative Agent,
the Collateral Agent or the Account Bank, as applicable, shall rely on and follow the instructions
given by the Administrative Agent.



     SECTION 2.06 Borrowing Base Deficiency Payments.



          (a) In addition to any other obligation of the Borrower to cure any Borrowing Base Deficiency
pursuant to the terms of this Agreement, if, on any day prior to the Collection Date, any Borrowing
Base Deficiency exists, then the Borrower shall, within three Business Days from the date of such
Borrowing Base Deficiency, eliminate such Borrowing Base Deficiency in its entirety by effecting
one or more (or any combination thereof) of the following actions in order to eliminate such
Borrowing Base Deficiency as of such date of determination: (i) deposit cash in United States
dollars into the Principal Collection Account, (ii) repay Advances (together with any Breakage
Fees, Hedge Breakage Costs and all accrued and unpaid costs and expenses of the Administrative
Agent, the Lender Agents and the Lenders, in each case in respect of the amount so prepaid), and/or
(iii) subject to the approval of the Administrative Agent, in its sole discretion, Pledge
additional Eligible Loan Assets; provided, that if the Borrower requests to Pledge another Eligible
Loan Asset within one Business Day of such Borrowing Base Deficiency and the Administrative Agent
does not either reject such Loan Asset or approve such Loan Asset within one Business Day of the
Borrower’s request to Pledge such Loan Asset, then the Administrative Agent may, in its sole
discretion, elect in writing to extend the three Business Day grace period set forth in this
Section 2.06 for up to seven Business Days.




          (b) No later than 2:00 p.m. on the Business Day prior to the proposed repayment of Advances or
Pledge of additional Eligible Loan Assets pursuant to Section 2.06(a), the Borrower (or the
Servicer on its behalf) shall deliver (i) to the Administrative Agent (with a copy to the
Collateral Agent and the Collateral Custodian), notice of such repayment or Pledge and a duly
completed Borrowing Base Certificate, updated to the date such repayment or Pledge is being made
and giving pro forma effect to such repayment or Pledge, and (ii) to the Administrative Agent, if
applicable, a description of any Eligible Loan Asset and each Obligor of such Eligible Loan Asset
to be Pledged and added to the updated Loan Asset Schedule. Any notice pertaining to any repayment
or any Pledge pursuant to this Section 2.06 shall be irrevocable.




     SECTION 2.07 Substitution and Sale of Loan Assets; Affiliate Transactions.



          (a) Substitutions. The Borrower may, with the consent of the Administrative Agent in
its sole discretion, replace any Loan Asset as a Loan Asset so long as (i) no event has



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occurred, or would result from such substitution, which constitutes an Event of Default and no
event has occurred and is continuing, or would result from such substitution, which constitutes an
Unmatured Event of Default or a Borrowing Base Deficiency and (ii) simultaneously therewith, the
Borrower Pledges (in accordance with all of the terms and provisions contained herein) a Substitute
Eligible Loan Asset.




          (b) Discretionary Sales. The Borrower shall be permitted to sell Loan Assets to
Persons other than the Transferor or its Affiliates from time to time; provided that (i) the
proceeds of such sale shall be deposited into the Collection Account to be disbursed in accordance
with Section 2.04 hereof, (ii) no event has occurred, or would result from such sale, which
constitutes an Event of Default and no event has occurred and is continuing, or would result from
such sale, which constitutes an Unmatured Event of Default or a Borrowing Base Deficiency; and
(iii) the prior written consent of the Administrative Agent shall be required if such Loan Asset is
sold for an amount which is less than the Adjusted Borrowing Value.




          (c) Repurchase or Substitution of Warranty Loan Assets. If on any day a Loan Asset is
(or becomes) a Warranty Loan Asset, no later than 10 Business Days following the earlier of
knowledge by the Borrower of such Loan Asset becoming a Warranty Loan Asset or receipt by the
Borrower from the Administrative Agent or the Servicer of written notice thereof, the Borrower
shall either:





          (i) make a deposit to the Collection Account (for allocation pursuant to Section
2.04) in immediately available funds in an amount equal to (x) the Advance Date Assigned
Value multiplied by the Outstanding Balance of such Loan Asset, (y) all Hedge Breakage Costs
arising as a result thereof and owed to the relevant Hedge Counterparty for any termination
of one or more Hedge Transactions, in whole or in part, as required by the terms of any
Hedging Agreement and (z) any expenses or fees with respect to such Loan Asset and costs and
damages incurred by the Administrative Agent or by any Lender in connection with any
violation by such Loan Asset of any predatory or abusive lending law which is an Applicable
Law (a notification regarding the amount of such expenses or fees to be provided by the
Administrative Agent to the Borrower); provided that the Administrative Agent shall have the
right to determine whether the amount so deposited is sufficient to satisfy the foregoing
requirements; or




          (ii) with the prior written consent of the Administrative Agent, in its sole
discretion, substitute for such Warranty Loan Asset a Substitute Eligible Loan Asset.



          Upon confirmation of the deposit of the amounts set forth in Section 2.07(c)(i) into
the Collection Account or the delivery by the Borrower of a Substitute Eligible Loan Asset for each
Warranty Loan Asset (the date of such confirmation or delivery, the “Release Date”), such
Warranty Loan Asset and related Portfolio Assets shall be removed from the Collateral Portfolio
and, as applicable, the Substitute Eligible Loan Asset and related Portfolio Assets shall be
included in the Collateral Portfolio. On the Release Date of each Warranty Loan Asset, the
Collateral Agent, for the benefit of the Secured Parties, shall automatically and without further
action be deemed to release to the Borrower, without recourse, representation or warranty, all the
right, title and interest and any Lien of the Collateral Agent, for the benefit of the Secured
Parties



-46-









 






in, to and under the Warranty Loan Asset and any related Portfolio Assets and all future
monies due or to become due with respect thereto.




          (d) Conditions to Sales, Substitutions and Repurchases. Any sales, substitutions or
repurchases effected pursuant to Sections 2.07(a), (b), or (c) shall be
subject to the satisfaction of the following conditions (as certified in writing to the
Administrative Agent and Collateral Agent by the Borrower):





          (i) the Borrower shall deliver a Borrowing Base Certificate to the Administrative Agent
in connection with such sale, substitution or repurchase;




          (ii) the Borrower shall deliver a list of all Loan Assets to be sold, substituted,
repurchased;




          (iii) no selection procedures adverse to the interests of the Administrative Agent, the
Lender Agents or the Lenders were utilized by the Borrower in the selection of the Loan
Assets to be sold, repurchased or substituted;




          (iv) the Borrower shall give one Business Day’s notice of such sale, substitution or
repurchase;




          (v) the Borrower shall notify the Administrative Agent of any amount to be deposited
into the Collection Account in connection with any sale, substitution or repurchase;




          (vi) the representations and warranties contained in Sections 4.01,
4.02 and 4.03 hereof shall continue to be correct in all respects, except to
the extent relating to an earlier date;




          (vii) any repayment of Advances Outstanding in connection with any sale, substitution
or repurchase of Loan Assets hereunder shall comply with the requirements set forth in
Section 2.18;




          (viii) the Borrower and the Servicer (on behalf of the Borrower) shall agree to pay the
legal fees and expenses of the Administrative Agent, each Lender, each Lender Agent,
Collateral Agent and the Collateral Custodian in connection with any such sale, substitution
or repurchase (including, but not limited to, expenses incurred in connection with the
release of the Lien of the Collateral Agent on behalf of the Secured Parties and any other
party having an interest in the Loan Asset in connection with such sale, substitution or
repurchase); and




          (ix) the Borrower shall pay any Hedge Breakage Costs arising as a result of such sale,
substitution or repurchase and owed to the relevant Hedge Counterparty for any termination
of one or more Hedge Transactions, in whole or in part, if applicable, as required by the
terms of any Hedging Agreement.



          (e) Affiliate Transactions. Notwithstanding anything to the contrary set forth herein
or in any other Transaction Document, the Transferor (or an Affiliate thereof) shall not



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reacquire from the Borrower and the Borrower shall not transfer to the Transferor or to
Affiliates of the Transferor, and none of the Transferor nor any Affiliates thereof will have a
right or ability to purchase, the Loan Assets without the prior written consent of the
Administrative Agent, except in the case of a Lien Release Dividend or repurchases of Loan Assets
by the Transferor pursuant to Section 6.1 of the Purchase and Sale Agreement or
substitutions of Loan Assets pursuant to Section 6.2 of the Purchase and Sale Agreement.




          (f) Limitations on Sales and Substitutions. The Outstanding Balance of all Loan
Assets (other than Warranty Loan Assets) sold pursuant to Section 2.07(b), substituted
pursuant to Section 2.07(a) or released pursuant to a Lien Release Dividend during the
12-month period immediately preceding the proposed date of sale or substitution (or such lesser
number of months as shall have elapsed as of such date) does not exceed 10% of the highest
aggregate Outstanding Balance of any month during such 12-month period (or such lesser number of
months as shall have elapsed as of such date).




          (g) Lien Release Dividend. Notwithstanding any provision contained in this Agreement
to the contrary, provided no Event of Default has occurred and no Unmatured Event of Default
exists, on a Lien Release Dividend Date, the Borrower may dividend to the Transferor Loan Assets
that were sold by the Transferor to the Borrower, or portions thereof (each, a “Lien Release
Dividend”), subject to the following terms and conditions, as certified by the Borrower and the
Transferor to the Administrative Agent (with a copy to the Collateral Agent and the Collateral
Custodian):





          (i) The Borrower and the Transferor shall have given the Administrative Agent, with a
copy to the Collateral Agent and the Collateral Custodian, at least five Business Days prior
written notice requesting that the Administrative Agent consent to the effectuation of a
Lien Release Dividend, in the form of Exhibit J hereto (a “Notice and Request
for Consent”), which consent shall be given in the sole and absolute discretion of the
Administrative Agent; provided that, if the Administrative Agent shall not have responded to
the Notice and Request for Consent by 11:00 a.m. on the day that is one Business Day prior
to the proposed Lien Release Dividend Date, the Administrative Agent shall be deemed not to
have given its consent;




          (ii) On any Lien Release Dividend Date, no more than four Lien Release Dividends shall
have been made during the 12-month period immediately preceding the proposed Lien Release
Dividend Date;




          (iii) After giving effect to the Lien Release Dividend on the Lien Release Dividend
Date, (A) no Borrowing Base Deficiency, Event of Default or Unmatured Event of Default shall
exist, (B) the representations and warranties contained in Sections 4.01,
4.02 and 4.03 hereof shall continue to be correct in all material respects,
except to the extent relating to an earlier date, (C) the eligibility of any Loan Asset
remaining as part of the Collateral Portfolio after the Lien Release Dividend will be
redetermined as of the Lien Release Dividend Date, (D) no claim shall have been asserted or
proceeding commenced challenging the enforceability or validity of any of the Required Loan
Documents and (E) there shall have been no material adverse change as to the Servicer or the
Borrower;



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          (iv) Such Lien Release Dividend must be in compliance with Applicable Law and may not
(A) be made with the intent to hinder, delay or defraud any creditor of the Borrower or (B)
leave the Borrower, immediately after giving effect to the Lien Release Dividend, (x)
insolvent, (y) with insufficient funds to pay its obligations as and when they become due or
(z) with inadequate capital for its present and anticipated business and transactions;




          (v) On or prior to the Lien Release Dividend Date, the Borrower shall have (A)
delivered to the Administrative Agent, with a copy to the Collateral Agent and the
Collateral Custodian, a list specifying all Loan Assets or portions thereof to be
transferred pursuant to such Lien Release Dividend and the Administrative Agent shall have
approved the same in its sole discretion and (B) obtained all authorizations, consents and
approvals required to effectuate the Lien Release Dividend;




          (vi) A portion of a Loan Asset may be transferred pursuant to a Lien Release Dividend
provided that (A) such transfer does not have an adverse effect on the portion of such Loan
Asset remaining as a part of the Collateral Portfolio, any other aspect of the Collateral
Portfolio, the Lenders, the Lender Agents, the Administrative Agent or any other Secured
Party and (B) a new promissory note (other than with respect to a Noteless Loan Asset) for
the portion of the Loan Asset remaining as a part of the Collateral Portfolio has been
executed, and the original thereof has been endorsed to the Collateral Agent and delivered
to the Collateral Custodian;




          (vii) Each Loan Asset, or portion thereof, as applicable, shall be transferred at a
value equal to the Outstanding Balance thereof, exclusive of any accrued and unpaid interest
or PIK Interest thereon;




          (viii) The Borrower shall deliver a Borrowing Base Certificate (including a calculation
of the Borrowing Base after giving effect to such Lien Release Dividend) to the
Administrative Agent;




          (ix) The Borrower shall have paid in full an aggregate amount equal to the sum of all
amounts due and owing to the Administrative Agent, the Lenders, the Lender Agents, the
Collateral Agent or the Collateral Custodian, as applicable, under this Agreement and the
other Transaction Documents, to the extent accrued to such date (including, without
limitation, Breakage Fees) with respect to the Loan Assets to be transferred pursuant to
such Lien Release Dividend and incurred in connection with the transfer of such Loan Assets
pursuant to such Lien Release Dividend; and




          (x) The Borrower and the Servicer (on behalf of the Borrower) shall pay the reasonable
legal fees and expenses of the Administrative Agent, the Lenders, the Lender Agents, the
Collateral Agent and the Collateral Custodian in connection with any Lien Release Dividend
(including, but not limited to, expenses incurred in connection with the release of the Lien
of the Collateral Agent, on behalf of the Secured Parties, and any other party having an
interest in the Loan Assets in connection with such Lien Release Dividend).



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     SECTION 2.08 Payments and Computations, Etc.



          (a) All amounts to be paid or deposited by the Borrower or the Servicer hereunder shall be
paid or deposited in accordance with the terms hereof no later than 5:00 p.m. on the day when due
in lawful money of the United States in immediately available funds to the Collection Account or
such other account as is designated by the Administrative Agent. The Borrower or the Servicer, as
applicable, shall, to the extent permitted by law, pay to the Secured Parties interest on all
amounts not paid or deposited when due to any of the Secured Parties hereunder at 4.0% per annum
above the Base Rate (other than with respect to any advances outstanding, which shall accrue at the
Yield Rate), payable on demand, from the date of such nonpayment until such amount is paid in full
(as well after as before judgment); provided, that such interest rate shall not at any time exceed
the maximum rate permitted by Applicable Law. Any Obligation hereunder shall not be reduced by any
distribution of any portion of Available Collections if at any time such distribution is rescinded
or required to be returned by any Lender to the Borrower or any other Person for any reason. All
computations of interest and all computations of Yield 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, other than calculations with respect to the Base Rate, which shall be based
on a year consisting of 365 or 366 days, as applicable.




          (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 Yield or any fee payable hereunder,
as the case may be.




          (c) If any Advance requested by the Borrower and approved by the Lender Agents and the
Administrative Agent pursuant to Section 2.02 is not for any reason whatsoever, except as a
result of the gross negligence or willful misconduct of, or failure to fund such Advance on the
part of, the Lenders, the Administrative Agent or an Affiliate thereof, made or effectuated, as the
case may be, on the date specified therefor, the Borrower shall indemnify such Lender against any
loss, cost or expense incurred by such Lender related thereto (other than any such loss, cost or
expense solely due to the gross negligence or willful misconduct or failure to fund such Advance on
the part of the Lenders, the Administrative Agent or an Affiliate thereof), including, without
limitation, any loss (including cost of funds and reasonable out-of-pocket expenses), cost or
expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund Advances or maintain the Advances. Any such Lender shall provide to the
Borrower documentation setting forth the amounts of any loss, cost or expense referred to in the
previous sentence, such documentation to be conclusive absent manifest error.




     SECTION 2.09 Non-Usage Fee.



          (a) The Borrower shall pay, in accordance with Section 2.04, pro rata to each Lender
(either directly or through the applicable Lender Agent), a non-usage fee (the “Non-Usage
Fee”) payable in arrears for each Remittance Period, equal to the sum of the products for each
day during such Remittance Period of (i) one divided by 360, (ii) the applicable Non-Usage Fee Rate
(as defined below), and (iii) the aggregate Commitments minus the Advances



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Outstanding on such day (such amount, the “Unused Portion”). The Non-Usage Fee Rate
(the “Non-Usage Fee Rate”) shall be (except as set forth pursuant to Section
2.09(b) below), (i) during the first six months following the Closing Date, 0.50% for any
Unused Portion of the aggregate Commitments and (ii) thereafter, (x) 0.50% on any Unused Portion up
to or equal to an amount equal to 20% of the aggregate Commitments and (y) 2.50% on any Unused
Portion in excess of such amount equal to 20% of the aggregate Commitments.




          (b) In the event of any Commitment Increase Closing Date, from such Commitment Increase
Closing Date until the date which is six months after such Commitment Increase Closing Date, the
Non-Usage Fee Rate shall be (i) 0.50% on any Unused Portion up to or equal to (x) the Commitment
Increase Amount plus (y) an amount equal to 20% of the aggregate Commitments which existed
prior to giving effect to such Commitment Increase Amount and (ii) 2.50% on any Unused Portion in
excess of the amount obtained by summing subclauses (x) and (y) of the foregoing
clause (i). From and after the date which is six months after such Commitment Increase
Closing Date, the Non-Usage Fee Rate shall equal (i) 0.50% on any Unused Portion up to or equal to
an amount equal to 20% of the aggregate Commitments and (ii) 2.50% on any Unused Portion in excess
of such amount equal to 20% of the aggregate Commitments.




     SECTION 2.10 Increased Costs; Capital Adequacy.



          (a) If, due to either (i) the introduction of or any change following the date hereof
(including, without limitation, any change by way of imposition or increase of reserve
requirements) in or in the interpretation, administration or application following the date hereof
of any Applicable Law (including, without limitation, any law or regulation resulting in any
interest payments paid to any Lender under this Agreement being subject to any Tax, except for
Taxes on the overall net income of such Lender), in each case whether foreign or domestic or (ii)
the compliance with any guideline or request following the date hereof from any central bank or
other Governmental Authority (whether or not having the force of law), there shall be any increase
in the cost to the Administrative Agent, any Lender, any Lender Agent, any Liquidity Bank or any
Affiliate, participant, successor or assign thereof (each of which shall be an “Affected
Party”) of agreeing to make or making, funding or maintaining any Advance (or any reduction of
the amount of any payment (whether of principal, interest, fee, compensation or otherwise) to any
Affected Party hereunder), as the case may be, or there shall be any reduction in the amount of any
sum received or receivable by an Affected Party under this Agreement, under any other Transaction
Document or any Liquidity Agreement, the Borrower shall, from time to time, after written demand by
the Administrative Agent (which demand shall be accompanied by a statement setting forth in
reasonable detail the basis for such demand), on behalf of such Affected Party, pay to the
Administrative Agent, on behalf of such Affected Party, additional amounts sufficient to compensate
such Affected Party for such increased costs or reduced payments within 10 days after such demand;
provided, that the amounts payable under this Section 2.10 shall be without duplication of
amounts payable under Section 2.11 and shall not include any Excluded Taxes.




          (b) If either (i) the introduction of or any change following the date hereof in or in the
interpretation, administration or application following the date hereof of any law, guideline, rule
or regulation, directive or request or (ii) the compliance by any Affected Party



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with any law, guideline, rule, regulation, directive or request following the date hereof,
from any central bank, any Governmental Authority or agency, including, without limitation,
compliance by an Affected Party with any request or directive regarding capital adequacy, has or
would have the effect of reducing the rate of return on the capital of any Affected Party, as a
consequence of its obligations hereunder or any related document or arising in connection herewith
or therewith to a level below that which any such Affected Party could have achieved but for such
introduction, change or compliance (taking into consideration the policies of such Affected Party
with respect to capital adequacy), by an amount deemed by such Affected Party to be material, then,
from time to time, after demand by such Affected Party (which demand shall be accompanied by a
statement setting forth in reasonable detail the basis for such demand), the Borrower shall pay the
Administrative Agent on behalf of such Affected Party such additional amounts as will compensate
such Affected Party for such reduction. For the avoidance of doubt, any increase in cost and/or
reduction in Yield with respect to any Affected Party caused by regulatory capital allocation
adjustments due to FAS 166, 167 and subsequent statements and interpretations shall constitute a
circumstance on which such Affected Party may base a claim for reimbursement under this Section
2.10.




          (c) If as a result of any event or circumstance similar to those described in clause
(a) or (b) of this Section 2.10, any Affected Party is required to compensate a
bank or other financial 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 amounts payable or paid by it.




          (d) In determining any amount provided for in this Section 2.10, the Affected Party
may use any reasonable averaging and attribution methods. The Administrative Agent, on behalf of
any Affected Party making a claim under this Section 2.10, shall submit to the Borrower a
certificate setting forth in reasonable detail the basis for and the computations of such
additional or increased costs, which certificate shall be conclusive absent manifest error.




          (e) Failure or delay on the part of any Affected Party to demand compensation pursuant to this
Section 2.10 shall not constitute a waiver of such Affected Party’s right to demand or
receive such compensation.




          (f) If at any time the Borrower shall be liable for the payment of any additional amounts in
accordance with this Section 2.10, then the Borrower shall have the option to terminate
this Agreement (in accordance with the provisions of Section 2.18(b) but without the
payment of any Make-Whole Premium); provided that such option to terminate shall in no event
relieve the Borrower of paying any amounts owing pursuant to this Section 2.10 in
accordance with the terms hereof.




     SECTION 2.11 Taxes.



          (a) All payments made by an Obligor in respect of a Loan Asset and all payments made by the
Borrower or made by the Servicer on behalf of the Borrower under this Agreement will be made free
and clear of and without deduction or withholding for or on



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account of any Taxes. If any Taxes are required to be withheld from any amounts payable to
any Indemnified Party, then the amount payable to such Person will be increased (the amount of such
increase, the “Additional Amount”) such that every net payment made under this Agreement
after 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 made. The foregoing obligation to pay Additional Amounts with respect to payments
required to be made by the Borrower or Servicer under this Agreement will not, however, apply with
respect to Taxes imposed on or measured by net income or franchise Taxes imposed on any Indemnified
Party by a taxing jurisdiction in which any such Person is organized, conducts business or is
paying Taxes (as the case may be) (“Excluded Taxes”).




          (b) The Borrower will indemnify, from funds available to it pursuant to Section 2.04
(and to the extent the funds available for indemnification provided by the Borrower is insufficient
the Servicer, on behalf of the Borrower, will indemnify) each Indemnified Party for the full amount
of Taxes payable by such Person in respect of Additional Amounts and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto. All payments in
respect of this indemnification shall be made within 10 days from the date a written invoice
therefor is delivered to the Borrower.




          (c) Within 30 days after the date of any payment by the Borrower or by the Servicer on behalf
of the Borrower of any Taxes, the Borrower or the Servicer, as applicable, will furnish to the
Administrative Agent and the Lender Agents at the applicable address set forth on this Agreement,
appropriate evidence of payment thereof.




          (d) If any assignee of a Lender is not created or organized under the laws of the United
States or a political subdivision thereof, such Lender shall deliver to the Borrower, with a copy
to the Administrative Agent, (i) within 15 days after becoming an assignee hereunder, two (or such
other number as may from time to time be prescribed by Applicable Law) duly completed copies of IRS
Form W-8BEN or Form W-8ECI (or 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 Law), as
appropriate, 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 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 2.11(d), copies (in such numbers as may from
time to time be prescribed by Applicable Law or regulations) of such additional, amended or
successor forms, certificates or statements as may be required under Applicable Law to permit the
Borrower or the Servicer to make payments hereunder for the account of such Lender without
deduction or withholding of United States federal income or similar Taxes.




          (e) If, in connection with an agreement or other document providing liquidity support, credit
enhancement or other similar support to any Lender in connection with this Agreement or the funding
or maintenance of Advances hereunder, such Lender is required to compensate a bank or other
financial institution in respect of Taxes under circumstances similar to those described in this
Section 2.11, then, within 10 days after demand by each applicable Lender, the Servicer
shall pay (or to the extent the Servicer does not make such payment the



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Borrower shall pay) to such Lender such additional amount or amounts as may be necessary to
reimburse such Lender for any amounts paid by them.




          Without prejudice to the survival of any other agreement of the Borrower and the Servicer
hereunder, the agreements and obligations of the Borrower and the Servicer contained in this
Section 2.11 shall survive the termination of this Agreement.




          (f) If at any time the Borrower shall be liable for the payment of any additional amounts in
accordance with this Section 2.11, then the Borrower shall have the option to terminate
this Agreement (in accordance with the provisions of Section 2.18(b) but without the
payment of any Make-Whole Premium); provided that such option to terminate shall in no event
relieve the Borrower of paying any amounts owing pursuant to this Section 2.11 in
accordance with the terms hereof.




     SECTION 2.12 Collateral Assignment of Agreements. The Borrower hereby collaterally
assigns to the Collateral Agent, for the benefit of the Secured Parties, all of the Borrower’s
right and title to and interest in, to and under (but not any obligations under) the Purchase and
Sale Agreement (and any UCC financing statements filed under or in connection therewith), any
Hedging Agreement, the Loan Agreements related to each Loan Asset, all other agreements, documents
and instruments evidencing, securing or guarantying any Loan Asset and all other agreements,
documents and instruments related to any of the foregoing but excluding any Excluded Amounts or
Retained Interest (the “Assigned Documents”). In furtherance and not in limitation of the
foregoing, the Borrower hereby collaterally assigns to the Collateral Agent, for the benefit of the
Secured Parties, its right to indemnification under Article IX of the Purchase and Sale Agreement.
The Borrower confirms that until the Collection Date the Collateral Agent (at the direction of the
Administrative Agent) on behalf of the Secured Parties shall have the sole right to enforce the
Borrower’s rights and remedies under the Purchase and Sale Agreement and any UCC financing
statements filed under or in connection therewith for the benefit of the Secured Parties. The
parties hereto agree that such collateral assignment to the Collateral Agent, for the benefit of
the Secured Parties, shall terminate upon the Collection Date.



     SECTION 2.13 Grant of a Security Interest. To secure the prompt, complete and
indefeasible payment in full when due, whether by lapse of time, acceleration or otherwise, of the
Obligations and the performance by the Borrower of all of the covenants and obligations to be
performed by it pursuant to this Agreement and each other Transaction Document, whether now or
hereafter existing, due or to become due, direct or indirect, or absolute or contingent, the
Borrower hereby (a) collaterally assigns and pledges to the Collateral Agent, on behalf of the
Secured Parties, and (b) grants a security interest to the Collateral Agent, on behalf of the
Secured Parties, in all of the Borrower’s right, title and interest in, to and under (but none of
the obligations under) all of the Collateral Portfolio (including any Hedging Agreements), whether
now existing or hereafter arising or acquired by the Borrower, and wherever the same may be
located. For the avoidance of doubt, the Collateral Portfolio shall not include any Excluded
Amounts, and the Borrower does not hereby assign, pledge or grant a security interest in any such
amounts. Anything herein to the contrary notwithstanding, (a) the Borrower shall remain liable
under the Collateral Portfolio 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 Collateral Agent, for the benefit of the Secured Parties, of any of its rights in
the



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Collateral Portfolio shall not release the Borrower from any of its duties or obligations
under the Collateral Portfolio, and (c) none of the Administrative Agent, the Collateral Agent, any
Lender (nor its successors and assigns), any Lender Agent, any Liquidity Bank nor any Secured Party
shall have any obligations or liability under the Collateral Portfolio by reason of this Agreement,
nor shall the Administrative Agent, the Collateral Agent, any Lender (nor its successors and
assigns), any Lender Agent, any Liquidity Bank nor 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 2.14 Evidence of Debt. The Administrative Agent shall maintain, solely for
this purpose as the agent of the Borrower, at its address referred to in Section 11.02 a
copy of each assignment and acceptance agreement and participation agreement delivered to and
accepted by it and a register for the recordation of the names and addresses and interests of the
Lenders (the “Register”). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower, the Administrative Agent, each Lender and
each Lender Agent shall treat each person whose name is recorded in the Register as a Lender under
this Agreement for all purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Lender Agent at any reasonable time and from time to time upon reasonable
prior notice.



     SECTION 2.15 Survival of Representations and Warranties. It is understood and agreed
that the representations and warranties set forth in Sections 4.01, 4.02 and
4.03 are made and are true and correct on the date of this Agreement and on each Cut-Off
Date unless such representations and warranties are made as of a specific date.



     SECTION 2.16 Release of Loan Assets.



          (a) The Borrower may obtain the release of (i) any Loan Asset (and the related Portfolio
Assets pertaining thereto) released pursuant to a Lien Release Dividend or sold or substituted in
accordance with the applicable provisions of Section 2.07 and any Portfolio Assets
pertaining to such Loan Asset and (ii) any Collateral Portfolio that expires by its terms and all
amounts in respect thereof have been paid in full by the related Obligor and deposited in the
Collection Account. The Collateral Agent, for the benefit of the Secured Parties, shall at the sole
expense of the Servicer and at the direction of the Administrative Agent, execute such documents
and instruments of release as may be prepared by the Servicer on behalf of the Borrower, give
notice of such release to the Collateral Custodian (in the form of Exhibit N) (unless the
Collateral Custodian and Collateral Agent are the same Person) and take other such actions as shall
reasonably be requested by the Borrower to effect such release of the Lien created pursuant to this
Agreement. Upon receiving such notification by the Collateral Agent as described in the immediately
preceding sentence, if applicable, the Collateral Custodian shall deliver the Required Loan
Documents to the Borrower.




          (b) Promptly after the Collection Date has occurred, each Lender and the Administrative Agent,
in accordance with their respective interests, shall release to the Borrower, for no consideration
but at the sole expense of the Borrower, their respective remaining interests in the Portfolio
Assets, free and clear of any Lien resulting solely from an act by the Collateral



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Agent, any Lender or the Administrative Agent but without any other representation or
warranty, express or implied, by or recourse against any Lender or the Administrative Agent.




     SECTION 2.17 Treatment of Amounts Received by the Borrower. Amounts received by the
Borrower pursuant to Section 2.07 on account of Loan Assets shall be treated as payments of
Principal Collections or Interest Collections, as applicable, on Loan Assets hereunder.



     SECTION 2.18 Prepayment; Termination.



          (a) Except as expressly permitted or required herein, including, without limitation, any
repayment necessary to cure a Borrowing Base Deficiency, Advances may only be prepaid in whole or
in part at the option of the Borrower at any time by delivering a Notice of Reduction (which notice
shall include a Borrowing Base Certificate) to the Administrative Agent, the Collateral Agent, the
Lender Agents and the Hedge Counterparty at least one Business Day prior to such reduction for
prepayments of $25,000,000 or less and three Business Days for all other prepayments. Upon any
prepayment, the Borrower shall also pay in full any Hedge Breakage Costs, Breakage Fees (solely to
the extent such prepayment occurs on any day other than a Payment Date) and other accrued and
unpaid costs and expenses of Administrative Agent, Lender Agents and Lenders related to such
prepayment; provided that no reduction in Advances Outstanding shall be given effect unless (i)
sufficient funds have been remitted to pay all such amounts in full, as determined by the
Administrative Agent, in its sole discretion, (ii) 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 reduction of the Advances Outstanding, and has paid in full all Hedge
Breakage Costs owing to the relevant Hedge Counterparty for any such termination and (iii) no event
has occurred or would result from such prepayment which would constitute an Event of Default or an
Unmatured Event of Default. The Administrative Agent shall apply amounts received from the Borrower
pursuant to this Section 2.18(a) to the payment of any Hedge Breakage Costs, to the payment
of any Breakage Fees and to the pro rata reduction of the Advances Outstanding. Any notice relating
to any repayment pursuant to this Section 2.18(a) shall be irrevocable.




          (b) The Borrower may, at its option, terminate this Agreement and the other Transaction
Documents upon three Business Days’ prior written notice to the Administrative Agent, the Lender
Agents and any Hedge Counterparty and upon payment in full of all outstanding Advances, all accrued
and unpaid Yield, any Breakage Fees, Hedge Breakage Costs, all accrued and unpaid costs and
expenses of the Administrative Agent, Lender Agents and Lenders, payment of the Make-Whole Premium
pro rata to each Lender Agent (for the account of the applicable Lender) and payment of all other
Obligations (other than unmatured contingent indemnification obligations); provided, further that
no Make-Whole Premium shall be due and payable so long as (i) this Agreement is terminated at least
six months after the Closing Date and (ii) the aggregate Commitments (calculated pursuant to
clause (i) of the definition thereof) at the time of termination is less than $100,000,000.
Any termination of this Agreement shall be subject to Section 11.05.




          (c) The Borrower hereby acknowledges and agrees that the Make-Whole Premium constitutes
additional consideration for the Lenders to enter into this Agreement.




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     SECTION 2.19 Extension of Stated Maturity Date and Reinvestment Period.



          (a) The Borrower may, within 60 days but not less than 45 days prior to the Stated Maturity
Date, make a request to the Lenders to extend the date set forth in the definition of “Stated
Maturity Date” for an additional period of one year. The Stated Maturity Date may be extended by
one year by mutual agreement among the Administrative Agent, each of the Lenders, the Borrower and
the Servicer (such extension, the “Initial Stated Maturity Extension”). Following such
Initial Stated Maturity Extension, the Borrower may, within 60 days but not less than 45 days prior
to the Stated Maturity Date (as revised by the Initial Stated Maturity Extension), make a request
to the Lenders to extend the date set forth in the definition of “Stated Maturity Date” (as revised
by the Initial Stated Maturity Extension) for an additional period of one year. The Stated Maturity
Date (as revised by the Initial Stated Maturity Extension) may be extended by one year upon the
mutual agreement among the Administrative Agent, each of the Lenders, the Borrower and the Servicer
(such extension, the “Second Stated Maturity Extension”). The effectiveness of either the
Initial Stated Maturity Extension or the Second Stated Maturity Extension shall be conditioned upon
the payment of any fees set forth in any Lender Fee Letter which shall be payable upon such
extension. The Borrower confirms that any of the Lenders or the Administrative Agent, in their sole
and absolute discretion, without regard to the value or performance of the Loan Assets or any other
factor, may elect not to extend the Stated Maturity Date.




          (b) The Borrower may, within 60 days but not less than 45 days prior to the date set forth in
clause (i) of the definition of “Reinvestment Period”, make a request to the Lenders to
extend the date set forth in clause (i) of the definition of “Reinvestment Period” for an
additional period of one year. Such date may be extended by one year by mutual agreement among the
Administrative Agent, each of the Lenders, the Borrower and the Servicer (such extension, the
“Initial Reinvestment Period Extension”). Following such Initial Reinvestment Period
Extension, the Borrower may, within 60 days but not less than 45 days prior to the date set forth
in clause (i) of the definition of “Reinvestment Period” (as revised by the Initial
Reinvestment Period Extension), make a request to the Lenders to extend the date set forth in
clause (i) of the definition of “Reinvestment Period” (as revised by the Initial
Reinvestment Period Extension) for an additional period of one year. Such date may be extended by
one year upon the mutual agreement among the Administrative Agent, each of the Lenders, the
Borrower and the Servicer (such extension, the “Second Reinvestment Period Extension”). The
Borrower confirms that any of the Lenders or the Administrative Agent, in their sole and absolute
discretion, without regard to the value or performance of the Loan Assets or any other factor, may
elect not to extend the date set forth in clause (i) of the definition of “Reinvestment
Period”.




     SECTION 2.20 Collections and Allocations.



          (a) The Servicer shall promptly identify any collections received as being on account of
Interest Collections, Principal Collections or other Available Collections and shall transfer, or
cause to be transferred, all Available Collections received directly by it to the Collection
Account by the close of business on the Business Day after such Collections are received. Upon the
transfer of Available Collections to the Collection Account, the Servicer shall segregate Principal
Collections and Interest Collections and transfer the same to the Principal Collection Account and
the Interest Collection Account, respectively. The Servicer



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shall further include a statement as to the amount of Principal Collections and Interest
Collections on deposit in the Principal Collection Account and the Interest Collection Account on
each Reporting Date in the Servicing Report delivered pursuant to Section 6.08(b).




          (b) On the Cut-Off Date with respect to any Loan Asset, the Servicer will deposit into the
Collection Account all Available Collections received in respect of Eligible Loan Assets being
transferred to and included as part of the Collateral Portfolio on such date.




          (c) With the prior written consent of the Administrative Agent (a copy of which will be
provided by the Servicer to the Collateral Agent), the Servicer may withdraw from the Collection
Account any deposits thereto constituting Excluded Amounts if the Servicer has, prior to such
withdrawal and consent, delivered to the Administrative Agent and each Lender Agent a report
setting forth the calculation of such Excluded Amounts in form and substance satisfactory to the
Administrative Agent and each Lender Agent in its sole discretion.




          (d) Prior to Notice of Exclusive Control (as defined in the Collection Account Agreement or
Unfunded Exposure Account Agreement, as applicable), the Servicer shall, pursuant to written
instruction (which may be in the form of standing instructions), direct the Collateral Agent to
invest, or cause the investment of, funds on deposit in the Controlled Accounts in Permitted
Investments, from the date of this Agreement until the Collection Date. Absent any such written
instruction, such funds shall not be invested. A Permitted Investment acquired with funds deposited
in any Controlled Account shall mature not later than the Business Day immediately preceding any
Payment Date, and shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be registered in the name of the Account Bank or its nominee for the benefit of
the Administrative Agent or Collateral Agent, and otherwise comply with assumptions of the legal
opinions of Rutan & Tucker, LLP and Sutherland Asbill & Brennan LLP dated the Closing Date and
delivered in connection with this Agreement; provided that compliance shall be the responsibility
of the Borrower and the Servicer and not the Collateral Agent and Account Bank. All income and gain
realized from any such investment, as well as any interest earned on deposits in any Controlled
Account shall be distributed in accordance with the provisions of Article II hereof. The
Borrower shall deposit in the Collection Account or the Unfunded Exposure Account, as the case may
be (with respect to investments made hereunder of funds held therein), an amount equal to the
amount of any actual loss incurred, in respect of any such investment, immediately upon realization
of such loss. None of the Account Bank, the Collateral Agent, the Administrative Agent, any Lender
Agent or any Lender shall be liable for the amount of any loss incurred, in respect of any
investment, or lack of investment, of funds held in any Controlled Account, other than with respect
to fraud or their own gross negligence or willful misconduct. The parties hereto acknowledge that
the Collateral Agent or any of its Affiliates may receive compensation with respect to the
Permitted Investments.




          (e) Until the Collection Date, neither the Borrower nor the Servicer shall have any rights of
direction or withdrawal, with respect to amounts held in any Controlled Account, except to the
extent explicitly set forth in Section 2.04 or Section 2.21.




     SECTION 2.21 Reinvestment of Principal Collections.



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          On the terms and conditions hereinafter set forth as certified in writing to the Collateral
Agent, the Lender Agents and Administrative Agent, prior to the end of the Reinvestment Period, the
Servicer may, to the extent of any Principal Collections on deposit in the Principal Collection
Account:




          (a) withdraw such funds for the purpose of reinvesting in additional Eligible Loan Assets to
be Pledged hereunder; provided that the following conditions are satisfied:





          (i) all conditions precedent set forth in Section 3.04 have been satisfied;




          (ii) no Event of Default has occurred, or would result from such withdrawal and
reinvestment, and no Unmatured Event of Default or Borrowing Base Deficiency exists or would
result from such withdrawal and reinvestment;




          (iii) the representations and warranties contained in Sections 4.01,
4.02 and 4.03 hereof shall continue to be correct in all respects, except to
the extent relating to an earlier date;




          (iv) the Servicer provides same day written notice to the Administrative Agent and the
Collateral Agent by facsimile or email (to be received no later than 1:00 p.m. on such day)
of the request to withdraw Principal Collections and the amount of such request;




          (v) the notice required in clause (iv) above shall be accompanied by a
Disbursement Request and a Borrowing Base Certificate, each executed by the Borrower and a
Responsible Officer of the Servicer; and




          (vi) the Collateral Agent provides to the Administrative Agent by facsimile (to be
received no later than 1:30 p.m. on that same day) a statement reflecting the total amount
on deposit as of the opening of business on such day in the Principal Collection Account; or



          (b) withdraw such funds for the purpose of making payments in respect of the Advances
Outstanding at such time in accordance with and subject to the terms of Section 2.18.




          Upon the satisfaction of the applicable conditions set forth in this Section 2.21 (as
certified by the Borrower to the Collateral Agent and the Administrative Agent), the Collateral
Agent will release funds from the Principal Collection Account to the Servicer in an amount not to
exceed the lesser of (A) the amount requested by the Servicer and (B) the amount on deposit in the
Principal Collection Account on such day.




     SECTION 2.22 Increase of Commitment; Maximum Facility Amount.



          (a) At any time during the Reinvestment Period, provided that no Event of Default has occurred
and no Unmatured Event of Default exists, the Commitment for any Lender may be increased in
connection with a corresponding increase in the Maximum Facility Amount with the prior written
consent of the Borrower, the Administrative Agent and the Lender Agent



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for such Lender; provided that, following such Commitment increase, the Maximum Facility
Amount shall not exceed $100,000,000. Prior to the effectiveness of any such increase, the Borrower
shall execute and deliver to the applicable Lender Agent a revised Variable Funding Note in an
aggregate face amount equal to the revised Commitment. The Borrower confirms that the Lender Agent,
in its sole and absolute discretion, without regard to the value or performance of the Loan Assets
or any other factor, may elect not to increase its Commitment. Upon such increase, Annex A
hereto shall be deemed to be revised to reflect such increase in such Lender’s Commitment.




          (b) The Borrower may, with the written consent of the Administrative Agent, add additional
Persons as Lenders. Each additional Lender and its applicable Lender Agent shall become a party
hereto by executing and delivering to the Administrative Agent and the Borrower a Joinder
Supplement and a Transferee Letter.




ARTICLE III.




CONDITIONS PRECEDENT




     SECTION 3.01 Conditions Precedent to Effectiveness.



          (a) This Agreement shall be effective upon satisfaction of the conditions precedent that:





          (i) all reasonable up-front expenses and fees (including legal fees, any fees required
under any Lender Fee Letter and the Wells Fargo Fee Letter) that are invoiced at or prior to
the Closing Date shall have been paid in full and all other acts and conditions (including,
without limitation, the obtaining of any necessary consents and regulatory approvals and the
making of any required filings, recordings or registrations) required to be done and
performed and to have happened prior to the execution, delivery and performance of this
Agreement and all related Transaction Documents and to constitute the same legal, valid and
binding obligations, enforceable in accordance with their respective terms, shall have been
done and performed and shall have happened in due and strict compliance with all Applicable
Law;




          (ii) in the reasonable judgment of the Administrative Agent and each Lender Agent,
there not having been any change in Applicable Law which adversely affects any Lender’s or
the Administrative Agent’s entering into the transactions contemplated by the Transaction
Documents or any Material Adverse Effect or material disruption after September 10, 2009 in
the financial, banking or commercial loan or capital markets generally;




          (iii) any and all information submitted to each Lender, Lender Agent and the
Administrative Agent by the Borrower, the Transferor or the Servicer or any of their
Affiliates is true, accurate, complete in all material respects and not misleading in any
material respect;




          (iv) each Lender Agent shall have received, all documentation and other information
requested by such Lender Agent in its sole discretion and/or required



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by regulatory authorities with respect to the Borrower, the Transferor and the Servicer
under applicable “know your customer” and anti-money laundering rules and regulations,
including, without limitation, the USA PATRIOT Act, all in form and substance reasonably
satisfactory to each Lender Agent;




          (v) the Administrative Agent shall have received on or before the date of such
effectiveness the items listed in Schedule I hereto, each in form and substance
satisfactory to the Administrative Agent and each Lender Agent;




          (vi) since September 10, 2009, no material adverse change on the business, assets,
financial conditions or performance of the Servicer and its subsidiaries, including the
Borrower, on a consolidated basis, or any material portion of the initial proposed Eligible
Loan Assets has occurred;




          (vii) the results of Administrative Agent’s financial, legal, tax and accounting due
diligence relating to the Transferor, the Borrower, the Servicer, the Eligible Loan Assets
and the transactions contemplated hereunder are satisfactory to Administrative Agent; and




          (viii) each applicable Lender Agent shall have received a duly executed copy of its
Variable Funding Note, in a principal amount equal to the Commitment of the related Lender.



          (b) By its execution and delivery of this Agreement, each of the Borrower and the Servicer
hereby certifies that each of the conditions precedent to the effectiveness of this Agreement set
forth in this Section 3.01 have been satisfied; provided, that with respect to conditions
precedent that expressly require the consent or approval of the Administrative Agent or another
party (other than the Borrower or the Servicer), the foregoing certification is only to the
knowledge of the Borrower and the Servicer, as applicable, with respect to such consents or
approvals.




     SECTION 3.02 Conditions Precedent to All Advances. Each Advance (including the Initial
Advance, except as explicitly set forth below) to the Borrower from the Lenders shall be subject to
the further conditions precedent that:



          (a) On the Advance Date of such Advance, the following statements shall be true and correct,
and the Borrower by accepting any amount of such Advance shall be deemed to have certified that:





          (i) the Servicer (on behalf of the Borrower) shall have delivered to the Administrative
Agent and each Lender Agent (with a copy to the Collateral Custodian and the Collateral
Agent) no later than 5:00 p.m. on the date that is one Business Day prior to the related
Advance Date (or, in the case of a Same-Day Advance, no later than 2:00 p.m. on the date of
such Advance): (A) a Notice of Borrowing, (B) a Borrowing Base Certificate, (C) a Loan Asset
Schedule and (D) except with respect to an Advance under Section 2.02(f), a Loan
Assignment in the form of Exhibit A to the Purchase and Sale Agreement (including Schedule I
thereto) and containing such additional information as may be reasonably requested by the
Administrative Agent;



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          (ii) except with respect to an Advance under Section 2.02(f), the Borrower
shall have delivered to the Collateral Custodian (with a copy to the Administrative Agent),
no later than 2:00 p.m. one Business Day prior to the related Advance Date, a faxed or
e-mailed copy of the duly executed original promissory notes of the Loan Assets (and, in the
case of any Noteless Loan Asset, a fully executed assignment agreement) and if any Loan
Assets are closed in escrow, a certificate (in the form of Exhibit K) from the
closing attorneys of such Loan Assets certifying the possession of the Required Loan
Documents; provided that, notwithstanding the foregoing, the Borrower shall cause the Loan
Asset Checklist and the Required Loan Documents to be in the possession of the Collateral
Custodian within five Business Days of any related Advance Date as to any Loan Assets;




          (iii) the representations and warranties contained in Sections 4.01,
4.02 and 4.03 are true and correct in all respects, and (except with respect
to an Advance required by Section 2.02(f)) there exists no breach of any covenant
contained in Sections 5.01, 5.02, 5.03 and 5.04 before and
after giving effect to the Advance to take place on such Advance Date and to the application
of proceeds therefrom, on and as of such day as though made on and as of such date (other
than any representation and warranty that is made as of a specific date);




          (iv) on and as of such Advance Date, after giving effect to such Advance and the
addition to the Collateral Portfolio of the Eligible Loan Assets being acquired by the
Borrower using the proceeds of such Advance (except with respect to an Advance required by
Section 2.02(f)), the Advances Outstanding does not exceed the Borrowing Base;




          (v) no Event of Default has occurred, or would result from such Advance, and no
Unmatured Event of Default or Borrowing Base Deficiency exists or would result from such
Advance;




          (vi) no event has occurred and is continuing, or would result from such Advance, which
constitutes a Servicer Termination Event or any event which, if it continues uncured, will,
with notice or lapse of time, constitute a Servicer Termination Event;




          (vii) since the Closing Date, no material adverse change has occurred in the ability of
the Servicer, Transferor or the Borrower to perform its obligations under any Transaction
Document;




          (viii) no Liens exist in respect of Taxes which are prior to the lien of the Collateral
Agent on the Eligible Loan Assets to be Pledged on such Advance Date; and




          (ix) all terms and conditions of the Purchase and Sale Agreement required to be
satisfied in connection with the assignment of each Eligible Loan Asset being Pledged
hereunder on such Advance Date (and the Portfolio Assets related thereto), including,
without limitation, the perfection of the Borrower’s interests therein, shall have been
satisfied in full, and all filings (including, without limitation, UCC filings) required



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to be made by any Person and all actions required to be taken or performed by any
Person in any jurisdiction to give the Collateral Agent, for the benefit of the Secured
Parties, a first priority perfected security interest (subject only to Permitted Liens) in
such Eligible Loan Assets and the Portfolio Assets related thereto and the proceeds thereof
shall have been made, taken or performed.



          (b) The Administrative Agent shall have approved in its sole and absolute discretion each of
the Eligible Loan Assets identified in the applicable Loan Asset Schedule for inclusion in the
Collateral Portfolio on the applicable Advance Date.




          (c) No Applicable Law shall prohibit, and no order, judgment or decree of any federal, state
or local court or governmental body, agency or instrumentality shall prohibit or enjoin, the making
of such Advances by any Lender or the proposed Pledge of Eligible Loan Assets in accordance with
the provisions hereof.




          (d) Except with respect to an Advance required by Section 2.02(f), the proposed
Advance Date shall take place during the Reinvestment Period and the Facility Maturity Date has not
yet occurred.




          (e) The Borrower shall have paid all fees then required to be paid, including all fees
required hereunder and under the applicable Lender Fee Letters and the Wells Fargo Fee Letter and
shall have reimbursed the Lenders, the Administrative Agent, each Lender Agent, the Collateral
Custodian, the Account Bank and the Collateral Agent for all fees, costs and expenses of closing
the transactions contemplated hereunder and under the other Transaction Documents, including the
reasonable attorney fees and any other legal and document preparation costs incurred by the
Lenders, the Administrative Agent and each Lender Agent.




          The failure of the Borrower to satisfy any of the foregoing conditions precedent in respect of
any Advance shall give rise to a right of the Administrative Agent and the applicable Lender Agent,
which right may be exercised at any time on the demand of the applicable Lender Agent, to rescind
the related Advance and direct the Borrower to pay to the applicable Lender Agent for the benefit
of the applicable Lender an amount equal to the Advances made during any such time that any of the
foregoing conditions precedent were not satisfied.




     SECTION 3.03 Advances Do Not Constitute a Waiver. No Advance made hereunder shall
constitute a waiver of any condition to any Lender’s obligation to make such an advance unless such
waiver is in writing and executed by such Lender.



     SECTION 3.04 Conditions to Pledges of Loan Assets. Each Pledge of an additional
Eligible Loan Asset pursuant to Section 2.06, a Substitute Eligible Loan Asset pursuant to
Section 2.07(a) or (c), an additional Eligible Loan Asset pursuant to Section
2.21 or any other Pledge of a Loan Asset hereunder shall be subject to the further conditions
precedent that (as certified to the Collateral Agent by the Borrower):



          (a) the Servicer (on behalf of the Borrower) shall have delivered to the Administrative Agent
and each Lender Agent (with a copy to the Collateral Custodian and the Collateral Agent) no later
than 5:00 p.m. on the date that is one Business Day prior to the related Cut-Off Date: (A) a
Borrowing Base Certificate, (B) a Loan Asset Schedule and (C) a Loan



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Assignment in the form of Exhibit A to the Purchase and Sale Agreement (including Schedule I
thereto) and containing such additional information as may be reasonably requested by the
Administrative Agent;




          (b) the Borrower shall have delivered to the Collateral Custodian (with a copy to the
Administrative Agent), no later than 2:00 p.m. one Business Day prior to the related Cut-Off Date,
a faxed or e-mailed copy of the duly executed original promissory notes of the Loan Assets (and, in
the case of any Noteless Loan Asset, a fully executed assignment agreement) and if any Loan Assets
are closed in escrow, a certificate (in the form of Exhibit K) from the closing attorneys
of such Loan Assets certifying the possession of the Required Loan Documents; provided that,
notwithstanding the foregoing, the Borrower shall cause the Loan Asset Checklist and the Required
Loan Documents to be in the possession of the Collateral Custodian within five Business Days of any
related Cut-Off Date as to any Loan Assets;




          (c) no Liens exist in respect of Taxes which are prior to the lien of the Collateral Agent on
the Eligible Loan Assets to be Pledged on such Cut-Off Date;




          (d) all terms and conditions of the Purchase and Sale Agreement required to be satisfied in
connection with the assignment of each Eligible Loan Asset being Pledged hereunder on such Cut-Off
Date (and the Portfolio Assets related thereto), including, without limitation, the perfection of
the Borrower’s interests therein, shall have been satisfied in full, and all filings (including,
without limitation, UCC filings) required to be made by any Person and all actions required to be
taken or performed by any Person in any jurisdiction to give the Collateral Agent, for the benefit
of the Secured Parties, a first priority perfected security interest (subject only to Permitted
Liens) in such Eligible Loan Assets and the Portfolio Assets related thereto and the proceeds
thereof shall have been made, taken or performed;




          (e) the Administrative Agent shall have approved in its sole and absolute discretion each of
the Eligible Loan Assets identified in the applicable Loan Asset Schedule for inclusion in the
Collateral Portfolio on the applicable Cut-Off Date;




          (f) no Event of Default has occurred, or would result from such Pledge, and no Unmatured Event
of Default exists, or would result from such Pledge (other than, with respect to any Pledge of an
Eligible Loan Asset necessary to cure a Borrowing Base Deficiency in accordance with Section
2.06, an Unmatured Event of Default arising solely pursuant to such Borrowing Base Deficiency);
and




          (g) the representations and warranties contained in Sections 4.01, 4.02 and
4.03 are true and correct in all respects, and there exists no breach of any covenant
contained in Sections 5.01, 5.02, 5.03 and 5.04 before and after
giving effect to the Pledge to take place on such Cut-Off Date, on and as of such day as though
made on and as of such date (other than any representation and warranty that is made as of a
specific date).




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ARTICLE IV.




REPRESENTATIONS AND WARRANTIES




     SECTION 4.01 Representations and Warranties of the Borrower. The Borrower hereby
represents and warrants, as of the Closing Date, as of each applicable Cut-Off Date, as of each
applicable Advance Date, as of each Reporting Date and as of each other date provided under this
Agreement or the other Transaction Documents on which such representations and warranties are
required to be (or deemed to be) made (unless a specific date is specified below):



          (a) Organization, Good Standing and Due Qualification. The Borrower is a limited
liability company duly organized, validly existing and in good standing under the laws of Delaware
and has the power and all licenses necessary to own its assets and to transact the business in
which it is engaged and is duly qualified and in good standing under the laws of each jurisdiction
where the transaction of such business or its ownership of the Loan Assets and the Collateral
Portfolio requires such qualification.




          (b) Power and Authority; Due Authorization; Execution and Delivery. The Borrower has
the power, authority and legal right to make, deliver and perform this Agreement and each of the
Transaction Documents to which it is a party and all of the transactions contemplated hereby and
thereby, and has taken all necessary action to authorize the execution, delivery and performance of
this Agreement and each of the Transaction Documents to which it is a party, and to grant to the
Collateral Agent, for the benefit of the Secured Parties, a first priority perfected security
interest in the Collateral Portfolio on the terms and conditions of this Agreement, subject only to
Permitted Liens.




          (c) Binding Obligation. This Agreement and each of the Transaction Documents to which
the Borrower is a party constitutes the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with their respective terms, except as the enforceability
hereof and thereof may be limited by Bankruptcy Laws and by general principles of equity (whether
such enforceability is considered in a proceeding in equity or at law).




          (d) All Consents Required. No consent of any other party and no consent, license,
approval or authorization of, or registration or declaration with, any Governmental Authority,
bureau or agency is required in connection with the execution, delivery or performance by the
Borrower of this Agreement or any Transaction Document to which it is a party or the validity or
enforceability of this Agreement or any such Transaction Document or the Loan Assets or the
transfer of an ownership interest or security interest in such Loan Assets, other than such as have
been met or obtained and are in full force and effect.




          (e) No Violation. The execution, delivery and performance of this Agreement and all
other agreements and instruments executed and delivered or to be executed and delivered pursuant
hereto or thereto in connection with the Pledge of the Collateral Portfolio will not (i) create any
Lien on the Collateral Portfolio other than Permitted Liens or (ii) violate any Applicable Law or
the certificate of formation or limited liability company agreement of the Borrower or (iii)
violate any contract or other agreement to which the Borrower is a party or by which the Borrower
or any property or assets of the Borrower may be bound.




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          (f) No Proceedings. There is no litigation or administrative proceeding or
investigation pending or, to the knowledge of the Borrower, threatened against the Borrower or any
properties of the Borrower, before any Governmental Authority (i) asserting the invalidity of this
Agreement or any other 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 other
Transaction Document to which the Borrower is a party or (iii) seeking any determination or ruling
that could reasonably be expected to have a Material Adverse Effect.




          (g) Selection Procedures. In selecting the Loan Assets to be Pledged pursuant to this
Agreement, no selection procedures were employed which are intended to be adverse to the interests
of the Lenders.




          (h) Bulk Sales. The grant of the security interest in the Collateral Portfolio by the
Borrower to the Collateral Agent, for the benefit of the Secured Parties, pursuant to this
Agreement, is in the ordinary course of business for the Borrower and is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable jurisdiction.




          (i) Pledge of Collateral Portfolio. Except as otherwise expressly permitted by the
terms of this Agreement, no item of Collateral Portfolio has been sold, transferred, assigned or
pledged by the Borrower to any Person, other than as contemplated by Article II and the
Pledge of such Collateral Portfolio to the Collateral Agent, for the benefit of the Secured
Parties, pursuant to the terms of this Agreement.




          (j) Indebtedness. The Borrower has no Indebtedness or other indebtedness, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other than (i)
Indebtedness incurred under the terms of the Transaction Documents and (ii) Indebtedness incurred
pursuant to certain ordinary business expenses arising pursuant to the transactions contemplated by
this Agreement and the other Transaction Documents.




          (k) Sole Purpose. The Borrower has been formed solely for the purpose of engaging in
transactions of the types contemplated by this Agreement, and has not engaged in any business
activity other than the negotiation, execution and to the extent applicable, performance of this
Agreement and the transactions contemplated by the Transaction Documents.




          (l) No Injunctions. No injunction, writ, restraining order or other order of any
nature adversely affects the Borrower’s performance of its obligations under this Agreement or any
Transaction Document to which the Borrower is a party.




          (m) Taxes. The Borrower has filed or caused to be filed (on a consolidated basis or
otherwise) on a timely basis all tax returns (including, without limitation, all foreign, federal,
state, local and other tax returns) required to be filed by it, is not liable for Taxes payable by
any other Person and has paid or made adequate provisions for the payment of all Taxes, assessments
and other governmental charges due and payable from the Borrower except for those Taxes being
contested in good faith by appropriate proceedings and in respect of which it has established
proper reserves on its books. No Tax lien or similar adverse claim has been filed, and no claim is
being asserted, with respect to any such Tax, assessment or other governmental



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charge. Any Taxes, fees and other governmental charges due and payable by the Borrower, as
applicable, in connection with the execution and delivery of this Agreement and the other
Transaction Documents and the transactions contemplated hereby or thereby have been paid or shall
have been paid if and when due.




          (n) Location. The Borrower’s location (within the meaning of Article 9 of the UCC) is
Delaware. The chief executive office of the Borrower (and the location of the Borrower’s records
regarding the Collateral Portfolio (other than those delivered to the Collateral Custodian)) is
located at the address set forth under its name on the signature pages hereto (or at such other
address as shall be designated by such party in a written notice to the other parties hereto).




          (o) Tradenames. Except as permitted hereunder, the Borrower’s legal name is as set
forth in this Agreement. Except as permitted hereunder, the Borrower has not changed its name since
its formation; does not have tradenames, fictitious names, assumed names or “doing business as”
names other than as disclosed on Schedule II hereto (as such schedule may be updated from time to
by the Administrative Agent upon receipt of a notice delivered to the Administrative Agent pursuant
to Section 5.02(r)); the Borrower’s only jurisdiction of formation is Delaware, and, except
as permitted hereunder, the Borrower has not changed its jurisdiction of formation.




          (p) Solvency. The Borrower is not the subject of any Bankruptcy Proceedings or
Bankruptcy Event. The Borrower is Solvent, and the transactions under this Agreement and any other
Transaction Document to which the Borrower is a party do not and will not render the Borrower not
Solvent. The Borrower is paying its debts as they become due (subject to any applicable grace
period); and the Borrower, after giving effect to the transactions contemplated hereby, will have
adequate capital to conduct its business.




          (q) No Subsidiaries. The Borrower has no Subsidiaries.




          (r) Value Given. The Borrower has given fair consideration and reasonably equivalent
value to the Transferor in exchange for the purchase of the Loan Assets (or any number of them)
from the Transferor pursuant to the Purchase and Sale Agreement. No such transfer has been made for
or on account of an antecedent debt owed by the Borrower to the Transferor and no such transfer is
or may be voidable or subject to avoidance under any section of the Bankruptcy Code.




          (s) Reports Accurate. All Servicer’s Certificates, Servicing Reports, Notices of
Borrowing, Borrowing Base Certificates and other written or electronic information, exhibits,
financial statements, documents, books, records or reports furnished by the Servicer to the
Administrative Agent, the Collateral Agent, the Lenders, the Lender Agents, or the Collateral
Custodian in connection with this Agreement are, as of their date, accurate, true and correct and
no such document or certificate omits to state a material fact or any fact necessary to make the
statements contained therein not misleading; provided that, solely with respect to written or
electronic information furnished by the Servicer which was provided to the Servicer from an Obligor
with respect to a Loan Asset, such information need only be accurate, true and correct to the
knowledge of the Servicer; provided, further, that the foregoing proviso shall not apply to



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any information presented in a Servicer’s Certificate, Servicing Report, Notice of Borrowing
or Borrowing Base Certificate.




          (t) Exchange Act Compliance; Regulations T, U and X. None of the transactions
contemplated herein or in the other Transaction Documents (including, without limitation, the use
of proceeds from the sale of the Collateral Portfolio) will violate or result in a violation of
Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R., Chapter II. The Borrower does not own or intend to carry or purchase, and no proceeds from
the Advances will be used to carry or purchase, any “margin stock” within the meaning of Regulation
U or to extend “purpose credit” within the meaning of Regulation U.




          (u) No Adverse Agreements. There are no agreements in effect adversely affecting the
rights of the Borrower to make, or cause to be made, the grant of the security interest in the
Collateral Portfolio contemplated by Section 2.13.




          (v) Event of Default/Unmatured Event of Default. No event has occurred which
constitutes an Event of Default, and no event has occurred and is continuing which constitutes an
Unmatured Event of Default (other than any Event of Default or Unmatured Event of Default which has
previously been disclosed to the Administrative Agent as such).




          (w) Servicing Standard. Each of the Loan Assets was underwritten or acquired and is
being serviced in conformance with the standard underwriting, credit, collection, operating and
reporting procedures and systems of the Servicer or the Transferor.




          (x) ERISA. The present value of all benefits vested under each “employee pension
benefit plan,” as such term is defined in Section 3 of ERISA, that is, or at any time during the
preceding six years was, maintained by the Borrower or any ERISA Affiliate of the Borrower, or open
to participation by employees of the Borrower or of any ERISA Affiliate of the Borrower, as from
time to time in effect (each, a “Pension Plan”), does not exceed the value of the assets of
the Pension Plan allocable to such vested benefits (based on the value of such assets as of the
last annual valuation date). No prohibited transactions, failure to meet the minimum funding
standard set forth in Section 302(a) of ERISA and Section 412(a) of the Code (with respect to any
Pension Plan other than a Multiemployer Plan), withdrawals or reportable events have occurred with
respect to any Pension Plan that, in the aggregate, could subject the Borrower to any material tax,
penalty or other liability. No notice of intent to terminate a Pension Plan has been filed, nor
has any Pension Plan been terminated under Section 4041(f) of ERISA, nor has the Pension Benefit
Guaranty Corporation instituted proceedings to terminate, or appoint a trustee to administer a
Pension Plan and no event has occurred or condition exists that might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan.




          (y) Allocation of Charges. There is not any agreement or understanding between the
Servicer and the Borrower (other than as expressly set forth herein or as consented to by the
Administrative Agent), providing for the allocation or sharing of obligations to make payments or
otherwise in respect of any taxes, fees, assessments or other governmental charges;




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provided that it is understood and acknowledged that the Borrower will be consolidated with
the Servicer for tax purposes.




          (z) Broker-Dealer. The Borrower is not a broker-dealer or subject to the Securities
Investor Protection Act of 1970, as amended.




          (aa) Instructions to Obligors. The Collection Account is the only account to which
Obligors have been instructed by the Borrower, or the Servicer on the Borrower’s behalf, to send
Principal Collections and Interest Collections on the Collateral Portfolio. The Borrower has not
granted any Person other than the Collateral Agent, on behalf of the Secured Parties, an interest
in the Collection Account.




          (bb) Purchase and Sale Agreement. The Purchase and Sale Agreement and the Loan
Assignment contemplated therein are the only agreements pursuant to which the Borrower acquires the
Collateral Portfolio.




          (cc) Investment Company Act. The Borrower is not required to register as an
“investment company” under the provisions of the 1940 Act.




          (dd) Compliance with Law. The Borrower has complied in all respects with all
Applicable Law to which it may be subject, and no item of the Collateral Portfolio contravenes any
Applicable Law (including, without limitation, all applicable predatory and abusive lending laws,
laws, rules and regulations relating to licensing, truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices and privacy).




          (ee) Collections. The Borrower acknowledges that all Available Collections received
by it or its Affiliates with respect to the Collateral Portfolio Pledged hereunder are held and
shall be held in trust for the benefit of the Collateral Agent, on behalf of the Secured Parties
until deposited into the Collection Account within one Business Day after receipt as required
herein.




          (ff) Set-Off, etc. No Loan Asset has been compromised, adjusted, extended, satisfied,
subordinated, rescinded, set-off or modified by the Borrower, the Transferor or the Obligor
thereof, and no Collateral Portfolio is subject to compromise, adjustment, extension, satisfaction,
subordination, rescission, set-off, counterclaim, defense, abatement, suspension, deferment,
deduction, reduction, termination or modification, whether arising out of transactions concerning
the Collateral Portfolio or otherwise, by the Borrower, the Transferor or the Obligor with respect
thereto, except, in each case, for amendments, extensions and modifications, if any, to such
Collateral Portfolio otherwise permitted pursuant to Section 6.04(a) of this Agreement and
in accordance with the Servicing Standard.




          (gg) Full Payment. As of the applicable Cut-Off Date thereof, the Borrower has no
knowledge of any fact which should lead it to expect that any Loan Asset will not be paid in full.




          (hh) Environmental. With respect to each item of Underlying Collateral as of the
applicable Cut-Off Date for the Loan Asset related to such Underlying Collateral, to the actual
knowledge of a Responsible Officer of the Borrower: (a) the related Obligor’s operations



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comply in all respects with all applicable Environmental Laws; (b) none of the related
Obligor’s operations is the subject of a federal or state investigation evaluating whether any
remedial action, involving expenditures, is needed to respond to a release of any Hazardous
Materials into the environment; and (c) the related Obligor does not have any material contingent
liability in connection with any release of any Hazardous Materials into the environment. As of
the applicable Cut-Off Date for the Loan Asset related to such Underlying Collateral, none of the
Borrower, the Transferor nor the Servicer has received any written or verbal notice of, or inquiry
from any Governmental Authority regarding, any violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance with Environmental
Laws with regard to any of the Underlying Collateral, nor does any such Person have knowledge or
reason to believe that any such notice will be received or is being threatened.




          (ii) USA PATRIOT Act. Neither the Borrower nor any Affiliate of the Borrower is (i) a
country, territory, organization, person or entity named on an Office of Foreign Asset Control
(OFAC) list; (ii) a Person that resides or has a place of business in a country or territory named
on such lists or which is designated as a “Non-Cooperative Jurisdiction” by the Financial Action
Task Force on Money Laundering, or whose subscription funds are transferred from or through such a
jurisdiction; (iii) a “Foreign Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a
foreign bank that does not have a physical presence in any country and that is not affiliated with
a bank that has a physical presence and an acceptable level of regulation and supervision; or (iv)
a person or entity that resides in or is organized under the laws of a jurisdiction designated by
the United States Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as
warranting special measures due to money laundering concerns.




          (jj) Confirmation from Transferor. The Borrower has received in writing from the
Transferor confirmation that the Transferor will not cause the Borrower to file a voluntary
bankruptcy petition under the Bankruptcy Code.




          (kk) Accuracy of Representations and Warranties. Each representation or warranty by
the Borrower contained herein or in any certificate or other document furnished by the Borrower
pursuant hereto or in connection herewith is true and correct in all respects.




          (ll) Reaffirmation of Representations and Warranties. On each day that any Advance is
made hereunder, the Borrower shall be deemed to have certified that all representations and
warranties described in Section 4.01 and Section 4.02 are correct on and as of such
day as though made on and as of such day, except for any such representations or warranties which
are made as of a specific date.




          (mm) Security Interest.





          (i) This Agreement creates a valid and continuing security interest (as defined in the
applicable UCC) in the Collateral Portfolio in favor of the Collateral Agent, on behalf of
the Secured Parties, which security interest is prior to all other Liens (except for
Permitted Liens), and is enforceable as such against creditors of and purchasers from the
Borrower;



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          (ii) the Collateral Portfolio is comprised of “instruments”, “security entitlements”,
“general intangibles”, “tangible chattel paper”, “accounts”, “certificated securities”,
“uncertificated securities”, “securities accounts”, “deposit accounts”, “supporting
obligations” or “insurance” (each as defined in the applicable UCC), real property and/or
such other category of collateral under the applicable UCC as to which the Borrower has
complied with its obligations under this Section 4.01(mm);




          (iii) with respect to Collateral Portfolio that constitute “security entitlements”:




          a. all of such security entitlements have been credited to one of the
Controlled Accounts and the securities intermediary for each Controlled Account has
agreed to treat all assets credited to such Controlled Account as “financial assets”
within the meaning of the applicable UCC;




          b. the Borrower has taken all steps necessary to cause the securities
intermediary to identify in its records the Borrower, for the benefit of the Secured
Parties, as the Person having a security entitlement against the securities
intermediary in each of the Controlled Accounts; and




          c. the Controlled Accounts are not in the name of any Person other than the
Borrower, subject to the lien of the Collateral Agent, for the benefit of the
Secured Parties. The securities intermediary of any Controlled Account which is a
“securities account” under the UCC has agreed to comply with the entitlement orders
and instructions of the Borrower, the Servicer and the Collateral Agent (acting at
the direction of the Administrative Agent) in accordance with the Transaction
Documents, including causing cash to be invested in Permitted Investments; provided
that, upon the delivery of a Notice of Exclusive Control (as defined under the
Collection Account Agreement or Unfunded Exposure Account Agreement, as applicable)
by the Collateral Agent (acting at the direction of the Administrative Agent), the
securities intermediary has agreed to only follow the entitlement orders and
instructions of the Collateral Agent, on behalf of the Secured Parties, including
with respect to the investment of cash in Permitted Investments.




          (iv) all Controlled Accounts constitute “securities accounts” or “deposit accounts” as
defined in the applicable UCC;




          (v) with respect to any Controlled Account which constitutes a “deposit account” as
defined in the applicable UCC, the Borrower, the Account Bank and the Collateral Agent, on
behalf of the Secured Parties, have entered into an account control agreement which permits
the Collateral Agent on behalf of the Secured Parties to direct disposition of the funds in
such deposit account;




          (vi) the Borrower owns and has good and marketable title to (or with respect to assets
securing any Loan Assets, a valid security interest in) the Collateral Portfolio free and
clear of any Lien (other than Permitted Liens) of any Person;




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          (vii) the Borrower has received all consents and approvals required by the terms of any
Loan Asset to the granting of a security interest in the Loan Assets hereunder to the
Collateral Agent, on behalf of the Secured Parties;




          (viii) the Borrower has caused the filing of all appropriate financing statements in
the proper filing office in the appropriate jurisdictions under Applicable Law in order to
perfect the security interest in the Collateral Portfolio and that portion of the Loan
Assets in which a security interest may be perfected by filing granted to the Collateral
Agent, on behalf of the Secured Parties, under this Agreement; provided that filings in
respect of real property shall not be required;




          (ix) other than as expressly permitted by the terms of this Agreement and the security
interest granted to the Collateral Agent, on behalf of the Secured Parties, pursuant to this
Agreement, the Borrower has not pledged, assigned, sold, granted a security interest in or
otherwise conveyed any of the Collateral Portfolio. The Borrower has not authorized the
filing of and is not aware of any financing statements against the Borrower that include a
description of collateral covering the Collateral Portfolio other than any financing
statement (A) relating to the security interests granted to the Borrower under the Purchase
and Sale Agreement, or (B) that has been terminated and/or fully and validly assigned to the
Collateral Agent on or prior to the date hereof. The Borrower is not aware of the filing of
any judgment or Tax lien filings against the Borrower;




          (x) all original executed copies of each underlying promissory note or copies of each
Loan Asset Register, as applicable, that constitute or evidence each Loan Asset has been, or
subject to the delivery requirements contained herein, will be delivered to the Collateral
Custodian;




          (xi) other than in the case of Noteless Loan Assets, the Borrower has received, or
subject to the delivery requirements contained herein will receive, a written acknowledgment
from the Collateral Custodian that the Collateral Custodian, as the bailee of the Collateral
Agent, is holding the underlying promissory notes that constitute or evidence the Loan
Assets solely on behalf of and for the Collateral Agent, for the benefit of the Secured
Parties; provided that the acknowledgement of the Collateral Custodian set forth in
Section 12.11 may serve as such acknowledgement;




          (xii) none of the underlying promissory notes, or Loan Asset Registers, as applicable,
that constitute or evidence the Loan Assets has any marks or notations indicating that they
have been pledged, assigned or otherwise conveyed to any Person other than the Collateral
Agent, on behalf of the Secured Parties;




          (xiii) with respect to any Collateral Portfolio that constitutes a “certificated
security,” such certificated security has been delivered to the Collateral Custodian, on
behalf of the Secured Parties and, if in registered form, has been specially Indorsed to the
Collateral Agent, for the benefit of the Secured Parties, or in blank by an effective
Indorsement or has been registered in the name of the Collateral Agent, for the benefit of
the Secured Parties, upon original issue or registration of transfer by the Borrower of such
certificated security; and



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          (xiv) with respect to any Collateral Portfolio that constitutes an “uncertificated
security”, that the Borrower shall cause the issuer of such uncertificated security to
register the Collateral Agent, on behalf of the Secured Parties, as the registered owner of
such uncertificated security.



     SECTION 4.02 Representations and Warranties of the Borrower Relating to the Agreement and
the Collateral Portfolio. The Borrower hereby represents and warrants, as of the Closing Date,
as of each applicable Cut-Off Date, as of each applicable Advance Date, as of each Reporting Date
and any date which Loan Assets are Pledged hereunder and as of each other date provided under this
Agreement or the other Transaction Documents on which such representations and warranties are
required to be (or deemed to be) made:



          (a) Valid Transfer and Security Interest. This Agreement constitutes a grant of a
security interest in all of the Collateral Portfolio to the Collateral Agent, for the benefit of
the Secured Parties, which upon the delivery of the Required Loan Documents to the Collateral
Custodian, the crediting of Loan Assets to the Controlled Accounts and the filing of the financing
statements, shall be a valid and first priority perfected security interest in the Loan Assets
forming a part of the Collateral Portfolio and in that portion of the Loan Assets in which a
security interest may be perfected by filing subject only to Permitted Liens. Neither the Borrower
nor any Person claiming through or under Borrower shall have any claim to or interest in the
Controlled Accounts and, if this Agreement constitutes the grant of a security interest in such
property, except for the interest of the Borrower in such property as a debtor for purposes of the
UCC.




          (b) Eligibility of Collateral Portfolio. (i) The Loan Asset Schedule and the
information contained in each Notice of Borrowing, is an accurate and complete listing of all the
Loan Assets contained in the Collateral Portfolio as of the related Cut-Off Date and the
information contained therein with respect to the identity of such item of Collateral Portfolio and
the amounts owing thereunder is true and correct as of the related Cut-Off Date, (ii) each Loan
Asset designated on any Borrowing Base Certificate as an Eligible Loan Asset and each Loan Asset
included as an Eligible Loan Asset in any calculation of Borrowing Base or Borrowing Base
Deficiency is an Eligible Loan Asset and (iii) with respect to each item of Collateral Portfolio,
all consents, licenses, approvals or authorizations of or registrations or declarations of any
Governmental Authority or any Person required to be obtained, effected or given by the Borrower in
connection with the transfer of a security interest in each item of Collateral Portfolio to the
Collateral Agent, for the benefit of the Secured Parties, have been duly obtained, effected or
given and are in full force and effect.




          (c) No Fraud. Each Loan Asset was originated without any fraud or misrepresentation by
the Transferor or, to the best of the Borrower’s knowledge, on the part of the Obligor.




     SECTION 4.03 Representations and Warranties of the Servicer. The Servicer hereby
represents and warrants, as of the Closing Date, as of each applicable Cut-Off Date, as of each
applicable Advance Date, as of each Reporting Date and as of each other date provided under this
Agreement or the other Transaction Documents on which such representations and warranties are
required to be (or deemed to be) made:



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          (a) Organization and Good Standing. The Servicer has been duly organized and is
validly existing as a corporation in good standing under the laws of the State of Delaware (except
as such jurisdiction is changed as permitted hereunder), with all requisite corporate power and
authority to own or lease its properties and to conduct its business as such business is presently
conducted and to enter into and perform its obligations pursuant to this Agreement.




          (b) Due Qualification. The Servicer is duly qualified to do business as a corporation
and is in good standing as a corporation, and has obtained all necessary licenses and approvals in
all jurisdictions in which the ownership or lease of its property and or the conduct of its
business requires such qualification, licenses or approvals.




          (c) Power and Authority; Due Authorization; Execution and Delivery. The Servicer (i)
has all necessary power, authority and legal right to (a) execute and deliver this Agreement and
the other Transaction Documents to which it is a party, (b) carry out the terms of the Transaction
Documents to which it is a party, and (ii) has duly authorized by all necessary corporate action
the execution, delivery and performance of this Agreement and the other Transaction Documents to
which it is a party. This Agreement and each other Transaction Document to which the Servicer is a
party have been duly executed and delivered by the Servicer.




          (d) Binding Obligation. This Agreement and each other Transaction Document to which
the Servicer is a party constitutes a legal, valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with its respective terms, except as such
enforceability may be limited by Bankruptcy Laws and general principles of equity (whether
considered in a suit at law or in equity).




          (e) No Violation. The consummation of the transactions contemplated by this Agreement
and the other Transaction Documents to which it is a party and the fulfillment of the terms hereof
and thereof will not (i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default under, the Servicer’s
articles of incorporation or by-laws or any contractual obligation of the Servicer, (ii) result in
the creation or imposition of any Lien upon any of the Servicer’s properties pursuant to the terms
of any such contractual obligation, other than this Agreement, or (iii) violate any Applicable Law.




          (f) No Proceedings. There is no litigation, proceeding or investigation pending or,
to the knowledge of the Servicer, threatened against the Servicer, before any Governmental
Authority (i) asserting the invalidity of this Agreement or any other Transaction Document to which
the Servicer is a party, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any other Transaction Document to which the Servicer is a party
or (iii) seeking any determination or ruling that could reasonably be expected to have a Material
Adverse Effect.




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




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          (h) Reports Accurate. No Borrowing Base Certificate, information, exhibit, financial
statement, document, book, record or report furnished by the Servicer to the Administrative Agent,
the Collateral Agent, the Lenders, the Lender Agents, or the Collateral Custodian in connection
with this Agreement is inaccurate in any respect as of the date it is dated, and no such document
contains any material misstatement of fact or omits to state a material fact or any fact necessary
to make the statements contained therein not misleading; provided that, solely with respect to
written or electronic information furnished by the Servicer which was provided to the Servicer from
an Obligor with respect to a Loan Asset, such information need only be accurate, true and correct
to the knowledge of the Servicer; provided, further, that the foregoing proviso shall not apply to
any information presented in a Servicer’s Certificate, Servicing Report, Notice of Borrowing or
Borrowing Base Certificate.




          (i) Servicing Standard. The Servicer has complied in all respects with the Servicing
Standard with regard to the servicing of the Loan Assets.




          (j) Collections. The Servicer acknowledges that all Available Collections received by
it or its Affiliates with respect to the Collateral Portfolio transferred or Pledged hereunder are
held and shall be held in trust for the benefit of the Secured Parties until deposited into the
Collection Account within one Business Day from receipt as required herein.




          (k) Bulk Sales. The execution, delivery and performance of this Agreement do not
require compliance with any “bulk sales” act or similar law by the Servicer.




          (l) Solvency. The Servicer is not the subject of any Bankruptcy Proceedings or
Bankruptcy Event. The transactions under this Agreement and any other Transaction Document to
which the Servicer is a party do not and will not render the Servicer not Solvent.




          (m) Taxes. The Servicer has filed or caused to be filed all tax returns that are
required to be filed by it (subject to any extensions to file properly obtained by the same). The
Servicer has paid or made adequate provisions for the payment of 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 Servicer), and no Tax lien has been
filed and no claim is being asserted, with respect to any such Tax, assessment or other charge.




          (n) Exchange Act Compliance; Regulations T, U and X. None of the transactions
contemplated herein or the other Transaction Documents (including, without limitation, the use of
the Proceeds from the sale of the Collateral Portfolio) will violate or result in a violation of
Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R., Chapter II.




          (o) Security Interest. The Servicer will take all steps necessary to ensure that the
Borrower has granted a security interest (as defined in the UCC) to the Collateral Agent, for the
benefit of the Secured Parties, in the Collateral Portfolio, which is enforceable in accordance
with Applicable Law upon execution and delivery of this Agreement. Upon the filing of UCC-1



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financing statements naming the Collateral Agent as secured party and the Borrower as debtor,
the Collateral Agent, for the benefit of the Secured Parties, shall have a valid and first priority
perfected security interest in the Loan Assets and that portion of the Collateral Portfolio in
which a security interest may be perfected by filing (except for any Permitted Liens). All filings
(including, without limitation, such UCC filings) as are necessary for the perfection of the
Secured Parties’ security interest in the Loan Assets and that portion of the Collateral Portfolio
in which a security interest may be perfected by filing have been (or prior to the applicable
Advance will be) made.




          (p) ERISA. The present value of all benefits vested under each “employee pension
benefit plan”, as such term is defined in Section 3 of ERISA, that is, or at any time during the
preceding six years was, maintained by the Servicer or any ERISA Affiliate of the Servicer, or open
to participation by employees of the Servicer or of any ERISA Affiliate of the Servicer, as from
time to time in effect (each, a “Servicer Pension Plan”) does not exceed the value of the
assets of the Servicer Pension Plan allocable to such vested benefits (based on the value of such
assets as of the last annual valuation date). No prohibited transactions, failure to meet the
minimum funding standard set forth in Section 302(a) of ERISA and Section 412(a) of the Code (with
respect to any Servicer Pension Plan other than a Multiemployer Plan), withdrawals or reportable
events have occurred with respect to any Servicer Pension Plan that, in the aggregate, could
subject the Servicer to any material tax, penalty or other liability. No notice of intent to
terminate a Servicer Pension Plan has been filed, nor has any Servicer Pension Plan been terminated
under Section 4041(f) of ERISA, nor has the Pension Benefit Guaranty Corporation instituted
proceedings to terminate, or appoint a trustee to administer, a Servicer Pension Plan and no event
has occurred or condition exists that might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Servicer Pension Plan.




          (q) USA PATRIOT Act. Neither the Servicer nor any Affiliate of the Servicer is (i) a
country, territory, organization, person or entity named on an OFAC list; (ii) a Person that
resides or has a place of business in a country or territory named on such lists or which is
designated as a “Non-Cooperative Jurisdiction” by the Financial Action Task Force on Money
Laundering, or whose subscription funds are transferred from or through such a jurisdiction; (iii)
a “Foreign Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a foreign bank that does
not have a physical presence in any country and that is not affiliated with a bank that has a
physical presence and an acceptable level of regulation and supervision; or (iv) a person or entity
that resides in or is organized under the laws of a jurisdiction designated by the United States
Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting special
measures due to money laundering concerns.




          (r) Environmental. With respect to each item of Underlying Collateral, to the actual
knowledge of a Responsible Officer of the Servicer: (a) the related Obligor’s operations comply in
all material respects with all applicable Environmental Laws; (b) none of the related Obligor’s
operations is the subject of a Federal or state investigation evaluating whether any remedial
action, involving expenditures, is needed to respond to a release of any Hazardous Materials into
the environment; and (c) the related Obligor does not have any material contingent liability in
connection with any release of any Hazardous Materials into the environment. The Servicer has not
received any written or verbal notice of, or inquiry from any Governmental



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Authority regarding, any violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws with regard to any
of the Underlying Collateral, nor does the Servicer, have knowledge or reason to believe that any
such notice will be received or is being threatened.




          (s) No Injunctions. No injunction, writ, restraining order or other order of any
nature adversely affects the Servicer’s performance of its obligations under this Agreement or any
Transaction Document to which the Servicer is a party.




          (t) Instructions to Obligors. The Collection Account is the only account to which
Obligors have been instructed by the Servicer on the Borrower’s behalf to send Principal
Collections and Interest Collections on the Collateral Portfolio.




          (u) Allocation of Charges. There is not any agreement or understanding between the
Servicer and the Borrower (other than as expressly set forth herein or as consented to by the
Administrative Agent), providing for the allocation or sharing of obligations to make payments or
otherwise in respect of any taxes, fees, assessments or other governmental charges; provided that
it is understood and acknowledged that the Borrower will be consolidated with the Servicer for tax
purposes.




          (v) Servicer Termination Event. No event has occurred which constitutes a Servicer
Termination Event (other than any Servicer Termination Event which has previously been disclosed to
the Administrative Agent as such).




          (w) Broker-Dealer. The Servicer is not a broker-dealer or subject to the Securities
Investor Protection Act of 1970, as amended.




          (x) Compliance with Applicable Law. The Servicer has complied in all respects with all
Applicable Law to which it may be subject, and no item in the Collateral Portfolio contravenes in
any respect any Applicable Law.




     SECTION 4.04 Representations and Warranties of the Collateral Agent. The Collateral
Agent in its individual capacity and as Collateral Agent represents and warrants as follows:



          (a) Organization; Power and Authority. It is a duly organized and validly existing
national banking association in good standing under the laws of the United States. It has full
corporate power, authority and legal right to execute, deliver and perform its obligations as
Collateral Agent under this Agreement.




          (b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for herein have been duly authorized by all necessary
association action on its part, either in its individual capacity or as Collateral Agent, as the
case may be.




          (c) No Conflict. The execution and delivery of this Agreement, the performance of the
transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with,
result in any breach of its articles of incorporation or bylaws or any of the



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terms and provisions of, or constitute (with or without notice or lapse of time or both) a
default under any indenture, contract, agreement, mortgage, deed of trust, or other instrument to
which the Collateral Agent is a party or by which it or any of its property is bound.




          (d) No Violation. The execution and delivery of this Agreement, the performance of
the transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with
or violate, in any respect, any Applicable Law.




          (e) All Consents Required. All approvals, authorizations, consents, orders or other
actions of any Person or Governmental Authority applicable to the Collateral Agent, required in
connection with the execution and delivery of this Agreement, the performance by the Collateral
Agent of the transactions contemplated hereby and the fulfillment by the Collateral Agent of the
terms hereof have been obtained.




          (f) Validity, Etc. The Agreement constitutes the legal, valid and binding obligation
of the Collateral Agent, enforceable against the Collateral Agent in accordance with its terms,
except as such enforceability may be limited by applicable Bankruptcy Laws and general principles
of equity (whether considered in a suit at law or in equity).




     SECTION 4.05 Representations and Warranties of each Lender. Each Lender hereby
individually represents and warrants, as to itself, that it is (a) either a Qualified Institutional
Buyer under Rule 144A of the Securities Act or an institutional “Accredited Investor” as defined in
Rule (1)-501(a)(1)-(3) or (7) under the Securities Act and (b) a “qualified purchaser” under the
1940 Act.



     SECTION 4.06 Representations and Warranties of the Collateral Custodian. The
Collateral Custodian in its individual capacity and as Collateral Custodian represents and warrants
as follows:



          (a) Organization; Power and Authority. It is a duly organized and validly existing
national banking association in good standing under the laws of the United States. It has full
corporate power, authority and legal right to execute, deliver and perform its obligations as
Collateral Custodian under this Agreement.




          (b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for herein have been duly authorized by all necessary
association action on its part, either in its individual capacity or as Collateral Custodian, as
the case may be.




          (c) No Conflict. The execution and delivery of this Agreement, the performance of the
transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with,
result in any breach of its articles of incorporation or bylaws or any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a default under any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which the Collateral Custodian
is a party or by which it or any of its property is bound.




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          (d) No Violation. The execution and delivery of this Agreement, the performance of
the transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with
or violate, in any respect, any Applicable Law.




          (e) All Consents Required. All approvals, authorizations, consents, orders or other
actions of any Person or Governmental Authority applicable to the Collateral Custodian, required in
connection with the execution and delivery of this Agreement, the performance by the Collateral
Custodian of the transactions contemplated hereby and the fulfillment by the Collateral Custodian
of the terms hereof have been obtained.




          (f) Validity, Etc. The Agreement constitutes the legal, valid and binding obligation
of the Collateral Custodian, enforceable against the Collateral Custodian in accordance with its
terms, except as such enforceability may be limited by applicable Bankruptcy Laws and general
principles of equity (whether considered in a suit at law or in equity).




ARTICLE V.




GENERAL COVENANTS




     SECTION 5.01 Affirmative Covenants of the Borrower.



          From the Closing Date until the Collection Date:




          (a) Organizational Procedures and Scope of Business. The Borrower will observe all
organizational procedures required by its certificate of formation, limited liability company
agreement and the laws of its jurisdiction of formation. Without limiting the foregoing, the
Borrower will limit the scope of its business to: (i) the acquisition of Eligible Loan Assets and
the ownership and management of the Portfolio Assets and the related assets in the Collateral
Portfolio; (ii) the sale, transfer or other disposition of Loan Assets as and when permitted under
the Transaction Documents; (iii) entering into and performing under the Transaction Documents; (iv)
consenting or withholding consent as to proposed amendments, waivers and other modifications of the
Loan Agreements to the extent not in conflict with the terms of this Agreement or any other
Transaction Document; (v) exercising any rights (including but not limited to voting rights and
rights arising in connection with a Bankruptcy Event with respect to an Obligor or the consensual
or non-judicial restructuring of the debt or equity of an Obligor) or remedies in connection with
the Loan Assets and participating in the committees (official or otherwise) or other groups formed
by creditors of an Obligor to the extent not in conflict with the terms of this Agreement or any
other Transaction Document; and (vi) to engage in any activity and to exercise any powers permitted
to limited liability companies under the laws of the State of Delaware that are related to the
foregoing and necessary, convenient or advisable to accomplish the foregoing.




          (b) Special Purpose Entity Requirements. The Borrower will at all times: (i)
maintain at least one Independent Director; (ii) maintain its own separate books and records and
bank accounts; (iii) hold itself out to the public and all other Persons as a legal entity separate
from the Transferor and any other Person (although, in connection with certain



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advertising and marketing, the Borrower may be identified as a Subsidiary of Fifth Street); (iv) have a Board
of Directors separate from that of the Transferor and any other Person; (v) file its own tax
returns, if any, as may be required under Applicable Law, to the extent (1) not part of a
consolidated group filing a consolidated return or returns or (2) not treated as a division for tax
purposes of another taxpayer, and pay any Taxes so required to be paid under Applicable Law in
accordance with the terms of this Agreement; (vi) except as contemplated by the Transaction
Documents, not commingle its assets with assets of any other Person; (vii) conduct its business in
its own name and strictly comply with all organizational formalities to maintain its separate
existence (although, in connection with certain advertising and marketing, the Borrower may be
identified as a Subsidiary of Fifth Street); (viii) maintain separate financial statements, except
to the extent that the Borrower’s financial and operating results are consolidated with those of
Fifth Street in consolidated financial statements; (ix) pay its own liabilities only out of its own
funds; (x) maintain an arm’s-length relationship with its Affiliates and the Transferor; (xi) pay
the salaries of its own employees, if any; (xii) not hold out its credit or assets as being
available to satisfy the obligations of others; (xiii) allocate fairly and reasonably any overhead
for shared office space; (xiv) use separate stationery, invoices and checks (although, in
connection with certain advertising and marketing, the Borrower may be identified as a Subsidiary
of Fifth Street); (xv) except as expressly permitted by this Agreement, not pledge its assets as
security for the obligations of any other Person; (xvi) correct any known misunderstanding
regarding its separate identity; (xvii) maintain adequate capital in light of its contemplated
business purpose, transactions and liabilities and pay its operating expenses and liabilities from
its own assets; (xviii) cause its Board of Directors to meet at least annually or act pursuant to
written consent and keep minutes of such meetings and actions and observe in all respects all other
Delaware limited liability company formalities; (xix) not acquire the obligations or any securities
of its Affiliates; and (xx) cause the directors, officers, agents and other representatives of the
Borrower to act at all times with respect to the Borrower consistently and in furtherance of the
foregoing and in the best interests of the Borrower. Where necessary, the Borrower will obtain
proper authorization from its members for limited liability company action.




          (c) Preservation of Company Existence. The Borrower will maintain its limited
liability company existence in good standing under the laws of its jurisdiction of formation and
will promptly obtain and thereafter maintain qualifications to do business as a foreign limited
liability company in any other state in which it does business and in which it is required to so
qualify under Applicable Law.




          (d) Compliance with Legal Opinions. The Borrower shall take all other actions
necessary to maintain the accuracy of the factual assumptions set forth in the legal opinions of
Rutan & Tucker, LLP, as special counsel to the Borrower, issued in connection with the Purchase and
Sale Agreement and relating to the issues of substantive consolidation and true sale of the Loan
Assets.




          (e) Deposit of Collections. The Borrower shall promptly (but in no event later than
one Business Day after receipt) deposit or cause to be deposited into the Collection Account any
and all Available Collections received by the Borrower, the Servicer or any of their Affiliates.




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          (f) Disclosure of Purchase Price. The Borrower shall disclose to the Administrative
Agent and the Lender Agents the purchase price for each Loan Asset proposed to be transferred to
the Borrower pursuant to the terms of the Purchase and Sale Agreement.




          (g) Obligor Defaults and Bankruptcy Events. The Borrower shall give, or shall cause
the Servicer to give, notice to the Administrative Agent and the Lender Agents within two Business
Days of the Borrower’s, the Transferor’s or the Servicer’s actual knowledge of the occurrence of
any default by an Obligor under any Loan Asset or any Bankruptcy Event with respect to any Obligor
under any Loan Asset.




          (h) Required Loan Documents. The Borrower shall deliver to the Collateral Custodian a
hard copy of the Required Loan Documents and the Loan Asset Checklist pertaining to each Loan Asset
within five Business Days of the Cut-Off Date pertaining to such Loan Asset.




          (i) Taxes. The Borrower will file or cause to be filed its tax returns and pay any
and all Taxes imposed on it or its property as required by the Transaction Documents (except as
contemplated in Section 4.01(m)).




          (j) Notice of Event of Default. The Borrower shall notify the Administrative Agent
and each Lender Agent of the occurrence of any Event of Default under this Agreement promptly upon
obtaining actual knowledge of such event. In addition, no later than two Business Days following
the Borrower’s knowledge or notice of the occurrence of any Event of Default or Unmatured Event of
Default, the Borrower will provide to the Administrative Agent and each Lender Agent a written
statement of a Responsible Officer of the Borrower setting forth the details of such event and the
action that the Borrower proposes to take with respect thereto.




          (k) Notice of Material Events. The Borrower shall promptly notify the Administrative
Agent and each Lender Agent of any event or other circumstance that is reasonably likely to have a
Material Adverse Effect.




          (l) Notice of Income Tax Liability. The Borrower shall furnish to the Administrative
Agent and each Lender Agent telephonic or facsimile notice within 10 Business Days (confirmed in
writing within five Business Days thereafter) of the receipt of revenue agent reports or other
written proposals, determinations or assessments of the Internal Revenue Service or any other
taxing authority which propose, determine or otherwise set forth positive adjustments (i) to the
Tax liability of Fifth Street or any “affiliated group” (within the meaning of Section 1504(a)(l)
of the Code) of which Fifth Street is a member in an amount equal to or greater than $1,000,000 in
the aggregate, or (ii) to the Tax liability of the Borrower itself in an amount equal to or greater
than $500,000 in the aggregate. Any such notice shall specify the nature of the items giving rise
to such adjustments and the amounts thereof.




          (m) Notice of Auditors’ Management Letters. The Borrower shall promptly notify the
Administrative Agent and each Lender Agent after the receipt of any auditors’ management letters
received by the Borrower or by its accountants.




          (n) Notice of Breaches of Representations and Warranties under this Agreement. The
Borrower shall promptly notify the Administrative Agent and each Lender Agent if any representation
or warranty set forth in Section 4.01 or Section 4.02 was incorrect at



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the time it was given or deemed to have been given and at the same time deliver to the
Collateral Agent, the Administrative Agent and the Lender Agents a written notice setting forth in
reasonable detail the nature of such facts and circumstances. In particular, but without limiting
the foregoing, the Borrower shall notify the Administrative Agent and each Lender Agent in the
manner set forth in the preceding sentence before any Cut-Off Date of any facts or circumstances
within the knowledge of the Borrower which would render any of the said representations and
warranties untrue at the date when such representations and warranties were made or deemed to have
been made.




          (o) Notice of Breaches of Representations and Warranties under the Purchase and Sale
Agreement. The Borrower confirms and agrees that the Borrower will, upon receipt of notice or
discovery thereof, promptly send to the Administrative Agent, each Lender Agent and the Collateral
Agent a notice of (i) any breach of any representation, warranty, agreement or covenant under the
Purchase and Sale Agreement or (ii) any event or occurrence that, upon notice, or upon the passage
of time or both, would constitute such a breach.




          (p) Notice of Proceedings. The Borrower shall notify the Administrative Agent and
each Lender Agent, as soon as possible and in any event within three Business Days, after the
Borrower receives notice or obtains knowledge thereof, of any settlement of, material judgment
(including a material judgment with respect to the liability phase of a bifurcated trial) in or
commencement of any material labor controversy, material litigation, material action, material suit
or material proceeding before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, affecting the Collateral Portfolio, the Transaction
Documents, the Collateral Agent’s, for the benefit of the Secured Parties, interest in the
Collateral Portfolio, or the Borrower, the Servicer or the Transferor or any of their Affiliates.
For purposes of this Section 5.01(p), (i) any settlement, judgment, labor controversy,
litigation, action, suit or proceeding affecting the Collateral Portfolio, the Transaction
Documents, the Collateral Agent’s, for the benefit of the Secured Parties, interest in the
Collateral Portfolio, or the Borrower in excess of $500,000 shall be deemed to be material and (ii)
any settlement, judgment, labor controversy, litigation, action, suit or proceeding affecting the
Servicer or the Transferor or any of their Affiliates (other than the Borrower) in excess of
$1,000,000 shall be deemed to be material.




          (q) Notice of ERISA Reportable Events. The Borrower shall promptly notify the
Administrative Agent and each Lender Agent after receiving notice of any “reportable event” (as
defined in Title IV of ERISA, other than an event for which the reporting requirements have been
waived by regulations) with respect to the Borrower (or any ERISA Affiliate thereof), and provide
them with a copy of such notice.




          (r) Notice of Accounting Changes. As soon as possible and in any event within three
Business Days after the effective date thereof, the Borrower will provide to the Administrative
Agent and each Lender Agent notice of any change in the accounting policies of the Borrower.




          (s) Additional Documents. The Borrower shall provide the Administrative Agent and
each Lender Agent with copies of such documents as the Administrative Agent or any



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Lender Agent may reasonably request evidencing the truthfulness of the representations set
forth in this Agreement.




          (t) Protection of Security Interest. With respect to the Collateral Portfolio
acquired by the Borrower, the Borrower will (i) acquire such Collateral Portfolio pursuant to and
in accordance with the terms of the Purchase and Sale Agreement, (ii) (at the expense of the
Servicer, on behalf of the Borrower) take all action necessary to perfect, protect and more fully
evidence the Borrower’s ownership of such Collateral Portfolio free and clear of any Lien other
than the Lien created hereunder and Permitted Liens, including, without limitation, (a) with
respect to the Loan Assets and that portion of the Collateral Portfolio in which a security
interest may be perfected by filing, filing and maintaining (at the expense of the Servicer, on
behalf of the Borrower), effective financing statements against the Transferor in all necessary or
appropriate filing offices, (including any amendments thereto or assignments thereof) and filing
continuation statements, amendments or assignments with respect thereto in such filing offices,
(including any amendments thereto or assignments thereof) and (b) executing or causing to be
executed such other instruments or notices as may be necessary or appropriate, (iii) (at the
expense of the Servicer, on behalf of the Borrower) take all action necessary to cause a valid,
subsisting and enforceable first priority perfected security interest, subject only to Permitted
Liens, to exist in favor of the Collateral Agent (for the benefit of the Secured Parties) in the
Borrower’s interests in all of the Collateral Portfolio being Pledged hereunder including the
filing of a UCC financing statement in the applicable jurisdiction adequately describing the
Collateral Portfolio (which may include an “all asset” filing), and naming the Borrower as debtor
and the Collateral Agent as the secured party, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, (including any amendments thereto or
assignments thereof), (iv) permit the Administrative Agent or any Lender Agent or their respective
agents or representatives to visit the offices of the Borrower during normal office hours and upon
reasonable advance notice examine and make copies of all documents, books, records and other
information concerning the Collateral Portfolio and discuss matters related thereto with any of the
officers or employees of the Borrower having knowledge of such matters, and (v) take all additional
action that the Administrative Agent, any Lender Agent or the Collateral Agent may reasonably
request to perfect, protect and more fully evidence the respective first priority perfected
security interests of the parties to this Agreement in the Collateral Portfolio, or to enable the
Administrative Agent or the Collateral Agent to exercise or enforce any of their respective rights
hereunder.




          (u) Liens. The Borrower will promptly notify the Administrative Agent and the Lender
Agents of the existence of any Lien on the Collateral Portfolio (other than Permitted Liens) and
the Borrower shall defend the right, title and interest of the Collateral Agent, for the benefit of
the Secured Parties, in, to and under the Collateral Portfolio against all claims of third parties.




          (v) Other Documents. At any time from time to time upon prior written request of the
Administrative Agent or any Lender Agent, at the sole expense of the Borrower, the Borrower will
promptly and duly execute and deliver such further instruments and documents and take such further
actions as the Administrative Agent or any Lender Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Agreement including the first priority security
interest (subject only to Permitted Liens) granted hereunder



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and of the rights and powers herein granted (including, among other things, authorizing the
filing of such UCC financing statements as the Administrative Agent may request).




          (w) Compliance with Law. The Borrower shall at all times comply in all respects with
all Applicable Law applicable to Borrower or any of its assets (including, without limitation,
Environmental Laws, and all federal securities laws), and Borrower shall do or cause to be done all
things necessary to preserve and maintain in full force and effect its legal existence, and all
licenses material to its business.




          (x) Proper Records. The Borrower shall at all times keep proper books of records and
accounts in which full, true and correct entries shall be made of its transactions in accordance
with GAAP and set aside on its books from its earning for each fiscal year all such proper reserves
in accordance with GAAP.




          (y) Satisfaction of Obligations. The Borrower shall pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves with respect thereto have been
provided on the books of the Borrower.




          (z) Performance of Covenants. The Borrower shall observe, perform and satisfy all the
material terms, provisions, covenants and conditions required to be observed, performed or
satisfied by it, and shall pay when due all costs, fees and expenses required to be paid by it,
under the Transaction Documents. The Borrower shall pay and discharge all Taxes, levies, liens and
other charges on it or its assets and on the Collateral Portfolio that, in each case, in any manner
would create any lien or charge upon the Collateral Portfolio, except for any such Taxes as are
being appropriately contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves have been provided in accordance with GAAP.




          (aa) Tax Treatment. The Borrower, the Transferor and the Lenders shall treat the
Advances advanced hereunder as indebtedness of the Borrower (or, so long as the Borrower is treated
as a disregarded entity for U.S. federal income tax purposes, as indebtedness of the entity of
which it is considered to be a part) for U.S. federal income tax purposes and to file any and all
tax forms in a manner consistent therewith.




          (bb) Maintenance of Records. The Borrower will maintain records with respect to the
Collateral Portfolio and the conduct and operation of its business with no less a degree of
prudence than if the Collateral Portfolio were held by the Borrower for its own account and will
furnish the Administrative Agent and each Lender Agent, upon the reasonable request by the
Administrative Agent and each Lender Agent, information with respect to the Collateral Portfolio
and the conduct and operation of its business.




          (cc) Obligor Notification Forms. The Borrower shall furnish the Collateral Agent and
the Administrative Agent with an appropriate power of attorney to send (at the Administrative
Agent’s discretion on the Collateral Agent’s behalf, after the occurrence of an Event of Default)
Obligor notification forms to give notice to the Obligors of the Collateral



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Agent’s interest in the Collateral Portfolio and the obligation to make payments as directed
by the Administrative Agent on the Collateral Agent’s behalf.




          (dd) Officer’s Certificate. On each anniversary of the date of this Agreement, the
Borrower shall deliver an Officer’s Certificate, in form and substance acceptable to the Lender
Agents and the Administrative Agent, providing (i) a certification, based upon a review and summary
of UCC search results, that there is no other interest in the Collateral Portfolio perfected by
filing of a UCC financing statement other than in favor of the Collateral Agent and (ii) a
certification, based upon a review and summary of tax and judgment lien searches satisfactory to
the Administrative Agent, that there is no other interest in the Collateral Portfolio based on any
tax or judgment lien.




          (ee) Continuation Statements. The Borrower shall, not earlier than six months and not
later than three months prior to the fifth anniversary of the date of filing of the financing
statement referred to in Schedule I hereto 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) authorize 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 Collateral Agent, the Administrative Agent
and the Lender Agents an opinion of the counsel for the Borrower, in form and substance
reasonably satisfactory to the Administrative Agent, confirming and updating the opinion
delivered pursuant to Schedule I with respect to perfection and otherwise to the
effect that the security interest hereunder continues to be an enforceable and perfected
security interest, 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.



          (ff) Disregarded Entity. The Borrower will be disregarded as an entity separate from
its owner pursuant to Treasury Regulation Section 301.7701-3(b), and neither the Borrower nor any
other Person on its behalf shall make an election to be treated as other than an entity disregarded
from its owner under Treasury Regulation Section 301.7701-3(c).




     SECTION 5.02 Negative Covenants of the Borrower.



          From the Closing Date until the Collection Date:




          (a) Special Purpose Entity Requirements. Except as otherwise permitted by this
Agreement, the Borrower shall not (i) guarantee any obligation of any Person, including any
Affiliate; (ii) engage, directly or indirectly, in any business, other than the actions required or
permitted to be performed under the Transaction Documents; (iii) incur, create or assume any
Indebtedness, other than Indebtedness incurred under the Transaction Documents or under any Hedging
Agreement pursuant to Section 5.09(a); (iv) make or permit to remain outstanding any loan
or advance to, or own or acquire any stock or securities of, any Person, except that the Borrower
may invest in those Loan Assets and other investments permitted under the Transaction Documents and
may make any advance required or expressly permitted to be made



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pursuant to any provisions of the Transaction Documents and permit the same to remain
outstanding in accordance with such provisions; (v) become insolvent or fail to pay its debts and
liabilities from its assets when due; (vi) create, form or otherwise acquire any Subsidiaries or
(vii) release, sell, transfer, convey or assign any Loan Asset unless in accordance with the
Transaction Documents.




          (b) Requirements for Material Actions. The Borrower shall not fail to provide (and at
all times the Borrower’s organizational documents shall reflect) that the unanimous consent of all
members (including the consent of the Independent Director(s)) is required for the Borrower to (i)
dissolve or liquidate, in whole or part, or institute proceedings to be adjudicated bankrupt or
insolvent, (ii) institute or consent to the institution of bankruptcy or insolvency proceedings
against it, (iii) file a petition seeking or consent to reorganization or relief under any
applicable federal or state law relating to bankruptcy or insolvency, (iv) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar
official for the Borrower, (v) make any assignment for the benefit of the Borrower’s creditors,
(vi) admit in writing its inability to pay its debts generally as they become due, or (vii) take
any action in furtherance of any of the foregoing.




          (c) Protection of Title. The Borrower shall not take any action which would directly
or indirectly impair or adversely affect Borrower’s title to the Collateral Portfolio.




          (d) Transfer Limitations. The Borrower shall not transfer, assign, convey, grant,
bargain, sell, set over, deliver or otherwise dispose of, or pledge or hypothecate, directly or
indirectly, any interest in the Collateral Portfolio to any person other than the Collateral Agent
for the benefit of the Secured Parties, or engage in financing transactions or similar transactions
with respect to the Collateral Portfolio with any person other than the Administrative Agent and
the Lenders, in each case, except as otherwise expressly permitted by the terms of this Agreement.




          (e) Liens. The Borrower shall not create, incur or permit to exist any lien,
encumbrance or security interest in or on any of the Collateral Portfolio subject to the security
interest granted by the Borrower pursuant to this Agreement, other than Permitted Liens.




          (f) Organizational Documents. The Borrower shall not modify or terminate any of the
organizational or operational documents of the Borrower without the prior written consent of the
Administrative Agent.




          (g) [Reserved].




          (h) Merger, Acquisitions, Sales, etc. The Borrower shall not change its
organizational structure, enter into any transaction of merger or consolidation or amalgamation, or
asset sale (other than pursuant to Section 2.07), or liquidate, wind up or dissolve itself
(or suffer any liquidation, winding up or dissolution) without the prior written consent of the
Administrative Agent.




          (i) Use of Proceeds. The Borrower shall not use the proceeds of any Advance other
than (x) to finance the purchase by the Borrower from the Transferor on a “true sale” basis, of
Collateral Portfolio pursuant to the terms of the Purchase and Sale Agreement or (y) to fund



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the Unfunded Exposure Account in order to establish reserves for unfunded commitments of
Revolving Loan Assets and Delayed Draw Loan Assets included in the Collateral Portfolio.




          (j) Limited Assets. The Borrower shall not hold or own any assets that are not part
of the Collateral Portfolio.




          (k) Tax Treatment. The Borrower shall not elect to be treated as a corporation for
U.S. federal income tax purposes and shall take all reasonable steps necessary to avoid being
treated as a corporation for U. S. federal income tax purposes.




          (l) Extension or Amendment of Collateral Portfolio. The Borrower will not, except as
otherwise permitted in Section 6.04(a) of this Agreement and in accordance with the
Servicing Standard, extend, amend or otherwise modify the terms of any Loan Asset (including the
Underlying Collateral).




          (m) Purchase and Sale Agreement. The Borrower will not amend, modify, waive or
terminate any provision of the Purchase and Sale Agreement without the prior written consent of the
Administrative Agent.




          (n) Restricted Junior Payments. The Borrower shall not make any Restricted Junior
Payment, except that, so long as no Event of Default or Unmatured Event of Default has occurred or
would result therefrom, the Borrower may declare and make distributions to its member on its
membership interests.




          (o) ERISA Matters. The Borrower will not (a) engage, and will exercise its best
efforts not to permit any ERISA Affiliate to engage, in any prohibited transaction (within the
meaning of ERISA Section 406(a) or (b) or Code Section 4975) for which an exemption is not
available or has not previously been obtained from the United States Department of Labor, (b) fail
to meet the minimum funding standard set forth in Section 302(a) of ERISA and Section 412(a) of the
Code with respect to any Pension 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 Pension Plan so as to result, directly or indirectly in any liability to the
Borrower, or (e) permit to exist any occurrence of any reportable event described in Title IV of
ERISA with respect to any Pension Plan, other than an event for which reporting requirements have
been waived by regulations.




          (p) Instructions to Obligors. The Borrower will not make any change, or permit the
Servicer to make any change, in its instructions to Obligors regarding payments to be made with
respect to the Collateral Portfolio to the Collection Account, unless the Administrative Agent has
consented to such change.




          (q) Taxable Mortgage Pool Matters. The sum of the Outstanding Balances of all Loan
Assets owned by the Borrower and that are principally secured by an interest in real property
(within the meaning of Treasury Regulation Section 301.7701(i)-1(d)(3)) shall not at any time
exceed 35% of the aggregate Outstanding Balance of all Loan Assets.




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          (r) Change of Jurisdiction, Location, Names or Location of Loan Asset Files. The
Borrower shall not change the jurisdiction of its formation, make any change to its corporate name
or use any tradenames, fictitious names, assumed names, “doing business as” names or other names
(other than those listed on Schedule II hereto, as such schedule may be revised from time to time
to reflect name changes and name usage permitted under the terms of this Section 5.02(r)
after compliance with all terms and conditions of this Section 5.02(r) related thereto)
unless, prior to the effective date of any such change in the jurisdiction of its formation, name
change or use, the Borrower receives prior written consent from the Administrative Agent of such
change and delivers to the Administrative Agent such financing statements as the Administrative
Agent may request to reflect such name change or use, together with such Opinions of Counsel and
other documents and instruments as the Administrative Agent may request in connection therewith.
The Borrower will not change the location of its chief executive office unless prior to the
effective date of any such change of location, the Borrower notifies the Administrative Agent of
such change of location in writing. The Borrower will not move, or consent to the Collateral
Custodian or the Servicer moving, the Loan Asset Files from the location thereof on the Closing
Date, unless the Administrative Agent shall consent to such move in writing and the Servicer shall
provide the Administrative Agent with such Opinions of Counsel and other documents and instruments
as the Administrative Agent may request in connection therewith.




          (s) Allocation of Charges. There will not be any agreement or understanding between
the Servicer and the Borrower (other than as expressly set forth herein or as consented to by the
Administrative Agent), providing for the allocation or sharing of obligations to make payments or
otherwise in respect of any Taxes, fees, assessments or other governmental charges; provided that
it is understood and acknowledged that the Borrower will be consolidated with the Servicer for tax
purposes.




     SECTION 5.03 Affirmative Covenants of the Servicer.



          From the Closing Date until the Collection Date:




          (a) Compliance with Law. The Servicer will comply in all respects with all Applicable
Law, including those with respect to servicing the Collateral Portfolio or any part thereof.




          (b) Preservation of Company 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 corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises, privileges and qualification
could reasonably be expected to have a Material Adverse Effect.




          (c) Obligations and Compliance with Collateral Portfolio. The Servicer will duly
fulfill and comply with all obligations on the part of the Borrower to be fulfilled or complied
with under or in connection with the administration of each item of Collateral Portfolio and will
do nothing to impair the rights of the Collateral Agent, for the benefit of the Secured Parties, or
of the Secured Parties in, to and under the Collateral Portfolio. It is understood and agreed that
the Servicer does not hereby assume any obligations of the Borrower in respect of



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any Advances or assume any responsibility for the performance by the Borrower of any of its
obligations hereunder or under any other agreement executed in connection herewith that would be
inconsistent with the limited recourse undertaking of the Servicer, in its capacity as seller,
under Section 2.1(e) of the Purchase and Sale Agreement.




          (d) Keeping of Records and Books of Account.





          (i) The Servicer will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing Collateral
Portfolio in the event of the destruction of the originals thereof), and keep and maintain
all documents, books, records and other information reasonably necessary or advisable for
the collection of all Collateral Portfolio and the identification of the Collateral
Portfolio.




          (ii) The Servicer shall permit the Administrative Agent, each Lender Agent or their
respective agents or representatives, to visit the offices of the Servicer during normal
office hours and upon reasonable advance notice and examine and make copies of all
documents, books, records and other information concerning the Collateral Portfolio and the
Servicer’s servicing thereof and discuss matters related thereto with any of the officers or
employees of the Servicer having knowledge of such matters.




          (iii) The Servicer will on or prior to the date hereof, mark its master data processing
records and other books and records relating to the Collateral Portfolio with a legend,
acceptable to the Administrative Agent describing (i) the sale of the Collateral Portfolio
from the Transferor to the Borrower and (ii) the Pledge from the Borrower to the Collateral
Agent, for the benefit of the Secured Parties.



          (e) Preservation of Security Interest. The Servicer (at its own expense, on behalf of
the Borrower) will file 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 first priority perfected security interest of the Collateral Agent, for the benefit of the
Secured Parties, in, to and under the Loan Assets and that portion of the Collateral Portfolio in
which a security interest may be perfected by filing.




          (f) [Reserved].




          (g) Events of Default. The Servicer will provide the Administrative Agent and each
Lender Agent (with a copy to the Collateral Agent) with immediate written notice of the occurrence
of each Event of Default and each Unmatured Event of Default of which the Servicer has knowledge or
has received notice. In addition, no later than two Business Days following the Servicer’s
knowledge or notice of the occurrence of any Event of Default or Unmatured Event of Default, the
Servicer will provide to the Collateral Agent, the Administrative Agent and each Lender Agent a
written statement of the chief financial officer or chief accounting officer of the Servicer
setting forth the details of such event and the action that the Servicer proposes to take with
respect thereto.




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          (h) Taxes. The Servicer will file its tax returns and pay any and all Taxes imposed
on it or its property as required under the Transaction Documents (except as contemplated by
Section 4.03(m)).




          (i) Other. The Servicer will promptly furnish to the Collateral Agent, the
Administrative Agent and each Lender Agent such other information, documents, records or reports
respecting the Collateral Portfolio or the condition or operations, financial or otherwise, of the
Borrower or the Servicer as the Collateral Agent, any Lender Agent or the Administrative Agent may
from time to time reasonably request in order to protect the interests of the Administrative Agent,
the Lender Agents, the Collateral Agent or Secured Parties under or as contemplated by this
Agreement.




          (j) Proceedings Related to the Borrower, the Transferor and the Servicer and the
Transaction Documents. The Servicer shall notify the Administrative Agent and each Lender
Agent as soon as possible and in any event within three Business Days after any executive officer
of the Servicer receives notice or obtains knowledge thereof of any settlement of, judgment
(including a judgment with respect to the liability phase of a bifurcated trial) in or commencement
of any labor controversy, litigation, action, suit or proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign, that could
reasonably be expected to have a Material Adverse Effect on the Borrower, the Transferor or the
Servicer (or any of their Affiliates) or the Transaction Documents. For purposes of this
Section 5.03(j), (i) any settlement, judgment, labor controversy, litigation, action, suit
or proceeding affecting the Transaction Documents or the Borrower in excess of $500,000 shall be
deemed to be expected to have such a Material Adverse Effect and (ii) any settlement, judgment,
labor controversy, litigation, action, suit or proceeding affecting the Servicer or the Transferor
or any of their Affiliates (other than the Borrower) in excess of $1,000,000 shall be deemed to be
expected to have such a Material Adverse Effect.




          (k) Deposit of Collections. The Servicer shall promptly (but in no event later than
one Business Day after receipt) deposit or cause to be deposited into the Collection Account any
and all Available Collections received by the Borrower, the Servicer or any of their Affiliates.




          (l) Loan Asset Register.





          (i) The Servicer shall maintain, or cause to be maintained, with respect to each
Noteless Loan Asset a register (which may be in physical or electronic form and readily
identifiable as the loan asset register) (each, a “Loan Asset Register”) in which it
will record, or cause to be recorded, (v) the amount of such Noteless Loan Asset, (w) the
amount of any principal or interest due and payable or to become due and payable from the
Obligor thereunder, (x) the amount of any sum in respect of such Noteless Loan Asset
received from the Obligor, (y) the date of origination of such Noteless Loan Asset and (z)
the maturity date of such Noteless Loan Asset.




          (ii) At any time a Noteless Loan Asset is included as part of the Collateral Portfolio
pursuant to this Agreement, the Servicer shall deliver to the Administrative Agent, the
Collateral Agent and the Collateral Custodian a copy of the



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related Loan Asset Register, together with a certificate of a Responsible Officer of
the Servicer (in the form of Exhibit R) certifying to the accuracy of such Loan
Asset Register as of the applicable Cut-Off Date.



          (m) Special Purpose Entity Requirements. The Servicer shall take such actions as are
necessary to cause the Borrower to be in compliance with the special purpose entity requirements
set forth in Sections 5.01(a) and (b) and 5.02(a) and (b).




          (n) Accounting Changes. As soon as possible and in any event within three Business
Days after the effective date thereof, the Servicer will provide to the Administrative Agent and
the Lender Agents notice of any change in the accounting policies of the Servicer.




          (o) Proceedings Related to the Collateral Portfolio. The Servicer shall notify the
Administrative Agent and each Lender Agent as soon as possible and in any event within three
Business Days after any Responsible Officer of the Servicer receives notice or has actual knowledge
of any settlement of, judgment (including a judgment with respect to the liability phase of a
bifurcated trial) in or commencement of any labor controversy, litigation, action, suit or
proceeding before any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that could reasonably be expected to have a Material Adverse
Effect on the interests of the Collateral Agent or the Secured Parties in, to and under the
Collateral Portfolio. For purposes of this Section 5.03(o), any settlement, judgment, labor
controversy, litigation, action, suit or proceeding affecting the Collateral Portfolio or the
Collateral Agent’s or the Secured Parties’ interest in the Collateral Portfolio in excess of
$1,000,000 or more shall be deemed to be expected to have such a Material Adverse Effect.




          (p) Compliance with Legal Opinions. The Servicer shall take all other actions
necessary to maintain the accuracy of the factual assumptions set forth in the legal opinions of
Rutan & Tucker, LLP, as special counsel to the Servicer, issued in connection with the Transaction
Documents and relating to the issues of substantive consolidation and true sale of the Loan Assets.




          (q) Instructions to Agents and Obligors. The Servicer shall direct, or shall cause the
Transferor to direct, any agent or administrative agent for any Loan Asset to remit all payments
and collections with respect to such Loan Asset, and, if applicable, to direct the Obligor with
respect to such Loan Asset to remit all such payments and collections with respect to such Loan
Asset directly to the Collection Account. The Borrower and the Servicer shall take commercially
reasonable steps to ensure, and shall cause the Transferor to take commercially reasonable steps to
ensure, that only funds constituting payments and collections relating to Loan Assets shall be
deposited into the Collection Account.




          (r) Capacity as Servicer. The Servicer will ensure that, at all times when it is
dealing with or in connection with the Loan Assets in its capacity as Servicer, it holds itself out
as Servicer, and not in any other capacity.




          (s) Notice of Breaches of Representations and Warranties under the Purchase and Sale
Agreement. The Servicer confirms and agrees that the Servicer will, upon receipt of notice or
discovery thereof, promptly send to the Administrative Agent, each Lender Agent and



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the Collateral Agent a notice of (i) any breach of any representation, warranty, agreement or
covenant under the Purchase and Sale Agreement or (ii) any event or occurrence that, upon notice,
or upon the passage of time or both, would constitute such a breach, in each case, promptly upon
learning thereof.




          (t) Audits. Prior to the Closing Date and periodically thereafter at the discretion of
the Administrative Agent and each Lender Agent, the Servicer shall allow the Administrative Agent
and each Lender Agent (during normal office hours and upon advance notice) to review the Servicer’s
collection and administration of the Collateral Portfolio in order to assess compliance by the
Servicer with the Servicing Standard, as well as with the Transaction Documents and to conduct an
audit of the Collateral Portfolio and Required Loan Documents in conjunction with such a review.
Such review shall be reasonable in scope and shall be completed in a reasonable period of time.




          (u) Notice of Breaches of Representations and Warranties under this Agreement. The
Servicer shall promptly notify the Administrative Agent and the Lender Agents if any representation
or warranty set forth in Section 4.03 was incorrect at the time it was given or deemed to
have been given and at the same time deliver to the Collateral Agent, the Administrative Agent and
the Lender Agents a written notice setting forth in reasonable detail the nature of such facts and
circumstances. In particular, but without limiting the foregoing, the Servicer shall notify the
Administrative Agent and the Lender Agents in the manner set forth in the preceding sentence before
any Cut-Off Date of any facts or circumstances within the knowledge of the Servicer which would
render any of the said representations and warranties untrue at the date when such representations
and warranties were made or deemed to have been made.




          (v) Insurance Policies. The Servicer has caused, and will cause, to be performed any
and all acts reasonably required to be performed to preserve the rights and remedies of the
Collateral Agent and the Secured Parties in any Insurance Policies applicable to Loan Assets (to
the extent the Servicer or an Affiliate of the Servicer is the agent or servicer under the
applicable Loan Agreement) including, without limitation, in each case, any necessary notifications
of insurers, assignments of policies or interests therein, and establishments of co-insured, joint
loss payee and mortgagee rights in favor of the Collateral Agent and the Secured Parties; provided
that, unless the Borrower is the sole lender under such Loan Agreement, the Servicer shall only
take such actions that are customarily taken by or on behalf of a lender in a syndicated loan
facility to preserve the rights of such lender.




          (w) Disregarded Entity. The Servicer shall cause the Borrower to be disregarded as an
entity separate from its owner pursuant to Treasury Regulation Section 301.7701-3(b) and shall
cause that neither the Borrower nor any other Person on its behalf shall make an election to be
treated as other than an entity disregarded from its owner under Treasury Regulation Section
301.7701-3(c).




     SECTION 5.04 Negative Covenants of the Servicer.



          From the Closing Date until the Collection Date:




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          (a) Mergers, Acquisition, Sales, etc. The Servicer will not consolidate with or merge
into any other Person or convey or transfer its properties and assets substantially as an entirety
to any Person, unless the Servicer is the surviving entity and unless:





          (i) the Servicer has delivered to the Administrative Agent and each Lender Agent an
Officer’s Certificate and an Opinion of Counsel each stating that any such consolidation,
merger, conveyance or transfer and any supplemental agreement executed in connection
therewith comply with this Section 5.04 and that all conditions precedent herein
provided for relating to such transaction have been complied with and, in the case of the
Opinion of Counsel, that such supplemental agreement is legal, valid and binding with
respect to the Servicer and such other matters as the Administrative Agent may reasonably
request;




          (ii) the Servicer shall have delivered notice of such consolidation, merger, conveyance
or transfer to the Administrative Agent and each Lender Agent;




          (iii) after giving effect thereto, no Event of Default or Servicer Termination Event or
event that with notice or lapse of time would constitute either an Event of Default or a
Servicer Termination Event shall have occurred; and




          (iv) the Administrative Agent shall have consented in writing to such consolidation,
merger, conveyance or transfer.



          Notwithstanding the foregoing or anything to the contrary contained in this Agreement, from
time to time, without the consent or approval of the Administrative Agent or any Secured Party or
the satisfaction of any of the conditions set forth in clauses (i), (iii) or (iv)
above, the Servicer may consolidate or merge with any Fifth Street Merger Party, and/or any Fifth
Street Merger Party may convey or transfer its properties and assets substantially as an entirety
to the Servicer (any such transaction, a “Fifth Street Affiliate Merger Transaction”);
provided that, in each case, the Servicer is the surviving entity in any such transaction or
transactions; provided, further, that the Servicer shall, upon the request of the Administrative
Agent, deliver an Opinion of Counsel that this Agreement and any supplemental agreement executed in
connection therewith is legal, valid and binding with respect to the Servicer after the
consummation of such Fifth Street Affiliate Merger Transaction.




          (b) Change of Name or Location of Loan Asset Files. The Servicer shall not (x) change
its name, move the location of its principal place of business and chief executive office, change
the offices where it keeps records concerning the Collateral Portfolio from the address set forth
under its name on the signature pages hereto, or change the jurisdiction of its formation, or (y)
move, or consent to the Collateral Custodian moving, the Required Loan Documents and Loan Asset
Files from the location thereof on the initial Advance Date, unless the Administrative Agent shall
consent of such move in writing and the Servicer shall provide the Administrative Agent with such
Opinions of Counsel and other documents and instruments as the Administrative Agent may request in
connection therewith and has taken all actions required under the UCC of each relevant jurisdiction
in order to continue the first priority perfected security interest of the Collateral Agent, for
the benefit of the Secured Parties, in the Collateral Portfolio.




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          (c) Change in Payment Instructions to Obligors. The Servicer will not make any change
in its instructions to Obligors regarding payments to be made with respect to the Collateral
Portfolio to the Collection Account, unless the Administrative Agent has consented to such change.




          (d) Extension or Amendment of Loan Assets. The Servicer will not, except as otherwise
permitted in Section 6.04(a), extend, amend or otherwise modify the terms of any Loan Asset
(including the Underlying Collateral).




          (e) Taxable Mortgage Pool Matters. The Servicer will manage the portfolio and advise
the Borrower with respect to purchases from the Transferor so as to not at any time allow the sum
of the Outstanding Balances of all Loan Assets owned by the Borrower and that are principally
secured by an interest in real property (within the meaning of Treasury Regulation Section
301.7701(i)-1(d)(3)) to exceed 35% of the aggregate Outstanding Balance of all Loan Assets.




          (f) Allocation of Charges. There will not be any agreement or understanding between
the Servicer and the Borrower (other than as expressly set forth herein or as consented to by the
Administrative Agent), providing for the allocation or sharing of obligations to make payments or
otherwise in respect of any Taxes, fees, assessments or other governmental charges; provided that
it is understood and acknowledged that the Borrower will be consolidated with the Servicer for tax
purposes.




     SECTION 5.05 Affirmative Covenants of the Collateral Agent.



          From the Closing Date until the Collection Date:




          (a) Compliance with Law. The Collateral Agent will comply in all material respects
with all Applicable Law.




          (b) Preservation of Existence. The Collateral Agent 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 failure to preserve and maintain such
existence, rights, franchises, privileges and qualification could reasonably be expected to have a
Material Adverse Effect.




     SECTION 5.06 Negative Covenants of the Collateral Agent.



          From the Closing Date until the Collection Date, the Collateral Agent will not make any
changes to the Collateral Agent Fees without the prior written approval of the Administrative
Agent.




     SECTION 5.07 Affirmative Covenants of the Collateral Custodian.



          From the Closing Date until the Collection Date:




          (a) Compliance with Law. The Collateral Custodian will comply in all material
respects with all Applicable Law.




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          (b) Preservation of Existence. The Collateral Custodian 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 failure to preserve and maintain
such existence, rights, franchises, privileges and qualification could reasonably be expected to
have a Material Adverse Effect.




          (c) Location of Required Loan Documents. Subject to Article XII of this
Agreement, the Required Loan Documents shall remain at all times in the possession of the
Collateral Custodian at the address set forth under its name on the signature pages hereto unless
notice of a different address is given in accordance with the terms hereof or unless the
Administrative Agent agrees to allow certain Required Loan Documents to be released to the Servicer
on a temporary basis in accordance with the terms hereof, except as such Required Loan Documents
may be released pursuant to the terms of this Agreement.




     SECTION 5.08 Negative Covenants of the Collateral Custodian.



          From the Closing Date until the Collection Date:




          (a) Required Loan Documents. The Collateral Custodian will not dispose of any
documents constituting the Required Loan Documents in any manner that is inconsistent with the
performance of its obligations as the Collateral Custodian pursuant to this Agreement and will not
dispose of any Collateral Portfolio except as contemplated by this Agreement.




          (b) No Changes in Collateral Custodian Fees. The Collateral Custodian will not make
any changes to the Collateral Custodian Fees without the prior written approval of the
Administrative Agent.




     SECTION 5.09 Covenants of the Borrower Relating to Hedging of Loan Assets.



          (a) At any time prior to an Event of Default, the Borrower may enter into Hedge Agreements for
certain Fixed Rate Loan Assets with a Hedge Counterparty with the prior consent of the
Administrative Agent. After an Event of Default or at any time after the Spread Differential has
fallen below 6.00%, the Administrative Agent may, at its sole discretion, direct the Borrower to
enter into Hedge Transactions for certain Fixed Rate Loan Assets.




          (b) As additional security hereunder, the Borrower hereby assigns to the Collateral Agent, for
the benefit of the Secured Parties, all right, title and interest of the Borrower (but none of the
obligations) in each Hedging Agreement, each Hedge Transaction, and all present and future amounts
payable by a Hedge Counterparty to the Borrower under or in connection with the respective Hedging
Agreement and Hedge Transaction(s) with that Hedge Counterparty (“Hedge Collateral”), and
grants a security interest to the Collateral Agent, for the benefit of the Secured Parties, in the
Hedge Collateral. The Borrower acknowledges that as a result of such assignment the Borrower may
not, without the prior written consent of the Administrative Agent and the Collateral 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 5.09(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



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requiring the consent of the Administrative Agent, the Lenders, the Lender Agents, the
Collateral Agent or any Secured Party for the performance by the Borrower of any such obligations.




          (c) The Borrower shall, promptly upon execution thereof, provide to the Administrative Agent
and the Collateral Agent a copy of any Hedging Agreement entered into in connection with this
Agreement.




ARTICLE VI.




ADMINISTRATION AND SERVICING OF CONTRACTS




     SECTION 6.01 Appointment and Designation of the Servicer.



          (a) Initial Servicer. The Borrower, each Lender Agent and the Administrative Agent
hereby appoint Fifth Street, pursuant to the terms and conditions of this Agreement, as Servicer,
with the authority to service, administer and exercise rights and remedies, on behalf of the
Borrower, in respect of the Collateral Portfolio. Until the Administrative Agent gives Fifth Street
a Servicer Termination Notice, Fifth Street hereby accepts such appointment and agrees to perform
the duties and responsibilities of the Servicer pursuant to the terms hereof. 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.




          (b) Servicer Termination Notice. The Borrower, the Servicer, each Lender Agent, and
the Administrative Agent hereby agree that, upon the occurrence of a Servicer Termination Event,
the Administrative Agent, by written notice to the Servicer (with a copy to the Collateral Agent)
(a “Servicer Termination Notice”), may terminate all of the rights, obligations, power and
authority of the Servicer under this Agreement. On and after the receipt by the Servicer of a
Servicer Termination Notice pursuant to this Section 6.01(b), the Servicer shall continue
to perform all servicing functions under this Agreement until the date specified in the Servicer
Termination Notice or otherwise specified by the Administrative Agent in writing or, if no such
date is specified in such Servicer Termination Notice or otherwise specified by the Administrative
Agent, until a date mutually agreed upon by the Servicer and the Administrative Agent and shall be
entitled to receive, to the extent of funds available therefor pursuant to Section 2.04,
the Servicing Fees therefor until such date. After such date, the Servicer agrees that it will
terminate its activities as Servicer hereunder in a manner that the Administrative Agent believes
will facilitate the transition of the performance of such activities to a successor Servicer, and
the successor Servicer shall assume each and all of the Servicer’s obligations to service and
administer the Collateral Portfolio, on the terms and subject to the conditions herein set forth,
and the Servicer shall use its best efforts to assist the successor Servicer in assuming such
obligations.




          (c) Appointment of Replacement Servicer. At any time following the delivery of a
Servicer Termination Notice, the Administrative Agent may, at its discretion, (i) appoint Wachovia
(or an Affiliate thereof) as Servicer under this Agreement and, in such case, all authority, power,
rights and obligations of the Servicer shall pass to and be vested in Wachovia (or an Affiliate
thereof) or (ii) appoint a new Servicer (the “Replacement Servicer”), which appointment
shall take effect upon the Replacement Servicer accepting such appointment



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by a written assumption in a form satisfactory to the Administrative Agent in its sole
discretion. In the event that Wachovia (or an Affiliate thereof) or a Replacement Servicer has not
accepted its appointment at the time when the Servicer ceases to act as Servicer, the
Administrative Agent shall petition a court of competent jurisdiction to appoint any established
financial institution, having a net worth of not less than United States $50,000,000 and whose
regular business includes the servicing of Collateral Portfolio, as the Replacement Servicer
hereunder.




          (d) Liabilities and Obligations of Replacement Servicer. Upon its appointment,
Wachovia (or an Affiliate thereof) or the Replacement Servicer, as applicable, shall be the
successor in all respects to the Servicer with respect to servicing functions under this Agreement
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 this Agreement to the
Servicer shall be deemed to refer to Wachovia (or an Affiliate thereof) or the Replacement
Servicer, as applicable; provided, that Wachovia (or an Affiliate thereof) or Replacement Servicer,
as applicable, shall have (i) no liability with respect to any action performed by the terminated
Servicer prior to the date that Wachovia (or an Affiliate thereof) or Replacement Servicer, as
applicable, becomes the successor to the Servicer or any claim of a third party based on any
alleged action or inaction of the terminated Servicer, (ii) no obligation to perform any advancing
obligations, if any, of the Servicer unless it elects to in its sole discretion, (iii) no
obligation to pay any Taxes required to be paid by the Servicer (provided that Wachovia (or an
Affiliate thereof) or Replacement Servicer, as applicable, shall pay any income Taxes for which it
is liable), (iv) no obligation to pay any of the fees and expenses of any other party to the
transactions contemplated hereby, and (v) no liability or obligation with respect to any Servicer
indemnification obligations of any prior Servicer, including the original Servicer. The
indemnification obligations of Wachovia (or an Affiliate thereof) or the Replacement Servicer, as
applicable, upon becoming a Replacement Servicer, are expressly limited to those arising on account
of its failure to act in good faith and with reasonable care under the circumstances. In addition,
Wachovia (or an Affiliate thereof) or Replacement Servicer, as applicable, shall have no liability
relating to the representations and warranties of the Servicer contained in Section 4.03.




          (e) Authority and Power. All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of this Agreement and shall pass
to and be vested in the Borrower and, without limitation, the Borrower 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 Borrower in effecting the termination of the responsibilities and rights of the
Servicer to conduct servicing of the Collateral Portfolio.




          (f) Subcontracts. The Servicer may, with the prior written consent of the
Administrative Agent, subcontract with any other Person for servicing, administering or collecting
the Collateral Portfolio; provided, that (i) the Servicer shall select any such Person with
reasonable care and shall be solely responsible for the fees and expenses payable to any such
Person, (ii) the Servicer shall not be relieved of, and shall remain liable for, the performance of
the duties and obligations of the Servicer pursuant to the terms hereof without regard to any
subcontracting arrangement and (iii) any such subcontract shall be terminable upon



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the occurrence of a Servicer Termination Event. The Administrative Agent hereby acknowledges
that the Servicer has engaged Fifth Street Management LLC in accordance with terms of the
Management Agreement, a copy of which has been previously delivered to the Administrative Agent.




          (g) Waiver. The Borrower acknowledges that the Administrative Agent or any of its
Affiliates may act as the Collateral Agent and/or the Servicer, and the Borrower waives any and all
claims against the Administrative Agent, each Lender Agent or any of their respective Affiliates,
the Collateral Agent and the Servicer (other than claims relating to such party’s gross negligence
or willful misconduct) relating in any way to the custodial or collateral administration functions
having been performed by the Administrative Agent or any of its Affiliates in accordance with the
terms and provisions (including the standard of care) set forth in the Transaction Documents.




     SECTION 6.02 Duties of the Servicer.



          (a) Duties. The Servicer shall take or cause to be taken all such actions as may be
necessary or advisable to service, administer and collect on the Collateral Portfolio from time to
time, all in accordance with Applicable Law and the Servicing Standard. Prior to the occurrence of
a Servicer Termination Event, but subject to the terms of this Agreement (including, without
limitation, Section 6.04), the Servicer has the sole and exclusive authority to make any
and all decisions with respect to the Collateral Portfolio and take or refrain from taking any and
all actions with respect to the Collateral Portfolio. Without limiting the foregoing, the duties of
the Servicer shall include the following:





          (i) supervising the Collateral Portfolio, including communicating with Obligors,
executing amendments, providing consents and waivers, enforcing and collecting on the
Collateral Portfolio and otherwise managing the Collateral Portfolio on behalf of the
Borrower;




          (ii) maintaining all necessary servicing records with respect to the Collateral
Portfolio and providing such reports to the Administrative Agent and each Lender Agent (with
a copy to the Collateral Agent and the Collateral Custodian) in respect of the servicing of
the Collateral Portfolio (including information relating to its performance under this
Agreement) as may be required hereunder or as the Administrative Agent or any Lender Agent
may reasonably request;




          (iii) maintaining and implementing administrative and operating procedures (including,
without limitation, an ability to recreate servicing records evidencing the Collateral
Portfolio 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 Collateral Portfolio;




          (iv) promptly delivering to the Administrative Agent, each Lender Agent, the Collateral
Agent or the Collateral Custodian, from time to time, such information and servicing records
(including information relating to its performance



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under this Agreement) as the Administrative Agent, each Lender Agent, Collateral
Custodian or the Collateral Agent may from time to time reasonably request;




          (v) identifying each Loan Asset clearly and unambiguously in its servicing records to
reflect that such Loan Asset is owned by the Borrower and that the Borrower is Pledging a
security interest therein to the Secured Parties pursuant to this Agreement;




          (vi) notifying the Administrative Agent and each Lender Agent of any material action,
suit, proceeding, dispute, offset, deduction, defense or counterclaim (1) that is or is
threatened to be asserted by an Obligor with respect to any Loan Asset (or portion thereof)
of which it has knowledge or has received notice; or (2) that could reasonably be expected
to have a Material Adverse Effect;




          (vii) using its best efforts to maintain the perfected security interest of the
Collateral Agent, for the benefit of the Secured Parties, in the Collateral Portfolio;




          (viii) maintaining the Loan Asset File with respect to Loan Assets included as part of
the Collateral Portfolio; provided that, so long as the Servicer is in possession of any
Required Loan Documents, the Servicer will hold such Required Loan Documents in a fireproof
safe or fireproof file cabinet;




          (ix) directing the Collateral Agent to make payments pursuant to the terms of the
Servicing Report in accordance with Section 2.04;




          (x) directing the sale or substitution of Collateral Portfolio in accordance with
Section 2.07;




          (xi) providing assistance to the Borrower with respect to the purchase and sale of and
payment for the Loan Assets;




          (xii) instructing the Obligors and the administrative agents on the Loan Assets to make
payments directly into the Collection Account established and maintained with the Collateral
Agent;




          (xiii) delivering the Loan Asset Files and the Loan Asset Schedule to the Collateral
Custodian; and




          (xiv) complying with such other duties and responsibilities as may be required of the
Servicer by this Agreement.



          It is acknowledged and agreed that in circumstances in which a Person other than the Borrower,
the Transferor (so long as the Transferor is also the Servicer) or the Servicer acts as lead agent
with respect to any Loan Asset, the Servicer shall perform its servicing duties hereunder only to
the extent a lender under the related loan syndication Loan Agreements has the right to do so.
Notwithstanding anything to the contrary contained herein, it is acknowledged and agreed that the
performance by the Servicer of its duties hereunder shall be limited insofar as such performance
would conflict with or result in a breach of any of the express terms of the



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related Loan Agreements; provided that the Servicer shall (a) provide prompt written notice to
the Administrative Agent upon becoming aware of such conflict or breach, (b) have determined that
there is no other commercially reasonable performance that it could render consistent with the
express terms of the Loan Agreements which would result in all or a portion of the servicing duties
being performed in accordance with this Agreement, and (c) undertake all commercially reasonable
efforts to mitigate the effects of such non-performance including performing as much of the
servicing duties as possible and performing such other commercially reasonable and/or similar
duties consistent with the terms of the Loan Agreements.




          (b) Notwithstanding anything to the contrary contained herein, the exercise by the
Administrative Agent, the Collateral Agent, each Lender Agent and the Secured Parties of their
rights hereunder shall not release the Servicer, the Transferor or the Borrower from any of their
duties or responsibilities with respect to the Collateral Portfolio. The Secured Parties, the
Administrative Agent, each Lender Agent and the Collateral Agent shall not have any obligation or
liability with respect to any Collateral Portfolio, nor shall any of them be obligated to perform
any of the obligations of the Servicer hereunder.




          (c) Any payment by an Obligor in respect of any indebtedness owed by it to the Transferor or
the Borrower shall, except as otherwise specified by such Obligor or otherwise required by contract
or law and unless otherwise instructed by the Administrative Agent, be applied as a collection of a
payment by such Obligor (starting with the oldest such outstanding payment due) to the extent of
any amounts then due and payable thereunder before being applied to any other receivable or other
obligation of such Obligor.




     SECTION 6.03 Authorization of the Servicer.



          (a) Each of the Borrower, the Administrative Agent, each Lender Agent, each Lender and the
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 in the determination of
the Servicer and not inconsistent with the sale of the Collateral Portfolio by the Transferor to
the Borrower under the Purchase and Sale Agreement and, thereafter, the Pledge by the Borrower to
the Collateral Agent on behalf of the Secured Parties hereunder, to collect all amounts due under
any and all Collateral Portfolio, including, without limitation, endorsing any of their names on
checks and other instruments representing Interest Collections and Principal Collections, executing
and delivering any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the Collateral
Portfolio and, after the delinquency of any Collateral Portfolio and to the extent permitted under
and in compliance with Applicable Law, to commence proceedings with respect to enforcing payment
thereof, to the same extent as the Transferor could have done if it had continued to own such
Collateral Portfolio. The Transferor, the Borrower and the Collateral Agent on behalf of the
Secured Parties 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 collectability of the Collateral Portfolio. In no event shall the Servicer be
entitled to make the Secured Parties, the Administrative Agent, the Collateral Agent, any Lender,
any Lender Agent or any Hedge Counterparty a party to any litigation without such party’s express
prior written consent, or to make the Borrower a party to



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any litigation (other than any routine foreclosure or similar collection procedure) without
the Administrative Agent’s and each Lender Agent’s consent.




          (b) After the declaration of the Facility Maturity Date, at the direction of the
Administrative Agent, the Servicer shall take such action as the Administrative Agent may deem
necessary or advisable to enforce collection of the Collateral Portfolio; provided, that the
Administrative Agent may, at any time that an Event of Default has occurred, notify any Obligor
with respect to any Collateral Portfolio of the assignment of such Collateral Portfolio to the
Collateral Agent on behalf of the Secured Parties and direct that payments of all amounts due or to
become due be made directly to the Administrative Agent or any servicer, collection agent or
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 Collateral Portfolio, and
adjust, settle or compromise the amount or payment thereof.




     SECTION 6.04 Collection of Payments; Accounts.



          (a) Collection Efforts, Modification of Collateral Portfolio. The Servicer will use
its commercially reasonable efforts and judgment to collect or cause to be collected, all payments
called for under the terms and provisions of the Loan Assets included in the Collateral Portfolio
as and when the same become due, all in accordance with the Servicing Standard. The Servicer may
not waive, modify or otherwise vary any provision of an item of Collateral Portfolio in a manner
that would impair the collectability of the Collateral Portfolio or in any manner contrary to the
Servicing Standard.




          (b) Acceleration. If consistent with the Servicing Standard, the Servicer shall
accelerate or vote to accelerate, as applicable, the maturity of all or any Scheduled Payments and
other amounts due under any Loan Asset promptly after such Loan Asset becomes defaulted.




          (c) Taxes and other Amounts. The Servicer will use its best efforts to collect all
payments with respect to amounts due for Taxes, assessments and insurance premiums relating to each
Loan Asset to the extent required to be paid to the Borrower for such application under the
applicable Loan Agreement and remit such amounts to the appropriate Governmental Authority or
insurer as required by the Loan Agreements.




          (d) Payments to Collection Account. On or before the applicable Cut-Off Date, the
Servicer shall have instructed all Obligors to make all payments in respect of the Collateral
Portfolio directly to the Collection Account; provided that the Servicer is not required to so
instruct any Obligor which is solely a guarantor or other surety (or an Obligor that is not
designated as the “lead borrower” or another such similar term) unless and until the Servicer calls
on the related guaranty or secondary obligation.




          (e) Controlled Accounts. Each of the parties hereto hereby agrees that (i) each
Controlled Account is intended to be a “securities account” or “deposit account” within the meaning
of the UCC and (ii) except as otherwise expressly provided herein and in the Collection Account
Agreement or Unfunded Exposure Account Agreement, as applicable, prior to the delivery of a Notice
of Exclusive Control (as defined in the Collection Account Agreement or Unfunded Exposure Account
Agreement, as applicable), the Borrower, the Servicer and the



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Collateral Agent (acting at the direction of the Administrative Agent) shall be entitled to
exercise the rights that comprise each Financial Asset held in each Controlled Account which is a
securities account and have the right to direct the disposition of funds in any Controlled Account
which is a deposit account; provided that after the delivery of a Notice of Exclusive Control (as
defined in the Collection Account Agreement or Unfunded Exposure Account Agreement, as applicable),
such rights shall be exclusively held by the Collateral Agent (acting at the direction of the
Administrative Agent). Each of the parties hereto hereby agrees to cause the securities
intermediary that holds any money or other property for the Borrower in a Controlled Account that
is a securities account to agree with the parties hereto that (A) the cash and other property
(subject to Section 6.04(f) below with respect to any property other than investment
property, as defined in Section 9-102(a)(49) of the UCC) is to be treated as a Financial Asset
under Article 8 of the UCC and (B) regardless of any provision in any other agreement, for purposes
of the UCC, with respect to the Controlled Accounts, New York shall be deemed to be the Account
Bank’s jurisdiction (within the meaning of Section 9-304 of the UCC) and the securities
intermediary’s jurisdiction (within the meaning of Section 8-110 of the UCC). All securities or
other property underlying any Financial Assets credited to the Controlled Accounts in the form of
securities or instruments shall be registered in the name of the Account Bank or if in the name of
the Borrower or the Collateral Agent, Indorsed to the Account Bank, Indorsed in blank, or credited
to another securities account maintained in the name of the Account Bank, and in no case will any
Financial Asset credited to the Controlled Accounts be registered in the name of the Borrower,
payable to the order of the Borrower or specially Indorsed to the Borrower, except to the extent
the foregoing have been specially Indorsed to the Account Bank or Indorsed in blank.




          (f) Loan Agreements. Notwithstanding any term hereof (or any term of the UCC that
might otherwise be construed to be applicable to a “securities intermediary” as defined in the UCC)
to the contrary, none of the Collateral Agent, the Collateral Custodian nor any securities
intermediary shall be under any duty or obligation in connection with the acquisition by the
Borrower, or the grant by the Borrower to the Collateral Agent, of any Loan Asset in the nature of
a loan or a participation in a loan to examine or evaluate the sufficiency of the documents or
instruments delivered to it by or on behalf of the Borrower under the related Loan Agreements, or
otherwise to examine the Loan Agreements, in order to determine or compel compliance with any
applicable requirements of or restrictions on transfer (including without limitation any necessary
consents). The Collateral Custodian shall hold any Instrument delivered to it evidencing any Loan
Asset granted to the Collateral Agent hereunder as custodial agent for the Collateral Agent in
accordance with the terms of this Agreement.




          (g) Adjustments. If (i) the Servicer makes a deposit into the Collection Account in
respect of a Interest Collection or Principal Collection of a Loan Asset and such Interest
Collection or Principal 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
Interest Collection or Principal Collection and deposits an amount that is less than or more than
the actual amount of such Interest Collection or Principal 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.





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     SECTION 6.05 Realization Upon Loan Assets. The Servicer will use reasonable efforts
consistent with the Servicing Standard to foreclose upon or repossess, as applicable, or otherwise
comparably convert the ownership of any Underlying Collateral relating to a defaulted Loan Asset as
to which no satisfactory arrangements can be made for collection of delinquent payments. The
Servicer will comply with the Servicing Standard and Applicable Law in realizing upon such
Underlying Collateral, and employ practices and procedures including reasonable efforts consistent
with the Servicing Standard to enforce all obligations of Obligors foreclosing upon, repossessing
and causing the sale of such Underlying Collateral at public or private sale in circumstances other
than those described in the preceding sentence. Without limiting the generality of the foregoing,
unless the Administrative Agent has specifically given instruction to the contrary, the Servicer
may cause the sale of any such Underlying Collateral to the Servicer or its Affiliates for a
purchase price equal to the then fair value thereof, any such sale to be evidenced by a certificate
of a Responsible Officer of the Servicer delivered to the Administrative Agent setting forth the
Loan Asset, the Underlying Collateral, the sale price of the Underlying Collateral and certifying
that such sale price is the fair value of such Underlying Collateral. In any case in which any
such Underlying Collateral has suffered damage, the Servicer will not expend funds in connection
with any repair or toward the foreclosure or repossession of such Underlying Collateral unless it
reasonably determines that such repair and/or foreclosure 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 Underlying
Collateral relating to a defaulted Loan Asset.



     SECTION 6.06 Servicing Compensation. As compensation for its activities hereunder and
reimbursement for its expenses, the Servicer shall be entitled to be paid the Servicing Fees and
reimbursed its reasonable out-of-pocket expenses as provided in Section 2.04.



     SECTION 6.07 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 its independent accountants, Taxes imposed on the Servicer,
expenses incurred by the Servicer 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. 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 Controlled Accounts.
The Servicer may be reimbursed for any reasonable out-of-pocket expenses incurred hereunder
(including out-of-pocket expenses paid by the Servicer on behalf of the Borrower), subject to the
availability of funds pursuant to Section 2.04; provided, that, to the extent funds are not
available for such reimbursement, 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 Fees.



     SECTION 6.08 Reports to the Administrative Agent; Account Statements; Servicing
Information.



          (a) Notice of Borrowing. On each Advance Date and on each reduction of Advances
Outstanding pursuant to Section 2.18, the Borrower (and the Servicer on its behalf) will
provide a Notice of Borrowing or a Notice of Reduction, as applicable, and a Borrowing




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Base Certificate, each updated as of such date, to the Administrative Agent and each Lender
Agent (with a copy to the Collateral Agent).




          (b) Servicing Report. On each Reporting Date and each Advance Date, the Servicer will
provide to the Borrower, each Lender Agent, the Administrative Agent, the Collateral Agent and any
Liquidity Bank, a monthly statement including (i) a Borrowing Base Certificate calculated as of the
most recent Determination Date, (ii) a summary prepared with respect to each Obligor and with
respect to each Loan Asset for such Obligor prepared as of the most recent Determination Date that
will be required to set forth only (x) calculations of the Net Leverage Ratio and the Interest
Coverage Ratio for each such Loan Asset for the most recently ended Relevant Test Period for each
such Loan Asset and (y) whether or not each such Loan Asset shall have become subject to an
amendment, restatement, supplement, waiver or other modification and whether such amendment,
restatement, supplement, waiver or other modification is a Material Modification and (iii) amounts
to be remitted pursuant to Section 2.04 to the applicable parties (which shall include any
applicable wiring instructions of the parties receiving payment) (such monthly statement, a
“Servicing Report”), with respect to related calendar month signed by a Responsible Officer
of the Servicer and the Borrower and substantially in the form of Exhibit L.




          (c) Servicer’s Certificate. Together with each Servicing Report, the Servicer shall
submit to the Administrative Agent, each Lender Agent, the Collateral Agent and any Liquidity Bank
a certificate substantially in the form of Exhibit M (a “Servicer’s Certificate”),
signed by a Responsible Officer of the Servicer, which shall include a certification by such
Responsible Officer that no Event of Default or Unmatured Event of Default has occurred.




          (d) Financial Statements. The Servicer will submit to the Administrative Agent, each
Lender Agent, any Liquidity Bank and the Collateral Agent, (i) within 60 days after the end of each
of its first three fiscal quarters (excluding the fiscal quarter ending on the date specified in
clause (ii)), commencing December 31, 2009, consolidated unaudited financial statements of
the Servicer for the most recent fiscal quarter, and (ii) within 90 days after the end of each
fiscal year, commencing with the fiscal year ended September 30, 2009, consolidated audited
financial statements of the Servicer, audited by a firm of nationally recognized independent public
accountants, as of the end of such fiscal year.




          (e) Tax Returns. Upon demand by the Administrative Agent, each Lender Agent or any
Liquidity Bank, the Servicer shall deliver, copies of all federal, state and local tax returns and
reports filed by the Borrower, the Transferor and the Servicer, or in which the Borrower, the
Transferor or Servicer was included on a consolidated or combined basis (excluding sales, use and
similar Taxes).




          (f) Obligor Financial Statements; Valuation Reports; Other Reports. The Servicer will
deliver to the Administrative Agent, the Lender Agents and the Collateral Agent, with respect to
each Obligor, (i) to the extent received by the Borrower and/or the Servicer pursuant to the Loan
Agreement, the complete financial reporting package with respect to such Obligor and with respect
to each Loan Asset for such Obligor provided to the Borrower and/or the Servicer either monthly or
quarterly, as the case may be, by such Obligor, which delivery shall be made within 10 days after
Servicer’s or Borrower’s receipt thereof, and (ii) asset and




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portfolio level monitoring reports prepared by the Servicer with respect to the Loan Assets,
which delivery shall be made within 60 days of the end of each calendar month. The Servicer will
promptly deliver to the Administrative Agent and any Lender Agent, upon reasonable request and to
the extent received by the Borrower and/or the Servicer, all other documents and information
required to be delivered by the Obligors to the Borrower with respect to any Loan Asset included in
the Collateral Portfolio.




          (g) Amendments to Loan Assets. The Servicer will deliver to the Administrative Agent,
the Lender Agents and the Collateral Custodian a copy of any amendment, restatement, supplement,
waiver or other modification to the Loan Agreement of any Loan Asset (along with any internal
documents prepared by the Servicer and provided to its investment committee in connection with such
amendment, restatement, supplement, waiver or other modification) within 10 Business Days of the
effectiveness of such amendment, restatement, supplement, waiver or other modification.




          (h) Website Access to Information. Notwithstanding anything to the contrary contained
herein, information required to be delivered or submitted to any Secured Party pursuant to
Section 5.03(i) and this Article VI shall be deemed to have been delivered on the
date on which such information is posted on a Debtx (or other replacement) website to which the
Administrative Agent and Lender Agents have access or upon receipt of such information through
e-mail or another delivery method acceptable to the Administrative Agent.




     SECTION 6.09 Annual Statement as to Compliance. The Servicer will provide to the
Administrative Agent, each Lender Agent and the Collateral Agent within 90 days following the end
of each fiscal year of the Servicer, commencing with the fiscal year ending on September 30, 2009,
a fiscal 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
fiscal 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 occurred.



     SECTION 6.10 Annual Independent Public Accountant’s Servicing Reports. The Servicer
will cause a firm of nationally recognized independent public accountants (who may also render
other services to the Servicer) to furnish to the Administrative Agent, each Lender Agent and the
Collateral Agent within 90 days following the end of each fiscal year of the Servicer, commencing
with the fiscal year ending on September 30, 2009, a report covering such fiscal year to the effect
that such accountants have applied certain agreed-upon procedures (a copy of which procedures are
attached hereto as Schedule IV, it being understood that the Servicer and the
Administrative Agent will provide an updated Schedule IV reflecting any further amendments
to such Schedule IV prior to the issuance of the first such agreed-upon procedures report,
a copy of which shall replace the then existing Schedule IV) to certain documents and
records relating to the Collateral Portfolio under any Transaction Document, compared the
information contained in the Servicing Reports and the Servicer’s Certificates delivered during the
period covered by such report with such documents and records and that no matters came to the
attention of such accountants that caused them to believe that such servicing was not conducted in
compliance with this Article VI, except for such exceptions as such



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accountants shall believe to be immaterial and such other exceptions as shall be set forth in
such statement.



     SECTION 6.11 The Servicer Not to Resign. The Servicer shall not resign from the
obligations and duties hereby imposed on it except upon the Servicer’s determination that (i) the
performance of its duties hereunder is or becomes impermissible under Applicable Law and (ii) there
is no reasonable action that the Servicer 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 Administrative Agent and each Lender Agent. No such resignation shall
become effective until a Replacement Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 6.02.



ARTICLE VII.




EVENTS OF DEFAULT




     SECTION 7.01 Events of Default. If any of the following events (each, an “Event
of Default”) shall occur:



          (a) the Borrower, Servicer or the Transferor defaults in making any payment required to be
made under one or more agreements for borrowed money to which it is a party in an aggregate
principal amount in excess of (x) $500,000 for the Borrower or (y) $1,000,000 for the Transferor or
Servicer and any such failure continues unremedied for two Business Days and such default is not
cured within the applicable cure period, if any, provided for under such agreement; or




          (b) any failure on the part of the Borrower or the Transferor duly to observe or perform in
any material respect any other covenants or agreements of the Borrower or the Transferor set forth
in this Agreement or the other Transaction Documents to which the Borrower or the Transferor is a
party and the same continues unremedied for a period of 30 days (if such failure can be remedied)
after the earlier 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 Borrower or the Transferor by the Administrative
Agent or Collateral Agent and (ii) the date on which the Borrower or the Transferor acquires
knowledge thereof; or




          (c) the occurrence of a Bankruptcy Event relating to the Transferor or the Borrower; or




          (d) the occurrence of a Servicer Termination Event (provided that Fifth Street or an Affiliate
is the Servicer) past any applicable notice or cure period provided in the definition thereof; or




          (e) (1) the rendering of one or more final judgments, decrees or orders by a court or
arbitrator of competent jurisdiction for the payment of money in excess individually or in the
aggregate of $1,000,000, against the Transferor, or $500,000, against the Borrower and the
Transferor or the Borrower, as applicable, shall not have either (i) discharged or provided for the
discharge of any such judgment, decree or order in accordance with its terms or (ii) perfected a




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timely appeal of such judgment, decree or order and caused the execution of same to be stayed
during the pendency of the appeal or (2) the Transferor or the Borrower shall have made payments of
amounts in excess of $1,000,000 (in the case of the Transferor) or $500,000 (in the case of the
Borrower), in the settlement of any litigation, claim or dispute (excluding payments made from
insurance proceeds); or




          (f) the Borrower shall fail to qualify as a bankruptcy-remote entity based upon customary
criteria such that reputable counsel could no longer render a substantive nonconsolidation opinion
with respect to the Borrower and the Transferor; or




          (g) (1) any Transaction Document, or any lien or security interest granted thereunder, shall
(except in accordance with its terms), in whole or in part, terminate, cease to be effective or
cease to be the legally valid, binding and enforceable obligation of the Borrower, the Transferor,
or the Servicer,





          (2) the Borrower, the Transferor or the Servicer or any other party shall, directly or
indirectly, contest in any manner the effectiveness, validity, binding nature or
enforceability of any Transaction Document or any lien or security interest thereunder, or




          (3) any security interest securing any obligation under any Transaction Document shall,
in whole or in part, cease to be a first priority perfected security interest except as
otherwise expressly permitted to be released in accordance with the applicable Transaction
Document; or



          (h) the Advances Outstanding on any day exceeds the Borrowing Base and has not been remedied
within three Business Days in accordance with Section 2.06; provided that, during the
period of time that such event remains unremedied, any payments required to be made by the Servicer
on a Payment Date shall be made under Section 2.04(d); or




          (i) failure on the part of the Borrower, the Transferor or the Servicer to make any payment or
deposit (including, without limitation, with respect to bifurcation and remittance of Interest
Collections and Principal Collections or any other payment or deposit required to be made by the
terms of the Transaction Documents, including, without limitation, to any Secured Party, Affected
Party or Indemnified Party) required by the terms of any Transaction Document (other than
Section 2.06) within two Business Days of the day such payment or deposit is required to be
made; or




          (j) the Borrower shall become required to register as an “investment company” within the
meaning of the 1940 Act or the arrangements contemplated by the Transaction Documents shall require
registration as an “investment company” within the meaning of the 1940 Act; or




          (k) the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the
Code with regard to any assets of the Borrower or the Transferor and such lien shall not have been
released within five Business Days, or the Pension Benefit Guaranty Corporation shall file notice
of a lien pursuant to Section 4068 of ERISA with regard to any of




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the assets of the Borrower or the Transferor and such lien shall not have been released within five Business
Days; or




          (l) any Change of Control shall occur; or




          (m) any representation, warranty or certification made by the Borrower or the Transferor in
any Transaction Document or in any certificate delivered pursuant to any Transaction Document shall
prove to have been incorrect when made in any material respect, and continues to be unremedied for
a period of 30 days after the earlier to occur of (i) the date on which written notice of such
incorrectness requiring the same to be remedied shall have been given to the Borrower or the
Transferor by the Administrative Agent or the Collateral Agent (which shall be given at the
direction of the Administrative Agent) and (ii) the date on which a Responsible Officer of the
Borrower or the Transferor acquires knowledge thereof; or




          (n) failure to pay, on the Facility Maturity Date, the outstanding principal of all
outstanding Advances, if any, and all Yield and all Fees accrued and unpaid thereon together with
all other Obligations, including, but not limited to, any Make-Whole Premium; or




          (o) an event has occurred which constitutes an Event of Default under and pursuant to the
terms of the Pledge Agreement (past any applicable notice and/or cure period provided therein); or




          (p) without limiting the generality of Section 7.01(i) above, failure of the Borrower
to pay Yield within two Business Days of any Payment Date or within two Business Days of when
otherwise due; or




          (q) the Borrower ceases to have a valid, perfected ownership interest in all of the Collateral
Portfolio; or




          (r) the Transferor fails to transfer to the Borrower the applicable Loan Assets and the
related Portfolio Assets on an Advance Date (provided that the Lenders shall have funded the
related Advance) unless the related Advance is repaid in full with accrued and unpaid Yield thereon
within five Business Days;




          (s) the Borrower makes any assignment or attempted assignment of their respective rights or
obligations under this Agreement or any other Transaction Document without first obtaining the
specific written consent of each of the Lenders and the Administrative Agent, which consent may be
withheld by any Lender or the Administrative Agent in the exercise of its sole and absolute
discretion;




          (t) the Borrower, the Servicer or the Transferor fails to observe or perform any covenant,
agreement or obligation with respect to the management and distribution of funds received with
respect to the Collateral Portfolio, and such failure is not cured within three Business Days; or




          (u) (i) failure of the Borrower to maintain at least one Independent Director, (ii) the
removal of any Independent Director of the Borrower without “cause” (as such term is defined in the
organizational document of the Borrower) or without giving prior written notice to




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the Administrative Agent and the Lender Agents, each as required in the organizational
documents of the Borrower or (iii) an Independent Director of the Borrower which is not provided by
CSC or a nationally recognized service reasonably acceptable to the Administrative Agent shall be
appointed without the consent of the Administrative Agent;



then the Administrative Agent or all of the Lenders, may, by notice to the Borrower, declare the
Facility Maturity Date to have occurred; provided, that, in the case of any event described in
Section 7.01(c) above, the Facility Maturity Date shall be deemed to have occurred
automatically upon the occurrence of such event. Upon any such declaration or automatic occurrence,
(i) the Borrower shall cease purchasing Loan Assets from the Transferor under the Purchase and Sale
Agreement, (ii) the Administrative Agent or all of the Lenders may declare the Variable Funding
Notes to be immediately due and payable in full (without presentment, demand, protest or notice of
any kind all of which are hereby waived by the Borrower) and any other Obligations to be
immediately due and payable, and (iii) all proceeds and distributions in respect of the Portfolio
Assets shall be distributed by the Collateral Agent (at the direction of the Administrative Agent)
as described in Section 2.04(d) (provided that the Borrower shall in any event remain
liable to pay such Advances and all such amounts and Obligations immediately in accordance with
Section 2.04(f) hereof). In addition, upon any such declaration or upon any such automatic
occurrence, the Collateral Agent, on behalf of the Secured Parties and at the direction of the
Administrative Agent, shall have, in addition to all other rights and remedies under this Agreement
or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction
and other Applicable Law, which rights shall be cumulative. Without limiting any obligation of the
Servicer hereunder, the Borrower confirms and agrees that the Collateral Agent, on behalf of the
Secured Parties and at the direction of the Administrative Agent, (or any designee thereof,
including, without limitation, the Servicer), following an Event of Default, shall, at its option,
have the sole right to enforce the Borrower’s rights and remedies under each Assigned Document, but
without any obligation on the part of the Administrative Agent, the Lenders, the Lender Agents or
any of their respective Affiliates to perform any of the obligations of the Borrower under any such
Assigned Document. If any Event of Default shall have occurred, the Yield Rate shall be increased
pursuant to the increase set forth in the definition of “Applicable Spread”, effective as of the
date of the occurrence of such Event of Default, and shall apply after the occurrence of such Event
of Default.




     SECTION 7.02 Additional Remedies of the Administrative Agent.



          (a) If, (i) upon the Administrative Agent’s or the Lenders’ declaration that the Advances made
to the Borrower hereunder are immediately due and payable pursuant to Section 7.01 upon the
occurrence of an Event of Default, or (ii) on the Facility Maturity Date, the aggregate outstanding
principal amount of the Advances, all accrued and unpaid Fees and Yield and any other Obligations
are not immediately paid in full, then the Collateral Agent (acting as directed by the
Administrative Agent) or the Administrative Agent, in addition to all other rights specified
hereunder, shall have the right, in its own name and as agent for the Lenders and Lender Agents, to
immediately sell (at the Servicer’s expense) in a commercially reasonable manner, in a recognized
market (if one exists) at such price or prices as the Administrative Agent may reasonably deem
satisfactory, any or all of the Collateral Portfolio and apply the proceeds thereof to the
Obligations; provided, that notwithstanding anything to the contrary herein or in




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any other Transaction Document, in the case of the declaration of the Facility Maturity Date
that arises solely pursuant to a change in Applicable Law which creates an Event of Default
pursuant to Section 7.01(f), the Collateral Agent and the Administrative Agent (as
applicable) may not order the assembly or liquidation of the Collateral Portfolio, or take any
action or exercise any power of attorney furnished hereunder in connection with such assembly or
liquidation, until on or after the earlier of (x) the date that is 90 days after the Administrative
Agent provides written notice to the Borrower of such declaration of the Facility Maturity Date as
a result of Section 7.01(f) or (y) the occurrence of an Event of Default for any other
reason other than pursuant to Section 7.01(f).




          (b) The parties recognize that it may not be possible to sell all of the Collateral Portfolio
on a particular Business Day, or in a transaction with the same purchaser, or in the same manner
because the market for the assets constituting the Collateral Portfolio may not be liquid.
Accordingly, the Administrative Agent may elect, in its sole discretion, the time and manner of
liquidating any of the Collateral Portfolio, and nothing contained herein shall obligate the
Administrative Agent to liquidate any of the Collateral Portfolio on the date the Administrative
Agent or all of the Lender Agents declares the Advances made to the Borrower hereunder to be
immediately due and payable pursuant to Section 7.01 or to liquidate all of the Collateral
Portfolio in the same manner or on the same Business Day.




          (c) If the Collateral Agent (acting as directed by the Administrative Agent) or the
Administrative Agent proposes to sell the Collateral Portfolio or any part thereof in one or more
parcels at a public or private sale, at the request of the Collateral Agent or the Administrative
Agent, as applicable, the Borrower and the Servicer shall make available to (i) the Administrative
Agent, on a timely basis, all information (including any information that the Borrower and the
Servicer is required by law or contract to be kept confidential) relating to the Collateral
Portfolio subject to sale, including, without limitation, copies of any disclosure documents,
contracts, financial statements of the applicable Obligors, covenant certificates and any other
materials requested by the Administrative Agent, and (ii) each prospective bidder, on a timely
basis, all reasonable information relating to the Collateral Portfolio subject to sale, including,
without limitation, copies of any disclosure documents, contracts, financial statements of the
applicable Obligors, covenant certificates and any other materials reasonably requested by each
such bidder.




          (d) Each of the Borrower and the Servicer agrees, to the full extent that it may lawfully so
agree, that neither it nor anyone claiming through or under it will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in
force in any locality where any Collateral Portfolio may be situated in order to prevent, hinder or
delay the enforcement or foreclosure of this Agreement, or the absolute sale of any of the
Collateral Portfolio or any part thereof, or the final and absolute putting into possession
thereof, immediately after such sale, of the purchasers thereof, and each of the Borrower and the
Servicer, for itself and all who may at any time claim through or under it, hereby waives, to the
full extent that it may be lawful so to do, the benefit of all such laws, and any and all right to
have any of the properties or assets constituting the Collateral Portfolio marshaled upon any such
sale, and agrees that the Collateral Agent, or the Administrative Agent on its behalf, or any court
having jurisdiction to foreclose the security interests granted in this




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Agreement may sell the Collateral Portfolio as an entirety or in such parcels as the
Collateral Agent (acting at the direction of the Administrative Agent) or such court may determine.




          (e) Any amounts received from any sale or liquidation of the Collateral Portfolio pursuant to
this Section 7.02 in excess of the Obligations will be applied by the Collateral Agent (as
directed by the Administrative Agent) in accordance with the provisions of Section 2.04(d),
or as a court of competent jurisdiction may otherwise direct.




          (f) The Administrative Agent, the Lender Agents and the Lenders shall have, in addition to all
the rights and remedies provided herein and provided by applicable federal, state, foreign, and
local laws (including, without limitation, the rights and remedies of a secured party under the UCC
of any applicable state, to the extent that the UCC is applicable, and the right to offset any
mutual debt and claim), all rights and remedies available to the Lenders at law, in equity or under
any other agreement between any Lender and the Borrower.




          (g) Except as otherwise expressly provided in this Agreement, no remedy provided for by this
Agreement shall be exclusive of any other remedy, each and every remedy shall be cumulative and in
addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair
any such right or remedy or shall be deemed to be a waiver of any Event of Default.




          (h) Each of the Borrower and the Servicer hereby irrevocably appoints each of the Collateral
Agent and the Administrative Agent its true and lawful attorney (with full power of substitution)
in its name, place and stead and at is expense, in connection with the enforcement of the rights
and remedies provided for in this Agreement, including without limitation the following powers:
(a) to give any necessary receipts or acquittance for amounts collected or received hereunder, (b)
to make all necessary transfers of the Collateral Portfolio in connection with any such sale or
other disposition made pursuant hereto, (c) to execute and deliver for value all necessary or
appropriate bills of sale, assignments and other instruments in connection with any such sale or
other disposition, the Borrower and the Servicer hereby ratifying and confirming all that such
attorney (or any substitute) shall lawfully do hereunder and pursuant hereto, and (d) to sign any
agreements, orders or other documents in connection with or pursuant to any Transaction Document or
Hedging Agreement. Nevertheless, if so requested by the Collateral Agent or the Administrative
Agent, the Borrower shall ratify and confirm any such sale or other disposition by executing and
delivering to the Collateral Agent or the Administrative Agent or all proper bills of sale,
assignments, releases and other instruments as may be designated in any such request.




ARTICLE VIII.




INDEMNIFICATION




     SECTION 8.01 Indemnities by the Borrower.



          (a) Without limiting any other rights which the Affected Parties, the Secured Parties, the
Administrative Agent, the Lenders, the Lender Agents, the Collateral Agent, the Account Bank, the
Collateral Custodian or any of their respective Affiliates may have hereunder




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or under Applicable Law, the Borrower hereby agrees to indemnify the Affected Parties, the
Secured Parties, Administrative Agent, the Lenders, the Lender Agents, the Collateral Agent, the
Account Bank, the Collateral Custodian and each of their respective Affiliates, assigns, officers,
directors, employees and agents (each, an “Indemnified Party” for purposes of this
Article VIII) from and against any and all damages, losses, claims, liabilities and related
costs and expenses, including attorneys’ fees and disbursements (all of the foregoing being
collectively referred to as “Indemnified Amounts”), awarded against or actually incurred by
such Indemnified Party arising out of or as a result of this Agreement or in respect of any of the
Collateral Portfolio, excluding, however, Indemnified Amounts to the extent resulting solely from
(a) gross negligence, bad faith or willful misconduct on the part of an Indemnified Party or (b)
Loan Assets which are uncollectible due to the Obligor’s financial inability to pay. Without
limiting the foregoing, the Borrower shall indemnify each Indemnified Party for Indemnified Amounts
relating to or resulting from any of the following (to the extent not resulting from the conditions
set forth in (a) or (b) above):





          (i) any Loan Asset treated as or represented by the Borrower to be an Eligible Loan
Asset which is not at the applicable time an Eligible Loan Asset, or the purchase by any
party or origination of any Loan Asset which violates Applicable Law;




          (ii) reliance on any representation or warranty made or deemed made by the Borrower,
the Servicer (if Fifth Street or one of its Affiliates is the Servicer) or any of their
respective officers under or in connection with this Agreement or any Transaction Document,
which shall have been false or incorrect in any respect when made or deemed made or
delivered;




          (iii) the failure by the Borrower or the Servicer (if Fifth Street or one of its
Affiliates is the Servicer) 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 item of Collateral Portfolio, or the nonconformity of any
item of Collateral Portfolio with any such Applicable Law;




          (iv) the failure to vest and maintain vested in the Collateral Agent, for the benefit
of the Secured Parties, a first priority perfected security interest in the Collateral
Portfolio, free and clear of any Lien other than Permitted Liens, whether existing at the
time of the related Advance or at any time thereafter;




          (v) on each Business Day prior to the Collection Date, the occurrence of a Borrowing
Base Deficiency and the same continues unremedied for three Business Days;




          (vi) the failure to file, or any delay in filing, financing statements, continuation
statements or other similar instruments or documents under the UCC of any applicable
jurisdiction or other Applicable Law with respect to any Loan Assets included in the
Collateral Portfolio or the other Portfolio Assets related thereto, whether at the time of
any Advance or at any subsequent time;



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          (vii) any dispute, claim, offset or defense (other than the discharge in bankruptcy of
an Obligor) to the payment of any Loan Asset included in the Collateral Portfolio
(including, without limitation, a defense based on such Loan Asset (or the Loan Agreement
evidencing such Loan Asset) not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim resulting from the
sale of the merchandise or services related to such Collateral Portfolio or the furnishing
or failure to furnish such merchandise or services;




          (viii) any failure of the Borrower or the Servicer (if Fifth Street or one of its
Affiliates is the Servicer) to perform its duties or obligations in accordance with the
provisions of the Transaction Documents to which it is a party or any failure by Fifth
Street, the Borrower or any Affiliate thereof to perform its respective duties under any
Collateral Portfolio;




          (ix) any inability to obtain any judgment in, or utilize the court or other
adjudication system of, any state in which an Obligor may be located as a result of the
failure of the Borrower or the Transferor to qualify to do business or file any notice or
business activity report or any similar report;




          (x) any action taken by the Borrower or the Servicer in the enforcement or collection
of the Collateral Portfolio which results in any claim, suit or action of any kind
pertaining to the Collateral Portfolio or which reduces or impairs the rights of the
Administrative Agent, Lender Agent or Lender with respect to any Loan Asset or the value of
any such Loan Asset;




          (xi) 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 the
Underlying Collateral or services that are the subject of any Collateral Portfolio;




          (xii) any claim, suit or action of any kind arising out of or in connection with
Environmental Laws relating to the Borrower or the Collateral Portfolio, including any
vicarious liability;




          (xiii) the failure by the 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 Portfolio;




          (xiv) any repayment by the Administrative Agent, the Lender Agents, the Lenders or a
Secured Party of any amount previously distributed in payment of Advances or payment of
Yield or Fees or any other amount due hereunder or under any Hedging Agreement, in each case
which amount the Administrative Agent, the Lender Agents, the Lenders or a Secured Party
believes in good faith is required to be repaid;




          (xv) the commingling by the Borrower or the Servicer of payments and collections
required to be remitted to the Collection Account or the Unfunded Exposure Account with
other funds;



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          (xvi) any investigation, litigation or proceeding related to this Agreement (or the
Transaction Documents), or the use of proceeds of Advances or the Collateral Portfolio, or
the administration of the Loan Assets by the Borrower or the Servicer (unless such
administration is carried out by Wachovia or any of its Affiliates in the capacity of the
Servicer, if applicable);




          (xvii) any failure by the Borrower to give reasonably equivalent value to Transferor in
consideration for the transfer by the Transferor to the Borrower of any item of Collateral
Portfolio 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;




          (xviii) the use of the proceeds of any Advance in a manner other than as provided in
this Agreement and the Transaction Documents;




          (xix) any failure of the Borrower, the Servicer or any of their respective agents or
representatives to remit to the Collection Account within one Business Day of receipt,
payments and collections with respect to the Collateral Portfolio remitted to the Borrower,
the Servicer or any such agent or representative (other than such a failure on the part of
Wachovia or any of its Affiliates in the capacity of Servicer, if applicable); and/or




          (xx) the failure by the Borrower to comply with any of the covenants relating to the
Hedging Agreement in accordance with the Transaction Documents.



          (b) Any amounts subject to the indemnification provisions of this Section 8.01 shall
be paid by the Borrower to the Administrative Agent on behalf of the applicable Indemnified Party
within two Business Days following the Administrative Agent’s written demand therefor on behalf of
the applicable Indemnified Party (and the Administrative Agent shall pay such amounts to the
applicable Indemnified Party promptly after the receipt by the Administrative Agent of such
amounts). The Administrative Agent, on behalf of any Indemnified Party making a request for
indemnification under this Section 8.01, shall submit to the Borrower a certificate setting
forth in reasonable detail the basis for and the computations of the Indemnified Amounts with
respect to which such indemnification is requested, which certificate shall be conclusive absent
demonstrable error.




          (c) If for any reason the indemnification provided above in this Section 8.01 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified Party harmless in
respect of any losses, claims, damages or liabilities, then the Borrower or the Servicer, as the
case may be, shall contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities 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 or
the Servicer, as the case may be, on the other hand but also the relative fault of such Indemnified
Party as well as any other relevant equitable considerations.




          (d) If the Borrower has made any payments in respect of Indemnified Amounts to the
Administrative Agent on behalf of an Indemnified Party pursuant to this Section 




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8.01 and such Indemnified Party thereafter collects any of such amounts from others,
such Indemnified Party will promptly repay such amounts collected to the Borrower, without
interest.




          (e) The obligations of the Borrower under this Section 8.01 shall survive the
resignation or removal of the Administrative Agent, the Lenders, the Lender Agents, the Servicer,
the Collateral Agent, the Account Bank or the Collateral Custodian and the termination of this
Agreement.




     SECTION 8.02 Indemnities by Servicer.



          (a) Without limiting any other rights which any Indemnified Party may have hereunder or under
Applicable Law, the Servicer hereby agrees to indemnify each Indemnified Party from and against any
and all Indemnified Amounts, awarded against or incurred by any Indemnified Party as a consequence
of any of the following, excluding, however, Indemnified Amounts to the extent resulting from gross
negligence, bad faith or willful misconduct on the part of any Indemnified Party claiming
indemnification hereunder:





          (i) the inclusion, in any computations made by it in connection with any Borrowing Base
Certificate or other report prepared by it hereunder, of any Loan Assets which were not
Eligible Loan Assets as of the date of any such computation;




          (ii) reliance on any representation or warranty made or deemed made by the Servicer or
any of its officers under or in connection with this Agreement or any other Transaction
Document, any Servicing 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 respect when made or deemed made or delivered;




          (iii) the failure by the Servicer to comply with (A) any term, provision or covenant
contained in this Agreement or any other Transaction Document, or any other agreement
executed in connection with this Agreement, or (B) any Applicable Law applicable to it with
respect to any Portfolio Assets;




          (iv) any litigation, proceedings or investigation against the Servicer;




          (v) any action or inaction by the Servicer that causes the Collateral Agent, for the
benefit of the Secured Parties, not to have a first priority perfected security interest in
the Collateral Portfolio, free and clear of any Lien other than Permitted Liens, whether
existing at the time of the related Advance or any time thereafter;




          (vi) the commingling by the Servicer of payments and collections required to be
remitted to the Collection Account or the Unfunded Exposure Account with other funds;




          (vii) any failure of the Servicer or any of its agents or representatives (including,
without limitation, agents, representatives and employees of such Servicer acting pursuant
to authority granted under Section 6.01 hereof) to remit to Collection



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Account, payments and collections with respect to Loan Assets remitted to the Servicer
or any such agent or representative within one Business Day of receipt;




          (viii) the failure by the Servicer to perform any of its duties or obligations in
accordance with the provisions of this Agreement or any other Transaction Document or errors
or omissions related to such duties;




          (ix) the failure by the Servicer to comply with any of the covenants relating to the
Hedging Agreement in accordance with the Transaction Documents;




          (x) failure or delay in assisting a successor Servicer in assuming each and all of the
Servicer’s obligations to service and administer the Collateral Portfolio, or failure or
delay in complying with instructions from the Administrative Agent with respect thereto;
and/or




          (xi) any of the events or facts giving rise to a breach of any of the Servicer’s
representations, warranties, agreements and/or covenants set forth in Article IV,
Article V or Article VI or this Agreement.



          (b) Any Indemnified Amounts shall be paid by the Servicer to the Administrative Agent, for the
benefit of the applicable Indemnified Party, within two Business Days following receipt by the
Servicer of the Administrative Agent’s written demand therefor (and the Administrative Agent shall
pay such amounts to the applicable Indemnified Party promptly after the receipt by the
Administrative Agent of such amounts).




          (c) If the Servicer has made any indemnity payments to the Administrative Agent, on behalf of
an Indemnified Party pursuant to this Section 8.02 and such Indemnified Party thereafter
collects any of such amounts from others, such Indemnified Party will promptly repay such amounts
collected to the Servicer, without interest.




          (d) The Servicer shall have no liability for making indemnification hereunder to the extent
any such indemnification constitutes recourse for uncollectible or uncollected Loan Assets.




          (e) The obligations of the Servicer under this Section 8.02 shall survive the
resignation or removal of the Administrative Agent, the Lenders, the Lender Agents, the Collateral
Agent, the Account Bank or the Collateral Custodian and the termination of this Agreement.




          (f) Any indemnification pursuant to this Section 8.02 shall not be payable from the
Collateral Portfolio.




          Each applicable Indemnified Party shall deliver to the Indemnifying Party under Section
8.01 and Section 8.02, within a reasonable time after such Indemnified Party’s receipt
thereof, copies of all notices and documents (including court papers) received by such Indemnified
Party relating to the claim giving rise to the Indemnified Amounts.




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     SECTION 8.03 Legal Proceedings. In the event an Indemnified Party becomes involved in
any action, claim, or legal, governmental or administrative proceeding (an “Action”) for
which it seeks indemnification hereunder, the Indemnified Party shall promptly notify the other
party or parties against whom it seeks indemnification (the “Indemnifying Party”) in
writing of the nature and particulars of the Action; provided that its failure to do so shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent such failure has a
material adverse effect on the Indemnifying Party. Upon written notice to the Indemnified Party
acknowledging in writing that the indemnification provided hereunder applies to the Indemnified
Party in connection with the Action (subject to the exclusion in the first sentence of Section
8.01, the first sentence of Section 8.02 or Section 8.02(d), as applicable),
the Indemnifying Party may assume the defense of the Action at its expense with counsel reasonably
acceptable to the Indemnified Party. The Indemnified Party shall have the right to retain separate
counsel in connection with the Action, and the Indemnifying Party shall not be liable for the legal
fees and expenses of the Indemnified Party after the Indemnifying Party has done so; provided that
if the Indemnified Party determines in good faith that there may be a conflict between the
positions of the Indemnified Party and the Indemnifying Party in connection with the Action, or
that the Indemnifying Party is not conducting the defense of the Action in a manner reasonably
protective of the interests of the Indemnified Party, the reasonable legal fees and expenses of the
Indemnified Party shall be paid by the Indemnifying Party; provided, further, that the Indemnifying
Party shall not, in connection with any one Action or separate but substantially similar or related
Actions in the same jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees or expenses of more than one separate firm of attorneys (and any required local
counsel) for such Indemnified Party, which firm (and local counsel, if any) shall be designated in
writing to the Indemnifying Party by the Indemnified Party. If the Indemnifying Party elects to
assume the defense of the Action, it shall have full control over the conduct of such defense;
provided that the Indemnifying Party and its counsel shall, as reasonably requested by the
Indemnified Party or its counsel, consult with and keep them informed with respect to the conduct
of such defense. The Indemnifying Party shall not settle an Action without the prior written
approval of the Indemnified Party unless such settlement provides for the full and unconditional
release of the Indemnified Party from all liability in connection with the Action. The Indemnified
Party shall reasonably cooperate with the Indemnifying Party in connection with the defense of the
Action.



     SECTION 8.04 After-Tax Basis. Indemnification under Section 8.01 and
8.02 shall be in an amount necessary to make the Indemnified Party whole after taking into
account any Tax consequences to the Indemnified Party of the receipt of the indemnity provided
hereunder, including the effect of such Tax or refund on the amount of Tax measured by net income
or profits that is or was payable by the Indemnified Party.



ARTICLE IX.




THE ADMINISTRATIVE AGENT AND LENDER AGENTS




     SECTION 9.01 The Administrative Agent.



          (a) Appointment. Each Lender Agent and each Secured Party hereby appoints and
authorizes the Administrative Agent as its agent hereunder and hereby further authorizes the




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Administrative Agent to appoint additional agents to act on its behalf and for the benefit of
each Lender Agent and each Secured Party. Each Lender Agent and each Secured Party further
authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement and the other Transaction Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Transaction Document, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth in this Agreement, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or Lender
Agent, and no implied covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Transaction Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the
term “agent” in this Agreement with reference to the Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under agency doctrine of
any Applicable Law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between independent contracting
parties.




          (b) Delegation of Duties. The Administrative Agent may execute any of its duties
under this Agreement or any other Transaction Document by or through agents, employees 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
agent or attorney in fact that it selects with reasonable care.




          (c) Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be liable for any action taken or omitted to be
taken by it or them as Administrative Agent under or in connection with this Agreement or any of
the other Transaction Documents, except for its or their own gross negligence or willful
misconduct. Each Lender, Lender Agent and each Secured Party hereby waives any and all claims
against the Administrative Agent or any of its Affiliates for any action taken or omitted to be
taken by the Administrative Agent or any of its Affiliates under or in connection with this
Agreement or any of the other Transaction Documents, except for its or their own gross negligence
or willful misconduct. Without limiting the foregoing, the Administrative Agent: (i) may consult
with legal counsel (including counsel for the Borrower or the Transferor), independent public
accountants and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants
or experts; (ii) makes no warranty or representation and shall not be responsible for any
statements, warranties or representations made in or in connection with this Agreement; (iii) shall
not have any duty to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or any of the other Transaction Documents on the
part of the Borrower, the Transferor, or the Servicer or to inspect the property (including the
books and records) of the Borrower, the Transferor, or the Servicer; (iv) shall not be responsible
for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement, any of the other Transaction Documents or any other instrument or document
furnished pursuant hereto or thereto; and (v) shall incur no liability under or in respect of this
Agreement or any of the other Transaction Documents by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing




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(which may be by facsimile) believed by it to be genuine and signed or sent by the proper
party or parties.




          (d) Actions by Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any other Transaction
Document unless it shall first receive such advice or concurrence of the Lender Agents as it deems
appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the
Lenders and Lender Agents against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or consent of the Lender Agents; provided, that,
notwithstanding anything to the contrary herein, the Administrative Agent shall not be required to
take any action hereunder if the taking of such action, in the reasonable determination of the
Administrative Agent, shall be in violation of any Applicable Law or contrary to any provision of
this Agreement or shall expose the Administrative Agent to liability hereunder or otherwise. In
the event the Administrative Agent requests the consent of a Lender Agent pursuant to the foregoing
provisions and the Administrative Agent does not receive a consent (either positive or negative)
from such Person within ten Business Days of such Person’s receipt of such request, then such
Lender or Lender Agent shall be deemed to have declined to consent to the relevant action.




          (e) Notice of Event of Default, Unmatured Event of Default or Servicer Termination
Event. The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default, Unmatured Event of Default or Servicer Termination Event, unless
the Administrative Agent has received written notice from a Lender, Lender Agent, the Borrower or
the Servicer referring to this Agreement, describing such Event of Default, Unmatured Event of
Default or Servicer Termination Event and stating that such notice is a “Notice of Event of
Default,” “Notice of Unmatured Event of Default” or “Notice of Servicer Termination Event,” as
applicable. The Agent shall (subject to Section 9.01(c)) take such action with respect to
such Event of Default, Unmatured Event of Default or Servicer Termination Event as may be requested
by the Lender Agents acting jointly or as the Administrative Agent shall deem advisable or in the
best interest of the Lender Agents.




          (f) Credit Decision with Respect to the Administrative Agent. Each Lender Agent and
each Secured Party acknowledges that none of the Administrative Agent or any of its Affiliates has
made any representation or warranty to it, and that no act by the Administrative Agent hereinafter
taken, including any consent to and acceptance of any assignment or review of the affairs of the
Borrower, the Servicer, the Transferor or any of their respective Affiliates or review or approval
of any of the Collateral Portfolio, shall be deemed to constitute any representation or warranty by
any of the Administrative Agent or its Affiliates to any Lender Agent as to any matter, including
whether the Administrative Agent has disclosed material information in its possession. Each Lender
Agent and each Secured Party acknowledges that it has, independently and without reliance upon the
Administrative Agent, or any of the Administrative Agent’s Affiliates, and based upon such
documents and information as it has deemed appropriate, made its own evaluation and decision to
enter into this Agreement and the other Transaction Documents to which it is a party. Each Lender
Agent and each Secured Party also acknowledges that it will, independently and without reliance
upon the Administrative




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Agent, or any of the Administrative Agent’s Affiliates, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own decisions in taking
or not taking action under this Agreement and the other Transaction Documents to which it is a
party. Each Lender Agent and each Secured Party hereby agrees that the Administrative Agent shall
not have any duty or responsibility to provide any Lender Agent with any credit or other
information concerning the business, prospects, operations, property, financial and other condition
or creditworthiness of the Borrower, the Servicer, the Transferor or their respective Affiliates
which may come into the possession of the Administrative Agent or any of its Affiliates.




          (g) Indemnification of the Administrative Agent. Each Lender Agent agrees to indemnify
the Administrative Agent (to the extent not reimbursed by the Borrower or the Servicer), ratably in
accordance with the Pro Rata Share of its related Lender, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Administrative Agent in any way relating to or arising out of this Agreement or any of
the other Transaction Documents, or any action taken or omitted by the Administrative Agent
hereunder or thereunder; provided that the Lender Agents shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful
misconduct; provided, further, that no action taken in accordance with the directions of the Lender
Agents shall be deemed to constitute gross negligence or willful misconduct for purposes of this
Article IX. Without limitation of the foregoing, each Lender Agent agrees to reimburse the
Administrative Agent, ratably in accordance with the Pro Rata Share of its related Lender, promptly
upon demand for any out-of-pocket expenses (including counsel fees) incurred by the Administrative
Agent in connection with the administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and the other Transaction Documents, to the extent that such
expenses are incurred in the interests of or otherwise in respect of the Lender Agents or Lenders
hereunder and/or thereunder and to the extent that the Administrative Agent is not reimbursed for
such expenses by the Borrower or the Servicer.




          (h) Successor Administrative Agent. The Administrative Agent may resign at any time,
effective upon the appointment and acceptance of a successor Administrative Agent as provided
below, by giving at least five days’ written notice thereof to each Lender Agent and the Borrower
and may be removed at any time with cause by the Lender Agents and the Borrower acting jointly.
Upon any such resignation or removal, the Lender Agents acting jointly shall appoint a successor
Administrative Agent. Each Lender Agent agrees that it shall not unreasonably withhold or delay
its approval of the appointment of a successor Administrative Agent. If no such successor
Administrative Agent shall have been so appointed, and shall have accepted such appointment, within
30 days after the retiring Administrative Agent’s giving of notice of resignation or the removal of
the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the
Secured Parties, appoint a successor Administrative Agent which successor Administrative Agent
shall be either (i) a commercial bank organized under the laws of the United States or of any state
thereof and have a combined capital and surplus of at least $50,000,000 or (ii) an Affiliate of
such a bank. Upon the acceptance of any




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appointment as Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement. After any retiring
Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of
this Article IX shall continue to inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement.




          (i) Payments by the Administrative Agent. Unless specifically allocated to a specific
Lender Agent pursuant to the terms of this Agreement, all amounts received by the Administrative
Agent on behalf of the Lender Agents shall be paid by the Administrative Agent to the Lender Agents
in accordance with their related Lender’s respective Pro Rata Shares in the applicable Advances
Outstanding, or if there are no Advances Outstanding in accordance with their related Lender’s most
recent Commitments, on the Business Day received by the Administrative Agent, unless such amounts
are received after 12:00 noon on such Business Day, in which case the Administrative Agent shall
use its reasonable efforts to pay such amounts to each Lender Agent on such Business Day, but, in
any event, shall pay such amounts to such Lender Agent not later than the following Business Day.




     SECTION 9.02 The Lender Agents.



          (a) Authorization and Action. Each Lender, respectively, hereby designates and
appoints its applicable Lender Agent to act as its agent hereunder and under each other Transaction
Document, and authorizes such Lender Agent to take such actions as agent on its behalf and to
exercise such powers as are delegated to such Lender Agent by the terms of this Agreement and the
other Transaction Documents, together with such powers as are reasonably incidental thereto. No
Lender Agent shall have any duties or responsibilities, except those expressly set forth herein or
in any other Transaction Document, or any fiduciary relationship with its related Lender, and no
implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of
such Lender Agent shall be read into this Agreement or any other Transaction Document or otherwise
exist for such Lender Agent. In performing its functions and duties hereunder and under the other
Transaction Documents, each Lender Agent shall act solely as agent for its related Lender 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 the Servicer or any of the Borrower’s or the Servicer’s successors or
assigns. No Lender Agent shall be required to take any action that exposes such Lender Agent to
personal liability or that is contrary to this Agreement, any other Transaction Document or
Applicable Law. The appointment and authority of each Lender Agent hereunder shall terminate upon
the indefeasible payment in full of all Obligations. Each Lender Agent hereby authorizes the
Administrative Agent to file any UCC financing statement deemed necessary by the Administrative
Agent on behalf of such Lender Agent (the terms of which shall be binding on such Lender Agent).




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




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          (c) Exculpatory Provisions. Neither any Lender 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 or any other Transaction Document
(except for its, their or such Person’s own gross negligence or willful misconduct), or (ii)
responsible in any manner to its related Lender for any recitals, statements, representations or
warranties made by the Borrower or the Servicer contained in Article IV, any other
Transaction Document or any certificate, report, statement or other document referred to or
provided for in, or received under or in connection with, this Agreement or any other Transaction
Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, any other Transaction Document or any other document furnished in connection
herewith or therewith, or for any failure of the Borrower or the Servicer to perform its
obligations hereunder or thereunder, or for the satisfaction of any condition specified in this
Agreement, or for the perfection, priority, condition, value or sufficiency of any collateral
pledged in connection herewith. No Lender Agent shall be under any obligation to its related
Lender 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 any other Transaction Document, or to
inspect the properties, books or records of the Borrower or the Servicer. No Lender Agent shall be
deemed to have knowledge of any Event of Default or Unmatured Event of Default unless such Lender
Agent has received notice from the Borrower or its related Lender.




          (d) Reliance by Lender Agent. Each Lender 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 such Lender Agent. Each Lender
Agent shall in all cases be fully justified in failing or refusing to take any action under this
Agreement or any other Transaction Document unless it shall first receive such advice or
concurrence of its related Lender as it deems appropriate and it shall first be indemnified to its
satisfaction by its related Lender; provided that, unless and until such Lender Agent shall have
received such advice, such Lender Agent may take or refrain from taking any action, as the Lender
Agent shall deem advisable and in the best interests of its related Lender. Each Lender Agent
shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a
request of its related Lender, and such request and any action taken or failure to act pursuant
thereto shall be binding upon its related Lender.




          (e) Non-Reliance on Lender Agent. Each Lender expressly acknowledges that neither its
related Lender Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by such Lender Agent
hereafter taken, including, without limitation, any review of the affairs of the Borrower or the
Servicer, shall be deemed to constitute any representation or warranty by such Lender Agent. Each
Lender represents and warrants to its related Lender Agent that it has and will, independently and
without reliance upon its related Lender Agent, 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, the other Transaction Documents and all other
documents related hereto or thereto.




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          (f) Lender Agents are in their Respective Individual Capacities. Each Lender Agent
and its 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 such Lender Agent were not a
Lender Agent hereunder. With respect to Advances pursuant to this Agreement, each Lender Agent
shall have the same rights and powers under this Agreement in its individual capacity as any Lender
and may exercise the same as though it were not a Lender Agent, and the terms “Lender,” and
“Lenders,” shall include the Lender Agent in its individual capacity.




          (g) Successor Lender Agent. Each Lender Agent may, upon five days’ notice to the
Borrower and its related Lender, and such Lender Agent will, upon the direction of its related
Lender resign as the Lender Agent for such Lender. If any Lender Agent shall resign, then its
related Lender during such five day period shall appoint a successor agent. If for any reason no
successor agent is appointed by such Lender during such five day period, then effective upon the
termination of such five day period, and the Borrower shall make all payments in respect of the
Obligations due to such Lender directly to such Lender, and for all purposes shall deal directly
with such Lender. After any retiring Lender Agent’s resignation hereunder as a Lender Agent, the
provisions of Articles VIII and IX shall inure to its benefit with respect to any
actions taken or omitted to be taken by it while it was a Lender Agent under this Agreement.




ARTICLE X.




COLLATERAL AGENT




     SECTION 10.01 Designation of Collateral Agent.



          (a) Initial Collateral Agent. Each of the Borrower, the Lender Agents and the
Administrative Agent hereby designate and appoint the Collateral Agent to act as its agent for the
purposes of perfection of a security interest in the Collateral Portfolio and hereby authorizes the
Collateral Agent to take such actions on its behalf and on behalf of each of the Secured Parties
and to exercise such powers and perform such duties as are expressly granted to the Collateral
Agent by this Agreement. The Collateral Agent hereby accepts such agency appointment to act as
Collateral Agent pursuant to the terms of this Agreement, until its resignation or removal as
Collateral Agent pursuant to the terms hereof.




          (b) Successor Collateral Agent. Upon the Collateral Agent’s receipt of a Collateral
Agent Termination Notice from the Administrative Agent of the designation of a successor Collateral
Agent pursuant to the provisions of Section 10.05, the Collateral Agent agrees that it will
terminate its activities as Collateral Agent hereunder.




          (c) Secured Party. The Administrative Agent, the Lender Agents and the Lenders hereby
appoint Wells Fargo, in its capacity as Collateral Agent hereunder, as their agent for the purposes
of perfection of a security interest in the Collateral Portfolio. Wells Fargo, in its capacity as
Collateral Agent hereunder, hereby accepts such appointment and agrees to perform the duties set
forth in Section 10.02(b).




     SECTION 10.02 Duties of Collateral Agent.



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          (a) Appointment. The Borrower, the Lender Agents and the Administrative Agent each
hereby appoints Wells Fargo to act as Collateral Agent, for the benefit of the Secured Parties.
The Collateral Agent hereby accepts such appointment and agrees to perform the duties and
obligations with respect thereto set forth herein.




          (b) Duties. On or before the initial Advance Date, and until its removal pursuant to
Section 10.05, the Collateral Agent shall perform, on behalf of the Secured Parties, the
following duties and obligations:





          (i) The Collateral Agent shall calculate amounts to be remitted pursuant to Section
2.04 to the applicable parties and notify the Servicer and the Administrative Agent in
the event of any discrepancy between the Collateral Agent’s calculations and the Servicing
Report (such dispute to be resolved in accordance with Section 2.05);




          (ii) The Collateral Agent shall make payments pursuant to the terms of the Servicing
Report or as otherwise directed in accordance with Sections 2.04 or 2.05
(the “Payment Duties”).




          (iii) The Collateral Agent shall provide to the Servicer a copy of all written notices
and communications identified as being sent to it in connection with the Loan Assets and the
other Collateral Portfolio held hereunder which it receives from the related Obligor,
participating bank and/or agent bank. In no instance shall the Collateral Agent be under
any duty or obligation to take any action on behalf of the Servicer in respect of the
exercise of any voting or consent rights, or similar actions, unless it receives specific
written instructions from the Servicer, prior to the occurrence of an Event of Default or
the Administrative Agent, after the occurrence of Event of Default, in which event the
Collateral Agent shall vote, consent or take such other action in accordance with such
instructions.



     (c) (i) The Administrative Agent, each Lender Agent and each Secured Party further
authorizes the Collateral Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Transaction Documents as are expressly
delegated to the Collateral Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto. In furtherance, and without limiting the generality
of the foregoing, each Secured Party hereby appoints the Collateral Agent (acting at the
direction of the Administrative Agent) as its agent to execute and deliver all further
instruments and documents, and take all further action that the Administrative Agent deems
necessary or desirable in order to perfect, protect or more fully evidence the security
interests granted by the Borrower hereunder, or to enable any of them to exercise or enforce
any of their respective rights hereunder, including, without limitation, the execution by
the Collateral Agent as secured party/assignee of such financing or continuation statements,
or amendments thereto or assignments thereof, relative to all or any of the Loan Assets now
existing or hereafter arising, and such other instruments or notices, as may be necessary or
appropriate for the purposes stated hereinabove. Nothing in this Section 10.02(c)
shall be deemed to relieve the Borrower or the Servicer of their respective obligations to
protect the interest of the Collateral Agent




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(for the benefit of the Secured Parties) in the Collateral Portfolio, including to file
financing and continuation statements in respect of the Collateral Portfolio in accordance
with Section 5.01(t).




     (ii) The Administrative Agent may direct the Collateral Agent to take any such
incidental action hereunder. With respect to other actions which are incidental to the
actions specifically delegated to the Collateral Agent hereunder, the Collateral Agent shall
not be required to take any such incidental action hereunder, but shall be required to act
or to refrain from acting (and shall be fully protected in acting or refraining from acting)
upon the direction of the Administrative Agent; provided that the Collateral Agent shall not
be required to take any action hereunder at the request of the Administrative Agent, any
Secured Party or otherwise if the taking of such action, in the reasonable determination of
the Collateral Agent, (x) shall be in violation of any Applicable Law or contrary to any
provisions of this Agreement or (y) shall expose the Collateral Agent to liability hereunder
or otherwise (unless it has received indemnity which it reasonably deems to be satisfactory
with respect thereto). In the event the Collateral Agent requests the consent of the
Administrative Agent and the Collateral Agent does not receive a consent (either positive or
negative) from the Administrative Agent within 10 Business Days of its receipt of such
request, then the Administrative Agent shall be deemed to have declined to consent to the
relevant action.




     (iii) Except as expressly provided herein, the Collateral Agent shall not be under any
duty or obligation to take any affirmative action to exercise or enforce any power, right or
remedy available to it under this Agreement (x) unless and until (and to the extent)
expressly so directed by the Administrative Agent or (y) prior to the Facility Maturity Date
(and upon such occurrence, the Collateral Agent shall act in accordance with the written
instructions of the Administrative Agent pursuant to clause (x)). The Collateral Agent
shall not be liable for any action taken, suffered or omitted by it in accordance with the
request or direction of any Secured Party, to the extent that this Agreement provides such
Secured Party the right to so direct the Collateral Agent, or the Administrative Agent. The
Collateral Agent shall not be deemed to have notice or knowledge of any matter hereunder,
including an Event of Default, unless a Responsible Officer of the Collateral Agent has
knowledge of such matter or written notice thereof is received by the Collateral Agent.



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




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          (e) Concurrently herewith, the Administrative Agent directs the Collateral Agent and the
Collateral Agent is authorized to enter into the Pledge Agreement, Collection Account Agreement and
Unfunded Exposure Account Agreement. For the avoidance of doubt, all of the Collateral Agent’s
rights, protections and immunities provided herein shall apply to the Collateral Agent for any
actions taken or omitted to be taken under the Pledge Agreement, Collection Account Agreement and
Unfunded Exposure Account Agreement in such capacity.




     SECTION 10.03 Merger or Consolidation.



          Any Person (i) into which the Collateral Agent may be merged or consolidated, (ii) that may
result from any merger or consolidation to which the Collateral Agent shall be a party, or (iii)
that may succeed to the properties and assets of the Collateral Agent substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption to perform every
obligation of the Collateral Agent hereunder, shall be the successor to the Collateral Agent under
this Agreement without further act of any of the parties to this Agreement.




     SECTION 10.04 Collateral Agent Compensation.



          As compensation for its Collateral Agent activities hereunder, the Collateral Agent shall be
entitled to the Collateral Agent Fees and Collateral Agent Expenses from the Borrower as set forth
in the Wells Fargo Fee Letter, payable to the extent of funds available therefor pursuant to the
provisions of Section 2.04. The Collateral Agent’s entitlement to receive the Collateral
Agent Fees shall cease on the earlier to occur of: (i) its removal as Collateral Agent pursuant to
Section 10.05 or (ii) the termination of this Agreement.




     SECTION 10.05 Collateral Agent Removal.



          The Collateral Agent may be removed, with or without cause, by the Administrative Agent by
notice given in writing to the Collateral Agent (the “Collateral Agent Termination
Notice”); provided, notwithstanding its receipt of a Collateral Agent Termination Notice, the
Collateral Agent shall continue to act in such capacity until a successor Collateral Agent has been
appointed and has agreed to act as Collateral Agent hereunder; provided that the Collateral Agent
shall continue to receive compensation of its fees and expenses in accordance with Section
10.04 above while so serving as the Collateral Agent prior to a successor Collateral Agent
being appointed.




     SECTION 10.06 Limitation on Liability.



          (a) The Collateral Agent may conclusively rely on and shall be fully protected in acting upon
any certificate, instrument, opinion, notice, letter, telegram or other document delivered to it
and that in good faith it reasonably believes to be genuine and that has been signed by the proper
party or parties. The Collateral Agent may rely conclusively on and shall be fully protected in
acting upon (a) the written instructions of any designated officer of the Administrative Agent or
(b) the verbal instructions of the Administrative Agent.




          (b) The Collateral Agent may consult counsel satisfactory to it and the advice or opinion of
such counsel shall be full and complete authorization and protection in respect of




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any action taken, suffered or omitted by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.




          (c) The Collateral Agent shall not be liable for any error of judgment, or for any act done or
step taken or omitted by it, in good faith, or for any mistakes of fact or law, or for anything
that it may do or refrain from doing in connection herewith except in the case of its willful
misconduct or grossly negligent performance or omission of its duties.




          (d) The Collateral Agent makes no warranty or representation and shall have no responsibility
(except as expressly set forth in this Agreement) as to the content, enforceability, completeness,
validity, sufficiency, value, genuineness, ownership or transferability of the Collateral
Portfolio, and will not be required to and will not make any representations as to the validity or
value (except as expressly set forth in this Agreement) of any of the Collateral Portfolio. The
Collateral Agent shall not be obligated to take any legal action hereunder that might in its
judgment involve any expense or liability unless it has been furnished with an indemnity reasonably
satisfactory to it.




          (e) The Collateral Agent shall have no duties or responsibilities except such duties and
responsibilities as are specifically set forth in this Agreement and no covenants or obligations
shall be implied in this Agreement against the Collateral Agent. Notwithstanding any provision to
the contrary elsewhere in the Transaction Documents, the Collateral Agent shall not have any
fiduciary relationship with any party hereto or any Secured Party in its capacity as such, and no
implied covenants, functions, obligations or responsibilities shall be read into this Agreement,
the other Transaction Documents or otherwise exist against the Collateral Agent. Without limiting
the generality of the foregoing, it is hereby expressly agreed and stipulated by the other parties
hereto that the Collateral Agent shall not be required to exercise any discretion hereunder and
shall have no investment or management responsibility.




          (f) The Collateral Agent shall not be required to expend or risk its own funds in the
performance of its duties hereunder.




          (g) It is expressly agreed and acknowledged that the Collateral Agent is not guaranteeing
performance of or assuming any liability for the obligations of the other parties hereto or any
parties to the Collateral Portfolio.




          (h) Subject in all cases to the last sentence of Section 2.05, in case any reasonable
question arises as to its duties hereunder, the Collateral Agent may, prior to the occurrence of an
Event of Default or the Facility Maturity Date, request instructions from the Servicer and may,
after the occurrence of an Event of Default or the Facility Maturity Date, request instructions
from the Administrative Agent, and shall be entitled at all times to refrain from taking any action
unless it has received instructions from the Servicer or the Administrative Agent, as applicable.
The Collateral Agent shall in all events have no liability, risk or cost for any action taken
pursuant to and in compliance with the instruction of the Administrative Agent. In no event shall
the Collateral Agent be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Collateral Agent has been
advised of the likelihood of such loss or damage and regardless of the form of action.




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          (i) The Collateral Agent shall not be liable for the acts or omissions of the Collateral
Custodian under this Agreement and shall not be required to monitor the performance of the
Collateral Custodian. Notwithstanding anything herein to the contrary, the Collateral Agent shall
have no duty to perform any of the duties of the Collateral Custodian under this Agreement.




     SECTION 10.07 Collateral Agent Resignation.



          The Collateral Agent may resign at any time by giving not less than 90 days written notice
thereof to the Administrative Agent and with the consent of the Administrative Agent, which consent
shall not be unreasonably withheld. Upon receiving such notice of resignation, the Administrative
Agent shall promptly appoint a successor collateral agent or collateral agents by written
instrument, in duplicate, executed by the Administrative Agent, one copy of which shall be
delivered to the Collateral Agent so resigning and one copy to the successor collateral agent or
collateral agents, together with a copy to the Borrower, Servicer and Collateral Custodian. If no
successor collateral agent shall have been appointed and an instrument of acceptance by a successor
Collateral Agent shall not have been delivered to the Collateral Agent within 45 days after the
giving of such notice of resignation, the resigning Collateral Agent may petition any court of
competent jurisdiction for the appointment of a successor Collateral Agent. Notwithstanding
anything herein to the contrary, the Collateral Agent may not resign prior to a successor
Collateral Agent being appointed.




ARTICLE XI.




MISCELLANEOUS




     SECTION 11.01 Amendments and Waivers.



          (a) (i) No amendment or modification of any provision of this Agreement shall be effective
without the written agreement of the Borrower, the Servicer, the Required Lenders, the
Administrative Agent and, solely if such amendment or modification would adversely affect the
rights and obligations of the Collateral Agent, the Account Bank or the Collateral Custodian, the
written agreement of the Collateral Agent, the Account Bank or the Collateral Custodian, as
applicable; (ii) no termination or waiver of any provision of this Agreement or consent to any
departure therefrom by the Borrower or the Servicer shall be effective without the written
concurrence of the Administrative Agent and the Required Lenders and (iii) no amendment, waiver or
modification adversely affecting the rights or obligations of any Hedge Counterparty shall be
effective without the written agreement of such Person. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.




          (b) Notwithstanding the provisions of Section 11.01(a), the written consent of all of
the Lenders shall be required for any amendment, modification or waiver (i) reducing any
outstanding Advances, or the Yield thereon, (ii) postponing any date for any payment of any
Advance, or the Yield thereon, (iii) modifying the provisions of this Section 11.01, (iv)
modifying the provisions of Section 2.22 or (v) extending the Stated Maturity Date or
clause (i) of the definition of “Reinvestment Period”.




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     SECTION 11.02 Notices, Etc. All notices and other communications hereunder shall,
unless otherwise stated herein, be in writing (which shall include facsimile communication and
communication by e-mail) and faxed, e-mailed or delivered, to each party hereto, at its address set
forth under its name on the signature pages hereto or at such other address as shall be designated
by such party in a written notice to the other parties hereto. Notices and communications by
facsimile and e-mail shall be effective when sent (and shall be followed by hard copy sent by
regular mail), and notices and communications sent by other means shall be effective when received.



     SECTION 11.03 No Waiver; Remedies. No failure on the part of the Administrative Agent,
the Collateral Agent, any Lender or any Lender Agent to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of any remedies provided by law.



     SECTION 11.04 Binding Effect; Assignability; Multiple Lenders.



          (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the
Servicer, the Administrative Agent, each Lender, the Lender Agents, the Collateral Agent, the
Account Bank, the Collateral Custodian and their respective successors and permitted assigns. Each
Lender and their respective successors and assigns may assign, or grant a security interest or sell
a participation interest in, (i) this Agreement and such Lender’s rights and obligations hereunder
and interest herein in whole or in part (including by way of the sale of participation interests
therein) and/or (ii) any Advance (or portion thereof) or any Variable Funding Note (or any portion
thereof) to any Person other than the Borrower or an Affiliate thereof; provided that, (x) unless
the Borrower shall otherwise consent, a Lender may only assign, grant a security interest or sell a
participation in, its rights and obligations hereunder to an Affiliate or a Permitted Assignee who
is not a Prohibited Transferee, (y) after an Event of Default has occurred, a Lender may assign its
rights and obligations hereunder to any Person and (z) any Conduit Lender shall not need prior
consent to at any time assign, or grant a security interest or sell a participation interest in,
any Advance (or portion thereof) to a Liquidity Bank or any commercial paper conduit sponsored by a
Liquidity Bank or an Affiliate of its related Lender Agent. Any such assignee shall execute and
deliver to the Servicer, the Borrower and the Administrative Agent a fully-executed Transferee
Letter substantially in the form of Exhibit O hereto (a “Transferee Letter”) and a
fully-executed Joinder Supplement. The parties to any such assignment, grant or sale of a
participation interest shall execute and deliver to the related Lender Agent for its acceptance and
recording in its books and records, such agreement or document as may be satisfactory to such
parties and the applicable Lender Agent. None of the Borrower, the Transferor or the Servicer may
assign, or permit any Lien to exist upon, any of its rights or obligations hereunder or under any
Transaction Document or any interest herein or in any Transaction Document without the prior
written consent of each Lender Agent and the Administrative Agent.




          (b) Notwithstanding any other provision of this Section 11.04, any Lender may at any
time pledge or grant a security interest in all or any portion of its rights (including, without
limitation, rights to payment of principal and interest) under this Agreement to secure



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obligations of such Lender to a Federal Reserve Bank, without notice to or consent of the
Borrower or the Administrative Agent; provided that no such pledge or grant of a security interest
shall release such Lender from any of its obligations hereunder, or substitute any such pledgee or
grantee for such Lender as a party hereto.




          (c) Each Hedge Counterparty, each Affected Party and each Indemnified Party shall be an
express third party beneficiary of this Agreement.




     SECTION 11.05 Term of This Agreement. This Agreement, including, without limitation,
the Borrower’s representations and covenants set forth in Articles IV and V and the
Servicer’s representations, covenants and duties set forth in Articles IV, V and
VI, shall remain in full force and effect until the Collection Date; provided that the
rights and remedies with respect to any breach of any representation and warranty made or deemed
made by the Borrower or the Servicer pursuant to Articles III and IV and the
indemnification and payment provisions of Article VIII, IX and Article XI
and the provisions of Section 2.10, Section 2.11, Section 11.07,
Section 11.08 and Section 11.09 shall be continuing and shall survive any
termination of this Agreement.



     SECTION 11.06 GOVERNING LAW; JURY WAIVER. THIS AGREEMENT SHALL, IN ACCORDANCE WITH
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR
INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER.



     SECTION 11.07 Costs, Expenses and Taxes.



          (a) In addition to the rights of indemnification granted to the Collateral Agent, the Account
Bank, the Administrative Agent, the Lenders, the Lender Agents, the Collateral Custodian and their
respective Affiliates under Section 8.01 and Section 8.02 hereof, each of the
Borrower, the Servicer and the Transferor agrees to pay on demand all out-of-pocket costs and
expenses of the Administrative Agent, the Lenders, the Lender Agents, the Collateral Agent, the
Account Bank and the Collateral Custodian incurred in connection with the preparation, execution,
delivery, administration (including periodic auditing), syndication, renewal, amendment or
modification of, any waiver or consent issued in connection with, this Agreement, the Transaction
Documents and the other documents to be delivered hereunder or in connection herewith, including,
without limitation, the fees and out-of-pocket expenses of counsel for the Administrative Agent,
the Lenders, the Lender Agents, the Collateral Agent, the Account Bank and the Collateral Custodian
with respect thereto and with respect to advising the Administrative Agent, the Lenders, the Lender
Agents, the Collateral Agent, the Account Bank and the Collateral Custodian as to their respective
rights and remedies under this Agreement and the other documents to be delivered hereunder or in
connection herewith, and all out-of-pocket costs and expenses, if any (including counsel fees and
expenses), incurred by the Administrative Agent, the Lenders, the Lender Agents, the Collateral
Agent, the Account Bank or the Collateral Custodian in connection with the enforcement or potential
enforcement of this Agreement or any




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Transaction Document by such Person and the other documents to be delivered hereunder or in
connection herewith.




          (b) The Borrower, the Servicer and the Transferor shall pay on demand any and all stamp,
sales, excise and other Taxes and fees payable or determined to be payable to any Governmental
Authority in connection with the execution, delivery, filing and recording of this Agreement, the
other Transaction Documents or any 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.




          (c) The Servicer and the Transferor shall pay on demand all other out-of-pocket costs,
expenses and Taxes (excluding Taxes imposed on or measured by net income) incurred by the
Administrative Agent, the Lenders, the Lender Agents, the Collateral Agent, the Collateral
Custodian and the Account Bank, including, without limitation, all costs and expenses incurred by
the Administrative Agent, the Lender Agents and the Lenders in connection with periodic audits of
the Borrower’s, the Transferor’s or the Servicer’s books and records.




     SECTION 11.08 No Proceedings.



          (a) Each of the parties hereto (other than the Administrative Agent with the consent of the
Lender Agents) and each Hedge Counterparty (by accepting the benefits of this Agreement) agree
that it will not institute against, or join any other Person in instituting against, the Borrower
any proceedings of the type referred to in the definition of Bankruptcy Event so long as there
shall not have elapsed one year and one day (or such longer preference period as shall then be in
effect) since the Collection Date.




          (b) Each of the parties hereto (other than any Conduit Lender) and each Hedge Counterparty (by
accepting the benefits of this Agreement) hereby agrees that it will not institute against, or join
any other Person in instituting against, any Conduit Lender, the Administrative Agent, or any
Liquidity Banks any Bankruptcy Proceeding so long as any commercial paper issued by such Conduit
Lender shall be outstanding and there shall not have elapsed one year and one day (or such longer
preference period as shall then be in effect) since the last day on which any such commercial paper
shall have been outstanding.




     SECTION 11.09 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,
the Lenders, the Lender Agents or any Secured Party as contained in this Agreement or any other
agreement, instrument or document entered into by the Administrative Agent, the Lenders, the Lender
Agents or any Secured Party pursuant hereto or in connection herewith shall be had against any
administrator of the Administrative Agent, the Lenders, the Lender Agents or any Secured Party or
any incorporator, affiliate, stockholder, officer, employee or director of the Administrative
Agent, the Lenders, the Lender Agents or any Secured Party or of any such administrator, as such,
by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any
statute or otherwise; it being expressly agreed and
understood that the agreements of each party hereto contained in this Agreement and all of
the




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other agreements, instruments and documents entered into by the Administrative Agent, the
Lenders, the Lender Agents or any Secured Party pursuant hereto or in connection herewith are, in
each case, solely the corporate obligations of such party (and nothing in this Section
11.09 shall be construed to diminish in any way such corporate obligations of such party), and
that no personal liability whatsoever shall attach to or be incurred by any administrator of the
Administrative Agent, the Lenders, the Lender Agents or any Secured Party or any incorporator,
stockholder, affiliate, officer, employee or director of the Lenders, the Lender Agents or the
Administrative Agent or of any such administrator, as such, or any of them, under or by reason of
any of the obligations, covenants or agreements of the Administrative Agent, the Lenders, the
Lender Agents or any Secured Party contained in this Agreement or in any other such instruments,
documents or agreements, or are implied therefrom, and that any and all personal liability of every
such administrator of the Administrative Agent, the Lenders, the Lender Agents or any Secured Party
and each incorporator, stockholder, affiliate, officer, employee or director of the Administrative
Agent, the Lenders, the Lender Agents or any Secured Party or of any such administrator, or any of
them, for breaches by the Administrative Agent, the Lenders, the Lender Agents or any Secured Party
of any such obligations, covenants or agreements, which liability may arise either at common law or
in equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of
and in consideration for the execution of this Agreement.




          (b) Notwithstanding any contrary provision set forth herein, no claim may be made by the
Borrower, the Transferor or the Servicer or any other Person against the Administrative Agent, the
Lenders, the Lender Agents or any Secured Party or their respective Affiliates, directors,
officers, employees, attorneys or agents for any special, indirect, consequential or punitive
damages in respect to any claim for breach of contract or any other theory of liability arising out
of or related to the transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Borrower, the Transferor and the Servicer each hereby
waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected.




          (c) No obligation or liability to any Obligor under any of the Loan Assets is intended to be
assumed by the Administrative Agent, the Lenders, the Lender Agents or any Secured Party under or
as a result of this Agreement and the transactions contemplated hereby.




          (d) Notwithstanding anything in this Agreement to the contrary, no Conduit Lender shall have
any obligation to pay any amount required to be paid by it hereunder in excess of any amount
available to such Conduit Lender after paying or making provision for the payment of its Commercial
Paper Notes. All payment obligations of each Conduit Lender hereunder are contingent on the
availability of funds in excess of the amounts necessary to pay its Commercial Paper Notes; and
each of the other parties hereto agrees that it will not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation owed to it by a Conduit
Lender exceeds the amount available to such Conduit Lender to pay such amount after paying or
making provision for the payment of its Commercial Paper Notes.




          (e) The provisions of this Section 11.09 shall survive the termination of this
Agreement.




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     SECTION 11.10 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. Delivery of an executed counterpart of a
signature page to this Agreement by e-mail in portable document format (.pdf) or facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement. In the event that 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 and any agreements or letters (including fee letters) executed in
connection herewith 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 delivered by the Servicer to the Administrative
Agent and the Lender Agents.



     SECTION 11.11 Consent to Jurisdiction; Service of Process.



          (a) Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of any New
York State or Federal court sitting in New York City in any action or proceeding arising out of or
relating to the Transaction Documents, and each party hereto hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. The parties hereto hereby
irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.




          (b) Each of the Borrower and the Servicer agrees that service of process may be effected by
mailing a copy thereof by registered or certified mail, postage prepaid, to the Borrower or the
Servicer, as applicable, at its address specified in Section 11.02 or at such other address
as the Administrative Agent shall have been notified in accordance herewith. Nothing in this
Section 11.11 shall affect the right of the Lenders, the Lender Agents or the
Administrative Agent to serve legal process in any other manner permitted by law.




     SECTION 11.12 Characterization of Conveyances Pursuant to the Purchase and Sale
Agreement.



          (a) It is the express intent of the parties hereto that the conveyance of the Eligible Loan
Assets by the Transferor to the Borrower as contemplated by the Purchase and Sale Agreement be, and
be treated for all purposes (other than accounting purposes and subject to the tax characterization
of the Borrower and the Advances described in Section 5.01(aa) and Section 5.02(k)
hereof) as, a sale by the Transferor of such Eligible Loan Assets. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Eligible Loan Assets by the
Transferor to the Borrower to secure a debt or other obligation of the Transferor. However, in the
event that, notwithstanding the intent of the parties, the Eligible Loan Assets are




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held to continue to be property of the Transferor, then the parties hereto agree that: (i) the
Purchase and Sale Agreement shall also be deemed to be a security agreement under Applicable Law;
(ii) as set forth in the Purchase and Sale Agreement, the transfer of the Eligible Loan Assets
provided for in the Purchase and Sale Agreement shall be deemed to be a grant by the Transferor to
the Borrower of a first priority security interest (subject only to Permitted Liens) in all of the
Transferor’s right, title and interest in and to the Eligible Loan Assets and all amounts payable
to the holders of the Eligible Loan Assets in accordance with the terms thereof and all proceeds of
the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property, including, without limitation, all amounts from time to time held or invested in
the Controlled Accounts, whether in the form of cash, instruments, securities or other property;
(iii) the possession by the Borrower (or the Collateral Custodian on its behalf) of Loan Assets and
such other items of property as constitute instruments, money, negotiable documents or chattel
paper shall be, subject to clause (iv), for purposes of perfecting the security interest
pursuant to the UCC; and (iv) acknowledgements from Persons holding such property shall be deemed
acknowledgements from custodians, bailees or agents (as applicable) of the Borrower for the purpose
of perfecting such security interest under Applicable Law. The parties further agree that any
assignment of the interest of the Borrower pursuant to any provision hereof shall also be deemed to
be an assignment of any security interest created pursuant to the terms of the Purchase and Sale
Agreement. The Borrower shall, to the extent consistent with this Agreement and the other
Transaction Documents, take such actions as may be necessary to ensure that, if the Purchase and
Sale Agreement was deemed to create a security interest in the Eligible Loan Assets, such security
interest would be deemed to be a perfected security interest of first priority (subject only to
Permitted Liens) under Applicable Law and will be maintained as such throughout the term of this
Agreement.




          (b) It is the intention of each of the parties hereto that the Eligible Loan Assets conveyed
by the Transferor to the Borrower pursuant to the Purchase and Sale Agreement shall constitute
assets owned by the Borrower and shall not be part of the Transferor’s estate in the event of the
filing of a bankruptcy petition by or against the Transferor under any bankruptcy or similar law.




          (c) The Borrower agrees to treat, and shall cause the Transferor to treat, for all purposes
(other than accounting purposes and subject to the tax characterization of the Borrower and the
Advances described in Section 5.01(aa) and Section 5.02(k) hereof), the
transactions effected by the Purchase and Sale Agreement as sales of assets to the Borrower. The
Borrower and the Servicer each hereby agree to cause the Transferor to reflect in the Transferor’s
financial records and to include a note in the publicly filed annual and quarterly financial
statements of Fifth Street indicating that: (i) assets related to transactions (including
transactions pursuant to the Transaction Documents) that do not meet SFAS 140 requirements for
accounting sale treatment are reflected in the consolidated balance sheet of Fifth Street, as
finance receivables pledged and non-recourse, secured borrowings and (ii) those assets are owned by
a special purpose entity that is consolidated in the financial statements of Fifth Street, and the
creditors of that special purpose entity have received ownership and/or security interests in such
assets and such assets are not intended to be available to the creditors of sellers (or any
affiliate of the sellers) of such assets to that special purpose entity.




     SECTION 11.13 Confidentiality.



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          (a) Each of the Administrative Agent, the Lenders, the Lender Agents, the Servicer, the
Collateral Agent, the Borrower, the Account Bank, the Transferor and the Collateral Custodian shall
maintain and shall cause each of its employees and officers to maintain the confidentiality of the
Agreement and all information with respect to the other parties, including all information
regarding the business of the Borrower and the Servicer 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, investigators, auditors, attorneys or
other agents, including any valuation firm engaged by such party in connection with any due
diligence or comparable activities with respect to the transactions and Loan Assets contemplated
herein and the agents of such Persons (“Excepted Persons”); provided that each Excepted
Person shall, as a condition to any such disclosure, agree for the benefit of the Administrative
Agent, the Lenders, the Lender Agents, the Servicer, the Collateral Agent, the Borrower, the
Account Bank, the Transferor and the Collateral Custodian that such information shall be used
solely in connection with such Excepted Person’s evaluation of, or relationship with, the Borrower
and its affiliates, (ii) disclose the existence of the Agreement, but not the financial terms
thereof, (iii) disclose such information as is required by Applicable Law and (iv) disclose the
Agreement and such information in any suit, action, proceeding or investigation (whether in law or
in equity or pursuant to arbitration) involving any of the Transaction Documents for the purpose of
defending itself, reducing its liability, or protecting or exercising any of its claims, rights,
remedies, or interests under or in connection with any of the Transaction Documents.
Notwithstanding the foregoing provisions of this Section 11.13(a), the Servicer may,
subject to Applicable Law and the terms of any Loan Agreements, make available copies of the
documents in the Servicing Files and such other documents it holds in its capacity as Servicer
pursuant to the terms of this Agreement, to any of its creditors. It is understood that the
financial terms that may not be disclosed except in compliance with this Section 11.13(a)
include, without limitation, all fees and other pricing terms, and all Events of Default, Servicer
Termination Events, and priority of payment provisions.




          (b) Anything herein to the contrary notwithstanding, the Borrower and the Servicer each hereby
consents to the disclosure of any nonpublic information with respect to it (i) to the
Administrative Agent, the Lenders, the Lender Agents, the Account Bank, the Collateral Agent or the
Collateral Custodian by each other, (ii) by the Administrative Agent, the Lenders, the Lender
Agents, the Account Bank, the Collateral Agent and the Collateral Custodian to any prospective or
actual assignee or participant of any of them provided such Person agrees to hold such information
confidential, or (iii) by the Administrative Agent, the Lenders, the Lender Agents, the Account
Bank, the Collateral Agent and the Collateral Custodian to any commercial paper dealer or provider
of a surety, guaranty or credit or liquidity enhancement to any Lender or any Person providing
financing to, or holding equity interests in, any Conduit Lender, as applicable, and to any
officers, directors, employees, outside accountants and attorneys of any of the foregoing, provided
each such Person is informed of the confidential nature of such information. In addition, the
Lenders, the Lender Agents, the Administrative Agent, the Collateral Agent, the Account Bank and
the Collateral Custodian may disclose any such nonpublic information as required pursuant to any
law, rule, regulation, direction, request or order of any judicial, administrative or regulatory
authority or proceedings (whether or not having the force or effect of law).




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          (c) Notwithstanding anything herein to the contrary, the foregoing shall not be construed to
prohibit (i) disclosure of any and all information that is or becomes publicly known; (ii)
disclosure of any and all information (a) if required to do so by any applicable statute, law, rule
or regulation, (b) to any government agency or regulatory body having or claiming authority to
regulate or oversee any respects of the Lenders’, the Lender Agents’, the Administrative Agent’s,
the Collateral Agent’s, the Account Bank’s or the Collateral Custodian’s business or that of their
affiliates, (c) pursuant to any subpoena, civil investigative demand or similar demand or request
of any court, regulatory authority, arbitrator or arbitration to which the Administrative Agent,
any Lender, any Lender Agent, the Collateral Agent, the Collateral Custodian or the Account Bank or
an officer, director, employer, shareholder or affiliate of any of the foregoing is a party, (d) in
any preliminary or final offering circular, registration statement or contract or other document
approved in advance by the Borrower, the Servicer or the Transferor or (e) to any affiliate,
independent or internal auditor, agent, employee or attorney of the Collateral Agent or the
Collateral Custodian having a need to know the same, provided that the disclosing party advises
such recipient of the confidential nature of the information being disclosed; or (iii) any other
disclosure authorized by the Borrower, Servicer or the Transferor.




     SECTION 11.14 Non-Confidentiality of Tax Treatment.



          All parties hereto agree that each of them and each of their employees, representatives, and
other agents may disclose to any and all Persons, without limitation of any kind, the tax treatment
and tax structure of the transaction and all materials of any kind (including, without limitation,
opinions or other tax analyses) that are provided to any of them relating to such tax treatment and
tax structure. “Tax treatment” and “tax structure” shall have the same meaning as such terms have
for purposes of Treasury Regulation Section 1.6011-4; provided that with respect to any document or
similar item that in either case contains information concerning the tax treatment or tax structure
of the transaction as well as other information, the provisions of this Section 11.14 shall
only apply to such portions of the document or similar item that relate to the tax treatment or tax
structure of the transactions contemplated hereby.




     SECTION 11.15 Waiver of Set Off.



          Each of the parties hereto hereby waives any right of setoff it may have or to which it may be
entitled under this Agreement from time to time against the Administrative Agent, the Lenders, the
Lender Agents or their respective assets.




     SECTION 11.16 Headings and Exhibits.



          The headings herein are for purposes of references only and shall not otherwise affect the
meaning or interpretation of any provision hereof. The schedules and exhibits attached hereto and
referred to herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.




     SECTION 11.17 Ratable Payments.



          If any Lender, whether by setoff or otherwise, shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of setoff, or otherwise) on account of




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Advances owing to it (other than pursuant to Breakage Fees, Section 2.10 or
Section 2.11) in excess of its ratable share of payments on account of the Advances
obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Advances owing to them as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them; provided, that, if all or any portion of
such excess payment is thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price
to the extent of such recovery together with an amount equal to such Lender’s ratable share
(according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the
total amount so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.




     SECTION 11.18 Failure of Borrower or Servicer to Perform Certain Obligations.



          If the Borrower or the Servicer, as applicable, fails to perform any of its agreements or
obligations under Section 5.01(t), Section 5.02(r) or Section 5.03(e), the
Administrative Agent may (but shall not be required to) itself perform, or cause performance of,
such agreement or obligation, and the expenses of the Administrative Agent incurred in connection
therewith shall be payable by the Borrower or the Servicer (on behalf of the Borrower), as
applicable, upon the Administrative Agent’s demand therefor.




     SECTION 11.19 Power of Attorney. 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 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 Portfolio and (ii) to file a carbon, photographic or other
reproduction of this Agreement or any financing statement with respect to the Collateral Portfolio
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 Secured Parties in the Collateral Portfolio. This appointment is coupled with an interest and
is irrevocable.



     SECTION 11.20 Delivery of Termination Statements, Releases, etc. Upon payment in full
of all of the Obligations (other than unmatured contingent indemnification obligations) and the
termination of this Agreement, the Administrative Agent and the Collateral Agent shall deliver to
the Borrower termination statements, reconveyances, releases and other documents necessary or
appropriate to evidence the termination of the Pledge and other Liens securing the Obligations, all
at the expense of the Borrower.



ARTICLE XII.




COLLATERAL CUSTODIAN




     SECTION 12.01 Designation of Collateral Custodian.



          (a) Initial Collateral Custodian. The role of Collateral Custodian with respect to
the Required Loan Documents shall be conducted by the Person designated as Collateral




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Custodian hereunder from time to time in accordance with this Section 12.01. Each of
the Borrower, the Lender Agents and the Administrative Agent hereby designate and appoint the
Collateral Custodian to act as its agent and hereby authorizes the Collateral Custodian to take
such actions on its behalf and to exercise such powers and perform such duties as are expressly
granted to the Collateral Custodian by this Agreement. The Collateral Custodian hereby accepts
such agency appointment to act as Collateral Custodian pursuant to the terms of this Agreement,
until its resignation or removal as Collateral Custodian pursuant to the terms hereof.




          (b) Successor Collateral Custodian. Upon the Collateral Custodian’s receipt of a
Collateral Custodian Termination Notice from the Administrative Agent of the designation of a
successor Collateral Custodian pursuant to the provisions of Section 12.05, the Collateral
Custodian agrees that it will terminate its activities as Collateral Custodian hereunder.




     SECTION 12.02 Duties of Collateral Custodian.



          (a) Appointment. The Borrower, the Lender Agents and the Administrative Agent each
hereby appoints Wells Fargo to act as Collateral Custodian, for the benefit of the Secured Parties.
The Collateral Custodian hereby accepts such appointment and agrees to perform the duties and
obligations with respect thereto set forth herein.




          (b) Duties. From the Closing Date until its removal pursuant to Section
12.05, the Collateral Custodian shall perform, on behalf of the Secured Parties, the following
duties and obligations:





          (i) The Collateral Custodian shall take and retain custody of the Required Loan
Documents delivered by the Borrower pursuant to Section 3.02(a) and Section
3.04(b) hereof in accordance with the terms and conditions of this Agreement, all for
the benefit of the Secured Parties. Within five Business Days of its receipt of any
Required Loan Documents, the related Loan Asset Schedule and a hard copy of the Loan Asset
Checklist, the Collateral Custodian shall review the Required Loan Documents to confirm that
(A) such Required Loan Documents have been executed (either an original or a copy, as
indicated on the Loan Asset Checklist) and have no mutilated pages, (B) filed stamped copies
of the UCC and other filings (required by the Required Loan Documents) are included, (C) if
listed on the Loan Asset Checklist, a copy of an Insurance Policy with respect to any real
or personal property constituting the Underlying Collateral is included, and (D) the related
original balance (based on a comparison to the note or assignment agreement, as applicable),
Loan Asset number and Obligor name, as applicable, with respect to such Loan Asset is
referenced on the related Loan Asset Schedule (such items (A) through (D) collectively, the
“Review Criteria”). In order to facilitate the foregoing review by the Collateral
Custodian, in connection with each delivery of Required Loan Documents hereunder to the
Collateral Custodian, the Servicer shall provide to the Collateral Custodian a hard copy
(which may be preceded by an electronic copy, as applicable) of the related Loan Asset
Checklist which contains the Loan Asset information with respect to the Required Loan
Documents being delivered, identification number and the name of the Obligor with respect to
such Loan Asset. Notwithstanding anything herein to the contrary, the Collateral
Custodian’s obligation to review the Required Loan Documents shall be limited to reviewing
such Required Loan



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Documents based on the information provided on the Loan Asset Checklist. If, at the
conclusion of such review, the Collateral Custodian shall determine that (i) the original
balance of the Loan Asset with respect to which it has received Required Loan Documents is
less than as set forth on the Loan Asset Schedule, the Collateral Custodian shall notify the
Administrative Agent and the Servicer of such discrepancy within one Business Day, or (ii)
any Review Criteria is not satisfied, the Collateral Custodian shall within one Business Day
notify the Servicer of such determination and provide the Servicer with a list of the
non-complying Loan Assets and the applicable Review Criteria that they fail to satisfy. The
Servicer shall have five Business Days after notice or knowledge thereof to correct any
non-compliance with any Review Criteria. In addition, if requested in writing (in the form
of Exhibit N) by the Servicer and approved by the Administrative Agent within 10
Business Days of the Collateral Custodian’s delivery of such report, the Collateral
Custodian shall return any Loan Asset which fails to satisfy a Review Criteria to the
Borrower. Other than the foregoing, the Collateral Custodian shall not have any
responsibility for reviewing any Required Loan Documents. Notwithstanding anything to the
contrary contained herein, the Collateral Custodian shall have no duty or obligation with
respect to any Loan Asset checklist delivered to it in electronic form.




          (ii) In taking and retaining custody of the Required Loan Documents, the Collateral
Custodian shall be deemed to be acting as the agent of the Secured Parties; provided that
the Collateral Custodian makes no representations as to the existence, perfection or
priority of any Lien on the Required Loan Documents or the instruments therein; and
provided, further, that, the Collateral Custodian’s duties shall be limited to those
expressly contemplated herein.




          (iii) All Required Loan Documents shall be kept in fire resistant vaults, rooms or
cabinets at the locations specified on the address of the Collateral Custodian on the
signature pages attached hereto, or at such other office as shall be specified to the
Administrative Agent and the Servicer by the Collateral Custodian in a written notice
delivered at least 30 days prior to such change. All Required Loan Documents shall be
placed together with an appropriate identifying label and maintained in such a manner so as
to permit retrieval and access. The Collateral Custodian shall segregate the Required Loan
Documents on its inventory system and will not commingle the physical Required Loan
Documents with any other files of the Collateral Custodian other than those, if any,
relating to Fifth Street and its Affiliates and subsidiaries; provided, however, the
Collateral Custodian shall segregate any commingled files upon written request of the
Administrative Agent and the Borrower.




          (iv) On the 12th calendar day of every month (or if such day is not a
Business Day, the next succeeding Business Day), the Collateral Custodian shall provide a
written report to the Administrative Agent and the Servicer (in a form mutually agreeable to
the Administrative Agent and the Collateral Custodian) identifying each Loan Asset for which
it holds Required Loan Documents and the applicable Review Criteria that any Loan Asset
fails to satisfy.



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          (v) Notwithstanding any provision to the contrary elsewhere in the Transaction
Documents, the Collateral Custodian shall not have any fiduciary relationship with any party
hereto or any Secured Party in its capacity as such, and no implied covenants, functions,
obligations or responsibilities shall be read into this Agreement, the other Transaction
Documents or otherwise exist against the Collateral Custodian. Without limiting the
generality of the foregoing, it is hereby expressly agreed and stipulated by the other
parties hereto that the Collateral Custodian shall not be required to exercise any
discretion hereunder and shall have no investment or management responsibility.




     (c) (i) The Collateral Custodian agrees to cooperate with the Administrative Agent and
the Collateral Agent and deliver any Required Loan Documents to the Collateral Agent or
Administrative Agent (pursuant to a written request in the form of Exhibit N), as
applicable, as requested in order to take any action that the Administrative Agent deems
necessary or desirable in order to perfect, protect or more fully evidence the security
interests granted by the Borrower hereunder, or to enable any of them to exercise or enforce
any of their respective rights hereunder, including any rights arising with respect to
Article VII. In the event the Collateral Custodian receives instructions from the
Collateral Agent, the Servicer or the Borrower which conflict with any instructions received
by the Administrative Agent, the Collateral Custodian shall rely on and follow the
instructions given by the Administrative Agent.




          (ii) The Administrative Agent may direct the Collateral Custodian to take any such
incidental action hereunder. With respect to other actions which are incidental to the
actions specifically delegated to the Collateral Custodian hereunder, the Collateral
Custodian shall not be required to take any such incidental action hereunder, but shall be
required to act or to refrain from acting (and shall be fully protected in acting or
refraining from acting) upon the direction of the Administrative Agent; provided that the
Collateral Custodian shall not be required to take any action hereunder at the request of
the Administrative Agent, any Secured Party or otherwise if the taking of such action, in
the reasonable determination of the Collateral Custodian, (x) shall be in violation of any
Applicable Law or contrary to any provisions of this Agreement or (y) shall expose the
Collateral Custodian to liability hereunder or otherwise (unless it has received indemnity
which it reasonably deems to be satisfactory with respect thereto). In the event the
Collateral Custodian requests the consent of the Administrative Agent and the Collateral
Custodian does not receive a consent (either positive or negative) from the Administrative
Agent within 10 Business Days of its receipt of such request, then the Administrative Agent
shall be deemed to have declined to consent to the relevant action.




          (iii) The Collateral Custodian shall not be liable for any action taken, suffered or
omitted by it in accordance with the request or direction of any Secured Party, to the
extent that this Agreement provides such Secured Party the right to so direct the Collateral
Custodian, or the Administrative Agent. The Collateral Custodian shall not be deemed to
have notice or knowledge of any matter hereunder, including an Event of Default, unless a
Responsible Officer of the Collateral Custodian has knowledge of such matter or written
notice thereof is received by the Collateral Custodian.



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     SECTION 12.03 Merger or Consolidation.



          Any Person (i) into which the Collateral Custodian may be merged or consolidated, (ii) that
may result from any merger or consolidation to which the Collateral Custodian shall be a party, or
(iii) that may succeed to the properties and assets of the Collateral Custodian substantially as a
whole, which Person in any of the foregoing cases executes an agreement of assumption to perform
every obligation of the Collateral Custodian hereunder, shall be the successor to the Collateral
Custodian under this Agreement without further act of any of the parties to this Agreement.




     SECTION 12.04 Collateral Custodian Compensation.



          As compensation for its Collateral Custodian activities hereunder, the Collateral Custodian
shall be entitled to the Collateral Custodian Fees from the Borrower as set forth in the Wells
Fargo Fee Letter, payable pursuant to the extent of funds available therefor pursuant to the
provisions of Section 2.04. The Collateral Custodian’s entitlement to receive the
Collateral Custodian Fees shall cease on the earlier to occur of: (i) its removal as Collateral
Custodian pursuant to Section 12.05, (ii) its resignation as Collateral Custodian pursuant
to Section 12.07 of this Agreement or (iii) the termination of this Agreement.




     SECTION 12.05 Collateral Custodian Removal.



          The Collateral Custodian may be removed, with or without cause, by the Administrative Agent by
notice given in writing to the Collateral Custodian (the “Collateral Custodian Termination
Notice”); provided, notwithstanding its receipt of a Collateral Custodian Termination Notice,
the Collateral Custodian shall continue to act in such capacity until a successor Collateral
Custodian has been appointed and has agreed to act as Collateral Custodian hereunder.




     SECTION 12.06 Limitation on Liability.



          (a) The Collateral Custodian may conclusively rely on and shall be fully protected in acting
upon any certificate, instrument, opinion, notice, letter, telegram or other document delivered to
it and that in good faith it reasonably believes to be genuine and that has been signed by the
proper party or parties. The Collateral Custodian may rely conclusively on and shall be fully
protected in acting upon (a) the written instructions of any designated officer of the
Administrative Agent or (b) the verbal instructions of the Administrative Agent.




          (b) The Collateral Custodian may consult counsel satisfactory to it and the advice or opinion
of such counsel shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.




          (c) The Collateral Custodian shall not be liable for any error of judgment, or for any act
done or step taken or omitted by it, in good faith, or for any mistakes of fact or law, or for
anything that it may do or refrain from doing in connection herewith except in the case of its
willful misconduct or grossly negligent performance or omission of its duties.




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          (d) The Collateral Custodian makes no warranty or representation and shall have no
responsibility (except as expressly set forth in this Agreement) as to the content, enforceability,
completeness, validity, sufficiency, value, genuineness, ownership or transferability of the
Collateral Portfolio, and will not be required to and will not make any representations as to the
validity or value (except as expressly set forth in this Agreement) of any of the Collateral
Portfolio. The Collateral Custodian shall not be obligated to take any legal action hereunder that
might in its judgment involve any expense or liability unless it has been furnished with an
indemnity reasonably satisfactory to it.




          (e) The Collateral Custodian shall have no duties or responsibilities except such duties and
responsibilities as are specifically set forth in this Agreement and no covenants or obligations
shall be implied in this Agreement against the Collateral Custodian.




          (f) The Collateral Custodian shall not be required to expend or risk its own funds in the
performance of its duties hereunder.




          (g) It is expressly agreed and acknowledged that the Collateral Custodian is not guaranteeing
performance of or assuming any liability for the obligations of the other parties hereto or any
parties to the Collateral Portfolio.




          (h) Subject in all cases to the last sentence of Section 12.02(c)(i), in case any
reasonable question arises as to its duties hereunder, the Collateral Custodian may, prior to the
occurrence of an Event of Default or the Facility Maturity Date, request instructions from the
Servicer and may, after the occurrence of an Event of Default or the Facility Maturity Date,
request instructions from the Administrative Agent, and shall be entitled at all times to refrain
from taking any action unless it has received instructions from the Servicer or the Administrative
Agent, as applicable. The Collateral Custodian shall in all events have no liability, risk or cost
for any action taken pursuant to and in compliance with the instruction of the Administrative
Agent. In no event shall the Collateral Custodian be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost profits), even if the
Collateral Custodian has been advised of the likelihood of such loss or damage and regardless of
the form of action.




     SECTION 12.07 Collateral Custodian Resignation.



          Collateral Custodian may resign and be discharged from its duties or obligations hereunder,
not earlier than 90 days after delivery to the Administrative Agent of written notice of such
resignation specifying a date when such resignation shall take effect. Upon the effective date of
such resignation, or if the Administrative Agent gives Collateral Custodian written notice of an
earlier termination hereof, Collateral Custodian shall (i) be reimbursed for any costs and expenses
Collateral Custodian shall incur in connection with the termination of its duties under this
Agreement and (ii) deliver all of the Required Loan Documents in the possession of Collateral
Custodian to the Administrative Agent or to such Person as the Administrative Agent may designate
to Collateral Custodian in writing upon the receipt of a request in the form of Exhibit N;
provided that the Borrower shall consent to any successor Collateral Custodian appointed by the
Administrative Agent (such consent not to be unreasonably withheld).




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Notwithstanding anything herein to the contrary, the Collateral Custodian may not resign prior
to a successor Collateral Custodian being appointed.




     SECTION 12.08 Release of Documents.



          (a) Release for Servicing. From time to time and as appropriate for the enforcement
or servicing of any of the Collateral Portfolio, the Collateral Custodian is hereby authorized
(unless and until such authorization is revoked by the Administrative Agent), upon written receipt
from the Servicer of a request for release of documents and receipt in the form annexed hereto as
Exhibit N, to release to the Servicer within two Business Days of receipt of such request,
the related Required Loan Documents or the documents set forth in such request and receipt to the
Servicer. All documents so released to the Servicer shall be held by the Servicer in trust for the
benefit of the Collateral Agent, on behalf of the Secured Parties in accordance with the terms of
this Agreement. The Servicer shall return to the Collateral Custodian the Required Loan Documents
or other such documents (i) promptly upon the request of the Administrative Agent, or (ii) when the
Servicer’s need therefor in connection with such foreclosure or servicing no longer exists, unless
the Loan Asset shall be liquidated, in which case, the Servicer shall deliver an additional request
for release of documents to the Collateral Custodian and receipt certifying such liquidation from
the Servicer to the Collateral Agent, all in the form annexed hereto as Exhibit N.




          (b) Limitation on Release. The foregoing provision with respect to the release to the
Servicer of the Required Loan Documents and documents by the Collateral Custodian upon request by
the Servicer shall be operative only to the extent that the Administrative Agent has consented to
such release. Promptly after delivery to the Collateral Custodian of any request for release of
documents, the Servicer shall provide notice of the same to the Administrative Agent. Any
additional Required Loan Documents or documents requested to be released by the Servicer may be
released only upon written authorization of the Administrative Agent. The limitations of this
paragraph shall not apply to the release of Required Loan Documents to the Servicer pursuant to the
immediately succeeding subsection.




          (c) Release for Payment. Upon receipt by the Collateral Custodian of the Servicer’s
request for release of documents and receipt in the form annexed hereto as Exhibit N (which
certification shall include a statement to the effect that all amounts received in connection with
such payment or repurchase have been credited to the Collection Account as provided in this
Agreement), the Collateral Custodian shall promptly release the related Required Loan Documents to
the Servicer.




     SECTION 12.09 Return of Required Loan Documents.



          The Borrower may, with the prior written consent of the Administrative Agent (such consent not
to be unreasonably withheld), require that the Collateral Custodian return each Required Loan
Document (a) delivered to the Collateral Custodian in error or (b) released from the Lien of the
Collateral Agent hereunder pursuant to Section 2.16, in each case by submitting to the
Collateral Custodian and the Administrative Agent a written request in the form of Exhibit
N hereto (signed by both the Borrower and the Administrative Agent) specifying the Collateral
Portfolio to be so returned and reciting that the conditions to such release have been met (and




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specifying the Section or Sections of this Agreement being relied upon for such release). The
Collateral Custodian shall upon its receipt of each such request for return executed by the
Borrower and the Administrative Agent promptly, but in any event within five Business Days, return
the Required Loan Documents so requested to the Borrower.




     SECTION 12.10 Access to Certain Documentation and Information Regarding the Collateral
Portfolio; Audits of Servicer.



          The Collateral Custodian shall provide to the Administrative Agent and each Lender Agent
access to the Required Loan Documents and all other documentation regarding the Collateral
Portfolio including in such cases where the Administrative Agent and each Lender Agent is required
in connection with the enforcement of the rights or interests of the Secured Parties, or by
applicable statutes or regulations, to review such documentation, such access being afforded
without charge but only (i) upon two Business Days prior written request, (ii) during normal
business hours and (iii) subject to the Servicer’s and the Collateral Custodian’s normal security
and confidentiality procedures. Prior to the Closing Date and periodically thereafter at the
discretion of the Administrative Agent and each Lender Agent, the Administrative Agent and each
Lender Agent may review the Servicer’s collection and administration of the Collateral Portfolio in
order to assess compliance by the Servicer with the Servicing Standard, as well as with this
Agreement and may conduct an audit of the Collateral Portfolio, and Required Loan Documents in
conjunction with such a review. Such review shall be (subject to Section 5.03(d)(ii))
reasonable in scope and shall be completed in a reasonable period of time. Without limiting the
foregoing provisions of this Section 12.10, from time to time on request of the
Administrative Agent, the Collateral Custodian shall permit certified public accountants or other
auditors acceptable to the Administrative Agent to conduct, at the expense of the Servicer (on
behalf of the Borrower), a review of the Required Loan Documents and all other documentation
regarding the Collateral Portfolio.




     SECTION 12.11 Bailment.



          The Collateral Custodian agrees that, with respect to any Required Loan Documents at any time
or times in its possession or held in its name, the Collateral Custodian shall be the agent and
bailee of the Collateral Agent, for the benefit of the Secured Parties, for purposes of perfecting
(to the extent not otherwise perfected) the Collateral Agent’s security interest in the Collateral
Portfolio and for the purpose of ensuring that such security interest is entitled to first priority
status under the UCC.




[Signature pages to follow.]




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          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.




	 	 	 	 	 
	THE BORROWER:       	FIFTH STREET FUNDING, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Fifth Street Funding, LLC

10 Bank Street, 12th Floor

White Plains, NY 10606

Attention: Bernard D. Berman

Facsimile: (914) 328-4214

Phone: (914) 286-6800

 	 



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Loan and Servicing Agreement



 









 








	 	 	 	 	 
	THE SERVICER:       	FIFTH STREET FINANCE CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Fifth Street Finance Corp.

10 Bank Street, 12th Floor

White Plains, NY 10606

Attention: Bernard D. Berman

Facsimile: (914) 328-4214

Phone: (914) 286-6800

 	 



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Loan and Servicing Agreement




 









 








	 	 	 	 	 
	 THE TRANSFEROR:       	FIFTH STREET FINANCE CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Fifth Street Finance Corp.

10 Bank Street, 12th Floor

White Plains, NY 10606

Attention: Bernard D. Berman

Facsimile: (914) 328-4214

Phone: (914) 286-6800

 	 



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Loan and Servicing Agreement



 









 








	 	 	 	 	 
	THE ADMINISTRATIVE AGENT:       	WELLS FARGO SECURITIES, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Wells Fargo Securities, LLC

One Wachovia Center, Mail Code:  NC0600

Charlotte, North Carolina 28288

Attention: Kevin Sunday

Facsimile No.: (704) 715-0067

Confirmation No: (704) 374-6230 	 
	 



Fifth Street Funding, LLC

Loan and Servicing Agreement



 









 





	 	 	 	 	 
	INSTITUTIONAL LENDER:        	WACHOVIA BANK, NATIONAL
 ASSOCIATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Wachovia Bank, National Association

One Wachovia Center, Mail Code: NC0600

Charlotte, North Carolina 28288

Attention: Kevin Sunday

Facsimile No.: (704) 715-0067

Confirmation No: (704) 374-6230

 	 
	 	 	 



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Loan and Servicing Agreement




 









 








	 	 	 	 	 
	THE COLLATERAL AGENT: 	
WELLS FARGO BANK, NATIONAL
 ASSOCIATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Wells Fargo Bank, National Association

9062 Old Annapolis Rd.

Columbia, Maryland 21045

Attn: CDO Trust Services—Fifth Street

Funding, LLC

Fax: (281) 667-3933

Phone: (410) 884-2000

 	 
	 	 	 
	 



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Loan and Servicing Agreement



 









 








	 	 	 	 	 
	THE  ACCOUNT BANK:                  	WELLS FARGO BANK, NATIONAL
 ASSOCIATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 Wells Fargo Bank, National Association

9062 Old Annapolis Rd.

Columbia, Maryland 21045

Attn: CDO Trust Services—Fifth Street

Funding, LLC

Fax: (281) 667-3933

Phone: (410) 884-2000

 	 
	 	 	 



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Loan and Servicing Agreement



 









 








	 	 	 	 	 
	THE  COLLATERAL CUSTODIAN:              	WELLS FARGO BANK, NATIONAL
 ASSOCIATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Wells Fargo Bank, National Association

ABS Custody Vault

1055 10th Avenue SE

MAC N9401-011

Minneapolis, MN 55414

Attention: Corporate Trust Services — Asset-

Backed Securities Vault

Phone: (612) 667-8058

Fax: (612) 667-1080

 	 
	 	With a copy to:

 	 
	 	Wells Fargo Bank, National Association

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, MN 55479

Attention: Corporate Trust Services — Asset-

Backed Administration

Phone: (612) 667-8058

Fax: (612) 667-3464

 	 
	 	With a copy to:

 	 
	 	Wells Fargo Bank, National Association

9062 Old Annapolis Rd.

Columbia, Maryland 21045

Attn: CDO Trust Services—Fifth Street
Funding, LLC

Fax: (281) 667-3933

Phone: (410) 884-2000

 	 
	 	 	 
	 	 	 
	 	 	 
	 




Fifth Street Funding, LLC

Loan and Servicing Agreement