Document:

Exhibit 10.8

 

Execution Version

 

	
 
    	
Master   Repurchase
    
	

    	
Agreement
   September 1996 Version
    

 

	
Dated   as of
    	
September 11,   2014
    	
 
    
	
 
    	
 
    	
 
    
	
Between:
    	
Goldman   Sachs Bank USA
    	
(“Party A”)
    
	
 
    	
 
    	
 
    
	
and
    	
Strafford   Funding LLC
    	
(“Party B”)
    

 

1.                                      Applicability

 

From time to time the parties hereto may enter into transactions in which one party (“Seller”) agrees to transfer to the other (“Buyer”) securities or other assets (“Securities”) against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a date certain or on demand, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto and in any other annexes identified herein or therein as applicable hereunder.

 

2.                                      Definitions

 

(a)         “Act of Insolvency”, with respect to any party, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratorium, dissolution, delinquency or similar law, or such party seeking the appointment or election of a receiver, conservator, trustee, custodian or similar official for such party or any substantial part of its property, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appointment or election, (ii) the commencement of any such case or proceeding against such party, or another seeking such an appointment or election, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for relief, such an appointment or election, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days, (iii) the making by such party of a general assignment for the benefit of creditors, or (iv) the admission in writing by such party of such party’s inability to pay such party’s debts as they become due;

 

(b)         “Additional Purchased Securities”, Securities provided by Seller to Buyer pursuant to Paragraph 4 (a) hereof,

 

(c)          “Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by application of the Buyer’s Margin Percentage to the Repurchase Price for such Transaction as of such date;

 

(d)         “Buyer’s Margin Percentage”, with respect to any Transaction as of any date, a percentage (which may be equal to the Seller’s Margin Percentage) agreed to by Buyer and Seller or, in the absence of

 

STRAFFORD FUNDING LLC

 

 

any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction;

 

(e)          “Confirmation”, the meaning specified in Paragraph 3(b) hereof;

 

(f)           “Income”, with respect to any Security at any time, any principal thereof and all interest, dividends or other distributions thereon;

 

(g)          “Margin Deficit”, the meaning specified in Paragraph 4(a) hereof;

 

(h)         “Margin Excess”, the meaning specified in Paragraph 4(b) hereof;

 

(i)             “Margin Notice Deadline”, the time agreed to by the parties in the relevant Confirmation, Annex I hereto or otherwise as the deadline for giving notice requiring same-day satisfaction of margin maintenance obligations as provided in Paragraph 4 hereof (or, in the absence of any such agreement, the deadline for such purposes established in accordance with market practice);

 

(j)            “Market Value”, with respect to any Securities as of any date, the price for such Securities on such date obtained from a generally recognized source agreed to by the parties or the most recent closing bid quotation from such a source, plus accrued Income to the extent not included therein (other than any Income credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to market practice for such Securities);

 

(k)         “Price Differential”, with respect to any Transaction as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction);

 

(1)         “Pricing Rate”, the per annum percentage rate for determination of the Price Differential;

 

(m)     “Prime Rate”, the prime rate of U.S. commercial banks as published in The Wall Street Journal (or, if more than one such rate is published, the average of such rates);

 

(n)         “Purchase Date”, the date on which Purchased Securities are to be transferred by Seller to Buyer;

 

(o)         “Purchase Price”, (i) on the Purchase Date, the price at which Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree otherwise, such price increased by the amount of any cash transferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s obligations under clause (ii) of Paragraph 5 hereof;

 

(p)         “Purchased Securities”, the Securities transferred by Seller to Buyer in a Transaction hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term “Purchased Securities” with respect to any Transaction at any time also shall include Additional

 

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Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude Securities returned pursuant to Paragraph 4(b) hereof;

 

(q)         “Repurchase Date”, the date on which Seller is to repurchase the Purchased Securities from Buyer, including any date determined by application of the provisions of Paragraph 3(c) or 11 hereof;

 

(r)            “Repurchase Price”, the price at which Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination;

 

(s)           “Seller’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by application of the Seller’s Margin Percentage to the Repurchase Price for such Transaction as of such date;

 

(t)            “Seller’s Margin Percentage”, with respect to any Transaction as of any date, a percentage (which may be equal to the Buyer’s Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction.

 

3.                                      Initiation; Confirmation; Termination

 

(a)         An agreement to enter into a Transaction may be made orally or in writing at the initiation of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to an account of Seller.

 

(b)         Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a “Confirmation”). The Confirmation shall describe the Purchased Securities (including CUSIP number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the Transaction not inconsistent with this Agreement. The Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Confirmation relates, unless with respect to the Confirmation specific objection is made promptly after receipt thereof. In the event of any conflict between the terms of such Confirmation and this Agreement, this Agreement shall prevail.

 

(c)          In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior to the business day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the

 

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obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase Price to an account of Buyer.

 

4.                                      Margin Maintenance

 

(a)         If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Buyer is less than the aggregate Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by notice to Seller require Seller in such Transactions, at Seller’s option, to transfer to Buyer cash or additional Securities reasonably acceptable to Buyer (“Additional Purchased Securities”), so that the cash and aggregate Market Value of the Purchased Securities, including any such Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer’s Margin Amount (decreased by the amount of any Margin Deficit as of such date arising from any Transactions in which such Buyer is acting as Seller).

 

(b)         If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Seller exceeds the aggregate Seller’s Margin Amount for all such Transactions at such time (a “Margin Excess”), then Seller may by notice to Buyer require Buyer in such Transactions, at Buyer’s option, to transfer cash or Purchased Securities to Seller, so that the aggregate Market Value of the Purchased Securities, after deduction of any such cash or any Purchased Securities so transferred, will thereupon not exceed such aggregate Seller’s Margin Amount (increased by the amount of any Margin Excess as of such date arising from any Transactions in which such Seller is acting as Buyer).

 

(c)          If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at or before the Margin Notice Deadline on any business day, the party receiving such notice shall transfer cash or Additional Purchased Securities as provided in such subparagraph no later than the close of business in the relevant market on such day. If any such notice is given after the Margin Notice Deadline, the party receiving such notice shall transfer such cash or Securities no later than the close of business in the relevant market on the next business day following such notice.

 

(d)         Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as shall be agreed upon by Buyer and Seller.

 

(e)          Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin Deficit or Margin Excess, as the case may be, exceeds a specified dollar amount or a specified percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be agreed to by Buyer and Seller prior to entering into any such Transactions).

 

(f)           Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be exercised whenever such a Margin Deficit or Margin Excess exists with respect to any single Transaction hereunder (calculated without regard to any other Transaction outstanding under this Agreement).

 

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5.                                      Income Payments

 

Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in respect of the Securities that is not otherwise received by Seller, to the full extent it would be so entitled if the Securities had not been sold to Buyer. Buyer shall, as the parties may agree with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall reasonably determine in its discretion), on the date such Income is paid or distributed either (i) transfer to or credit to the account of Seller such Income with respect to any Purchased Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence (A) to the extent that such action would result in the creation of a Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an Event of Default with respect to Seller has occurred and is then continuing at the time such Income is paid or distributed.

 

6.                                      Security Interest

 

Although the parties intend that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Securities with respect to all Transactions hereunder and all Income thereon and other proceeds thereof.

 

7.                                      Payment and Transfer

 

Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank and such other documentation as the party receiving possession may reasonably request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank, or (iii) shall be transferred by any other method mutually acceptable to Seller and Buyer.

 

8.                                      Segregation of Purchased Securities

 

To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be segregated from other securities in its possession and shall be identified as subject to this Agreement. Segregation may be accomplished by appropriate identification on the books and records of the holder, including a financial or securities intermediary or a clearing corporation. All of Seller’s interest in the Purchased Securities shall pass to Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Securities or otherwise selling, transferring, pledging or hypothecating the Purchased Securities, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to Seller pursuant to Paragraph 3, 4

 

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or 11 hereof, or of Buyer’s obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof.

 

Required Disclosure for Transactions in Which the Seller Retains Custody of the Purchased Securities

 

Seller is not permitted to substitute other securities for those subject to this Agreement and therefore must keep Buyer’s securities segregated at all times unless in this Agreement Buyer grants Seller the right to substitute other securities. If Buyer grants the right to substitute, this means that Buyer’s securities will likely be commingled with Seller’s own securities during the trading day. Buyer is advised that during any trading day that Buyer’s securities are commingled with Seller’s securities, they [will]* [may]** be subject to liens granted by Seller to [its clearing bank]* [third parties] ** and may be used by Seller for deliveries on other securities transactions. Whenever the securities are commingled, Seller’s ability to resegregate substitute securities for Buyer will be subject to Seller’s ability to satisfy [the clearing] * [any]** lien or to obtain substitute securities.

 

*                      Language to be used under 17 C.F.R, §403.4 (e) if Seller is a government securities broker or dealer other than a financial institution.

 

**                                  Language to be used under 17 C.F.R. §403.5 (d) if Seller is a financial institution.

 

9.                                      Substitution

 

(a)         Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for any Purchased Securities. Such substitution shall be made by transfer to Buyer of such other Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall be deemed to be Purchased Securities.

 

(b)         In Transactions in which Seller retains custody of Purchased Securities, the parties expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of other Securities for Purchased Securities; provided, however, that such other Securities shall have a Market Value at least equal to the Market Value of the Purchased Securities for which they are substituted.

 

10. Representations

 

Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in writing, in the form of an annex hereto or otherwise, in advance of any Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal), (iv) it has obtained all authorizations of any governmental body required in

 

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connection with this Agreement and the Transactions hereunder and such authorizations are in full force and effect and (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance, charter, bylaw or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it.

 

11. Events of Default

 

In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one business day’s notice, to comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any representation made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or its intention not to, perform any of its obligations hereunder (each an “Event of Default”):

 

(a)         The nondefaulting party may, at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency), declare an Event of Default to have occurred hereunder and, upon the exercise or deemed exercise of such option, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). The nondefaulting party shall (except upon the occurrence of an Act of Insolvency) give notice to the defaulting party of the exercise of such option as promptly as practicable.

 

(b)         In all Transactions in which the defaulting party is acting as Seller, if the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, (i) the defaulting party’s obligations in such Transactions to repurchase all Purchased Securities, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subparagraph (a) of this Paragraph, shall thereupon become immediately due and payable, (ii) all Income paid after such exercise or deemed exercise shall be retained by the nondefaulting party and applied to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder, and (iii) the defaulting party shall immediately deliver to the nondefaulting party any Purchased Securities subject to such Transactions then in the defaulting party’s possession or control.

 

(c)          In all Transactions in which the defaulting party is acting as Buyer, upon tender by the nondefaulting party of payment of the aggregate Repurchase Prices for all such Transactions, all right, title and interest in and entitlement to all Purchased Securities subject to such Transactions shall be deemed transferred to the nondefaulting party, and the defaulting party shall deliver all such Purchased Securities to the nondefaulting party.

 

(d)         If the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, the nondefaulting party, without prior notice to the defaulting party, may:

 

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(i)          as to Transactions in which the defaulting party is acting as Seller, (A) immediately sell, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory, any or all Purchased Securities subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Securities, to give the defaulting party credit for such Purchased Securities in an amount equal to the price therefor on such date, obtained from a generally recognized source or the most recent closing bid quotation from such a source, against the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder; and

 

(ii)       as to Transactions in which the defaulting party is acting as Buyer, (A) immediately purchase, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory, securities (“Replacement Securities”) of the same class and amount as any Purchased Securities that are not delivered by the defaulting party to the nondefaulting party as required hereunder or (B) in its sole discretion elect, in lieu of purchasing Replacement Securities, to be deemed to have purchased Replacement Securities at the price therefor on such date, obtained from a generally recognized source or the most recent closing offer quotation from such a source.

 

Unless otherwise provided in Annex I, the parties acknowledge and agree that (1) the Securities subject to any Transaction hereunder are instruments traded in a recognized market, (2) in the absence of a generally recognized source for prices or bid or offer quotations for any Security, the nondefaulting party may establish the source therefor in its sole discretion and (3) all prices, bids and offers shall be determined together with accrued Income (except to the extent contrary to market practice with respect to the relevant Securities).

 

(e)          As to Transactions in which the defaulting party is acting as Buyer, the defaulting party shall be liable to the nondefaulting party for any excess of the price paid (or deemed paid) by the nondefaulting party for Replacement Securities over the Repurchase Price for the Purchased Securities replaced thereby and for any amounts payable by the defaulting party under Paragraph 5 hereof or otherwise hereunder.

 

(f)           For purposes of this Paragraph 11, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is acting as Buyer shall not increase above the amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed exercise by the nondefaulting party of the option referred to in subparagraph (a) of this Paragraph.

 

(g)          The defaulting party shall be liable to the nondefaulting party for (i) the amount of all reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and commissions) of entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a result of an Event of Default, and (iii) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction.

 

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(h)         To the extent permitted by applicable law, the defaulting party shall be liable to the nondefaulting party for interest on any amounts owing by the defaulting party hereunder, from the date the defaulting party becomes liable for such amounts hereunder until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in full by the exercise of the nondefaulting party’s rights hereunder. Interest on any sum payable by the defaulting party to the nondefaulting party under this Paragraph 11(h) shall be at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate.

 

(i)             The nondefaulting party shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or applicable law.

 

12. Single Agreement

 

Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.

 

13. Notices and Other Communications

 

Any and all notices, statements, demands or other communications hereunder may be given by a party to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified in Annex II hereto, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices, demands and requests hereunder may be made orally, to be confirmed promptly in writing, or by other communication as specified in the preceding sentence.

 

14. Entire Agreement; Severability

 

This Agreement shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

15. Non-assignability; Termination

 

(a)         The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party, and

 

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any such assignment without the prior written consent of the other party shall be null and void. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may be terminated by either party upon giving written notice to the other, except that this Agreement shall, notwithstanding such notice, remain applicable to any Transactions then outstanding.

 

(b)         Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning, charging or otherwise dealing with all or any part of its interest in any sum payable to it under Paragraph 11 hereof.

 

16. Governing Law

 

This Agreement shall be governed by the laws of the State of New York without giving effect to the conflict of law principles thereof.

 

17. No Waivers, Etc.

 

No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure here-from shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date.

 

18. Use of Employee Plan Assets

 

(a)         If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed.

 

(b)         Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition.

 

(c)          By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition which Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party.

 

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19. Intent

 

(a)         The parties recognize that each Transaction is a “repurchase agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Securities subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

 

(b)         It is understood that either party’s right to liquidate Securities delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended.

 

(c)          The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

 

(d)         It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).

 

20. Disclosure Relating to Certain Federal Protections

 

The parties acknowledge that they have been advised that:

 

(a)         in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder;

 

(b)         in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

 

(c)          in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

 

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GOLDMAN SACHS BANK USA
    	
 
    	
STRAFFORD   FUNDING LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:   
    	
/s/   Meera Bhutta
    	
 
    	
By:   
    	
/s/   Gerald F. Stahlecker
    
	
Title:
    	
Managing   Director
    	
 
    	
Name:   
    	
Gerald   F. Stahlecker
    
	
Date:   
    	
9/11/2014
    	
 
    	
Title:   
    	
Executive   Vice President
    
	
 
    	
 
    	
 
    	
Date:   
    	
9/11/2014
    

 

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Annex I

 

Supplemental Terms and Conditions

 

This Annex I forms a part of the Master Repurchase Agreement dated as of September 11, 2014 (the “Agreement”) between Goldman Sachs Bank USA (“Party A” or “Buyer”) and Strafford Funding LLC (“Party B” or “Seller”).  Capitalized terms used but not defined in this Annex I shall have the meanings ascribed to them in the Agreement.

 

1.                                      Other Applicable Annexes.  In addition to this Annex I the following Annexes and any Schedules thereto shall form a part of this Agreement and shall be applicable thereunder:

 

	
 
    	
 
    	
Applicable if checked and initialed below:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Party A
    	
 
    	
Party B
    
	
Annex   II (Names and Addresses)
    	
 
    	
x
    	
 
    	
 
    	
 
    	
 
    
	
Annex   III (International Transactions)
    	
 
    	
o
    	
 
    	
 
    	
 
    	
 
    
	
Annex   IV (Party Acting as Agent)
    	
 
    	
o
    	
 
    	
 
    	
 
    	
 
    
	
Annex   VII (Transactions Involving Registered Investment Companies)
    	
 
    	
o
    	
 
    	
 
    	
 
    	
 
    
	
Annex   VIII (Transactions in Equity Securities)
    	
 
    	
o
    	
 
    	
 
    	
 
    	
 
    
	
Annex   IX (Transactions Involving Certain Japanese Financial Institutions)
    	
 
    	
o
    	
 
    	
 
    	
 
    	
 
    
	
Annex   XI (Tri-Party Transactions)
    	
 
    	
o
    	
 
    	
 
    	
 
    	
 
    

 

2.                                      Confirmations; Etc.

 

Confirmations in accordance with Paragraph 3(b) of the Agreement are in all cases to be furnished by Party A.  Notwithstanding anything set forth in Paragraph 3(b) of the Agreement to the contrary, to the extent of any conflict between the terms of this Agreement (including, without limitation, each annex thereto) and the letter agreement between Buyer and Seller dated as of September 11, 2014 (together with the annexes thereto and as amended and supplemented from time to time, the “Master Confirmation”), the terms set forth in the Master Confirmation shall prevail.  Each Transaction governed by the Agreement shall be a Transaction that has been entered into pursuant to the terms of the Master Confirmation, and no other Transactions shall be entered into hereunder.

 

3.                                      Definitions.

 

(a)                                 Paragraph 2 of the Agreement shall be amended by:

 

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(i)                                     in clause (iv) of the definition of “Act of Insolvency” in Paragraph 2(a), inserting the words “an Authorized Representative of” immediately after the words “admission in writing by”, and

 

(ii)                                  deleting the definition of “Buyer’s Margin Percentage” in its entirety and replacing it with the following:

 

“Buyer’s Margin Percentage”, with respect to any Transaction as of any date, 177.77777778%;

 

(iii)                               deleting the definition of “Income” in its entirety and replacing it with the following:

 

“Income”, with respect to any Security at any time, all interest or other distributions thereon excluding Cash Principal Payments;

 

(iv)                              deleting the definition of “Margin Notice Deadline” in its entirety and replacing it with the following:

 

“Margin Notice Deadline”, 10:00 A.M. New York time;

 

(v)                                 deleting the definition of “Market Value” in its entirety and replacing it with the following:

 

“Market Value”, the meaning assigned to such term in the Master Confirmation;

 

(vi)                              deleting the definition of “Pricing Rate” in its entirety and replacing it with the following:

 

“Pricing Rate”, the per annum percentage rate for determination of the Financing Fee Payments;

 

(vii)                           deleting the definition of “Purchased Securities” in its entirety and replacing it with the following:

 

“Purchased Securities”, the Securities transferred by Seller to Buyer in a Transaction hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof;

 

(viii)                        deleting the definition of “Repurchase Price” in its entirety and replacing it with the following:

 

“Repurchase Price”, the price at which Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of (i) the Purchase Price for such Transaction plus (ii) the ratable share of the accrued and unpaid Financing Fee Payments allocated to such Transaction by the Calculation Agent for such Transaction, as of the date of such determination, minus 

 

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(iii) the aggregate Repurchase Price Reduction Amount for such Transaction, as of the date of such determination and any other amounts applied to reduce the Purchase Price in accordance with this Agreement;

 

(ix)                              deleting the definition of “Seller’s Margin Amount” in its entirety.

 

(x)                                 deleting the definition of “Seller’s Margin Percentage” in its entirety.

 

(b)                                  Paragraph 2 of the Agreement shall be amended by the addition of the following definitions:

 

(u)                                 “Affiliate”, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person.  For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person;

 

(v)                                 “Authorized Representative”, President, Executive Vice President, Vice President or Chief Financial Officer of Party B; or the Investment Manager or Investment Advisor of Party B;

 

(w)                               “Cash Principal Payments”, the meaning assigned to such term in the Master Confirmation;

 

(x)                                 “Counterparty Application Amount”, the meaning assigned to such term in the Master Confirmation;

 

(y)                                 “Financing Fee Payments”, the meaning assigned to such term in the Master Confirmation;

 

(z)                                  “Indebtedness”, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money;

 

(aa)                          “Independent Director”, 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 Party B or any of its Affiliates (other than his or her service as an Independent Director of Affiliates of Party B that are structured to be “bankruptcy remote” in a manner substantially similar to Party B); (ii) a customer or supplier of Party B or any of its Affiliates (other than a supplier of his or her service as an Independent Director of Party B or such Affiliate); 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 applicable federal or state law relating to bankruptcy and (ii) at least 

 

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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;

 

(bb)                          “Lien”, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset;

 

(cc)                            “Prospective Make-Whole Event”, at any date:

 

(1)                                 an Event of Default with respect to Party B that has occurred and is continuing; or

 

(2)                                 the Repurchase Date of all Transactions has occurred (other than due to a Regulatory Change); or

 

(3)                                 the sum of the Repurchase Prices of all Purchased Securities on such date is less than or equal to U.S.$50,000,000;

 

(dd)                          “Prospective Make-Whole Payment Amount”, at any date, the Make-Whole Amount (as defined in the Master Confirmation) that would be calculated on such date;

 

(ee)                            “Material Action”, to:

 

(i)                                     file or consent to the filing of any bankruptcy, insolvency or reorganization petition under any applicable federal, state or other law relating to a bankruptcy naming Party B as debtor or other initiation of bankruptcy or insolvency proceedings by or against Party B, or otherwise seek, with respect to Party B, relief under any laws relating to the relief from debts or the protection of debtors generally;

 

(ii)                                  seek or consent to the appointment of a receiver, liquidator, conservator, assignee, trustee, sequestrator, custodian or any similar official for Party B or all or any portion of its properties;

 

(iii)                               make or consent to any assignment for the benefit of Party B’s creditors generally;

 

(iv)                              admit in writing the inability of Party B to pay its debts generally as they become due;

 

(v)                                 petition for or consent to substantive consolidation of Party B with any other person;

 

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(vi)                              amend or alter or otherwise modify or remove all or any part of Section 9(j) of Party B’s Limited Liability Company Agreement; or

 

(vii)                           amend, alter or otherwise modify or remove all or any part of the definition of “Independent Director” or the definition of “Material Action” in Party B’s Limited Liability Company Agreement;

 

(ff)                              “Organizational Documents”, the meaning specified in subparagraph (xi) of Paragraph 11(a) hereof;

 

(gg)                            “Regulatory Change”, the meaning assigned to such term in the Master Confirmation;

 

(hh)                          “Repurchase Price Reduction Amount”, the meaning assigned to such term in the Master Confirmation;

 

(ii)                                  “Specified Transaction” means (a) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into between Party A (or any of its Affiliates) and Party B which is not a Transaction under this Agreement but (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the Master Confirmation;

 

(jj)                                “Master Confirmation”, the meaning assigned to such term in Annex I;

 

(kk)                          “Facility End Date”, the meaning assigned to such term in the Master Confirmation.

 

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(c)                                        Paragraph 2 of the Agreement shall be amended by deleting the definitions of “Price Differential” and the Agreement shall be construed as if the term “Price Differential” does not exist.

 

4.                                      Margin Maintenance.

 

(a)                                 Paragraph 4 of the Agreement is amended by replacing subparagraph (a) thereof with the following:

 

“(a)                           If at any time the Market Value is less than the Buyer’s Required Amount for all Transactions outstanding hereunder at such time (a “Margin Deficit”), then Buyer may by notice (a “Margin Call Notice”) to Seller require Seller in such Transactions to transfer to Buyer cash in U.S. dollars, so that the cash and such Market Value will thereupon equal or exceed such Buyer’s Required Amount.

 

For purposes hereof, the “Buyer’s Required Amount” at any time is equal to (i) the Buyer’s Margin Amount for all Transactions at such time plus (ii) if a Prospective Make-Whole Event has occurred and is then continuing, the Prospective Make-Whole Payment Amount at such time.”

 

(b)                                 Paragraph 4(b) of the Agreement shall not apply to any Transaction hereunder and the Agreement shall be construed as if the concept of “Margin Excess” does not exist.

 

(c)                                  Paragraph 4 of the Agreement is amended by replacing subparagraph (c) thereof with the following:

 

“(c)                            If any Margin Call Notice is given by Buyer at or before the Margin Notice Deadline on any business day, Seller shall transfer cash in U.S. dollars to Buyer no later than 6:00 P.M. New York time on the next business day following such notice.  If any Margin Call Notice is given by Buyer after the Margin Notice Deadline, Seller shall transfer such cash to Buyer no later than 6:00 P.M. New York time on the second business day following such notice.”

 

(d)                                 Paragraph 4(d) of the Agreement shall not apply to any Transaction hereunder.

 

(e)                                  Pursuant to Paragraph 4(e) of the Agreement, Party A and Party B acknowledge and agree that the rights of Party B under Paragraph 4(a) of the Agreement may be exercised only where a Margin Deficit exceeds $1,000,000 on such date of determination.

 

(f)                                   Paragraph 4 of the Agreement is amended by adding the following paragraph at the end thereto:

 

“(g)                            In the event that (i) upon the issuance of any Margin Call Notice pursuant to Paragraph 4(a) of the Agreement, Seller transfers to Buyer cash in U.S. dollars to cure the related Margin Deficit (such cash, the 

 

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“Margin Deficit Cure Collateral”; the amount of such cash, the “Margin Deficit Cure Collateral Amount”; such cure of the Margin Deficit by Seller, a “Margin Deficit Cure Event”) and (ii) after such Margin Deficit Cure Event, the Market Value plus the Margin Deficit Cure Collateral Amount equals or exceeds Buyer’s Required Amount for all such Transactions then, so long as immediately before and after giving effect thereto (A) no Event of Default shall have occurred with respect to Seller, (B) no event has occurred and is continuing that, with notice or lapse of time or both, would constitute an Event of Default with respect to Seller and (C) no Margin Deficit shall have occurred and remain unsatisfied,

 

(1)                                 upon written notice to Buyer (such notice, a “Market Value Re-determination Request Notice”), Seller may request that Buyer return an amount (such amount, the “Excess Cure Collateral Refund Amount”) equal to (x) the Margin Deficit Cure Collateral Amount less (y) an amount equal to the Buyer’s Required Amount less the Market Value (which amount under this clause (y) cannot be less than zero); and

 

(2)                                 if (x) Buyer receives the Market Value Re-determination Request Notice prior to 10:00 A.M. New York time on any business day, Buyer shall return such Excess Cure Collateral Refund Amount to Seller no later than 6:00 P.M. New York time on the next business day following such notice and (y) Buyer receives the Market Value Re-determination Request Notice after 10:00 A.M. New York time on any business day, Buyer shall return such Excess Cure Collateral Refund Amount to Seller no later than 6:00 P.M. New York time on the second business day following such notice, so long as, in the case of each of the foregoing clauses (x) and (y), Buyer shall be satisfied in its sole and absolute discretion exercised in good faith that at such time of determination the Market Value plus the Remaining Margin Deficit Cure Collateral Amount as of such time of determination is equal to or exceeds Buyer’s Required Amount for all Transactions.

 

As used herein the “Remaining Margin Deficit Cure Collateral” means, as at any time of determination, an amount (which may be zero) equal to (a) the Margin Deficit Cure Collateral Amount at such time less (b) the Excess Cure Collateral Refund Amount at such time.”

 

5.                                      Representations and Covenants.  Paragraph 10 of the Agreement is hereby amended by adding an “(a)” before the first word of the first paragraph and add the following new paragraphs at the end thereof:

 

(b)                                 Each of Buyer and Seller further represents and warrants that, with respect to each Transaction under the Agreement:

 

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Non-Reliance.  It has made its own determinations regarding the tax and accounting treatment of all aspects of the Transaction including, without limitation, the tax and accounting treatment of any Income paid with respect to the Securities.  It is acting for its own account, and it has made its own independent decisions to enter into that Transaction. It has evaluated for itself whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary.  It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction.  No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction.

 

Assessment and Understanding.  It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction.  It is also capable of assuming, and assumes, the risks of that Transaction.

 

Status of Parties.  The other party is not acting as a fiduciary for or an adviser to it in respect of that Transaction.

 

(c)                                  Seller hereby represents and covenants for so long as any Transaction is outstanding hereunder that Seller has since its formation, and shall at all times, abide by the following requirements, the compliance with which it acknowledges that Buyer is relying upon in entering into this Agreement:

 

(1)                                 maintains at least one Independent Director;

 

(2)                                 has a board of directors separate from that of any other person (although members of the board of directors of Seller may serve as directors of one or more Affiliates of Seller);

 

(3)                                 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;

 

(4)                                 not commingle its assets with assets of any other person;

 

(5)                                 conduct its business in its own name and strictly comply with all organizational formalities necessary to maintain its separate existence (and all such formalities have been complied with since the Seller’s formation);

 

(6)                                 maintain separate financial statements (it being understood that, if Party B’s financial statements are part of a consolidated group with its Affiliates, then any such consolidated statements shall contain a note 

 

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indicating Party B’s separateness from any such Affiliates and that its assets are not available to pay the debts of such Affiliate);

 

(7)                                 pay its own liabilities only out of its own funds;

 

(8)                                 maintain an arm’s-length relationship with its Affiliates;

 

(9)                                 pay the salaries of its own employees, if any;

 

(10)                          not hold out its credit or assets as being available to satisfy the obligations of others;

 

(11)                          pay its fair and reasonable share of overhead for shared office space, if any;

 

(12)                          use separate stationery, invoices and checks and not of any other entity (unless such entity is clearly designated as being Party B’s agent);

 

(13)                          not pledge its assets as security for the obligations of any other person;

 

(14)                          correct any known misunderstanding regarding its separate identity;

 

(15)                          maintain adequate capital in light of its contemplated business purpose, transactions and liabilities and pay its operating expenses and liabilities from its own assets;

 

(16)                          not take any Material Action without the unanimous affirmative vote of each member of its board of directors, including, in all cases, the Independent Director;

 

(17)                          is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws of any jurisdiction or the liquidation of all or a major portion of its assets or property, and it has no knowledge of any person contemplating the filing of any such petition against it;

 

(18)                          at all times since its formation has been, and will continue to be, a duly formed and existing limited liability company organized under the laws of the State of Delaware; and Seller’s member at all times since its formation has been, and will continue to be, duly qualified in each jurisdiction in which such qualification was or may be necessary for the conduct of its business;

 

(19)                          has complied, and will continue to comply, with the provisions of its Organizational Documents and the laws of the jurisdiction of its formation relating to limited liability companies;

 

(20)                          has not any time since its formation assumed or guaranteed, and will not assume or guarantee, the liabilities of its member, any Affiliate of its member, or any other persons;

 

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(21)                          not sell, exchange, lease or otherwise transfer all or substantially all of the assets of Party B or consolidate or merge Party B with another person whether by means of a single transaction or a series of related transactions; and

 

(22)                      comply with all assumptions as to Seller set forth in all legal opinions delivered with respect to bankruptcy non-consolidation matters in connection with this Agreement.

 

On the Purchase Date for each Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it.

 

6.                                     Agreement to Deliver Information.

 

Party B agrees to deliver the following documents/information:

 

	
Form/Document/ Certificate
    	
 
    	
Date by which
   to be delivered
    
	
Evidence   reasonably satisfactory to Party A of the signing authority and specimen   signature of any individual executing this Agreement
    	
 
    	
Upon   or promptly following execution of this Agreement
    
	
 
    	
 
    	
 
    
	
Audited   consolidated annual financial statements of Party B’s parent, FS Energy and   Power Fund (“FSEP”)
    	
 
    	
Within   120 days of the end of FSEP’s fiscal year
    
	
 
    	
 
    	
 
    
	
Unaudited   quarterly financial statements of FSEP
    	
 
    	
Within   45 days after the end of each fiscal quarter of FSEP (other than the last   fiscal quarter of each fiscal year of FSEP)
    
	
 
    	
 
    	
 
    
	
Such   other financial or other information with respect to Party B as Party A may   reasonably request from time to time
    	
 
    	
Within   five (5) Business Days after request by Party A
    
	
 
    	
 
    	
 
    
	
For   each Non-Private Underlying Asset (as defined in the Master Confirmation),   all financial information (other than material non-public information)   relating to the obligors on such Underlying Asset and made available by such   obligors to the lenders of record of such Underlying Asset in accordance with   the documents governing such Underlying Asset.
    	
 
    	
Within   five (5) Business Days of such information being made available to Party   B, FSEP or FSEP’s affiliates. Such information shall be made available in an   electronic data room that is at all times available to Party A.
    
	
 
    	
 
    	
 
    
	
For   each Private Underlying Asset (as defined in the Master Confirmation), all   bank syndicate information 
    	
 
    	
Within   five (5) Business Days of such information 
    

 

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Form/Document/ Certificate
    	
 
    	
Date by which
   to be delivered
    
	
relating   to the obligors on such Underlying Asset and made available by such obligors   to the lenders of record of such Underlying Asset in accordance with the   documents governing such Underlying Asset (but subject to satisfaction of   applicable confidentiality requirements under the documents governing such   Underlying Asset). For purposes of the foregoing, “bank syndicate   information” shall not include any material non-public information relating   to the obligors on a Private Underlying Asset that not been made available to   all of the private-side lenders of record under the documents governing such   Underlying Asset.
    	
 
    	
being   made available to Party B, FSEP or FSEP’s affiliates. Such information shall   be made available in an electronic data room that is at all times available   to Party A.
    
	
 
    	
 
    	
 
    
	
A   copy of each Commitment to purchase or sell an Underlying Asset entered into   by the Security Issuer from time to time (with terms used in this paragraph   without definition having the meanings assigned to them in the Master Confirmation).
    	
 
    	
Within   two Business Days
    
	
 
    	
 
    	
 
    
	
Investment   management agreement or other evidence of investment management authority.
    	
 
    	
Upon   request by Party A
    
	
 
    	
 
    	
 
    
	
Favorable   written opinions (addressed to Party A) of Dechert LLP as to New York,   Delaware and U.S. federal law, and covering such matters relating to Party B,   this Agreement, the Master Confirmation and the Transactions as Party A shall   reasonably request.
    	
 
    	
Within   10 business days of the execution of this Agreement
    

 

7.                                      Purchase Price Maintenance.

 

(a)                                 The parties agree that in any Transaction hereunder whose term extends over an Income payment date for the Securities subject to such Transaction, if Income is paid to Buyer then Buyer shall promptly transfer to Seller an amount equal to such Income payment or payments pursuant to Paragraph 5(i) of the Agreement; and Buyer shall not apply the Income payment or payments to reduce the amount to be transferred to Buyer or Seller upon termination of the Transaction pursuant to Paragraph 5(ii) of the Agreement.

 

(b)                                 Notwithstanding the definition of “Purchase Price” in Paragraph 2 of the Agreement and the provisions of Paragraph 4 of the Agreement, the parties agree that the Purchase Price will not be increased or decreased by the amount of any cash transferred by one party to the other pursuant to Paragraph 4 of the Agreement.

 

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8.                                      Events of Default.

 

(a)                                 Paragraph 11 shall be amended by deleting the word “or” immediately before subparagraph (vii) and by adding the following before the words “(each an “Event of Default”)” at the end of subparagraph (vii) thereof:

 

“(viii)                  Party B fails to comply with any obligation to deliver information under Paragraph 6 of this Annex I (Agreement to Deliver Information) within the time specified;

 

(ix)                              Party B fails to pay any Financing Fee Payment or any Make-Whole Amount when and as the same shall become due payable and such failure shall continue unremedied for five business days after written notice thereof from Party A to Party B;

 

(x)                                 Party B fails to notify Party A as to a change in legal structure that would have the effect of Party B ceasing to exist as a Delaware LLC (as defined below);

 

(xi)                              Party B incurs or suffers to exist any Indebtedness or enters into any transaction that would be a Specified Transaction if such transaction were between Party A and Party B (except pursuant to this Agreement);

 

(xii)                           Party B directly or indirectly creates, incurs, assumes or permits to exist any Lien on any of its property (except pursuant to this Agreement);

 

(xiii)                        Party B engages in any business activity or incurs any material liabilities (other than the sales, repurchases and maintenance of and margining related to the Purchased Securities in compliance with the terms of this Agreement and the other Transaction Documents and activities incidental to the foregoing);

 

(xiv)                       Party B fails to observe or perform any covenant set forth in Paragraph 10(c) of this Agreement or any representation set forth therein fails to be true and correct;

 

(xv)                          Party B fails to observe or perform any covenant, agreement or obligation contained in the Agreement or the Master Confirmation (other than the matters referred to in the preceding clauses (i), (ii), (iii), (iv), (viii), (ix) (x), (xi), (xii) and (xiii)) and such failure, if capable of remedy, shall continue unremedied for a period of thirty (30) or more days after the earlier of Party B’s knowledge thereof and notice thereof from Party A to Party B;

 

(xvi)                       the limited liability company agreement or any other organizational document of Party B (collectively, the “Organizational Documents”), or any provision thereof, shall be amended, modified, changed, waived, terminated, cease to be 

 

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effective or cease to be the legally valid, binding and enforceable obligation, if the effect of such amendment, modification, change, termination or other action would have a material adverse effect on (1) the ability of Party B to perform its obligations under the Agreement, the Master Confirmation or any Transaction or (2) the validity or enforceability of the Agreement or the Master Confirmation against Party B by Party A or the rights and remedies of Party A against Party B under the Agreement or the Master Confirmation;

 

(xvii)                    Party B shall default or breach of any provision under any Organizational Document, if the effect of such default or breach, would have a material adverse effect on (1) the ability of Party B to perform its obligations under the Agreement, the Master Confirmation or any Transaction or (2) the validity or enforceability of the Agreement or the Master Confirmation against Party B by Party A or the rights and remedies of Party A against Party B under the Agreement or the Master Confirmation; or

 

(xviii)                 Party B:

 

(A)                               defaults (other than by failing to make a delivery) under a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction;

 

(B)                               defaults, after giving effect to any applicable notice requirement or grace period, in making any payment due on the last payment or exchange date of, or any payment on early termination of, a Specified Transaction (or, if there is no applicable notice requirement or grace period, such default continues for at least one business day);

 

(C)                               defaults in making any delivery due under (including any delivery due on the last delivery or exchange date of) a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, all transactions outstanding under the documentation applicable to that Specified Transaction; or

 

(D)                               disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, a Specified 

 

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Transaction or any credit support arrangement relating to a Specified Transaction that is, in either case, confirmed or evidenced by a document or other confirming evidence executed and delivered by that party (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf).”

 

(b)                                 Paragraph 11 of the Agreement is hereby amended by replacing subparagraph (a) thereof with the following:

 

“(a)                           The nondefaulting party may, at its option, declare an Event of Default to have occurred hereunder and, upon the exercise or deemed exercise of such option, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). The nondefaulting party shall give notice to the defaulting party of the exercise of such option as promptly as practicable.”

 

(c)                                  Notwithstanding clauses (i) and (ii) of the introductory paragraph to Paragraph 11 of the Agreement, it will not be an Event of Default if:

 

(A)                               Seller fails to transfer Purchased Securities on the applicable Purchase Date for a Transaction, but Buyer may, by written notice to Seller, (1) if Buyer has paid the Purchase Price to Seller, require Seller to immediately repay the sum so paid; (2) if there exists a Margin Deficit in respect of such Transaction, require Seller to deliver (in accordance with the notice and delivery requirements of Paragraph 4 of the Agreement) margin in an amount equal to such Margin Deficit; and (3) at any time while such failure continues, terminate such Transaction (but only such Transaction) (“Buyer Mini Close-out”) and upon such termination, the provisions of Paragraph 11 of the Agreement shall apply with respect to the terminated Transaction (but only such Transaction).

 

(B)                               Buyer fails to transfer Purchased Securities on the applicable Repurchase Date for a Transaction, but Seller may, by written notice to Buyer, (1) if Seller has paid the Repurchase Price to Buyer, require Buyer to immediately repay the sum so paid; and (2) at any time while such failure continues, terminate such Transaction (but only such Transaction) (“Seller Mini Close-out”, and together with Buyer Mini Close-out, “Mini Close-out”) and upon such termination, the provisions of Paragraph 11 of the Agreement shall apply with respect to the terminated Transaction (but only such Transaction).

 

Any transfer of margin pursuant to Clauses (A)(2) above, shall be due and payable within the time period specified in Paragraph 4(c) of the Agreement with respect to cash (as if such notice from Buyer were a notice requesting the delivery of margin), and any failure to make any such transfer or payment shall be an event that will be an Event of Default under paragraph 11(iii).

 

14

 

For the avoidance of doubt, it shall be an Event of Default under the Agreement if, with respect to any amount due and payable under Paragraph 11 following any Mini Close-out, such amount is not paid by the defaulting party before the end of the Business Day on which the defaulting party receives notice of such due and payable amount from the non-defaulting party, if the defaulting party receives such notice before the Margin Notice Deadline. If any such notice is given after the Margin Notice Deadline on a Business Day, the party receiving such notice shall transfer such amount due and payable no later than the close of business in the relevant market on the next Business Day following receipt of such notice.

 

9.                                      Notices.  Paragraph 13 of the Agreement shall be amended by replacing the last sentence thereof with the following:

 

“All notices, demands and requests hereunder shall be made in writing (which may include, without limitation, email notifications) to the address (or email address) set forth in Annex II.”

 

10.                               Qualified Institutional Buyers.  It is agreed that with respect to Transactions in Purchased Securities which are eligible for resale under Rule 144A under the Securities Act of 1933, as amended (“Rule 144A Securities”), the following representations shall apply:

 

(a)         on the Purchase Date for any Transaction, (i) Buyer represents and warrants that Buyer is familiar with the provisions of Rule 144A, (ii) Buyer represents and warrants that Buyer is a “Qualified Institutional Buyer” as such term is defined in Rule 144A, (iii) Seller represents and warrants that Seller is not, and within the preceding three months has not been, an “affiliate,” as that term is used in Rule 144 under the Securities Act, of the issuer of any Purchased Securities, and (iv) Seller represents and warrants that any Purchased Securities transferred to Buyer are not subject to any legal or regulatory restrictions on transfer other than those applicable to “restricted securities” within the meaning of Rule 144; and

 

(b)         on the Repurchase Date for any Transaction, (i) Seller represents and warrants that Seller is familiar with the provisions of Rule 144A, (ii) Seller represents and warrants that Seller is a “Qualified Institutional Buyer” as such term is defined in Rule 144A, (iii) Buyer represents and warrants that Buyer is not, and within the preceding three months has not been, an “affiliate,” as that term is used in Rule 144, of the issuer of any Purchased Securities, and (iv) assuming the accuracy and completeness of Seller’s representations under subparagraph (a) of this Paragraph, Buyer represents and warrants that any Purchased Securities transferred to Seller are not subject to any legal or regulatory restrictions on transfer other than those applicable to “restricted securities” within the meaning of Rule 144.

 

11.                               Assignment.  Paragraph 15 of the Agreement is hereby amended by inserting the following between the first and second sentences of subparagraph 15(a):

 

“Notwithstanding the foregoing, Party A may not assign its rights nor delegate its obligations under this Agreement, in whole or in part, without the prior written consent of the other party to this Agreement, and any purported assignment or delegation absent such consent is void, except for an assignment or delegation of all of the Party A’s rights 

 

15

 

and obligations hereunder in whatever form Party A determines may be appropriate to (i) Goldman Sachs & Co. or any other Affiliate of Party A (other than Goldman Sachs BDC, Inc. or any other business development company that is an Affiliate of Party A) or (ii) any other third party organized under the laws of the United States of America, any state thereof or the District of Columbia (a “Third Party”); provided that, with respect to an assignment by Party A under the foregoing clause (ii), Party B shall have the right to cause the Repurchase Date of all (but not less than all) of the Transactions then outstanding to occur simultaneously (an “Assignment-Related Repurchase Date Acceleration”, and the date thereof the related “Assignment-Related Repurchase Date”) on not less than two Business Days’ notice to Party A if neither such Third Party nor any credit support provider of such Third Party has a long-term unsubordinated credit rating of at least Baa3 by Moody’s Investor Services, Inc. or at least BBB- by Standard & Poor’s Rating Group immediately prior to the assignment.  For the avoidance of doubt, no Make-Whole Amount (as defined in the Master Confirmation) will be owing by Party B in connection with any Assignment-Related Repurchase Date Acceleration.  Upon any such delegation and assumption of obligations, so long as Goldman Sachs & Co., such other Affiliate of Party A or the Third Party, as the case may be, shall be responsible for all such obligations, Party A shall be relieved of and fully discharged from all future obligations hereunder from and after such delegation and assumption.”

 

12.                               Termination.  Paragraph 15 of the Agreement shall be amended by replacing the last sentence of subparagraph (a) thereof with the following:

 

“This Agreement shall terminate and be of no further force and effect (except with respect to any obligations of Party A and Party B that are otherwise expressly stated in the Agreement or the Master Confirmation as surviving termination, which shall, as so specified, survive without prejudice and remain in full force and effect) on the first date after all obligations under all Transactions have been paid in full.”

 

13.                               Operational Error.  Notwithstanding any other provision contained herein, no Event of Default under subparagraphs (i), (ii), (iii), (iv) or (ix) of paragraph 11 of the Agreement shall have occurred if (i) the relevant failure to pay or transfer is caused solely by an error or omission of an operational nature or by the failure of the defaulting party or a custodian of the defaulting party to make any payment or delivery to the nondefaulting party after the defaulting party has issued instructions; (ii) assets were available to such party to make the relevant payment or transfer when due; and (iii) the defaulting party has upon the non-defaulting party’s request, provided to the nondefaulting party, written verification of clauses (i) and (ii) above that is reasonably satisfactory to the nondefaulting party and (iv) such payment or transfer is made by the close of business on the day after notice of the relevant failure to pay or transfer is given to the defaulting party.

 

14.                               Set-off.  Upon the occurrence of an Event of Default with respect to a party (“X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to X or any other person to set-off or apply any obligation of X owed to Y (or any Affiliate of Y) (whether or not matured or continent and whether or not arising under this Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y (or any Affiliate of Y) owed to X (whether or not matured or contingent and whether or not arising under this Agreement, and regardless of the currency, place of payment or booking office of the obligation).  Y will give notice to the 

 

16

 

other party of any set off effected under this paragraph 14 to Annex I, provided that any failure to give such notice shall not invalidate the relevant set off.

 

Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y into the currency in which the other is denominated at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency.

 

If an obligation is unascertained, Y may in good faith estimate that obligation and set off in respect of the estimate, subject to such party accounting to (and, if the set off in respect of the estimate exceeds the ascertained obligation, settling with and reimbursing) the other when the obligation is ascertained.

 

Nothing in this paragraph 14 to Annex I will be effective to create a charge or other security interest.  This paragraph 14 to Annex I will be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).

 

15.                               Additional Representation.  Party B represents that it is a limited liability company formed under the Limited Liability Company Act of the State of Delaware (a “Delaware LLC”) and agrees to notify Party A prior to a change in legal structure which would have the effect of Party B ceasing to exist as a Delaware LLC.

 

17

 

This Agreement may be signed in any number of counterparts, each of which shall be considered an original.

 

 

	
GOLDMAN SACHS BANK USA  
    	
 
    	
STRAFFORD   FUNDING LLC  
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Meera Bhutta 
    	
 
    	
By:   
    	
/s/   Gerald F. Stahlecker 
    
	
Title: Managing Director 
    	
 
    	
Name:   Gerald F. Stahlecker 
    
	
Date: 9/11/2014
    	
 
    	
Title:   Executive Vice President  

Date:   9/11/2014
    
					

 

18

 

Annex II

 

Names and Addresses for Communications Between Parties

 

Party A:  Goldman Sachs Bank USA

 

	
Goldman Sachs Bank   USA
    
	
Facsimile:
    	
+1 212 428 4534
    
	
Email:
    	
gs-sctabs-reporting@ny.email.gs.com
    
	
 
    	
 
    
	
With a copy to:
    
	
 
    	
 
    
	
Attention:
    	
Managing Director of PFI Desk
    
	
Address:
    	
200 West Street, 6th Floor
    
	
 
    	
New York, NY 10282
    
	
 
    	
 
    
	
Attention:
    	
PFI Middle Office
    
	
Address:
    	
200 West Street, 16th Floor
    
	
 
    	
New York, NY 10282
    
	
 
    	
 
    

All correspondence shall include the GS Reference Number: SDB4064875388

 

Party B:  Strafford Funding LLC

 

	
Address: Strafford Funding LLC
    
	
 
    	
c/o   FS Energy and Power Fund
    
	
 
    	
2929   Arch Street, Suite 675
    
	
 
    	
Philadelphia,   PA 19104
    
	
 
    	
 
    
	
Attention:
    	
Gerald   F. Stahlecker, Executive Vice President
    
	
 
    	
 
    
	
Phone   No.:
    	
(215)   495-1169
    
	
Facsimile   No.:
    	
(215)   222-4649
    
	
Email:
    	
jerry.stahlecker@franklinsquare.com
    

 

 

Goldman Sachs Bank USA | 200 West Street | New York, New York 10282-2198 | Tel: +1 212 902 1000 | Fax: +1 212 428 9189

 

MASTER CONFIRMATION

 

	
DATE:
    	
September 11,   2014
    
	
 
    	
 
    
	
TO:
    	
Strafford Funding LLC (“Counterparty”)
    
	
 
    	
 
    
	
FROM:
    	
Goldman Sachs Bank USA (“GS”)
    
	
 
    	
 
    
	
SUBJECT:
    	
Repurchase Facility
    
	
 
    	
 
    
	
REF. NO.:
    	
SDB4064875388
    

 

The purpose of this  communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced Repurchase Facility entered into on the Trade Date specified below between GS and Counterparty (the “Facility”).  This communication constitutes a “Confirmation” as referred to in the Master Repurchase Agreement specified below.  This communication supersedes and replaces all prior communications between the parties hereto with respect to the Facility and Transactions described below.

 

This Confirmation shall supplement, form a part of, and be subject to, the Master Repurchase Agreement (including the Annexes thereto) dated as of  September 11, 2014, each as  amended or replaced from time to time (collectively, the “Master Repurchase Agreement”), between GS and Counterparty.  This Confirmation shall be read and construed as one with the executed Master Repurchase Agreement and all other outstanding confirmations between the parties, so that all such confirmations, this Confirmation and the executed Master Repurchase Agreement constitute a single Agreement between the parties.  Except as expressly modified hereby, all provisions contained in, or incorporated by reference into, the Master Repurchase Agreement shall govern each Transaction hereunder.  In the event of any inconsistencies between the Master Repurchase Agreement and this Confirmation, this Confirmation will govern with respect to the Transactions covered hereby (and the last sentence of Paragraph 3(b) of the Master Repurchase Agreement shall not apply to any such Transaction).  In the event of any inconsistencies between Annex A hereto and this Confirmation with respect to any Transaction, the terms of Annex A with respect to such Transaction will govern.  System-generated confirmations of trade may be generated by GS that set forth the trade terms of the individual repurchase transactions described in this Confirmation; and, if any such system-generated confirmation of trade are generated and there is any inconsistency between such system-generated confirmations of trade and this Confirmation or the Master Repurchase Agreement, then the terms of this Confirmation or the Master Repurchase Agreement, as the case may be, shall prevail.  Capitalized terms not defined herein have the meaning ascribed to them in the Master Repurchase Agreement.

 

This Confirmation evidences a separate transaction with respect to each Purchased Security specified in Annex A from time to time (each, a “Transaction”) as if the details specified in Annex A with respect to that Purchased Security were set out in the Confirmation in full.  Each such Transaction will have a unique Transaction Number as is set out in Annex A.  The terms of the Facility and each particular Transaction to which this Confirmation relates are as follows:

 

(A)                               Terms Related to the Facility

 

1.                                      Basic Terms

 

	
Buyer
    	
 
    	
GS
    
	
 
    	
 
    	
 
    
	
Seller
    	
 
    	
Counterparty
    

 

1

 

	
Trade Date
    	
 
    	
September 11, 2014
    
	
 
    	
 
    	
 
    
	
Facility Commencement Date
    	
 
    	
September 15, 2014
    
	
 
    	
 
    	
 
    
	
Ramp-up Period End Date
    	
 
    	
December 15, 2014
    
	
 
    	
 
    	
 
    
	
Facility End Date
    	
 
    	
September 15, 2017
    
	
 
    	
 
    	
 
    
	
Maximum Purchased Security Notional Amount
    	
 
    	
USD 400,000,000.00
    
	
 
    	
 
    	
 
    
	
Aggregate Purchased Security Notional Amount
    	
 
    	
At any time, the sum of the Purchased   Security Notional Amounts under all Transactions for which a Purchase Date   has occurred at or prior to such time.
    
	
 
    	
 
    	
 
    
	
Maximum Aggregate Facility Size
    	
 
    	
USD 225,000,000.00
    
	
 
    	
 
    	
 
    
	
Eligible Security
    	
 
    	
Gladwyne Funding LLC Floating Rate Notes due   December 1, 2024

 

CUSIP No. 376769 AA3

 

For the avoidance of doubt, the Purchased   Security for each Transaction under this Master Confirmation shall be the   Eligible Security identified above.
    
	
 
    	
 
    	
 
    
	
Security Issuer
    	
 
    	
Gladwyne Funding LLC
    
	
 
    	
 
    	
 
    
	
Haircut Percentage
    	
 
    	
43.75%
    
	
 
    	
 
    	
 
    
	
Business Days
    	
 
    	
London and New York.
    
	
 
    	
 
    	
 
    
	
Business Day Convention
    	
 
    	
Modified Following
    
	
 
    	
 
    	
 
    
	
Calculation Agent
    	
 
    	
GS

 

Unless otherwise expressly stated   herein, all determinations by the Calculation Agent hereunder shall be made   in its sole and absolute discretion exercised in good faith and in a manner   generally consistent with its then-current practices.
    
	
 
    	
 
    	
 
    
	
2.                                      Conditions   Precedent to Effectiveness of the Facility
    
	
 
    	
 
    	
 
    
	
Conditions
    	
 
    	
It   shall be a condition to the effectiveness of this Confirmation, and to the   entry of the first Transaction hereunder, that the following conditions shall   have been satisfied (or waived by GS), in form and substance satisfactory to   GS in its sole and absolute discretion:

 

(a)                                 GS shall have   received the documents and certificates referred to in paragraph 6 to Annex I   to the Master Repurchase Agreement, all in form and substance satisfactory to   GS and its counsel in its sole discretion;

 

(b)                                 GS shall have   received the Master Repurchase Agreement and this Confirmation duly executed   by Counterparty, and shall have received executed copies of the Security   Indenture (including the schedules and exhibits thereto) and all documents,   certificates and 
    

 

2

 

	
 
    	
 
    	
opinions   delivered pursuant thereto, all in form and substance satisfactory to GS in   its sole discretion; and

 

(c)                                  no default or event of default with respect to Counterparty has   occurred under the Master Repurchase Agreement and is then continuing.
    
	
 
    	
 
    	
 
    
	
3.                                      Additions   of Transactions; Post-Ramp-up Period Transaction Combination
    
	
 
    	
 
    	
 
    
	
Additions
    	
 
    	
Subject   to the satisfaction of the conditions precedent set forth herein, on any   Business Day during the period from and including the Facility Commencement   Date to but excluding the Ramp-Up Period End Date, Counterparty may, by   delivery to GS of an Addition Notice with a Notice Date not less than five   Business Days prior to the proposed Purchase Date for such Transaction, elect   to enter into a Transaction (an “Addition”)   with GS with respect to the Eligible Security (and GS agrees to enter into   such Transaction on the terms and conditions specified herein), provided in each case that:

 

(a)                                 after giving   effect to such Transaction, the sum of the Initial Purchase Prices of all   Transactions for which a Purchase Date shall have occurred shall not exceed   the Maximum Aggregate Facility Size;

 

(b)                                 the terms of   such Transaction are in compliance with the terms and conditions set forth in   this Confirmation and the Master Repurchase Agreement; and

 

(c)                                  the   Conditions to Effectiveness with respect to such Transaction are satisfied.

 

In   connection with each Transaction, GS shall notify Counterparty of the   Purchase Date (which shall be a Business Day) and the related Purchase Price.
    
	
 
    	
 
    	
 
    
	
Addition Notice
    	
 
    	
A   notice in substantially the form attached as Annex B duly completed and   executed by Counterparty and setting forth (among other information) the   proposed Purchase Date and the proposed Purchased Security Notional Amount,   or a notice otherwise in form and substance satisfactory to GS.
    
	
 
    	
 
    	
 
    
	
Notice Date
    	
 
    	
With   respect to any Addition Notice, the date on which such Addition Notice is   received by GS (or, if any such day is not a Business Day, the next   succeeding Business Day).
    
	
 
    	
 
    	
 
    
	
Combination of   Transactions
    	
 
    	
On   the Business Day immediately following the Ramp-up Period End Date, all   Transactions hereunder shall (automatically and without action by any Person)   be deemed combined into a single Transaction hereunder having (for the   avoidance of doubt):

 

(a)                                 a Purchased Security Notional Amount equal to the sum of the Purchased Security Notional Amounts of each individual   Transaction hereunder immediately prior to such combination; and
    

 

3

 

	
 
    	
 
    	
(b)                                 a Purchase   Price (and an Initial Purchase Price) equal to the sum of the Purchase Prices (or Initial Purchase Prices) of each   individual Transaction hereunder immediately prior to such combination.

 

GS   shall prepare and deliver to Counterparty a revised Annex A (or another form   setting forth information corresponding to that set forth on Annex A),   reflecting the terms of the Transaction after giving effect to such   combination, reasonably promptly following the occurrence thereof.
    
	
 
    	
 
    	
 
    
	
(B)                               Terms   Relating to Each Transaction
    
	
 
    	
 
    	
 
    
	
1.                                      General   Terms
    
	
 
    	
 
    	
 
    
	
Terms Specified in Annex   A
    	
 
    	
The following terms in relation to each   Transaction will be specified in Annex A (by the Calculation Agent):

 

·                                          Transaction Number (to be assigned by the Calculation Agent)

 

·                                          Security Issuer (which shall be Gladwyne Funding LLC)

 

·                                          Purchased Security (which shall be the Eligible Security)

 

·                                          Purchase Date (which shall be the Business Day on which the   Conditions to Effectiveness for such Transaction are satisfied)

 

·                                          Initial Purchase Price

 

·                                          Purchased Security Notional Amount
    
	
 
    	
 
    	
 
    
	
Purchased Security   Notional Amount
    	
 
    	
For each Transaction, the original par   amount of the Eligible Security that is purchased hereunder in such   Transaction (determined without regard to paydowns on the Eligible Security   occurring at any time).
    
	
 
    	
 
    	
 
    
	
Purchase Price
    	
 
    	
For each Transaction, an amount equal to   the product of:

 

(a)                                 the Purchased Security Notional Amount for such Transaction; and

 

(b)                                 one minus the   Haircut Percentage.
    
	
 
    	
 
    	
 
    
	
Initial Purchase Price
    	
 
    	
For each Transaction, the Purchase Price   for such Transaction on the Purchase Date for such Transaction.
    
	
 
    	
 
    	
 
    
	
Repurchase Date
    	
 
    	
In relation to the Purchased Security in   each Transaction, the earliest to occur of:

 

(a)                                 the Scheduled Repurchase Date for such Purchased Security;

 

(b)                                 the date on which the non-defaulting party exercises its 
    

 

4

 

	
 
    	
 
    	
option to declare an Event of Default   pursuant to Section 11 of the Master Repurchase   Agreement;

 

(c)                                  the date (if any) on or following the occurrence of a Credit   Event with respect to such Purchased Security specified in writing by GS to   Counterparty;

 

(d)                                 the date (if any) on or following the occurrence of a Regulatory   Change specified in writing by GS to Counterparty;

 

(e)                                  the Assignment-Related Repurchase Date (if any) specified in   writing by Counterparty to GS; and

 

(f)                                   the date (if any) specified in writing by Counterparty to GS, provided that a Dispute-Related Repurchase Right has   occurred and is continuing on the date of such notice from Counterparty (the   occurrence of the Repurchase Date under this clause (f), a “Dispute-Related Repurchase Date Acceleration”).
    
	
 
    	
 
    	
 
    
	
Scheduled Repurchase   Date
    	
 
    	
For each Transaction, the Facility End   Date.
    
	
 
    	
 
    	
 
    
	
Regulatory Change
    	
 
    	
Any   enactment or establishment of or supplement or amendment to, or change in any   law, regulation, rule, policy or guideline (including any accord or standard   of the Basel Committee on Banking Supervision, the Federal Reserve Board or   any state banking regulatory) or in the application or official   interpretation of any such law, regulation, rule, policy or guideline that,   in each case, becomes effective on or after the Facility Commencement Date   and is binding on or otherwise has an effect on GS and, as a result of which,   in the reasonable determination of GS, for reasons outside GS’s control, GS   will (either by voluntary submission or by applicable law) no longer be   permitted to enter into or maintain any Transaction hereunder or be subject   to materially less favorable regulatory capital treatment with respect to the   Transactions by comparison to the regulatory capital treatment applicable as   a result of the entry into this Facility on the Facility Commencement Date.

 

Before   declaring a Repurchase Date due to the occurrence of a Regulatory Change, GS   agrees to take commercially reasonable measures to eliminate or mitigate the   impact of such Regulatory Change (which, for the avoidance of doubt, includes   but is not limited to GS using commercially reasonable efforts to restructure   the Transactions under this Confirmation with Counterparty to make them   compliant (in the case of any such changes that would restrict entry into or   maintenance of Transactions) or more efficient from a regulatory perspective   (in the case of any such changes that would result in less favorable   regulatory capital treatment), provided that   Counterparty is under no obligation to agree to any such restructuring or any   other changes to the terms of this Confirmation or the Master Repurchase   Agreement.
    
	
 
    	
 
    	
 
    
	
Market Value
    	
 
    	
With respect to the Purchased Security   (in its entirety) as of any date, an amount equal to lesser of (a) the   Look-Through Market 
    

 

5

 

	
 
    	
 
    	
Value of the Purchased Security at such   date and (b) the Maximum Purchased Security Notional Amount.

 

If on any date the sum of the Purchased   Security Notional Amounts for all Transactions hereunder at such time is for   any reason less than the full par amount of the Purchased Security that has   been issued under the Security Indenture (determined without regard to   paydowns on the Purchased Security), then the Calculation Agent will pro-rate   the Look-Through Market Value to reflect the portion of the Purchased   Security that is then the subject of Transactions hereunder.
    
	
 
    	
 
    	
 
    
	
Look-Through Market   Value
    	
 
    	
With respect to the Eligible Security   (in its entirety) as of any date, the sum of:

 

(a)                                the aggregate Asset Market Related Amounts in respect of all   Underlying Assets and Unsettled Purchase Assets in the Underlying Portfolio   on such date; plus

 

(b)                                 the Cash Value as at such date.
    
	
 
    	
 
    	
 
    
	
Asset Market Related   Amount
    	
 
    	
As of any   date:

 

(a)                                 in respect of an Underlying Asset in the Underlying Portfolio as   of such date or an Unsettled Purchase Asset as of such date (but excluding   all Unsettled Sale Assets and all Zero Value Assets), the product of:

 

(1)                                 the Asset Amortized Amount therefor as of such date; and

 

(2)                                 the Asset Current Price (expressed as a percentage) therefor as   of such date;

 

(b)                                 in respect of an Unsettled Sale Asset in the Underlying   Portfolio as of such date that is not a Zero Value Asset, the Settlement   Value of such Unsettled Sale Asset as of such date; and

 

(c)                                  in respect of a Zero Value Asset in the Underlying Portfolio as   of such date, zero.
    
	
 
    	
 
    	
 
    
	
Asset Amortized Amount
    	
 
    	
In respect of an Underlying Asset or   Unsettled Purchase Asset on any day, an amount equal to the principal amount   outstanding under such Underlying Asset or Unsettled Purchase Asset on such   day (after giving effect on a pro-rata basis to any repurchase, repayment or   tender offer in respect of that Underlying Asset or Unsettled Purchase   Asset).
    
	
 
    	
 
    	
 
    
	
Asset Current Price
    	
 
    	
In respect of an Underlying Asset or   Unsettled Purchase Asset on any date, the bid side market value of that   Underlying Asset or Unsettled Purchase Asset (expressed as a percentage of   par of the Underlying Asset Notional Amount) but excluding any accrued   interest, as determined by the Calculation Agent and notified to the parties   by the Calculation Agent on each Business Day.
    

 

6

 

	
Underlying Asset Notional   Amount
    	
 
    	
In respect of any Underlying Asset or   any Unsettled Purchase Asset, the full principal amount of the Underlying   Asset or Unsettled Purchase Asset, as applicable, owned by the Security   Issuer or Committed to be owned by the Security Issuer, as the case may be.
    
	
 
    	
 
    	
 
    
	
Cash Value
    	
 
    	
As of any date, an amount, determined by   the Calculation Agent, equal to:

 

(a)                                 the aggregate amount of cash standing to the credit of the   Security Issuer Account (excluding any accrued and unpaid interest); minus

 

(b)                                 the aggregate Settlement Value for all Unsettled Purchase Assets   as at such date (if any).
    
	
 
    	
 
    	
 
    
	
Security Issuer Account
    	
 
    	
The “Principal Collection Account”, as   defined in the Security Indenture.
    
	
 
    	
 
    	
 
    
	
Underlying Asset
    	
 
    	
Each loan or bond that is owned by the   Security Issuer from time to time and is identified in the Schedule of   Collateral Obligations (as defined in the Security Indenture) set forth on   Schedule A to the Security Indenture and amended from time to time.
    
	
 
    	
 
    	
 
    
	
Private Underlying Asset
    	
 
    	
Each Underlying Asset or Proposed   Underlying Asset that has been designated a “Private Collateral Obligation”   pursuant to Section 12.2(a)(ii) of the Security Indenture.
    
	
 
    	
 
    	
 
    
	
Non-Private Underlying   Asset
    	
 
    	
Each Underlying Asset and Proposed   Underlying Asset that is not a Private Underlying Asset.
    
	
 
    	
 
    	
 
    
	
Underlying Portfolio
    	
 
    	
The portfolio of Underlying Assets or   Unsettled Purchase Assets, as applicable, owned by the Security Issuer or   Committed to be owned by the Security Issuer from time to time.
    
	
 
    	
 
    	
 
    
	
Collateral Manager
    	
 
    	
The Collateral Manager as defined in the   Security Indenture.
    
	
 
    	
 
    	
 
    
	
Proposed Underlying Asset
    	
 
    	
A loan or bond that the Collateral Manager   has proposed to be acquired by the Security Issuer that satisfies the   Reinvestment Criteria at the time of such proposal.
    
	
 
    	
 
    	
 
    
	
Unsettled Purchase Asset
    	
 
    	
As of any date, an asset that the   Security Issuer has Committed to acquire and in respect of which the purchase   by the Security Issuer has not yet settled.
    
	
 
    	
 
    	
 
    
	
Unsettled Sale Asset
    	
 
    	
As of any date, an Underlying Asset that   the Security Issuer has Committed to sell and in respect of which the sale by   the Security Issuer has not yet settled.
    
	
 
    	
 
    	
 
    
	
Zero Value Asset
    	
 
    	
An Underlying Asset at any time:

 

(a)                                 in respect of which there has occurred a Zero Value Event;

 

(b)                                 that did not satisfy the Reinvestment Criteria at the time the   Security Issuer Committed to acquire such Underlying Asset (unless such   Underlying Asset, after such date, subsequently satisfies the Reinvestment   Criteria);
    

 

7

 

	
 
    	
 
    	
(c)                                  that has been the subject of a Restructuring or a Material   Modification if, in either case:

 

(1)                                 immediately following such Restructuring or Material   Modification, such Underlying Asset fails to satisfy the Reinvestment   Criteria (unless such Underlying Asset, after such date, subsequently   satisfies the Reinvestment Criteria); or

 

(2)                                 the GS Consent Condition is not satisfied with respect to such   Restructuring or Material Modification.
    
	
 
    	
 
    	
 
    
	
Restructuring
    	
 
    	
With respect to an Underlying Asset:

 

(a)                                 if such Underlying Asset is a Non-Private Underlying Asset, a   “Restructuring” (as defined in Section 4.7 of the Credit Definitions)   has occurred in respect of the Underlying Asset; and

 

(b)                                 if such Underlying Asset is a Private Underlying Asset, a   “Restructuring” (as defined in Section 4.7 of the Credit Definitions)   has occurred in respect of the Underlying Asset (except that, for such   purposes, Section 4.7(a)(iv) of the Credit Definitions shall be   amended to include the following at the end thereof “; or a release of liens   or other credit support for the Obligation; or any other change that   materially reduces the level of subordination enhancing the Obligation”).

 

For purposes of this Confirmation,   “Multiple Holder Obligation” will not be applicable in determining whether   any such Restructuring occurs.
    
	
 
    	
 
    	
 
    
	
Material Modification
    	
 
    	
A “Specified Change” (as defined in the   Security Indenture) to an Underlying Asset.
    
	
 
    	
 
    	
 
    
	
Settlement Value
    	
 
    	
As of any   date:

 

(a)                                 in respect of any Unsettled Purchase Asset, the aggregate   consideration to be paid by the Security Issuer to acquire such Unsettled   Purchase Asset; and

 

(b)                                 in respect of any Unsettled Sale Asset, the contractual sale   price for such Unsettled Sale Asset (expressed in USD) to be received by the   Security Issuer from the purchaser of such Underlying Asset; provided that:

 

(1)                                 if the sale of such Unsettled Sale Asset remains unsettled for   more than 30 calendar days, then:

 

(x)                                 from time to time upon request from GS Counterparty shall   provide to GS all information known to Counterparty concerning the facts and   circumstances causing such delay in settlement and
    

 

8

 

	
 
    	
 
    	
cooperate   with GS in discussing with the Security Issuer and the Collateral Manager   strategies for accelerating settlement of such sale; and

 

(y)                                 if the purchaser of such Unsettled Sale Asset is an affiliate of   Counterparty and such delay in settlement is not solely a result of   operational or logistical issues, Counterparty and GS shall work together in   good faith to determine the Settlement Value for such Unsettled Purchase   Asset; and

 

(2)                                 if the sale of such Unsettled Sale Asset continues to remain   unsettled for more than 90 calendar days, then the Settlement Value for such   Unsettled Sale Asset will be determined by the Calculation Agent.
    
	
 
    	
 
    	
 
    
	
Credit Event
    	
 
    	
Defaulted Asset Sale Failure

 

Security Event of Default

 

As used herein:

 

“Defaulted Asset Sale   Failure” shall mean the Security Issuer’s failure to Commit to   sell any Defaulted Obligation  (as   defined in the Security Indenture) within 30 days of such Underlying Asset   becoming a Defaulted Obligation, provided that   the failure to Commit to sell any Defaulted Obligation within 30 days of such   Underlying Asset becoming a Defaulted Obligation shall not result in a   Defaulted Asset Sale Failure for so long as the Security Issuer continues to   use commercially reasonable efforts to continue to sell such Defaulted   Obligation after such 30 day period.

 

“Security Event of   Default” shall mean, with respect to any Purchased Security, an   event of default (however designated) in the Security Indenture.

 

“Security Indenture”   shall mean the indenture or other underlying instruments governing the   Purchased Security.
    
	
 
    	
 
    	
 
    
	
Zero Value Event
    	
 
    	
In respect of any Underlying Asset, the   occurrence of any one or more of the following:

 

Bankruptcy

 

Failure to Pay

 

As used herein:

 

“Bankruptcy”   with respect to an Underlying Asset shall mean a “Bankruptcy” (as defined in   the 2003 ISDA Credit Derivatives Definitions as published by the International   Swap and Derivatives Association, Inc. (the “Credit   Definitions”)) with respect to the
    

 

9

 

	
 
    	
 
    	
related obligor.

 

“Failure to Pay”   with respect to an Underlying Asset shall mean, after the expiration of any   applicable grace period (however defined under the terms of the Underlying   Asset), the occurrence of a non-payment of a payment of interest Scheduled to   be Due or principal on the Underlying Asset when due, in accordance with the   terms of the Underlying Asset at the time of such failure.

 

“Scheduled to be Due”   shall mean, in the case of an interest payment, that such interest payment   would accrue during the related calculation period for the Underlying Asset.
    
	
 
    	
 
    	
 
    
	
Commitment
    	
 
    	
A binding commitment pursuant to FSEP’s   and/or the Collateral Manager’s then current policies and procedures to   purchase or sell an Underlying Asset between the buyer and seller of such   Underlying Asset entered into pursuant to customary documents in the relevant   market.  The terms “Commit” and “Committed”   have correlative meanings.
    
	
 
    	
 
    	
 
    
	
Reinvestment Criteria
    	
 
    	
The criteria set forth in the Security   Indenture (including, without limitation, the criteria set forth in the   definition of “Collateral Obligation” set forth therein) that, pursuant to   the terms set forth in the Security Indenture are required to be satisfied as   a condition to the purchase of an Underlying Asset (other than any consent of   one or more holders of the Eligible Security).
    
	
 
    	
 
    	
 
    
	
GS Consent Condition
    	
 
    	
For any Underlying Asset proposed to be   acquired by the Security Issuer or any Underlying Asset subject to a   Restructuring or Material Modification after it was acquired by the Security   Issuer, a condition satisfied if GS consents to such acquisition,   Restructuring or Material Modification, as applicable (which GS may withhold   in its sole and absolute discretion).
    
	
 
    	
 
    	
 
    
	
2.                                      Conditions to Effectiveness
    
	
 
    	
 
    	
 
    
	
Conditions to   Effectiveness
    	
 
    	
The   effectiveness of each Transaction shall be subject to the satisfaction of   each of the conditions precedent for such Transaction specified in the Master   Repurchase Agreement and the satisfaction of each of the following additional   conditions:

 

(a)                                 a valid   Addition Notice has been timely delivered to GS;

 

(b)                                 in the case   of the first Transaction hereunder:

 

(1)                                 the “Closing   Date” under and as defined in the Security Indenture shall have occurred, and   the Seller shall have acquired a portion of the Eligible Security in an   amount equal to the Purchased Security Notional Amount for such Transaction;   and

 

(2)                                 Counterparty shall have initiated the transfer to GS of a par amount   of the Eligible Securities equal to the Purchased Security Notional Amount
    

 

10

 

	
 
    	
 
    	
for such   Transaction pursuant to Paragraph 3(a) of the Master Repurchase   Agreement for scheduled settlement substantially in accordance with the   then-current market practice in the principal market for such Security;

 

(c)                                  in the case   of each subsequent Transaction hereunder, the related “Increase” under the   Security Indenture shall have occurred, and Counterparty shall have initiated the transfer to GS of a par amount   of the Eligible Securities equal to the Purchased Security Notional Amount   for such Transaction pursuant to Paragraph 3(a) of the Master Repurchase   Agreement for scheduled settlement substantially in accordance with the   then-current market practice in the principal market for such Security;

 

(d)                                 no default or event of default with respect to Counterparty has   occurred under the Master Repurchase Agreement and is then continuing; and

 

(e)                                  no Margin Deficit exists under the Master Repurchase Agreement.

 

GS   shall prepare and deliver to Counterparty a revised Annex A (or another form   setting forth information corresponding to that set forth on Annex A),   reflecting the terms of such Transaction, reasonably promptly following the   satisfaction of the Conditions to Effectiveness for such Transaction.
    
	
 
    	
 
    	
 
    
	
3.                                      Financing   Fees
    
	
 
    	
 
    	
 
    
	
Ramp-Up Period Financing   Fee Payments
    	
 
    	
In lieu of accrual and payment of   Pricing Differential in respect of the Transactions, on the initial Financing   Fee Payment Date, Counterparty shall pay to GS an amount in   USD (the initial “Financing Fee Payments”)   equal to:

 

(a)                                 the Initial Purchase Price for each Transaction; multiplied by

 

(b)                                 the sum of (1) the Floating Rate as of the Financing Fee   Reset Date for such Financing Fee Period for such Transaction plus (2) the Spread; multiplied   by

 

(c)                                  the Financing Fee Day Count Fraction.
    
	
 
    	
 
    	
 
    
	
Spread
    	
 
    	
2.75% per annum.
    
	
 
    	
 
    	
 
    
	
Post-Ramp-Up Period   Financing Fee Payments
    	
 
    	
In lieu of accrual and payment of   Pricing Differential in respect of all of the Transactions collectively (and   without duplication of any Financing Fees theretofore paid as part of the   Repurchase Price of any Purchased Securities), on each Financing Fee Payment   Date (other than the initial Financing Fee Payment Date), Counterparty shall   pay to GS an amount in USD (the subsequent “Financing   Fee Payments”) equal to:
    

 

11

 

	
 
    	
 
    	
(a)                                 the Maximum Aggregate Facility Size; multiplied   by

 

(b)                                 the sum of (1) the Floating Rate as of the Financing Fee   Reset Date for such Financing Fee Period plus (2) the   Average Applicable Margin for such Financing Fee Period; multiplied   by

 

(c)                                  the Financing Fee Day Count Fraction.
    
	
 
    	
 
    	
 
    
	
Financing Fee Payment Dates
    	
 
    	
Each date that is 2 Business Days after each   Financing Fee Period End Date.
    
	
 
    	
 
    	
 
    
	
Financing Fee Period End   Dates
    	
 
    	
(a)                                 Each three-month anniversary of the Facility Commencement Date   to, but excluding, the Repurchase Date; and

 

(b)                                 the Repurchase Date.
    
	
 
    	
 
    	
 
    
	
Financing Fee Period
    	
 
    	
(a)                                 For each Transaction having a Purchase Date prior to the Ramp-Up   Period End Date, initially, the period from, and including, the Purchase Date   for such Transaction to, but excluding, the initial Financing Fee Period End   Date; and

 

(b)                                 for each Transaction (including those having an initial Financing Fee   Period under clause (a) above), each period from, and including, the   prior Financing Fee Period End Date to, but excluding, the current Financing   Fee Period End Date.
    
	
 
    	
 
    	
 
    
	
Floating Rate
    	
 
    	
For   any Financing Fee Period, three-month USD LIBOR, except that linear   interpolation will apply for Financing Fee Periods commencing prior to the   Ramp-Up Period End Date.

 

“USD LIBOR” for any Financing Fee Period shall be the rate   for deposits in U.S. Dollars which appears on the Reuters Screen LIBOR01 (or   a successor page) at 11:00 a.m. London time on the date that is two   London Business Days prior to the first day of such Financing Fee Period (or,   if such rate does not appear thereon, the arithmetic mean of the offered   quotations of four major banks in London designated by the Buyer to prime   banks in the London interbank market for U.S. Dollar deposits in Europe)   having a maturity of three months.
    
	
 
    	
 
    	
 
    
	
London Business Day
    	
 
    	
Any   day on which commercial banks are open for general business in London. 
    
	
 
    	
 
    	
 
    
	
New York Business Day
    	
 
    	
Any   day on which commercial banks are open for general business in New York.
    
	
 
    	
 
    	
 
    
	
Average Applicable Margin
    	
 
    	
For   any Financing Fee Period, the sum of the Applicable Margin for each day in   such Financing Fee Period divided by   the number of days in such Financing Fee Period.
    
	
 
    	
 
    	
 
    
	
Applicable Margin
    	
 
    	
For   any day, the product of:

 

(a)                                 the Spread;   and

 

(b)                                 the ratio on   such day of:
    

 

12

 

	
 
    	
 
    	
(1)                                 the Aggregate   Purchased Security Notional Amount minus the   Adjusted Aggregate Reduction Amount as of such day; to

 

(2)                                 the Aggregate   Purchased Security Notional Amount as of such day.
    
	
 
    	
 
    	
 
    
	
Financing Fee Day Count   Fraction
    	
 
    	
Actual/360
    
	
 
    	
 
    	
 
    
	
Financing Fee Reset Dates
    	
 
    	
For each Transaction, the first day of each   Financing Fee Period for such Transaction
    
	
 
    	
 
    	
 
    
	
Adjusted Aggregate Reduction   Amount
    	
 
    	
For any day, the lesser of:

 

(a)                                 the Aggregate Reduction Amount in effect on such day; and

 

(b)                                 the Cash Value as of such day.
    
	
 
    	
 
    	
 
    
	
Reduction Amounts
    	
 
    	
If after the Ramp-Up Period End Date the   Collateral Manager proposes a Proposed Underlying Asset for which at least   two Pricing Sources are available and GS notifies Counterparty (including by   telephone or email) that:

 

(x)                                 GS has determined (in its sole and absolute discretion) that such   Proposed Underlying Asset is a Non-Private Underlying Asset; and

 

(y)                                 the GS Consent Condition is not satisfied with respect to such   Proposed Underlying Asset,

 

such event will constitute a “Rejection Event” and the Proposed Underlying Asset will   constitute a “Rejected Underlying Asset”   unless the GS Consent Condition is subsequently satisfied with respect to   such Proposed Underlying Asset within three Business Days after GS receives a   Reduction Notice for the related Reduction Event as described below.

 

If the GS Consent Condition is not satisfied   with respect to any Restructuring or any Material Modification of an   Underlying Asset, such event will constitute a “Rejection   Event” and the Underlying Asset will also constitute a “Rejected Underlying Asset” unless the GS Consent Condition   is subsequently satisfied with respect to such Restructuring or Material   Modification within three Business Days after GS receives a Reduction Notice   for the related Reduction Event as described below.

 

Each time three unique and consecutive   Rejection Events occur (each with respect to Underlying Assets or Proposed   Underlying Assets issued by obligors unaffiliated with one another), such   occurrence will constitute a “Reduction Event”,   whereupon Counterparty may, by written notice to GS (each such notice, a “Reduction Notice”), declare a “Reduction   Amount” (with effect from the date of such Reduction Notice, each   such date a “Reduction Date”) with respect to   such Reduction Event equal to 
    

 

13

 

	
 
    	
 
    	
the average of the Reduction Calculation   Amounts of the Rejected Underlying Assets relating to such Reduction Event   (determined, for the avoidance of doubt, taking into account the portion of   such Rejected Underlying Asset that is or would have been acquired by the   Security Issuer), provided that   the Reduction Amount related to such Reduction Event shall be deemed reduced   to zero (with effect from the date of the related Reduction Notice) if,   within three Business Days following the related Reduction Date, the GS   Consent Condition is subsequently satisfied with respect to one or more of   the Rejected Underlying Assets related to such Reduction Event.

 

For the avoidance of doubt, multiple   Reduction Events may occur during the term of this Agreement entitling   Counterparty to declare Reduction Amounts with respect to each such Reduction   Event (the sum of all Reduction Amounts at any time, the “Aggregate Reduction Amount” at such time).

 

If (at any time after any Reduction Event)   the Collateral Manager proposes a Proposed Underlying Asset and GS notifies   Counterparty (including by telephone or email) that the GS Consent Condition   is satisfied with respect to such Proposed Underlying Asset (each such date,   an “Acceptance Date”), or the GS Consent   Condition is satisfied with respect to a related Restructuring or Material   Modification, the Aggregate Reduction Amount will be reduced (but not below   zero) (with effect from such Acceptance Date) by an amount equal to the   Reduction Calculation Amount of such Proposed Underlying Asset or Underlying   Asset (determined, for the avoidance of doubt, taking into account the   portion of such Proposed Underlying Asset or Underlying Asset, as the case   may be, that is or would have been acquired by the Security Issuer).
    
	
 
    	
 
    	
 
    
	
Reduction Calculation Amount
    	
 
    	
For any Rejection Event relating to a   Proposed Underlying Asset that is a Rejected Underlying Asset, the proposed   purchase price of such Rejected Underlying Asset.

 

For any Rejection Event relating to a   Restructuring or Material Modifications, the then-prevailing market value of   the related Rejected Underlying Asset.
    
	
 
    	
 
    	
 
    
	
Pricing Source
    	
 
    	
For any Underlying Asset or Proposed   Underlying Asset, a market maker in the relevant market, LoanX or other   pricing sources reasonably acceptable to GS.
    
	
 
    	
 
    	
 
    
	
4.                                      Make-Whole   Payment
    
	
 
    	
 
    	
 
    
	
Make-Whole Payment   Requirement
    	
 
    	
If   the Repurchase Date for the Transactions is accelerated for any reason (other   than the occurrence of a Regulatory Change, the occurrence of an   Assignment-Related Repurchase Date Acceleration or the occurrence of a   Dispute-Related Repurchase Date Acceleration) (a “Repurchase   Date Acceleration”), then Counterparty shall pay to GS, within   five Business Days of the date on which such acceleration occurs, an amount   equal to the Make-Whole Amount.
    

 

14

 

	
Make-Whole Amount
    	
 
    	
In   connection with a Repurchase Date Acceleration (if any), an amount equal to   the aggregate amount of Financing Fee Payments that would be payable to GS   hereunder during the period from and including the date on which such   Repurchase Date Acceleration occurs to but excluding the Scheduled Repurchase   Date (determined as if the Floating Rate were equal to zero), discounted to   present value, all as calculated by the Calculation Agent.
    
	
 
    	
 
    	
 
    
	
5.                                      Application   of Principal Payments.
    
	
 
    	
 
    	
 
    
	
Cash Principal Payment   Provisions
    	
 
    	
On   each date on which GS receives a payment (other than a payment of interest)   on the Purchased Security in cash and in immediately available funds (each, a   “Cash Principal Payment”), GS shall   reduce the Repurchase Price for such Purchased Security by an amount equal to   the related Repurchase Price Reduction Amount.

 

On   or reasonably promptly following the second Business Day after GS’s receipt   of a Cash Principal Payment GS shall use commercially reasonable efforts to   remit to Counterparty an amount equal to the related Counterparty Application   Amount.
    
	
 
    	
 
    	
 
    
	
Repurchase Price Reduction   Amount
    	
 
    	
With   respect to any Cash Principal Payment, an amount equal to the product of:

 

(a)                                 such Cash   Principal Payment; and

 

(b)                                 one minus the Haircut Percentage.
    
	
 
    	
 
    	
 
    
	
Counterparty Application Amount
    	
 
    	
With   respect to any Cash Principal Payment, an amount equal to the product of:

 

(a)                                 such Cash   Principal Payment; minus

 

(b)                                 the   Repurchase Price Reduction Amount for such Cash Principal Payment.
    
	
 
    	
 
    	
 
    
	
6.                                      Dispute   Resolution, Etc.
    
	
 
    	
 
    	
 
    
	
Dispute Resolution
    	
 
    	
If   Counterparty in good faith disputes the Asset Market Related Amounts of one   or more Underlying Assets as determined by the Calculation Agent as of any   Business Day and, accordingly, Counterparty wishes to dispute the calculation   of a Margin Deficit or an Excess Cure Collateral Refund Amount (each, a “Dispute”), then for so long as such Dispute is continuing   (and provided that no Event of Default,   Monetary Default or Other Material Default with respect to Counterparty   occurs or is then continuing), upon the request of Counterparty, GS and   Counterparty will work together in good faith to resolve such Dispute, it   being understood that Counterparty shall at all times during the pendency of   each Dispute be required to comply with its obligations under Paragraph 4 of   the Master Repurchase Agreement based upon the determinations of the Asset   Market Related Amounts of the Underlying Assets as determined by the   Calculation Agent.
    

 

15

 

	
 
    	
 
    	
GS   agrees that, if any Dispute continues unresolved for more than five Business   Days, a “Dispute-Related Repurchase Right”   shall be deemed to exist until the earlier to occur (if any) of (a) the   resolution of such Dispute by the parties and (b) the occurrence of an   Event of Default, a Monetary Default or an Other Material Default  with respect to Counterparty.

 

The   provisions set forth in this Dispute Resolution section supersede all   inconsistent provisions in the Master Repurchase Agreement.
    
	
 
    	
 
    	
 
    
	
Monetary Default
    	
 
    	
A   default by a party in the payment of money hereunder or under the Master   Repurchase Agreement when due (determined without regard to any grace period   otherwise specified), or a default by such party in the performance or   observance of any other obligation hereunder or under the Master Repurchase   Agreement (determined without regard to any grace period otherwise specified)   that by its terms can be cured solely by the payment of money.
    
	
 
    	
 
    	
 
    
	
Other Material Default
    	
 
    	
A   default by a party in the performance or observance of any material   obligation of that party hereunder or under the Master Repurchase Agreement   that, with the giving of notice or lapse of time or both, would become an   Event of Default with respect to such party.
    
	
 
    	
 
    	
 
    
	
7.                                      Additional   Provisions
    
	
 
    	
 
    	
 
    
	
Restriking Terms
    	
 
    	
If   for any period of five or more consecutive Business Days the net amount of   cash margin held by GS under Paragraph 4 of the Master Repurchase Agreement   exceeds 10% of the sum of the then-current Repurchase Prices hereunder, then   for so long as such condition is continuing (and provided   that no Event of Default or event that, with the giving of notice or lapse of   time or both, would become an Event of Default with respect to Counterparty   occurs or is then continuing), upon the request of Counterparty, GS and   Counterparty will work together in good faith to restrike one or more of the   economic terms of the Transactions under the Master Repurchase Agreement with   a view to reducing or eliminating the amount of cash margin then required to   be posted to GS thereunder, it being understood that, in connection with any   such restriking, GS may require that changes to other economic terms of the   Transactions be made, and that changes to the terms of the Purchased   Securities be made, in order to preserve the overall economic effect of the   Transactions for GS.
    
	
 
    	
 
    	
 
    
	
Limit on Optional Redemptions
    	
 
    	
GS   agrees that, for so long as any Transaction is outstanding under this   Confirmation (unless an Event of Default with respect to Counterparty has   occurred and is then continuing), it will not give the Security Issuer or the   Trustee under the Security Indenture any direction to effect a redemption (in   whole or in part) of the Purchased Securities.
    
	
 
    	
 
    	
 
    
	
Counterparty Note Restriction
    	
 
    	
Counterparty   agrees that, for so long as any Transaction is outstanding under this   Confirmation, it shall not at any time (1) hold any portion of the   Purchased Securities or (2) transfer any
    

 

16

 

	
 
    	
 
    	
portion   of the Purchased Securities (other than pursuant to the provisions hereof and   of the Master Repurchase Agreement).
    
	
 
    	
 
    	
 
    
	
No Substitution Rights
    	
 
    	
Seller   may not substitute other Securities for the Purchased Security, unless   otherwise agreed to by Purchaser in writing in its sole and absolute   discretion.  
    
	
 
    	
 
    	
 
    
	
Indemnity
    	
 
    	
Counterparty   shall indemnify GS and each Related Party (as defined below) (each such   person being referred to herein as an “Indemnitee”)   against, and hold each Indemnitee harmless from, any and all losses, claims,   damages, liabilities and related expenses, including the reasonable fees and   reasonable out-of-pocket expenses of any counsel for any Indemnitee, incurred   by or asserted against any Indemnitee arising out of, in connection with, or   as a result of (i) the execution or delivery of the Master Repurchase   Agreement, this Confirmation or any agreement or instrument contemplated   hereby, the performance by the parties hereto of their respective obligations   hereunder or thereunder or the consummation of the Transaction or any other   transactions contemplated hereby or thereby or (ii) any claim,   litigation, investigation or proceeding relating to any of the foregoing,   whether based on contract, tort or any other theory and regardless of whether   any Indemnitee is a party thereto; provided that   such indemnity shall not, as to any Indemnitee, be available to the extent   that such losses, claims, damages, liabilities or related expenses have   resulted from the bad faith, gross negligence or willful misconduct of any   Indemnitee or a breach of the Master Repurchase Agreement or this   Confirmation by GS.

 

Notwithstanding   the foregoing, in no event shall Counterparty be liable for any indirect, consequential,   incidental, exemplary or punitive damages, opportunity cost or lost profits   (other than as set forth in Paragraph 11 of the Master Repurchase Agreement).

 

The   obligations of Counterparty in this Indemnity section shall survive   termination of the Transaction and any termination of the Master Repurchase   Agreement.

 

As   used herein “Related Party” means GS’s   affiliates and the respective directors, officers, employees, agents and   advisors of GS and GS’s affiliates.
    
	
 
    	
 
    	
 
    
	
Taxes
    	
 
    	
Each   of the parties hereto intends and agrees to treat the Transaction, for United   States income tax purposes, as a secured loan made by Buyer to Seller.  Consistent with the Transaction being   treated for U.S. federal income tax purposes as a secured loan made by Buyer   to Seller, Buyer agrees to provide Seller with a Form 1099-INT (or any   successor form) with respect to interest paid to Buyer and passed on to   Seller pursuant to Paragraph 5 of the Master Repurchase Agreement.
    
	
 
    	
 
    	
 
    
	
Certain Voting Rights
    	
 
    	
If   GS has the right to exercise any Specified Voting Right in relation to any   consent, vote, direction proposal or resolution arising at any time while   this Transaction is outstanding, then:

 

(a)                                 GS shall   notify Counterparty thereof in writing after its
    

 

17

 

	
 
    	
 
    	
receipt   of notice thereof or GS otherwise becomes aware thereof;

 

(b)                                 GS shall not   exercise such Specified Voting Right unless and until directed to do so by   Counterparty; and

 

(c)                                  GS shall   either (x) follow Counterparty’s written instructions as to the manner   and timing of exercising such Specified Voting Right or (y) procure that   Counterparty may exercise such Specified Voting Right directly,

 

provided that,   without prejudice to clause (b), GS shall have no obligation to take any   action in relation to any direction from Counterparty with respect to the   exercise of any Specified Voting Right if doing so could expose GS to   liability, could violate any rule or regulation applicable to GS or any   interpretation thereof (whether or not having the force of law), could cause   reputational damage to GS or otherwise cause GS to otherwise incur any   expenses not paid by Counterparty in a manner satisfactory to GS.

 

Notwithstanding   the foregoing, GS may exercise at any time and from time to time all other   rights given to it as a holder of the Purchased Security as if this   Transaction were not outstanding (including, without limitation, all rights   to exercise remedies upon the occurrence of an event of default or an   acceleration event, all rights to give or refrain from giving consents to   amendments, modifications, supplements and waivers to the Security Indenture   and the other documents executed and delivered thereunder or in connection   therewith, all rights to consent or refrain from giving consent to changes to   the assets purchased or sold by the Security Issuer, and all rights to   otherwise give directions or refrain from giving directions under the   Purchased Security), in each case other than the Specified Voting Rights.
    
	
 
    	
 
    	
 
    
	
Specified Voting Right
    	
 
    	
The   right of a holder of the Purchased Security (in its capacity as such) to   participate in the selection or removal of a general partner, managing   member, member of the board of directors or trustees, investment manager,   investment adviser, or commodity trading advisor of the Security Issuer   (excluding the rights of a creditor to exercise remedies upon the occurrence   of an event of default or an acceleration event).
    
	
 
    	
 
    	
 
    
	
Expense Reimbursement
    	
 
    	
GS   agrees to reimburse Counterparty for payment of out-of-pocket costs incurred   by Counterparty in connection with Additions hereunder through the Ramp-up   Period End Date, promptly following presentation of an invoice therefor, in   an amount up to the lesser of:

 

(a)                                 the product   of (1) USD 10,000; and (2) the number of Additions that occurred   from the Facility Commencement Date through the Ramp-up Period End Date; and

 

(b)                                 USD 50,000.
    

 

18

 

	
8.                                      Payment   Details, Etc.
    
	
 
    	
 
    	
 
    
	
Payments to GS
    	
 
    	
In accordance with GS’s prior written   instructions as set forth below or as otherwise delivered to   Counterparty.  
    
	
 
    	
 
    	
 
    
	
GS Payment Details
    	
 
    	
In accordance with GS’s written   instructions as delivered to Counterparty.
    
	
 
    	
 
    	
 
    
	
GS Inquiries
    	
 
    	
Goldman Sachs Bank USA

Facsimile:                                +1 212 428 4534

Email:                                                   gs-sctabs-reporting@ny.email.gs.com
    
	
 
    	
 
    	
 
    
	
GS Notices
    	
 
    	
Goldman Sachs Bank USA

Facsimile:                                +1 212 428 4534

Email:                                                   gs-pfi-mo-confidential@gs.com

 

With a copy to:

 

Attention:                                Managing Director of PFI Desk

Address:                                        200 West Street, 6th Floor

                                                                                       New York, NY 10282

 

Attention:                                PFI Middle Office

Address:                                        200 West Street, 16th Floor

                                                                                       New York, NY 10282

 

All correspondence shall include the GS   Reference Number:

SDB4064875388
    
	
 
    	
 
    	
 
    
	
Payments to Counterparty
    	
 
    	
In accordance with Counterparty’s written   instructions as set forth below or otherwise delivered to GS.  GS shall make no   payments (and have no obligation to make any payment hereunder) without   having received (i) such written instructions and (ii) a fully   executed facsimile copy of this Confirmation or other written acceptance of   the terms hereof.
    
	
 
    	
 
    	
 
    
	
Counterparty Payment Details
    	
 
    	
In accordance with Counterparty’s written   instructions as delivered to GS.  
    
	
 
    	
 
    	
 
    
	
Counterparty Inquiries
    	
 
    	
In accordance with Counterparty’s written   instructions as delivered to GS
    

 

(C)                               Miscellaneous.

 

1.                                      Amendments, Etc.  Except as otherwise expressly stated herein, this Confirmation may not be amended except in writing signed by both parties.

 

2.                                      Execution.  This Confirmation may be executed in counterparts (including by facsimile or electronic transmission), each of which counterpart, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same agreement.

 

3.                                      Legal Requirements.  Buyer shall not be required to purchase the Purchased Security if any such purchase shall result in any violation of applicable rules or regulations, including, but not limited to, rules applicable to new issuances of securities.

 

19

 

(D)                               Additional Acknowledgements, Representations and Agreements:

 

1.                                      Counterparty hereby represents to and acknowledges and agrees with GS that:

 

(i)                                     It has consulted with its own tax advisors to the extent that it has deemed necessary, and it has made its own decisions regarding entering into the Facility based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by GS or any of its affiliates or agents.

 

(ii)                                  The fair value of the assets of Counterparty will exceed the debt and liabilities, subordinated, contingent and otherwise of Counterparty, and Counterparty will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

 

2.                                      Each party acknowledges and agrees that:

 

(i)                                     Unless identified as an underwriter or arranger in an offering document relating to a Purchased Security, Underlying Asset or Unsettled Purchase Asset (each, an “Instrument”), GS and its affiliates have played no role in structuring or arranging any Instrument or in negotiating or establishing the terms of such Instrument.  Whether or not GS or its affiliates are identified as an underwriter or arranger in any offering document relating to an Instrument, any and all information that may have been or is in the future provided by GS to Counterparty with respect to any Instrument is not being furnished by GS in the capacity of an underwriter or arranger in relation to the Instrument in connection with the relevant Transaction, and GS accepts no responsibility or liability therefor.

 

(ii)                                  The contents of this Confirmation and the other agreements relating to the Facility are confidential and shall not be disclosed to any third party, and neither party shall make any public announcement relating to the Facility without consent of the other party; except that disclosure of this Confirmation and the terms of the Facility is permitted (A) where required or appropriate in response to any summons, subpoena, or otherwise in connection with any litigation or regulatory inquiry or to comply with any applicable law, order, regulation, ruling, or disclosure requirement, including without limitation, any requirement of any regulatory body or stock exchange where the shares of such disclosing party are listed, as determined by the disclosing party in good faith following consultation with the other party hereto, (B) to officers, directors, employees, attorneys, accountants and advisors of the parties or their affiliates who are subject to a duty of confidentiality to the disclosing party or such affiliate and otherwise have a need to know such information, (C) to rating agencies and (D) where the information has otherwise become public (other than as a result of a breach of this subparagraph). Notwithstanding the foregoing or any other provision in this Confirmation or any other document, GS and Counterparty (and each employee, representative, or other agent of GS or Counterparty) may each disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to them relating to such U.S. tax treatment and U.S. tax structure (as those terms are used in Treasury Regulations under Sections 6011, 6111 and 6112 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”)), other than any information for which nondisclosure is reasonably necessary in order to comply with applicable securities laws.

 

(iii)                               As of the Facility Commencement Date and so long as either party has or may have any obligation under any Transaction, it is not and will not be an “employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), subject to Title I of ERISA, a “plan” (as defined in Section 4975(e) of the Code), subject to Section 4975 of the Code or an entity whose underlying assets include the assets of any such plan by reason of 29 CFR 2510.3-101, Section 3(42) of ERISA or otherwise.

 

20

 

(iv)                              GS and any of its affiliates may deal in any Instrument and may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of commercial or investment banking or other business with any issuer of or obligor on any Instrument, any affiliate thereof, any other person or entity having obligations relating to any Security Issuer or any such issuer or obligor and may act with respect to such business in the same manner as if any Transaction did not exist and may originate, purchase, sell, hold or trade, and may exercise consensual or remedial rights in respect of, obligations, securities or other financial instruments of, issued by or linked to the Security Issuer or any such issuer or obligor, regardless of whether any such action might have an adverse effect on such Security Issuer, such issuer or such obligor, the value of the related Instrument or the position of the other party to such Transaction or otherwise.

 

(v)                                 Except as otherwise expressly provided herein, each party and its affiliates and the Calculation Agent may, whether by virtue of the types of relationships described herein or otherwise, at the date hereof or at any time hereafter, be in possession of information regarding any Security Issuer or any issuer of or obligor on any Instrument, or any affiliate thereof, that is or may be material in the context of such Transaction and that may or may not be publicly available or known to the other party.  In addition, except as expressly provided herein, this Confirmation does not create any obligation on the part of such party and its affiliates to disclose to the other party any such relationship or information (whether or not confidential).

 

[remainder of page intentionally blank]

 

21

 

Counterparty hereby agrees (a) to check this Confirmation (Reference No.: SDB4064875388) carefully upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing correctly sets forth the terms of the agreement between the parties with respect to the particular Transaction to which this Confirmation relates, by manually signing this Confirmation and providing the other information requested herein and returning an executed copy to PFI Middle Office, facsimile No. +1 212 428 4534.

 

	
 
    	
 
    	
Very   truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GOLDMAN   SACHS BANK USA
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Meera Bhutta
    
	
 
    	
 
    	
 
    	
Name:   Meera Bhutta
    
	
 
    	
 
    	
 
    	
Title:   Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
AGREED   AND ACCEPTED BY:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
STRAFFORD   FUNDING LLC
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Gerald F. Stahlecker
    	
 
    	
 
    
	
 
    	
Name:   Geralf F. Stahlecker
    	
 
    	
 
    
	
 
    	
Title:   Executive Vice President
    	
 
    	
 
    

 

22

 

Annex A

 

Repurchase Transactions

 

	
Transaction
   Number
    	
 
    	
Security
   Issuer
    	
 
    	
Purchased
   Security
    	
 
    	
Purchase
   Date
    	
 
    	
Initial
   Purchase
   Price
    	
 
    	
Purchased
   Security
   Notional
   Amount
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Effective as of                     ,         :

 

	
GOLDMAN   SACHS BANK USA
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
STRAFFORD   FUNDING LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

23

 

Annex B

 

Form of Addition Notice

 

	
To:
    	
Goldman   Sachs Bank USA
    
	
 
    	
Facsimile:
    	
+1   212 428 4534
    
	
 
    	
Email:
    	
gs-sctabs-reporting@ny.email.gs.com
    
	
 
    	
 
    	
 
    
	
 
    	
With   a copy to:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Attention:
    	
Managing   Director of PFI Desk
    
	
 
    	
Address:
    	
200   West Street, 6th Floor
    
	
 
    	
 
    	
New   York, NY 10282
    
	
 
    	
 
    	
 
    
	
 
    	
Attention:
    	
PFI   Middle Office
    
	
 
    	
Address:
    	
200   West Street, 16th Floor
    
	
 
    	
 
    	
New   York, NY 10282
    

 

GS Reference Number: SDB4064875388

 

Date:                  [                         ], 20

 

Ladies and Gentlemen:

 

We refer to the Confirmation, dated as of September 11, 2014 (the “Confirmation”) to the Master Repurchase Agreement (including the Annexes thereto) dated as of September 11, 2014, each as amended or replaced from time to time, between Goldman Sachs Bank USA and Strafford Funding LLC.  Terms defined therein shall have the same respective meanings herein.

 

This notice is an Addition Notice for the purposes of the Confirmation.  For the proposed Transaction:

 

(i)                                     the proposed Purchase Date is [                        ];

 

(ii)                                  the proposed Purchased Security Notional Amount is USD [                        ];

 

(iii)                               the Security Issuer is Security Issuer Gladwyne Funding LLC; and

 

(iv)                              the Purchased Security is:  Gladwyne Funding LLC Floating Rate Note due December 1, 2024, CUSIP No. 376769 AA3.

 

 

	
Yours   faithfully,
    	
 
    
	
 
    	
 
    
	
STRAFFORD   FUNDING LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

24Exhibit 10.9

 

REVOLVING CREDIT AGREEMENT

 

THIS REVOLVING CREDIT AGREEMENT, (this “Agreement”) is made as of September 11, 2014, between FS Energy and Power Fund, a Delaware statutory trust (the “Lender”), and Strafford Funding LLC, a Delaware limited liability company (the “Borrower”).

 

PRELIMINARY STATEMENTS

 

WHEREAS, from time to time, the Borrower will sell certain securities (the “Notes”) to Goldman Sachs Bank USA (the “Purchaser”) pursuant to the September 1996 Version Master Repurchase Agreement, the Annex thereto and the Master Confirmation exchanged thereunder, each dated as of September 11, 2014, and each between the Borrower and the Purchaser (as each may be amended, restated, supplemented or otherwise modified, collectively, the “Repurchase Agreement”);

 

WHEREAS, from time to time, the Borrower will be required to deliver cash collateral to the Purchaser to satisfy certain margining requirements in accordance with the terms of and under the Repurchase Agreement and the Borrower desires to borrow from the Lender the amount, if any, necessary from time to time to satisfy the Borrower’s obligation to deliver such collateral; and

 

WHEREAS, the Lender may be willing to make subordinated loans to the Borrower to fund such amounts on the terms and conditions set forth herein.

 

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

 

ARTICLE I.

 

Section 1.1.  Defined Terms. Except as otherwise specified herein or as the context may otherwise require, capitalized terms used but not otherwise defined herein are defined in the Repurchase Agreement. In addition, the following terms have the following meanings:

 

“Event of Default” means any event of default specified in Section 5.1.

 

“LIBOR Rate” means, the rate per annum determined as of the first Business Day of each calendar month equal to the rate determined by the Lender to be the offered rate that appears on the page of the Reuters Screen that displays an average ICE Benchmark Administration Limited (or any other Person that takes over the administration of such rate) (such page currently being LIBOR01) for deposits in United States dollars with a one-month period. The LIBOR Rate applicable to Loans hereunder will change monthly on the first Business Day of each calendar month.

 

“Loan” means each loan of funds or each advance made to the Borrower by the Lender pursuant to Section 2.1.

 

 

“Maturity Date” means the earlier to occur of (i) the date designated as such in writing by the Borrower and the Lender from time to time and (ii) the date this Agreement is terminated by the Lender pursuant to Section 5.2; provided, that in no event shall the Maturity Date occur prior to the date that is 90 days after the Final Repurchase Date under the Repurchase Agreement.

 

“Scheduled Expiration Date” means the date that is 364 days after the date hereof, which shall be automatically renewed for one or more additional, successive terms of 364 days each unless either the Borrower or the Lender sends written notice to the other party not less than 30 days prior to the next applicable Scheduled Expiration Date of such party’s desire not to extend the Scheduled Expiration Date for an additional term.

 

“Spread” means 0.75%.

 

ARTICLE II.

 

Section 2.1.  Loans to Borrower. Subject to the terms and conditions of this Agreement and in reliance on the representations and warranties set forth herein, the Lender, in its sole discretion, may make Loans to the Borrower, from time to time from the date of this Agreement to but excluding the Scheduled Expiration Date, in an aggregate principal amount outstanding at any one time not to exceed TWO HUNDRED AND TWENTY FIVE MILLION DOLLARS ($225,000,000), as reduced from time to time as the Maximum Aggregate Facility Size is reduced in accordance with the Repurchase Agreement. The determination of the Lender to make a Loan will also be subject to the conditions that (and the Borrower shall not request a Loan unless) (i) no event has occurred and is continuing, or would occur by the borrowing of the Loan, which constitutes an Event of Default or which, upon the giving of notice, the lapse of time, or both, would constitute an Event of Default and (ii) the representations and warranties contained in Section 3.1 are true and correct in all material respects on and as of the date of each such Loan and will continue to be true and correct in all material respects after such Loan is made.

 

Section 2.2.  Borrower’s Obligations. The Borrower hereby promises to pay in full the unpaid principal amount of the Loans on the Maturity Date and any and all accrued and unpaid interest on the Loans as more fully set forth in Section 2.4 below. The obligation of the Borrower to pay the principal of and interest on the Loans shall be absolute and unconditional, shall be binding and, to the fullest extent permitted by law, enforceable in all circumstances whatsoever and shall not be subject to setoff, recoupment or counterclaim; provided, however, that the Borrower shall only be obligated to pay principal of and interest on the Loans from distributions of available funds (if any) after satisfaction of the Borrower’s payment and margin maintenance obligations under the Repurchase Agreement and, after termination of the Repurchase Agreement, from funds of the Borrower. The Lender shall maintain on its books and records a register on which it will record each Loan made and each repayment of any Loan and interest thereon. Any such recordation by the Lender shall be presumptively correct, absent manifest error. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrower’s obligations hereunder. The register shall be available for inspection by the Borrower at any reasonable time and from time to time upon reasonable prior notice.

 

 

Section 2.3.  Requests for Loans. Unless otherwise agreed to by the Lender, the Borrower will give the Lender notice of a request for a Loan at least one Business Day prior to the day on which the Borrower wishes to receive the Loan. Subject to the terms and conditions of this Agreement, if agreed to by the Lender, the Lender will make the requested Loan on the Business Day specified in the notice in immediately available funds in accordance with the Borrower’s payment instructions.

 

Section 2.4.  Interest. (a) Interest will accrue on the average daily balance of the unpaid principal amount of the Loans, for each day from the date such Loans are made until they become due or are paid in full, at a rate per annum equal to the sum of the LIBOR Rate then in effect plus the Spread. Should any principal of, or accrued interest on, a Loan not be paid when due, such amount will bear interest from its due date until paid in full, at a rate per annum equal to the sum of (i) the LIBOR Rate plus the Spread, then in effect, plus (ii) 200 basis points (2.00%). In no event will the rate of interest hereunder exceed the maximum rate allowed by law. A certificate of the Lender as to determination of the LIBOR Rate, the Spread, the calculation of the interest rate therefrom and the calculation of any interest due and payable will be, absent manifest error, conclusive and binding on the Borrower.

 

(b)                                 Interest shall be payable on each Repurchase Date during the term of this Agreement and on the Maturity Date; provided, that if such day is not a Business Day the payment date for such period shall be the Business Day immediately following such day (but in each case only to the extent the Borrower has funds in accordance with Section 2.2 hereof).  Interest will be computed on the basis of a year of 360 days and paid for the actual number of days elapsed including the first day but excluding the last day.

 

Section 2.5.  Repayment and Prepayment of the Loans. The outstanding principal amount of all Loans and all accrued and unpaid interest thereon will be due and payable in full on the Maturity Date. The Borrower may prepay any outstanding Loan, in whole or in part, at any time without penalty. Any amounts prepaid may be reborrowed. All payments of principal of and interest on the Loans will be made in lawful money of the United States, in immediately available funds, to the Lender. If any such payment falls due on a day which is not a Business Day, such payment will be due on the next following Business Day. Payments received by the Lender will be applied: first, to accrued and unpaid interest on the Loans, and second, to the principal of the Loans.

 

Section 2.6.  Transfer Restrictions. The Lender may not transfer any interest in the Loans to persons other than affiliates of the Lender that are U.S. Persons for U.S. federal income tax purposes. For this purpose, a “non-U.S. person” is a person other than “U.S. person” as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended.

 

ARTICLE III.

 

Section 3.1.  Representations and Warranties. To induce the Lender to enter into this Agreement and to make Loans in its sole discretion hereunder, the Borrower represents and warrants as follows:

 

 

(a)                                 It is a limited liability company duly organized, validly existing and in good standing solely under the laws of the State of Delaware and is duly qualified to do business, and is in good standing, in every jurisdiction in which the nature of its business requires it to be so qualified;

 

(b)                                 It has full power and authority to enter into the transactions provided for in this Agreement and has been duly authorized to do so by all necessary and appropriate action and when executed and delivered by it, this Agreement will constitute the legal, valid and binding obligation of the Borrower enforceable in accordance with its terms, subject, as to enforcement, to (i) the effect of bankruptcy, insolvency or similar laws affecting generally the enforcement of creditors’ rights, as such laws would apply in the event of any bankruptcy, receivership, insolvency or similar event applicable to the Borrower and (ii) general equitable principles (whether enforceability of such principles is considered in a proceeding at law or in equity);

 

(c)                                  There does not exist any default or violation by it of or under any of the terms, conditions or obligations of: (i) its organizational documents; (ii) any material agreement or other instrument to which it is a party or by which it is bound (other than defaults under the Repurchase Agreement that the Loan is intended to cure, resolve or alleviate); or (iii) in any material respect, any law, regulation, ruling, order, injunction, decree, condition or other requirement applicable to or imposed upon it by any law or by any governmental authority, court or agency; and

 

(d)                                 At the time of (and immediately after) each Loan is made hereunder, (i) the Borrower is solvent, (ii) the Borrower’s cash on hand is sufficient to satisfy all of its current obligations (other than its obligations under this Agreement and the Repurchase Agreement), (iii) its capitalization, including its equity, is commercially reasonable and adequate to conduct its business as presently contemplated and (iv) the financial capacity of the Borrower to meet its financial commitments under this Agreement is adequate.

 

ARTICLE IV.

 

Section 4.1.  Compliance with Laws. The Borrower shall comply with all applicable laws, rules and regulations in all material respects.

 

Section 4.2.  Keeping of Records and Books of Accounts. The Borrower shall maintain and keep proper books and records and accounts which enable the Borrower to prepare and issue financial statements in accordance with generally accepted accounting principles and as otherwise may be required by any applicable law, rule or regulation and in which full, true and correct entries shall be made of all of its dealings and business and financial affairs. The Borrower shall permit the Lender to examine and make excerpts from such books and records at such times and as often as the Lender may reasonably request. The Borrower shall permit, upon the request of the Lender, an audit to be conducted of the Borrower’s financial statements and books and records. Any such audit shall be at the Borrower’s expense and shall be conducted by independent accountants selected by the Lender.

 

 

Section 4.3.  No Distributions. The Borrower will not make any cash or in-kind distributions to its equity holders unless both before and after each such distribution the representations and warranties contained in Section 3.1 above would be true and correct.

 

ARTICLE V.

 

Section 5.1.  Events of Default. Each of the following shall constitute an Event of Default:

 

(a)                                 the Borrower fails to pay, within five Business Days after it is due and payable, any principal of or interest on any of the Loans; provided, that for purposes of this Section 5.1(a) only, no principal or interest shall be considered due and payable on a date that is prior to the Maturity Date; or

 

(b)                                 the Borrower fails to perform or observe any other term or condition of any of this Agreement applicable to it and such event or circumstance, if capable of being cured, is not cured within 30 days after written notice thereof is given by the Lender to the Borrower; or

 

(c)                                  an Event of Bankruptcy occurs with respect to the Borrower.

 

Section 5.2.  Remedies. Upon the occurrence of an Event of Default, the Lender may do any one or more of the following (without presentment, protest or notice of protest, all of which are expressly waived by the Borrower): (i) terminate this Agreement and declare the principal of and interest on the Loans and all other sums owing by the Borrower to the Lender under this Agreement forthwith due and payable, whereupon this Agreement will terminate and the principal of, and interest on, the Loans and all such other sums will become forthwith due and payable; and (ii) subject to Section 5.3, exercise all rights granted pursuant to this Agreement, in such order and in such manner as the Lender may, in its sole and exclusive judgment, determine.

 

Section 5.3.  Subordination. Notwithstanding anything contained in this Agreement to the contrary, to the extent that the Lender is deemed to have any interest in any assets of the Borrower, the Lender agrees that all amounts outstanding hereunder and its interest in those assets are subordinate in all respects to claims or rights of the Purchaser pursuant to the Repurchase Agreement; provided, that notwithstanding any rights or remedies available to the Lender under this Agreement, applicable law or otherwise, prior to the time that all secured indebtedness or other secured obligations owned by the Borrower, including the obligations of the Borrower under the Repurchase Agreement, shall have been repaid in full, the Lender shall not, directly or indirectly, seek to accelerate or enforce (judicially or non-judicially) its rights hereunder or assert any claims or interests therein (including, without limitation, by setoff or notification of account debtors). The Lender agrees that this Agreement constitutes a subordination agreement for purposes of Section 510(a) of the United States Bankruptcy Code, as amended from time to time (11 U.S.C. §§ 101 et seq.).

 

 

ARTICLE VI.

 

Section 6.1.  Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and, in the case of an amendment, is signed by all the parties hereto and, in the case of a waiver, is signed by the party granting the waiver and then such waiver shall be effective only in the specific instance and for the specific purpose for which given, in each case with the prior written consent of the Purchaser. To the extent the consent of the Lender is required under this Agreement, the determination as to whether to grant or withhold such consent shall be made by the Lender in its sole discretion without any implied duty toward any other Person, except as otherwise expressly provided herein or therein.

 

Section 6.2.  Notices. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including communication by facsimile copy or other electronic means) and mailed, delivered by nationally recognized overnight courier service, transmitted or delivered by hand, as to each party hereto, at its address set forth 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. Each such notice, request or other communication shall be effective (i) if given by facsimile, when such facsimile is transmitted to the specified facsimile number and an appropriate confirmation is received, (ii) if given by mail, five days after being deposited in the United States mails, first class postage prepaid, (iii) if given by recognized courier guaranteeing overnight delivery, the Business Day following such day after such communication is delivered to such courier or (iv) if given by any other means, when delivered at the address specified in this Section 6.2.

 

Section 6.3.  No Waivers; Remedies. No failure or delay by any party hereto 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 6.4.  Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, except that no party may assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of each other party, except as otherwise permitted by this Agreement, and any such purported assignment without such consent shall be void.

 

Section 6.5.  Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

Section 6.6.  Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any

 

 

provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement.

 

Section 6.7.  Submission to Jurisdiction. EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY HERETQ OR ANY OF THEIR PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.

 

Section 6.8.  Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH, RELATING TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.

 

Section 6.9.  Bankruptcy Non-Petition and Limited Recourse. Notwithstanding any other provision of this Agreement, the Lender covenants and agrees that it shall not, prior to the date which is one year and one day (or, if longer, any applicable preference period plus one day) after the Final Repurchase Date, institute against, or join any other Person in instituting against, the Borrower, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or any similar proceeding under any federal or state bankruptcy or similar law; provided that nothing in this provision shall preclude or be deemed to stop any other party hereto from taking any action prior to the expiration of the aforementioned one year and one day period in (i) any case or proceeding voluntarily filed or commenced by the Borrower or (ii) any involuntary insolvency proceeding filed or commenced against the Borrower by a Person other than any other party hereto. The obligations of the Borrower under this Agreement are unsecured obligations. The Lender acknowledges that the Borrower has no assets other than the Notes (subject to the Borrower’s rights and obligations under the Repurchase Agreement) and all amounts owed hereunder are limited recourse obligations payable solely from available funds generated by the Notes (subject to the Borrower’s rights and obligations under the Repurchase Agreement). In addition, no recourse shall be had for any amounts payable or any other obligations arising under this Agreement against any officer, member, director, employee, partner or security holder of the Borrower or any of its successors or assigns. The provisions of this Section shall survive the termination of this Agreement.

 

 

Section 6.10.  Execution in Counterparts. 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 by facsimile or electronic mail of an executed signature page of this Agreement shall be effective as delivery of an executed counterpart hereof.

 

Section 6.11.  Integration. This Agreement, including all exhibits, schedules and appendices and other documents attached hereto or incorporated by reference herein, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all other negotiations, understandings and representations, oral or written, with respect to the subject matter hereof

 

Section 6.12.  Section Titles. The section titles contained in this Agreement shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties.

 

Section 6.13.  Survival. The provisions of this Article VI shall be continuing and shall survive termination of this Agreement.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.

 

 

	
 
    	
 
    	
STRAFFORD   FUNDING LLC,
    
	
 
    	
 
    	
as   Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Gerald F. Stahlecker
    
	
 
    	
 
    	
Gerald   F. Stahlecker
    
	
 
    	
 
    	
Executive   Vice President
    

 

 

Address for Notices:

 

Strafford Funding LLC

Cira Centre

2929 Arch Street, Suite 675

Philadelphia, Pennsylvania 19104

Telephone: (215) 495-1169

Telecopy: (215) 222-4649

Attention: Gerald F. Stahlecker

 

 

[Signatures continue on next page.]

 

 

[Strafford Funding Revolving Credit Agreement]

 

 

[Signatures continued from previous page.]

 

 

	
 
    	
 
    	
FS   ENERGY AND POWER FUND, as Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Gerald F. Stahlecker
    
	
 
    	
 
    	
 
    	
Gerald   F. Stahlecker
    
	
 
    	
 
    	
 
    	
Executive   Vice President
    

 

Address for Notices:

 

FS Energy and Power Fund

Cira Centre

2929 Arch Street, Suite 675

Philadelphia, Pennsylvania 19104

Telephone: (215) 495-1169

Telecopy: (215) 222-4649

Attention: Gerald F. Stahlecker

 

 

[Strafford Funding Revolving Credit Agreement]

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