Document:

EX-10.3

Exhibit 10.3

THIRD SUPPLEMENTAL INDENTURE

THIS THIRD SUPPLEMENTAL INDENTURE, dated as of July 31, 2009 (this “Supplemental
Indenture”) is entered into by and between Deerfield Capital LLC, a Delaware limited
liability company (formerly Deerfield Triarc Capital LLC) (the “Company”), and
The Bank of New York Mellon Trust Company, National Association, a national banking
association (as successor to JPMorgan Chase Bank, National Association), as trustee (the
“Trustee”).

Reference is made to the Junior Subordinated Indenture dated as of October 27, 2006 (the
“Original Indenture”) by and between the Company and the Trustee, the Supplemental
Indenture dated May 6 2008 between the parties hereto (the “First Supplemental Indenture”)
and the Second Supplemental Indenture dated September 26, 2008 between the parties hereto (the
“Second Supplmental Indenture” and together with the Original Indenture and the First
Supplemental Indenture, the “Indenture”). Capitalized terms used herein and not defined
herein shall have the meanings given to such terms under the Indenture.

WHEREAS, the holders will be entering into similar supplemental indentures in relation to the
Junior Subordinated Indenture dated as of September 29, 2005 and August 2, 2006 (such supplemental
indentures being the “Related Supplemental Indentures”);

WHEREAS, the Holders of the Preferred Securities desire to amend the Indenture to amend
certain covenants;

WHEREAS, the Company desires to amend Article V of the Indenture to include certain additional
events of default; and

WHEREAS, the Company desires to amend Article X of the Indenture to include certain additional
covenants.

NOW, THEREFORE, in consideration of the foregoing, the Trustee and the Company are entering
into this Supplemental Indenture pursuant to Section 9.2 of the Indenture as follows:

ARTICLE I

AMENDMENTS TO INDENTURE

Section 1.01 Section 1.1 of the Indenture is amended by inserting, in the appropriate
alphabetical order, the following:

“Attributable Indebtedness” means, when used with respect to any sale and
leaseback transaction, as at the time of determination, the present value (discounted at a
rate equivalent to the Guarantor’s or its Subsidiary’s, as applicable, then-current weighted
average cost of funds for borrowed money as at the time of determination, compounded on a
semi-annual basis) of the total obligations of the lessee for rental payments during the
remaining term of the lease included in any such sale and leaseback transaction.

“Capital Lease” means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in accordance with GAAP, is
or should be accounted for as a capital lease on the balance sheet of that Person.

“Capital Stock” means, with respect to any Person, any and all shares,
interests, participations or other equivalents, including membership interests (however
designated, whether voting or nonvoting), of equity of such Person, including, if such Person
is a partnership, partnership interests (whether general or limited) and any other interest
or participation that confers on a Person the right to receive a share of the profits and
losses of, or distributions of property of, such partnership, whether outstanding on the date
hereof or issued hereafter.

“Cash” means Money or a credit balance in a Deposit Account.

“Conflict” or “Conflicting” means, with respect to any Contractual
Obligation, Organizational Document, Requirement of Law, Consent or Other Action or any other
item, any conflict with, breach of or default under, or any triggering of any remedial
rights, benefits, or obligations under or in connection with, the terms of such item.

“Consent(s) and/or Other Action” means any consent, authorization, Judgment,
directive, approval, license, certificate, registration, permit, exemption, filing, notice,
declaration or other action by, with or to any Person.

“Consolidated Amortization Expense” shall mean, for any period, the amortization
expense of the Guarantor and its Subsidiaries (including discount amortization on
investments, loans and debt issuance) for such period, determined on a consolidated basis in
accordance with GAAP.

“Consolidated Depreciation Expense” shall mean, for any period, the depreciation
expense of the Guarantor and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.

“Consolidated EBITDA” means, for any period, Consolidated Net Income of the
Guarantor and its Subsidiaries for such period, adjusted by (x) adding thereto, in each case
only to the extent (and in the same proportion) deducted in determining such Consolidated Net
Income and without duplication (and with respect to the portion of Consolidated Net Income
attributable to any Subsidiary of the Guarantor only if a corresponding amount would be
permitted at the date of determination to be distributed to the Guarantor by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of its
Organization Documents and all Contractual Obligations and Requirements of Law applicable to
such Subsidiary or its equity holders): (a) Consolidated Interest Expense for such period;
(b) Consolidated Amortization Expense for such period; (c) Consolidated Depreciation Expense
for such period; (d) Consolidated Tax Expense for such period; (e) costs and expenses
incurred in connection with any acquisition and other one-time or non-recurring charges; (f)
non-cash stock or option based compensation; and (g) the aggregate amount of all other
non-cash charges reducing Consolidated Net Income (excluding any non-cash charge that results
in an accrual of a reserve for cash charges in any future period) for such period, and (y)
subtracting therefrom, only to the extent (and in the same proportion) included in
determining such Consolidated Net Income and without duplication the aggregate amount of all
non-cash items (other than any pay-in-kind interest, pay-in-kind dividends, capitalized
interest and similar non-cash interest and dividends payable on, or in connection with,
Financial Assets) increasing Consolidated Net Income, including any non-cash gains on the
sale of Investments (other than the accrual of revenue or recording of receivables in the
ordinary course of business) for such period. It is agreed that a reduction in the carrying
value of an asset (whether through write-down or write-off or increase in a loan loss or
other valuation reserve) constitutes a non-cash item for purposes of this definition.

“Consolidated Guarantor Debt” means, for the Guarantor and its Subsidiaries, as
of any date of determination, the aggregate principal amount of Indebtedness of the type
specified in clauses (a), (b), (d), (e) and (f) of the definition of “Indebtedness” and
non-contingent obligations of the type specified in clause (c) of such definition, less any
such Indebtedness permitted under Section 10.11(a)(ii).

“Consolidated Interest Expense” means for any period, the total consolidated
interest expense of the Guarantor and its Subsidiaries for such period with respect to
Consolidated Guarantor Debt plus, without duplication: (a) imputed interest on
obligations under any Capital Lease and Attributable Indebtedness of the Guarantor and its
Subsidiaries for such period; (b) commissions, discounts and other fees and charges owed by
the Guarantor or any of its Subsidiaries with respect to letters of credit securing financial
obligations, bankers’ acceptance financing and receivables financings for such period; (c)
amortization of debt issuance costs, debt discount or premium and other financing fees and
expenses incurred by the Guarantor or any of its Subsidiaries for such period; (d) all
interest paid or payable with respect to discontinued operations of the Guarantor or any of
its Subsidiaries for such period; (e) the interest portion of any deferred payment
obligations of the Guarantor or any of its Subsidiaries for such period; and (f) all interest
on any Indebtedness of the Guarantor or any of its Subsidiaries of the type described in
clause (g) or (h) of the definition of “Indebtedness” for such period.

“Consolidated Net Income” means for any period, the consolidated net income (or
loss) of any Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP; provided that in calculating Consolidated Net Income of the
Guarantor and its Subsidiaries for any period, there shall be excluded (a) the income (or
deficit) of any Person (other than a Subsidiary of the Guarantor or the Company) in which the
Guarantor or any of its Subsidiaries has an ownership interest, except to the extent that any
such income is actually received by the Guarantor or such Subsidiary in the form of dividends
or similar distributions and (b) the income (or deficit) of, but not any actual cash
dividends received from, any Subsidiary of the Guarantor, if a corresponding amount would not
be permitted at the date of determination to be distributed to the Guarantor by such
Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its
Organizational Documents and all Contractual Obligations (other than under any document in
relation to the Seller Notes or the Securities) and Requirements of Law applicable to such
Subsidiary or its equity holders) provided further that in calculating Consolidated Net
Income of the Guarantor and its Subsidiaries for any period, there shall be included the
income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the
Guarantor or is merged into or consolidated with the Guarantor or any of its Subsidiaries.

“Consolidated Tax Expense” shall mean, for any period, the tax expense of the
Guarantor and its Subsidiaries, for such period, determined on a consolidated basis in
accordance with GAAP.

“Contractual Obligations” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to which such
Person is a party or by which its property is bound.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise, and the terms “Controlling” and
“Controlled” shall have meanings correlative thereto.

“Deerfield Capital Intercompany Notes” means the Revolving Notes issued by the
Company, as maker, to the order of (i) DFR Middle Market Sub-1, Inc., a Delaware corporation,
(ii) DFR Middle Market Sub-2, Inc., a Delaware corporation, (iii) DFR Middle Market Sub-3,
Inc., a Delaware corporation, (iv) DFR Middle Market Sub-4, Inc., a Delaware corporation, and
(v) DFR Middle Market Sub-5, Inc., a Delaware corporation, in each case of (i) through and
including (v) above, for a principal amount of up to $100,000,000, (y) dated as of January 1,
2008, and (z) without giving effect to any amendment thereof entered into after May 12, 2008.

“Deerfield Special Purpose Entities” means (i) Access Institutional Loan Fund,
Bridgeport CLO Ltd., Bridgeport CLO II Ltd., Bryn Mawr II CLO Ltd., Buckingham CDO Ltd.,
Buckingham CDO II Ltd., Buckingham CDO III Ltd., Burr Ridge CLO Plus Ltd., Deerfield Triarc
TRS (Bahamas) Ltd., DFR Middle Market CLO Ltd., DWFC, LLC, Castle Harbor II CLO Ltd.,
Muirfield Trading LLC, Coltrane CLO P.L.C., Cumberland II CLO Ltd., Forest Creek CLO Ltd.,
Gillespie CLO PLC, Knollwood CDO Ltd., Knollwood CDO II Ltd., Long Grove CLO Ltd., Market
Square CLO Ltd., Marquette Park CLO Ltd., Mid Ocean CBO 2000-1 Ltd., Mid Ocean CBO 2001-1
Ltd., NorthLake CDO I, Limited, Oceanview CBO I, Ltd., Pinetree CDO Ltd., River North CDO
Ltd., Rosemont CLO, Ltd., Schiller Park CLO Ltd., Valeo Investment Grade CDO Ltd., Valeo
Investment Grade CDO II Ltd., Western Springs CDO Ltd., Credit-Linked Enhanced Asset
Repackagings (C.L.E.A.R.) PLC (Aramis), DM Fund LLC, DM Fund Ltd., Deerfield Synthetic
Options Fund Ltd., Deerfield Relative Value Fund Ltd., DRV Sunrise Fund I, Ltd., LIBOR
Enhanced Arbitrage Portfolio, Ltd., Leap Trading, Ltd., and (ii) any Person in which the
Guarantor or any of its Subsidiaries made or maintains an investment permitted under the
documents related to the Seller Notes and (x) to which the Guarantor or any of its
Subsidiaries provides investment management services or (y) which is directly or indirectly
Controlled by the Guarantor.

“Deposit Account” shall have the meaning accorded to such term in the UCC.

“Designated Preferred Stock” means the shares of series A preferred stock of the
Guarantor, par value $0.001 per share, having a liquidation preference of $10.00 per share
received by the Purchasers and the other sellers in connection with the acquisition by the
Guarantor of Deerfield & Co. and any shares of such Series A preferred stock issued as a
dividend paid-in-kind thereon, and any security into which such series A preferred stock or
any portion thereof is converted, exchanged, reclassified, recapitalized or the like.

“Disqualified Capital Stock” means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is exchangeable), or
upon the happening of any event, (i) matures (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to a date that is 181 days after the Maturity Date, (ii) is
convertible into or exchangeable (unless at the sole option of the issuer thereof) for (a)
debt securities or (b) any Capital Stock referred to in clause (i) above, in each case at any
time on or prior to a date that is 181 days after the Maturity Date, (iii) contains any
repurchase obligation which may come into effect prior to payment in full of all Obligations
and (iv) provides the holders of such Capital Stock with any rights to receive any cash upon
the occurrence of a change of control (provided that any Capital Stock that would not
constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or
the holders of any security into or for which such Capital Stock is convertible, exchangeable
or exercisable) the right to require the issuer thereof to redeem such Capital Stock upon the
occurrence of a change in control or an asset sale occurring prior to the first anniversary
of the Maturity Date shall not constitute Disqualified Capital Stock if such Capital Stock
provides that the issuer thereof will not redeem any such Capital Stock pursuant to such
provisions prior to the repayment in full of the Seller Notes. In no event shall
Disqualified Capital Stock include trust preferred securities or any Designated Preferred
Stock.

“Fair Market Value” means (i) with respect to any asset or group of assets at
any date, the value of the consideration obtainable in a sale of such asset at such date
assuming a sale by a willing seller to a willing purchaser dealing at arm’s length and
arranged in an orderly manner having regard to the nature and characteristics of such asset,
as reasonably determined in good faith by the Guarantor and (ii) with respect to any
marketable security that cannot be valued in accordance with the preceding clause (i), the
closing sale price of such security on the Business Day preceding such date, as appearing in
any published list of any national securities exchange or the NASDAQ Stock Market or, if
there is no such closing sale price of such security, the final price for the purchase of
such security at face value quoted on such Business Day by a financial institution of
recognized standing regularly dealing in Securities of such type and selected by the
Guarantor.

“Fifth Third Facility” means the Revolving Note, dated February 2, 2006,
executed by the Management Company and made payable to the order of Fifth Third Bank, Fifth
Third Bancorp, for itself and as agent for any affiliates of Fifth Third Bancorp.

“Financial Assets” means (i) all financial assets (as defined in the UCC) and
(ii) Capital Stock in any Deerfield Special Purpose Entity, securities (including equity and
debt, and whether or not such securities are themselves backed by mortgages, loans or other
Financial Assets), bonds, notes, debentures, loans, derivative instruments, collateralized
loan obligations, collateralized debt obligations, “warehouse” loan facilities, loan
securitization facilities or any other similar credit facilities or investment vehicles.

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or such other principles as may be approved by a significant
segment of the accounting profession in the United States, that are applicable to the
circumstances as of the date of determination, consistently applied.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality, regulatory body,
court, administrative tribunal, central bank, public office, court, arbitration or mediation
panel, or other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of government.

“Guarantor Leverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated Guarantor Debt to (b) Consolidated EBITDA of the Guarantor and its
Subsidiaries for the last four fiscal quarters of the Guarantor ending on, or most recently
before, such date.

“Guaranty and Pledge Agreements” means (a) the Series A Guaranty and Pledge
Agreement dated as of December 21, 2007 among the parties to the Series A Note Purchase
Agreement and (b) the Series B Guaranty and Pledge Agreement dated as of December 21, 2007
among the parties to the Series B Note Purchase Agreement.

“Indebtedness” means, as applied to any Person: (a)(i) all indebtedness for
borrowed money, and (ii) all Disqualified Capital Stock; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of Property or services (other than
trade payables entered into in the ordinary course of business); (c) the principal amount of
all letters of credit issued for the account of such Person and without duplication, all
drafts drawn thereunder and all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments issued by such Person; (d) all
obligations evidenced by notes, bonds, debentures or similar instruments (other than checks
in the ordinary course of the business), including obligations so evidenced incurred in
connection with the acquisition of Property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention agreement, or incurred
as financing, in either case with respect to Property acquired by the Person (even though the
rights and remedies of the seller or bank under such agreement in the event of default
section thereof are limited to repossession or sale of such Property); (f) all monetary
obligations under any Capital Lease; (g) all indebtedness referred to in clauses (a) through
(f) above secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in Property (including accounts
and contracts rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such indebtedness (the amount of any such obligation shall be
deemed to be the lower of (x) an amount equal to the stated or determinable amount of such
obligation and (y) the Fair Market Value of the property securing such obligation, unless the
maximum amount for which such Person may be liable is not stated or determinable, in which
case the amount of such obligation shall be such Person’s maximum reasonably anticipated
liability in respect thereof as determined by the Guarantor in good faith); and (h) any
direct or indirect liability, contingent or otherwise, with respect to any Indebtedness or
other similar obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such liability will
be protected (in whole or in part) against loss with respect thereto (the amount of any such
obligation shall be deemed to be the lower of (x) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such assurance is made and
(y) the maximum amount for which such assuring Person may be liable pursuant to the terms of
the instrument embodying such assurance, unless such primary obligation and the maximum
amount for which such assuring Person may be liable are not stated or determinable, in which
case the amount of such obligation shall be such assuring Person’s maximum reasonably
anticipated liability in respect thereof as determined by the Guarantor in good faith);
provided that Indebtedness shall exclude (i) obligations under repurchase agreements
and obligations due to brokers and broker-dealers in the ordinary course of business, (ii)
obligations under trust preferred securities or debt securities that are convertible into
Qualified Capital Stock of the Guarantor or any of its Subsidiaries.

“Judgment” means any judgment, order, writ, decision, decree, award or
injunction of any Governmental Authority.

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or administration thereof by
any Governmental Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority.

“License” means any license, permit, directive, authorization, approval or
stipulation required to operate the Business at any location.

“Management Agreement” means the Management Agreement, dated December 21, 2007,
between the Guarantor and Deerfield Capital Management LLC.

“Maturity Date” means the fifth anniversary of December 21, 2007.

“Money” shall have the meaning accorded to such term in the UCC.

“Non-Recourse Indebtedness” means Indebtedness incurred by the Guarantor or any
of its Subsidiaries with respect to which the applicable creditor has recourse only to (i) a
particular asset and not to the general balance sheet of the Guarantor or any of its
Subsidiaries or (ii) a Deerfield Special Purpose Entity and, in each case, is not recourse to
the general balance sheet of the Guarantor or any of its Subsidiaries other than such
Deerfield Special Purpose Entity.

“Note Purchase Agreements” means (a) the Series A Note Purchase Agreement dated
as of December 21, 2007 among the Guarantor, Deerfield & Company LLC, Triarc Deerfield
Holdings LLC and other purchasers signatory thereto and (b) the Series B Note Purchase
Agreement dated as of December 21, 2007 among the Guarantor, Deerfield & Company LLC, Triarc
Deerfield Holdings LLC and other purchasers signatory thereto.

“One O’Hare Centre Lease” means the lease dated as of July 1, 2005 between
Prentiss Properties Acquisition Partners, L.P., a Delaware limited partnership, as landlord,
and Deerfield & Company LLC, as tenant.

“Organizational Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any
limited liability company, the certificate or articles of formation or organization and
operating agreement; and (c) with respect to any partnership, joint venture, trust or other
form of business entity, the partnership, joint venture or other applicable agreement of
formation or organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the applicable
Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.

“Other Indentures” means the Junior Subordinated Indenture dated as of September
29. 2005 and the Junior Subordinated Indenture dated as of August 2, 2006, in each case, as
amended, supplemented or otherwise modified from time to time.

“Permitted Management Fees” means the management fees and expenses paid under
the Management Agreement.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Guarantor,
the Company or the Management Company issued in exchange for, or the net proceeds of which
are used to refinance (including renewals, extensions, refunds or defeasances) Indebtedness
permitted by Section 10.11(a); provided that (a) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the
original principal amount plus accrued interest (or accreted value, if applicable) of
the Indebtedness so refinanced (plus the amount of reasonable costs and expenses
(including any premiums) incurred in connection therewith); (b), other than in the case of
Indebtedness permitted by Section 10.11(a)(x), such Permitted Refinancing
Indebtedness has a final maturity date not earlier than the earlier of (i) the final maturity
date of, at the time of such refinancing, the Indebtedness being refinanced and (ii) a date
that is at least 180 days after the Maturity Date; and (c) if the Indebtedness being
refinanced is subordinated to the Seller Notes, such Permitted Refinancing Indebtedness has
(to the extent the Indebtedness being refinanced originally had a final maturity date later
than the final maturity date of the Notes) a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Seller Notes on terms at
least as favorable to the holders of the Seller Notes as those contained in the documentation
governing the Indebtedness being refinanced.

“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including Capital Stock
and leasehold interests.

“Qualified Capital Stock” of any Person means any Capital Stock of such Person
that is not Disqualified Capital Stock.

“Requirement of Law” or “Requirements of Law” means any requirement,
direction, policy or procedure of any Law or License, Judgment, or Consent or Other Action.

“Restricted Payment” means, with respect to any Person, (i) any dividend or
other distribution (whether direct or indirect, and whether in Cash, securities or other
property) with respect to any class of Capital Stock of such Person now or hereafter
outstanding, other than a dividend payable to the holders of any class of Capital Stock
solely in shares of Capital Stock of such Person, (ii) any payment (whether direct or
indirect, and whether in Cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, full or partial redemption, full or partial
withdrawal, retirement, acquisition, cancellation or termination of any such Capital Stock or
of any option, warrant or other right to acquire any such Capital Stock, (iii) any prepayment
of principal of, premium, if any, or interest on, or redemption, purchase, retirement,
defeasance (including in-substance or legal defeasance), sinking fund or similar payment with
respect to, any subordinated Indebtedness of such Person and (iv) any management (or similar)
fees payable to an Affiliate of such Person.

“Seller Note Documents” means (a) the Note Purchase Agreements; (b) the Seller
Notes; (c) the Guaranty and Pledge Agreements; (d) any other guarantee of the obligations of
the issuer of the Seller Notes; (e) collateral assignments for the benefit of the holders of
the Seller Notes and the agent therefor; and (f) any Contractual Obligation, filings and
recordings executed, delivered or filed, including any amendments, supplements, renewals,
extensions or replacements thereof, executed pursuant to or in connection with any of the
documents refereed to in clauses (a) through (e) above or any agreements or other documents
relating to any Permitted Refinancing Indebtedness thereof.

"Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of shares or
securities or other interests having ordinary voting power for the election of directors or
other governing body (other than securities or interests having such power only by reason of
the happening of a contingency) are at the time beneficially owned, directly or indirectly
through one or more intermediaries, or both, by such Person.

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as
in effect from time to time as adopted in the State of New York

“Voting Stock” means, with respect to any Person, any class or classes of
Capital Stock pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors of such Person.

Section 1.02 Section 10.6(d) of the Indenture is deleted in its entirety and replaced
with the following:

“(d) Minimum Consolidated Net Worth. Commencing on September 30, 2012 and
thereafter until the Securities and all of the other obligations under this Indenture have
been paid and satisfied in full, the Company shall maintain a Consolidated Net Worth of not
less than Fifty Million Dollars ($50,000,000).”

Section 1.03 Section 10.9(b) is deleted in its entirety and replaced with the
following:

(b) The Company shall not, and shall not permit any its Subsidiaries to, directly or
indirectly, without the prior written consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Preferred Securities, (a) sell, transfer,
pledge or issue, in one or more transactions, any direct or indirect beneficial ownership
interests in the Management Company which results in (i) any Person, whether directly or
indirectly, other than the Guarantor (and/or any Subsidiaries wholly owned, directly or
indirectly, by the Guarantor) owning any equity interests in the Management Company or any
rights to distributions from the Management Company or (ii) any Person other than the
Guarantor (and/or any Subsidiary wholly owned, directly or indirectly, by the Guarantor)
having responsibility for the management of the Management Company and the administration of
the day-to-day business and affairs of the Management Company or (b) sell, transfer, pledge
or assign any material asset of the Management Company; provided, however, that the existing
liens under the documents relating to the Seller Notes shall not constitute a breach of this
Section 10.9(b).

Section 1.04 A new Section 10.11 to the Indenture is inserted as follows:

“SECTION 10.11 Additional Covenants

The Company agrees as follows:

(a) not to incur, or permit the Guarantor or any of its Subsidiaries or the Management Company
to incur, any Indebtedness, except for the following:

(i) Indebtedness pursuant to any documents in relation to the Seller Note Documents;

(ii) (i) Indebtedness incurred in the ordinary course of business and consistent with
guidelines established by the Guarantor’s board of directors from time to time under any
“warehouse” financing or repurchase obligation and (ii) Non-Recourse Indebtedness incurred
in connection with financing of investment positions in Financial Assets;

(iii) Indebtedness under hedging obligations with respect to interest rates or foreign
currency exchange rates, in each case entered into in the ordinary course of business for
bona fide hedging purposes and not for speculative purposes;

(iv) Indebtedness outstanding as of June 30, 2009 and listed on Schedule B hereto;

(v) Indebtedness owing by the Guarantor or any of its Subsidiaries to the Guarantor or
any of its Subsidiaries;

(vi) any Indebtedness arising from Capital Leases and purchase money Indebtedness;
provided that such Indebtedness, in the aggregate, shall not exceed $2,500,000
outstanding at any time; provided, further, that the Guarantor, the Company,
the Subsidiaries and the Management Company can incur purchase money Indebtedness pursuant
to this Section 10.11(a)(vi) within one hundred-eighty (180) days after the
acquisition of the property acquired therewith;

(vii) Indebtedness in respect of bid, performance or surety bonds, workers’
compensation claims, self-insurance obligations, bankers acceptances and similar obligations
issued for the account of the Guarantor, the Company, any Subsidiary or the Management
Company in the ordinary course of business, including guarantees or obligations of the
Guarantor, the Company, any Subsidiary and the Management Company with respect to letters of
credit supporting such bid, performance or surety bonds, workers’ compensation claims,
self-insurance obligations, bankers acceptances or other similar obligations (in each case
other than for an obligation for money borrowed);

(viii) guarantees by the Guarantor, the Company, any Subsidiary or the Management
Company in respect of Indebtedness otherwise permitted under this Section 10.11(a);

(ix) any Indebtedness; provided that on the date of incurrence of such
Indebtedness and after giving effect thereto (i) no Event of Default shall exist or result
therefrom and (ii) the Guarantor Leverage Ratio shall not be more than 2.50:1:00;

(x) Indebtedness not otherwise permitted by the foregoing clauses; provided
that the aggregate principal amount of all Indebtedness permitted under this Section
10.11(a)(x) shall not exceed $5,000,000 at any time outstanding;

(xi) unsecured Indebtedness under the Fifth Third Facility, as the same may be amended,
restated, supplemented or otherwise modified, refinanced or replaced; provided that
any such amendment, restatement, supplement or other modification, refinancing or
replacement (pursuant to a waiver or otherwise) shall not increase the aggregate principal
amount of the commitment under the Fifth Third Facility as of the date hereof;

(xii) any Permitted Refinancing Indebtedness (other than in respect of Indebtedness
permitted by Section 10.11(a)(xi);

(xiii) Indebtedness under any of the Deerfield Capital Intercompany Notes;

(xiv) Indebtedness consisting of reimbursement obligations relating to letters of
credit issued as security for the performance of tenant’s obligations under the One O’Hare
Center Lease; provided that the aggregate principal amount of all Indebtedness
permitted under this clause (xiv) shall not exceed $3,000,000 at any time outstanding; and

(xv) any Indebtedness incurred pursuant to or in relation with this Indenture or the
Other Indentures to the extent it constitutes Indebtedness;

provided that, if (x) the Guarantor or its Subsidiaries incur any
Permitted Refinancing Indebtedness with respect to the refinancing or replacement of the
Guarantor’s obligations under any of the Note Purchase Agreements and (y) the agreement
governing such Permitted Refinancing Indebtedness shall provide for limitation on
Indebtedness that are more restrictive than the limitations on Indebtedness set forth in
this Section 10.11(a), then the more restrictive limitations on Indebtedness set
forth in such Permitted Refinancing Indebtedness will immediately apply as if set forth in
this Section 10.11(a) without any further action by the Guarantor or its
Subsidiaries for so long as and to the same extent as such limitations are applicable under
such Permitted Refinancing Indebtedness and thereafter only those limitations that are set
forth in this Section 10.11(a) as of the date hereof shall apply; and

(b) not to permit the Guarantor, the Company or any of their Subsidiaries to directly or
indirectly make any Restricted Payments, provided that: (a) each of the Guarantor, the
Company and their Subsidiaries may distribute dividends of Capital Stock (other than Disqualified
Capital Stock) in respect of its Capital Stock; (b) each of the Guarantor, the Company and their
Subsidiaries may make Restricted Payments to Guarantor, the Company and any of their direct and
indirect wholly-owned Subsidiaries; (c) the Guarantor and its Subsidiaries may make Restricted
Payments with respect to any Designated Preferred Stock; (d) the Guarantor, the Company and their
Subsidiaries may purchase the Guarantor’s, the Company’s or any of their Subsidiary’s common stock
or options to purchase common stock from current officers, directors or employees of the Guarantor
or any of its Subsidiaries upon the death, disability or termination of employment of such officer,
director or employee (at current market value prices to the extent available); (e) the Guarantor
may repurchase shares of its common stock; provided that the aggregate amount used for the
purposes permitted under this clause (e) shall not exceed $1,000,000 ; (f) each of the Guarantor,
the Company and their Subsidiaries may make Restricted Payments to enable the Guarantor to avoid
the imposition of any entity level tax on the Guarantor with respect to any taxable period ending
on or before December 31, 2007; provided that such Restricted Payments shall be made to the
maximum extent possible, from cash on hand and dividends from non-guarantor Subsidiaries; (g) each
of the Guarantor, the Company and their Subsidiaries may make Restricted Payments to the Guarantor,
the Company and their Subsidiaries to be used by such Person (i) to the extent necessary to pay the
Permitted Management Fees and (ii) to the extent necessary for the Guarantor, the Company and their
Subsidiaries to pay any taxes which are due an payable by the Guarantor, the Company and their
Subsidiaries; provided that in the case of this subclause (ii), such amount shall not
exceed the lesser of (x) the amount of such taxes that are due and payable and (y) the amount of
taxes that would be due and payable by each Subsidiary making such Restricted Payment if such
Subsidiary were the parent of a consolidated group consisting of itself and its Subsidiaries; and
(h) the Guarantor may make Restricted Payments to any of its Subsidiaries to be used by such Person
to the extent necessary to pay any management or similar fee to any Affiliate; provided
that (i) no Event of Default has occurred and is continuing or would occur as a result thereof and
(ii) such management or similar fee shall be on fair and reasonable terms that, taken as a whole,
are not less favorable to the relevant Subsidiary of the Guarantor, as applicable, as could be
obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other
than an Affiliate of the Guarantor; provided that this Section 10.11(b) shall not
apply to any Deerfield Special Purpose Entity to the extent and so long as compliance by such
Person with, or such Person’s agreement to be subject to, the restrictions set forth in this
Section 10.11(b) contravenes or Conflicts with such Person’s Organizational Documents or
any Contractual Obligation, in existence as the date hereof, or entered into after the date hereof
in the ordinary course of business, or Requirement of Law applicable to such Person or any of its
Properties; provided further if no Event of Default has occurred and is continuing or would
occur as a result thereof, the Guarantor has a Guarantor Leverage Ratio less than 2.50:1.00 for the
previous 12 months and the Consolidated Net Worth is not less than $50,000,000 for the previous 12
months (provided that if the Guarantor or any of its Subsidiaries completes any acquisition,
strategic transaction or consolidation, then the Consolidated Net Worth for any previous 12-month
period shall be calculated on a pro forma basis to reflect the combined entity after such
acquisition, strategic transaction or consolidation), the Guarantor, the Company or any Subsidiary
may make Restricted Payments up to an amount equal to 30% of the Consolidated Net Income of the
Guarantor for the previous 12 months provided that any such Restricted Payment shall not
cause the Consolidated Net Worth of the Guarantor to fall below $50,000,000.”

Section 1.05 A new Section 10.12 to the Indenture is inserted as follows:  

“SECTION 10.12 Inspections

Taberna Capital Management LLC shall have the right, upon not less than three (3) Business
Days prior written notice to the Company to have representatives and agents of Taberna Capital
Management LLC to visit and inspect, at such reasonable time during normal business hours as stated
in such notice, any of the Guarantor’s, the Company’s and the Management Company’s properties, to
examine their respective corporate, financial and operating records, and make abstracts therefrom,
and to discuss their affairs, finances and accounts with their respective directors and officers,
all (unless an Event of Default has occurred and is then continuing) at the expense of Taberna
Capital Management LLC (which expense shall not be reimbursable by any of the Guarantor, the
Company, the Management Company or any of their respective Subsidiaries); provided that
Taberna Capital Management LLC may not exercise their rights under this Section 10.12
(which shall include where Taberna Capital Management LLC has exercised such similar rights
pursuant to the Other Indentures) more than once in any fiscal quarter of the Guarantor, unless an
Event of Default is continuing, in which case Taberna Capital Management LLC may do any of the
foregoing at the expense of the Guarantor, the Company or the Management Company at any reasonable
time during normal business hours and as often as may reasonably be desired.”

Section 1.06 Schedule 1 to this Supplemental Indenture is inserted as a new Schedule B
after Schedule A in the Indenture.

ARTICLE II

MISCELLANEOUS

Section 2.01 By execution of this Supplemental Indenture, each of the Administrative
Trustees, on behalf of Deerfield Capital Trust III (formerly Deerfield Triarc Capital Trust III),
as Holder of 100% in aggregate principal amount of the Outstanding Securities and each of Taberna
Preferred Funding VIII, Ltd., as Holder of 44.44% in aggregate Liquidation Amount of the
outstanding Preferred Securities (“TPF VIII”) and Taberna Preferred Funding IX, Ltd., as
Holder of 55.56% in aggregate Liquidation Amount of the outstanding Preferred Securities (“TPF
IX”), hereby in accordance with Section 9.2 of the Indenture, (a) consents to the Trustee and
the Company executing and delivering this Supplemental Indenture, (b) directs the Trustee to
execute and deliver this Supplemental Indenture and (c) agrees to and does hereby release the
Trustee for any action taken or to be taken by the Trustee in connection with its execution and
delivery of this Supplemental Indenture and for any liability or responsibility arising in
connection herewith. Each of TPF VIII and TPF IX hereby in accordance with Section 9.2 of the
Indenture, (a) directs the Administrative Trustees and the Property Trustee to execute and deliver
this Supplemental Indenture and (b) agrees to and does hereby release the Administrative Trustees
and the Property Trustee for any action taken or to be taken by the Administrative Trustees and the
Property Trustee, respectively, in connection with their execution and delivery of this
Supplemental Indenture and for any liability or responsibility arising in connection herewith.

Section 2.02 The Trustee accepts the trust in this Supplemental Indenture declared and
provided upon the terms and conditions set forth in the Indenture. The Trustee shall not be
responsible in any manner whatsoever for the validity or sufficiency of this Supplemental Indenture
or the due execution hereof by the Company or for or in respect of the recitals and statements
contained herein, all of which recitals and statements are made solely by the Company.

Section 2.03 Except as hereby expressly modified, the Indenture and the Securities
issued thereunder are ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect.

Section 2.04 This Supplemental Indenture shall become effective only upon the
Trustee’s receipt of a counterpart of this Supplemental Indenture duly executed by the Company and
the Trustee.

Section 2.05 The Company agrees to pay (a) reasonable attorneys’ fees and
disbursements of Taberna Capital Management, LLC, the holders of the Preferred Securities and the
Trustee; (b) an aggregate fee to the Holders and the holders of the trust preferred securities
under the Related Supplemental Indentures of $250,000 on the date of this Supplemental Indenture;
and (c) an additional aggregate fee to the Holders and the holders of the trust preferred
securities under the Related Supplemental Indentures of $250,000 on or, at the election of the
Company in its absolute discretion, before the first anniversary of the date of this Supplemental
Indenture, each in connection with this Supplemental Indenture and each Related Supplemental
Indenture.

Section 2.06 This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be deemed to be an original for all purposes; but such
counterparts shall together be deemed to constitute but one and the same instrument. The executed
counterparts may be delivered by facsimile transmission, which facsimile copies shall be deemed
original copies.

Section 2.07 The laws of the State of New York shall govern this Supplemental
Indenture without regard to the conflict of law principles thereof.

Section 2.08 In the event of any inconsistency between the terms and provisions of
this Supplemental Indenture and the Indenture, the terms and provisions of this Supplemental
Indenture shall prevail.

Section 2.09 For the purposes of entry by TPF VIII and TPF IX into this Supplemental
Indenture only, the Company represents and warrants to Taberna Capital Management LLC that it
reasonably believes that no consent is required from the holders of the Seller Notes in respect of
the entry by the Company and its Affiliates into this Supplemental Indenture.

[Remainder of Page Intentionally Left Blank]

 

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

DEERFIELD CAPITAL LLC,

as Company

By: /s/ Francis P. Straub III

Name: Francis P. Straub III

Title: CFO

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,

as Trustee

By: /s/ Bill Marshall

Name: Bill Marshall

Title: Vice President

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,

as Property Trustee

(as to Section 2.01 only)

By: /s/ Bill Marshall

Name: Bill Marshall

Title: Vice President

DEERFIELD CAPITAL TRUST III

(as to Section 2.01 only)

By: /s/ Francis P. Straub III

Name: Francis P. Straub III

Title: Administrative Trustee

 

Attest: /s/ Jennifer Straub

By: Jennifer Straub

TABERNA PREFERRED FUNDING VIII, LTD.

(as to Section 2.01 only)

By: /s/ Mora Goddard

Name: Mora Goddard

Title: Director

Attest: /s/ Azandra Whittaker

By: Senior SPV Administrator

TABERNA PREFERRED FUNDING IX, LTD.

(as to Section 2.01 only)

By: /s/ Mora Goddard

Name: Mora Goddard

Title: Director

Attest: /s/ Azandra Whittaker

By: Senior SPV AdministratorEX-10.1

SEVERANCE AGREEMENT

THIS SEVERANCE AGREEMENT entered into as of the 31st day of July, 2009, by and
between Patriot Capital Funding, Inc. (the “Company”), a Delaware corporation, and Clifford L.
Wells, an individual (the “Executive”) (hereinafter collectively referred to as the “Parties”).

WHEREAS, the Executive has heretofore been employed by the Company as its Executive
Vice-President and Chief Compliance Officer, the Company recognizes the Executive’s experience and
relationships in the Company’s industry, and the Company desires to retain the services and
employment of the Executive; and

WHEREAS, the Company and the Executive desire to enter into this agreement (the “Agreement”)
which provides that the Executive will receive severance pay if the Executive’s employment is
terminated under certain circumstances in connection with a change in control of the Company.

NOW, THEREFORE, in consideration of the respective agreements of the Parties contained herein,
it is agreed as follows:

1. Term. The term (the “Term”) of this Agreement shall be from July 31, 2009 through
January 31, 2010.

2. Termination of Employment. The Executive’s employment by the Company may be
terminated by either the Executive or the Company at any time and, except as expressly set forth in
this Section 2, with no requirement of notice or explanation from either Party. Upon the
Executive’s termination of employment during the Term, the Executive (or his estate in the event he
dies after becoming entitled to, but before receiving, any payment) shall be entitled to the
payments described below.

(a) Termination in Connection with Change in Control. If a Change in Control (as defined
below) occurs during the Term, and, within 30 days before or within six months after such Change in
Control, the Company terminates the Executive’s employment without Cause (as defined below) or the
Executive terminates employment with Good Reason (as defined below) then, subject to the
Executive’s compliance with Section 2(c) and Section 3 hereof, the Company shall pay to the
Executive his monthly base salary in monthly installments for six months following his termination
of employment.

The Company shall also pay the Executive any earned but unpaid base salary, any annual bonus
awards with respect to a completed measurement period that are fully earned and vested at
separation but not yet paid, both at the time otherwise payable, and any amounts to which the
Executive is entitled under the generally applicable terms of pension, savings, disability, life
insurance, or other programs. Other than the payments and benefits described in this Section 2(a),
the Company will make no additional severance or similar payments unless otherwise approved by the
Board or an authorized committee of the Board.

(b) Termination of Employment for Any Other Reason. If the Executive’s employment is
terminated under any circumstances other than those described in Section 2(a), (including, without
limitation, involuntary termination of employment more than 30 days before or more than six months
after a Change in Control, voluntary termination of employment without Good Reason, death, or
disability), the Company shall pay the Executive any earned but unpaid base salary, any annual
bonus payment with respect to a completed measurement period that is fully earned and vested at
separation or death but not yet paid, both at the time otherwise payable, and any amounts to which
the Executive is legally entitled under the generally applicable terms of pension, savings,
disability, life insurance, or other programs, and any business expenses that would otherwise be
reimbursed under the Company’s policies. Other than the payments and benefits described in this
Section 2(b), the Company will be under no obligation to make additional severance or similar
payments to the Executive or his estate, as the case may be. Notwithstanding the foregoing, if the
Company terminates the Executive’s employment with Cause, the Company shall pay the Executive only
any earned but unpaid base salary at the time otherwise payable and any amounts to which the
Executive is legally entitled under the generally applicable terms of pension, savings, disability
or other programs.

(c) Release of Claims. As a condition to receiving severance payments under Section 2(a)
hereof, the Executive shall be required to deliver to the Company and not revoke a general release
of claims against the Company, its affiliates, and their officers, directors, employees and agents
in substantially the form attached hereto as Exhibit A. The Executive shall be afforded seven days
after execution and delivery of such release to revoke it, in which event the Executive shall not
be entitled to the payments, rights or other entitlements hereunder other than as required by
applicable law.

(d) Definitions. The following terms shall have the following meanings for purposes of this
Agreement.

“Cause” means (i) the Executive’s willful and continued failure to perform
substantially his duties with the Company (other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness or any such failure subsequent to the
Executive being delivered a notice of termination without Cause by the Company or delivering a
notice of termination for Good Reason to the Company that results in the Executive’s termination of
employment) after a written demand for substantial performance is delivered to the Executive by the
Company which specifically identifies the manner in which the Company believes that the Executive
has failed to perform substantially his duties; (ii) the Executive’s willfully engaging in illegal
conduct or gross misconduct which is demonstrably and materially injurious to the Company or its
affiliates, (iii) the Executive’s ineligibility to serve as an employee, officer, or director of
the Company pursuant to Section 9 of the Investment Company Act of 1940, as amended, or (iv) the
Executive’s conviction of a felony or crime involving moral turpitude; provided, however, that a
failure on the part of the Executive to achieve performance objectives set by the Company shall not
in and of itself constitute Cause pursuant to clause (i) hereof. Prior to terminating the
Executive’s employment for Cause, the Company must notify the Executive in writing of any event
purporting to constitute Cause within 45 days of the knowledge of the Board of Directors (the
“Board”) of its existence and, if curable, must provide the Executive with at least 20 days to cure
such event. If such event is not cured by the Executive in such time period, or is incurable, then
the Executive’s employment shall be terminated for Cause if 2/3 of the independent members of the
Board determine in writing to so terminate his employment.

“Change in Control” has the meaning provided in the Patriot Capital Funding, Inc.
Amended Stock Option Plan.

“Good Reason” means, without the Executive’s express written consent, the occurrence
of any of the following events:

(i) any material change in the duties or responsibilities (including reporting
responsibilities) of the Executive that is inconsistent in any material and adverse respect with
the Executive’s position, duties, responsibilities or status with the Company (including any
material and adverse diminution of such duties or responsibilities); or

(ii) a material and adverse change in the Executive’s titles or offices (including, if
applicable, membership on the Board) with the Company hereof;

(iii) a reduction by the Company in the Executive’s rate of annual base salary or an adverse
change in the Executive’s annual bonus opportunity as a percentage of his base salary, provided,
however, that the Executive’s rate of annual base salary may be reduced without being considered
Good Reason if such reduction is implemented by the Company as part of an overall general salary
reduction affecting substantially all of its employees and such reduction to the base salary on a
percentage basis is equal to or less than the percentage reduction otherwise implemented;

(iv) any requirement of the Company that the Executive be based anywhere more than 35 miles
from the office where the Executive is located at the commencement of the Term or, if the Executive
subsequently agrees to a change in such location, 35 miles from such new office location; or

(v) the failure of any purchaser of or successor to all or substantially all of the Company’s
assets to assume the obligations of the Company contained in this Agreement, either in writing or
as a matter of law.

The Executive must notify the Company of any event purporting to constitute Good Reason within
45 days following the Executive’s knowledge of its existence, and the Company shall have 20 days in
which to correct or remove such Good Reason, or such event shall not constitute Good Reason.

3. Restrictive Covenants. In consideration of the severance promises contained in
this Agreement, the sufficiency of which is hereby acknowledged, the Executive enters into the
following covenants.

(a) Confidentiality. During the Term and ending two years after the Executive’s termination
of employment with the Company, the Executive shall not, without the prior express written consent
of the Company, directly or indirectly, use for any purpose any Confidential Information (as
defined below) in any way, or divulge, disclose or make available or accessible any Confidential
Information to any person, firm, partnership, corporation, trust or any other entity or third party
unless (i) such disclosure is reasonably necessary or appropriate in connection with the
performance by the Executive of his duties as an executive of the Company or (ii) such disclosure
is required by applicable law or (iii) the Executive is requested or required by a judicial or
arbitration body or governmental agency (by oral question, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar process) to disclose any
such information, in which case the Executive will (A) promptly notify the Company of such request
or requirement, so that the Company may seek an appropriate protective order and (B) cooperate with
the Company, at its expense, in seeking such an order. “Confidential Information” means all
information respecting the business and activities of the Company and any of its affiliates,
including, without limitation, respecting the clients, customers, suppliers, employees,
consultants, prospects, computer or other files, projects, products, computer disks or other media,
computer hardware or computer software programs, underwriting, lending or investment standards,
marketing plans, financial information, methodologies, know-how, processes, trade secrets,
policies, practices, projections, forecasts, formats, operational methods, product development
techniques, research, strategies or information agreed to with third-parties to be kept
confidential by the Company and any of its

affiliates. Notwithstanding the immediately preceding sentence, Confidential Information shall not
include any information that is, or becomes, a part of the public domain or generally available to
the public (unless such availability occurs as a result of any breach by the Executive of this
Agreement) or any business knowledge and experience of the type usually acquired by persons engaged
in positions similar to the Executive’s position with the Company, to

the extent such knowledge and experience is non-Company specific and not proprietary to the Company
or any of its affiliates.

(b) Return of Materials. Upon termination of employment, the Executive will leave with the
Company all memoranda, notes, records, manuals, or other documents and media (in whatever form
maintained, whether documentary, computer storage or otherwise) pertaining to the Company’s
business, including all copies thereof; other than such documents and items that are personal to
the employee (e.g., pay stubs, personal tax documentation and other compensation or employment
related materials).

(c) Non-Disparagement. Following the termination of his employment for any reason, whether
during or after the Term, the Executive agrees to refrain from making any statement or comment,
whether oral or written, of a defamatory or disparaging nature to third parties regarding the
Company, its affiliates, or their directors and officers, and the Company agrees to refrain, and to
use its best efforts to cause its directors and officers to refrain, from making any statement or
comment, whether oral or written, of a defamatory or disparaging nature to third parties regarding
the Executive.

(d) Cooperation. Following the termination of his employment for any reason, whether during
or after the Term, upon reasonable request by the Company, the Executive shall cooperate with the
Company or any of its affiliates with respect to any legal or investigatory proceeding, including
any government or regulatory investigation, or any litigation or other dispute relating to any
matter in which the Executive was involved or had knowledge during his employment with the Company,
subject to the reasonable demands of the Executive business endeavors and schedule. The Company
shall reimburse the Executive for all reasonable out-of-pocket costs, such as travel, hotel and
meal expenses, incurred by the Executive in providing any cooperation pursuant to this Section
3(d).

4. Code Section 409A. The Agreement shall be interpreted, construed and operated to
reflect the intent of the Company that all aspects of the Agreement shall be interpreted either to
be exempt from the provisions of section 409A of the Internal Revenue Code (the “Code”) or, to the
extent subject to Code section 409A, comply with Code section 409A and any regulations and other
guidance thereunder. If required under Code section 409A, any payments made under Section 2 that
are subject to section 409A shall be delayed and paid in a lump sum on the first day of the seventh
month following the month in which the Executive separates from service with the Company. Nothing
in the Agreement shall provide a basis for any person to take action against the Company or any
affiliate based on matters covered by Code section 409A, including the tax treatment of any amount
paid or award made under the Agreement, and neither the Company nor any of its affiliates shall
under any circumstances have any liability to the Executive or his estate for any taxes, penalties
or interest due on amounts paid or payable under the Agreement, including taxes, penalties or
interest imposed under Code section 409A.

5. Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and assigns, provided, however, that neither this
Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive,
his beneficiaries or legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal personal representative.

6. Arbitration. Except with respect to Section 3 hereof, any and all disputes, claims
and controversies between the Company or any of its affiliates and the Executive arising out of or
relating to this Agreement, or the breach thereof, or otherwise arising out of or relating to the
Executive’s employment or the termination thereof shall be resolved by binding arbitration before a
single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration shall take place in Westport, Connecticut. The arbitrator shall have
no authority to award punitive damages. The award of the arbitrator shall be final and judgment
thereon may be entered in any court having jurisdiction. The Parties shall share the costs of the
arbitrator equally, but the Parties shall pay their own legal and other expenses.

7. Notice. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered (provided written acknowledgement of receipt is obtained) or three days after
being sent by certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Company:

Chief Financial Officer

Patriot Capital Funding, Inc.

274 Riverside Avenue

Westport, CT 06880

with a copy to:

Chairman of the Board of Directors

Patriot Capital Funding, Inc.

274 Riverside Avenue

Westport, CT 06880

and

Harry Pangas, Esq.

Sutherland Asbill & Brennan LLP

1275 Pennsylvania Ave., N.W.

Washington, D.C. 20004

If to the Executive:

Clifford L. Wells

10 Bend of River Lane

Stamford, CT 06902

or to such other address given by each Party to the other in accordance with the foregoing
procedures.

8. Miscellaneous. No provision of this Agreement may be modified or discharged unless
such modification or discharge is agreed to in writing and signed by the Executive and the Company.
No waiver of any provision of this Agreement shall be deemed effective unless in writing and signed
by the Party against whom it is being enforced. No waiver by either Party hereto at any time of
any breach by the other Party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other Party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either Party which are not expressly set forth in this Agreement.

9. Withholding. The Company may withhold from any amounts or payments under this
Agreement such Federal, state, local or other taxes as shall be required to be withheld pursuant to
any applicable law or regulation.

10. Governing Law. To the extent not preempted by Federal law, this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State of Connecticut
without giving effect to the conflict of law principles thereof.

11. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.

12. Entire Agreement. This Agreement constitutes the entire agreement between the
Parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral
or written, between the Parties hereto with respect to the subject matter hereof.

13. Counterparts. This Agreement may be executed in two or more counterparts.

14. Voluntary Agreement. The Executive acknowledges that he has been advised that he
may consult with counsel of his choosing in considering this Agreement, that he has had an adequate
opportunity to do so, and that he is entering into this Agreement voluntarily.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and the Executive has executed this Agreement as of the day and year first above
written.

Patriot Capital Funding, Inc.

	 	 	 
	By:      

Dennis C. O’Dowd

Chairman, Board of Directors

Compensation Committee

	 	     

Date

	     

Clifford L. Wells

	 	     

Date

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