Document:

exv10w3

Exhibit 10.3

Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation (the “Depository”), to the Company or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co.
or in such other name as is requested by an authorized representative of the Depository (and any
payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of the Depository), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.

			
	REGISTERED

	 	REGISTERED

CNA FINANCIAL CORPORATION

7.350% NOTE DUE November 15, 2019

	 	 	 
	 

	 	CUSIP 126117AP5
	 
	 	 
	 

	 	ISIN US126117AP53
	 
	 	 
	No. 001

	 	US$350,000,000

CNA FINANCIAL CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware (the “Company”, which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered
assignees, the principal sum of Three Hundred Fifty Million Dollars ($350,000,000) on November 15,
2019, and to pay interest thereon from and including November 13, 2009, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, semi-annually on May 15
and November 15 of each year, commencing May 15, 2010, at the rate of 7.350% per annum, until the
principal hereof becomes due and payable, and at such rate on any overdue principal and (to the
extent that the payment of such interest shall be legally enforceable) on any overdue installment
of interest. The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest payment, which shall be the May 1 or November 1 (whether or not a
Business Day), as the case may be, prior to the applicable Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be payable to the
registered Holder on such Regular Record Date by virtue of his having been such Holder, and may
either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture.

Payment of the principal of (and premium, if any) and interest on this Security will be in
immediately available funds, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts.

Unless the certificate of authentication herein has been duly executed by the Trustee referred
to herein by manual signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

This security is one of a duly authorized issue of securities of the Company (the
“Securities”), issued or to be issued in one or more series under an indenture, dated as of March
1, 1991, as amended and supplemented by a first supplemental indenture, dated as of October 15,
1993, and a second supplemental indenture, dated as of December 15, 2004 (collectively, the
“Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as successor
in interest to J. P. Morgan Trust Company, National Association (formerly known as The First
National Bank of Chicago), a national banking association, as trustee (the “Trustee”, which term
includes any successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to

 

 

be, authenticated and delivered. This Security is one of the series designated “7.350% Notes
due November 15, 2019”, and is limited, subject to the provisions of the Indenture, initially in
aggregate principal amount to $350,000,000. The Company may, from time to time, without the
consent of the Holders of the Securities of this series, reopen this series and issue additional
Securities.

The Securities of this series will be redeemable, in whole or in part, at the Company’s option
at any time, at a redemption price (the “Redemption Price”) equal to the greater of (i) 100% of the
principal amount of the Securities of this series and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest on the Securities of this series (exclusive
of interest accrued to the date of redemption (the “Redemption Date”)) discounted to the Redemption
Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 50 basis points, plus accrued interest thereon to the Redemption Date.

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the
semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

“Comparable Treasury Issue” means the United States Treasury security or securities selected
by an Independent Investment Banker as having an actual or interpolated maturity comparable to the
remaining term of the Securities of this series to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of a comparable maturity to the remaining term of such Securities.

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the
Trustee after consultation with the Company.

“Comparable Treasury Price” means, with respect to any Redemption Date, (A) the average of the
Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such quotations.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York time on
the third business day preceding such Redemption Date.

“Reference Treasury Dealer” means each of Citigroup Global Markets Inc., J.P. Morgan
Securities Inc., a Primary Treasury Dealer (as defined below) selected by Wells Fargo Securities,
LLC and one other U.S. Government securities dealer selected by the Company, or their affiliates
which are primary U.S. Government securities dealers, and their respective successors; provided,
however, that if any of the foregoing or their affiliates shall cease to be a primary U.S.
Government securities dealer in The City of New York (a “Primary Treasury Dealer”), the Company
shall substitute therefor another Primary Treasury Dealer.

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Securities of this series to be redeemed.

Unless the Company defaults in payment of the Redemption Price, on and after the Redemption
Date interest will cease to accrue on the Securities of this series or portions thereof called for
redemption.

If an Event of Default with respect to the Securities of this series shall have occurred and
be continuing, the principal of all the Securities of this series may be declared due and payable
in the manner and with the effect provided in the Indenture.

 

 

In addition to the covenants contained in the Indenture, the Company hereby covenants and
agrees that it will not, and will not permit any Subsidiary to, create, assume, incur or permit to
exist any indebtedness for borrowed money (including any guarantee of indebtedness for borrowed
money) that is secured by a pledge, lien or other encumbrance on:

	 	(a)	 	the voting securities of The Continental Corporation, Continental
Casualty Company, The Continental Insurance Company, Continental Assurance Company,
CNA Surety Corporation or CNA National Warranty Corporation, or any Subsidiary
succeeding to any substantial part of the business now conducted by any of those
corporations (collectively, the “Principal Subsidiaries”), or
	 
	 	(b)	 	the voting securities of a Subsidiary that owns, directly or
indirectly, the voting securities of any of the Principal Subsidiaries,

without making effective provision so that the Outstanding Securities of this series shall be
secured equally and ratably with the indebtedness so secured so long as such other indebtedness
shall be secured. This covenant and agreement by the Company constitutes an agreement of the
Company in respect of the Securities of this series within the meaning of Section 5.1(d) of the
Indenture.

For purposes of the preceding paragraph, “Subsidiary” means any corporation, partnership or
other entity of which at the time of determination the Company or one or more other Subsidiaries
own directly or indirectly more than 50% of the outstanding shares of the Voting Stock or
equivalent interest, and “Voting Stock” means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class of stock has such
voting power by reason of any contingency.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities to be affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in aggregate principal amount of the outstanding
Securities to be affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities of any series at the time
Outstanding, on behalf of the Holders of all the Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

Holders of Securities may not enforce their rights pursuant to the Indenture or the Securities
except as provided in the Indenture. No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of (and premium, if any) and interest on this Security at
the times, place and rate, and in the coin or currency, herein prescribed.

The Securities of this series are issuable in registered form without coupons in minimum
denominations of $2,000 and any integral multiple of $1,000. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series of different authorized denominations,
as requested by the Holder surrendering the same.

As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable on the Security Register of the Company, upon surrender of
this Security for registration of transfer at the office or agency of the Company in the Borough of
Manhattan, the City and State of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company, the Security Registrar and the Trustee and duly
executed by the Holder hereof or his attorney duly authorized in writing, thereupon one or more new
Securities of this series, of authorized denominations and for the same aggregate principal amount
will be issued to the designated transferee or transferees.

 

 

This Security is in the form of a Global Security as provided in the Indenture. If at any
time the Depository notifies the Company that it is unwilling or unable to continue as Depository
for this Security or if at any time the Depository for this Security shall no longer be eligible or
in good standing under the Securities Exchange Act of 1934, as amended, or other applicable statute
or regulation, the Company shall appoint a successor Depository with respect to this Security. If
a successor Depository for this Security is not appointed by the Company within 90 days after the
Company receives notice or becomes aware of such ineligibility, the Company will execute, and the
Trustee or its agent, upon receipt of a Company Request for the authentication and delivery of
certificates representing Securities of this series in exchange for this Security, will
authenticate and deliver, certificates representing Securities of this series of like tenor and
terms in an aggregate principal amount equal to the principal amount of this Security in exchange
for this Security.

The Company may at any time and in its sole discretion determine that this Security or portion
hereof shall no longer be represented in the form of a Global Security. In such event the Company
will execute, and the Trustee, upon receipt of a Company Request for the authentication and
delivery of certificates representing Securities of this series in exchange in whole or in part for
this Security, will authenticate and deliver certificates representing Securities of this series of
like tenor and terms in definitive form in an aggregate principal amount equal to the principal
amount of this Security or portion hereof in exchange for this Security.

If specified by the Company pursuant to the Indenture with respect to this Security, the
Depository may surrender this Security in exchange in whole or in part for certificates
representing Securities of this series of like tenor and terms in definitive form on such terms as
are acceptable to the Company and the Depository. Thereupon the Company shall execute, and the
Trustee or its agent shall authenticate and deliver, without a service charge, (1) to each Holder
specified by the Security Registrar or the Depository a certificate or certificates representing
Securities of this series of like tenor and terms and of any authorized denomination as requested
by such person in an aggregate principal amount equal to and in exchange for such Holder’s
beneficial interest as specified by the Security Registrar or the Depository in this Security; and
(2) to the Depository a new Global Security of like tenor and terms and in an authorized
denomination equal to the difference, if any, between the principal amount of the surrendered
Security and the aggregate principal amount of certificates representing Securities delivered to
Holders thereof.

No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

Prior to due presentment of this Security for registration or transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

No recourse shall be had for the payment of the principal of or interest on this Security, or
for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liabilities being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.

The Securities of this series are subject to defeasance at the option of the Company as
provided in the Indenture.

All terms used in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal.

	 	 	 	 	 	 	 
	Dated: November 13, 2009	 	CNA FINANCIAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	  /s/ D. Craig Mense	 	 
	 	 	 
	 	 
	 

	 	Name: 
	  D. Craig Mense	 	 
	 

	 	Title: 
	  Executive Vice President and 

  Chief Financial Officer	 	 
	[SEAL]
	 	 	 	 	 	 
	 	 	Attest:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	  /s/ Mary Ribikawskis	 	 
	 	 	 
	 	 
	 

	 	Name:
	  Mary Ribikawskis	 	 
	 

	 	Title:
	  Assistant Vice President and 

  Assistant Secretary	 	 
	 
	 
	 
	This is one of the Securities of the series designated herein and referred to in the
within-mentioned Indenture.

	 
	 	 	 	 	 	 	 
	Dated: November 13, 2009	 	THE BANK OF NEW YORK MELLON TRUST

COMPANY, N.A., as Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	  /s/ L. Garcia
 

  Authorized Officer
	 	 

[Signature Page to Global Note]

 

 

—

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to applicable laws or
regulations:

TEN COM - as tenants in common

TEN ENT - as tenants by the entireties

JT TEN  - as joint tenants with right of survivorship and not as tenants in common

	 	 	 	 	 	 	 	 	 	 	 
	 	  UNIF GIFT MIN ACT -

	 	 
	Custodian	 
	 	 
	 

	 	 	 	  (Cust)  
	 	 	  (Minor)  	 	 
	 	 	 	 	Under Uniform Gifts to Minors Act
	 	 	 	 	 	 	 
	 	 	 	 	(State)
	 	 

Additional abbreviations may also be used though not in the above list.

—

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE

	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 
	 	 	 	 
	 	 	 	 	 	 
	PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

                                                                    
            

the within Security and all rights thereunder, hereby irrevocably constituting and appointing
                     attorney to transfer said Security on the books of the Company,
with full power of substitution in the premises.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 
	 

	 	 

Signature
	 	 

NOTICE:  THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF
THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.

THE SIGNATURE(S) MUST BE GUARANTEED BY AN “ELIGIBLE GUARANTOR INSTITUTION” THAT IS A MEMBER OR
PARTICIPANT IN A “SIGNATURE GUARANTEE PROGRAM” (E.G., THE SECURITIES TRANSFER AGENTS MEDALLION
PROGRAM, THE STOCK EXCHANGE MEDALLION PROGRAM OR THE NEW YORK STOCK EXCHANGE, INC. MEDALLION
SIGNATURE PROGRAM).exv10w1

Exhibit 10.1

AGREEMENT, LIMITED CONSENT AND AMENDMENT NO. 1 TO SECOND

AMENDED AND RESTATED LOAN FUNDING AND SERVICING AGREEMENT

     This AGREEMENT, LIMITED CONSENT AND AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED
LOAN FUNDING AND SERVICING AGREEMENT (this “Amendment”), dated as of July 9,
2009, is entered into by and between PATRIOT CAPITAL FUNDING LLC I (“PCAP LLC”),
as the borrower (the “Borrower”), PATRIOT CAPITAL FUNDING, INC., in its
individual capacity (in such capacity, “PCAP”) and as the servicer (in such
capacity, the “Servicer”), BMO CAPITAL MARKETS CORP., as the agent (in such
capacity, the “Agent”), FAIRWAY FINANCE COMPANY, LLC, as a conduit lender (in
such capacity, the “Conduit Lender”), BRANCH BANKING AND TRUST COMPANY, as an
institutional lender (in such capacity, the “Institutional Lender”), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, as the trustee (in such capacity, the
“Trustee”). Capitalized terms used but not defined herein shall have the meanings
provided in the Agreement (as defined below).

R E C I T A L S

     WHEREAS, Borrower, Servicer, each of the lenders party thereto (the
“Lenders”), the Agent, the other agents party thereto and Trustee have entered
into that certain Second Amended and Restated Loan Funding and Servicing Agreement, dated
as of April 11, 2008 (such agreement as amended, modified, supplemented, waived or
restated from time to time, the “Agreement”);

     WHEREAS, the Borrower has requested that the Agent, the Trustee and the Lenders
agree to amend the Agreement as more fully set forth herein;

     WHEREAS, the Agent, the Trustee and the Lenders are willing to agree to amend the
Agreement on the terms and subject to the conditions set forth herein;

     WHEREAS, the Borrower and PCAP have requested that the Agent and the Lenders consent
to (a) the sale (as described in this clause (a), the “Encore Sale Transaction”)
by the Borrower of the Transferred Loans and other rights in, to and under that certain
Senior Loan Agreement, dated as of November 21, 2003, among Encore Legal Solutions, Inc.
(“Encore”), PCAP, as agent for PCAP LLC, and PCAP LLC, as lender (the “Encore
Loans”), to the extent outstanding as of the date of consummation of the sale of the
Encore Loans, the sale of certain equity interests of Encore, and the consummation of
certain related transactions, in each case pursuant to and strictly in accordance with
the terms of a purchase agreement in the form attached hereto as Exhibit A (with
such changes as the Agent shall approve in its sole discretion, the “Encore Sale
Agreement”), (b) the sale (as described in this clause (b), the “L.A.
Spas Sale Transaction”; and, together with the Encore Sale Transaction, the “Sale
Transactions”) by the Borrower of the Transferred Loans and other rights in, to and under
that certain Credit Agreement, dated as of October 28, 2004 among L.A. Spas, Inc.
(“L.A. Spas”), PCAP LLC, as lender and PCAP, as Agent (the “L.A. Spas
Loans”), to the extent outstanding as of the date of consummation of the sale of the
L.A. Spas Loans, the sale of the equity interests of L.A. Spas, and the consummation of
certain related transactions, in each case pursuant to and strictly in accordance with
the terms of an agreement to transfer business in the form attached hereto as

 

 

Exhibit B (with such changes as the Agent shall approve in its sole discretion, the
“L.A. Spas Sale Agreement”) and, (c) in connection therewith, the release of the Trustee’s
Liens on the Transferred Loans and related Collateral sold pursuant to the Sale Transactions
(collectively, the “Released Collateral”); and

     WHEREAS, the Agent and the Lenders are willing to consent to the Sale Transactions and the
release of the Trustee’s Liens on the Released Collateral, in each case solely on the terms and
subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the foregoing, the mutual premises and agreements
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:

     SECTION 1. AMENDMENT. Section 2.8(b)(i) of the Agreement is hereby amended by
replacing the dollar amount “$250,000.00” in the last line thereof with the dollar amount
“$500,000.00.”

     SECTION 2. LIMITED CONSENT TO SALE TRANSACTIONS; RELEASE OF LIENS. Notwithstanding
anything to the contrary set forth in the Transaction Documents:

     (a) as long as (i) the Encore Sale Transaction is consummated pursuant to and strictly
in accordance with the terms of the Encore Sale Agreement and (ii) the L.A. Spas Sale
Transaction is consummated pursuant to and strictly in accordance with the terms of the L.A.
Spas Sale Agreement, and subject to the satisfaction of each of the conditions to
effectiveness set
forth in Section 5 hereof and each of the provisions of clause (b) of this
Section 2, the Agent and
the Lenders hereby consent to consummation by the Borrower of the Sale Transactions;

     (b) the Borrower, the Servicer and PCAP hereby covenant and agree, and the Agent
and the Lenders hereby acknowledge and agree, that, upon the consummation of the Encore Sale
Transaction, the Borrower and PCAP shall cause the Buyer (as defined in the Encore Sale
Agreement) to pay 100% of the Purchase Price (as defined in the Encore Sale Agreement), which
amount shall be no less than $3,175,000 (the “Encore Sale Payment”) directly to the
Collection
Account to be applied against Obligations in accordance with Section 2.8(b) of the
Agreement;
and

     (c) the Agent and each Lender hereby authorize and direct the Trustee, upon the
consummation of the Sale Transactions in accordance with the terms hereof, to execute and
deliver such documents and instruments as are necessary or appropriate to release the Liens of
the Secured Parties on the Released Collateral.

     SECTION 3. TRANSACTION DOCUMENTS IN FULL FORCE AND EFFECT AS AMENDED. Except as
specifically amended hereby, all provisions of the Transaction Documents shall remain in full
force and effect. After this Amendment becomes effective, all references to the Agreement or any
other Transaction Document, and corresponding references thereto or therein such as “hereof,
“herein”, or words of similar effect referring to the Agreement or any other Transaction Document
shall be deemed to mean the Agreement or such Transaction Document as amended hereby. This
Amendment shall not be deemed to expressly

-2-

 

or impliedly waive, amend or supplement any provision of the Agreement or any other Transaction
Document other than as expressly set forth herein.

     SECTION 4. REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS.

     (a) Representations and Warranties. Each of the Borrower, PCAP and Servicer
represents and warrants as of the date of this Amendment as follows:

     (i) it is duly incorporated or organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization;

     (ii) the execution, delivery and performance by it of this Amendment are within its
powers, have been duly authorized, and do not contravene (A) its charter, bylaws, or other
organizational documents, or (B) any Applicable Law;

     (iii) this Amendment hereby constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally or by general principles of
equity;

     (iv) no consent, license, permit, approval or authorization of, or registration,
filing or declaration with any governmental authority, is required in connection with the
execution, delivery, performance, validity or enforceability of this Amendment (as amended
hereby) by or against it;

     (v) this Amendment has been duly executed and delivered by it;

     (vi) the Encore Sale Payment is the only consideration (cash or otherwise) paid or to
be paid to the Borrower or PCAP in respect of the purchase of the Transferred Loans and
other assets sold pursuant to the Encore Sale Agreement;

     (vii) neither the Borrower nor PCAP nor any other Person has received or will receive
any cash or other property in connection with the L.A. Spas Sale Transaction;

     (viii) attached hereto as Exhibit C is a true and correct copy of the Credit
and Collection Policy as in effect as of the date hereof;

     (ix) Exhibit D sets forth a true, correct and complete listing of all Loans
(and the outstanding principal balance thereof as of July 1, 2009) that are owned by the
Borrower that constitute Transferred Loans (it being understood and agreed that, with
respect to any Loan listed on Exhibit D that was not, prior to the date hereof,
duly sold or contributed by PCAP to Borrower, PCAP hereby makes a capital contribution of
such Loan, the Related Property related thereto and all other related assets of the types
described in clauses (iii) through (viii) of Section 2.1 (a) of the
Purchase Agreement and agrees to comply with all other procedures contemplated in the
Purchase Agreement to effectuate and evidence such capital contribution); and

-3-

 

     (x) the recitals to this Amendment are true.

     (b) Additional Covenants and Agreements.

     (i) No later than 30 days after the Effective Date, PCAP shall (A) establish a new
deposit account in its own name (the “PCAP Account”) and (B) notify each Person that is not
an Obligor on a Transferred Loan to make all payments due to PCAP into the PCAP Account and
not into the Concentration Account.

     (ii) Promptly after request by the Agent, the Borrower and the Servicer shall enter
into an amendment to the Agreement, in form and substance satisfactory to the Agent and the
Lenders, in order to amend Section 2.8 of the Agreement to provide for application
of any or all of the amounts on deposit in the Collection Account and the Reserve Account
on a daily basis.

     (iii) Without limitation of anything set forth in the Agreement, the Borrower, the
Servicer and PCAP hereby acknowledge and agree that, without the prior written consent of
the Agent, neither the Borrower, the Servicer nor PCAP shall agree with any Obligor on any
Transferred Loan (other then EmployBridge Holding Company, so long as any such agreement
with EmployBridge Holding Company is consummated pursuant to documentation reasonably
acceptable to Agent), to accept equity interests or any other non-cash consideration in
lieu of (A) forbearance from exercising any or all rights and remedies with respect to any
Transferred Loan or (B) cash payment of any amounts due in respect of any such Transferred
Loan.

     (iv) The Borrower, PCAP and the Servicer agree to (A) take such actions and do such
other things as Agent shall reasonably request to carry out the agreements set forth in
this Amendment, (B) execute and deliver such documentation as Agent shall reasonably
request and (C) provide the Agent and the Lenders with regular updates and reports
regarding the process relating to the contemplated sale of, or other strategic transaction
involving, PCAP, including, without limitation, providing the Agent and the Lenders with
copies of any and all letters of intent relating to such sale and any other material
information related thereto.

     SECTION 5. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective on the
date (such date, the “Effective Date”) upon which each of the following conditions is satisfied:

     (a) the Agent shall have received duly executed signature pages to this Amendment by each of
the parties hereto;

     (b) the Encore Sale Transaction shall have been consummated, and 100% of the gross proceeds of
the Encore Sale Payment shall have been deposited in the Collection Account for application as
provided in Section 2(b) hereof;

     (c) PCAP shall have made a cash equity contribution to the Borrower in an amount equal to the
positive difference, if any, of (i) $3,375,000 minus (b) the Encore Sale Payment, and the
proceeds of such cash contribution shall have been deposited in the Collection Account (and

-4-

 

the parties hereto agree that such amounts shall be applied against Obligations in accordance with
Section 2.8(b) of the Agreement);

     (d) the Agent shall have received by wire transfer of immediately available funds for the
ratable benefit of each Lender, an amendment fee in the amount of $137,000 (which fee shall be
fully-earned and non-refundable once paid);

     (e) pursuant to a letter agreement satisfactory to Agent (the “Swap Termination Letter”),
an Early Termination Date shall be deemed to have occurred under and as defined in
the ISDA Master Agreement (as amended, restated, supplemented or otherwise modified from time to
time, the “ISDA Master”), dated as of July 27, 2005, between the Borrower and the Bank of Montreal
(“BMO”) with respect to all existing Transactions (as defined in the ISDA Master) thereunder (and
the parties hereto acknowledge and agree that (i) the Borrower owes BMO a Settlement Amount (as
defined in the ISDA Master) of $3,251,026, (ii) such amount constitutes Hedge Breakage Costs,
which, if not otherwise paid, shall be paid to BMO pursuant to Section 2.8(b) of the
Agreement, (iii) notwithstanding anything to the contrary in Section 5.2 of the Agreement, the
Borrower shall have no obligation to enter into any further Hedge Transaction under the Agreement
and, (iv) notwithstanding anything in the Agreement to the contrary, the deemed occurrence of the
Early Termination Date pursuant to the Swap Termination Letter shall not constitute a Termination
Event under the Agreement);

     (f) the Agent shall have received payment in the amount of $500,000 as reimbursement for all
fees and expenses of Latham & Watkins LLP, special counsel to the Agent, the fees and expenses of
Macquarie, financial advisor to the Agent, and the other costs and expenses incurred by the Agent
in connection with the Transaction Documents and this Amendment on or prior to the Effective Date;
and

     (g) Macquarie shall have received duly executed signature pages from the Borrower and PCAP to
that certain letter agreement regarding indemnification dated as of May 25, 2009.

     SECTION 6. CONFIRMATION OF ADVANCES OUTSTANDING AND, OCCURRENCE OF TERMINATION EVENTS,
SERVICER TERMINATION EVENTS AND AMORTIZATION PERIOD.

     (a) Borrower hereby acknowledges and agrees that, as of July 1, 2009, the aggregate principal
amount of Advances Outstanding was $137,365,363.37.

     (b) Borrower and Servicer hereby acknowledge and agree that certain Termination Events and
Servicer Termination Events have occurred and are continuing and that the Amortization Period has
commenced.

     SECTION 7. MISCELLANEOUS.

     (a) This Amendment may be executed in any number of counterparts (including by facsimile or
email in “.pdf” format), and by the different parties hereto on the same or separate counterparts,
each of which shall be deemed to be an original instrument but all of which together shall
constitute one and the same agreement.

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     (b) The descriptive headings of the various sections of this Amendment are inserted for
convenience of reference only and shall not be deemed to affect the meaning or construction of any
of the provisions hereof.

     (c) This Amendment may not be amended or otherwise modified except as provided in the
Agreement.

     (d) The failure or unenforceability of any provision hereof shall not affect the other
provisions of this Amendment.

     (e) Whenever the context and construction so require, all words used in the singular number
herein shall be deemed to have been used in the plural number, and vice versa, and the masculine
gender shall include the feminine and neuter and the neuter shall include the masculine and
feminine.

     (f) This Amendment and the Agreement represent the final agreement among the parties with
respect to the matters set forth therein and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements among the parties. There are no unwritten oral
agreements among the parties with respect to such matters.

     (g) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE
AGREEMENT AND SHALL BE SUBJECT TO THE AMENDMENT OF JURY TRIAL AND NOTICE PROVISIONS OF THE
AGREEMENT.

[Remainder of Page Intentionally Left Blank]

-6-

 

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

	 	 	 	 	 	 	 
	 	 	PATRIOT CAPITAL FUNDING LLC I,	 	 
	 	 	as the Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Timothy W. Hassler
 

Name: Timothy W. Hassler
	 	 
	 

	 	 	 	Title: Chief Investment Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Matthew R. Colucci
 

Name: Matthew R. Colucci
	 	 
	 

	 	 	 	Title: Managing Director	 	 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

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

	 	 	 	 	 
	 	 	PATRIOT CAPITAL FUNDING, INC.,
	 	 	individually and as the Servicer
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Timothy W. Hassler
	 

	 	 	 	 
	 

	 	 	 	Name: Timothy W. Hassler
	 

	 	 	 	Title: Chief Investment Officer
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Matthew R. Colucci
	 

	 	 	 	 
	 

	 	 	 	Name: Matthew R. Colucci
	 

	 	 	 	Title: Managing Director

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

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

	 	 	 	 	 
	 	 	BMO CAPITAL MARKETS CORP.,

as the Agent
	 
	 	 	 	 
	 

	 	By:
	 	Bank of Montreal,
	 

	 	 	 	its Attorney in Fact

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

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

	 	 	 	 	 	 	 
	 	 	FAIRWAY FINANCE COMPANY, LLC.

as Conduit Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Philip A. Martone
 

Name: Philip A. Martone
	 	 
	 

	 	 	 	Title: Vice President	 	 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

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

	 	 	 	 	 
	 	BRANCH BANKING AND TRUST COMPANY, as
Institutional Lender

 	 
	 	By:  	/s/ Cory Boyte
 	 
	 	 	Name:  	Cory Boyte 	 
	 	 	Title:  	Senior Vice President 	 
	 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

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

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Backup Servicer
and as Trustee

 	 
	 	By:  	/s/ Cheryl Zimmerman
 	 
	 	 	Name:  	Cheryl Zimmerman 	 
	 	 	Title:  	Vice President

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