Document:

Exhibit 10.9
 	 
 	  
 	 EXECUTION COPY
 

   
 

 

$100,000,000

CREDIT AGREEMENT

Dated as of October 19, 2006

Among

GLADSTONE BUSINESS INVESTMENT LLC

as the Borrower

GLADSTONE MANAGEMENT CORPORATION

as the Servicer

THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO

as Committed Lenders

THE COMMERCIAL PAPER LENDERS FROM TIME TO TIME PARTY HERETO

as CP Lenders

THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO

as Managing Agents

and

DEUTSCHE BANK AG,
NEW YORK BRANCH

as the Administrative Agent

 

   
 

 

TABLE
OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
  Section 1.1

  	
   

  	
  Certain Defined Terms.

  	
   

  	
  1

  
	
  Section 1.2

  	
   

  	
  Other Terms.

  	
   

  	
  29

  
	
  Section 1.3

  	
   

  	
  Computation of Time Periods.

  	
   

  	
  29

  
	
  Section 1.4

  	
   

  	
  Interpretation.

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II ADVANCES

  	
   

  	
  30

  
	
  Section 2.1

  	
   

  	
  Advances.

  	
   

  	
  30

  
	
  Section 2.2

  	
   

  	
  Procedures for Advances.

  	
   

  	
  31

  
	
  Section 2.3

  	
   

  	
  Optional Changes in Facility Amount; Prepayments.

  	
   

  	
  32

  
	
  Section 2.4

  	
   

  	
  Principal Repayments.

  	
   

  	
  33

  
	
  Section 2.5

  	
   

  	
  The Notes.

  	
   

  	
  33

  
	
  Section 2.6

  	
   

  	
  Interest Payments.

  	
   

  	
  34

  
	
  Section 2.7

  	
   

  	
  Fees.

  	
   

  	
  35

  
	
  Section 2.8

  	
   

  	
  Settlement Procedures.

  	
   

  	
  35

  
	
  Section 2.9

  	
   

  	
  Collections and Allocations.

  	
   

  	
  36

  
	
  Section 2.10

  	
   

  	
  Payments, Computations, Etc.

  	
   

  	
  37

  
	
  Section 2.11

  	
   

  	
  Breakage Costs.

  	
   

  	
  37

  
	
  Section 2.12

  	
   

  	
  Increased Costs; Capital Adequacy; Illegality.

  	
   

  	
  38

  
	
  Section 2.13

  	
   

  	
  Taxes.

  	
   

  	
  39

  
	
  Section 2.14

  	
   

  	
  Revolver Loan Funding.

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III CONDITIONS OF EFFECTIVENESS AND ADVANCES

  	
   

  	
  42

  
	
  Section 3.1

  	
   

  	
  Conditions to Effectiveness and Advances.

  	
   

  	
  42

  
	
  Section 3.2

  	
   

  	
  Additional Conditions Precedent to All Advances.

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES

  	
   

  	
  43

  
	
  Section 4.1

  	
   

  	
  Representations and Warranties of the Borrower.

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V GENERAL COVENANTS OF THE BORROWER

  	
   

  	
  47

  
	
  Section 5.1

  	
   

  	
  Covenants of the Borrower.

  	
   

  	
  47

  
	
  Section 5.2

  	
   

  	
  Hedging Agreement.

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI SECURITY INTEREST

  	
   

  	
  52

  
	
  Section 6.1

  	
   

  	
  Security Interest.

  	
   

  	
  52

  
	
  Section 6.2

  	
   

  	
  Remedies.

  	
   

  	
  53

  
	
  Section 6.3

  	
   

  	
  Release of Liens.

  	
   

  	
  54

  
	
  Section 6.4

  	
   

  	
  Assignment of the Purchase Agreement.

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII ADMINISTRATION AND SERVICING OF LOANS

  	
   

  	
  55

  
	
  Section 7.1

  	
   

  	
  Appointment of the Servicer.

  	
   

  	
  55

  
	
  Section 7.2

  	
   

  	
  Duties and Responsibilities of the Servicer.

  	
   

  	
  55

  
	
  Section 7.3

  	
   

  	
  Authorization of the Servicer.

  	
   

  	
  57

  
	
  Section 7.4

  	
   

  	
  Collection of Payments.

  	
   

  	
  58

  

 

 i
 

 

 

	
  Section 7.5

  	
   

  	
  Servicer Advances.

  	
   

  	
  59

  
	
  Section 7.6

  	
   

  	
  Realization Upon Defaulted Loans or Charged-Off
  Loans.

  	
   

  	
  59

  
	
  Section 7.7

  	
   

  	
  Optional Repurchase of Transferred Loans.

  	
   

  	
  60

  
	
  Section 7.8

  	
   

  	
  Representations and Warranties of the Servicer.

  	
   

  	
  60

  
	
  Section 7.9

  	
   

  	
  Covenants of the Servicer.

  	
   

  	
  62

  
	
  Section 7.10

  	
   

  	
  Payment of Certain Expenses by Servicer.

  	
   

  	
  63

  
	
  Section 7.11

  	
   

  	
  Reports.

  	
   

  	
  64

  
	
  Section 7.12

  	
   

  	
  Annual Statement as to Compliance.

  	
   

  	
  64

  
	
  Section 7.13

  	
   

  	
  Limitation on Liability of the Servicer and Others.

  	
   

  	
  64

  
	
  Section 7.14

  	
   

  	
  The Servicer Not to Resign.

  	
   

  	
  65

  
	
  Section 7.15

  	
   

  	
  Access to Certain Documentation and Information
  Regarding the Loans.

  	
   

  	
  65

  
	
  Section 7.16

  	
   

  	
  Merger or Consolidation of the Servicer.

  	
   

  	
  66

  
	
  Section 7.17

  	
   

  	
  Identification of Records.

  	
   

  	
  66

  
	
  Section 7.18

  	
   

  	
  Servicer Termination Events.

  	
   

  	
  66

  
	
  Section 7.19

  	
   

  	
  Appointment of Successor Servicer.

  	
   

  	
  68

  
	
  Section 7.20

  	
   

  	
  Market Servicing Fee.

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII EARLY TERMINATION EVENTS

  	
   

  	
  69

  
	
  Section 8.1

  	
   

  	
  Early Termination Events.

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX INDEMNIFICATION

  	
   

  	
  71

  
	
  Section 9.1

  	
   

  	
  Indemnities by the Borrower.

  	
   

  	
  71

  
	
  Section 9.2

  	
   

  	
  Indemnities by the Servicer.

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X THE ADMINISTRATIVE AGENT AND THE MANAGING
  AGENTS

  	
   

  	
  74

  
	
  Section 10.1

  	
   

  	
  Authorization and Action.

  	
   

  	
  74

  
	
  Section 10.2

  	
   

  	
  Delegation of Duties.

  	
   

  	
  75

  
	
  Section 10.3

  	
   

  	
  Exculpatory Provisions.

  	
   

  	
  75

  
	
  Section 10.4

  	
   

  	
  Reliance.

  	
   

  	
  76

  
	
  Section 10.5

  	
   

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

  	
   

  	
  77

  
	
  Section 10.6

  	
   

  	
  Reimbursement and Indemnification.

  	
   

  	
  77

  
	
  Section 10.7

  	
   

  	
  Administrative Agent and Managing Agents in their
  Individual Capacities.

  	
   

  	
  77

  
	
  Section 10.8

  	
   

  	
  Successor Administrative Agent or Managing Agent.

  	
   

  	
  78

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI ASSIGNMENTS; PARTICIPATIONS

  	
   

  	
  78

  
	
  Section 11.1

  	
   

  	
  Assignments and Participations.

  	
   

  	
  78

  
	
  Section 11.2

  	
   

  	
  Additional Lender Groups.

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII MISCELLANEOUS

  	
   

  	
  82

  
	
  Section 12.1

  	
   

  	
  Amendments and Waivers.

  	
   

  	
  82

  
	
  Section 12.2

  	
   

  	
  Notices, Etc.

  	
   

  	
  83

  
	
  Section 12.3

  	
   

  	
  No Waiver, Rights and Remedies.

  	
   

  	
  83

  
	
  Section 12.4

  	
   

  	
  Binding Effect.

  	
   

  	
  83

  

 

 ii
 

 

 

	
  Section 12.5

  	
   

  	
  Term of this Agreement.

  	
   

  	
  83

  
	
  Section 12.6

  	
   

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

  	
   

  	
  83

  
	
  Section 12.7

  	
   

  	
  WAIVER OF JURY TRIAL.

  	
   

  	
  84

  
	
  Section 12.8

  	
   

  	
  Costs, Expenses and Taxes.

  	
   

  	
  84

  
	
  Section 12.9

  	
   

  	
  No Proceedings.

  	
   

  	
  85

  
	
  Section 12.10

  	
   

  	
  Recourse Against Certain Parties.

  	
   

  	
  85

  
	
  Section 12.11

  	
   

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

  	
   

  	
  86

  
	
  Section 12.12

  	
   

  	
  Confidentiality.

  	
   

  	
  87

  
	
  Section 12.13

  	
   

  	
  Execution in Counterparts; Severability;
  Integration.

  	
   

  	
  88

  

 

EXHIBITS

	
  EXHIBIT A

  	
   

  	
  Form of Borrower Notice

  
	
  EXHIBIT B

  	
   

  	
  Form of Note

  
	
  EXHIBIT C

  	
   

  	
  Form of Assignment and Acceptance

  
	
  EXHIBIT D

  	
   

  	
  Form of Joinder Agreement

  
	
  EXHIBIT E

  	
   

  	
  Form of Monthly Report

  
	
  EXHIBIT F

  	
   

  	
  Form of Servicer’s Certificate

  
	
  EXHIBIT G

  	
   

  	
  [Reserved]

  
	
  EXHIBIT H

  	
   

  	
  Form of Primary Document Trust Receipt

  
	
  EXHIBIT I

  	
   

  	
  Form of Assignment of Mortgage

  
	
  EXHIBIT J

  	
   

  	
  [Reserved]

  
	
  EXHIBIT K

  	
   

  	
  [Reserved]

  
	
  EXHIBIT L

  	
   

  	
  Form of Deposit Account Control Agreement

  
	
  EXHIBIT M         

  	
   

  	
  Credit Report and Transaction Summary

  
	
  EXHIBIT N

  	
   

  	
  Moody’s Industry Classifications

  

 

SCHEDULES

	
  SCHEDULE I

  	
   

  	
  Schedule of Documents

  
	
  SCHEDULE II

  	
   

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

  
	
  SCHEDULE III    

  	
   

  	
  Loan List

  
	
  SCHEDULE IV

  	
   

  	
  Form of Loans

  

 

 

 iii

THIS CREDIT
AGREEMENT is made as of October 19, 2006, among:

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

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

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

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

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

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

IT IS AGREED as follows:

ARTICLE I

DEFINITIONS

Section
1.1 Certain Defined Terms.

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

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

“Additional Amount” is defined in Section
2.13.

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

“1940 Act”
is defined in Section 4.1(x).

“Administrative Agent”
is defined in the preamble hereto.

“Advance” is defined in Section 2.1(a).

 

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

“Adverse Claim” means a lien,
security interest, pledge, charge, encumbrance or other right or claim of any
Person.

“Affected Committed Lender” is defined
in Section 11.1(c).

“Affected Party” is defined in Section 2.12(a).

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

“Agent’s Account” means Account
number 10-581587-0008 at
Deutsche Bank AG, New York Branch.

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

“Aggregate Purchased Loan Balance” means
on any day, (a) the sum of (i) the Purchased Loan Balances of all Eligible
Loans included as part of the Collateral on such date and (ii) the amount of
cash and cash equivalents held in the Collection Account less the sum of the
aggregate accrued but unpaid Servicing Fee, Revolving Loan Funding Fee, Program
Fee and Commitment Fee minus (b) the Excess Concentration Amount as of
such date.

“Agreement” or “Credit Agreement”
means this Credit Agreement, dated as of October 19, 2006, as hereafter
amended, modified, supplemented or restated from time to time.

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

“Amortization Period” means the
period beginning on the Termination Date and ending on the Maturity Date.

“Applicable Law” means, for any
Person, all existing and future applicable laws, rules, regulations (including
proposed, temporary and final income tax regulations), statutes, treaties,
codes, ordinances, permits, certificates, orders and licenses of and
interpretations by any Governmental Authority (including, without limitation,
usury laws, the Federal Truth in Lending Act, and Regulation Z, Regulation W,
Regulation U and Regulation B of the Federal Reserve 

 2
 

 

Board), and applicable
judgments, decrees, injunctions, writs, orders, or line action of any court,
arbitrator or other administrative, judicial, or quasi-judicial tribunal or
agency of competent jurisdiction.

“Assignment and Acceptance” is
defined in Section 11.1(b).

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

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

“Available Collections” is defined in Section
2.8(a).

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

“Backup Servicer Expenses”
means the out-of-pocket expenses to be paid to the Backup Servicer under the
Backup Servicing Agreement.

“Backup Servicer Fee”
means the fee to be paid to the Backup Servicer as set forth in the Backup
Servicing Agreement.

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

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

“Base Rate” means
on any date, a fluctuating rate of interest per annum equal to the higher of
(a) the Prime Rate or (b) the Federal Funds Rate plus 0.5%.

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

“Borrower” means
Gladstone Business Investment LLC, a Delaware limited liability company, or any
permitted successor thereto.

 3
 

 

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

“Borrowing Base Test” means as of any date, a
determination that the Borrowing Base shall be equal to or greater than the
Advances Outstanding.

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

“Breakage Costs” is defined in Section 2.11.

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

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

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

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

“Closing Date” means October 19,
2006.

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

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

 4
 

 

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

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

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

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

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

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

(vii)         all
Hedge Collateral; and

(viii)        all
income and Proceeds of the foregoing.

“Collateral Custodian” means The Bank
of New York Trust Company, N.A., in its capacity as Collateral Custodian under
the Custody Agreement, together with its successors and assigns.

“Collateral Custodian Expenses” means
the out-of-pocket expenses to be paid to the Collateral Custodian under the
Custody Agreement.

“Collateral Custodian Fee” means the
fee to be paid to the Collateral Custodian as set forth in the Custody
Agreement.

“Collateral Quality Test” means as of any date,
(i) the weighted average life of the Transferred Loans shall not be greater
than 66 months, (ii) the weighted average excess spread in respect of
Transferred Loans shall not be less than 2.5% (for the purpose of this
definition, the excess spread on (A) Transferred Loans which accrue interest at
a floating rate shall be the amount by which the interest rate on such
Transferred Loans exceeds the LIBO Rate and (B) Transferred Loans which accrue
interest at a fixed rate shall be amount by which the interest rate on such
Transferred Loans exceeds the cap rate under the related Hedge Transactions)
and (iii) the weighted average Risk Rating of the portfolio shall not be less
than B-/B3/4 by S&P, Moody’s or the Servicer’s risk rating model,
respectively.

“Collection Account” is defined in Section 7.4(e).

“Collection Date” means the date
following the Termination Date on which all Advances Outstanding have been
reduced to zero, the Lenders have received all accrued Interest, fees, and all
other amounts owing to them under this Agreement and the Hedging Agreement, the
Hedge Counterparties have received all amounts due and owing hereunder and
under the Hedge 

 5
 

 

Transactions, and each of the Backup Servicer, the
Collateral Custodian, the Administrative Agent and the Managing Agents have
each received all amounts due to them in connection with the Transaction
Documents.

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

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

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

“Commitment Fee” is defined in the
Fee Letter.

“Commitment Termination Date” means
October 18, 2007, or such later date to
which the Commitment Termination Date may be extended (if extended) in the sole
discretion of the Lenders in accordance with the terms of Section 2.1(b).

“Committed Lenders” is defined in the
preamble hereto.

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

“CP Lenders” is defined in the
preamble hereto.

“CP Rate” means for any Settlement
Period for any Advances made by a CP Lender, the per annum rate equivalent to
the weighted average of the per annum rates paid or payable by such CP Lender
from time to time as interest on or otherwise (by means of interest rate hedges
or otherwise taking into consideration any incremental carrying costs
associated with short-term promissory notes issued by such CP Lender maturing
on dates other than those certain dates on 

 6
 

 

which such CP Lender is
to receive funds) in respect of the Commercial Paper Notes issued by such CP
Lender during such period, as determined by such CP Lender and reported to the
Borrower and the Servicer, which rates shall reflect and give effect to the
commissions of placement agents and dealers in respect of such promissory
notes, to the extent such commissions are allocated, in whole or in part, to
such promissory notes by such CP Lender, provided,
however, that if any component of such rate
is a discount rate, in calculating the CP Rate, such CP Lender shall for such
component use the rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum.

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

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

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

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

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

 7
 

 

any claim by any Person (whether such claim arises out
of the same or a related transaction or an unrelated transaction).

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

“Default Ratio” means with respect to
any Settlement Period, the percentage equivalent of a fraction, calculated as
of the Determination Date for such Settlement Period, (a) the numerator of
which is equal to the aggregate Outstanding Loan Balance of all Transferred
Loans (excluding Charged-Off Loans) included as part of the Collateral that
became Defaulted Loans during such Settlement Period and (b) the denominator of
which is equal to (i) the sum of (x) the Aggregate Outstanding Loan Balance as
of the first day of such Settlement Period and (y) the Aggregate Outstanding
Loan Balance as of the last day of such Settlement Period divided by
(ii) two.

“Deposit Account Control Agreement”
means a letter agreement, substantially in the form of Exhibit
L, among the Borrower, the Administrative Agent and the bank
maintaining the Collection Account or a Lock-Box Bank.

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

“Determination Date” means the last
day of each Settlement Period.

“DIP Loan” means a Loan made to
a debtor-in-possession as described in Section 1107 of the Bankruptcy Code or a
trustee (if appointment of such trustee has been ordered pursuant to Section
1104 of the Bankruptcy Code) (a “Debtor”) organized under the laws of the
United States or any state therein, the terms of which have been approved by an
order of a court of competent jurisdiction, which order provides that (i) such
DIP Loan is secured by liens on the Debtor’s otherwise unencumbered assets
pursuant to 364(c)(2) of the Bankruptcy Code, (ii) such DIP Loan is secured by
liens of equal or senior priority on property of the Debtor’s estate that is
otherwise subject to a lien pursuant to Section 364(d) of the Bankruptcy Code,
(iii) such DIP Loan is secured by junior liens on the Debtor’s encumbered
assets (so long as such DIP Loan is 

 8
 

 

fully secured
based upon a current valuation or appraisal report), or (iv) if the DIP Loan or
any portion thereof is unsecured, the repayment of such DIP Loan retains
priority over all other administrative expenses pursuant to Section 364(c)(1)
of the Bankruptcy Code; provided that, in the case of the origination or
acquisition of any DIP Loan, neither Borrower nor the Servicer have actual
knowledge that the order set forth above is subject to any pending contested
matter or proceeding (as such terms are defined in the Federal Rules of
Bankruptcy Procedure).

“Early Termination Event” is
defined in Section 8.1.

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

“Eligible Loan” means on any date of
determination, each Loan which is either:

(i)            an
Unrestricted Eligible Loan; or

(ii)           a Current Pay Loan.

“Eligible Obligor” means on any day,
any Obligor that satisfies each of the following requirements:

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

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

(iii)          such
Obligor is (A) not the subject of any Insolvency Event or (B) the Obligor with
regard to a DIP Loan;

(iv)          such
Obligor is not a Governmental Authority;

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

(vi)          such
Obligor is not (A) an Affiliate of the Borrower, the Servicer or the Originator
or (B) an entity to which the Borrower, the Servicer or the Originator would be
deemed an Insider.

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

“ERISA Affiliate” means (a) any
corporation that is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as the Borrower; (b) a trade
or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Code) with the Borrower or (c) a member of the
same affiliated service 

 9
 

 

group (within the meaning
of Section 414(m) of the Code) as the Borrower, any corporation described in
clause (a) above or any trade or business described in clause (b) above.

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

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

“Excess Concentration Amount” means on any date of determination, the sum
of, without duplication, (a) the aggregate amount by which the Outstanding Loan
Balances of Eligible Loans included as part of the Collateral, the Obligors of
which are residents of any one state, exceeds 40% of the Aggregate Outstanding
Loan Balance, (b) the aggregate amount by which the Outstanding Loan Balances
of Eligible Loans included as part of the Collateral, the Obligors of which are
in the same Industry, exceeds 25% of the Aggregate Outstanding Loan Balance,
(c) the aggregate amount by which the Outstanding Loan Balance of each Eligible
Loan included as part of the Collateral exceeds the Large Loan Limit applicable
to such Eligible Loan, (d) the aggregate amount by which the Outstanding Loan
Balances of all Eligible Loans included as part of the Collateral which are PIK
Loans exceeds 25% of the Aggregate Outstanding Loan Balance, (e) the aggregate
amount by which the Outstanding Loan Balances of all Eligible Loans that have
original terms to maturity greater than 84 months (measured as of the date such
Loans became Transferred Loans) exceeds 15% of the Aggregate Outstanding Loan
Balance, (f) the aggregate amount by which the Outstanding Loan Balances of
Qualifying Syndicated Loans included as part of the Collateral, for which no
Subsequent Delivery Trust Receipt (as defined in the Custody Agreement) has
been received exceeds 10% of the Aggregate Outstanding Loan Balance, (g) the
aggregate Outstanding Loan Balances of all Loans which have a Risk Rating of
CCC+/Caa1/3 or below exceeds 10% of the Aggregate Outstanding Loan Balance, (h)
the aggregate amount by which the Outstanding Loan Balances of all Eligible
Loans included as part of the Collateral which are Revolver Loans exceeds 25%
of the Aggregate Outstanding Loan Balance, (i) the aggregate amount by which
the Outstanding Loan Balances of all Eligible Loans included as part of the
Collateral which are Revolver Loans having a term to maturity of more than one
year (measured as of the date such Loans became Transferred Loans) exceeds 10%
of the Aggregate Outstanding Loan Balance, (j) the aggregate Outstanding Loan
Balances of all Loans which are not priced by Standard & Poor’s Securities
Evaluations, Inc. on a quarterly 

 10
 

 

basis and have not been
so priced by Standard & Poor’s Securities Evaluations, Inc. for a period in
excess of 135 days from the date such Loans became Transferred Loans, (k) the
aggregate amount by which the Outstanding Loan Balances of all Eligible Loans
that are unsecured exceeds 10% of the Aggregate Outstanding Loan Balance, (l)
the aggregate amount by which the Outstanding Loan Balances of all Fixed Rate
Loans exceeds 35% of the Aggregate Outstanding Loan Balance, (m) the aggregate
amount by which the Outstanding Loan Balances of all Fixed Rate Loans which are
not subject to a Hedge Transaction exceeds 10% of the Aggregate Outstanding
Loan Balance, (n) the aggregate amount by which the Outstanding Loan Balances
of all Eligible Loans that are Current Pay Loans exceeds 10% of the Aggregate
Outstanding Loan Balance, (o) the aggregate amount by which the Outstanding
Loan Balances of all Eligible Loans included as part of the Collateral which
are DIP Loans exceeds 20% of the Aggregate Outstanding Loan Balance and (p) the
aggregate amount by which the Outstanding Loan Balances of all Loans which are
subordinated to any other indebtedness of the applicable Obligor exceeds 60% of
the Aggregate Outstanding Loan Balance.

“Facility Amount” means at any time,
$100,000,000; provided, however, that on or after the Termination Date,
the Facility Amount shall be equal to the amount of Advances Outstanding.

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

“FASB” is defined in Section 2.12(a).

“Federal Funds Rate” means for any
period, a fluctuating interest rate per annum for each day during such period
equal to (a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the preceding Business Day) by the Federal Reserve Bank of New York;
or (b) if such rate is not so published for any day which is a Business Day,
the average of the quotations at approximately 10:30 a.m. (New York City 

 11
 

 

time) for such day on
such transactions received by DB from three federal funds brokers of recognized
standing selected by it.

“Federal Reserve Board” means the
Board of Governors of the Federal Reserve System.

“Fee Letter” means the letter
agreement in respect of fees among the Borrower, the Originator, the Managing
Agents, Deutsche Bank Securities Inc., as arranger and the Administrative
Agent, as it may be amended or modified and in effect from time to time.

“Fixed Rate Loans” is defined in Section
5.2.

“Funding Date” means any day on which
an Advance is made in accordance with and subject to the terms and conditions
of this Agreement.

“Funding Request” means a Borrower
Notice requesting an Advance and including the items required by Section 2.2.

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

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

“Group Advance Limit” means for each
Lender Group, the sum of the Commitments of the Committed Lenders in such
Lender Group.

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

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

“Hedge Collateral” is defined in Section 5.2(b).

“Hedge Counterparty” means DB or any
entity that (a) on the date of entering into any Hedge Transaction (i) is an
interest rate swap dealer that is either a Lender or an Affiliate of a Lender,
or has been approved in writing by the Administrative Agent (which approval
shall not be unreasonably withheld), and (ii) has a short-term unsecured debt
rating of not less than A-1 by S&P and not less than P-1 by Moody’s, and
(b) in a Hedging Agreement (i) consents to the assignment of the Borrower’s
rights under the Hedging Agreement to the Administrative Agent pursuant to Section 5.2(b) and (ii) agrees that in the event
that S&P or Moody’s reduces its short-term unsecured debt rating below A-1
or P-1, respectively, it shall transfer its rights and obligations under each
Hedging Transaction to another entity that meets the requirements of clause (a)
and (b) hereof or make other arrangements acceptable to the Administrative
Agent and the Rating Agencies.

 

 12

 

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

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

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

“Increased Costs” means any amounts
required to be paid by the Borrower to an Affected Party pursuant to Section 2.12.

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

“Indemnified Amounts” is defined in Section 9.1.

“Indemnified Party” is defined in Section 9.1.

“Industry” means the industry of an
Obligor as determined by reference to the Moody’s Industry Classifications.

“Ineligible Loan” is defined in the Purchase
Agreement.

“Insider” is defined in Section
101(31) of the Bankruptcy Code.

“Insolvency Event” means with respect
to a specified Person, (a) the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any applicable
Insolvency Law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person’s affairs, and such decree or order
shall 

 13
 

 

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

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

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

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

“Insurance Proceeds” means any
amounts payable or any payments made, to the Borrower or to the Servicer on its
behalf under any Insurance Policy.

“Interest” means for each Settlement
Period and each Advance outstanding during such Settlement Period, the product
of:

	
  

  	
   

  	
  IR x P x

  	
   

  	
  AD

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  360

  	
   

  	
   

  

 

where

	
  

  	
   

  	
  IR

  	
   

  	
  =

  	
   

  	
  the Interest Rate applicable to such Advance;

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  P

  	
   

  	
  =

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AD

  	
   

  	
  =

  	
   

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

  

 

provided,
however, that (i) no provision of this
Agreement shall require or permit the collection of Interest in excess of the
maximum permitted by Applicable Law and (ii) Interest shall not be 

 14
 

 

considered paid by any distribution if at any time
such distribution is rescinded or must otherwise be returned for any reason.

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

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

“Interest Rate” means for any
Settlement Period:

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

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

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

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

“Key Man Event”
means any two of (a) David Gladstone, (b) Terry Brubaker and (c) George
Stelljes shall cease to be executive officers of Gladstone Management
Corporation.

“Large Loan Limit” means: (a)
for the Eligible Loans with the three largest Outstanding Loan Balances,
$17,500,000; (b) for the Eligible Loans with the fourth to sixth largest
Outstanding Loan Balances, $15,000,000; (c) for the Eligible Loans with the
seventh to ninth 

 15
 

 

largest
Outstanding Loan Balances, $12,500,000; and (d) for all other Eligible Loans,
$10,000,000.

“Lender Group” means any CP
Lender, its related Committed Lenders and their related Managing Agent.

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

“LIBO Rate” means for any Settlement
Period and any Advance, an interest rate per annum equal to:

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

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

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

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

“Liquidity Agreement” means a
liquidity agreement entered into by a CP Lender with a group of financial
institutions in connection with this Agreement.

“Liquidity Bank” means each financial
institution that is a party to a Liquidity Agreement.

“Loan” means any senior or
subordinate loan arising from the extension of credit to an Obligor by the
Originator in the ordinary course of the Originator’s business.

 16
 

 

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

“Loan File” means with respect to any
Loan, each of the Loan Documents related thereto.

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

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

“Lock-Box Account” means an account,
subject to a Deposit Account Control Agreement, maintained in the name of the
Borrower for the purpose of receiving Collections at a Lock-Box Bank.

“Lock-Box Bank” means any of the
banks or other financial institutions holding one or more Lock-Box Accounts.

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

“Mandatory Prepayment” is defined in Section
2.4(a).

“Market Servicing Fee” is defined in Section 7.20.

“Market Servicing Fee Differential”
means on any date of determination, an amount equal to the positive difference
between the Market Servicing Fee and Servicing Fee.

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

“Material Adverse Effect” means with
respect to any event or circumstance, means a material adverse effect on (a)
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Servicer or the Borrower, (b) the validity,
enforceability or collectibility of this Agreement or any other Transaction
Document or any Liquidity Agreement or the validity, enforceability or
collectibility of the Loans, (c) the rights and remedies of the Administrative Agent
or any Secured Party under this Agreement or any Transaction Document or any
Liquidity Agreement or (d) the ability of the Borrower or the Servicer to
perform its obligations under this Agreement or any other Transaction Document,
or 

 17
 

 

(e) the status,
existence, perfection, priority, or enforceability of the Administrative Agent’s
or Secured Parties’ interest in the Collateral.

“Maturity Date” means the date that is two
years after the Termination Date.  The
Advances Outstanding will be due and payable in full on the Maturity Date.

“Maximum Lawful Rate” is defined in Section
2.6(d).

“Monthly Report” is defined in Section 7.11(a).

“Moody’s” means Moody’s Investors
Service, Inc., and any successor thereto.

“Moody’s Industry Classifications” means the
classifications as set forth in Exhibit N.

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

“Non-Syndicated Loan” means each Loan which is
not a Qualifying Syndicated Loan.

“Notes” is defined in Section 2.5(a).

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

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

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

 18
 

 

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

“Originator” means Gladstone
Investment Corporation, a Delaware corporation.

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

“Participant” is defined in Section 11.1(g).

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

“Performance Guarantor” is defined in the
Performance Guaranty.

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

“Permitted Investments” means any one
or more of the following types of investments:

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

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

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

(d)           repurchase
obligations with a term of not more than ten (10) days for underlying
securities of the types described in clauses (a), (b) and (c) above entered
into with any bank of the type described in clause (c) above;

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

(f)            demand
deposits, time deposits or certificates of deposit (having original maturities
of no more than 365 days) of depository institutions or trust companies
incorporated 

 19
 

 

under the laws of the
United States or any state thereof (or domestic branches of any foreign bank)
and subject to supervision and examination by federal or state banking or
depository institution authorities; provided,
however that at the time such investment,
or the commitment to make such investment, is entered into, the short-term debt
rating of such depository institution or trust company shall be at least A-1 by
S&P and P-1 by Moody’s.

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

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

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

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

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

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

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

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

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

“Program Fee” means for each
Settlement Period and each Advance Outstanding during such Settlement Period,
the product of:

 20
 

 

PFR x P x AD/360

where

	
  

  	
   

  	
  PFR

  	
   

  	
  =

  	
   

  	
  the Program Fee Rate;

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  P

  	
   

  	
  =

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AD

  	
   

  	
  =

  	
   

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

  

 

“Program Fee Rate” is defined in the
Fee Letter.

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

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

“Purchase Date” is defined in the
Purchase Agreement.

“Purchased Loan Balance” means as of
any date of determination and any Transferred Loan, the lesser of (i) the
Outstanding Loan Balance of such Loan as of such date and (ii) the Fair Market
Value of such Loan.

“Purchasing Committed Lender” is defined
in Section 11.1(b).

“Qualified Institution” is defined in
Section 7.4(e).

“Qualifying Syndicated Loan” means any Loan
designated by the Borrower as such in the Loan List.

“Rating Agency” means any rating
agency that has been requested to issue a rating with respect to the Commercial
Paper Notes issued by a CP Lender.

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

 21
 

 

“Recoveries” means with respect to
any Defaulted Loan or Charged-Off Loan, Proceeds of the sale of any Related
Property, Insurance Proceeds, and any other recoveries with respect to such
Loan and Related Property, and amounts representing late fees and penalties,
net of Liquidation Expenses and amounts, if any, received that are required to
be refunded to the Obligor on such Loan.

“Reference Bank” means any bank that
furnishes information for purposes of determining the Adjusted Eurodollar Rate.

“Register” is defined in Section 11.1(e).

“Regulatory Change” is defined
in Section 2.12(a).

“Related Obligation” means an
obligation issued by Gladstone Management Corporation, any of its Affiliates
that are investment funds or any other Person that is an investment fund, whose
investments are primarily managed by Gladstone Management Corporation or any of
its Affiliates.

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

“Reporting Date” means the date that
is two (2) Business Days prior to each Payment Date.

“Repurchase Price” means for any
Transferred Loan purchased pursuant to Section 7.7, an amount equal to
the outstanding principal balance of such Loan as of the date of purchase, plus
all accrued and unpaid interest on such Loan.

“Required Committed Lenders” means at
a particular time, Committed Lenders with Commitments in excess of 66 2/3 % of
the Facility Amount.

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

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

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

“Responsible Officer” means as to the
Borrower, David Gladstone, Terry Brubaker, George Stelljes, Harry Brill,
Michael Melka or Gary Gerson, and as to any other Person, any 

 22
 

 

officer of such Person
with direct responsibility for the administration of this Agreement and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer’s knowledge of and familiarity with the
particular subject.  The Borrower may
designate other Responsible Officers from time to time by notice to the
Administrative Agent.

“Revolver Loan” means
each Loan with respect to which the Borrower has a revolving credit commitment
to advance amounts to the applicable Obligor during a specified term.

“Revolver Loan Funding” is defined in Section
2.14.

‘Revolver Loan Funding Account” is defined in Section
2.14.

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

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

“Revolver Loan Funding Amount” is defined in Section
2.14.

“Revolver Loan Funding Date”
means the Termination Date, if Revolver Loans are outstanding on such date.

“Revolver Loan Funding Fee” means, for any Settlement Period, a fee
equal to 0.80% multiplied by the weighted average amount on deposit in the
Revolver Loan Funding Accounts during such Settlement Period, calculated on the
basis of a year of 360 days for the actual number of days elapsed.

“Revolving Period” means the period
commencing on the Closing Date and ending on the day immediately preceding the
Termination Date.

“Risk Rating” means, with respect to any Loan at any time, if such Loan is at such
time (i) rated by both S&P and Moody’s, the lower of such ratings, (ii)
rated by either S&P or Moody’s, such rating or (iii) not rated by either
S&P or Moody’s, the rating determined by the Servicer’s risk rating model.

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

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

 23

 

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

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

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

“Securitization” means a disposition
of Transferred Loans in one or a series of structured finance securitization
transactions.

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

“Senior Syndicated Loan” means any
Senior Debt Loan which is a Qualifying Syndicated Loan.

“Servicer” means Gladstone Management
Corporation, a Delaware corporation, and its permitted successors and assigns.

“Servicer Advance” means an advance
of Scheduled Payments made by the Servicer pursuant to Section
7.5.

“Servicer Termination Event” is
defined in Section 7.18.

“Servicer’s Certificate” is
defined in Section 7.11(b).

“Servicing Duties” means those
duties of the Servicer which are enumerated in Section
7.2.

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

“Servicing Fee Limit
Amount” means for each Payment Date, an amount equal to 10% of the
Servicing Fee for the related Settlement Period.

“Servicing Fee Rate” means with
respect all Loans, a rate equal to 2.0% per annum.

“Servicing Records” means all
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, data processing software and 

 24
 

 

related property rights)
prepared and maintained by the Servicer with respect to the Transferred Loans
and the related Obligors.

“Settlement Period” means each period
from and including a Payment Date to but excluding the following Payment Date.

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

“Subordination Event”
is defined in Section 5.1(u).

“Successor Servicer” is defined
in Section 7.19(a).

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

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

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

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

“Termination Notice” is defined
in Section 7.18.

“Transaction Documents” means this
Agreement, the Purchase Agreement, all Hedging Agreements, the Custody
Agreement, the Backup Servicing Agreement, the Performance Guaranty and any
additional document, letter, fee letter, certificate, opinion, agreement or 

 25
 

 

writing the execution of
which is necessary or incidental to carrying out the terms of the foregoing
documents.

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

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

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

“United States” means The United
States of America.

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

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

 “Unrestricted
Eligible Loan” means on any date of determination, each Loan
which satisfies each of the following requirements:

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

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

(iii)          the
Loan is not a Defaulted Loan;

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

 26
 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 27
 

 

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

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

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

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

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

(xxiii)       the Loan will not cause the Borrower to
be deemed to own 5.0% or more of the voting securities of any publicly
registered issuer or any securities that are immediately convertible into or
immediately exercisable or exchangeable for 5.0% or more of the voting
securities of any publicly registered issuer, as determined by the Servicer;

(xxiv)       the Loan is not an equity security;

(xxv)        the Loan is not a Related Obligation;

(xxvi)       the repayment of such Loan is not subject
to non-credit related risks;

(xxvii)      such Loan does not contain a
confidentiality provision that restricts the ability of the Administrative
Agent to exercise its rights under the Transaction Documents, including,
without limitation, its rights to review the Loan and related Loan File;

(xxviii)     the proceeds of such Loan are not used to
finance construction projects or activities;

(xxix)       the financing of such Loan by the
Lenders does not contravene in any material respect Regulation U of the Federal
Reserve Board, nor require the Lenders to undertake reporting thereunder which
it would not otherwise have cause to make; and

 28
 

 

(xxx)        the
Loan will not cause the Borrower, the Servicer or the Originator to be deemed
an Insider or an Affiliate of the related Obligor.

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

Section
1.2                                   Other Terms.

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

Section
1.3                                   Computation of Time Periods.

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

Section
1.4                                   Interpretation.

In each Transaction Document, unless a contrary
intention appears:

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

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

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

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

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

 29
 

 

ARTICLE II

ADVANCES

Section 2.1                                   Advances.

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

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

 30
 

 

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

Section 2.2                                   Procedures for Advances.

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

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

(c)           No later than 10:00
a.m. (New York City time) five (5) Business Days prior to the proposed Funding
Date (or such shorter period of time or later date as may be agreed to by the
Required Committed Lenders), the Borrower shall notify (i) the Collateral
Custodian by delivery to the Collateral Custodian of written notice of such
proposed Funding Date, and (ii) the Administrative Agent by delivery to the
Administrative Agent of a credit report and transaction summary for each Loan
that is the subject of the proposed Advance setting forth the credit
underwriting by the Originator of such Loan, including without limitation a
description of the Obligor and the proposed loan transaction in the form of Exhibit M hereto; provided that the requirements of this Section 2.2(c) shall apply only
with respect to the first Advance to be made with respect to a Revolver Loan.  By 5:00 p.m. (New York City time) on the next
Business Day, the Administrative Agent shall use its best efforts to confirm to
the Borrower the receipt of such items and whether it has reviewed such items
and found them to be complete and in proper form.  If the Administrative Agent makes a determination
that the items are incomplete or not in proper form, it will communicate such
determination to the Borrower.  Failure
by the Administrative Agent to respond to the Borrower by 5:00 p.m. (New York
City time) on the day the related Funding Request is delivered by the Borrower
shall constitute an implied determination that the items are incomplete or not
in proper form.  The Borrower will take
such steps requested by the Administrative Agent to correct the
problem(s).  In the event of a delay in
the actual Funding Date due to the need to correct any such problems, the
Funding Date shall be no earlier than two (2) Business Days after the day on
which the Administrative Agent confirms to the Borrower that the problems have
been corrected.

 31
 

 

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

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

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

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

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

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

Section 2.3                                   Optional Changes in Facility Amount; Prepayments.

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

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

 32
 

 

by delivering to the Administrative Agent and each Managing Agent a
Borrower Notice at least two (2) Business Day prior to the date of such repayment; provided, that no such reduction shall be given
effect unless the Borrower has complied with the terms of any Hedging Agreement
requiring that one or more Hedge Transactions be terminated in whole or in part
as the result of any such prepayment of the Advances Outstanding, and the
Borrower has paid all Hedge Breakage Costs owing to the relevant Hedge
Counterparty for any such termination. 
If any Borrower Notice relating to any prepayment is given, the amount
specified in such Borrower Notice shall be due and payable on the date
specified therein, together with accrued Interest to the payment date on the
amount prepaid and any Breakage Costs (including Hedge Breakage Costs) related
thereto.  Any partial prepayment by the
Borrower of Advances hereunder, other than with respect to Mandatory
Prepayments, shall be in a minimum amount of $500,000 with integral multiples of $100,000 above such amount.  Any amount so prepaid may, subject to the
terms and conditions hereof, be reborrowed during the Revolving Period.  A Borrower Notice relating to any such
prepayment shall be irrevocable when delivered.

Section 2.4                                   Principal
Repayments.

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

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

Section 2.5                                   The Notes.

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

(b)           Each Managing Agent
is hereby authorized to enter on a schedule attached to its Notes the following
notations (which may be computer generated) with respect to each Advance made
by each Lender in the applicable Lender Group: 
(i) the date and principal amount thereof and (ii) each payment and
repayment of principal thereof, and any such recordation shall constitute prima facie evidence
of the accuracy of the information so recorded. 
The failure of a Managing Agent to make any such notation on the schedule
attached to the applicable Note shall not limit or otherwise affect the
obligation of the Borrower to repay the Advances in accordance with their
respective terms as set forth herein.

 33
 

 

Section 2.6                                   Interest Payments.

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

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

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

(d)           Anything in this
Agreement or the other Transaction Documents to the contrary notwithstanding,
if at any time the rate of interest payable by any Person under this Agreement
and the Transaction Documents exceeds the highest rate of interest permissible
under Applicable Law (the “Maximum Lawful Rate”), then, so long as the Maximum Lawful
Rate would be exceeded, the rate of interest under this Agreement and the
Transaction Documents shall be equal to the Maximum Lawful Rate.  If at any time thereafter the rate of
interest payable under this Agreement and the Transaction Documents is less
than the Maximum Lawful Rate, such Person shall continue to pay interest under
this Agreement and the Transaction Documents at the Maximum Lawful Rate until
such time as the total interest received from such Person is equal to the total
interest that would have been received had Applicable Law not limited the
interest rate payable under this Agreement and the Transaction Documents.  In no event shall the total interest received
by a Lender under this Agreement and the Transaction Documents exceed the
amount that such Lender could lawfully have received, had the interest due
under this Agreement and the Transaction Documents been calculated since the
Closing Date at the Maximum Lawful Rate.

 

 34

 

Section 2.7                                   Fees.

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

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

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

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

Section 2.8                                   Settlement Procedures.

On each Payment Date, the Servicer on behalf of the Borrower shall pay
for receipt by the applicable Lender no later than 11:00 a.m. (New York City
time) to the following Persons, from (i) the Collection Account, to the extent
of available funds, (ii) Servicer Advances, and (iii) amounts received in
respect of any Hedge Agreement during such Settlement Period (the sum of such
amounts described in clauses (i), (ii) and (iii), minus any amounts required to
be deposited to the Revolver Loan Funding Accounts in accordance with Section
2.14 below being the “Available Collections”) the following amounts in the
following order of priority:

(i)            FIRST,
to each Hedge Counterparty, any amounts owing that Hedge Counterparty under its
respective Hedging Agreement in respect of any Hedge Transaction(s), for the
payment thereof, but excluding, to the extent the Hedge Counterparty is not the
same Person as the Administrative Agent, any Swap Breakage and Indemnity
Amounts;

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

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

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

(v)           FIFTH,
to the Servicer, in an amount equal to (A) if the Servicer is Gladstone
Management Corporation or any of its Affiliates, its accrued and unpaid 

 35
 

 

Servicing Fees to the end of the preceding Settlement Period, up to the
Servicing Fee Limit Amount for such Settlement Period, for the payment thereof
and (B) otherwise, its accrued and unpaid Servicing Fees to the end of the
preceding Settlement Period for the payment thereof;

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

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

(viii)        EIGHTH,
during the Amortization Period and from and after the Maturity Date, to the
Administrative Agent for ratable payment to each Managing Agent, on behalf of
the related Lenders, in an amount to reduce Advances Outstanding to zero and to
pay any other Obligations in full;

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

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

(xi)           ELEVENTH,
to the Administrative Agent, all other amounts then due under this Agreement to
the Administrative Agent, the Lenders, the Affected Parties or Indemnified
Parties, each for the payment thereof;

(xii)          TWELFTH, to
the Servicer, in an amount equal to (A) if the Servicer is Gladstone Management
Corporation or any of its Affiliates, its accrued and unpaid Servicing Fees to
the end of the preceding Settlement Period not otherwise paid pursuant to
priority FIFTH above; and

(xiii)         THIRTEENTH,
all remaining amounts to the Borrower

Section 2.9                                   Collections and Allocations.

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

 36
 

 

The Servicer on behalf of the Borrower shall make such deposits or
payments on the date indicated by wire transfer, in immediately available
funds.

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

Section 2.10                            Payments, Computations, Etc.

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

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

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

Section 2.11                            Breakage Costs.

The Borrower shall pay to the Administrative Agent for
the account of the applicable Managing Agent, on behalf of the related Lenders,
upon the request of any Managing Agent, any Lender or the Administrative Agent
on each Payment Date on which a prepayment is made, such amount or amounts as
shall, without duplication, compensate the Lenders for any loss, cost or
expense (the “Breakage
Costs”) incurred by the Lenders (as reasonably determined by the
applicable Lender) as a result of any prepayment of an Advance (and interest
thereon) arising under this Agreement and the Liquidity Agreements.  The determination by any Managing Agent, on
behalf of the related Lenders, of the amount of any such loss or expense shall
be set forth in a written notice to the Borrower delivered by the applicable
Lender prior to the date of 

 37
 

 

such prepayment in the
case where notice of such prepayment is delivered to such Lender in accordance
with Section 2.3(b) or within two (2) Business Days following such
prepayment in the case where no such notice is delivered (in which case,
Breakage Costs shall include interest thereon from the date of such prepayment)
and shall be conclusive absent manifest error. 
No Breakage Costs shall be payable to any CP Lender to the extent that
(a) notice of such prepayment shall have been delivered to such CP Lender in
accordance with the provisions of Section 2.3(b) or 7.7(c), (b)
such prepayment is made on a Payment Date, and (c) such prepayment does not
exceed the lesser of (i) 20% of the Advances made by such CP Lender and (ii)
$20,000,000.

Section 2.12                            Increased Costs; Capital Adequacy; Illegality.

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

(b)           If
as a result of any event or circumstance similar to those described in clause (a) of this Section
2.12, an Affected Party is required to compensate a bank or other
financial institution providing liquidity support, credit enhancement or other
similar support to such Affected Party in connection with this Agreement or the
funding or maintenance of Advances hereunder, then within ten (10) days after
demand by such Affected Party, the Borrower shall pay to such Affected Party
such additional amount or amounts as may be necessary to reimburse such
Affected Party for any such amounts paid by it.

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

Section 2.13                            Taxes.

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

(b)           The
Borrower will indemnify each Lender, each Managing Agent and the Administrative
Agent for the full amount of Taxes in respect of which the Borrower is required
to pay Additional Amounts (including, without limitation, any Taxes imposed by
any jurisdiction on such Additional Amounts) paid by such Lender, Managing
Agent or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto; provided, however,
that such Lender, Managing Agent or the Administrative Agent, as appropriate,
making a demand for indemnity payment, shall provide the Borrower, at its
address set forth under its name on the signature pages hereof, with a
certificate from the relevant taxing authority or from a Responsible Officer of
such Lender, Managing Agent or the Administrative Agent stating or otherwise
evidencing that such Lender, Managing Agent or the Administrative Agent has
made payment of such Taxes and will provide a copy of or extract from
documentation, if available, furnished by such taxing authority evidencing
assertion or payment of such Taxes.  This
indemnification shall be made within ten (10) days from the date such Lender,
Managing Agent or the Administrative Agent (as the case may be) makes written
demand therefor.

(c)           Within thirty (30)
days after the date of any payment by the Borrower of any Taxes, the Borrower
will furnish to the Administrative Agent, the Managing Agent or the 

 39
 

 

Lender, as applicable, at its address set
forth under its name on the signature pages hereof, appropriate evidence of
payment thereof.

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

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

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

(g)           If, in connection
with an agreement or other document providing liquidity support, credit
enhancement or other similar support to the Lenders in connection with this Agreement
or the funding or maintenance of Advances hereunder, the Lenders are required
to compensate a bank or other financial institution in respect of Taxes under
circumstances similar to those described in this section then within ten (10)
days after demand by the Lenders, the Borrower shall pay to the Lenders such
additional amount or amounts as may be necessary to reimburse the Lenders for
any amounts paid by them.

 40
 

 

Section
2.14                            Revolver
Loan Funding.

(a)           Upon the occurrence
of a Revolver Loan Funding Date each CP Lender may, in its sole discretion
make, and if it does not, the related Committed Lenders shall make an advance
(each, a “Revolver Loan Funding”) in an amount equal to such Committed
Lender’s ratable share of the aggregate outstanding unfunded commitments under
the Revolver Loans (collectively, the “Revolver Loan Funding Amount”).  Upon receipt of the proceeds of such Revolver
Loan Funding, the Administrative Agent shall deposit such funds into segregated
accounts (each, a “Revolver Loan Funding Account”), in its name,
referencing the name of the applicable Lender, and maintained at a Qualified
Institution.  Each Lender hereby grants
to the Administrative Agent full power and authority, on its behalf, to
withdraw funds from the applicable Revolver Loan Funding Account at the time
of, and in connection with, the funding of any Post-Termination Revolver Loan
Fundings to be made by the Borrower, and to deposit to the related Revolver
Loan Funding Account any funds received in respect of each relevant Lender’s
ratable share of principal payments under Section 2.8 hereof, all in
accordance with the terms of and for the purposes set forth in this
Agreement.  The deposit of monies in such
Revolver Loan Funding Account by any Lender shall not constitute an Advance
(and such Lender shall not be entitled to interest on such monies except as
provided in clause (d) below) unless and until (and then only to the extent
that) such monies are used to make Post-Termination Revolver Loan Fundings
pursuant to the first sentence of clause (b) below).

(b)           From and after the
establishment of a Revolver Loan Funding Account with respect to any Lender,
and until the earlier of (i) the reduction to zero of all outstanding
commitments in respect of Revolver Loans and (ii) five years following the
Revolver Loan Funding Date, all Post-Termination Revolver Loan Fundings to be
made by such Lender hereunder shall be made by withdrawing funds from the
applicable Revolver Loan Funding Account. 
On each Business Day during such time, the Administrative Agent shall,
(i) if a Revolver Loan Funding Account Shortfall exists, deposit the lesser of
(A) the amount allocable to the repayment of principal to the Lenders and (B)
the Revolver Loan Funding Account Shortfall and (ii) if a Revolver Loan Funding
Account Surplus exists, pay to the applicable Managing Agent, on behalf of each
Lender, such Lender’s ratable share of the Revolver Loan Funding Account
Surplus.  Until the earlier of (i) the
reduction to zero of all outstanding commitments in respect of Revolver Loans
and (ii) five years following the Revolver Loan Funding Date, all remaining
funds then held in such Revolver Loan Funding Account (after giving effect to
any Post-Termination Revolver Loan Fundings to be made on such date) shall be
paid by the Administrative Agent to the applicable Managing Agent, on behalf of
such Lender, and thereafter all payments made in respect of the Loans (whether
or not originally funded from such Lender’s Revolver Loan Funding Account)
shall be paid directly to the applicable Managing Agent, on behalf of such
Lender, in accordance with the terms of Section 2.8.

(c)           The Administrative
Agent may, its sole discretion, advance funds withdrawn from the Revolver Loan
Funding Accounts to (i) the Borrower or (ii) the applicable Obligor directly,
on behalf of the Borrower, and in either case, such funds shall be used solely
for the purpose of funding advances requested by an Obligor under a Revolver
Loan.

(d)           Proceeds in a
Revolver Loan Funding Account shall be invested, at the written direction of
the applicable Lender (or the applicable Managing Agent on its behalf) to the 

 41
 

 

applicable
Revolver Loan Funding Account bank, only in investments which constitute
Permitted Investments.  The investment
earnings with respect to a Revolver Loan Funding Account shall accrue as the
Lender and Revolver Loan Funding Account bank shall agree.  The Administrative Agent shall direct the
Revolver Loan Funding Account bank to pay all such investment earnings from the
relevant account directly to the applicable Managing Agent, for the account of
the applicable Lender.

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

ARTICLE III

CONDITIONS OF
EFFECTIVENESS AND ADVANCES

Section 3.1                                   Conditions to Effectiveness and Advances.

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

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

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

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

(d)           The Required Equity
Investment shall be maintained.

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

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Section 3.2                                   Additional Conditions Precedent to All Advances.

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

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

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

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

(b)           The Termination Date
shall not have occurred;

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

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

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

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

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

ARTICLE IV

REPRESENTATIONS
AND WARRANTIES

Section
4.1                                   Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

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

 43
 

 

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

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

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

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

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

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

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

 44
 

 

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

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

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

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

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

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

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

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

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

 

 45

 

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

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

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

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

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

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

(x)            Investment Company Act.

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

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

(y)           Government Regulations.  The Borrower is not engaged in the business
of extending credit for the purpose of “purchasing” or “carrying” any “margin
security,” as such terms are defined in Regulation U of the Federal Reserve
Board as now and from time to time hereafter in effect (such securities being
referred to herein as “Margin
Stock”).  The Borrower owns no
Margin Stock, and no portion of the proceeds of any Advance hereunder will be
used,

 46
 

 

directly or indirectly, for the purpose of purchasing
or carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any Margin Stock
or for any other purpose that might cause any portion of such proceeds to be
considered a “purpose credit” within the meaning of Regulation T, U or X of the
Federal Reserve Board.  The Borrower will
not take or permit to be taken any action that might cause any Related Document
to violate any regulation of the Federal Reserve Board.

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

Section
4.2                                   Joint
Representations and Warranties Regarding Ordinary Course of Business.

(a)           Each of the Borrower
and the Administrative Agent represents and warrants as to itself that each
remittance of Collections by the Borrower to the Administrative Agent pursuant
to the terms of this Agreement will have been (i) in payment of a debt incurred
by the Borrower in the ordinary course of business or financial affairs of the
Borrower and the Administrative Agent and (ii) made in the ordinary course of
business or financial affairs of the Borrower and the Administrative Agent. 

(b)           The representations
and warranties set forth in this Sections 4.2
and shall survive the termination of this Agreement.

ARTICLE V

GENERAL COVENANTS
OF THE BORROWER

Section
5.1                                   Covenants of the Borrower.

The Borrower hereby covenants that:

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

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

 47
 

 

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

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

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

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

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

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

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

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

 48
 

 

Termination Event has occurred or will occur as a
result thereof, the Borrower may make Distributions.

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

(l)            Separate Existence.  The Borrower shall:

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

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

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

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

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

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

 49
 

 

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

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

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

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

(p)           Transactions with Affiliates.  The Borrower will not enter into, or be a
party to, any transaction with any of its Affiliates, except (i) the
transactions permitted or contemplated by this Agreement, the Purchase
Agreement and any Hedging Agreements and (ii) other transactions (including,
without limitation, transactions related to the use of office space or computer
equipment or software by the Borrower to or from an Affiliate) (A) in the
ordinary course of business, (B) pursuant to the reasonable requirements of the
Borrower’s business, (C)

 50
 

 

upon fair and reasonable terms that are no less
favorable to the Borrower than could be obtained in a comparable arm’s-length
transaction with a Person not an Affiliate of the Borrower, and (D) not
inconsistent with the factual assumptions set forth in the Williams Mullen
Opinion, as such assumptions may be modified in any subsequent opinion letters
delivered to the Administrative Agent pursuant to Section
3.2 or otherwise.  It
is understood that any compensation arrangement for any officer or employee
shall be permitted under clause (ii)(A)
through (C) above if such
arrangement has been expressly approved by the managers of the Borrower in
accordance with the Borrower’s limited liability company agreement.

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

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

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

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

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

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

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

(u)           Subordination
Events.  The Borrower will not engage
or permit any Affiliate to engage in any activities relating to any Obligor
and/or with respect to any Loan that would subject a Loan to the risk of (i)
equitable subordination under Section 510(c) of the Bankruptcy

 51
 

 

Code, or (ii) recharacterization as an equity security
under Section 105(a) of the Bankruptcy Code or otherwise, as a result of the
conduct of the Borrower, the Servicer, the Originator or any of their
respective Affiliates (items (i), and (ii) above, each a “Subordination Event”).

(v)           Compliance With
Loan Documents.  The Borrower will
act in strict conformity with all material terms and conditions of the Loan
Documents, including the prompt enforcement of its rights thereunder.

Section 5.2                                   Hedging Agreement.

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

(b)           As additional
security hereunder, the Borrower hereby assigns to the Administrative Agent, as
agent for the Secured Parties, all right, title and interest of the Borrower in
any and all Hedging Agreements, any and all Hedge Transactions, and any and all
present and future amounts payable by a Hedge Counterparty to the Borrower
under or in connection with its respective Hedging Agreement and Hedge
Transaction(s) (collectively, the “Hedge
Collateral”), and grants a security interest to the
Administrative Agent, as agent for the Secured Parties, in the Hedge
Collateral.  The Borrower acknowledges
that, as a result of that assignment, the Borrower may not, without the prior
written consent of the Administrative Agent, exercise any rights under any
Hedging Agreement or Hedge Transaction, except for the Borrower’s right under
any Hedging Agreement to enter into Hedge Transactions in order to meet the
Borrower’s obligations under Section 5.2(a) hereof.  Nothing herein shall have the effect of
releasing the Borrower from any of its obligations under any Hedging Agreement
or any Hedge Transaction, nor be construed as requiring the consent of the
Administrative Agent or any Secured Party for the performance by the Borrower
of any such obligations.

ARTICLE VI

SECURITY INTEREST

Section 6.1                                   Security Interest.

As collateral security for the prompt, complete and
indefeasible payment and performance in full when due, whether by lapse of
time, acceleration or otherwise, of the Obligations, the Borrower hereby
assigns, pledges and grants to the Administrative Agent, as agent for the
Secured Parties, a lien on and security interest in all of the Borrower’s
right, title and interest in, to and under (but none of its obligations under)
the Collateral, whether now 

 52
 

 

existing or owned or hereafter arising or acquired by
the Borrower, and wherever located.  The
assignment under this Section 6.1 does not constitute and is
not intended to result in a creation or an assumption by the Administrative
Agent, the Managing Agents or any of the Secured Parties of any obligation of
the Borrower or any other Person in connection with any or all of the
Collateral or under any agreement or instrument relating thereto.  Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the Transferred
Loans to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Administrative Agent, as agent for the
Secured Parties, of any of its rights in the Collateral shall not release the
Borrower from any of its duties or obligations under the Collateral, and (c)
none of the Administrative Agent, the Managing Agents or any Secured Party
shall have any obligations or liability under the Collateral by reason of this
Agreement, nor shall the Administrative Agent, the Managing Agents or any
Secured Party be obligated to perform any of the obligations or duties of the
Borrower thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

Section
6.2                                   Remedies.

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

 

 53

 

Section 6.3                                   Release of Liens.

(a)           If (i) the Borrowing
Base Test is met, and (ii) no Early Termination Event or Unmatured Termination
Event has occurred and is continuing, at the same time as any Loan that is part
of the Collateral expires by its terms and all amounts in respect thereof have
been paid by the related Obligor and deposited in the Collection Account, the
Administrative Agent as agent for the Secured Parties will, to the extent
requested by the Borrower or the Servicer on behalf of the Borrower, release
its interest in such Loan and any Supplemental Interests related thereto.  In connection with any such release on or
after the occurrence of the above, the Administrative Agent, as agent for the
Secured Parties, will execute and deliver to the Borrower or the Servicer on
behalf of the Borrower any termination statements and any other releases and
instruments as the Borrower or the Servicer on behalf of the Borrower may
reasonably request in order to effect the release of such Loan and Supplemental
Interest; provided, that,
the Administrative Agent as agent for the Secured Parties will make no
representation or warranty, express or implied, with respect to any such Loan
or Supplemental Interest in connection with such sale or transfer and
assignment.

(b)           Upon any request for
a release of certain Loans in connection with a proposed Securitization, if,
upon application of the proceeds of such transaction in accordance with Section
2.8 either (x) all Advances Outstanding hereunder shall have been or reduced
to zero or (y) (i) the Required Equity Investment shall be maintained, (ii) the
Borrowing Base Test shall be met, (iii) the Collateral Quality Test shall be
met and (iv) no Early Termination Event or Unmatured Termination Event shall
result therefrom or shall have occurred and be continuing, the Administrative
Agent as agent for the Secured Parties will, to the extent requested by the
Borrower or the Servicer on behalf of the Borrower, release its interest in
such Loan and any Supplemental Interests related thereto.  In connection with any such release on or
after the occurrence of the above, the Administrative Agent, as agent for the
Secured Parties, will execute and deliver to the Borrower or the Servicer on
behalf of the Borrower any termination statements and any other releases and
instruments as the Borrower or the Servicer on behalf of the Borrower may
reasonably request in order to effect the release of such Loan and Supplemental
Interest; provided, that, the Administrative Agent as agent for the Secured
Parties will make no representation or warranty, express or implied, with
respect to any such Loan or Supplemental Interest in connection with such sale
or transfer and assignment.

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

(d)           Upon receipt by the
Administrative Agent of the Proceeds of a purchase of a Transferred Loan
pursuant to the terms of Section 7.7, the Administrative Agent, as agent
for the

 54
 

 

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

Section 6.4                                   Assignment of the Purchase Agreement.

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

ARTICLE VII

ADMINISTRATION AND
SERVICING OF LOANS

Section 7.1                                   Appointment of the Servicer.

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

Section 7.2                                   Duties and Responsibilities of the Servicer.

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

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

 55
 

 

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

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

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

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

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

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

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

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

 56
 

 

collectibility of any Transferred Loan, or
(C) the ability of the Servicer to perform its obligations hereunder; and

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

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

Section 7.3                                   Authorization of the Servicer.

(a)           Each of the
Borrower, each Managing Agent, on behalf of itself and the related Lenders, the
Administrative Agent and each Hedge Counterparty hereby authorizes the Servicer
(including any successor thereto) to take any and all reasonable steps in its
name and on its behalf necessary or desirable and not inconsistent with the
pledge of the Transferred Loans to the Lender, each Hedge Counterparty, and the
Collateral Custodian, in the determination of the Servicer, to collect all
amounts due under any and all Transferred Loans, including, without limitation,
endorsing any of their names on checks and other instruments representing
Collections, executing and delivering any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Transferred Loans and, after the
delinquency of any Transferred Loan and to the extent permitted under and in
compliance with Applicable Law, to commence proceedings with respect to
enforcing payment thereof, to the same extent as the Originator could have done
if it had continued to own such Loan. 
The Borrower shall furnish the Servicer (and any successors thereto)
with any powers of attorney and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder, and shall cooperate with the Servicer to the fullest extent in order
to ensure the collectibility of the Transferred Loans.  In no event shall the Servicer be entitled to
make the Borrower, any Lender, any Managing Agent, any Hedge Counterparty, the
Collateral Custodian or the Administrative Agent a party to any litigation
without such party’s express prior written consent, or to make the Borrower a
party to any litigation (other than any routine foreclosure or similar
collection procedure) without the Administrative Agent’s consent.

(b)           After an Early
Termination Event has occurred and is continuing, at the Administrative Agent’s
direction, the Servicer shall take such action as the Administrative Agent may
deem necessary or advisable to enforce collection of the Transferred Loans; provided, however,
that the Administrative Agent may, at any time that an Early Termination Event
has occurred and is continuing, notify any Obligor with respect to any
Transferred Loans of the assignment of such Transferred Loans to the
Administrative Agent and direct that payments of all amounts due or to become
due to the Borrower thereunder be made directly to the Administrative Agent or
any servicer, collection agent or lock-box or other account designated by the
Administrative Agent and, upon such notification and at the expense of the
Borrower, the Administrative Agent may enforce collection of any such
Transferred Loans and adjust, settle or 

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compromise the amount or payment thereof.  The Administrative Agent shall give written
notice to any Successor Servicer of the Administrative Agent’s actions or
directions pursuant to this Section 7.3(b), and no Successor
Servicer shall take any actions pursuant to this Section 7.3(b)
that are outside of its Credit and Collection Policy.

Section 7.4                                   Collection of Payments.

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

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

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

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

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

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Administrative Agent and (ii) whose deposits are
insured by the Federal Deposit Insurance Corporation (any such depository
institution or trust company, a “Qualified Institution”).

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

Section 7.5                                   Servicer Advances.

For each Settlement Period, if the Servicer determines
that any Scheduled Payment (or portion thereof) that was due and payable
pursuant to a Loan included in the Collateral during such Settlement Period was
not received prior to the end of such Settlement Period, the Servicer may, but
shall not be obligated to, make an advance in an amount up to the amount of
such delinquent Scheduled Payment (or portion thereof) to the extent that the
Servicer reasonably expects to be reimbursed for such advance; in addition, if
on any day there are not sufficient funds on deposit in the Collection Account
to pay accrued Interest on any Advance the Settlement Period of which ends on
such day, the Servicer may make an advance in the amount necessary to pay such
Interest (in either case, any such advance, a “Servicer Advance”).  Notwithstanding the preceding sentence, any
Successor Servicer will not be obligated to make any Servicer Advances.  The Servicer will deposit any Servicer
Advances into the Collection Account on or prior to 11:00 a.m. (New York City
time) on the related Payment Date, in immediately available funds.

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

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

 

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Section 7.7                                   Optional Repurchase of Transferred Loans.

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

(b)           Either of the
Originator or the Servicer (or its assignee) may, at its sole option, with
respect to any Transferred Loan that it determines, in the exercise of its
reasonable discretion, will likely become a Defaulted Loan or a Charged-Off
Loan, or that has become a Defaulted Loan or a Charged-Off Loan, notify the
Borrower and the Administrative Agent that it is requesting to purchase each
such Transferred Loan; provided, however, that no more than six
Transferred Loans may be purchased pursuant to this paragraph (b) during
the term of this Agreement.

(c)           The Servicer (or its
assignee) may request purchase of a Transferred Loan pursuant to paragraph
(a) or (b) above, and the Originator may request purchase of a
Transferred Loan pursuant to paragraph (b) above, by providing five (5)
Business Days’ prior written notice to Borrower and the Administrative
Agent.  The Borrower may agree to such
purchase with the consent of the Administrative Agent (which consent shall not
be unreasonably withheld).  With respect
to any such purchase of a Transferred Loan, the party providing the required
written notice shall, on the date of purchase, remit to the Borrower in
immediately available funds an amount equal to the Repurchase Price
therefor.  Upon each purchase of a
Transferred Loan pursuant to this Section 7.7, the Borrower shall
automatically and without further action be deemed to transfer, assign and
set-over to the purchaser thereof all the right, title and interest of the
Borrower in, to and under such Transferred Loan and all monies due or to become
due with respect thereto, all proceeds thereof and all rights to security for
any such Transferred Loan, and all proceeds and products of the foregoing, free
and clear of any Lien created pursuant to this Agreement, all of the Borrower’s
right, title and interest in such Transferred Loan, including any related
Supplemental Interests.  Each Lender
shall receive five (5) Business Days’ notice of any repurchase that results in
a prepayment of all or a portion of any Advance.

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

Section 7.8                                   Representations and Warranties of the Servicer.

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

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

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

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

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

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

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

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

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

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Section 7.9            Covenants
of the Servicer.

The Servicer hereby covenants that:

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

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

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

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

(e)           No Bankruptcy Petition.  With respect to any CP Lender, prior to the
date that is one year and one (1) day after the payment in full of all amounts
owing in respect of all outstanding commercial paper issued by such CP Lender
and, with respect to the Borrower, prior to the date that is one year and one (1)
day after the Collection Date, the Servicer will not institute against the
Borrower or such CP Lender, or join any other Person in instituting against the
Borrower or such CP Lender, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceedings under the
laws of the United States or any state of the United States.  This Section 7.9(e)
will survive the termination of this Agreement.

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

(g)           Credit and Collection Policy.  The Servicer will (i) comply in all material
respects with the Credit and Collection Policy in regard to each Transferred
Loan and (ii) furnish to each Managing Agent and the Administrative Agent, at
least twenty (20) days prior to its proposed

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effective date, prompt notice of any material change
in the Credit and Collection Policy.  The
Servicer will not agree or otherwise permit to occur any material change in the
Credit and Collection Policy, which change would impair the collectibility of
any Transferred Loan or otherwise adversely affect the interests or remedies of
the Administrative Agent or the Secured Parties under this Agreement or any
other Transaction Document, without the prior written consent of the
Administrative Agent (in its sole discretion).

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

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

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

(k)           Subordination
Events.  The Servicer will not engage
or permit any Affiliate to engage in any activities relating to any Obligor
and/or with respect to any Loan that would subject a Loan to the risk of a
Subordination Event.

(l)            Compliance
With Loan Documents.  The Servicer
will, on behalf of the Borrower, act in strict conformity with all material
terms and conditions of the Loan Documents, including the prompt enforcement of
the Borrower’s rights thereunder.

Section 7.10                            Payment of Certain Expenses by Servicer.

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

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Section 7.11                            Reports.

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

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

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

Section 7.12                            Annual Statement as to Compliance.

The Servicer will provide to the Borrower, each
Managing Agent, the Administrative Agent, and the Backup Servicer, within
ninety (90) days following the end of each fiscal year of the Servicer,
commencing with the fiscal year ending on March 31, 2008, an annual report
signed by a Responsible Officer of the Servicer certifying that (a) a review of
the activities of the Servicer, and the Servicer’s performance pursuant to this
Agreement, for the period ending on the last day of such fiscal year has been
made under such Person’s supervision and (b) the Servicer has performed or has
caused to be performed in all material respects all of its obligations under
this Agreement throughout such year and no Servicer Termination Event has
occurred and is continuing (or if a Servicer Termination Event has so occurred
and is continuing, specifying each such event, the nature and status thereof
and the steps necessary to remedy such event, and, if a Servicer Termination
Event occurred during such year and no notice thereof has been given to the
Administrative Agent, specifying such Servicer Termination Event and the steps
taken to remedy such event).

Section 7.13                            Limitation on Liability of the Servicer and Others.

Except as provided herein, neither the Servicer
(including any Successor Servicer) nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Borrower,
the Administrative Agent, the Lenders or any other Person for any action taken
or for refraining from the taking of any action expressly provided for in this
Agreement; provided, however,
that this provision shall not protect the Servicer or any such Person against 

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any liability that would otherwise be imposed by
reason of its willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of its willful misconduct hereunder.

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

Section 7.14                            The Servicer Not to Resign.

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

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

The
Borrower or the Servicer, as applicable, shall provide to the Administrative
Agent and each Managing Agent access to the Loan Documents and all other
documentation regarding the Loans included as part of the Collateral and the
Related Property, such access being afforded without charge but only (i) upon
reasonable prior notice, (ii) during normal business hours and (iii) subject to
the Servicer’s normal security and confidentiality procedures.  From and after (x) the Closing Date and
periodically thereafter at the discretion of the Administrative Agent (but in
no event limited to fewer than twice per calendar year), the Administrative
Agent, on behalf of and with the input of each Managing Agent, may review the
Borrower’s and the Servicer’s collection and administration of the Loans in
order to assess compliance by the Servicer with the Servicer’s written policies
and procedures, as well as with this Agreement and may conduct an audit of the
Transferred Loans, Loan Documents and Records in conjunction with such a
review, which audit shall be reasonable in scope and shall be completed in a
reasonable period of time and (y) the occurrence, and during the continuation
of an Early Termination Event, the Administrative Agent and each Managing Agent
may review the Borrower’s and the Servicer’s collection and administration of
the Transferred Loans in order to assess compliance by the Servicer with the
Servicer’s written policies and procedures, as well as with this Agreement,
which review shall not be limited in scope or frequency, nor restricted in
period.  The Administrative Agent may
also conduct an audit (as such term is used in clause (x) of this Section
7.15) of the Transferred Loans, Loan Documents and Records in conjunction
with such a review.  The Borrower shall
bear the cost of such reviews and audits.

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Section 7.16         Merger or Consolidation of the Servicer.

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

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

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

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

Section 7.17                            Identification of Records.

The Servicer shall clearly and unambiguously identify
each Loan that is part of the Collateral and the Related Property in its
computer or other records to reflect that the interest in such Loans and
Related Property have been transferred to and are owned by the Borrower and
that the Administrative Agent has the interest therein granted by Borrower
pursuant to this Agreement.

Section 7.18                            Servicer Termination Events.

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

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

(ii)           any failure by the
Servicer to give instructions or notice to the Borrower, any Managing Agent
and/or the Administrative Agent as required by this Agreement or 

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to deliver any
Required Reports hereunder on or before the date occurring two (2) Business
Days after the date such instructions, notice or report is required to be made
or given, as the case may be, under the terms of this Agreement;

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

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

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

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

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

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

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

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

(xi)           any Guarantor Event
of Default shall occur;

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

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

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

Section 7.19                            Appointment of Successor Servicer.

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

(b)           Upon
its appointment as Successor Servicer, the Backup Servicer (subject to Section 7.19(a)) or the alternate successor
servicer, as applicable, shall be the successor in all respects to the Servicer
with respect to servicing functions under this Agreement, shall assume all Servicing
Duties hereunder and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Backup Servicer or the Successor Servicer, as applicable.  Any Successor Servicer shall be entitled,
with the prior consent of the Administrative Agent, to appoint agents to
provide some or all of its duties hereunder, provided that no such appointment
shall relieve such Successor Servicer of the duties and obligations of the
Successor Servicer pursuant to the terms hereof and that any such subcontract
may be terminated upon the occurrence of a Servicer Termination Event.

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

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termination of the responsibilities and rights of the
Servicer to conduct servicing on the Collateral.

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

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

Section 7.20                            Market Servicing Fee.

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

ARTICLE VIII

EARLY TERMINATION
EVENTS

Section 8.1                                   Early Termination Events.

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

(a)           the
Borrower shall fail to (i) make payment of any amount required to be made under
the terms of this Agreement and such failure shall continue for more than two
(2) Business Days; or (ii) repay all Advances Outstanding on or prior to the
Maturity Date; or

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

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

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

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

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(f)            a
Servicer Termination Event occurs; or

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

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

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

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

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

(l)            a Key Man Event
occurs; or

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

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

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

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

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

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

(s)           any Material Adverse
Change occurs with respect to the Borrower, the Originator or the Servicer; or

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(t)            (i) the difference
between (A) the Aggregate Outstanding Loan Balance minus (B) the Advances
Outstanding shall be less than (ii) an amount equal to 50% of the Required
Equity Investment;

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

ARTICLE IX

INDEMNIFICATION

Section
9.1                                   Indemnities by the Borrower.

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

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

(ii)           reliance on any representation or
warranty made or deemed made by the Borrower, the Servicer (or one of its
Affiliates) or any of their respective officers under or in connection with
this Agreement, which shall have been false or incorrect in any material
respect when made or deemed made or delivered;

(iii)          the failure by the Borrower or the
Servicer (or one of its Affiliates) to comply with any term, provision or
covenant contained in this Agreement or any agreement executed in connection
with this Agreement, or with any Applicable Law with respect to any Loan
comprising a portion of the Collateral, or the nonconformity of any

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Loan, the
Related Property with any such Applicable Law or any failure by the Originator,
the Borrower or any Affiliate thereof to perform its respective duties under
the Loans included as a part of the Collateral;

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

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

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

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

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

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

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

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

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

 

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

(xiv)        the occurrence of a Subordination Event.

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

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

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

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

Section 9.2                                   Indemnities by the Servicer.

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

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indemnity shall run directly to and be enforceable by
an injured party subject to the limitations hereof.  If the Servicer has made any indemnity
payment pursuant to this Section 9.2 and such payment fully
indemnified the recipient thereof and the recipient thereafter collects any
payments from others in respect of such Indemnified Amounts, the recipient
shall repay to the Servicer an amount equal to the amount it has collected from
others in respect of such indemnified amounts.

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

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

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

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

ARTICLE X

THE ADMINISTRATIVE
AGENT AND THE MANAGING AGENTS

Section 10.1                            Authorization and Action.

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

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

Section 10.2                            Delegation
of Duties.

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

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

Section 10.3                            Exculpatory
Provisions.

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

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document or other written communication titled “Notice
of Early Termination Event” from the Borrower or a Secured Party.

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

Section 10.4                            Reliance.

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

(b)           Each
Managing Agent shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by such Managing Agent.  Each
Managing Agent shall in

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all cases be fully justified in failing or refusing to
take any action under this Agreement or any other document furnished in
connection herewith unless it shall first receive such advice or concurrence of
the Committed Lenders in its related Lender Group as it deems appropriate or it
shall first be indemnified to its satisfaction by the Committed Lenders in its
related Lender Group, provided that unless and until such Managing Agent shall
have received such advice, the Managing Agent may take or refrain from taking
any action, as the Managing Agent shall deem advisable and in the best
interests of the Lenders in its Lender Group. 
Each Managing Agent shall in all cases be fully protected in acting, or
in refraining from acting, in accordance with a request of the Committed
Lenders in such Managing Agent’s Lender Group and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
in such Managing Agent’s Lender Group.

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

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

Section 10.6                            Reimbursement and Indemnification.

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

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

The Administrative Agent, each Managing Agent and each
of their respective Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the 

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

Section 10.8                            Successor Administrative Agent or Managing Agent.

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

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

ARTICLE XI

ASSIGNMENTS;
PARTICIPATIONS

Section 11.1                            Assignments and Participations.

(a)           Borrower
and each Committed Lender hereby agree and consent to the complete or partial
assignment by each CP Lender of all or any portion of its rights under, interest
in, title to and obligations under this Agreement (i) to its Liquidity Banks
pursuant to a Liquidity

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

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

(c)           Each
of the Committed Lenders agrees that in the event that it shall cease to have
the Required Ratings (an “Affected Committed Lender”),
such Affected Committed Lender shall be obliged, at the request of the CP
Lenders in such Committed Lender’s Lender Group or the applicable Managing Agent,
to assign all of its rights and obligations hereunder to (x) another Committed
Lender or (y) another funding entity nominated by such Managing Agent and
acceptable to such affected CP Lenders, and willing to participate in this
Agreement through the Termination Date in the place of such Affected Committed
Lender; provided that the Affected Committed Lender receives payment in
full, pursuant to an Assignment Agreement, of an amount equal to such Committed
Lender’s Pro Rata Share of the outstanding Advances and Interest owing to the
Committed Lenders and all accrued but unpaid fees and other costs and expenses
payable in respect of its Pro Rata Share of the outstanding Advances of the
Committed Lenders.

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

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

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

(g)           Any
Committed Lender may, in the ordinary course of its business at any time sell
to one or more Persons (each a “Participant”)
participating interests in its Pro-Rata Share of the Advances of the Committed
Lenders or any other interest of such Committed Lender 

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hereunder. 
Notwithstanding any such sale by a Committed Lender of a participating
interest to a Participant, such Committed Lender’s rights and obligations under
this Agreement shall remain unchanged, such Committed Lender shall remain
solely responsible for the performance of its obligations hereunder, and the
Borrower, the CP Lenders, the Managing Agents and the Administrative Agent
shall continue to deal solely and directly with such Committed Lender in
connection with such Committed Lender’s rights and obligations under this
Agreement.  Each Committed Lender agrees
that any agreement between such Committed Lender and any such Participant in
respect of such participating interest shall not restrict such Committed Lender’s
right to agree to any amendment, supplement, waiver or modification to this
Agreement, except for any amendment, supplement, waiver or modification set
forth in Section 12.1 of this Agreement.

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

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

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

Section 11.2                            Additional
Lender Groups.

Upon the Borrower’s
request, with the consent of the Administrative Agent, an additional Lender
Group may be added to this Agreement at any time by the execution and delivery
of a Joinder Agreement by the members of such proposed additional Lender Group,
the Borrower, the Servicer and the Administrative Agent, which execution and
delivery shall not be unreasonably refused by such parties.  Upon the effective date of such Joinder
Agreement, (i) each Person specified therein as a “CP Lender” shall become a
party hereto as a CP Lender, entitled to the rights and subject to the
obligations of a CP Lender hereunder, (ii) each Person specified therein as a “Committed
Lender” shall become a party hereto as a Committed Lender, entitled to the
rights and subject to the obligations of a Committed Lender hereunder, (iii)
each Person specified therein as a “Managing Agent” shall become a party hereto
as a Managing Agent, entitled to the rights and subject to the obligations of a
Managing Agent hereunder and (iv) the Facility Amount shall be increased by an
amount equal to the aggregate Commitments of the Committed Lenders party to
such Joinder Agreement.  On or prior to
the effective date of such Joinder Agreement, the Borrower, the Servicer and
the new Managing Agent shall enter into a fee letter for purposes of setting
forth the fees payable to the members of such Lender Group in connection with
this Agreement, which fee letter shall be considered the “Fee Letter”

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for all purposes of this Agreement.  The Administrative Agent shall give each
Lender prompt notice of the addition of any Lender Group.

ARTICLE XII

MISCELLANEOUS

Section 12.1                            Amendments and Waivers.

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

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

 

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Section 12.2                            Notices, Etc.

All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including telex
communication and communication by facsimile copy) and mailed, telexed,
transmitted or hand delivered, as to each party hereto, at its address set
forth under its name on the signature pages hereof or specified in such party’s
Assignment and Acceptance or Joinder Agreement or at such other address as
shall be designated by such party in a written notice to the other parties
hereto.  All such notices and
communications shall be effective, upon receipt, or in the case of (a) notice
by mail, five (5) days after being deposited in the United States mail, first
class postage prepaid, (b) notice by telex, when telexed against receipt of
answer back, or (c) notice by facsimile copy, when verbal communication of
receipt is obtained, except that notices and communications pursuant to this Article
XII shall not be effective until received with respect to any notice sent
by mail or telex.

Section 12.3                            No Waiver, Rights and Remedies.

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

Section 12.4                            Binding Effect.

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

Section 12.5                            Term of this Agreement.

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

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

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  EACH OF THE SECURED PARTIES, THE BORROWER AND
THE ADMINISTRATIVE AGENT HEREBY

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

Section 12.7                            WAIVER OF JURY TRIAL.

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

Section 12.8                            Costs, Expenses and Taxes.

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

(b)           The Borrower shall
pay on demand any and all stamp, sales, excise and other taxes and fees payable
or determined to be payable in connection with the execution, delivery, filing
and recording of this Agreement, the other documents to be delivered hereunder
or any agreement or other document providing liquidity support, credit
enhancement or other similar Support to the Lender in connection with this
Agreement or the funding or maintenance of Advances hereunder.

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

Section 12.9                                No Proceedings.

Each party hereto (other than the applicable CP
Lender) hereby covenants and agrees that on behalf of itself and each of its
affiliates, that prior to the date which is one year and one (1) day after the
payment in full of all indebtedness for borrowed money of a CP Lender, such
party will not institute against, or join any other Person in instituting
against, such CP Lender any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings or other similar proceeding under the laws of the
United States or any state of the United States.  The provisions of this Section 12.9
shall survive the termination of this Agreement.

Each of the parties hereto (other than the
Administrative Agent and the Secured Parties) hereby agrees that it will not
institute against, or join any other Person in instituting against the Borrower
any Insolvency Proceeding so long as there shall not have elapsed one (1) year
and one (1) day since the Collection Date.

Section 12.10                          Recourse Against Certain Parties.

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

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

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

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

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

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

(c)           If
the Borrower or the Servicer fails to perform any of its obligations hereunder
after five (5) Business Days’ notice from the Administrative Agent, the
Administrative Agent or any Lender may (but shall not be required to) perform,
or cause performance of, such obligation; and the Administrative Agent’s or
such Lender’s reasonable costs and expenses incurred in connection therewith
shall be payable by the Borrower (if the Servicer that fails to so perform is
the Borrower or an Affiliate thereof) as provided in Article
IX, as applicable.  The
Borrower irrevocably authorizes the Administrative Agent and appoints the
Administrative Agent as its attorney-in-fact to act on behalf of the Borrower,
(i) to execute on behalf of the Borrower as debtor and to file financing
statements necessary or desirable in the Administrative Agent’s sole discretion
to perfect and to maintain the perfection and priority of the interest of the
Secured Parties in the Collateral and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to
the Collateral as a financing statement in such offices as the Administrative
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the interests of the Lenders in the
Collateral.  This appointment is coupled
with an interest and is irrevocable.

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

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

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

Section 12.12                     Confidentiality.

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

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

(c)           The
Borrower and the Servicer each agrees that it shall not (and shall not permit
any of its Affiliates to) issue any news release or make any public
announcement pertaining to the transactions contemplated by this Agreement and
the Transaction Documents without the prior written consent of the
Administrative Agent (which consent shall not be unreasonably withheld) unless
such news release or public announcement is required by law, in which case the

 87
 

 

Borrower or the Servicer shall consult with the
Administrative Agent and each Managing Agent prior to the issuance of such news
release or public announcement.  The
Borrower and the Servicer each may, however, disclose the general terms of the
transactions contemplated by this Agreement and the Transaction Documents to
trade creditors, suppliers and other similarly-situated Persons so long as such
disclosure is not in the form of a news release or public announcement.

Section 12.13                     Execution in Counterparts; Severability; Integration.

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

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

 88

 

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

	
  BORROWER:

  	
   

  	
  GLADSTONE BUSINESS INVESTMENT LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ George Stelljes III

  
	
   

  	
   

  	
   

  	
   

  	
  Name: George Stelljes III

  Title: President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Gladstone Business Investment LLC 

  1521 Westbranch Drive, Suite 200

  McLean, Virginia 22102

  Attention: President

  Facsimile No.: (703) 287-5801

  Confirmation No.: (703) 286-7000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SERVICER:

  	
   

  	
  GLADSTONE MANAGEMENT CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ David Gladstone

  
	
   

  	
   

  	
   

  	
   

  	
  Name: David Gladstone

  Title: Chairman

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Gladstone Management Corporation

  1521 Westbranch Drive, Suite 200

  McLean, Virginia 22102

  Attention: Chairman

  Facsimile No.: (703) 287-5801

  Confirmation No.: (703) 286-7000

  

 

 S-1
 

 

 

 

	
  COMMITTED LENDER:

  	
   

  	
  DEUTSCHE BANK AG, CAYMAN ISLAND BRANCH

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Daniel Pietrzak

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Daniel Pietrzak

  Title: Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Peter Kim

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Peter Kim

  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Commitment: $100,000,000

   

  60 Wall Street

  18th Floor

  New York, New York 10005

  Attention: Tina Gu

  Phone:(212) 250-0357

  Facsimile: (212) 797-5150

  

 

 S-2
 

 

 

	
  CP LENDER:

  	
   

  	
  SARATOGA FUNDING CORP., LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Lori Gebron

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Lori Gebron

  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SARATOGA FUNDING CORP., LLC

  c/o Lord Securities Corporation

  48 Wall Street, 27th Floor

  New York, NY 10005

  Attention: President

  Phone: (212) 346-9000

  Facsimile: (212) 346-9012

   

  with copies to:

  DEUTSCHE BANK AG, NEW YORK BRANCH

  60 Wall Street

  18th Floor

  New York, New York 10005

  Attention: Tina Gu

  Phone: (212) 250-0357

  Facsimile: (212) 797-5150

  

 

 S-3
 

 

 

	
  MANAGING AGENT for the Saratoga 

  Lender Group:

  	
  DEUTSCHE BANK AG, NEW YORK BRANCH

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Daniel Pietrzak

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Daniel Pietrzak

  Title: Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Peter Kim

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Peter Kim

  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  60 Wall Street

  18th Floor

  New York, New York 10005

  Attention: Tina Gu

  Phone:(212) 250-0357

  Facsimile: (212) 797-5150

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ADMINISTRATIVE AGENT

  	
  DEUTSCHE BANK AG, NEW YORK BRANCH

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Daniel Pietrzak

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Daniel Pietrzak

  Title: Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
  /s/ Peter Kim

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Peter Kim

  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  60 Wall Street

  18th Floor

  New York, New York 10005

  Attention: Tina Gu

  Phone:(212) 250-0357

  Facsimile: (212) 797-5150

  

 

 

 S-4Exhibit
10.1

INDEMNIFICATION
AGREEMENT

This
Indemnification Agreement, dated as of
                    ,
20    , is made by and between Veeco Instruments Inc., a
Delaware corporation (the “Corporation”) and
                         
(“Indemnitee”).

RECITALS

A.            The Corporation recognizes that
competent and experienced persons are increasingly reluctant to serve or to
continue to serve as directors or officers of corporations unless they are
protected by comprehensive liability insurance or indemnification, or both, due
to increased exposure to litigation costs and risks resulting from their
service to such corporations, and due to the fact  that the exposure frequently bears no
reasonable relationship to the compensation of such directors and officers;

B.            The statutes and judicial decisions
regarding the duties of directors and officers are often difficult to apply,
ambiguous, or conflicting, and therefore fail to provide such directors and
officers with adequate, reliable knowledge of legal risks to which they are
exposed or information regarding the proper course of action to take;

C.            The Corporation and Indemnitee
recognize that plaintiffs often seek damages in such large amounts and the
costs of litigation may be so enormous (whether or not the case is meritorious),
that the defense and/or settlement of such litigation is often beyond the
personal resources of directors and officers;

D.            The Corporation believes that it is
unfair for its directors and officers to assume the risk of huge judgments and
other expenses which may occur in cases in which the director or officer
received no personal profit and in cases where the director or officer was not
culpable;

E.             The Corporation, after reasonable
investigation, has determined that the liability insurance coverage presently
available to the Corporation may be inadequate in certain circumstances to
cover all possible exposure for which Indemnitee should be protected.  The Corporation believes that the interests
of the Corporation and its stockholders would best be served by a combination
of such insurance and the indemnification by the Corporation of the directors
and officers of the Corporation;

F.             The Corporation’s Certificate of
Incorporation requires the Corporation to indemnify its directors and officers
to the fullest extent permitted by the Delaware General Corporation Law (the “DGCL”);

G.            Section 145 of the DGCL (“Section 145”),
under which the Corporation is organized, empowers the Corporation to indemnify
its officers, directors, employees and agents by agreement and to indemnify
persons who serve, at the request of the Corporation, as the directors,
officers, employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 145 is not
exclusive;

 

H.            Section 102(b)(7) of the DGCL allows
a corporation to include in its certificate of incorporation a provision
limiting or eliminating the personal liability of a director for monetary
damages in respect of claims by shareholders and corporations for breach of
certain fiduciary duties, and the Corporation has so provided in its
Certificate of Incorporation that each Director shall be exculpated from such
liability to the maximum extent permitted by law;

I.              The Board of Directors has
determined that contractual indemnification as set forth herein is not only
reasonable and prudent but also promotes the best interests of the Corporation
and its stockholders; and

J.             The Corporation desires and has
requested Indemnitee to serve or continue to serve as a director or officer of
the Corporation free from undue concern for unwarranted claims for damages
arising out of or related to such services to the Corporation.

AGREEMENT

NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth below, and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:

Section 1. Generally.

To the fullest
extent permitted by the laws of the State of Delaware:

(a) The
Corporation shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that Indemnitee is or was or has agreed to serve at the
request of the Corporation as a director, officer, employee or agent of the
Corporation, or while serving as a director or officer of the Corporation, is
or was serving or has agreed to serve at the request of the Corporation as a
director, officer, employee or agent (which, for purposes hereof, shall include
a trustee, partner or manager or similar capacity) of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
or by reason of any action alleged to have been taken or omitted in such
capacity.  For the avoidance of doubt,
the foregoing indemnification obligation includes, without limitation, claims
for monetary damages against Indemnitee in respect of an alleged breach of
fiduciary duties, to the fullest extent permitted under Section 102(b)(7) of
the DGCL as in existence on the date hereof.

(b) The
indemnification provided by this Section 1 shall be from and against expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection with such action, suit or proceeding and any appeal therefrom, but
shall only be provided if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action, suit or proceeding,
had no reasonable cause to believe Indemnitee’s conduct was unlawful.

(c)
Notwithstanding the foregoing provisions of this Section 1, in the case of any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a 

 2
 

 

judgment in its favor by
reason of the fact that Indemnitee is or was a director, officer, employee or
agent of the Corporation, or while serving as a director or officer of the
Corporation, is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
no indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Corporation
unless, and only to the extent that, the Delaware Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.

(d) The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that Indemnitee did not act in good faith and in a
manner which Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that Indemnitee’s conduct was
unlawful.

Section 2. Successful Defense; Partial
Indemnification. To the extent that Indemnitee has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
Section 1 hereof or in defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against expenses (including attorneys’ fees)
actually and reasonably incurred in connection therewith. For purposes of  this Agreement and without limiting the
foregoing, if any action, suit or proceeding is disposed of, on the merits or
otherwise (including a disposition without prejudice), without (i) the
disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee
was liable to the Corporation, (iii) a plea of guilty or nolo contendere by
Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and
in a manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and (v) with respect to any criminal proceeding,
an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s
conduct was unlawful, Indemnitee shall be considered for the purposes hereof to
have been wholly successful with respect thereto.

If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Corporation for some or a portion of the
expenses (including attorneys’ fees), judgments, fines or amounts paid in
settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf in connection with any action, suit, proceeding or investigation, or in
defense of any claim, issue or matter therein, and any appeal therefrom but
not, however, for the total amount thereof, the Corporation shall nevertheless
indemnify Indemnitee for the portion of such expenses (including attorneys’
fees), judgments, fines or amounts paid in settlement to which Indemnitee is
entitled.

Section 3. Determination That Indemnification Is
Proper. Any indemnification hereunder shall (unless otherwise ordered by a
court) be made by the Corporation unless a determination is made that
indemnification of such person is not proper in the circumstances because he or
she has not met the applicable standard of conduct set forth in Section 1(b)
hereof. Any such determination, if any, shall be made (i) by Independent Legal
Counsel, or (ii) by a court of competent jurisdiction.

 3
 

 

Section 4. Advance
Payment of Expenses; Notification and Defense of Claim.

(a) Expenses (including
attorneys’ fees) incurred by Indemnitee in defending a threatened or pending
civil, criminal, administrative or investigative action, suit or proceeding, or
in connection with an enforcement action pursuant to Section 5(b), shall
be paid by the Corporation in advance of the final disposition of such action,
suit or proceeding within thirty (30) days after receipt by the Corporation of
(i) a statement or statements from Indemnitee requesting such advance or
advances from time to time, and (ii) an undertaking by or on behalf of
Indemnitee to repay such amount or amounts, only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to be
indemnified by the Corporation as authorized by this Agreement or otherwise.  Such undertaking shall be accepted without
reference to the financial ability of Indemnitee to make such repayment.
Advances shall be unsecured and interest-free.

(b) Promptly after
receipt by Indemnitee of notice of the commencement of any action, suit or
proceeding, Indemnitee shall, if a claim thereof is to be made against the
Corporation hereunder, notify the Corporation of the commencement thereof.  The failure to promptly notify the
Corporation of the commencement of the action, suit or proceeding, or
Indemnitee’s request for indemnification, will not relieve the Corporation from
any liability that it may have to Indemnitee hereunder, except to the extent
the Corporation is prejudiced in its defense of such action, suit or proceeding
as a result of such failure.

(c) In the event
the Corporation shall be obligated to pay the expenses of Indemnitee with
respect to an action, suit or proceeding, as provided in this Agreement, the
Corporation, if appropriate, shall be entitled to assume the defense of such
action, suit or proceeding, with counsel reasonably acceptable to Indemnitee,
upon the delivery to Indemnitee of written notice of its election to do
so.  After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by the
Corporation, the Corporation will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same action, suit or proceeding, provided that (1) Indemnitee
shall have the right to employ Indemnitee’s own counsel in such action, suit or
proceeding at Indemnitee’s expense and (2) if (i) the employment of counsel by
Indemnitee has been previously authorized in writing by the Corporation, (ii)
counsel to the Corporation or Indemnitee shall have reasonably concluded that
there may be a conflict of interest or position, or reasonably believes that a
conflict is likely to arise, on any significant issue between the Corporation
and Indemnitee in the conduct of any such defense or (iii) the Corporation
shall not, in fact, have employed counsel to assume the defense of such action,
suit or proceeding, then the fees and expenses of Indemnitee’s counsel shall be
at the expense of the Corporation, except as otherwise expressly provided by
this Agreement.  The Corporation shall
not be entitled, without the consent of Indemnitee, to assume the defense of
any claim brought by or in the right of the Corporation or as to which counsel
for the Corporation or Indemnitee shall have reasonably made the conclusion
provided for in clause (ii) above.

(d)
Notwithstanding any other provision of this Agreement to the contrary, to the
extent that Indemnitee is, by reason of Indemnitee’s corporate status with
respect to the Corporation or any corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which Indemnitee is or was
serving or has agreed to serve at the request of the Corporation, a witness or
otherwise participates in any action, suit or proceeding at a time when 

 4
 

 

Indemnitee is not a party
in the action, suit or proceeding, the Corporation shall indemnify Indemnitee
against all expenses (including attorneys’ fees) actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

Section 5. Procedure
for Indemnification

(a) To obtain
indemnification, Indemnitee shall promptly submit to the Corporation a written
request, including therein or therewith such documentation and information as
is reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The
Corporation shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has requested indemnification.

(b) The
Corporation’s determination whether to grant Indemnitee’s indemnification
request shall be made promptly, and in any event within 60 days following
receipt of a request for indemnification pursuant to Section 5(a). The right to
indemnification as granted by Section 1 of this Agreement shall be enforceable
by Indemnitee in any court of competent jurisdiction if the Corporation denies
such request, in whole or in part, or fails to respond within such 60-day
period.  It shall be a defense to any
such action (other than an action brought to enforce a claim for the
advancement of costs, charges and expenses under Section 4 hereof where the
required undertaking, if any, has been received by the Corporation) that
Indemnitee has not met the standard of conduct set forth in Section 1 hereof,
but the burden of proving such defense by clear and convincing evidence shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors or one of its committees, its independent legal counsel, and
its stockholders) to have made a determination prior to the commencement of
such action that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct set forth in Section
1 hereof, nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors or one of its committees, its
independent legal counsel, and its stockholders) that Indemnitee has not met
such applicable standard of conduct, shall create a presumption that Indemnitee
has or has not met the applicable standard of conduct.  The Indemnitee’s expenses (including
attorneys’ fees) incurred in connection with successfully establishing
Indemnitee’s right to indemnification, in whole or in part, in any such
proceeding or otherwise shall also be indemnified by the Corporation.

(c) The Indemnitee
shall be presumed to be entitled to indemnification under this Agreement upon
submission of a request for indemnification pursuant to this Section 5, and the
Corporation shall have the burden of proof in overcoming that presumption in
reaching a determination contrary to that presumption.  Such presumption shall be used as a basis for
a determination of entitlement to indemnification unless the Corporation
overcomes such presumption by clear and convincing evidence.

Section 6. Insurance
and Subrogation.

(a) The
Corporation may purchase and maintain insurance on behalf of Indemnitee who is
or was or has agreed to serve at the request of the Corporation as a director
or officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee 

 5
 

 

benefit plan or other
enterprise against any liability asserted against, and incurred by, Indemnitee
or on Indemnitee’s behalf in any such capacity, or arising out of Indemnitee’s
status as such, whether or not the Corporation would have the power to
indemnify Indemnitee against such liability under the provisions of this
Agreement. If the Corporation has such insurance in effect at the time the
Corporation receives from Indemnitee any notice of the commencement of a
proceeding, the Corporation shall give prompt notice of the commencement of
such proceeding to the insurers in accordance with the procedures set forth in
the policy.  The Corporation shall
thereafter take all necessary or desirable action to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policy.

(b) In the event
of any payment by the Corporation under this Agreement, the Corporation shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee with respect to any insurance policy, and Indemnitee shall execute
all papers required and take all action necessary to secure such rights,
including execution of such documents as are necessary to enable the
Corporation to bring suit to enforce such rights in accordance with the terms
of such insurance policy. The Corporation shall pay or reimburse all expenses
actually and reasonably incurred by Indemnitee in connection with such
subrogation.

(c) The
Corporation shall not be liable under this Agreement to make any payment of
amounts otherwise indemnifiable hereunder (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) if and to the extent that Indemnitee has otherwise actually
received such payment under this Agreement or any insurance policy, contract,
agreement or otherwise.

Section 7. Certain
Definitions. For purposes of this Agreement, the following definitions
shall apply:

(a) The term “action,
suit or proceeding” shall be broadly construed and shall include, without
limitation, the investigation, preparation, prosecution, defense, settlement,
arbitration and appeal of, and the giving of testimony in, any threatened,
pending or completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative.

(b) The term “by
reason of the fact that Indemnitee is or was a director, officer, employee or
agent of the Corporation, or while serving as a director or officer of the
Corporation, is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise”
shall be broadly construed and shall include, without limitation, any actual or
alleged act or omission to act.

(c) The term “expenses”
shall be broadly and reasonably construed and shall include, without
limitation, all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all attorneys’ fees and related disbursements,
appeal bonds, other out-of-pocket costs and reasonable compensation for time
spent by Indemnitee for which Indemnitee is not otherwise compensated by the
Corporation or any third party, provided that the rate of compensation and
estimated time involved is approved by the Board of Directors, which approval
shall not be unreasonably withheld), actually and reasonably incurred by
Indemnitee in 

 6
 

 

connection with either
the investigation, defense or appeal of a proceeding or establishing or
enforcing a right to indemnification under this Agreement, Section 145 of the
General Corporation Law of the State of Delaware or otherwise.

(d) The term “judgments,
fines and amounts paid in settlement” shall be broadly construed and shall include,
without limitation, all direct and indirect payments of any type or nature
whatsoever (including, without limitation, all penalties and amounts required
to be forfeited or reimbursed to the Corporation), as well as any penalties or
excise taxes assessed on a person with respect to an employee benefit plan.

(e) The term “Corporation”
shall include, without limitation and in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, shall stand in the same position
under the provisions of this Agreement with respect to the resulting or
surviving corporation as he or she would have with respect to such constituent
corporation if its separate existence had continued.

(f) The term “other
enterprises” shall include, without limitation, employee benefit plans.

(g) The term “serving
at the request of the Corporation” shall include, without limitation, any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries.

(h) A person who
acted in good faith and in a manner such person reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner “not opposed to the best interests of
the Corporation” as referred to in this Agreement.

(i) The term “independent
legal counsel” shall mean shall mean an attorney or firm of attorneys who shall
not have otherwise performed services for the Company or Indemnitee within the
last three years (other than with respect to matters concerning the rights of
Indemnitee under this Agreement or of other indemnitees under similar indemnity
agreements).

Section 8. Limitation
on Indemnification.  Notwithstanding
any other provision herein to the contrary, the Corporation shall not be
obligated pursuant to this Agreement:

(a) Claims
Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee
with respect to an action, suit or proceeding (or part thereof) initiated by
Indemnitee, except with respect to an action, suit or proceeding brought to
establish or enforce a right to indemnification (which shall be governed by the
provisions of Section 8(b) of this Agreement), or unless such action, suit or
proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.

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(b) Action for
Indemnification. To indemnify Indemnitee for any expenses incurred by
Indemnitee with respect to any action, suit or proceeding instituted by
Indemnitee to enforce or interpret this Agreement, unless Indemnitee is
successful in establishing Indemnitee’s right to indemnification in such
action, suit or proceeding, in whole or in part, or unless and to the extent
that the court in such action, suit or proceeding shall determine that, despite
Indemnitee’s failure to establish his or her right to indemnification,
Indemnitee is entitled to indemnity for such expenses; provided, however, that
nothing in this Section 8(b) is intended to limit the Corporation’s obligation
with respect to the advancement of expenses to Indemnitee in connection with
any such action, suit or proceeding instituted by Indemnitee to enforce or
interpret this Agreement, as provided in Section 4 hereof.

(c) Section 16
Violations. To indemnify Indemnitee on account of any proceeding with
respect to which final judgment is rendered against Indemnitee for payment or
an accounting of profits arising from the purchase or sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of
1934, as amended, or any similar successor statute.

(d) Non-compete
and Non-disclosure.  To indemnify
Indemnitee in connection with proceedings or claims involving the enforcement
of non-compete and/or non-disclosure agreements or the non-compete and/or
non-disclosure provisions of employment, consulting or similar agreements the
Indemnitee may be a party to with the Corporation, or any subsidiary of the
Corporation or any other applicable foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, if any.

Section 9.  Certain Settlement Provisions.  The Corporation shall have no obligation to
indemnify Indemnitee under this Agreement for amounts paid in settlement of any
action, suit or proceeding without the Corporation’s prior written consent,
which shall not be unreasonably withheld. 
The Corporation shall not settle any action, suit or proceeding in any
manner that would impose any fine or other obligation on Indemnitee without
Indemnitee’s prior written consent, which shall not be unreasonably withheld.

Section 10. Savings
Clause. If any provision or provisions of this Agreement shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify Indemnitee as to costs, charges and
expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated and to the full
extent permitted by applicable law.

Section 11. Contribution.  In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for herein
is held by a court of competent jurisdiction to be unavailable to Indemnitee in
whole or in part, it is agreed that, in such event, the Corporation shall, to
the fullest extent permitted by law, contribute to the payment of Indemnitee’s
costs, charges and expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, in proportion to the
relative benefits received by the Company and all officers, directors or
employees of the Company other than Indemnitee who are jointly liable with
Indemnitee, on the one hand, and Indemnitee, on the other hand, from the
transaction from which such action, suit, proceeding or Claim arose; provided,
however, that the proportion determined on the basis of relative benefit may,
to the extent necessary to conform to law, be further adjusted by reference to
the relative fault of the Company and all officers, directors or employees of
the Company other than Indemnitee who are jointly 

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liable with Indemnitee,
on the one hand, and Indemnitee, on the other hand, in connection with the
events that resulted in such expenses, judgments, fines or settlement amounts,
as well as any other equitable considerations which the law may require to be
considered.  The relative fault of the
Company and all officers, directors or employees of the Company other than
Indemnitee who are jointly liable with Indemnitee, on the one hand, and
Indemnitee, on the other hand, shall be determined by reference to, among other
things, the degree to which their actions were motivated by intent to gain
personal profit or advantage, the degree to which their liability is primary or
secondary, and the degree to which their conduct is active or passive.  ; Notwithstanding the foregoing, such
contribution shall not be required where such holding by the court is due to
(i) the failure of Indemnitee to meet the standard of conduct set forth in
Section 1 hereof, or (ii) any limitation on indemnification set forth in
Section 6(c), 8 or 9 hereof.

Section 12. Notices.  All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
duly given (i) if delivered by hand, on the date of such receipt, (ii) if
delivered by overnight courier, one business day after being sent, (iii) in the case of telecopy
notice, when acknowledged as received, or (iv) if mailed by domestic
certified or registered mail with postage prepaid, on the third business day
after the date postmarked.  Addresses for notice to either party are as
shown on the signature page of this Agreement, or as subsequently modified by
written notice.

Section 13. Subsequent Legislation. If the
General Corporation Law of Delaware is amended after adoption of this Agreement
to expand further the indemnification permitted to directors or officers, then
the Corporation shall indemnify Indemnitee to the fullest extent permitted by
the General Corporation Law of Delaware, as so amended.

Section 14. Nonexclusivity.  The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which Indemnitee may have under any provision of
law, the Corporation’s Certificate of Incorporation or ByLaws, in any court in
which a proceeding is brought, the vote of the Corporation’s stockholders or
disinterested directors, other agreements or otherwise, and Indemnitee’s rights
hereunder shall continue after Indemnitee has ceased acting as an agent of the
Corporation and shall inure to the benefit of the heirs, executors and
administrators of Indemnitee.  However,
no amendment or alteration of the Corporation’s Certificate of Incorporation or
ByLaws or any other agreement shall adversely affect the rights provided to
Indemnitee under this Agreement

Section 15. Enforcement.  The Corporation shall be precluded from
asserting in any judicial proceeding that the procedures and presumptions of
this Agreement are not valid, binding and enforceable. The Corporation agrees
that its execution of this Agreement shall constitute a stipulation by which it
shall be irrevocably bound in any court of competent jurisdiction in which a
proceeding by Indemnitee for enforcement of his or her rights hereunder shall
have been commenced, continued or appealed, that its obligations set forth in
this Agreement are unique and special, and that failure of the Corporation to
comply with the provisions of this Agreement will cause irreparable and
irremediable injury to Indemnitee, for 

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which a remedy at law
will be inadequate. As a result, in addition to any other right or remedy
Indemnitee may have at law or in equity with respect to breach of this
Agreement, Indemnitee shall be entitled to injunctive or mandatory relief
directing specific performance by the Corporation of its obligations under this
Agreement.

Section 16. Interpretation
of Agreement.  It is understood that
the parties hereto intend this Agreement to be interpreted and enforced so as
to provide indemnification to Indemnitee to the fullest extent now or hereafter
permitted by law.

Section 17. Entire
Agreement.  This Agreement and the
documents expressly referred to herein constitute the entire agreement between
the parties hereto with respect to the matters covered hereby, and any other
prior or contemporaneous oral or written understandings or agreements with
respect to the matters covered hereby are expressly superceded by this
Agreement.

Section 18. Modification
and Waiver.  No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. 
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

Section 19. Successor
and Assigns.  All of the terms and
provisions of this Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the parties hereto and their respective
successors, assigns, heirs, executors, administrators and legal
representatives. The Corporation shall require and cause any direct or indirect
successor (whether by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, by written
agreement in form and substance reasonably satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Corporation would be required to perform if no such
succession had taken place.

Section 20. Service of Process and Venue.  For purposes of any claims or proceedings to
enforce this agreement, the Corporation consents to the jurisdiction and venue
of any federal or state court of competent jurisdiction in the state of
Delaware, and waives and agrees not to raise any defense that any such court is
an inconvenient forum or any similar claim.

Section 21. Supercedes Prior Agreement.  This Agreement supercedes any prior
indemnification agreement between Indemnitee and the Corporation or its
predecessors.

Section 22. Governing
Law.  This Agreement shall be
governed exclusively by and construed according to the laws of the State of
Delaware, as applied to contracts between Delaware residents entered into and
to be performed entirely within Delaware. 
If a court of competent jurisdiction shall make a final determination
that the provisions of the law of any state other than Delaware govern
indemnification by the Corporation of its officers and directors, then the
indemnification provided under this Agreement shall in all instances be
enforceable to the fullest extent permitted under such law, notwithstanding any
provision of this Agreement to the contrary.

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Section 23. Employment
Rights. Nothing in this Agreement is intended to create in Indemnitee any
right to employment or continued employment.

Section 24. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original and all of which together shall be deemed to be one
and the same instrument, notwithstanding that both parties are not signatories
to the original or same counterpart.

Section 25.  Headings. The section and subsection
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.

IN WITNESS
WHEREOF, this Agreement has been duly executed and delivered to be effective as
of the date first above written.

	
  VEECO INSTRUMENTS INC.

  	
   

  	
  INDEMNITEE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  100 Sunnyside
  Boulevard, Suite B

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
  Woodbury, NY
  11797

  	
   

  	
   

  	
   

  	
   

  
	
  Telecopy:

  	
  516-677-0380

  	
   

  	
  Telecopy:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

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