cswc-20240320
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  March 20, 2024

CAPITAL SOUTHWEST CORPORATION
(Exact Name Of Registrant As Specified In Charter)
Texas814-0006175-1072796
(State or Other Jurisdiction of Incorporation)(Commission File Number)(IRS Employer Identification No.)

8333 Douglas Avenue, Suite 1100
Dallas, Texas 75225
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (214) 238-5700
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.25 par value per shareCSWCThe Nasdaq Global Select Market
7.75% Notes due 2028CSWCZThe Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 1.01 Entry into a Material Definitive Agreement.

On March 20, 2024, Capital Southwest Corporation (the “Company”) entered into a Loan Financing and Servicing Agreement (the “Loan Agreement”) for a special purpose vehicle financing credit facility (the “SPV Facility”) by and among Capital Southwest SPV LLC (“Capital Southwest SPV”), as borrower, the Company, as equityholder and servicer, Deutsche Bank AG, New York Branch (“Deutsche Bank”), as facility agent, U.S. Bank Trust Company, National Association as collateral agent, U.S. Bank National Association, as collateral custodian, and the lenders that are party thereto from time to time. The SPV Facility provides for $150 million of initial commitments with (i) an increase to $200 million of total commitments on the earlier of (a) June 20, 2024, the three month anniversary of the effective date of the Loan Agreement, or (b) the date requested by the Company, in its sole discretion, and (ii) an accordion feature that allows increases up to $400 million of total commitments from new and existing lenders on the same terms and conditions as the existing commitments. Advances under the SPV Facility bear interest at three-month Term SOFR plus an applicable margin of 2.50% during the revolving period ending on March 20, 2027 and three-month Term SOFR plus an applicable margin of 2.85% thereafter. The Loan Agreement provides for an unused commitment fee of, from the effective date of the Loan Agreement through April 20, 2024, 0.10% per annum on the unused commitments, and thereafter, 0.35% per annum on the unused commitments, and other customary fees. The Credit Facility matures on March 20, 2029.

The Loan Agreement contains customary terms and conditions, including affirmative and negative covenants. The Loan Agreement also contains customary events of default including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, bankruptcy, and change of control, with customary cure and notice provisions.

Capital Southwest SPV’s obligations to the lenders are secured by a first lien interest in all of its assets but are non-recourse to the Company.

Deutsche Bank and other lenders under the SPV Facility, and their respective affiliates, may from time to time receive customary fees and expenses in the performance of investment banking, financial advisory or other services for the Company.

The description above is only a summary of the material provisions of the SPV Facility and is qualified in its entirety by reference to the copy of the Loan Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference thereto.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated in this item 2.03 by reference.

Item 9.01 Financial Statements and Exhibits.

(d)          Exhibits
Exhibit No.Description
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: March 21, 2024
By:/s/ Michael S. Sarner
Name: Michael S. Sarner
Title:   Chief Financial Officer





Document
EXECUTION VERSION

LOAN FINANCING AND SERVICING AGREEMENT
dated as of March 20, 2024
CAPITAL SOUTHWEST SPV LLC,
as Borrower
CAPITAL SOUTHWEST CORPORATION,
as Equityholder and as Servicer,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Facility Agent
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Collateral Agent
and
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Custodian


TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS    1
Section 1.1     Defined Terms    1
Section 1.2.    Other Definitional Provisions.    49
ARTICLE II THE FACILITY, ADVANCE PROCEDURES AND NOTES    52
Section 2.1.    Advances.    52
Section 2.2.    Funding of Advances.    52
Section 2.3.    Notes    53
Section 2.4.    Repayment and Prepayments.    53
Section 2.5.    Permanent Reduction of Facility Amount.    54
Section 2.6.    Extension of Revolving Period    55
Section 2.7.    Calculation of Discount Factor.    55
Section 2.8.    Increase in Facility Amount    55
Section 2.9.    Defaulting Lenders.    56
Section 2.10.    Conforming Changes.    57
ARTICLE III YIELD, UNDRAWN FEE, ETC.    57
Section 3.1.    Yield and Undrawn Fee.    57
Section 3.2.    Yield Distribution Dates    58
Section 3.3.    Yield Calculation    58
Section 3.4.    Computation of Yield, Fees, Etc    58
Section 3.5.    Utilization    58
ARTICLE IV PAYMENTS; TAXES    59
Section 4.1.    Making of Payments    59
Section 4.2.    Due Date Extension    59
Section 4.3.    Taxes.    59
ARTICLE V INCREASED COSTS, ETC.    63
Section 5.1.    Increased Costs, Capital Adequacy.    63
ARTICLE VI EFFECTIVENESS; CONDITIONS TO ADVANCES    65
Section 6.1.    Effectiveness    65
Section 6.2.    Advances and Reinvestments    66
Section 6.3.    Transfer of Collateral Obligations and Permitted Investments.    69
ARTICLE VII ADMINISTRATION AND SERVICING OF COLLATERAL OBLIGATIONS    70
Section 7.1.    Retention and Termination of the Servicer    70
Section 7.2.    Resignation and Removal of the Servicer; Appointment of Successor Servicer.    70
Section 7.3.    Duties of the Servicer    71
Section 7.4.    Representations and Warranties of the Servicer    72
Section 7.5.    Covenants of the Servicer    75
Section 7.6.    Servicing Fees; Payment of Certain Expenses by Servicer    78
Section 7.7.    Collateral Reporting    78
Section 7.8.    Notices    78
Section 7.9.    Procedural Review of Collateral Obligations; Access to Servicer and Servicer’s Records.    78
Section 7.10.    Optional Sales.    80
Section 7.11.    Repurchase or Substitution of Warranty Collateral Obligations.    81
- i -


TABLE OF CONTENTS
(continued)
Page
Section 7.12.    Servicing of REO Assets.    82
Section 7.13.    Acknowledgment    83
ARTICLE VIII ACCOUNTS; PAYMENTS    84
Section 8.1.    Accounts.    84
Section 8.2.    Excluded Amounts    85
Section 8.3.    Distributions, Reinvestment and Dividends.    86
Section 8.4.    Fees    90
Section 8.5.    Collateral Report    90
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF THE BORROWER    91
Section 9.1.    Organization and Good Standing    91
Section 9.2.    Due Qualification    91
Section 9.3.    Power and Authority    91
Section 9.4.    Binding Obligations    92
Section 9.5.    Security Interest    92
Section 9.6.    No Violation    93
Section 9.7.    No Proceedings    93
Section 9.8.    No Consents    93
Section 9.9.    Solvency    93
Section 9.10.    Compliance with Laws    93
Section 9.11.    Taxes    94
Section 9.12.    Collateral Report    94
Section 9.13.    No Liens, Etc    94
Section 9.14.    Information True and Correct    94
Section 9.15.    Bulk Sales    95
Section 9.16.    Collateral    95
Section 9.17.    Selection Procedures    95
Section 9.18.    Indebtedness    95
Section 9.19.    No Injunctions    95
Section 9.20.    No Subsidiaries    95
Section 9.21.    ERISA Compliance    95
Section 9.22.    Investment Company Status    95
Section 9.23.    Set-Off, Etc    96
Section 9.24.    Collections    96
Section 9.25.    Value Given    96
Section 9.26.    Use of Proceeds    96
Section 9.27.    Separate Existence    96
Section 9.28.    Transaction Documents    96
Section 9.29.    EEA Financial Institution    97
Section 9.30.    Anti-Terrorism, Anti-Money Laundering    97
Section 9.31.    Anti-Bribery and Corruption    98
Section 9.32.    Volcker Rule    98
Section 9.33.    AIFMD    98
ARTICLE X COVENANTS    98
Section 10.1.    Protection of Security Interest of the Secured Parties.    98
Section 10.2.    Other Liens or Interests    99
Section 10.3.    Costs and Expenses    100
Section 10.4.    Reporting Requirements    100
Section 10.5.    Separate Existence.    101
- ii -


TABLE OF CONTENTS
(continued)
Page
Section 10.6.    Hedging Agreements.    103
Section 10.7.    Tangible Net Worth    105
Section 10.8.    Taxes    106
Section 10.9.    Merger, Consolidation, Etc    106
Section 10.10.    Deposit of Collections    106
Section 10.11.    Indebtedness; Guarantees    106
Section 10.12.    Limitation on Purchases from Affiliates    106
Section 10.13.    Documents    106
Section 10.14.    Preservation of Existence    107
Section 10.15.    Limitation on Investments    107
Section 10.16.    Distributions.    107
Section 10.17.    Performance of Borrower Assigned Agreements    107
Section 10.18.    Material Modifications    108
Section 10.19.    Further Assurances; Financing Statements.    108
Section 10.20.    Obligor Payment Instructions    108
Section 10.21.    Delivery of Collateral Obligation Files    109
Section 10.22.    Risk Retention.    109
Section 10.23.    Proceedings    112
Section 10.24.    Officer’s Certificate    113
Section 10.25.    Policies and Procedures for Sanctions    113
Section 10.26.    Compliance with Sanctions    113
Section 10.27.    Compliance with Anti-Money Laundering    113
Section 10.28.    Ineligible Collateral    113
Section 10.29.    ERISA    113
Section 10.30.    RiskCalc    114
Section 10.31.    Credit Estimate Procedures    114
Section 10.32.    Collateral Obligation Schedule    114
ARTICLE XI THE COLLATERAL AGENT    114
Section 11.1.    Appointment of Collateral Agent    114
Section 11.2.    Collateral Reports    115
Section 11.3.    Collateral Administration    115
Section 11.4.    Removal or Resignation of Collateral Agent    118
Section 11.5.    Representations and Warranties    119
Section 11.6.    No Adverse Interest of Collateral Agent    119
Section 11.7.    Reliance of Collateral Agent    119
Section 11.8.    Limitation of Liability and Collateral Agent Rights.    120
Section 11.9.    Tax Reports    122
Section 11.10.    Merger or Consolidation    122
Section 11.11.    Collateral Agent Compensation    123
Section 11.12.    Compliance with Applicable Anti-Bribery and Corruption, Anti-Terrorism and Money Laundering Regulations    123
Section 11.13.    Collateral Agent’s Website.    123
ARTICLE XII GRANT OF SECURITY INTEREST    124
Section 12.1.    Borrower’s Grant of Security Interest    124
Section 12.2.    Borrower Remains Liable    125
Section 12.3.    Release of Collateral    126
Section 12.4.    Collateral Assignment of Agreements    126
ARTICLE XIII EVENTS OF DEFAULT    127
- iii -


TABLE OF CONTENTS
(continued)
Page
Section 13.1.    Events of Default    127
Section 13.2.    Effect of Event of Default.    130
Section 13.3.    Rights upon Event of Default    130
Section 13.4.    Collateral Agent May Enforce Claims Without Possession of Notes    131
Section 13.5.    Collective Proceedings    131
Section 13.6.    Insolvency Proceedings    131
Section 13.7.    Delay or Omission Not Waiver    132
Section 13.8.    Waiver of Stay or Extension Laws    132
Section 13.9.    Limitation on Duty of Collateral Agent in Respect of Collateral.    133
Section 13.10.    Power of Attorney.    133
ARTICLE XIV THE FACILITY AGENT    134
Section 14.1.    Appointment    134
Section 14.2.    Delegation of Duties    134
Section 14.3.    Exculpatory Provisions    134
Section 14.4.    Reliance by the Facility Agent    135
Section 14.5.    Notices    135
Section 14.6.    Non-Reliance on the Facility Agent    135
Section 14.7.    Indemnification    136
Section 14.8.    Successor Facility Agent    136
Section 14.9.    Facility Agent in its Individual Capacity    137
Section 14.10.    Compliance with Applicable Anti-Bribery and Corruption, Anti-Terrorism and Money Laundering Regulations    137
Section 14.11.    Erroneous Payments.    137
ARTICLE XV ASSIGNMENTS    140
Section 15.1.    Restrictions on Assignments    140
Section 15.2.    Documentation    140
Section 15.3.    Rights of Assignee    140
Section 15.4.    Assignment by Lenders    140
Section 15.5.    Registration; Registration of Transfer and Exchange.    141
Section 15.6.    Mutilated, Destroyed, Lost and Stolen Notes.    142
Section 15.7.    Persons Deemed Owners    143
Section 15.8.    Cancellation    143
Section 15.9.    Participations; Pledge.    143
Section 15.10.    Reallocation of Advances    144
ARTICLE XVI INDEMNIFICATION    144
Section 16.1.    Borrower Indemnity    144
Section 16.2.    Servicer Indemnity    145
Section 16.3.    Contribution.    146
Section 16.4.    After-Tax Basis    146
ARTICLE XVII MISCELLANEOUS    146
Section 17.1.    No Waiver; Remedies    146
Section 17.2.    Amendments, Waivers    147
Section 17.3.    Notices, Etc    148
Section 17.4.    Costs and Expenses    148
Section 17.5.    Binding Effect; Survival    150
Section 17.6.    Captions and Cross References    150
Section 17.7.    Severability    150
- iv -


TABLE OF CONTENTS
(continued)
Page
Section 17.8.    GOVERNING LAW    150
Section 17.9.    Counterparts    150
Section 17.10.    WAIVER OF JURY TRIAL    151
Section 17.11.    No Proceedings.    151
Section 17.12.    Limited Recourse    151
Section 17.13.    ENTIRE AGREEMENT    152
Section 17.14.    Confidentiality.    152
Section 17.15.    Mitigation; Replacement of Lenders.    153
Section 17.16.    Consent to Jurisdiction    154
Section 17.17.    Option to Acquire Rating    154
Section 17.18.    Limited Liability Company Formalities    154
Section 17.19.    Intent of the Parties    155
Section 17.20.    Adequacy of Monetary Damages    155
Section 17.21.    Covered Transactions    155
Section 17.22.    Waiver of Setoff    155
Section 17.23.    Acknowledgment and Consent to Bail-In of EEA Financial Institutions    155
ARTICLE XVIII COLLATERAL CUSTODIAN    156
Section 18.1.    Designation of Collateral Custodian    156
Section 18.2.    Duties of the Collateral Custodian.    156
Section 18.3.    Delivery of Collateral Obligation Files.    158
Section 18.4.    Collateral Obligation File Certification.    158
Section 18.5.    Release of Collateral Obligation Files.    159
Section 18.6.    Examination of Collateral Obligation Files    161
Section 18.7.    Lost Note Affidavit    161
Section 18.8.    Transmission of Collateral Obligation Files    161
Section 18.9.    Merger or Consolidation    162
Section 18.10.    Collateral Custodian Compensation    162
Section 18.11.    Removal or Resignation of Collateral Custodian.    162
Section 18.12.    Limitations on Liability.    163
Section 18.13.    Collateral Custodian as Agent of Collateral Agent    164
Section 18.14.    Authorization    164

- v -




EXHIBIT A    Form of Note
EXHIBIT B    Audit Standards
EXHIBIT C-1    Form of Advance Request
EXHIBIT C-2    Form of Reinvestment Request
EXHIBIT C-3    Form of Electronic Asset Approval Request
EXHIBIT D    Form of Collateral Report
EXHIBIT E    [Reserved]
EXHIBIT F-1    Authorized Representatives of Servicer
EXHIBIT F-2    Request for Release and Receipt
EXHIBIT F-3    Request for Release and Receipt (Liquidation or Optional Sale)
EXHIBIT G-1    U.S. Tax Compliance Certificate (Foreign Lender - non-Partnerships)
EXHIBIT G-2    U.S. Tax Compliance Certificate (Foreign Participant - non-Partnerships)
EXHIBIT G-3    U.S. Tax Compliance Certificate (Foreign Participants - Partnerships)
EXHIBIT G-4    U.S. Tax Compliance Certificate (Foreign Lenders - Partnerships)
EXHIBIT H    Schedule of Collateral Obligations Certification
EXHIBIT I     Form of Prepayment Notice
EXHIBIT J    Form of Joinder Agreement
EXHIBIT K    Form of Collateral Custodian Certification
SCHEDULE 1    Diversity Score Calculation
SCHEDULE 2    Moody’s Industry Classification Group List
SCHEDULE 3    Collateral Obligations
SCHEDULE 4    Moody’s RiskCalc Calculation



- vi -



LOAN FINANCING AND SERVICING AGREEMENT
THIS LOAN FINANCING AND SERVICING AGREEMENT is made and entered into as of March 20, 2024, among CAPITAL SOUTHWEST SPV LLC, a Delaware limited liability company (the “Borrower”), CAPITAL SOUTHWEST CORPORATION, a Texas corporation, as equityholder (in such capacity, together with its successors and permitted assigns in such capacity, the “Equityholder”), the SERVICER (as hereinafter defined), each LENDER (as hereinafter defined) FROM TIME TO TIME PARTY HERETO, U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Collateral Agent (as hereinafter defined), U.S. BANK NATIONAL ASSOCIATION, as Collateral Custodian (as hereinafter defined), and DEUTSCHE BANK AG, NEW YORK BRANCH, as Facility Agent (in such capacity, together with its successors and permitted assigns in such capacity, the “Facility Agent”).
RECITALS
WHEREAS, the Borrower desires that each Lender extend financing on the terms and conditions set forth herein and also desires to retain the Servicer to perform certain servicing functions related to the Collateral Obligations (as defined herein) on the terms and conditions set forth herein; and
WHEREAS, each Lender desires to extend financing on the terms and conditions set forth herein and the Servicer desires to perform certain servicing functions related to the Collateral Obligations on the terms and conditions set forth herein.
NOW, THEREFORE, based upon the foregoing Recitals, the premises and the mutual agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I

DEFINITIONS
Section 1.1.    Defined Terms. As used in this Agreement, the following terms have the following meanings:
1940 Act” means the Investment Company Act of 1940, as amended.
Account” means the Unfunded Exposure Account, the Principal Collection Account and the Interest Collection Account, together with any sub-accounts deemed appropriate or necessary by the Securities Intermediary, for convenience in administering such accounts.
Account Collateral” has the meaning set forth in Section 12.1(d).
Account Control Agreement” means the Securities Account Control Agreement, dated as of the Effective Date, by and among the Borrower, as pledgor, the Collateral Agent on behalf of the Secured Parties, as secured party, and the Securities Intermediary.
Accrual Period” means, with respect to any Distribution Date, the period from and including the previous Distribution Date (or, in the case of the first Distribution Date, from and including the Effective Date) through and including the day preceding such Distribution Date.



Adjusted Aggregate Eligible Collateral Obligation Balance” means, as of any date, the Aggregate Eligible Collateral Obligation Amount minus the Excess Concentration Amount on such date.
Advance” and “Advances” each has the meaning set forth in Section 2.1(a).
Advance Date” has the meaning set forth in Section 2.1(a).
Advance Rate” means, with respect to any Eligible Collateral Obligation on any date of determination, as determined by the Facility Agent in its sole discretion, (a) that is a First Lien Loan, 70.0% (subject to clauses, (b), (c) and (d)); (b) that is a First Lien Loan with a trailing twelve month EBITDA of less than $25,000,000, 65.0%; (c) that is a First Lien Loan that is a Small Obligor Collateral Obligation, 60.0%; (d) that is a First Lien Loan that is a Multiple of Recurring Revenue Loan, 60.0% (or such higher amount as agreed to by the Facility Agent in its sole discretion); (e)(i) that is a FILO Loan with an Attaching Leverage Multiple greater than 1.0x but less than 1.5x, 55.0%, (ii) that is a FILO Loan with an Attaching Leverage Multiple greater than or equal to 1.5x but less than 2.0x, 50.0% or (iii) that is a FILO Loan with an Attaching Leverage Multiple greater than or equal to 2.0x but less than 2.5x, 45.0%; or (f) that is a not a First Lien Loan or that is a FILO Loan with an Attaching Leverage Multiple greater than 2.5x, 35.0%.
Advance Request” has the meaning set forth in Section 2.2(a).
Adverse Claim” means any claim of ownership or any Lien, title retention, trust or other charge or encumbrance, or other type of preferential arrangement having the effect or purpose of creating a Lien, other than Permitted Liens.
Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
Affected Person” has the meaning set forth in Section 5.1.
Affiliate” of any Person means any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person (excluding any trustee under, or any committee with responsibility for administering, any employee benefit plan). For the purposes of this definition, “Control” means the possession, directly or indirectly (including through affiliated entities), of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, provision of management services, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.
Agency Rating” means, as of any date of determination, with respect to any Collateral Obligation (a) if a public rating of such Collateral Obligation is available from Moody’s, S&P or Fitch, then such rating (and, if available from more than one, the lowest of such ratings), (b) if no such rating described in clause (a) is available but such Collateral Obligation has a credit estimate assigned (or affirmed) within the last twelve months by Moody’s, S&P or Fitch, then such credit estimate (and, if assigned or affirmed by more than one, the lowest of such ratings), (c) if no rating described in clause (a) or (b) is available, the rating that is one notch below the .EDF (as defined on Schedule 4) used to determine the “Agency Rating” in accordance with Moody’s RiskCalc for such Collateral Obligation, as updated in accordance with Section 10.28, or (d) if no rating is obtained through clause (a), (b) or (c), the Borrower or Servicer shall assign a rating of “Caa2”; provided that for purposes of calculating an Agency Rating, each applicable rating on credit watch by a Rating Agency that is on (i) positive watch will be treated as having been upgraded by one rating subcategory, (ii) negative watch will be treated as having been
2



downgraded by two rating subcategories, (iii) positive outlook will not be treated as having been upgraded by any rating subcategories and (iv) negative outlook will be treated as having been downgraded by one rating subcategory.
Agent Fee Letter” means that certain fee letter, dated as of the date hereof, by and between the Borrower and the Facility Agent.
Aggregate Eligible Collateral Obligation Amount” means, as of any date, the sum of the Collateral Obligation Amounts for all Eligible Collateral Obligations.
Aggregate Funded Spread” means, as of any day, the sum of: (a) in the case of each Eligible Collateral Obligation (including, for any Deferrable Collateral Obligation, only the required current cash pay interest thereon) that bears interest at a spread over an index, (A) the excess for each such Collateral Obligation of (x) the sum of (I) the sum of such spread for each such Collateral Obligation and such index (inclusive of any credit adjustment spread, if any) for each such Collateral Obligation plus (II) for each such Collateral Obligation that provides for a minimum index amount, the excess, if any, of such minimum index amount over such index on such date of determination, over (y) Term SOFR in effect for such applicable period of time (which spread or excess may be expressed as a negative percentage) multiplied by (B) the Collateral Obligation Amount of each such Collateral Obligation plus (b) in the case of each Eligible Collateral Obligation (including, for any Deferrable Collateral Obligation, only the required current cash pay interest thereon) that is a Fixed Rate Collateral Obligation, (i) the excess for each such Collateral Obligation of (x) the interest rate for such Collateral Obligation over (y) Term SOFR in effect for the Accrual Period that includes such date of determination multiplied by (ii) the Collateral Obligation Amount of each such Collateral Obligation.
Aggregate Notional Amount” means, as of any date of determination, an amount equal to the sum of the notional amounts or equivalent amounts of all outstanding Hedging Agreements, Replacement Hedging Agreements and Qualified Substitute Arrangements, each as of such date of determination.
Aggregate Unfunded Amount” means, as of any date of determination, the sum of the unfunded commitments and all other standby or contingent commitments associated with each Variable Funding Asset included in the Collateral as of such date. The Aggregate Unfunded Amount shall not include any commitments under Variable Funding Assets that have expired, terminated or been reduced to zero, and shall be reduced concurrently (and upon notice thereof to the Facility Agent) with each documented reduction in commitments of the Borrower under such Variable Funding Assets.
Agreement” means this Loan Financing and Servicing Agreement (including each annex, exhibit and schedule hereto), as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
AIF” has the meaning given to the term under the AIFMD and/or UK AIFM Regulations, as relevant.
AIFM” has the meaning given to the term under the AIFMD and/or UK AIFM Regulations, as relevant.
AIFMD” means (a) Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No. 1060/2009 and (EU) No. 1095/2010, as the same may be amended, supplemented, superseded or re-adopted from time to time (whether
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with or without qualification) and (b) any applicable law of a member state of the European Economic Area implementing the AIFMD.
Alternate Base Rate” means a fluctuating rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the higher of:
(a)    the rate of interest announced publicly by DBNY in New York, New York, from time to time as DBNY’s base commercial lending rate; and
(b)    ½ of one percent above the Federal Funds Rate.
provided, that notwithstanding the foregoing, the Alternate Base Rate shall at no time be less than 0.00% per annum.
Amortization Period” means the period from but excluding the last day of the Revolving Period to but including the Facility Termination Date; provided that in connection with any Non-Extending Lender, “Amortization Period” shall mean the period from but excluding the last day of the Revolving Period in effect immediately prior to the date such Lender becomes a Non-Extending Lender pursuant to Section 2.6 to but including the Facility Termination Date (it being understood that the Amortization Period for a Non-Extending Lender shall commence prior to that of other Lenders and the Applicable Margin in respect of Advances of a Non-Extending Lender may accordingly be higher than that applicable to similar Advances of other Lenders).
Amount Available” means, with respect to any Distribution Date, the sum of (a) the amount of Collections in the Collection Account with respect to the related Collection Period (excluding any Collections necessary to settle the acquisition of Eligible Collateral Obligations), plus (b) any investment income earned on amounts on deposit in the Collection Account since the immediately prior Distribution Date (or since the Effective Date in the case of the first Distribution Date).
Anti-Bribery and Corruption Laws” has the meaning set forth in Section 9.31(a).
Anti-Money Laundering Laws” has the meaning set forth in Section 9.30(b).
Applicable Banking Law” means, for any Person, all existing and future laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including, without limitation, those relating to anti-bribery and corruption, the funding of terrorist activities and money laundering, including the Anti-Money Laundering Laws, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, other applicable anti-bribery and corruption legislation, and Section 326 of the USA Patriot Act.
Applicable Law” means, for any Person, all existing and future laws, rules, regulations (including temporary and final income tax regulations), statutes, treaties, codes, ordinances, permits, certificates, orders, licenses of and interpretations by any Official Body applicable to such Person (including, without limitation, predatory and abusive lending laws, usury laws, the Federal Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson Moss Warranty Act, the FRS Board’s Regulations “B” and “Z”, the Servicemembers Civil Relief Act of 2003 and state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code and all other consumer credit laws and equal credit opportunity and disclosure laws) and applicable judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other administrative, judicial, or quasi-judicial tribunal or agency of competent jurisdiction.
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Applicable Margin” means (i) prior to the Amortization Period, 2.50% per annum (or, on and after the occurrence of any Event of Default, 4.50% per annum) and (ii) during the Amortization Period, 2.85% per annum (or, on and after the occurrence of any Event of Default, 4.85% per annum).
Appraised Value” means, with respect to any Asset Based Loan, the appraised value of the pro rata portion of the underlying collateral securing such Collateral Obligation as determined by an Approved Valuation Firm.
Approved Dealer” means each of the following entities or their Affiliates (or any successor thereto): Bank of America, N. A., Bank of Montreal, Barclays, BNP Paribas, Citibank, Deutsche Bank, Goldman Sachs, Jefferies, JP Morgan, KeyBanc, Macquarie Bank, Morgan Stanley, Nomura, Royal Bank of Canada, Royal Bank of Scotland, Societe Generale, Scotiabank, Truist, UBS, Wells Fargo or any other independent, nationally or internationally recognized third party dealer agreed to by the Required Lenders and the Borrower in writing from time to time; provided, that none of the Servicer or any of their respective Affiliates shall be an Approved Dealer.
Approved Valuation Firm” means, with respect to any Collateral Obligation, any valuation firm that is a Valuation Firm or any other valuation firm with the prior written approval of the Facility Agent in its reasonable discretion.
Article 7 Transparency and Reporting Requirements” means the reporting requirements set out in Article 7(1) of the EU Securitization Regulation, together with any relevant technical standards adopted by the European Commission in relation thereto, and, in each case, any relevant guidance published in relation thereto as may be effective from time to time.
Asset Approval Notice” means an electronic notice in the form of an email containing the information from Exhibit C-3 and that provides the approval of the Facility Agent, in its sole discretion, to the acquisition (or incremental pledge) of one or more Collateral Obligations.
Asset Approval Request” means an electronic notice to the Facility Agent in the form of an email that (a) either (i) is in the form of Exhibit C-3 or (ii) notifies the Facility Agent that the information required by Exhibit C-3 has been posted to the relevant data site and (b) requests the approval of the Facility Agent, in its sole discretion, of one or more Collateral Obligations.
Asset Based Loan” means any Loan where (i) the underwriting of such Loan was based primarily on the appraised value of the assets securing such Loan and (ii) advances in respect of such Loan are governed by a borrowing base relating to certain of the assets securing such Loan.
Attaching Leverage Multiple” means, with respect to any Collateral Obligation, the Leverage Multiple of any Loan of the applicable Obligor secured by all or any portion of the same collateral that is immediately senior in right of payment to such Collateral Obligation.
Automatic Increase Date” means the three-month anniversary of the Effective Date (or, if so requested by the Servicer, such earlier date as notified in writing (which may be via e-mail) to the Facility Agent, the Collateral Agent and each Lender).
Average Life” means, as of any day and with respect to any Collateral Obligation, the quotient obtained by dividing (i) the sum of the products of (a) the number of years (rounded up to the nearest one hundredth thereof) from such day to the respective dates of each successive Scheduled Collateral Obligation Payment of principal on such Collateral Obligation (assuming, for purposes of this definition, the full exercise of any option to extend the maturity date or otherwise lengthen the maturity schedule that is exercisable without the consent of the Borrower)
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multiplied by (b) the respective amounts of principal of such Scheduled Collateral Obligation Payments by (ii) the sum of all successive Scheduled Collateral Obligation Payments of principal on such Collateral Obligation.
Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. § 101, et seq., as amended.
Base Rate” for any Advance means a rate per annum equal to Term SOFR for such Advance or portion thereof; provided, that in the case of
(a)    any day on or after the first day on which a Lender shall have notified the Facility Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other Official Body asserts that it is unlawful, for such Lender to fund such Advance at the Base Rate set forth above (and such Lender shall not have subsequently notified the Facility Agent that such circumstances no longer exist), or
(b)    any period in the event Term SOFR is not reasonably available to any Lender for such period,
the “Base Rate” shall be a floating rate per annum equal to the Alternate Base Rate in effect on each day of such period.
Basel III Regulation” means, with respect to any Affected Person, any rule, regulation or guideline applicable to such Affected Person and arising directly or indirectly from (a) any of the following documents prepared by the Basel Committee on Banking Supervision of the Bank of International Settlements: (i) Basel III: International Framework for Liquidity Risk Measurement, Standards and Monitoring (December 2010), (ii) Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems (June 2011), (iii) Basel III: The Liquidity Coverage Ratio and Liquidity Risk Monitoring Tools (January 2013), or (iv) any document supplementing, clarifying or otherwise relating to any of the foregoing, or (b) any accord, treaty, statute, law, rule, regulation, guideline or pronouncement (whether or not having the force of law) of any Official Body implementing, furthering or complementing any of the principles set forth in the foregoing documents of strengthening capital and liquidity, in each case as from time to time amended, restated, supplemented or otherwise modified. Without limiting the generality of the foregoing, “Basel III Regulation” shall include Part 6 of the European Union regulation 575/2013 on prudential requirements for credit institutions and investment firms (the “CRR”) and any law, regulation, standard, guideline, directive or other publication supplementing or otherwise modifying the CRR.
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Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation, which certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published in May 2018 to comply with the Financial Crimes Enforcement Network customer due diligence rules.
Beneficial Ownership Regulation” means 31 C.F.R. §1010.230.
Benefit Plan Investor” means (a) any “employee benefit plan” (as defined in Section 3(3) of Title I of ERISA) that is subject to the fiduciary responsibility provisions of Title I of ERISA, (b) any “plan” as defined in Section 4975(e) of the Code that is subject to Section 4975 of the Code, (c) any governmental or other plan or arrangement that is not subject to ERISA or to Section 4975 of the Code but is subject to any law or restriction substantially similar to Section 406 of ERISA or Section 4975 of the Code or (d) any entity whose underlying assets include “plan assets” of the foregoing employee benefit plans or plans (within the meaning of the DOL Regulations or otherwise).
Borrower” has the meaning set forth in the Preamble.
Borrower Assigned Agreements” has the meaning set forth in Section 12.1(c).
Borrowing Base” means, on any date of determination, (i) the product of the lower of (a) the Weighted Average Advance Rate and (b) the Maximum Portfolio Advance Rate multiplied by the Adjusted Aggregate Eligible Collateral Obligation Balance plus (ii) the amount of Principal Collections on deposit in the Principal Collection Account minus (iii) the Aggregate Unfunded Amount plus (iv) the amount on deposit in the Unfunded Exposure Account.
Business Day” means any day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York or the city in which the Corporate Trust Office of the Collateral Agent or Collateral Custodian are located are authorized or obligated by law, executive order or government decree to remain closed. All references to any “day” or any particular day of any “calendar month” shall mean calendar day unless otherwise specified.
Capped Fees/Expenses” means, at any time, the Collateral Agent Fees and Expenses and the Collateral Custodian Fees and Expenses, in an aggregate amount not to exceed $220,000 in any calendar year.
Cause” means, with respect to an Independent Manager, (i) acts or omissions by such Independent Manager that constitute willful misconduct of such Independent Manager’s duties as set forth in the Borrower’s organizational documents, (ii) that such Independent Manager has engaged in or has been charged with, or has been convicted of, fraud or other acts constituting a crime under any law applicable to such Independent Manager, (iii) that such Independent Manager is unable to perform his or her duties as Independent Manager due to death, disability or incapacity, or (iv) that such Independent Manager no longer meets the definition of Independent Manager.
Change of Control” means any of (a) the Equityholder shall no longer own 100% of the equity interests of the Borrower free and clear of any liens; (b) the Equityholder ceases to Control (as defined in the definition of “Affiliate”) the Borrower; or (c) with respect to Capital Southwest Corporation, the occurrence of an event where any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act or any successor provisions), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than the owners of Capital Southwest Corporation as of the date hereof and their Affiliates, (i) becomes the “beneficial
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owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the total voting power of Capital Southwest Corporation (for purposes of this clause (c), such person or group shall be deemed to beneficially own any voting stock of a corporation held by any other corporation (the “parent corporation”) so long as such person or group beneficially owns, directly or indirectly, in the aggregate at least a majority of the total voting power of the voting stock of such parent corporation).
Charges” means (i) all federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to the PBGC at the time due and payable); (ii) all levies, assessments, charges, or claims of any governmental entity or any claims of statutory lienholders, the nonpayment of which could give rise by operation of law to a Lien on the Collateral Obligations or any other property of the Borrower and (iii) any such taxes, levies, assessment, charges or claims which constitute a Lien or encumbrance on any property of the Borrower.
Code” means the Internal Revenue Code of 1986, as amended.
Collateral” has the meaning set forth in Section 12.1.
Collateral Agent” means U.S. Bank Trust Company, National Association, solely in its capacity as Collateral Agent, together with its successors and permitted assigns in such capacity.
Collateral Agent and Collateral Custodian Fee Letter” means that certain letter agreement among the Collateral Agent, the Collateral Custodian, the Securities Intermediary and the Borrower and acknowledged by the Facility Agent, as the same may be amended, supplemented or otherwise modified by the parties thereto with the consent of the Facility Agent.
Collateral Agent Fees and Expenses” has the meaning set forth in Section 11.11.
Collateral Agent’s Website” means that certain internet website of the Collateral Agent initially located at https://pivot.usbank.com.
Collateral Custodian” means U.S. Bank National Association, solely in its capacity as collateral custodian, together with its successors and permitted assigns in such capacity.
Collateral Custodian Fees and Expenses” has the meaning set forth in Section 18.10.
Collateral Database” has the meaning set forth in Section 11.3(a)(i).
Collateral Obligation” means a Loan or Participation Interest owned by the Borrower, excluding the Retained Interest thereon.
Collateral Obligation Amount” means for any Collateral Obligation, as of any date of determination, an amount equal to the product of (i) the Discount Factor of such Collateral Obligation at such time multiplied by (ii) the Principal Balance of such Collateral Obligation at such time; provided that the Collateral Obligation Amount of any Collateral Obligation that ceases to be or otherwise is not an Eligible Collateral Obligation or that was subject to a Material Modification without the consent of the Facility Agent shall be zero.
Collateral Obligation File” means, with respect to each Collateral Obligation as identified on the related Document Checklist, in each case in English, (i) if the Collateral Obligation includes a promissory note, (x) an original, executed copy of the related promissory note, or (y) in the case of a lost promissory note, a copy of the executed underlying promissory note accompanied by an original executed affidavit and indemnity endorsed by the Borrower in
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blank, in each case with respect to clause (x) or clause (y) with an unbroken chain of endorsements from each prior holder of such promissory note to the Borrower or in blank (unless such note is in bearer form, in which case delivery alone shall suffice), or (z) in the case of a noteless Collateral Obligation, a copy of each executed document or instrument evidencing the assignment of such Collateral Obligation to the Borrower, (ii) paper or electronic copies (as indicated on the Schedule of Collateral Obligations and the related Document Checklist) of any related loan agreement, security agreement, mortgage, moveable or immoveable hypothec, deed of hypothec, guarantees, note purchase agreement, intercreditor and/or subordination agreement, each to the extent available with respect to such Collateral Obligation, (iii) paper or electronic copies of (A) the file stamped UCC-1 financing statements, if any, and any related continuation statements (including amendments or modifications thereof), filed against any Obligor thereof or by another Person on the Obligor’s behalf in respect of such Collateral Obligation, with evidence of filing thereon, or (B) copies of any such financing statements certified by the Servicer to be true and complete copies thereof in instances where the original financing statements have been sent to the appropriate public filing office for filing, in each case, as set forth in the Document Checklist (iv) in the case of any Collateral Obligation with respect to which the Equityholder or any Affiliate thereof acts as administrative agent, an assignment and assumption agreement, transfer document or instrument relating to such Collateral Obligation in blank, endorsed by the Equityholder or such Affiliate, and (v) any other document included by the Servicer on the related Document Checklist.
Collateral Obligation Schedule” means the list of Collateral Obligations set forth on Schedule 3, as the same may be updated by the Borrower (or the Servicer on behalf of the Borrower) from time to time.
Collateral Quality Tests” means, collectively or individually as the case may be, the Minimum Diversity Test, the Minimum Weighted Average Spread Test, the Minimum Weighted Average Coupon Test and the Maximum Weighted Average Life Test.
Collateral Report” means a report substantially in the form of Exhibit D prepared as of the close of business on each Reporting Date.
Collection Account” means, collectively, the Principal Collection Account and the Interest Collection Account.
Collection Period” means, with respect to the first Distribution Date, the period from and including the Effective Date to and including the Determination Date preceding the first Distribution Date; and thereafter, the period from but excluding the Determination Date preceding the previous Distribution Date to and including the Determination Date preceding the current Distribution Date.
Collections” means the sum of all Interest Collections and all Principal Collections received with respect to the Collateral.
Commitment” means, for each Lender, (a) prior to the Facility Termination Date, the commitment of such Lender to make Advances to the Borrower in an amount not to exceed, in the aggregate, the amount set forth opposite such Lender’s name on Annex B or pursuant to the assignment executed by such Lender and its assignee(s) and delivered pursuant to Article XV or pursuant to a Joinder Agreement executed and delivered pursuant to Article XV (as such Commitment (x) may be reduced as set forth in Section 2.5 or increased as set forth in Section 2.8 and (y) shall be increased on the Automatic Increase Date), and (b) on and after the earlier to occur of (i) the Facility Termination Date and (ii) the end of the Revolving Period, such Lender’s pro rata share of all Advances outstanding.
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Conforming Changes” means, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Alternate Base Rate, any technical, administrative or operational changes (including the addition of a concept of “interest period”, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods and other technical, administrative or operational matters) that the Facility Agent and the Borrower decide may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Facility Agent in a manner substantially consistent with market practice (or, if the Borrower and Facility Agent decide that adoption of any portion of such market practice is not administratively feasible or if the Borrower and Facility Agent determine that no market practice for the administration of any such rate exists, in such other manner of administration as the Borrower and Facility Agent decide is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).
Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
Corporate Trust Office” means the applicable designated corporate trust office of the Collateral Agent or the Collateral Custodian, as applicable, specified on Annex A hereto, or such other address within the United States as it may designate from time to time by notice to the Facility Agent.
Critical Component” means, in respect of a weapons system referred to in the definition of Prohibited Defense Asset, a component used specifically in the production of the weapons system or plays a direct role in the lethality of the weapons system.
Cut-Off Date” means, with respect to each Collateral Obligation, the date such Collateral Obligation becomes a part of the Collateral.
DBNY” means Deutsche Bank AG, New York Branch, and its successors.
Debt-to-Recurring-Revenue Ratio” means, with respect to any Multiple of Recurring Revenue Loan for any period, the meaning of “Debt-to-Recurring Revenue Ratio” or any comparable definition in the Underlying Instruments for each Loan, and in any case that “Debt-to-Recurring Revenue Ratio” or such comparable definition is not defined in such Underlying Instruments, the ratio of (a) Indebtedness of the related Obligor less Unrestricted Cash, to (b) recurring revenue, as calculated by the Servicer in accordance with the Servicing Standard using information from and calculations consistent with the relevant compliance statements and financial reporting packages provided by the relevant Obligor as per the requirements of the related Underlying Instruments; provided that, in the event of a lack of any such information necessary to calculate the Debt-to-Recurring-Revenue Ratio, a Revaluation Event shall occur as set forth in the definition thereof.
Defaulted Collateral Obligation” means any Collateral Obligation as to which any one of the following events has occurred:
(a)    any Scheduled Collateral Obligation Payment or part thereof is unpaid more than 2 Business Days beyond the grace period (if any) permitted by the related Underlying Instrument;
(b)    an Insolvency Event occurs with respect to the Obligor thereof, unless the related Loan is a DIP Loan;
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(c)    a Responsible Officer of the Servicer or the Borrower has actual knowledge of the occurrence of a default as to the payment of principal or interest which continues for more than two (2) Business Days beyond the grace period (if any) permitted by the related agreement or documentation evidencing such other debt obligation, with respect to another debt obligation of the same Obligor secured by the same collateral and which is either senior to or pari passu with such Collateral Obligation in right of payment;
(d)    such Collateral Obligation has (x) a rating by S&P or Fitch of “CC” or below or “SD” or (y) a Moody’s probability of default rating (as published by Moody’s) of “D” or “LD” or, in each case, had such ratings before they were withdrawn by S&P, Fitch or Moody’s, as applicable, unless the related Loan is a DIP Loan;
(e)    a Responsible Officer of the Servicer or the Borrower has actual knowledge that such Collateral Obligation is pari passu or junior in right of payment as to the payment of principal and/or interest to another debt obligation of the same Obligor which has (i) a rating by S&P or Fitch of “CC” or below or “SD” or (ii) a Moody’s probability of default rating (as published by Moody’s) of “D” or “LD”, and in each case such other debt obligation remains outstanding (provided that both the Collateral Obligation and such other debt obligation are full recourse obligations of the applicable Obligor);
(f)    a Responsible Officer of the Servicer or the Borrower has received written notice or has actual knowledge that a default has occurred under the Underlying Instruments, any applicable grace period has expired and the holders of such Collateral Obligation have accelerated the repayment of such Collateral Obligation (but only until such default is cured or waived) in the manner provided in the Underlying Instruments;
(g)    with respect to any Related Collateral Obligation, an Affiliate of the Borrower that owns the related Variable Funding Asset fails to comply with any funding obligation under such Variable Funding Asset; or
(h)    (i) the Servicer determines, in its sole discretion, in accordance with the Servicing Standard, that all or a portion of such Collateral Obligation is not collectible or otherwise places such Collateral Obligation on non-accrual status or (ii) the Borrower or the Equityholder makes a realized loss (other than with respect to any obligation or portion thereof held by the Borrower or the Equityholder, the sale of which results in a realized loss) or write-down on such Collateral Obligation in the Borrower’s or the Equityholder’s financial statements (other than, with respect to the Borrower and the Equityholder, any write-down of a Collateral Obligation that results from the Servicer’s periodic valuation determinations and is not due to a determination by the Servicer that the Collateral Obligation is impaired or not collectible in whole or in part).
Defaulting Lender” means, subject to Section 2.9(b), any Lender that (a) has failed to (i) fund all or any portion of its Advances within two Business Days of the date such Advances were required to be funded hereunder unless such Lender notifies the Facility Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Facility Agent or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Borrower or the Facility Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lenders’ obligation to fund an Advance hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public
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statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Facility Agent or the Borrower, to confirm in writing to the Facility Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Facility Agent and the Borrower), or (d) the Facility Agent has received notification that such Lender has, or has a direct or indirect parent company that (i) has become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-in Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by an Official Body so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Official Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Facility Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.9(b)) upon delivery of written notice of such determination to the Borrower and each Lender.
Deferrable Collateral Obligation” means a Collateral Obligation that by its terms permits the deferral or capitalization of payment of accrued and unpaid interest.
Determination Date” means the last calendar day of each month, or if such day is not a Business Day, the preceding Business Day.
DIP Loan” means any Loan made to a debtor-in-possession pursuant to Section 364 of the Bankruptcy Code having the priority allowed by either Section 364(c) or 364(d) of the Bankruptcy Code and fully secured by senior Liens.
Discount Factor” means, with respect to each Collateral Obligation and as of any date of determination, the value (expressed as a percentage of par) of such Collateral Obligation as determined by the Facility Agent in its sole discretion in accordance with Section 2.7.
Distribution Date” means the 25th day of each calendar month, or if such day is not a Business Day, the next succeeding Business Day, commencing in May, 2024.
Diversity Score” means, as of any day, a single number that indicates collateral concentration in terms of both issuer and industry concentration, calculated as set forth in Schedule 1 hereto, as such diversity scores shall be updated if Moody’s publishes revised criteria and such revised criteria is consistent with the internal methodology of the Facility Agent.
Document Checklist” means an electronic or hard copy list delivered by the Borrower (or by the Servicer on behalf of the Borrower) to the Collateral Custodian that identifies each of the documents contained in each Collateral Obligation File and whether such document is an original or a copy and whether a hard copy or electronic copy will be delivered to the Collateral Custodian related to a Collateral Obligation and includes the name of the Obligor with respect to such Collateral Obligation, in each case as of the related Funding Date.
DOL Regulations” means regulations promulgated by the U.S. Department of Labor at 29 C.F.R. § 2510.3 101, as modified by Section 3(42) of ERISA, and at 29 C.F.R. § 2550.401c-1.
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Dollar(s)” and the sign “$” mean lawful money of the United States of America.
EBITDA” means, with respect to any period and any Collateral Obligation, the meaning of “EBITDA,” “Adjusted EBITDA” or any comparable definition in the Underlying Instruments for each such Collateral Obligation. In any case that “EBITDA,” “Adjusted EBITDA” or such comparable definition is not defined in such Underlying Instruments, an amount, for the related Obligor and any of its parents or Subsidiaries that are obligated with respect to such Collateral Obligation pursuant to its Underlying Instruments (determined on a consolidated basis without duplication in accordance with GAAP) equal to earnings from continuing operations for such period plus interest expense, income taxes, depreciation and amortization and, to the extent approved by the Facility Agent on a Collateral Obligation by Collateral Obligation basis, any other costs and expenses reducing earnings and other extraordinary non-recurring costs and expenses for such period (to the extent deducted in determining earnings from continuing operations for such period).
EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
Effective Advance Rate” means, on any date of determination, (a) the Advances outstanding on such date divided by (b) the sum of (i) the Adjusted Aggregate Eligible Collateral Obligation Balance on such date plus (ii) the amount of Principal Collections on deposit in the Principal Collection Account on such date minus (iii) the Aggregate Unfunded Amount on such date plus (iv) the amount on deposit in the Unfunded Exposure Account on such date.
Effective Date” has the meaning set forth in Section 6.1.
Effective Equity” means, as of any day, the greater of (x) the sum of the Collateral Obligation Amount of all Eligible Collateral Obligations minus the outstanding principal amount of all Advances and (y) $0.
Effective Loan Level LTV” means, with respect to any Enterprise Value Loan as of the related Cut-Off Date, the result of the calculation, made in good faith, pursuant to the applicable definition for such Enterprise Value Loan in the Servicer’s investment committee memo.
Effective LTV” means, with respect to any Asset Based Loan as of any date of determination, (i) the Principal Balance of such Collateral Obligation divided by (ii) the Appraised Value of such Collateral Obligation as of such date of determination.
Eligible Account” means (i) a segregated account or (ii) a segregated direct deposit account, in each case, maintained with a securities intermediary or trust company organized under the laws of the United States of America, or any of the States thereof, or the District of Columbia, having a certificate of deposit, short-term deposit, short-term issuer or commercial paper rating of at least A-1 by S&P and P-1 by Moody’s. In either case, such depository
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institution or trust company shall have been approved by the Facility Agent, acting in its reasonable discretion, by written notice to the Servicer. DBNY and U.S. Bank National Association are deemed to be acceptable securities intermediaries to the Facility Agent.
Eligible Collateral Obligation” means, on any Measurement Date, each Collateral Obligation that satisfies the following conditions (unless otherwise (i) added by the Facility Agent (subject to the consent of the Borrower) or (ii) waived by the Facility Agent in its sole discretion in writing or in the related Asset Approval Notice):
(a)    the Facility Agent in its respective sole discretion has delivered an Asset Approval Notice with respect to such Collateral Obligation, which has been acknowledged and agreed by the Borrower;
(b)    such Collateral Obligation is not a Defaulted Collateral Obligation;
(c)    such Collateral Obligation is not an Equity Security and is not convertible into an Equity Security at the option of the applicable Obligor or any Person other than the Borrower;
(d)    such Collateral Obligation is not a Structured Finance Obligation;
(e)    such Collateral Obligation is denominated in Dollars and is not convertible by the Obligor thereof into any currency other than Dollars;
(f)    such Collateral Obligation is not a single-purpose real estate based loan (unless the related real estate is a hotel, casino or other operating company), a construction loan or a project finance loan;
(g)    such Collateral Obligation is not a lease (including a financing lease);
(h)    if such Collateral Obligation is a Deferrable Collateral Obligation, it provides for periodic payments of interest thereon in cash no less frequently than semi-annually and the portion of interest required to be paid in cash under the terms of the related Underlying Instruments results in the outstanding principal amount of such Collateral Obligation having an effective rate of current interest paid in cash on such day of not less than (i) if such Deferrable Collateral Obligation is a Fixed Rate Collateral Obligation, 5.00% per annum over Term SOFR or (ii) otherwise, 5.00% per annum over the applicable index rate;
(i)    [reserved];
(j)    such Collateral Obligation is not incurred or issued in connection with a merger, acquisition, consolidation, sale of all or substantially all of the assets of a Person, restructuring or similar transaction, which obligation or security by its terms is required to be repaid within one year of the incurrence thereof with proceeds from additional borrowings or other refinancings (other than any additional borrowing or refinancing if one or more financial institutions has provided the issuer of such obligation or security with a binding written commitment to provide the same, so long as (i) such commitment is equal to the outstanding principal amount of such Collateral Obligation and (ii) such committed replacement facility has a maturity of at least one year and cannot be extended beyond such one year maturity pursuant to the terms thereof); provided that, for the avoidance of doubt, this clause (j) shall not be deemed to exclude any DIP Loan;
(k)    such Collateral Obligation is not a trade claim and the value of such Collateral Obligation is not primarily derived from an insurance policy;
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(l)    such Collateral Obligation is not a bond or a floating rate note;
(m)    the Obligor with respect to such Collateral Obligation is an Eligible Obligor;
(n)    such Collateral Obligation is not a purpose credit advanced for the acquisition of Margin Stock;
(o)    such Collateral Obligation is not a security or swap transaction that has payments associated with either payments of interest on and/or principal of a reference obligation or the credit performance of a reference obligation;
(p)    such Collateral Obligation provides for the periodic payment of cash interest;
(q)    such Collateral Obligation has a term to stated maturity that does not exceed eight years;
(r)    such Collateral Obligation is not subject to substantial non-credit related risk, as determined by the Servicer in accordance with the Servicing Standard;
(s)    the acquisition of such Collateral Obligation will not cause the Borrower to be deemed to own 5.0% or more of any class of vested voting securities of any Obligor or 25.0% or more of the total equity of any Obligor or any securities that are immediately convertible into or immediately exercisable or exchangeable for 5.0% or more of any class of vested voting securities of any Obligor or 25.0% or more of the total equity of any Obligor, in each case as determined by the Servicer;
(t)    the Underlying Instrument for which does not contain confidentiality provisions that restrict the ability of any of the Facility Agent, Collateral Agent, Collateral Custodian or the Lenders to exercise its rights under the Transaction Documents, including, without limitation, its rights to review such debt obligation or Participation Interest, the Underlying Instrument and related documents and credit approval file; provided that, a provision which requires the prospective recipient of confidential information to maintain the confidentiality of such information shall not be deemed to restrict the exercise of such rights;
(u)    the acquisition of which is not in violation of Regulation T, U or X of the FRS Board;
(v)    such Collateral Obligation is capable of being transferred to and owned by the Borrower (whether directly or by means of a security entitlement) and of being pledged, assigned or novated by the owner thereof or of an interest therein, subject to customary qualifications for instruments similar to such Collateral Obligation (i) to the Facility Agent, (ii) to any assignee of the Facility Agent permitted or contemplated under this Agreement, (iii) to any Person at any foreclosure or strict foreclosure sale or other disposition initiated by a secured creditor in furtherance of its security interest, and (iv) to commercial banks, financial institutions, offshore and other funds (in each case, including transfer permitted by operation of the UCC);
(w)    the proceeds of such Collateral Obligation will not be used to finance activities of the type engaged in by businesses classified under NAICS Codes 2361 (Residential Building Construction), 2362 (Nonresidential Building Construction), 2371 (Utility System Construction), or 2372 (Land Subdivision);
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(x)    except in the case of Collateral Obligations of Permitted Foreign Obligors, the Related Security for such Collateral Obligation is primarily located in the United States;
(y)    such Collateral Obligation, if rated, does not have an Agency Rating from S&P or Fitch of “CCC-” or below or from Moody’s of “Caa3” or below;
(z)    such Collateral Obligation is not the subject of an Offer, exchange or tender by the related Obligor for cash, securities or any other type of consideration, other than (in the case of any Measurement Date other than a Funding Date) a Permitted Offer, but only to the extent of such Offer;
(aa)    the Equityholder is the originator of at least 50% (measured by total nominal amount) of all Collateral Obligations acquired (or committed to be acquired) by the Borrower, such proportion measured on the basis of the nominal value at each respective acquisition of any Collateral Obligation (other than cash or those acquired from interest proceeds) acquired by the Borrower in aggregate during the term of this Agreement;
(bb)    such Collateral Obligation does not have an Obligor in a Prohibited Industry;
(cc)    the proceeds of such Collateral Obligation will not be used to finance activities within the marijuana industry or the opioid industry, the sale of firearms or any other defense equipment, the development of adult entertainment, any form of betting and gambling (other than a Permitted Gaming Industry) or the making or collection of pay day loans, nor will they be used to provide financing to any industry which is illegal under Applicable Law at the time of acquisition of such Collateral Obligation;
(dd)    if such Collateral Obligation is an Asset Based Loan, the related Underlying Instruments require delivery of a calculation of each related borrowing base in reasonable detail to each lender not less frequently than monthly;
(ee)    if such Collateral Obligation is a Multiple of Recurring Revenue Loan, as of the Cut-Off Date, (i) it is a First Lien Loan, (ii) the related Obligor has annualized Revenue of at least $50,000,000 (calculated using the most recent financial information of such Obligor received by the Borrower or the Servicer prior to the Cut-Off Date), (iii) it has a Debt to-Recurring-Revenue Ratio of less than 3.00x and (iv) has an Effective Loan Level LTV of less than 35%;
(ff)    unless such Collateral Obligation is a Multiple of Recurring Revenue Loan or a Small Obligor Collateral Obligation, such Collateral Obligation has a trailing twelve month EBITDA of greater than $10,000,000;
(gg)    if such Collateral Obligation is a Participation Interest, the seller thereof has (A) long-term unsecured ratings of at least “Baa1” by Moody’s and “BBB+” by S&P and (B) short-term unsecured ratings of at least “A-1” by S&P and “P-1” by Moody’s;
(hh)    such Collateral Obligation was originated or acquired in the ordinary course of business and not primarily for personal, family or household use;
(ii)    such Collateral Obligation is an “instrument” or a “payment intangible” (each as defined under Article 9 of the UCC);
(jj)    such Collateral Obligation and the relevant Underlying Instruments are in full force and effect, free and clear of any liens (other than Permitted Liens); and
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(kk)    such Collateral Obligation does not subject the Borrower to withholding tax unless the Obligor is required to make “gross-up” payments constituting 100% of such withholding on an after-tax basis.
Eligible Obligor” means, on any day, any Obligor that (i) is a Person (other than a natural person) that is duly organized and validly existing under the laws of the United States or any State thereof (provided that Permitted Foreign Obligors with Collateral Obligations constituting no more than 10% of the Excess Concentration Measure may be Eligible Obligors), (ii) is a legal operating entity or holding company, (iii) is not an Official Body, (iv) is not insolvent, (v) is required to pay all maintenance, repair, insurance and taxes related to the related Collateral Obligations, (vi) is not an Affiliate of, or controlled by, the Borrower, the Servicer or the Equityholder or any of their respective Affiliates and (vii) is not a Non-Sustainable Obligor.
Enterprise Value Loan” means any Loan that is not an Asset Based Loan.
Environmental Laws” means any and all foreign, federal, state and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders of courts or any other Official Body, relating to the protection of human health or the environment, including requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials. Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C. § 331 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300, et seq.), the Environmental Protection Agency’s regulations relating to underground storage tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the rules and regulations thereunder, each as amended or supplemented from time to time.
Equity Interest” has the meaning set forth in Section 10.22(a).
Equity Security” means any asset that is not a First Lien Loan or Second Lien Loan.
Equityholder” has the meaning set forth in the Preamble.
ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended from time to time, including all regulations promulgated thereunder.
ERISA Affiliate” means any Person that, for purposes of Title IV of ERISA, is a member of the Borrower’s “controlled group” or is under “common control” with the Borrower, within the meaning of Section 414 of the Code.
ERISA Event” means (a) the occurrence with respect to a Plan of a reportable event, within the meaning of Section 4043 of ERISA, unless the thirty (30)-day notice requirement with respect thereto has been waived by the PBGC; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such a Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Borrower or any ERISA Affiliate from a Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions set forth in Section 430(k) of the Code or Section 303(k)(1)(A) and (B) of ERISA to the creation of a lien upon property or assets or rights to property or assets of
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the Borrower or any ERISA Affiliate for failure to make a required payment to a Plan are satisfied; (g) the termination of a Plan by the PBGC pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan; (h) any failure by any Plan to satisfy the minimum funding standards of Sections 412 or 430 of the Code or Section 302 of ERISA, whether or not waived; (i) the determination that any Plan is or is expected to be in “at-risk” status, within the meaning of Section 430 of the Code or Section 303 of ERISA, (j) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of liability with respect to the withdrawal or partial withdrawal from a Multiemployer Plan or a determination that a Multiemployer Plan is, or is expected to be, “insolvent” (within the meaning of Section 4245 of ERISA), in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA), or terminated (within the meaning of Section 4041A or Section 4042 of ERISA); (k) the failure of the Borrower or any ERISA Affiliate to pay when due (after expiration of any applicable grace period) any installment payment with respect to withdrawal liability under Section 4201 of ERISA; (l) the Borrower or any ERISA Affiliate incurs any liability under Title IV of ERISA with respect to any Plan (other than premiums due and not delinquent under Section 4007 of ERISA); or (m) the Borrower or any ERISA Affiliate commits any act (or omission) which could give rise to the imposition of fines, penalties, taxes, or related charges under ERISA or the Code.
Erroneous Payment” has the meaning assigned to it in Section 14.11(a).
Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 14.11(d).
Erroneous Payment Impacted Class” has the meaning assigned to it in Section 14.11(d).
Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 14.11(d).
Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 14.11(d).
EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
EU Risk Retention Requirement” means the risk retention requirement under Article 6(1) of the EU Securitization Regulation.
EU Securitization Regulation” means Regulation (EU) 2017/2402 (as amended by Regulation (EU) 2021/557); and, except as otherwise stated, means such Regulation as further amended from time to time.
EU Securitization Rules” means (a) the EU Securitization Regulation; (b) all regulatory and/or implementing technical standards adopted by the European Commission in relation thereto; (c) any official binding guidance published in relation thereto by the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority (including any predecessor, successor or replacement organization thereto) or by the European Commission; and (d) any implementing laws or regulations (all, except as otherwise stated, as amended from time).
Event of Default” means any of the events described in Section 13.1.
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Excess Concentration Amount” means, as of the most recent Measurement Date (and after giving effect to all Collateral Obligations to be purchased or sold by the Borrower on such date), the sum, without duplication, of the following amounts:
(a)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are not First Lien Loans over 15.0% of the Excess Concentration Measure; provided that, the sum of the Collateral Obligation Amounts of all Collateral Obligations that are Second Lien Loans shall not exceed 7.5% of the Excess Concentration Measure (with any excess being included in the Excess Concentration Amount);
(b)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are obligations of any single Obligor (other than an Obligor described in the following provisos) over 5.0% of the Excess Concentration Measure; provided that with respect to the two Obligors that represent the highest individual Collateral Obligation Amounts out of all single Obligors, the sum of the Collateral Obligation Amounts of all Collateral Obligations that are obligations of such two Obligors may collectively be up to 7.5% of the Excess Concentration Measure; provided further, that with respect to the three Obligors that represent the highest individual Collateral Obligation Amounts out of all single Obligors, the sum of the Collateral Obligation Amounts of all Collateral Obligations that are obligations of such three Obligors may collectively be up to 10.0% of the Excess Concentration Measure;
(c)    notwithstanding clause (e) below, the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations in the Moody’s Industry Classifications Energy: Oil & Gas and Utilities: Oil & Gas, over 10.0% of the Excess Concentration Measure (which limit shall at all times remain 10.0% and shall not be construed as being in addition to the concentration limits set forth in clause (e) below);
(d)    notwithstanding clause (e) below, the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations in the Moody’s Industry Classification Retail, over 10.0% of the Excess Concentration Measure (which limit shall not be construed as being in addition to the concentration limits set forth in clause (e) below);
(e)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations in any single Moody’s Industry Classification (other than as described in the following proviso) over 10.0% of the Excess Concentration Measure; provided that, (w) the sum of the Collateral Obligation Amounts of all Collateral Obligations in the largest Moody’s Industry Classification may be up to 22.5% of the Excess Concentration Measure; (x) the sum of the Collateral Obligation Amounts of all Collateral Obligations in the second-largest Moody’s Industry Classification may be up to 17.5% of the Excess Concentration Measure; (y) the sum of the Collateral Obligation Amounts of all Collateral Obligations in the third-largest Moody’s Industry Classification may be up to 15.0% of the Excess Concentration Measure; and (z) the sum of the Collateral Obligation Amounts of all Collateral Obligations in the fourth-largest Moody’s Industry Classification may be up to 12.5% of the Excess Concentration Measure;
(f)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Loans that are Fixed Rate Collateral Obligations that are not subject to a qualifying Hedging Agreement pursuant to Section 10.6 over 10.0% of the Excess Concentration Measure;
(g)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are Deferrable Collateral Obligations over 10.0% of the Excess Concentration Measure;
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(h)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are Variable Funding Assets over 5.0% of the Excess Concentration Measure;
(i)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are DIP Loans over 10.0% of the Excess Concentration Measure;
(j)    [reserved];
(k)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are in a Permitted Gaming Industry over 5.0% of the Excess Concentration Measure;
(l)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are in the defense industry (other than a Prohibited Defense Asset) over 10.0% of the Excess Concentration Measure;
    (m)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that do not satisfy the requirements of an “Eligible Collateral Obligation” but are nonetheless approved by the Facility Agent in its sole discretion as “Eligible Collateral Obligations” over 20% of the Excess Concentration Measure; provided that if any such Collateral Obligation’s failure to satisfy the requirements of an “Eligible Collateral Obligation” is subsequently waived by the Facility Agent, then such Collateral Obligation shall not be included in the calculation of this clause (m);
(n)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations with a primary Obligor domiciled in a jurisdiction other than the United States or any State thereof over 10% of the Excess Concentration Measure;
(o)    [reserved];
(p)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are Participation Interests over 5% of the Excess Concentration Measure;
(q)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are Multiple of Recurring Revenue Loans over 10% of the Excess Concentration Measure;
(r)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that are Small Obligor Collateral Obligations over 30% of the Excess Concentration Measure; provided that the sum of the Collateral Obligation Amounts of all Collateral Obligations that are Small Obligor Collateral Obligations with a trailing twelve month EBITDA of less than $5,000,000 shall not exceed 15% of the Excess Concentration Measure (with any excess being included in the Excess Concentration Amount); provided further that the sum of the Collateral Obligation Amounts of all Collateral Obligations that are Small Obligor Collateral Obligations with a Leverage Multiple greater than or equal to 6.00x shall not exceed 5% of the Excess Concentration Measure (with any excess being included in the Excess Concentration Amount); and
(s)    the excess, if any, of the sum of the Collateral Obligation Amounts of all Collateral Obligations that, as of the date of acquisition, are Collateral Obligations that have a stated maturity greater than seven years, over 10% of the Excess Concentration Measure.
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Excess Concentration Measure” means, as of any date of determination (a) during the Ramp-Up Period, the greater of (i) the Target Portfolio Amount and (ii) the Aggregate Eligible Collateral Obligation Amount and (b) after the Ramp-Up Period, the sum of (i) the aggregate of the Collateral Obligation Amounts for all Eligible Collateral Obligations, plus (ii) all amounts on deposit in the Principal Collection Account plus (iii) all amounts on deposit in the Unfunded Exposure Account.
Exchange Act” means the United States Securities Exchange Act of 1934.
Excluded Amounts” means, as of any date of determination, (i) any amount deposited into the Collection Account with respect to any Collateral Obligation, which amount is attributable to the reimbursement of payment by the Borrower of any Tax, fee or other charge imposed by any Official Body on such Collateral Obligation or on any Related Security, (ii) any interest or fees (including origination, agency, structuring, management or other up-front fees) that are for the account of the applicable Person from whom the Borrower purchased such Collateral Obligation, (iii) any reimbursement of insurance premiums, (iv) any escrows relating to Taxes, insurance and other amounts in connection with Collateral Obligations which are held in an escrow account for the benefit of the Obligor and the secured party pursuant to escrow arrangements under Underlying Instruments and (v) any amount deposited into the Collection Account in error (including any amounts relating to any portion of an asset sold by the Borrower and occurring after the date of such sale).
Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in the Obligations or otherwise under a Transaction Document pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Obligations or becomes a party to this Agreement (other than pursuant to Section 17.15) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 4.3, additional amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 4.3(f) or the inaccuracy or deficiency of any form or documentation provided thereunder, (d) any U.S. federal withholding Taxes imposed under FATCA and (e) any U.S. federal backup withholding imposed pursuant to Section 3406 of the Code.
Executive Officer” means, with respect to the Borrower, the Servicer or the Equityholder, the Chief Executive Officer, the Chief Operating Officer of such Person, any manager or any other Person included on the incumbency of the Borrower, Servicer or Equityholder, as applicable, delivered pursuant to Section 6.1 and, with respect to any other Person, the President, Chief Financial Officer or any Vice President.
Extension Request” has the meaning set forth in Section 2.6.
Facility” means the loan facility to be provided to the Borrower pursuant to, and in accordance with, this Agreement.
Facility Agent” has the meaning set forth in the Preamble.
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Facility Amount” means (a) (x) as of the Effective Date and prior to the Automatic Increase Date, $150,000,000 and (y) from the Automatic Increase Date and prior to the end of the Revolving Period, $200,000,000, in each case, unless this amount is permanently reduced pursuant to Section 2.5, in which event it means such lower amount or increased pursuant to Section 2.8 (in which event it means such higher amount) and (b) after the end of the Revolving Period, the Advances outstanding.
Facility Termination Date” means the earlier of (i) March 20, 2029, (ii) the date on which the term of the Equityholder’s existence ends and (iii) the date on which the facility hereunder is terminated pursuant to Section 13.2.
FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), and any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any intergovernmental agreement entered into in connection with such sections of the Code and any legislation, law, regulation or practice enacted or promulgated pursuant to such intergovernmental agreement.
Federal Funds Rate” means, for any period, the greater of (a) 0.0% and (b) a fluctuating rate per annum equal for each day during such period to 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 next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Facility Agent from three federal funds brokers of recognized standing selected by it.
Fee Letter” has the meaning set forth in Section 8.4.
Fees” has the meaning set forth in Section 8.4.
FILO Loan” means a Loan that would constitute a First Lien Loan but that, at any time prior to and/or after an event of default under the related Underlying Instrument of such Loan (or in any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings), will be paid after one or more other obligations issued by the same obligor have been paid in full in accordance with a specified waterfall or other priority of payments, other than as set forth in the proviso to the definition of “First Lien Loan”.
First Lien Loan” means any Loan that (i) is not (and cannot by its terms become) subordinate in right of payment to any obligation of the related Obligor in any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings, (ii) is secured by a pledge of collateral, which security interest is validly perfected and first priority under Applicable Law (subject to liens permitted under the applicable Underlying Instruments that are reasonable for similar loans, and liens accorded priority by law in favor of any Official Body), and (iii) the Servicer determines in good faith that the value of the collateral or the enterprise value securing the Loan on or about the time of acquisition equals or exceeds the outstanding principal balance of the Loan plus the aggregate outstanding balances of all other loans of equal or higher seniority secured by the same collateral; provided that, with respect to any Loan that would otherwise be a First Lien Loan but for the fact that such Loan is subordinated in right of payment to other obligations of the applicable Obligor, such Loan will be deemed to be a First Lien Loan for all purposes hereunder so long as (a) all such obligations that are senior to such Loan do not exceed an amount equal to the product of (i) 25% multiplied by (ii) the aggregate principal amount of senior tranches of such credit facility (including any such revolving tranche
22



or senior tranche as well as the “first lien” tranche acquired by the Borrower) and (b) all such obligations that are senior to such Loan do not represent more than 1.0x of leverage of such Obligor, as reasonably determined by the Facility Agent; provided further that any Loan that would otherwise be a FILO Loan hereunder but has an Attaching Leverage Multiple below 1.0x shall be deemed to be a First Lien Loan for all purposes hereunder. For the avoidance of doubt, DIP Loans shall constitute First Lien Loans.
Fitch” means Fitch Ratings, Inc., Fitch Ratings Ltd. and their subsidiaries, including Derivative Fitch Inc. and Derivative Fitch Ltd. and any successor thereto.
Fixed Rate Collateral Obligation” means any Collateral Obligation that bears a fixed rate of interest.
Foreign Lender” means a Lender that is not a U.S. Person.
FRS Board” means the Board of Governors of the Federal Reserve System and, as applicable, the staff thereof.
Funding Date” means any Advance Date or any Reinvestment Date, as applicable.
GAAP” means generally accepted accounting principles in the United States, which are applicable to the circumstances as of any day.
Hazardous Materials” means all materials subject to any Environmental Law, including materials listed in 49 C.F.R. § 172.101, materials defined as hazardous pursuant to § 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, flammable, explosive or radioactive materials, hazardous or toxic wastes or substances, lead based materials, petroleum or petroleum distillates or asbestos or material containing asbestos, polychlorinated biphenyls, radon gas, urea formaldehyde and any substances classified as being “in inventory”, “usable work in process” or similar classification that would, if classified as unusable, be included in the foregoing definition.
Hedge Breakage Costs” means, with respect to each Hedge Counterparty upon the early termination of any Hedge Transaction with such Hedge Counterparty, the net amount, if any, payable by the Borrower to such Hedge Counterparty for the early termination of that Hedge Transaction or any portion thereof.
Hedge Counterparty” means (a) DBNY and its Affiliates or any Lender and its Affiliates and (b) any other entity that (i) on the date of entering into any Hedge Transaction (x) is an interest rate swap dealer that has been approved in writing by the Facility Agent, and (y) has a long-term unsecured debt rating of not less than “A” by Standard & Poor’s, not less than “A2” by Moody’s and not less than “A” by Fitch (if such entity is rated by Fitch) (the “Long-term Rating Requirement”) and a short-term unsecured debt rating of not less than “A-1” by Standard & Poor’s, not less than “P-1” by Moody’s and not less than “F1” by Fitch (if such entity is rated by Fitch) (the “Short-term Rating Requirement”), and (ii) in a Hedging Agreement (x) consents to the assignment hereunder of the Borrower’s rights under the Hedging Agreement to the Facility Agent on behalf of the Secured Parties and (y) agrees that in the event that Moody’s, S&P or Fitch reduces its long-term unsecured debt rating below the Long-term Rating Requirement or reduces it short-term debt rating below the Short-term Rating Requirement, it shall either collateralize its obligations in a manner reasonably satisfactory to the Facility Agent, or transfer its rights and obligations under each Hedging Agreement (excluding, however, any right to net payments or Hedge Breakage Costs under any Hedge Transaction, to the extent accrued to such date or to accrue thereafter and owing to the transferring Hedge Counterparty as of the date of such transfer) to another entity that meets the Long-term Rating Requirement and
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the Short-term Rating Requirement and has entered into a Hedging Agreement with the Borrower on or prior to the date of such transfer; provided, at the time of entering into a Hedging Agreement, no Hedge Counterparty shall be a Defaulting Lender.
Hedge Transaction” means each interest rate swap, index rate swap or interest rate cap transaction or comparable derivative arrangement between the Borrower and a Hedge Counterparty that is entered into pursuant to Section 10.6 and is governed by a Hedging Agreement.
Hedging Agreement” means the agreement between the Borrower and a Hedge Counterparty that governs one or more Hedge Transactions entered into by the Borrower and such Hedge Counterparty pursuant to Section 10.6, 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, and each “Confirmation” thereunder confirming the specific terms of each such Hedge Transaction or a “Confirmation” that incorporates the terms of such a “Master Agreement” and “Schedule.”
Increased Costs” means, collectively, any increased cost, loss or liability owing to the Facility Agent and/or any other Affected Person under Article V of this Agreement.
Indebtedness” means, with respect to any Person, as of any day, without duplication: (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes, deferrable securities or other similar instruments; (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business; (iv) all obligations of such Person as lessee under capital leases; (v) all non-contingent obligations of such Person to reimburse or prepay any bank or other Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument; (vi) all debt of others secured by a Lien on any asset of such Person, whether or not such debt is assumed by such Person; and (vii) all debt of others guaranteed by such Person and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or otherwise to assure a creditor against loss other than any unfunded commitments of the Borrower with respect to Variable Funding Assets.
Indemnified Amounts” has the meaning set forth in Section 16.1.
Indemnified Party” has the meaning set forth in Section 16.1.
Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Transaction Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
Independent Accountants” means a firm of nationally recognized independent certified public accountants.
Independent Manager” means an individual who has prior experience as an independent director, independent manager or independent member with at least three years of employment experience and who is provided by CT Corporation, Corporation Service Company, Puglisi & Associates, National Registered Agents, Inc., Wilmington Trust Company, Wilmington Trust SP Servicer, Inc., Wilmington Trust, National Association, Stewart Management Company, Lord Securities Corporation or, another nationally or internationally-recognized company (or any other company approved by the Facility Agent) that routinely provides professional Independent Managers or managers in the ordinary course of its business, in each case that is not an Affiliate of the Borrower and that provides professional Independent Managers and other corporate services in the ordinary course of its business, and which individual is duly appointed as an
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Independent Manager and is not, and has never been, and will not while serving as Independent Manager be, any of the following:
(a)    a member, partner, equityholder, manager, director, officer or employee of the Borrower, the Equityholder, or any of their respective equityholders or Affiliates other than as an Independent Manager of the Borrower or an Affiliate of the Borrower or the Equityholder that is not in the direct chain of ownership of the Borrower and that is required by a creditor to be a single purpose bankruptcy remote entity;
(b)    a creditor, supplier or service provider (including provider of professional services) to the Borrower, the Equityholder, or any of their respective equityholders or Affiliates (other than as an employee of a nationally-recognized company that routinely provides professional Independent Managers and other corporate services to the Borrower, the Equityholder or any of their respective Affiliates in the ordinary course of its business);
(c)    a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or
(d)    a Person that controls (whether directly, indirectly or otherwise) any of (a), (b) or (c) above.
Insolvency Event” means, with respect to any Person, (a) the entry 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 federal or state bankruptcy, winding-up, insolvency or other similar 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, or the commencement of an involuntary case under the federal bankruptcy laws, as now or hereinafter in effect, or another present or future federal or state bankruptcy, insolvency or similar law and such case is not dismissed within 45 days, (b) the commencement by such Person of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar 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 such Person shall admit in writing its inability to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing or (c) the dissolution, liquidation or winding up of such Person in accordance with such Person’s governing documents.
Interest Collection Account” means a segregated, non-interest bearing securities account (within the meaning of Section 8-501 of the UCC) number 117951-201, which is created and maintained on the books and records of the Securities Intermediary entitled “Interest Collection Account” in the name of the Borrower and subject to the prior Lien of the Collateral Agent for the benefit of the Secured Parties, which is established and maintained pursuant to Section 8.1(a).
Interest Collections” means, with respect to the Collateral following the applicable Cut-Off Date, (i) all payments and collections owing to or received by the Borrower in its capacity as lender and attributable to interest on any Collateral Obligation or other Collateral, including scheduled payments of interest and payments of interest relating to principal prepayments, all guaranty payments attributable to interest and proceeds of any liquidations, sales, dispositions or securitizations attributable to interest on such Collateral Obligation or other Collateral, (ii) any commitment, ticking, upfront, underwriting, origination or amendment fees received in respect of any Collateral Obligation, (iii) any proceeds received by the Borrower as a result of exercising
25



any Warrant Asset at any time, (iv) any payments received by the Borrower pursuant to any interest rate Hedging Agreement (other than termination, breakage and similar payments) and (v) the earnings on Interest Collections in the Collection Account that are invested in Permitted Investments, in each case other than Retained Interests.
Interest Rate” means, for any Accrual Period and any Lender, a rate per annum equal to the sum of (a) the Applicable Margin and (b) the Base Rate for such Accrual Period.
IRS” means the United States Internal Revenue Service.
Joinder Agreement” means an agreement among the Borrower, a Lender and the Facility Agent in the form of Exhibit J to this Agreement (appropriately completed) delivered in connection with a Person becoming a Lender hereunder, as contemplated by the terms of this Agreement, a copy of which shall be delivered to the Collateral Agent and the Servicer.
Lender” means each lender party hereto with a Commitment.
Lender Allocation Percentage” means (i) if the Effective Advance Rate is equal to or greater than 65%, 50%, (ii) if the Effective Advance Rate is equal to or greater than 55% but less than 65%, 45%, (iii) if the Effective Advance Rate is equal to or greater than 45% but less than 55%, 40%, (iv) if the Effective Advance Rate is less than 45%, 35%; provided that, notwithstanding the foregoing, from and after the occurrence of any Event of Default the Lender Allocation Percentage shall be 100%.
Lender Effective Date” has the meaning set forth in Section 5.1.
Lender Information” has the meaning set forth in Section 1.2(l).
Leverage Multiple” means, with respect to any Collateral Obligation for the most recent relevant period of time for which the Borrower has received the financial statements of the relevant Obligor, the ratio of (i) Indebtedness of the relevant Obligor (other than Indebtedness of such Obligor that is junior in terms of payment or lien subordination (including unsecured Indebtedness) to Indebtedness of such Obligor held by the Borrower) less unrestricted cash of the relevant Obligor to (ii) EBITDA of such Obligor.
Lien” means any security interest, lien, charge, pledge, preference, equity or encumbrance of any kind, including tax liens, mechanics’ liens and any liens that attach by operation of law.
Loan” means any commercial loan.
Loan Register” has the meaning set forth in Section 15.5(a).
Loan Registrar” has the meaning set forth in Section 15.5(a).
Margin Stock” means “Margin Stock” as defined under Regulation U issued by the FRS Board.
Material Action” means an action to institute proceedings to have the Borrower be adjudicated bankrupt or insolvent, to file any insolvency case or proceeding, to institute proceedings under any applicable insolvency law, to seek relief under any law relating to relief from debts or the protection of debtors, or consent to the institution of bankruptcy or insolvency proceedings against the Borrower or file a petition seeking, or consent to, reorganization or relief with respect to the Borrower under any applicable federal or state law relating to bankruptcy, or
26



consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Borrower or a substantial part of its property, or make any assignment for the benefit of creditors of the Borrower, or admit in writing the Borrower’s inability to pay its debts generally as they become due, or take action in furtherance of any such action.
Material Adverse Effect” means a material adverse effect on: (a) the assets, operations, properties, financial condition, or business of the Borrower or the Servicer; (b) the ability of the Borrower or the Servicer to perform its obligations under this Agreement or any of the other Transaction Documents; (c) the validity or enforceability of this Agreement, any of the other Transaction Documents, or the rights and remedies of the Secured Parties hereunder or thereunder taken as a whole; or (d) the aggregate value of the Collateral or on the assignments and security interests granted by the Borrower in this Agreement.
Material Modification” means any amendment or waiver of, or modification or supplement to, any Underlying Instrument governing a Collateral Obligation executed or effected on or after the related Cut-Off Date which:
(a)    reduces or forgives any or all of the principal amount due under such Collateral Obligation;
(b)    (i) waives one or more interest payments, (ii) permits any interest due in cash to be deferred or capitalized and added to the principal amount of such Collateral Obligation (other than any deferral or capitalization already allowed by the terms of any Deferrable Collateral Obligation as of the related Cut-Off Date) or (iii) reduces the spread or coupon payable on such Collateral Obligation;
(c)    either (i) releases any material Obligor from its obligations with respect thereto unless (x) such release was in connection with a sale of such Obligor and (y) the related proceeds of such were used to repay the outstanding principal balance of such Collateral Obligation or (ii) contractually or structurally subordinates such Collateral Obligation by operation of (w) any priority of payment provisions, (x) turnover provisions, (y) the transfer of assets in order to limit recourse to the related Obligor or (z) the granting of Liens (other than by the granting of Permitted Liens) on any of the collateral securing such Collateral Obligation, each that requires the consent of the Borrower or any lenders thereunder;
(d)    either (i) extends the maturity date of such Collateral Obligation past the maturity date as of the related Cut-Off Date or (ii) extends the amortization schedule with respect thereto;
(e)    substitutes, alters or releases the Related Security securing such Collateral Obligation and such substitution, alteration or release, individually or in the aggregate and as determined in the Facility Agent’s reasonable discretion, materially and adversely affects the value of such Collateral Obligation;
(f)    results in any less financial information in respect of reporting frequency, scope or otherwise being provided with respect to the related Obligor or reduces the frequency or total number of any appraisals required thereunder that, in each case, has a material adverse effect on the ability of the Servicer, the Collateral Custodian, the Collateral Agent or the Facility Agent (as determined by the Facility Agent in its reasonable discretion) to make any determinations or calculations required or permitted hereunder; provided, that any waiver of delivery of quarterly or annual financial statements shall be deemed to have a “material adverse effect” for purposes of this clause (f); provided further, that it shall not be a Material Modification if the Borrower (or the Servicer or another agent on behalf of the Borrower) grants, pursuant to an amendment to the applicable Underlying Instrument, up to one (i) 30-day
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extension of the time for delivery of (or the grace period applicable to) quarterly or annual financial statements and (ii) extension of the time for delivery of, or waiver of delivery of, financial statements other than quarterly and annual financial statements, so long as, in each case, no such grant, extension or waiver extends the requirement for the time of delivery of any quarterly or annual financial statement beyond 60 days from the date on which any such financial statement was originally due;
(g)    amends, waives, forbears, supplements or otherwise modifies in any way the definition of “indebtedness,” “leverage” or “permitted lien” (or, in each case, the definition of such similar term) or any other definition used in the calculation of financial covenants, in each case in a manner that is materially adverse to any Lender;
(h)    results in any change in the currency or composition of any payment of interest or principal to any currency other than that in which such Collateral Obligation was originally denominated;
(i)    with respect to an Asset Based Loan, results in a material change (as determined by the Facility Agent in its reasonable discretion) to or grants relief from the borrowing base or any related definition;
(j)    results in a change to the calculation of EBITDA for the related Obligor;
(k)    results in a change to the calculation of recurring revenue for the related Obligor;
(l)    results in the conversion of such Collateral Obligation (or any other debt of the related Obligor that is senior or pari passu to such Collateral Obligation) into or exchange for any class of debt, equity or other securities of the related Obligor;
(m)    [reserved]; or
(n)    waives or forbears a default or an event of default or a covenant breach under the Underlying Instruments governing such Collateral Obligation that is material to the Lenders.
Maximum Availability” means, as of any date of determination, the difference of (i) the Facility Amount minus (ii) the balance of all unfunded Advances approved but not yet funded (but for the avoidance of doubt, when measured to determine whether the conditions to the making of any Advance are satisfied, excluding such Advance) minus (iii) the Aggregate Unfunded Amount plus (iv) all amounts on deposit in the Unfunded Exposure Account, each as of such date of determination.
Maximum Portfolio Advance Rate” means, on any date of determination, the highest applicable percentage in the table below set forth under the heading “Advance Rate”:
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Diversity Score
(on such date)
Advance Rate
Greater than or equal to 10 but less than 1555.0%
Greater than or equal to 15 but less than 2060.0%
Greater than or equal to 20 but less than 2565.0%
Greater than or equal to 2567.5%
Maximum Weighted Average Life Test” means a test that will be satisfied on any date of determination if the Weighted Average Life of all Eligible Collateral Obligations included in the Collateral is less than or equal to 5.00 years.
Measurement Date” means each of the following, as applicable: (i) the Effective Date; (ii) each Determination Date; (iii) each Funding Date; (iv) the date of any repayment or prepayment pursuant to Section 2.4; (v) the date that the Servicer has actual knowledge of the occurrence of any Revaluation Event with respect to any Collateral Obligation; (vi) the date of any optional repurchase or substitution pursuant to Section 7.11; (vii) the last date of the Revolving Period; (viii) the date of any Optional Sale; (ix) the date on which the Facility Agent amends the Discount Factor of any Collateral Obligation and (x) each Distribution Date.
Minimum Diversity Test” means a test that will be satisfied on any date of determination if the Diversity Score of all Eligible Collateral Obligations included in the Collateral is equal to or greater than (a) during the Ramp-up Period, 10 and (b) thereafter, 15.
Minimum Equity Test” means a test that will be satisfied on any date of determination if the Effective Equity is not less than the greater of (a) the sum of the Collateral Obligation Amounts of the five Obligors with Collateral Obligations constituting the highest aggregate Collateral Obligation Amounts and (b) an amount equal to $25,000,000; provided that, for purposes of calculating clause (a) above, the Collateral Obligation Amount with respect to any Obligor shall be the sum of all Collateral Obligation Amounts with respect to which such Person is an Obligor.
Minimum Liquidity Threshold” means, with respect to any Collateral Obligation, the meaning of “Minimum Liquidity Threshold” or any comparable definition in the Underlying Instrument for each such Loan, and in any case that “Minimum Liquidity Threshold” or such comparable definition is not defined in such Underlying Instrument, the amount of Total Liquidity to be held by the related obligor that was assigned by the Facility Agent at acquisition, as calculated by the Facility Agent in good faith.
Minimum Weighted Average Coupon Test” means a test that will be satisfied on any date of determination if the Weighted Average Coupon of all Eligible Collateral Obligations that are Fixed Rate Collateral Obligations included in the Collateral on such date is equal to or greater than 7.00%.
Minimum Weighted Average Spread Test” means a test that will be satisfied on any date of determination if the Weighted Average Spread of all Eligible Collateral Obligations included in the Collateral on such date is equal to or greater than 5.75%.
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Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.
Moody’s Industry Classification” means the industry classifications set forth in Schedule 2 hereto, as such industry classifications shall be updated if Moody’s publishes revised industry classifications and such revised industry classifications are consistent with the internal methodology of the Facility Agent.
Moody’s RiskCalc” has the meaning specified in Schedule 4.
Multiemployer Plan” means a multiemployer plan, as defined in Section 3(37) or Section 4001(a)(3) of ERISA, as applicable, in respect of which the Borrower or any ERISA Affiliate has or could have any obligation or liability, contingent or otherwise.
Multiple of Recurring Revenue Loans” means any Loan that is structured based on a multiple of the related Obligor’s Revenue.
Non-Sustainable Obligor” means any Obligor (a) currently engaged (i) in activities within or in close proximity to World Heritage Sites that might impact the outstanding universal values of the site as defined by UNESCO, (ii) in activities located in or involving the clearing of primary tropical moist forests, illegal logging or uncontrolled and/or illegal use of fire (iii) as an upstream producer and / or processor of palm oil and palm fruit products that is not a member or certified in accordance with the Roundtable on Sustainable Palm Oil (“RSPO”) or time-bound committed toward RSPO certification, (iv) in expanding an existing or developing a new coal-fired power irrespective of location, (v) in developing greenfield thermal coal mining, or (vi) in using mountain top removal as an extraction method in mining or (b) in relation to which there is evidence of child or forced labor in accordance with international labor conventions or other human rights violations such as slavery, forced or compulsory labor and human trafficking as defined by the Modern Slavery Act 2015.
Non-Call Fee” has the meaning set forth in the Fee Letter.
Non-Extending Lender” has the meaning set forth in Section 2.6.
Note” means a promissory note in the form of Exhibit A, made payable to a Lender or its registered assigns.
Notice of Prepayment” has the meaning set forth in Section 2.4(b)(i).
Obligations” means all obligations (monetary or otherwise) of the Borrower to the Lenders, the Collateral Agent, the Collateral Custodian, the Securities Intermediary, the Facility Agent or any other Affected Person or Indemnified Party arising under or in connection with this Agreement, the Notes and each other Transaction Document.
Obligor” means any Person that owes payments under any Loan and, solely for purposes of calculating the Excess Concentration Amount pursuant to clause (b) of the definition thereof, any Obligor that is an Affiliate of another Obligor shall be treated as the same Obligor; provided that, for purposes of this definition, the term Affiliate shall not include any Affiliate relationship which may exist solely as a result of direct or indirect ownership of, or control by, a common financial sponsor. Notwithstanding the foregoing, for purposes of calculating the Diversity Score, Affiliated Obligors in the same Moody’s Industry Classification Group are deemed to be a single Obligor except as otherwise agreed to by Moody’s.
Obligor Information” means, with respect to any Obligor, (i) the legal name of such Obligor, (ii) the jurisdiction in which such Obligor is domiciled, (iii) the audited financial
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statements for the two prior fiscal years of such Obligor, (iv) the Servicer’s internal credit memo with respect to the Obligor and the related Collateral Obligation, (v) the annual report for the most recent fiscal year of such Obligor to the extent available, (vi) a company forecast of such Obligor including plans related to capital expenditures, if any, (vii) the business model, company strategy and names of known peers of such Obligor, (viii) the shareholding pattern and reasonable details of the management team of such Obligor and (ix) details of any banking facilities and the debt maturity schedule of such Obligor; provided that (x) to the extent that any of the foregoing information is not available to the Servicer, the Servicer shall notify the Facility Agent, and such information shall not constitute Obligor Information if the Facility Agent consents to such exclusion and (y) the information set forth in the foregoing clauses of this definition may be set forth in the Servicer’s internal credit memo with respect to the Obligor and related Collateral Obligation, and need not be delivered separately.
OFAC” has the meaning set forth in Section 9.30(a).
Offer” means a tender offer, voluntary redemption, exchange offer, conversion or other similar action.
Officer’s Certificate” means a certificate signed by an Executive Officer.
Official Body” means any self-regulatory organization, government or political subdivision or any agency, authority, regulatory body, bureau, central bank, commission, department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
Opinion of Counsel” means a written opinion of independent counsel reasonably acceptable in form and substance and from counsel reasonably acceptable to the Facility Agent.
Optional Sale” has the meaning set forth in Section 7.10.
Original Effective LTV” means, with respect to any Collateral Obligation, the Effective LTV of such Collateral Obligation as calculated by the Servicer (which may include a normalized revolving loan assumption on any unfunded revolving loan) (and, to the extent set forth in the Asset Approval Request, approved by the Facility Agent in its sole discretion in the related Asset Approval Notice) in accordance with the definition of Effective LTV and the definitions used therein and set forth in the related Asset Approval Notice.
Original Leverage Multiple” means, with respect to any Collateral Obligation, the Leverage Multiple applicable to such Collateral Obligation as calculated by the Servicer (and, to the extent set forth in the Asset Approval Request, approved by the Facility Agent in its sole discretion in the related Asset Approval Notice) in accordance with the definition of Leverage Multiple and the definitions used therein and set forth in the related Asset Approval Notice.
Other Administrative Expenses” means all amounts of costs and expenses due and payable by the Borrower to any Person in connection with the transactions contemplated by the Transaction Documents or under any Underlying Instruments, including fees and expenses of any third party service provider to the Borrower, including any Approved Valuation Firm or any Valuation Firm, other than any Indemnified Amounts.
Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any
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Transaction Document, or sold or assigned an interest in the Obligations or any Transaction Document).
Other Taxes” means all present or future stamp, court or documentary, intangible, mortgage, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Transaction Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 17.15).
Participant” has the meaning set forth in Section 15.9(a).
Participant Register” has the meaning set forth in Section 15.9(c).
Participation Interest” means a participation interest in a loan that would, at the time of acquisition or the Borrower’s commitment to acquire the same, satisfy each of the following criteria: (i) such participation would constitute an Eligible Collateral Obligation were it acquired directly, (ii) the seller of the participation is the lender on the subject loan, (iii) the aggregate participation in the loan does not exceed the principal amount or commitment of such loan, (iv) such participation does not grant, in the aggregate, to the participant in such participation a greater interest than the seller holds in the loan or commitment that is the subject of the participation, (v) the entire purchase price for such participation is paid in full at the time of its acquisition, and (vi) the participation provides the participant all of the economic benefit and risk of the whole or part of the loan or commitment that is the subject of the loan participation.
Payment Recipient” has the meaning assigned to it in Section 14.11(a).
PBGC” means the Pension Benefit Guaranty Corporation and its successors and assigns.
Permitted Foreign Obligor” means, on any day, any Obligor that is (i) a business organization (and not a natural person) that is duly organized and validly existing under the laws of Canada (or any province thereof), the United Kingdom or Luxembourg and (ii) either (A) at least 60% of such Obligor’s operations are located in the United States or (B) at least 60% of its revenues from operations are derived from operations located in the United States.
Permitted Gaming Industry” means an industry in respect of which the following conditions must be satisfied:
(a)    the Obligor or any of its Affiliates hold the required licenses for the jurisdiction and are in compliance with the applicable local gaming, betting and gambling legislation and regulation; and
(b)    the Obligor or any of its Affiliates have satisfactory anti-financial crime policies (including anti-money laundering and anti-bribery and corruption) in place which satisfy the applicable policies of the Servicer.
Permitted Investment” means, at any time:
(a)    direct interest bearing obligations of, and interest bearing obligations guaranteed as to timely payment of principal and interest by, the United States or any agency or instrumentality of the United States, the obligations of which are backed by the full faith and credit of the United States;
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(b)    demand or time deposits in, certificates of deposit of, demand notes of, or bankers’ acceptances issued by any depository institution or trust company organized under the laws of the United States or any State thereof (including any federal or state branch or agency of a foreign depository institution or trust company) and subject to supervision and examination by federal and/or state banking authorities (including, if applicable, the Collateral Agent, the Collateral Custodian or Facility Agent or any agent or Affiliate thereof acting in its commercial capacity); provided, that the short-term unsecured debt obligations of such depository institution or trust company at the time of such investment, or contractual commitment providing for such investment, are rated at least “A-1” by S&P and “P-1” by Moody’s;
(c)    commercial paper that (i) is payable in Dollars and (ii) is rated at least “A-1” by S&P and “P-1” by Moody’s; or
(d)    units of money market funds rated in the highest credit rating category by each Rating Agency.
Permitted Investments may be purchased by or through the Collateral Agent or any of its Affiliates. All Permitted Investments shall be held in the name of the Securities Intermediary. No Permitted Investment shall have an “f”, “r”, “p”, “pi”, “q”, “sf” or “t” subscript affixed to its S&P rating. Any such investment may be made or acquired from or through the Collateral Agent or the Facility Agent or any of their respective affiliates, or any entity for whom the Collateral Agent or the Facility Agent or any of their respective affiliates provides services and receives compensation (so long as such investment otherwise meets the applicable requirements of the foregoing definition of Permitted Investment at the time of acquisition); provided, that notwithstanding the foregoing clauses (a) through (d), unless the Borrower and the Servicer have received the written advice of counsel of national reputation experienced in such matters to the contrary (together with an Officer’s Certificate of the Borrower or the Servicer to the Facility Agent and the Collateral Agent that the advice specified in this definition has been received by the Borrower and the Servicer), Permitted Investments may only include obligations or securities that constitute cash equivalents for purposes of the rights and assets in paragraph (c)(8)(i)(B) of the exclusions from the definition of “covered fund” for purposes of the Volcker Rule.
Permitted Lien” means (i) the Lien in favor of the Collateral Agent for the benefit of the Secured Parties, (ii) Liens for Taxes and mechanics’ or suppliers’ liens for services or materials supplied, in either case, not yet due and payable and for which adequate reserves have been established in accordance with GAAP, (iii) as to Related Security (1) the Lien in favor of the Borrower pursuant to the Sale Agreement and (2) any Liens on the Related Security permitted pursuant to the applicable Underlying Instruments and (iv) as to agented Loans, Liens in favor of the agent on behalf of all the lenders of the related Obligor.
Permitted Offer” means an offer (i) pursuant to the terms of which the offeror offers to acquire a debt obligation (including a Collateral Obligation) in exchange for consideration consisting solely of cash in an amount equal to or greater than the full face amount of such debt obligation plus any accrued and unpaid interest and (ii) as to which the Servicer has reasonably determined that the offeror has sufficient access to financing to consummate the offer.
Person” means an individual, partnership, corporation (including a business trust), joint stock company, limited liability company, trust, unincorporated association, joint venture, government or any agency or political subdivision thereof or any other entity.
Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title IV of ERISA, Section 412 and 430 of the Code, or Section 302 of ERISA and in respect of which the Borrower or any ERISA Affiliate (x) is (or, if such Plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an “employer” as defined
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in Section 3(5) of ERISA, or (y) has or could have any obligation or liability, contingent or otherwise.
Principal Balance” means with respect to any Collateral Obligation and as of any date, the lower of (A) the Purchase Price paid by the Borrower or the Equityholder for such Collateral Obligation and (B) the outstanding principal balance of such Collateral Obligation, exclusive of (x) any deferred or capitalized interest on such Collateral Obligation and (y) any unfunded amounts with respect to any Variable Funding Asset included in the Collateral as of such date; provided, that for purposes of calculating the “Principal Balance” of any Deferrable Collateral Obligation, principal payments received on such Collateral Obligation shall first be applied to reducing or eliminating any outstanding deferred or capitalized interest. The “Principal Balance” of any Equity Security shall be zero.
Principal Collections” means any and all amounts of collections received with respect to the Collateral other than Interest Collections, including (but not limited to) (i) all collections attributable to principal on such Collateral, (ii) all payments received by the Borrower pursuant to any Hedging Agreement (other than payments constituting interest proceeds pursuant to clause (iv) of the definition of Interest Collections), (iii) the earnings on Principal Collections in the Collection Account that are invested in Permitted Investments, and (iv) all Repurchase Amounts, in each case other than Retained Interests.
Principal Collection Account” means a segregated, non-interest bearing securities account (within the meaning of Section 8-501 of the UCC) number 117951-202, which is created and maintained on the books and records of the Securities Intermediary entitled “Principal Collection Account” in the name of the Borrower and subject to the prior Lien of the Collateral Agent for the benefit of the Secured Parties, which is established and maintained pursuant to Section 8.1(a).
Proceeding” means any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person.
Prohibited Defense Asset” means a Collateral Obligation in respect of which the related Obligor’s primary direct business is the production or distribution of antipersonnel landmines, cluster munitions, biological and chemical, radiological and nuclear weapons or their Critical Components.
Prohibited Industry” means with respect to any Obligor, its primary business is (a) within an industry referred to in the definition of Prohibited Defense Asset; (b) the sale or manufacture of fully completed and operational assault weapons or firearms; (c) in pornography or adult entertainment (including the development thereof); or (d) in the gaming industry (including for purposes of this clause (d) any form of betting and gambling, but not including (i) any Permitted Gaming Industry or (ii) hospitality and/or resorts development or the management thereof).
Purchase Price” means, with respect to any Collateral Obligation, the actual price in Dollars paid by the Borrower or the Equityholder for such Collateral Obligation minus all collections attributable to principal on such Collateral Obligation.
Qualified Substitute Arrangement” has the meaning set forth in Section 10.6(c).
Ramp-up Period” means the period from and including the Effective Date to the earlier of (i) the first date on which the sum of (a) the Aggregate Eligible Collateral Obligation Amount
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plus (b) Principal Collections on deposit in the Principal Collection Account equals the Target Portfolio Amount and (ii) the six-month anniversary of the Automatic Increase Date.
Rating Agency” means any of Standard & Poor’s, Fitch and Moody’s as the context shall require.
Recipient” means (a) the Facility Agent, (b) any Lender and (c) any other recipient of a payment hereunder.
Records” means the Collateral Obligation File for any Collateral Obligation and all other documents, books, records and other information prepared and maintained by or on behalf of the Borrower with respect to any Collateral Obligation and the Obligors thereunder, including all documents, books, records and other information prepared and maintained by the Borrower or the Servicer with respect to such Collateral Obligation or Obligors.
Reinvestment” has the meaning set forth in Section 8.3(b).
Reinvestment Date” has the meaning set forth in Section 8.3(b).
Reinvestment Request” has the meaning set forth in Section 8.3(b).
Related Collateral Obligation” means any Collateral Obligation where any Affiliate of the Borrower, Servicer or the Equityholder owns a Variable Funding Asset pursuant to the same Underlying Instruments; provided that any such asset will cease to be a Related Collateral Obligation once all commitments by such Affiliate of the Borrower, Servicer or the Equityholder to make advances or fund such Variable Funding Asset to the related Obligor expire or are irrevocably terminated or reduced to zero.
Related Property” means, with respect to a Collateral Obligation, any property or other assets designated and pledged or mortgaged as collateral to secure repayment of such Collateral Obligation, including, without limitation, any pledge of the stock, membership or other ownership interests in the related Obligor or its subsidiaries, all Warrant Assets with respect to such Collateral Obligation and all proceeds from any sale or other disposition of such property or other assets.
Related Security” means, with respect to each Collateral Obligation:
(a)    all Warrant Assets and any Related Property securing a Collateral Obligation, all payments paid to the Borrower in respect thereof and all monies due, to become due and paid to the Borrower in respect thereof accruing after the applicable Advance Date and all liquidation proceeds thereof;
(b)    all guaranties, indemnities and warranties, insurance policies, financing statements and other agreements or arrangements of whatever character from time to time supporting or securing payment of any such indebtedness;
(c)    all Collections with respect to such Collateral Obligation and any of the foregoing;
(d)    any guarantees or similar credit enhancement for an Obligor’s obligations under any Collateral Obligation, all UCC financing statements or other filings relating thereto, including all rights and remedies, if any, against any Related Security, including all amounts due and to become due to the Borrower thereunder and all rights, remedies, powers, privileges and
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claims of the Borrower thereunder (whether arising pursuant to the terms of such agreement or otherwise available to the Borrower at law or in equity);
(e)    all Records with respect to such Collateral Obligation and any of the foregoing; and
(f)    all recoveries and proceeds of the foregoing.
REO Asset” means, with respect to any Collateral Obligation, any real property that is Related Property that has been foreclosed on or repossessed from the current Obligor by the Servicer, and is being managed by the Servicer on behalf of, and in the name of, any REO Asset Owner, for the benefit of the Secured Parties and any other equity holder of such REO Asset Owner.
REO Asset Owner” has the meaning set forth in Section 7.12(a).
REO Servicing Standard” has the meaning set forth in Section 7.12(a).
Replacement Hedging Agreement” means one or more Hedging Agreements, which in combination with all other Hedging Agreements then in effect, after giving effect to any planned cancellations of any presently outstanding Hedging Agreements satisfy the Borrower’s covenant contained in Section 10.6 of this Agreement to maintain Hedging Agreements.
Reporting Date” means, with respect to any calendar month, the second Business Day prior to the Distribution Date.
Repurchase Amount” means, for any Warranty Collateral Obligation for which a payment or substitution is being made pursuant to Section 7.11 as of any time of determination, the sum of (i) the greater of (a) an amount equal to the purchase price paid by the Borrower for such Collateral Obligation (excluding purchased accrued interest and original issue discount) less all payments of principal received in connection with such Collateral Obligation since the date it was added to the Collateral and (b) the Collateral Obligation Amount of such Collateral Obligation, (ii) any accrued and unpaid interest thereon since the last Distribution Date and (iii) all Hedge Breakage Costs owed to any relevant Hedge Counterparty for any termination of one or more Hedge Transactions, in whole or in part, as required by the terms of any Hedging Agreement, incurred in connection with such payment or repurchase and the termination of any Hedge Transactions in whole or in part in connection therewith.
Repurchased Collateral Obligation” means, with respect to any Collection Period, any Collateral Obligation as to which the Repurchase Amount has been deposited in the Collection Account by or on behalf of the Borrower or the Servicer, as applicable, on or before the immediately prior Reporting Date and any Collateral Obligation purchased by the Equityholder pursuant to the Sale Agreement as to which the Repurchase Amount has been deposited in the Collection Account by or on behalf of the Equityholder.
Request for Release and Receipt” means a form substantially in the form of Exhibit F-2 completed and signed by the Servicer.
Required Lenders” means, at any time, (a) Lenders holding Advances aggregating greater than 50% of all Advances outstanding or if there are no Advances outstanding, Lenders holding Commitments aggregating greater than 50% of all Commitments or (b) the Facility Agent and Lenders holding aggregate Advances equal to 50% of all Advances outstanding or if there are no Advances outstanding, Lenders holding aggregate Commitments equal to 50% of all Commitments.
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Required Utilization” has the meaning set forth in Section 3.5.
Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
Responsible Officer” means, with respect to (a) the Servicer or the Borrower, its Chief Executive Officer, Chief Financial Officer, any manager or any other officer or employee of the Servicer or the Borrower directly responsible for the administration or collection of the Collateral Obligations, (b) the Collateral Agent or Collateral Custodian, any officer within the Corporate Trust Office, including any director, vice president, assistant vice president or associate having direct responsibility for the administration of this Agreement, who at the time shall be such officers, respectively, or to whom any matter is referred because of his or her knowledge of and familiarity with the particular subject, or (c) any other Person, the President, any Vice President or Assistant Vice President, Corporate Trust Officer or the Controller of such Person, or any other officer or employee having similar functions.
Restricted Information” has the meaning set forth in Section 10.22(b).
Retained Economic Interest” has the meaning set forth in Section 10.22(a).
Retained Interest” means, with respect to any Collateral Obligation included in the Collateral, (a) such obligations to provide additional funding with respect to such Collateral Obligation that have been retained by the other lender(s) of such Collateral Obligation, (b) all of the rights and obligations, if any, of the agent(s) under the Underlying Instruments, (c) any unused commitment fees associated with the additional funding obligations that are being retained in accordance with clause (a) above, and (d) any agency or similar fees associated with the rights and obligations of the agent(s) that are being retained in accordance with clause (b) above.
Retention Holder Originated Collateral Obligation” means a Collateral Obligation for which the Equityholder was directly, or indirectly through the Borrower, involved in the origination of the Underlying Instrument which created such Collateral Obligation.
Revaluation Event” means each occurrence of any of the following with respect to any Collateral Obligation during the time such Collateral Obligation is Collateral:
(a)    such Collateral Obligation becomes a Defaulted Collateral Obligation;
(b)    the occurrence of a Material Modification with respect to such Collateral Obligation that is not previously approved by the Facility Agent (in its sole discretion);
(c)    the related Obligor fails to deliver to the Borrower or the Servicer any financial reporting information (i) as required by the Underlying Instruments of such Collateral Obligation (after giving effect to any applicable grace or cure period thereunder) and (ii) with a frequency of at least quarterly (allowing for any applicable grace or cure periods);
(d)    with respect to any Enterprise Value Loan, the Leverage Multiple with respect to such Collateral Obligation increases by 1.0x or more over the Original Leverage Multiple with respect to such Collateral Obligation;
(e)    with respect to any Asset Based Loan, (A) the Borrower fails (or fails to cause the Obligor to) retain an Approved Valuation Firm to re-calculate the Appraised Value of (x) with respect to any such Asset Based Loan that has intellectual property, equipment or real property, as the case may be, in its borrowing base, the collateral securing such Asset Based
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Loan at least once every twelve (12) months that such Loan is included in the Collateral (subject to a 30 day grace period with respect to any such review) and (y) with respect to all other Asset Based Loans included in the Collateral, the collateral securing such Loan at least once every six (6) months that such Loan is included in the Collateral (subject to a 30 day grace period with respect to any such review) or (B) the Borrower (or the related Obligor, as applicable) changes the Approved Valuation Firm with respect to any Asset Based Loan that or the related Approved Valuation Firm changes the metric for valuing the collateral of such Loan, each without the written approval of the Facility Agent;
(f)    with respect to any Asset Based Loan, the Effective LTV of such Collateral Obligation increases by more than an amount equal to 10% of the Original Effective LTV of such Collateral Obligation (or such other percentage determined by the Facility Agent in its sole discretion);
(g)    with respect to any Asset Based Loan, the Effective LTV of such Collateral Obligation increases by 10% or to an amount greater than 1;
(h)    the related Obligor undergoes a merger, acquisition or other restructuring;
(i)    with respect to any Multiple of Recurring Revenue Loan, (1) the Debt-to-Recurring-Revenue Ratio with respect to such Multiple of Recurring Revenue Loan on any date reported under the Underlying Instrument increases by more than 20% from the Debt-to-Recurring-Revenue Ratio calculated on the applicable Cut-Off Date; (2) the related Obligor’s last quarter annualized Revenue is less than $50,000,000 calculated using the most recent financial information of such Obligor received by the Borrower (or otherwise available to the Borrower with respect to such Obligor); (3) such Obligor’s Debt-to-Recurring-Revenue Ratio increases above 3.0x; or (4) the Obligor’s Total Liquidity falls below the Minimum Liquidity Threshold as defined and specified in the Underlying Instruments;
(j)    with respect calculating the Debt-to-Recurring-Revenue Ratio with respect to such Multiple of Recurring Revenue Loan, the failure to provide the necessary information to calculate the Debt-to-Recurring-Revenue Ratio;
(k)    with respect to any Collateral Obligation, such Collateral Obligation has negative EBITDA for the latest fiscal year as of the related Cut-Off Date;
(l)    with respect to any Collateral Obligation, a breach of a financial covenant in the applicable Underlying Instrument;
(m)    with respect to any Collateral Obligation, such Collateral Obligation is the subject of an Offer, exchange or tender by the related Obligor; or
(n)    if such Collateral Obligation is a Participation Interest, the seller thereof ceases to have (x) long-term unsecured ratings of at least “Baa1” by Moody’s and “BBB+” by S&P and (y) short-term unsecured ratings of at least “A-1” by S&P and “P-1” by Moody’s (or as approved by the Facility Agent in its sole discretion).
Revenue” means, with respect to any Collateral Obligations that are Multiple of Recurring Revenue Loans, the definition of annualized recurring revenue used in the Underlying Instruments for each such Collateral Obligation, or any comparable term for “Revenue,” “Recurring Revenue” or “Adjusted Revenue” in the Underlying Instruments for each such Collateral Obligation or if there is no such term in the Underlying Instruments, revenue for the related Obligor and any of its parents or Subsidiaries that are obligated with respect to such Collateral Obligation pursuant to its Underlying Instruments (determined on a consolidated basis
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without duplication in accordance with GAAP) for the most recent four fiscal quarter period for which financial statements have been delivered.
Revolving Loan” means a Collateral Obligation that specifies a maximum aggregate amount that can be borrowed by the related Obligor and permits such Obligor to re-borrow any amount previously borrowed and subsequently repaid during the term of such Collateral Obligation.
Revolving Period” means the period of time starting on the Effective Date and ending on the earliest to occur of (i) March 20, 2027 or such later date to which it is extended pursuant to Section 2.6, (ii) the date on which the Facility Amount is terminated in full pursuant to Section 2.5 or (iii) the occurrence of an Event of Default.
S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor or successors thereto.
Sale Agreement” means the Sale and Contribution Agreement, dated as of the date hereof, by and between the Equityholder, as seller, and the Borrower, as purchaser.
Sanction Target” has the meaning set forth in Section 9.30(a).
Sanctioned Countries” has the meaning set forth in Section 9.30(a).
Sanctions” has the meaning set forth in Section 9.30(a).
Schedule of Collateral Obligations” means the list or lists of Collateral Obligations attached to each Asset Approval Request and each Reinvestment Request. Each such schedule shall identify the assets that will become Collateral Obligations, shall set forth such information with respect to each such Collateral Obligation as the Borrower or the Facility Agent may reasonably require and shall supplement any such schedules attached to previously delivered Asset Approval Requests and Reinvestment Requests.
Scheduled Collateral Obligation Payment” means each periodic installment payable by an Obligor under a Collateral Obligation for principal, interest and/or unutilized/commitment fees (as applicable) in accordance with the terms of the related Underlying Instrument.
Second Lien Loan” means any Loan that (i) is not (and that by its terms is not permitted to become) subordinate in right of payment to any other obligation of the related Obligor other than a First Lien Loan with respect to the liquidation of such Obligor or the collateral for such Loan, (ii) is secured by a valid second priority perfected Lien to or on specified collateral securing the related Obligor’s obligations under the Loan, which Lien is not subordinate to the Lien securing any other debt for borrowed money other than a First Lien Loan on such specified collateral and any Permitted Liens and (iii) the Servicer determines in good faith that the value of the collateral or the enterprise value securing the Loan on or about the time of acquisition equals or exceeds the outstanding principal balance of the Loan plus the aggregate outstanding balances of all other loans of equal or higher seniority secured by the same collateral.
Secured Parties” means, collectively, the Collateral Agent, the Collateral Custodian, the Securities Intermediary, each Lender, the Facility Agent, each other Affected Person, Indemnified Party and Hedge Counterparty and their respective permitted successors and assigns.
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Securities Intermediary” means U.S. Bank National Association, solely in its capacity as securities intermediary under the Account Control Agreement, or any subsequent institution acceptable to the Facility Agent and the Borrower at which the Accounts are kept.
Servicer” means initially Capital Southwest Corporation or any successor servicer appointed pursuant to this Agreement.
Servicing Fee” means, with respect to any Distribution Date, the fee payable to the Servicer or successor servicer (as applicable) for services rendered during the related Collection Period, which shall be equal to one-twelfth of the product of (i) the Servicing Fee Percentage multiplied by (ii) the average of the values of the Aggregate Eligible Collateral Obligation Amount on the first day and the last day of the related Collection Period.
Servicing Fee Percentage” means 0.25%.
Servicing Standard” means, with respect to any Collateral Obligations, to service and administer such Collateral Obligations on behalf of the Secured Parties in accordance with the Underlying Instruments and all customary and usual servicing practices which are consistent with the higher of: (i) the customary and usual servicing practices that a prudent loan investor or lender would use in servicing loans like the Collateral Obligations for its own account, and (ii) the same care, skill, prudence and diligence with which the Servicer services and administers loans for its own account or for the account of others.
Small Obligor Collateral Obligation” means any Collateral Obligation (other than a Multiple of Recurring Revenue Loan) for which the related Obligor has a trailing twelve month EBITDA of less than $10,000,000 and greater than $0.
SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
Specified Borrowing Base Breach” means the aggregate principal amount of all Advances outstanding hereunder exceed the Borrowing Base by an amount (calculated as a percentage) equal to or less than 3% of the Borrowing Base (in the aggregate), and such condition was caused by action taken by the Facility Agent in connection with a Revaluation Event with respect to one or more Collateral Obligations (whether through the impact of virtual tranching or an amendment to the Discount Factor); provided that such event shall not be a Specified Borrowing Base Breach if any other event occurred on the same date that independently caused all Advances outstanding hereunder to exceed the Borrowing Base.
SR Lender” means each Lender that is subject to the EU Securitization Rules.
Structured Finance Obligation” means any obligation secured directly by, referenced to, or representing ownership of, a pool of receivables or other financial assets of any obligor, including collateralized debt obligations and mortgage-backed securities, including (but not limited to) collateral debt obligations, collateral loan obligations, asset backed securities and commercial mortgage backed securities or any resecuritization thereof.
Submission Date” has the meaning set forth in Section 10.22(b).
Subsidiary” means, with respect to any Person, a corporation, partnership or other entity of which such Person and/or its other Subsidiaries own, directly or indirectly, such number of
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outstanding shares as have more than 50% of the ordinary voting power for the election of directors.
Substituted Collateral Obligation” means, with respect to any Collection Period, any Warranty Collateral Obligation with respect to which the Equityholder has substituted in a replacement Eligible Collateral Obligation pursuant to Section 7.11 and the Sale Agreement.
Tangible Net Worth” means, with respect to any Person, the consolidated net worth of such Person and its consolidated Subsidiaries calculated in accordance with GAAP after subtracting therefrom the aggregate amount of the intangible assets of such Person and its consolidated Subsidiaries, including, without limitation, goodwill, franchises, licenses, patents, trademarks, tradenames, copyrights and service marks.
Target Portfolio Amount” means $250,000,000.
Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other Charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto.
Term SOFR” means, for any calculation with respect to an Advance (other than an Advance bearing interest at the Alternate Base Rate), the greater of (i) 0.25% and (ii) the Term SOFR Reference Rate for a tenor of three (3) months on the day (such day, the “Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of the relevant Accrual Period, as such rate is published by the Term SOFR Administrator.
Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Facility Agent in its reasonable discretion).
Term SOFR Determination Day” has the meaning set forth in the definition of “Term SOFR” in this Section 1.1.
Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
Total Liquidity” means, with respect to any Collateral Obligation, the meaning of “Total Liquidity”, “Available Liquidity” or any comparable definition in the Underlying Instrument for each such Loan, and in any case that “Total Liquidity”, “Available Liquidity” or such comparable definition is not defined in such Underlying Instrument, the total amount of unencumbered cash held by the related obligor, as calculated by the Facility Agent in good faith.
Transaction Documents” means this Agreement, the Notes, the Sale Agreement, the Collateral Agent and Collateral Custodian Fee Letter, each Fee Letter, the Account Control Agreement, any Joinder Agreement and the other documents to be executed and delivered in connection with this Agreement, specifically excluding from the foregoing, however, Underlying Instruments delivered in connection with this Agreement.
Transparency Reports” means: (i) the quarterly reports containing portfolio level disclosure information required pursuant to and in accordance with Article 7(1)(a) of the EU Securitization Regulation and the Transparency Technical Standards applicable thereto; and (ii) the quarterly investor reports required pursuant to and in accordance with Article 7(1)(e) of the EU Securitization Regulation and the Transparency Technical Standards applicable thereto; or (iii) such other successor reporting requirements which may become applicable to this Agreement pursuant to any change to the Article 7 Transparency and Reporting Requirements.
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Transparency Technical Standards” means Commission Delegated Regulation (EU) 2020/1224 and Commission Implementing Regulation (EU) 2020/1225, together with any other guidelines and technical standards published in relation thereto, in each case, as may be effective from time to time.
UCC” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction or jurisdictions.
UK AIFM Regulations” means the UK Alternative Investment Fund Managers Regulations 2013.
UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
Underlying Instrument” means the loan agreement, credit agreement or other customary agreement pursuant to which a Collateral Obligation has been created or issued and each other agreement that governs the terms of or secures the obligations represented by such Collateral Obligation or of which the holders of such Collateral Obligation are the beneficiaries.
Undrawn Fee” means a fee payable during the Revolving Period pursuant to Section 3.1 for each day of the related Collection Period equal to the product of (x) the difference between the aggregate Commitments on such day minus the aggregate principal amount of outstanding Advances on such day times (y) the Undrawn Fee Rate times (z) 1/360; provided that, notwithstanding the foregoing, the Undrawn Fee relating to any Utilization Shortfall shall not be payable to the extent that the Utilization Fee relating to such Utilization Shortfall is paid to the Lenders in accordance with this Agreement and any applicable Fee Letters.
Undrawn Fee Rate” has the meaning set forth in the Fee Letters.
Unfunded Exposure Account” means a segregated, non-interest bearing securities account (within the meaning of Section 8-501 of the UCC) number 117951-203, which is created and maintained on the books and records of the Securities Intermediary entitled “Unfunded Exposure Account” in the name of the Borrower and subject to the Lien of the Collateral Agent for the benefit of the Secured Parties, which is established and maintained pursuant to Section 8.1(a).
Unfunded Exposure Shortfall” has the meaning set forth in Section 8.1(a).
Unmatured Event of Default” means any event that, if it continues uncured, will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default.
Unrestricted Cash” means, (a) with respect to any Loan, the meaning of “Unrestricted Cash” or any comparable term in the Underlying Instruments for the applicable Loan and (b) in any case that “Unrestricted Cash” or such comparable term is not defined in such Underlying Instruments or otherwise as applicable in this Agreement, cash and cash equivalents of the applicable Person available for use for general corporate purposes and not held in any reserve account or legally or contractually restricted for any particular purposes or uses.
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Upfront Fee” has the meaning set forth in the Fee Letters.
USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107 56.
U.S. Borrower” means any Borrower that is a U.S. Person.
U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
U.S. Tax Compliance Certificate” has the meaning set forth in Section 4.3(f).
Utilization” has the meaning set forth in Section 3.5.
Utilization Condition” has the meaning set forth in Section 3.5.
Utilization Fee” has the meaning set forth in Section 3.5.
Utilization Shortfall” has the meaning set forth in Section 3.5.
Valuation Firm” means Valuation Research Corporation, Lincoln International and/or Murray, Devine & Company, Inc.
Variable Funding Asset” means any Revolving Loan or other asset that by its terms may require one or more future advances to be made to the related Obligor by any lender thereon or owner thereof.
Volcker Rule” means Section 13 of the U.S. Bank Holding Company Act of 1956, as amended, and the applicable rules and regulations thereunder.
Warrant Asset” means any equity purchase warrants or similar rights convertible into or exchangeable or exercisable for any equity interests received by the Borrower as an “equity kicker” from the Obligor in connection with a Collateral Obligation.
Warranty Collateral Obligation” has the meaning set forth in Section 7.11.
Weighted Average Advance Rate” means, as of any date of determination with respect to all Eligible Collateral Obligations included in the Adjusted Aggregate Eligible Collateral Obligation Balance, the number obtained by (i) summing the products obtained by multiplying (a) the Advance Rate of each such Eligible Collateral Obligation by (b) such Eligible Collateral Obligation’s contribution to the Adjusted Aggregate Eligible Collateral Obligation Balance and (ii) dividing such sum by the Adjusted Aggregate Eligible Collateral Obligation Balance.
Weighted Average Coupon” means, as of any day, the number expressed as a percentage equal to (i) the sum, for each Eligible Collateral Obligation (including, for any Deferrable Collateral Obligation, only the required current cash pay interest thereon) that is a Fixed Rate Collateral Obligation of (x) the interest rate for such Collateral Obligation minus the Base Rate
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multiplied by (y) the Collateral Obligation Amount of each such Collateral Obligation divided by (ii) the sum of the Collateral Obligation Amounts for all Eligible Collateral Obligations that are Fixed Rate Collateral Obligations.
Weighted Average Life” means, as of any day with respect to all Eligible Collateral Obligations included in the Collateral, the number of years following such date obtained by (i) summing the products obtained by multiplying (a) the Average Life at such time of each such Eligible Collateral Obligation by (b) the Collateral Obligation Amount of such Collateral Obligation and (ii) dividing such sum by the aggregate Collateral Obligation Amounts of all Eligible Collateral Obligations included in the Collateral.
Weighted Average Spread” means, as of any day, the number expressed as a percentage equal to (i) the Aggregate Funded Spread divided by (ii) the Aggregate Eligible Collateral Obligation Amount (excluding any interest that has been deferred and capitalized on any Deferrable Collateral Obligation).
Withholding Agent” means the Borrower, the Collateral Agent and the Servicer.
Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
written” or “in writing” (and other variations thereof) means any form of written communication or a communication by means of telex, telecopier device, telegraph or cable.
Yield” means, with respect to any period, the daily interest accrued on Advances during such period as provided for in Article III.
Section 1.2.    Other Definitional Provisions.
(a)    Unless otherwise specified therein, all terms defined in this Agreement have the meanings as so defined herein when used in the Notes or any other Transaction Document, certificate, report or other document made or delivered pursuant hereto or thereto.
(b)    Each term defined in the singular form in Section 1.1 or elsewhere in this Agreement shall mean the plural thereof when the plural form of such term is used in this Agreement, the Notes or any other Transaction Document, certificate, report or other document made or delivered pursuant hereto or thereto, and each term defined in the plural form in Section 1.1 shall mean the singular thereof when the singular form of such term is used herein or therein.
(c)    The words “hereof,” “herein,” “hereunder” and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, the term “including” means “including without limitation,” and article, section, subsection, schedule and exhibit references herein are references to articles, sections, subsections, schedules and exhibits to this Agreement unless otherwise specified.
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(d)    The following terms which are defined in the UCC in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Certificated Securities, Chattel Paper, Control, Documents, Equipment, Financial Assets, Funds Transfer System, General Intangibles, Indorse, Indorsement and Indorsed, Instruments, Inventory, Investment Property, Proceeds, Securities Accounts, Securities Intermediary, Security Certificates, Security Entitlements, Security Interest, Supporting Obligations and Uncertificated Securities.
(e)    [Reserved].
(f)    Unless otherwise specified, each reference in this Agreement or in any other Transaction Document to a Transaction Document shall mean such Transaction Document as the same may from time to time be amended, restated, amended and restated, supplemented or otherwise modified in accordance with the terms of the Transaction Documents.
(g)    Unless otherwise specified, each 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
(h)    All calculations required to be made hereunder with respect to the Collateral Obligations, the Maximum Availability and the Borrowing Base shall be made on a trade date basis (other than sales to a Person who is not an Approved Dealer (and for the avoidance of doubt, the Servicer shall notify the Facility Agent and the Collateral Agent when a sale is not with an Approved Dealer), which such sales shall be calculated on a settlement date basis) and after giving effect to (w) all purchases or sales to be entered into on such trade date or settlement date, as applicable, (x) all Advances requested to be made on such trade date or settlement date, as applicable, plus the balance of all unfunded Advances to be made in connection with the Borrower’s purchase of previously requested (and approved) Collateral Obligations or any funding with respect to a Variable Funding Asset included in the Collateral, (y) in the case of calculations pursuant to Section 8.3(a), all distributions to be made at or prior to the relevant time of determination and (z) the application of any Principal Collections on deposit in the Principal Collections Account necessary to settle all outstanding and unsettled assignments.
(i)    Any use of the term “knowledge” or “actual knowledge” in this Agreement shall mean actual knowledge after reasonable inquiry.
(j)    Any use of “material” or “materially” or words of similar meaning in this Agreement shall mean material, as determined by the Facility Agent in its sole discretion.
(k)    For purposes of this Agreement, an Event of Default shall be deemed to be continuing until it is waived in accordance with Section 17.2.
(l)    Subject to the provisions of Section 11.13, each reference to delivery to “each Lender (via the Collateral Agent’s Website)” shall mean delivery by the applicable party to the Collateral Agent of such notice, report, certificate or other documents (collectively, the “Lender Information”) by e-mail at Capital.Southwest@usbank.com (or such other email address as the Collateral Agent may specify), with a subject heading “FOR POSTING – Capital Southwest SPV LLC/DB”; provided, however, that with respect to (w) any Advance Request (or subsequent notice of a revocation or delay thereof), any notice delivered pursuant to Section 2.4 or Section 2.5, posting pursuant to the preceding sentence shall not constitute delivery to the Lenders. The Facility Agent, the Collateral Agent and the Collateral Custodian agree to provide
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all Lender Information and other materials as requested by the Lenders (to the extent such materials are reasonably available to such party) to be delivered to the Collateral Agent to be posted on the Collateral Agent’s Website for access by each Lender. Any Lender Information so delivered to the Collateral Agent will be made available on a password protected basis to the Lenders and other parties entitled thereto under this Agreement on the Collateral Agent’s Website within one (1) Business Day following the Collateral Agent’s receipt thereof. Posting pursuant to the preceding sentence shall constitute valid delivery of the Lender Information to the Lenders with the terms of this Agreement. As a condition to access to the Collateral Agent’s internet website, the Collateral Agent may require registration and the acceptance of a disclaimer. The Collateral Agent shall be entitled to rely on but shall not be responsible for the content or accuracy of any information provided in any notice and may affix thereto any disclaimer it deems appropriate in its reasonable discretion.
(m)    If any Lender elects not to receive a Note, all references herein and in the other Transaction Documents to such Lender’s Note shall be deemed to mean the Advances outstanding with respect to such Lender. The parties hereto acknowledge and agree that the provisions herein and the other Transaction Documents related to the Lenders hereunder shall apply to each Lender regardless of whether such Lender has received a Note.
(n)    Unless otherwise expressly stated in this Agreement, if at any time any change in generally accepted accounting principles (including the adoption of IFRS) would affect the computation of any covenant (including the computation of any financial covenant) set forth in this Agreement or any other Transaction Document, the Borrower and the Facility Agent shall negotiate in good faith to amend such covenant to preserve the original intent in light of such change; provided, that, until so amended, (i) such covenant shall continue to be computed in accordance with the application of generally accepted accounting principles prior to such change and (ii) the Borrower shall provide to the Facility Agent a written reconciliation in form and substance reasonably satisfactory to the Facility Agent, between calculations of such covenant made before and after giving effect to such change in generally accepted accounting principles.
(o)    Any reference to “execute”, “executed”, “sign”, “signed”, “signature” or any other like term hereunder shall include execution by electronic signature (including, without limitation, any .pdf file, .jpeg file, or any other electronic or image file, or any “electronic signature” as defined under the U.S. Electronic Signatures in Global and National Commerce Act (“E-SIGN”) or the New York Electronic Signatures and Records Act (“ESRA”), which includes any electronic signature provided using Orbit, Adobe Fill & Sign, Adobe Sign, DocuSign, or any other similar platform identified by the Borrower and reasonably available at no undue burden or expense to the Collateral Agent and the Collateral Custodian), except to the extent the Collateral Agent or the Collateral Custodian requests otherwise. Any such electronic signatures shall be valid, effective and legally binding as if such electronic signatures were handwritten signatures and shall be deemed to have been duly and validly delivered for all purposes hereunder.
(p)    Any instruction, direction, request or order by the Borrower (or the Servicer on its behalf) shall be deemed to include the delivery to the Collateral Agent, the Collateral Custodian or the Securities Intermediary, as applicable, by email or otherwise in writing or other electronic communication or file transfer protocol, of a confirmation of trade, trade ticket, trade blotter, instruction to post or to commit to the trade, message via Markit Loan Settlement Custodial Services (Markit CIDD) or similar language, document or other written instruction by the Borrower (or the Servicer on its behalf), and shall constitute a direction and certification that the transaction is in compliance with and satisfies all applicable provisions as provided under this Agreement.
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ARTICLE II

THE FACILITY, ADVANCE PROCEDURES AND NOTES
Section 2.1.    Advances.
(a)    On the terms and subject to the conditions set forth in this Agreement, each Lender hereby agrees to make advances to or on behalf of the Borrower (individually, an “Advance” and collectively the “Advances”) from time to time on any date (each such date on which an Advance is made, an “Advance Date”) during the period from the Effective Date to the end of the Revolving Period; provided that (i) there shall be no more than two (2) Advance Dates during any calendar week and (ii) a Non-Extending Lender shall (notwithstanding anything in this Agreement to the contrary) only be required to make Advances to or on behalf of the Borrower during such Lender’s Revolving Period in effect immediately prior to becoming a Non-Extending Lender pursuant to Section 2.6.
(b)    Under no circumstances shall any Lender make an Advance if, after giving effect to such Advance and any purchase of Eligible Collateral Obligations by the Borrower in connection therewith, the aggregate outstanding principal amount of all Advances would exceed the lowest of (i) the Facility Amount, (ii) the Borrowing Base on such day and (iii) the Maximum Availability. Subject to the terms of this Agreement, during the Revolving Period, the Borrower may borrow, reborrow, repay and prepay (subject to the provisions of Section 2.4) one or more Advances.
Section 2.2.    Funding of Advances.
(a)    Subject to the satisfaction of the conditions precedent set forth in Section 6.2, the Borrower may request Advances hereunder by giving notice to the Collateral Agent, the Facility Agent and each Lender of the proposed Advance at or prior to 10:00 a.m., New York City time, at least one (1) Business Day prior to the proposed Advance Date. Such notice (herein called the “Advance Request”) shall be in substantially the form of Exhibit C-1 and shall include (among other things) the proposed Advance Date, the amount of such proposed Advance, and shall, if applicable, be accompanied by an Asset Approval Request setting forth the information required therein with respect to the Collateral Obligations to be acquired by the Borrower on the Advance Date (if applicable). The amount of any Advance shall at least be equal to the least of (x) $500,000, (y) the (1) Borrowing Base on such day minus (2) the Advances outstanding on such day and (z) the (1) Facility Amount on such day minus (2) the Advances outstanding on such day before giving effect to the requested Advance as of such date. Any Advance Request given by the Borrower pursuant to this Section 2.2, shall be irrevocable and binding on the Borrower. The Facility Agent shall have no obligation to lend funds hereunder in its capacity as Facility Agent. Subject to receipt by the Collateral Agent of an Officer’s Certificate of the Borrower confirming the satisfaction of the conditions precedent set forth in Section 6.2, and the Collateral Agent’s receipt of such funds from the Lenders no later than 2:30 p.m. (New York City time) (or such other time as otherwise agreed in writing between the Lenders and the Collateral Agent), the Collateral Agent shall make the proceeds of such requested Advances available to the Borrower by deposit to such account as may be designated by the Borrower in the Advance Request in same day funds no later than 3:00 p.m., New York City time, on such Advance Date.
(b)    Lender’s Commitment. Notwithstanding anything contained in this Section 2.2(b) or elsewhere in this Agreement to the contrary, no Lender shall be obligated to provide the Borrower with funds in connection with an Advance in an amount that would result in the portion of the Advances then funded by it exceeding its Commitment then in effect. The obligation of each Lender to remit any Advance shall be several from that of the other Lenders,
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and the failure of any Lender to so make such amount available to the Borrower shall not relieve any other Lender of its obligation hereunder.
(c)    Unfunded Commitment Provisions. Notwithstanding anything to the contrary herein, upon the occurrence of the earlier of (i) any acceleration of the maturity of Advances pursuant to Section 13.2 or (ii) the end of the Revolving Period, if an Unfunded Exposure Shortfall exists, the Lenders shall, to the extent of available Commitments, fund Advances in an aggregate amount of the Unfunded Exposure Shortfall directly to the Collateral Agent to be deposited into the Unfunded Exposure Account, notwithstanding anything to the contrary herein (including, without limitation, the Borrower’s failure to satisfy any of the conditions precedent set forth in Section 6.2). For the avoidance of doubt, no Lender shall be obligated to fund an aggregate amount in excess of its Commitment.
Section 2.3.    Notes. The Borrower shall, upon the request of any Lender, on or after the date such Lender becomes a party hereto (whether on the date hereof or by assignment or otherwise), execute and deliver a Note evidencing the Advances of such Lender. Each such Note shall be payable to such Lender (or its registered assigns) in a face amount equal to such Lender’s Commitment as of the date hereof or the effective date on which such Lender becomes a party hereto, as applicable. Promptly upon the request of any Lender that has not previously received a Note, the Borrower shall deliver a duly executed Note in an aggregate face amount equal to the applicable Lender’s Commitment as of the date of such request or the delivery of such Note (whichever is later). The Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to the Notes (or on any continuation of such grid, or at the option of such Lender, in its records), which notations, if made, shall evidence, inter alia, the date of the outstanding principal of the Advances evidenced thereby and each payment of principal thereon. Such notations shall be rebuttably presumptive evidence of the subject matter thereof absent manifest error; provided, that the failure to make any such notations shall not limit or otherwise affect any of the Obligations or any payment thereon.
Section 2.4.    Repayment and Prepayments.
(a)    The Borrower shall repay the Advances outstanding (i) on each Distribution Date to the extent required to be paid hereunder and funds are available therefor pursuant to Section 8.3 and (ii) in full on the Facility Termination Date.
(b)    Prior to the Facility Termination Date, the Borrower may, from time to time, make one or more voluntary prepayments, in whole or in part, of the outstanding principal amount of any Advance using Principal Collections on deposit in the Principal Collection Account or other funds available to the Borrower on such date; provided, that
(i)    all such voluntary prepayments shall require prior written notice substantially in the form of Exhibit I (a “Notice of Prepayment”) in accordance with Section 17.3 to the Collateral Agent, the Facility Agent and the Lenders by 11:00 a.m. one (1) Business Day prior to such voluntary prepayment;
(ii)    all such voluntary partial prepayments shall be in a minimum amount of $500,000;
(iii)    each prepayment shall be applied on the Business Day received by the Collateral Agent if received by 3:00 p.m., New York City time, on such day (or, if received after 3:00 p.m., New York City time, on the immediately following Business Day) as Amount Available constituting Principal Collections pursuant to Section 8.3(a) as if (x) the date of such prepayment were a Distribution Date and (y) such prepayment occurred during the Collection
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Period to which such Distribution Date relates; provided that, after the end of the Revolving Period of a Non-Extending Lender (which, for the avoidance of doubt, shall mean such Lender’s Revolving Period in effect immediately prior to becoming a Non-Extending Lender pursuant to Section 2.6), at the Borrower’s election any prepayment under this sub-clause (b) may be made to the Non-Extending Lenders pro rata (without requiring a payment to be made to the other Lenders) in accordance with this Section 2.4, and such prepayment shall result in a simultaneous reduction of such Non-Extending Lender’s Commitments in the amount of such prepayment.
Each such prepayment shall be subject to the payment of any amounts required by Section 2.5(b) (if any) resulting from a prepayment or payment.
Section 2.5.    Permanent Reduction of Facility Amount.
(a)    The Borrower may at any time upon three (3) Business Days’ prior written notice given in accordance with Section 17.3 to the Facility Agent (with a copy to the Collateral Agent), permanently reduce the Facility Amount (i) in whole upon payment in full (in accordance with Section 2.4) of the aggregate outstanding principal amount of all Advances or (ii) in part by any pro rata amount that the Facility Amount exceeds the aggregate outstanding principal amount of all Advances (after giving effect to any concurrent prepayment thereof). In connection with any permanent reduction of the Facility Amount under this Section 2.5(a), the unfunded Commitment of each Lender shall automatically, and without any further action by any party, be reduced pro rata with all other Lenders such that the sum of all Commitments will equal the newly reduced Facility Amount.
(b)    As a condition precedent to any permanent reduction of the Facility Amount pursuant to Section 2.5(a), the Borrower shall pay to each Lender and the Facility Agent for their respective accounts, any applicable Non-Call Fee; provided that no such Non-Call Fee shall be payable to any Non-Extending Lender.
Section 2.6.    Extension of Revolving Period. The Borrower may, at any time after the first anniversary of the Effective Date and prior to the date that is twenty Business Days prior to the last day of the then effective Revolving Period, deliver a written notice to each Lender (with a copy to the Facility Agent and the Collateral Agent) requesting an extension of the Revolving Period for an additional twelve months (each qualifying request, an “Extension Request”). Each Lender may approve or decline (each such declining Lender, a “Non-Extending Lender”) an Extension Request in its sole discretion; provided, that the Lenders shall respond to an Extension Request in writing not later than 30 days following receipt of such Extension Request, and if any Lender does not respond in writing by the end of such 30 day period it shall be deemed to have denied such Extension Request. Each Lender shall promptly notify the Facility Agent (with a copy to the Collateral Agent) of any approved Extension Request. All Extension Requests must be approved by all Lenders to be effective, except for any Non-Extending Lender which has been or is expected to be repaid in full by the date that is 60 months after the Effective Date.
Section 2.7.    Calculation of Discount Factor.
(a)    In connection with the purchase of each Collateral Obligation and prior to such Collateral Obligation being purchased by the Borrower and included in the Collateral, the Facility Agent will assign (in its sole discretion) a Discount Factor for such Collateral Obligation; provided, that, such Discount Factor shall not exceed the lesser of (i) the Purchase Price or (ii) 100% of the par value of each such Collateral Obligation.
(b)    If a Revaluation Event occurs with respect to any Collateral Obligation, the Discount Factor of such Collateral Obligation may be amended by the Facility Agent (in its sole discretion). The Facility Agent will provide written notice of the revised Discount Factor to
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the Borrower, the Collateral Agent, each Lender (via the Collateral Agent’s Website) and the Servicer. To the extent the Servicer has actual knowledge or has received notice of any Revaluation Event with respect to any Collateral Obligation, the Servicer shall give prompt notice thereof to the Facility Agent.
(c)    If the circumstances giving rise to any Revaluation Event with regard to any Collateral Obligation cease to be applicable, the Servicer may provide written notice of such changed circumstance to the Facility Agent, and if no Revaluation Event shall then be continuing for such Collateral Obligation, the Facility Agent shall in good faith re-evaluate the Discount Factor for such Collateral Obligation; provided that the Discount Factor shall not exceed the Discount Factor previously assigned to such Collateral Obligation pursuant to clause (a) above.
Section 2.8.    Increase in Facility Amount.
(a)    The Borrower may, with the prior written consent of the Facility Agent (which consent may be conditioned on one or more conditions precedent in its sole discretion), (i) increase the Commitment of the existing Lenders (pro rata) with the consent of each such Lender agreeing to an increase (which consent may be conditioned on one or more conditions precedent in its sole discretion), (ii) if such existing Lenders do not agree to the a pro rata increase of the Commitments pursuant to the foregoing clause (i), increase the Commitment of existing Lenders non-pro rata with the consent of each such Lender agreeing to an increase (which consent may be conditioned on one or more conditions precedent in its sole discretion) and/or (iii) if such existing Lenders do not agree to increase the Commitments pursuant to the foregoing clauses (i) or (ii), add additional Lenders satisfactory to the Borrower, in each case which shall increase the Facility Amount by the amount of the increased or new Commitment of each such existing or additional Lenders. Notwithstanding the foregoing, no such increase shall be permitted without the prior written consent of DBNY if, after giving effect to any such increase, DBNY’s Commitment will no longer be at least 51% of the Facility Amount. Notwithstanding anything herein to the contrary, no Lender shall have any obligation to increase its Commitment and no Lender’s Commitment shall be increased without its consent thereto, and each Lender may at its option, unconditionally and without cause, decline to increase its Commitment.
(b)    Notwithstanding anything to the contrary in clause (a), the Borrower may, with the prior written consent of the Facility Agent and DBNY (which consents may be conditioned on one or more conditions precedent in its sole discretion), further increase the Commitment of DBNY up to an aggregate Facility Amount of $400,000,000 (with notice to the Collateral Agent).
Section 2.9.    Defaulting Lenders.
(a)    Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i)    Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Collateral Agent, with respect to the Advances, for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article XIII or otherwise) shall be applied at such time or times as may be determined by the Facility Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Facility Agent hereunder; second, as the Borrower may request (so long as no Unmatured Event of Default or Event of Default shall have occurred and be continuing), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Facility Agent; third, if so determined by the
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Facility Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Advances under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Event of Default shall have occurred and be continuing, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.9(a)(i) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(ii)    Certain Fees. No Defaulting Lender shall be entitled to receive any fee or expenses pursuant to this Agreement for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
(iii)    Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders.
(b)    Defaulting Lender Cure. If the Borrower and the Facility Agent agree in writing that a Lender is no longer a Defaulting Lender, the Facility Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Facility Agent may determine to be necessary to cause the Loans to be held pro rata by the Lenders in accordance with the applicable Commitments whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.
(c)    Hedge Counterparties. So long as any Lender is a Defaulting Lender, such Lender shall not be a Hedge Counterparty with respect to any Hedging Agreement entered into while such Lender was a Defaulting Lender.
Section 2.10.    Conforming Changes.
(a)    In connection with the use or administration of Term SOFR, the Facility Agent and the Borrower will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document. The Facility Agent will promptly notify the Lenders and the Collateral Agent of the effectiveness of any Conforming Changes in connection with the use or administration of Term SOFR.
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ARTICLE III

YIELD, UNDRAWN FEE, ETC.
Section 3.1.    Yield and Undrawn Fee.
(a)    The Borrower hereby promises to pay, on the dates specified in Section 3.2, Yield on the outstanding amount of each Advance (or each portion thereof) for the period commencing on the applicable Advance Date until such Advance is paid in full. No provision of this Agreement or the Notes shall require the payment or permit the collection of Yield in excess of the maximum amount permitted by Applicable Law.
(b)    The Borrower shall pay any Utilization Fee and any Undrawn Fee on the dates specified in Section 3.2.
Section 3.2.    Yield Distribution Dates. Yield accrued on each Advance (including any previously accrued and unpaid Yield), any accrued Utilization Fee and any accrued Undrawn Fee (as applicable) shall be payable, without duplication:
(a)    on the Facility Termination Date;
(b)    on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Advance; and
(c)    on each Distribution Date.
Section 3.3.    Yield Calculation. Each Advance shall bear interest on each day during each Accrual Period at a rate per annum equal to the product of (a) the Interest Rate for such Accrual Period multiplied by (b) the outstanding Advances attributable to such Note on such day. All Yield shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such Yield is payable over a year comprised of 360 days.
Section 3.4.    Computation of Yield, Fees, Etc. Each Lender shall determine the applicable Yield and all Fees to be paid by the Borrower on each Distribution Date for the related Accrual Period and shall advise the Facility Agent and the Collateral Agent thereof in writing no later than the Determination Date immediately prior to such Distribution Date. Such reporting may also include an accounting of any amounts due and payable pursuant to Sections 4.3 and 5.1.
Section 3.5.    Utilization. If the Utilization Condition is not satisfied at any time during the Revolving Period, then the applicable Utilization Shortfall shall be deemed to bear interest on each day such condition is not satisfied at a rate per annum equal to the Applicable Margin. Such interest shall be payable as a fee (the “Utilization Fee”) to the Lenders in accordance with Sections 3.1 and 3.2 and each applicable Fee Letter, and shall be computed on the basis of the actual number of days (including the first day but excluding the last day) in the relevant period such condition is not satisfied over a year comprised of 360 days. As used herein:
Required Utilization” has the same meaning as the term “Utilization Fee Rate” as set forth in the Fee Letters (other than the Agent Fee Letter).
Utilization” means an amount (expressed as a percentage) equal to (i) the aggregate principal amount of outstanding Advances divided by (ii) the aggregate Commitments.
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Utilization Condition” means a condition that is satisfied if the Utilization is greater than or equal to the Required Utilization.
Utilization Shortfall” means, on any date of determination, the greater of (I) zero and (II) the difference between (i)(x) the Required Utilization multiplied by (y) the aggregate Commitments on such day minus (ii) the aggregate principal amount of outstanding Advances on such day.
ARTICLE IV

PAYMENTS; TAXES
Section 4.1.    Making of Payments. Subject to, and in accordance with, the provisions of this Agreement, all payments of principal of or Yield on the Advances or Fees and other amounts due to the Lenders shall be made pursuant to Section 8.3(a) by no later than 3:00 p.m., New York City time, on the day when due in lawful money of the United States of America in immediately available funds. Payments received by any Lender after 3:00 p.m., New York City time, on any day will be deemed to have been received by such Lender on the next following Business Day. Payments in reduction of the principal amount of the Advances shall be allocated and applied to Lenders pro rata based on their respective portions of such Advances, or in any such case in such other proportions as each affected Lender may agree upon in writing from time to time with the Borrower. Payments of Yield and Undrawn Fee shall be allocated and applied to Lenders pro rata based upon the respective amounts of interest and fees due and payable to them.
Section 4.2.    Due Date Extension. If any payment of principal or Yield with respect to any Advance or Fee falls due on a day which is not a Business Day, then such due date shall be extended to the next following Business Day, and additional Yield shall accrue and be payable for the period of such extension at the rate applicable to such Advance.
Section 4.3.    Taxes.
(a)    Payments Free of Taxes. Any and all payments to a Recipient by or on account of any obligation of the Borrower under any Transaction Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Official Body in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings for Indemnified Tax applicable to additional sums payable under this Section 4.3(a)) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding for Indemnified Tax been made.
(b)    Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Official Body in accordance with Applicable Law, or at the option of the Facility Agent timely reimburse it for the payment of, any Other Taxes.
(c)    Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 4.3(c)) payable or paid by such Recipient or required to be withheld or
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deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Facility Agent and the Collateral Agent), or by the Facility Agent on its own behalf or on behalf of a Lender, accompanied by a written statement thereof setting forth in reasonable detail the basis and calculation of such amounts, shall be conclusive absent manifest error.
(d)    Indemnification by the Lenders. Each Lender shall severally indemnify the Facility Agent or the Collateral Agent, as applicable, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Facility Agent or the Collateral Agent, as applicable, for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 15.9 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Facility Agent or the Collateral Agent, as applicable, in connection with any Transaction Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Official Body. A certificate as to the amount of such payment or liability delivered to any Lender by the Facility Agent or the Collateral Agent, as applicable, shall be conclusive absent manifest error. Each Lender hereby authorizes the Facility Agent and the Collateral Agent, as applicable, to set off and apply any and all amounts at any time owing to such Lender under any Transaction Document or otherwise payable by the Facility Agent or the Collateral Agent, as applicable, to the Lender from any other source against any amount due to the Facility Agent or the Collateral Agent, as applicable, under this Section 4.3(d).
(e)    Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to an Official Body pursuant to this Section 4.3, the Borrower shall deliver to the Facility Agent the original or a certified copy of a receipt issued by such Official Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Facility Agent.
(f)    Status of Lenders.
(i)    Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Transaction Document shall deliver to the Borrower and the Facility Agent and the Collateral Agent, at the time or times prescribed by Applicable Law or reasonably requested by the Borrower, the Facility Agent or the Collateral Agent, such properly completed and executed documentation prescribed by Applicable Law or reasonably requested by the Borrower, the Facility Agent or the Collateral Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower, the Facility Agent or the Collateral Agent, shall promptly deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower, the Facility Agent or the Collateral Agent as will enable the Borrower, the Facility Agent or the Collateral Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 4.3(f)(ii)(A), (ii)(B), and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii)    Without limiting the generality of the foregoing, if the Borrower is a U.S. Borrower:
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(A)    any Lender that is a U.S. Person shall deliver to the Borrower and the Facility Agent (with a copy to the Collateral Agent) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Facility Agent) properly completed and executed originals of IRS Form W-9 (or successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B)    any Foreign Lender shall, to the extent it is entitled to do so under Applicable Law, deliver to the Borrower and the Facility Agent (with a copy to the Collateral Agent) (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Facility Agent) whichever of the following is applicable:
(I)    in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Transaction Document, properly completed and executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E (or successor form of each) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Transaction Document, properly completed and executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E (or successor form of each) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(II)    properly completed and executed originals of IRS Form W-8ECI (or successor form);
(III)    in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that such Foreign Lender is not a “bank” as that term is used in Section 881(c)(3)(A) of the Code, a “10-percent shareholder” with respect to the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) properly completed and executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E (or successor form of each); or
(IV)    to the extent a Foreign Lender is not the beneficial owner, properly completed and executed originals of IRS Form W-8IMY (or any successor forms), accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9 (or any successor forms), and/or other certification documents from each beneficial owner, as applicable, or successor form of each of the foregoing certifications; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner;
(C)    any Foreign Lender shall, to the extent it is entitled to do so under Applicable Law, deliver to the Borrower and the Facility Agent (with a copy to the
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Collateral Agent) (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Facility Agent) executed originals of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Facility Agent to determine the withholding or deduction required to be made; and
(D)    if a payment made to a Lender under any Transaction Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Facility Agent (with a copy to the Collateral Agent) at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Facility Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Facility Agent as may be necessary for the Borrower and the Facility Agent to (x) comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or (y) determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments or expansions of FATCA made after the date of this Agreement and any successor versions of FATCA.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Facility Agent in writing of its legal inability to do so.
(g)    Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it is eligible to receive or has received a refund, credit, offset or other reimbursement of or with respect to any Taxes (including any Tax credit in lieu of a refund) as to which it has been indemnified pursuant to this Section 4.3 (including by the payment of additional amounts pursuant to this Section 4.3), it shall promptly pay to the indemnifying party an amount equal to such refund, credit, offset or reimbursement (but only to the extent of indemnity payments made under this Section 4.3 with respect to the Taxes giving rise to such refund, credit, offset or reimbursement), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Official Body with respect to such refund, credit, offset or reimbursement). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 4.3(g) (plus any penalties, interest or other Charges imposed by the relevant Official Body) in the event that such indemnified party is required to repay such refund, credit, offset or reimbursement to such Official Body. Notwithstanding anything to the contrary in this Section 4.3(g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 4.3(g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund, credit, offset or reimbursement had never been paid. This Section 4.3(g) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. In no event shall this Section 4.3(g) be construed to require a Lender to repay any indirect tax benefit arising from an Indemnified Tax such as a foreign tax credit.
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(h)    Survival. Each party’s obligations under this Section 4.3 shall survive the resignation or replacement of the Facility Agent or any assignment of rights by, or the replacement of, a Lender and the repayment, satisfaction or discharge of all obligations under any Transaction Document.
(i)    Defined Terms. For the avoidance of doubt, for purposes of this Section 4.3, the term “Applicable Law” includes FATCA.
ARTICLE V

INCREASED COSTS, ETC.
Section 5.1.    Increased Costs, Capital Adequacy.
(a)    If, due to either (i) the introduction of or any change following the date hereof (with respect to DBNY or any Lender to which DBNY assigns any outstanding Advance) and the date that a Lender becomes a Lender hereunder (with respect to such other Lender, such date, a “Lender Effective Date”) (including, without limitation, any change by way of imposition or increase of reserve requirements) in or in the interpretation, administration or application arising following the date hereof or the Lender Effective Date, as applicable, of any Applicable Law, in each case whether foreign or domestic or (ii) the compliance with any guideline or request following the date hereof or Lender Effective Date, as applicable, from any central bank or other Official Body (whether or not having the force of law), (A) there shall be any increase in the cost to the Facility Agent, any Lender, successor or assign thereof (each of which shall be an “Affected Person”) of agreeing to make or making, funding or maintaining any Advance (or any reduction of the amount of any payment (whether of principal, interest, fee, compensation or otherwise) to any Affected Person hereunder), as the case may be, (B) there shall be any reduction in the amount of any sum received or receivable by an Affected Person under this Agreement or under any other Transaction Document, or (C) any Recipient is subject to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations under this Agreement, or its deposits, reserves, other liabilities or capital attributable thereto, then, in each case, the Borrower shall, from time to time but subject to Section 8.3, after written demand by the Facility Agent (which demand shall be accompanied by a statement setting forth in reasonable detail the basis for such demand, together with documents evidencing the same), on behalf of such Affected Person, pay to such Affected Person, additional amounts sufficient to compensate such Affected Person for such increased costs or reduced payments within thirty (30) days after such demand; provided, that the amounts payable under this Section 5.1 shall be without duplication of amounts payable under Section 4.3.
(b)    If either (i) the introduction of or any change following the date hereof or Lender Effective Date, as applicable, in or in the interpretation, administration or application arising following the date hereof or Lender Effective Date, as applicable, of any law, guideline, rule or regulation, directive or request or (ii) the compliance by any Affected Person with any law, guideline, rule, regulation, directive or request following the date hereof, from any central bank, any Official Body or agency, including, without limitation, compliance by an Affected Person with any request or directive regarding capital adequacy or liquidity coverage, has or would have the effect of reducing the rate of return on the capital of any Affected Person, as a consequence of its obligations hereunder or any related document or arising in connection herewith or therewith to a level below that which any such Affected Person could have achieved but for such introduction, change or compliance (taking into consideration the policies of such Affected Person with respect to capital adequacy or liquidity coverage), by an amount deemed by such Affected Person to be material, then, from time to time but subject to Section 8.3, after
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demand by such Affected Person (which demand shall be accompanied by a statement setting forth in reasonable detail the basis for such demand, together with documents evidencing the same), the Borrower shall pay such Affected Person such additional amounts as will compensate such Affected Person for such reduction.
(c)    If an Affected Person shall at any time (without regard to whether any Basel III Regulations are then in effect) suffer or incur (i) any explicit or implicit charge, assessment, cost or expense by reason of the amount or type of assets, capital, liquidity or supply of funding such Affected Person or any of its Affiliates is required or expected to maintain in connection with the transactions contemplated herein, without regard to (A) whether such charge, assessment, cost or expense is imposed or recognized internally, externally or inter-company or (B) whether it is determined in reference to a reduction in the rate of return on such Affected Person’s or Affiliate’s assets or capital, an inherent cost of the establishment or maintenance of a reserve of stable funding, a reduction in the amount of any sum received or receivable by such Affected Person or its Affiliates or otherwise, or (ii) any other imputed cost or expense arising by reason of the actual or anticipated compliance by such Affected Person or any of its Affiliates with the Basel III Regulations, then, subject to Section 8.3, upon demand by or on behalf of such Affected Person through the Facility Agent, the Borrower shall pay to such Affected Person, such amount as will, in the determination of such Affected Person, compensate such Affected Person therefor. A certificate of the applicable Affected Person setting forth the amount or amounts necessary to compensate the Affected Person under this Section 5.1(c) shall be delivered to the Borrower and shall be conclusive absent manifest error.
(d)    In determining any amount provided for in this Section 5.1, the Affected Person may use any reasonable averaging and attribution methods. The Facility Agent, on behalf of any Affected Person making a claim under this Section 5.1, shall submit to the Borrower a certificate setting forth in reasonable detail the basis for and the computations of such additional or increased costs, which certificate shall be conclusive absent manifest error.
ARTICLE VI

EFFECTIVENESS; CONDITIONS TO ADVANCES
Section 6.1.    Effectiveness. This Agreement shall become effective on the first day (the “Effective Date”) on which the Facility Agent, on behalf of the Lenders, shall have received the following, each in form and substance reasonably satisfactory to the Facility Agent:
(a)    Transaction Documents. This Agreement and each other Transaction Document, in each case duly executed by each party thereto;
(b)    Notes. For each Lender that has requested the same, a Note duly completed and executed by the Borrower and payable to such Lender;
(c)    Establishment of Accounts. Evidence that each Account has been established;
(d)    Resolutions. Certified copies of the resolutions of the board of managers (or similar items) of the Borrower, the Equityholder and the Servicer approving the Transaction Documents to be delivered by it hereunder and the transactions contemplated hereby, certified by its secretary or assistant secretary or other authorized officer;
(e)    Organizational Documents. The certificate of formation (or similar organizational document) of each of the Borrower, the Equityholder and the Servicer certified by
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the Secretary of State of its jurisdiction of organization; and a certified, executed copy of the Borrower’s, the Equityholder’s and the Servicer’s organizational documents;
(f)    Good Standing Certificates. Good standing certificates for each of the Borrower, the Equityholder and the Servicer issued by the applicable Official Body of its jurisdiction of organization;
(g)    Incumbency. A certificate of a manager of each of the Borrower, the Equityholder and the Servicer certifying the names and true signatures of the managers or officers authorized on its behalf to sign this Agreement and the other Transaction Documents to be delivered by it;
(h)    Filings. Copies of proper financing statements, as may be necessary or, in the opinion of the Facility Agent, desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the security interest of the Collateral Agent on behalf of the Secured Parties in all Collateral in which an interest may be pledged hereunder;
(i)    Opinions. Legal opinions of Eversheds Sutherland (US) LLP, counsel for the Borrower, the Equityholder and the Servicer, and Nixon Peabody LLP, counsel for the Collateral Agent, each in form and substance reasonably satisfactory to the Facility Agent covering such matters as the Facility Agent may reasonably request;
(j)    No Event of Default, etc. No Event of Default or Unmatured Event of Default has occurred and is continuing or will result from the issuance of the Notes and the borrowing hereunder;
(k)    Liens. The Facility Agent shall have received (i) the results of a recent search by a Person satisfactory to the Facility Agent, of the UCC, judgment, security interest and tax lien filings which may have been filed with respect to personal property of the Borrower, and bankruptcy and pending lawsuits with respect to the Borrower and the results of such search shall be satisfactory to the Facility Agent and (ii) filed UCC termination statements, if any, necessary to release all security interests and other rights of any Person in any Collateral previously granted by the Borrower and any executed pay off letters reasonably requested by the Facility Agent;
(l)    No Material Adverse Effect. No Material Adverse Effect shall have occurred since the formation date of the Equityholder and no litigation shall have commenced which, if successful, could reasonably be expected to have a Material Adverse Effect;
(m)    [Reserved].
(n)    Compliance. The Facility Agent and the Lenders shall have received sufficiently in advance of the date hereof, all documents and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56; and
(o)    Other. Such other approvals, documents, opinions, certificates and reports as the Facility Agent may reasonably request.
Section 6.2.    Advances and Reinvestments. The making of any Advance (including the initial Advance hereunder) and any Reinvestment are all subject to the condition that the Effective Date shall have occurred and to the following further conditions precedent that:
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(a)    No Event of Default, Etc. Each of the Transaction Documents shall be in full force and effect (unless terminated in accordance with their terms) and (i) no Event of Default or Unmatured Event of Default shall have occurred and be continuing or will result from the making of such Advance or Reinvestment (other than in connection with an Advance made pursuant to Section 2.2(c)), (ii) the representations and warranties of the Borrower and the Servicer contained herein and in the other Transaction Documents shall be true and correct in all respects as of the related Funding Date (or if such representations and warranties specifically refer to an earlier date, such earlier date), with the same effect as though made on the date of (and after giving effect to) such Advance or Reinvestment (or if applicable, such earlier specified date), and (iii) after giving effect to such Advance, or, in the case of any Reinvestment, both before and after giving effect to such Reinvestment (and in each case any purchase of Eligible Collateral Obligations in connection therewith), the aggregate outstanding principal balance of the Advances will not exceed the Borrowing Base, the Maximum Availability or the Facility Amount;
(b)    Requests. (i) In connection with the funding of any Advance pursuant to Section 2.2(a), the Collateral Agent, the Facility Agent and the Lenders shall have received the Advance Request for such Advance in accordance with Section 2.2(a), together with all items required to be delivered in connection therewith and (ii) in connection with any Reinvestment, the Collateral Agent, each Lender and the Facility Agent shall have received the Reinvestment Request for such Reinvestment in accordance with Section 8.3(b), together with all items required to be delivered in connection therewith;
(c)    Revolving Period. The Revolving Period shall not have ended (other than in connection with an Advance made pursuant to Section 2.2(c));
(d)    Document Checklist. The Facility Agent, the Collateral Agent and the Collateral Custodian shall have received a Document Checklist for each Eligible Collateral Obligation to be added to the Collateral on the related Funding Date;
(e)    Borrowing Base Confirmation. The Collateral Agent and the Facility Agent shall have received an Officer’s Certificate of the Borrower or the Servicer (which may be included as part of the Advance Request or Reinvestment Request) computed as of the date of such request and after giving effect thereto and to the purchase by the Borrower of the Collateral Obligations to be purchased by it on such date (if any), demonstrating that (i) the aggregate principal amount of all outstanding Advances shall not exceed the Borrowing Base, the Maximum Availability or the Facility Amount, and (ii) no Specified Borrowing Base Breach has occurred and is continuing, in each case, calculated as of the Funding Date as if the Collateral Obligations purchased by the Borrower on such Funding Date were owned by the Borrower;
(f)    Collateral Quality Tests, Minimum Equity Test. The Collateral Agent and the Facility Agent shall have received an Officer’s Certificate (which may be included as part of the Advance Request or Reinvestment Request) computed as of the date of such requested Advance and after giving effect thereto and to the purchase by the Borrower of the Collateral Obligations to be purchased by it on such Funding Date, demonstrating that (i) with respect to each Advance, all of the Collateral Quality Tests and the Minimum Equity Test are satisfied or (ii) with respect to each Reinvestment, each Collateral Quality Test is satisfied (or, if any Collateral Quality Test is not satisfied, it is improved or maintained);
(g)    Hedging Agreements. The Facility Agent shall have received evidence, in form and substance satisfactory to the Facility Agent, that the Borrower has entered into Hedging Agreements to the extent required by, and satisfying the requirements of, Section 10.6;
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(h)    Facility Agent Approval. In connection with the acquisition of any Collateral Obligation by the Borrower or the incremental pledge of any Collateral Obligation owned by the Borrower, (1) the Borrower shall have received an Asset Approval Notice with respect to such Collateral Obligation from the Facility Agent and (2) the Borrower (or the Servicer on its behalf) shall have given electronic notice back to the Facility Agent that it acknowledges and agrees to the terms set forth in the related Asset Approval Notice;
(i)    Permitted Use. The proceeds of any Advance or Reinvestment will be used solely by the Borrower (A) to acquire Collateral Obligations as identified on the applicable Asset Approval Notice, (B) to satisfy any unfunded commitments in connection with any Variable Funding Asset or (C) to make a distribution pursuant to Section 10.16;
(j)    Appraised Value. In connection with the acquisition of each Asset Based Loan and within the time periods set forth below, the Borrower or the Servicer (on behalf of the Borrower) shall have retained or shall have caused the Obligor to retain an Approved Valuation Firm to calculate the Appraised Value of (A) with respect to any such Collateral Obligation that has intellectual property, equipment or real property, as the case may be, in its borrowing base, the collateral securing such Collateral Obligation within twelve (12) months prior to the acquisition of such Collateral Obligation and inclusion into the Collateral and (B) with respect to all other Asset Based Loans, the collateral securing such Collateral Obligation within six (6) months prior to the acquisition of such Collateral Obligation and inclusion into the Collateral. The Servicer shall provide the appraised value report prepared by such Approved Valuation Firm and separately report the Approved Valuation Firm, appraisal metric and Appraised Value for such Collateral Obligation to the Facility Agent in the Advance Request or the Reinvestment Request related to such Collateral Obligation;
(k)    Borrower’s Certification. The Borrower shall have delivered to the Collateral Agent and the Facility Agent an Officer’s Certificate (which may be included as part of the Advance Request or Reinvestment Request) dated the date of such requested Advance or Reinvestment certifying that the conditions described in Sections 6.2(a) through (j) have been satisfied;
(l)    Certain Releases. If the proceeds of any Advance will be used by the Borrower to acquire Collateral Obligations from the Equityholder, the Facility Agent shall have received evidence satisfactory to it that any liens and other encumbrances on such Collateral Obligations have been terminated;
(m)    Payment of Fees. Prior to the date of or contemporaneously with the initial Advance, the Facility Agent and each Lender shall have received evidence, to its sole satisfaction, that all Fees due to the Facility Agent and the Lenders on the Effective Date have been paid in full;
(n)    Equity Contribution. Prior to the date of or contemporaneously with the initial Advance, the Facility Agent shall have received satisfactory evidence that the Equityholder has contributed $25,000,000 to the Borrower, such amount to be comprised of cash deposited in to the Principal Collection Account and/or Eligible Collateral Obligations (based on the Collateral Obligation Amount of such Eligible Collateral Obligation) as an equity contribution to the Borrower;
(o)    Borrowing Base Model. The Borrower, the Servicer and the Facility Agent shall have agreed to a form of Borrowing Base model (in Excel format); and
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(p)    Other. With respect to any Advance, the Facility Agent shall have received such other approvals, documents, opinions, certificates and reports as it may request, which request is reasonable as to content and timing.
Section 6.3.    Transfer of Collateral Obligations and Permitted Investments.
(a)    To the extent delivered by the Borrower (or Servicer on behalf of the Borrower) to the Securities Intermediary or the Collateral Custodian, the Securities Intermediary or the Collateral Custodian, as applicable, shall hold all Certificated Securities (whether Collateral Obligations or Permitted Investments) and Instruments in physical form at the Corporate Trust Office.
(b)    On the Effective Date (with respect to each Collateral Obligation and Permitted Investment owned by the Borrower on such date) and each time that the Borrower or the Servicer shall direct or cause the acquisition of any Collateral Obligation or Permitted Investment, the Borrower or the Servicer shall, if such Permitted Investment or, in the case of a Collateral Obligation, the related promissory note or assignment documentation has not already been delivered to the Securities Intermediary or the Collateral Custodian in accordance with the requirements set forth in Section 18.3(a) or such other provision the Account Control Agreement, cause the delivery of such Permitted Investment or, in the case of a Collateral Obligation, the related promissory note or assignment documentation in accordance with the requirements set forth in Section 18.3(a) or the Account Control Agreement to the Collateral Custodian or the Securities Intermediary, as applicable, to be held by the Collateral Custodian or credited by the Securities Intermediary to the Collection Account, as applicable, in accordance with the terms of this Agreement.
(c)    The Borrower or the Servicer shall cause all Collateral Obligations or Permitted Investments acquired by the Borrower to be transferred to the Collateral Custodian or the Securities Intermediary, as applicable, to be held hereunder or credited to the Collection Account, and shall cause all Collateral Obligations and Permitted Investments acquired by the Borrower to be delivered to the Collateral Custodian or the Securities Intermediary, as applicable, by one of the following means (and shall take any and all other actions necessary to create and perfect in favor of the Collateral Agent a valid security interest in each Collateral Obligation and Permitted Investment, which security interest shall be senior (subject to Permitted Liens) to that of any other creditor of the Borrower (whether now existing or hereafter acquired)):
(i)    in the case of an Instrument or a Certificated Security in registered form by having it Indorsed to the Collateral Custodian or the Securities Intermediary, as applicable, or in blank by an effective Indorsement or registered in the name of the Collateral Custodian or the Securities Intermediary, as applicable, and by (A) delivering such Instrument or Security Certificate to the Collateral Custodian or the Securities Intermediary, as applicable, at the Corporate Trust Office and (B) causing the Collateral Custodian or the Securities Intermediary, as applicable, to maintain (on behalf of the Collateral Agent for the benefit of the Secured Parties) continuous possession of such Instrument or Certificated Security at the Corporate Trust Office;
(ii)    in the case of an Uncertificated Security, by (A) causing the Collateral Agent to become the registered owner of such Uncertificated Security and (B) causing such registration to remain effective (for the avoidance of doubt, interests in Collateral Obligations consisting of loans that are not evidenced by delivery of a security (as defined in the UCC) shall not be treated as an Uncertificated Security);
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(iii)    in the case of any Security Entitlement, by causing each such Security Entitlement to be credited to the Account in the name of the Borrower;
(iv)    in the case of General Intangibles (including any Uncertificated Security, Collateral Obligation or Permitted Investment not evidenced by an Instrument) by filing, maintaining and continuing the effectiveness of, a financing statement naming the Borrower as debtor and the Collateral Agent as secured party and describing the Collateral Obligation or Permitted Investment (or a description of “all assets” of the Borrower) as the collateral at the filing office of the Secretary of State of Delaware; and
(v)    in the case of the Collateral Obligation Files, by delivering each to the Collateral Custodian in accordance with the terms of Section 18.3.
ARTICLE VII

ADMINISTRATION AND SERVICING OF COLLATERAL OBLIGATIONS
Section 7.1.    Retention and Termination of the Servicer. The servicing, administering and collection of the Collateral Obligations shall be conducted by the Person designated as Servicer from time to time in accordance with this Section 7.1. Subject to early termination due to the occurrence of an Event of Default or as otherwise provided below in this Article VII, the Borrower hereby designates the Equityholder, and the Equityholder hereby agrees to serve, as Servicer until the termination of this Agreement. For the avoidance of doubt, the Servicer is not an agent of the Facility Agent or any Lender.
Section 7.2.    Resignation and Removal of the Servicer; Appointment of Successor Servicer.
(a)    If an Event of Default shall occur and be continuing, the Facility Agent, by written notice given to the Servicer, may terminate all of the rights and obligations of the Servicer and appoint a successor pursuant to the terms hereof. In addition, if the Servicer is terminated during the continuance of an Event of Default, the Servicer shall, if so requested by the Facility Agent (individually or acting at the direction of the Required Lenders), deliver to any successor servicer copies of its Records within ten (10) Business Days after demand therefor and a computer tape or diskette (or any other means of electronic transmission acceptable to such successor servicer) containing as of the close of business on the date of demand all of the data maintained by the Servicer in computer format in connection with servicing the Collateral Obligations.
(b)    The Servicer shall not resign from the obligations and duties imposed on it by this Agreement as Servicer, except (subject to Section 7.2(d)) upon a reasonable determination by it that, by reason of a change in applicable legal requirements, the performance of its duties hereunder would cause it to be in violation of such legal requirements. Any such determination permitting the resignation of the Servicer pursuant to this Section 7.2(b) shall be evidenced by an Officer’s Certificate to such effect delivered and acceptable to the Facility Agent.
(c)    Any Person (i) into which the Servicer may be merged or consolidated in accordance with the terms of this Agreement, (ii) resulting from any merger or consolidation to which the Servicer shall be a party, (iii) acquiring by conveyance, transfer or lease substantially all of the assets of the Servicer, or (iv) succeeding to the business of the Servicer in any of the foregoing cases, shall execute an agreement of assumption to perform every obligation of the Servicer under this Agreement and, whether or not such assumption agreement is executed, shall be the successor to the Servicer under this Agreement without the execution or filing of any
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paper or any further act on the part of any of the parties to this Agreement, anything in this Agreement to the contrary notwithstanding.
(d)    Subject to the last sentence of this Section 7.2(d), Capital Southwest Corporation shall continue to perform the obligations of the Servicer hereunder until a successor Servicer has commenced servicing activities in the place of Capital Southwest Corporation. On and after the termination or resignation of the Servicer pursuant to this Section 7.2, the successor servicer appointed by the Facility Agent shall be the successor in all respects to the Servicer in its capacity as Servicer under this Agreement and the transactions set forth or provided for in this Agreement and shall be subject to all the rights, responsibilities, restrictions, duties, liabilities and termination provisions relating thereto placed on the Servicer by the terms and provisions of this Agreement. The Servicer agrees to cooperate and use reasonable efforts in effecting the transition of the responsibilities and rights of servicing of the Collateral Obligations, including the transfer to any successor servicer for the administration by it of all cash amounts that shall at the time be held by the Servicer for deposit, or have been deposited by the Servicer, or thereafter received with respect to the Collateral Obligations and the delivery to any successor servicer in an orderly and timely fashion of all files and records in its possession or reasonably obtainable by it with respect to the Collateral Obligations containing all information necessary to enable the successor servicer to service the Collateral Obligations. Notwithstanding anything contained herein to the contrary and to the extent permitted by Applicable Law without causing the Servicer to have liability, the resignation or termination of the Servicer shall not become effective until an entity acceptable to the Facility Agent in its sole discretion shall have assumed the responsibilities and obligations of the Servicer.
(e)    At any time, any of the Facility Agent or any Lender may irrevocably waive any rights granted to such party under Section 7.2(a). Any such waiver shall be in writing and executed by such party that is waiving its rights hereunder. A copy of such waiver shall be promptly delivered by the waiving party to the Servicer and the Facility Agent.
Section 7.3.    Duties of the Servicer. The Servicer shall manage, service, administer and make collections on the Collateral Obligations and perform the other actions required by the Servicer in accordance with the terms and provisions of this Agreement and the Servicing Standard.
(a)    The Servicer shall take or cause to be taken all such actions, as may be reasonably necessary or advisable to attempt to recover Collections from time to time, all in accordance with (i) Applicable Law, (ii) the applicable Collateral Obligation and its Underlying Instruments and (iii) the Servicing Standard. The Borrower hereby appoints the Servicer, from time to time designated pursuant to Section 7.1, as agent for itself and in its name to enforce and administer its rights and interests in the Collections and the related Collateral Obligations.
(b)    The Servicer shall administer the Collections in accordance with the procedures described herein. The Servicer shall (i) instruct all Obligors (and related agents) to deposit Collections directly into the Collection Account, (ii) deposit all Collections received directly by it into the Collection Account within one (1) Business Day of receipt thereof and (iii) cause the Equityholder and each administrative agent that is Affiliated with it to deposit all Collections received directly by the Equityholder or any such Affiliate into the Collection Account within one (1) Business Day of receipt thereof. The Servicer shall identify all Collections as either Principal Collections or Interest Collections, as applicable. The Servicer shall make such deposits or payments by electronic funds transfer through the Automated Clearing House system, or by wire transfer.
(c)    The Servicer shall maintain for the Borrower and the Secured Parties in accordance with their respective interests all Records that evidence or relate to the Collections
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not previously delivered to the Collateral Agent and shall, as soon as reasonably practicable upon reasonable demand of the Facility Agent, make available, or, upon the occurrence and during the continuation of an Event of Default, deliver to the Facility Agent copies of all Records in its possession which evidence or relate to the Collections.
(d)    The Servicer shall, as soon as practicable following receipt thereof, turn over to the applicable Person any cash collections or other cash proceeds received with respect to each Collateral Obligation that does not constitute a Collateral Obligation or was paid in connection with a Retained Interest.
(e)    On each Measurement Date, the Servicer (on behalf of the Borrower) shall re-determine the status of each Eligible Collateral Obligation as of such calculation date and provide notice of any change in the status of any Eligible Collateral Obligation to the Collateral Agent and, as a consequence thereof, (i) Collateral Obligations that were previously Eligible Collateral Obligations on a prior Measurement Date may be excluded from the Aggregate Eligible Collateral Obligation Amount on such Measurement Date, and (ii) Collateral Obligations that were previously not Eligible Collateral Obligations on a prior Measurement Date may (with the consent of the Facility Agent in its sole discretion as set forth in the related Asset Approval Notice following the Facility Agent’s receipt and review of a new Asset Approval Request) be included in the Aggregate Eligible Collateral Obligation Amount on such Measurement Date.
(f)    On each Measurement Date, the Servicer shall provide to the Facility Agent the updated Borrowing Base model in the form agreed pursuant to Section 6.2(o).
Section 7.4.    Representations and Warranties of the Servicer. The Servicer represents, warrants and covenants as of the Effective Date and each Funding Date as to itself:
(a)    Organization and Good Standing. It has been duly organized and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted;
(b)    Due Qualification. It is duly qualified to do business as a corporation in good standing and has obtained all necessary licenses and approvals in all jurisdictions where the failure to do so would reasonably be expected to have a Material Adverse Effect;
(c)    Power and Authority. It has the power, authority and legal right to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder; and the execution, delivery and performance of this Agreement and the Transaction Documents to which it is a party have been duly authorized by the Servicer by all necessary corporate action;
(d)    Binding Obligations. This Agreement and the Transaction Documents to which it is a party have been duly executed and delivered by the Servicer and, assuming due authorization, execution and delivery by each other party hereto and thereto, constitute its legal, valid and binding obligations enforceable against it in accordance with their respective terms, except as such enforceability may be limited by (A) bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights generally, (B) equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law and (C) implied covenants of good faith and fair dealing;
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(e)    No Violation. The execution, delivery and performance of this Agreement and the Transaction Documents to which it is a party, the consummation of the transactions contemplated thereby and the fulfillment of the terms thereof do not (A) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, its organizational documents, or any material indenture, agreement, mortgage, deed of trust or other instrument to which it is a party or by which it or its properties are bound, (B) result in the creation or imposition of any Adverse claim upon any of its properties pursuant to the terms of any such material indenture, agreement, mortgage, deed of trust or other instrument (except as may be created pursuant to this Agreement or any other Transaction Document) or (C) violate in any material respect any Applicable Law except, in the case of this subclause (C), to the extent that such conflict or violation would not reasonably be expected to have a Material Adverse Effect;
(f)    No Proceedings. There are no proceedings or investigations pending or, to the best of the Servicer’s knowledge, threatened against it, before any Official Body having jurisdiction over it or its properties (A) asserting the invalidity of any of the Transaction Documents, (B) seeking to prevent the making of the Advances or the consummation of any of the transactions contemplated by the Transaction Documents or (C) seeking any determination or ruling that would reasonably be expected to have a Material Adverse Effect;
(g)    No Consents. No consent, license, approval, authorization or order of, or registration, declaration or filing with, any Official Body having jurisdiction over it or any of its properties is required to be made in connection with the execution, delivery or performance of this Agreement and the Transaction Documents to which it is a party or the consummation of the transactions contemplated thereby, in each case other than (A) consents, licenses, approvals, authorizations, orders, registrations, declarations or filings which have been obtained or made and continuation statements and renewals in respect thereof and (B) where the lack of such consents, licenses, approvals, authorizations, orders, registrations, declarations or filings would not reasonably be expected to have a Material Adverse Effect;
(h)    Information True and Correct. All factual information (other than projections and forward-looking information (which are not facts) or information relating to third parties that are not Affiliates of the Borrower, the Equityholder or the Servicer) heretofore furnished by or on behalf of the Servicer in writing to any Lender, the Collateral Agent or the Facility Agent in connection with this Agreement or any transaction contemplated hereby (including, without limitation, prior to the date hereof but after taking into account all updates, modifications and supplements to such information) is (when taken as a whole) true and correct in all material respects (or, if not prepared by or under the direction of the Servicer, true and correct in all material respects to the knowledge of the Servicer after reasonable inquiry) and does not and will not omit to state a material fact necessary to make the statements contained therein (when taken as a whole) not misleading (or, if not prepared by or under the direction of the Servicer, does not omit to state such a fact to the knowledge of the Servicer after reasonable inquiry), in each case as of the date furnished;
(i)    Financial Statements. The Servicer has delivered to each Lender complete and correct copies of (A) for the fiscal year ending March 31, 2023, within the time period required by Section 10.4(f) hereof, the unaudited consolidated financial statements of the Servicer for the fiscal year then ended, (B) beginning with the fiscal year ending March 31, 2024, within the time period required by Section 10.4(f) hereof, the audited consolidated financial statements of the Servicer for the fiscal year most recently ended, and (C) beginning with the fiscal quarter ending March 31, 2024, within the time period required by Section 10.4(f) hereof, the unaudited consolidated financial statements of the Servicer for the fiscal quarter most recently ended. Such financial statements (including the related notes) fairly present the financial condition of the Servicer as of the respective dates thereof and the results of operations
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for the periods covered thereby in all material respects, each in accordance with GAAP, except in the case of unaudited financial statements, the absence of footnotes and year-end adjustments. There has been no material adverse change in the business, operations, financial condition, properties or assets of the Servicer since March 31, 2023;
(j)    Eligibility of Collateral Obligations. All Collateral Obligations included as Eligible Collateral Obligations in the most recent calculation of any Borrowing Base required to be determined hereunder are Eligible Collateral Obligations as of the date such Borrowing Base was calculated;
(k)    Collections. The Servicer acknowledges that all Collections received by it or its Affiliates with respect to the Collateral are held and shall be held in trust for the benefit of the Secured Parties until deposited into the Collection Account;
(l)    [Reserved];
(m)    Solvency. The Servicer is not the subject of any Insolvency Event. The transactions under this Agreement and any other Transaction Document to which the Servicer is a party do not and will not render the Servicer insolvent;
(n)    Exchange Act Compliance; Regulations T, U and X. None of the transactions contemplated herein or the other Transaction Documents (including, without limitation, the use of the Proceeds from the pledge of the Collateral) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X of the FRS Board, 12 C.F.R., Chapter II;
(o)    No Injunctions. No injunction, writ, restraining order or other order of any nature materially adversely affects the Servicer’s performance of its obligations under this Agreement or any Transaction Document to which the Servicer is a party;
(p)    Allocation of Charges. There is not any agreement or understanding between the Servicer and the Borrower (other than as expressly set forth herein or as consented to by the Facility Agent), providing for the allocation or sharing of obligations to make payments or otherwise in respect of any Taxes, fees, assessments or other governmental Charges; and
(q)    Selection Procedures. In selecting the Collateral Obligations hereunder and for Affiliates of the Borrower, no selection procedures were employed which are intended to be adverse to the interests of any Lender.
Section 7.5.    Covenants of the Servicer. Until the date on or after the Facility Termination Date on which the Commitments have been terminated in full and the Obligations (other than contingent Obligations for which no claim has been made) shall have been repaid in full:
(a)    Compliance with Agreements and Applicable Laws. The Servicer shall perform each of its obligations under this Agreement and the other Transaction Documents and comply with all Applicable Laws, including those applicable to the Collateral Obligations and all Collections thereof, except to the extent that the failure to so comply would not reasonably be expected to have a Material Adverse Effect.
(b)    Maintenance of Existence and Conduct of Business. The Servicer shall: (i) do or cause to be done all things necessary to (A) preserve and keep in full force and effect its existence as a corporation and its rights and franchises in the jurisdiction of its formation and (B) qualify and remain qualified as a foreign corporation in good standing and preserve its rights and
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franchises in each jurisdiction in which the failure to so qualify and remain qualified and preserve its rights and franchises would reasonably be expected to have a Material Adverse Effect; (ii) continue to conduct its business substantially as now conducted or as otherwise permitted hereunder and under its organizational documents; and (iii) at all times maintain, preserve and protect all of its licenses, permits, charters and registrations except where the failure to maintain, preserve and protect such licenses, permits, charters and registrations would not reasonably be expected to have a Material Adverse Effect.
(c)    Books and Records. The Servicer shall keep proper books of record and account in which full and correct, in all material respects, entries shall be made of all financial transactions and the assets and business of the Servicer in accordance with GAAP, maintain and implement administrative and operating procedures, and keep and maintain all documents, books, records and other information necessary or reasonably advisable for the collection of all Collateral Obligations.
(d)    ERISA. The Servicer shall give the Facility Agent, the Collateral Agent and each Lender prompt written notice of any ERISA Event that, alone or together with all other ERISA Events that have occurred, would reasonably be expected to have a Material Adverse Effect.
(e)    Compliance with Collateral Obligations and Servicing Standard. The Servicer shall, at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under any Collateral Obligations (except, in the case of a successor Servicer, such material provisions, covenants and other provisions shall only include those provisions relating to the collection and servicing of the Collateral Obligations to the extent such obligations are set forth in a document included in the related Collateral Obligation File) and shall comply with the Servicing Standard in all material respects with respect to all Collateral Obligations.
(f)    Maintain Records of Collateral Obligations. The Servicer shall, at its own cost and expense, maintain reasonably satisfactory and complete records of the Collateral, including a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral. The Servicer shall maintain its computer systems so that, from and after the time of sale of any Collateral Obligation to the Borrower, the Servicer’s master computer records (including any back up archives) that refer to such Collateral Obligation shall indicate the interest of the Borrower and the Collateral Agent in such Collateral Obligation and that such Collateral Obligation is owned by the Borrower and has been pledged to the Collateral Agent for the benefit of the Secured Parties pursuant to this Agreement.
(g)    Liens. The Servicer shall not create, incur, assume or permit to exist any Lien on or with respect to any of its rights under any of the Transaction Documents, whether with respect to the Collateral Obligations or any other Collateral other than Permitted Liens. The Servicer (on behalf of the Borrower and at the Borrower’s expense) will execute and file such financing and continuation statements and any other documents that may be required by any law or regulation of any governmental authority to preserve and protect fully the first priority perfected security interest of the Collateral Agent, for the benefit of the Secured Parties, in, to and under the Collateral Obligations and that portion of the Collateral in which a security interest may be perfected by filing.
(h)    Mergers. The Servicer shall not directly or indirectly, by operation of law or otherwise, merge with, consolidate with, acquire all or substantially all of the assets or capital stock of, or otherwise combine with or acquire, any Person, except that the Servicer shall be allowed to merge with any entity so long as the Servicer remains the surviving corporation of such merger and such merger does not result in a Change of Control. The Servicer shall give
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prior written notice of any merger to the Facility Agent, the Collateral Agent and each Lender (via the Collateral Agent’s Website).
(i)    Servicing Obligations. The Servicer will not (i) agree to any amendment, waiver or other modification of any Transaction Document to which it is a party and to which the Facility Agent is not a party without the prior written consent of the Facility Agent, (ii) agree or permit the Borrower to agree to a Material Modification with respect to any Collateral Obligation other than in accordance with Section 10.18, (iii) interpose any claims, offsets or defenses it may have as against the Borrower as a defense to its performance of its obligations in favor of any Affected Person hereunder or under any other Transaction Documents, (iv) agree to any amendment, waiver or other modification of any Underlying Instrument without the prior consent of the Borrower and (v) change its fiscal year so that the reports described in Section 10.4(f) would be delivered to the Facility Agent less frequently than every twelve (12) months.
(j)    Obligor Reports. The Servicer shall furnish to the Facility Agent, with respect to each Obligor:
(i)    within 10 Business Days of the completion of the Servicer’s portfolio review of such Obligor (which, for any individual Obligor, shall occur no less frequently than quarterly) (i) any financial reporting packages with respect to such Obligor and with respect to each Collateral Obligation for each Obligor (including any attached or included written information, statements and calculations) received by the Borrower and/or the Servicer as of the date of the Servicer’s most recent portfolio review and (ii) the internal monitoring report prepared by the Servicer with respect to each Obligor. Upon demand by the Facility Agent, the Servicer will provide (i) such other information as the Facility Agent may reasonably request with respect to any Collateral Obligation or Obligor (to the extent reasonably available to the Servicer) and (ii) with respect to any Collateral Obligation, updated Obligor Information for such Obligor. In no case, however, shall the Servicer be obligated hereunder to deliver such Obligor reports to the Facility Agent more than once per calendar month.
(k)    Commingling. The Servicer shall not, and shall not permit any of its Affiliates to, deposit or permit the deposit of any funds that do not constitute Collections or other proceeds of any Collateral Obligations into the Collection Account. The Servicer (on behalf of the Borrower) shall direct each Obligor to make payments in respect of each related Collateral Obligation directly into the Collection Account.
(l)    Indebtedness. The Servicer shall, within thirty (30) days of the Servicer incurring any Indebtedness, provide written notice of such Indebtedness to the Facility Agent.
(m)    Taxes. The Servicer shall file on a timely basis all federal and other material Tax returns (including foreign, federal, state, local and otherwise) required to be filed, if any, and shall pay all federal and other material Taxes due and payable by it (other than any amount the validity of which is contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP are provided on the books of the Servicer).
(n)    Payment, Performance and Discharge of Obligations. The Servicer shall pay, perform and discharge or cause to be paid, performed and discharged promptly all Charges payable by it except where the failure to so pay, discharge or otherwise satisfy such obligation would not, individually or in the aggregate, be expected to have a Material Adverse Effect.
(o)    Proceedings. The Servicer shall furnish to the Facility Agent, as soon as possible and in any event within three (3) Business Days after the Servicer receives notice or obtains actual knowledge thereof, notice of any settlement of, material judgment (including a material judgment with respect to the liability phase of a bifurcated trial) in or commencement of
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any material labor controversy, material litigation, material action, material suit or material proceeding before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Collateral, the Transaction Documents, the Collateral Agent’s interest in the Collateral or the Servicer, in each case which could reasonably be expected to cause a Material Adverse Effect.
(p)    Equity of the Borrower. The Servicer shall not, in its capacity as Equityholder, pledge the equity interests of the Borrower or otherwise permit any equity interests of the Borrower to be subject to a Lien.
Section 7.6.    Servicing Fees; Payment of Certain Expenses by Servicer. On each Distribution Date, to the extent not deferred in the Servicer’s discretion, the Servicer shall be entitled to receive out of the Collection Account the Servicing Fee for the related Collection Period pursuant to Section 8.3(a). The Servicer shall be required to pay all expenses incurred by it in connection with its activities under this Agreement and each other Transaction Document.
Section 7.7.    Collateral Reporting. The Servicer shall cooperate with the Collateral Agent in the performance of the Collateral Agent’s duties under Section 11.3. Without limiting the generality of the foregoing, the Servicer shall supply in a timely fashion any information maintained by it that the Collateral Agent may from time to time reasonably request with respect to the Collateral Obligations and reasonably necessary to complete the reports and certificates required to be prepared by the Collateral Agent hereunder or required to permit the Collateral Agent to perform its obligations hereunder.
Section 7.8.    Notices. The Servicer shall deliver to the Facility Agent and the Collateral Agent and each Lender via the Collateral Agent’s Website, (i) promptly (but in no event later than three (3) Business Days) after any of its Responsible Officers having obtained actual knowledge thereof, notice of any Unmatured Event of Default or Event of Default and (ii) promptly (but in no event later than four (4) Business Days) after any of its Responsible Officers having obtained actual knowledge thereof, notice of any Revaluation Event or Material Modification which was not previously approved by the Facility Agent.
Section 7.9.    Procedural Review of Collateral Obligations; Access to Servicer and Servicer’s Records.
(a)    The Facility Agent shall, at the Borrower’s expense, retain Protiviti, Inc. (or another nationally recognized audit firm acceptable to the Facility Agent in its sole discretion) to conduct and complete a procedural review of the Collateral Obligations in compliance with the standards set forth on Exhibit B hereto (as such Exhibit B may be reasonably amended from time to time by the Facility Agent with the consent of the Borrower; provided that during the occurrence of an Unmatured Event of Default or Event of Default, the Facility Agent may amend Exhibit B in its sole discretion by delivery of such amended Exhibit B by the Facility Agent to the Borrower without the consent of the Borrower or any other Person), (i) within 120 days after the Effective Date and (ii) twice annually thereafter at the request of the Facility Agent; provided that there shall be no limits on the Facility Agent’s right to conduct audits (at the Borrower’s expense) during the occurrence of an Unmatured Event of Default or Event of Default. The Facility Agent shall upon request, provide the results of such audit to the Borrower, the Servicer, the Collateral Agent and any Lender; provided that such requesting Borrower, Servicer, Collateral Agent or Lender executes a confidentiality agreement acceptable to the Facility Agent and Protiviti, Inc. or such other nationally recognized audit firm, as applicable.
(b)    Each of the Borrower and the Servicer shall permit representatives of the Facility Agent (and the Lenders may accompany the Facility Agent) and the Collateral Agent at
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any time and from time to time as the Facility Agent shall reasonably request (a) to inspect and make copies of and abstracts from its records relating to the Collateral Obligations, and (b) to visit its properties in connection with the collection, processing or servicing of the Collateral Obligations for the purpose of examining such records, and to discuss matters relating to the Collateral Obligations or such Person’s performance under this Agreement and the other Transaction Documents with any officer or employee or auditor (if any) of such Person having knowledge of such matters. Each of the Borrower and the Servicer agrees to render to the Facility Agent, Collateral Agent or any Lender such clerical and other assistance as may be reasonably requested with regard to the foregoing; provided, that such assistance shall not interfere in any material respect with the Servicer’s business and operations. So long as no Event of Default has occurred and is continuing, such visits and inspections shall occur only (i) upon five (5) days’ prior written notice, (ii) during normal business hours and (iii) no more than twice in any calendar year. During the existence of an Unmatured Event of Default, such visits and inspections shall occur upon three (3) Business Day’s prior written notice and during the existence of an Event of Default During, such visits and inspections shall occur upon two (2) Business Days’ prior written notice. During the existence of an Unmatured Event of Default or an Event of Default, there shall be no limit on the number of such inspections.
(c)    The Borrower and the Servicer, as applicable, shall provide to the Facility Agent (who may be accompanied by the Lenders) and the Collateral Agent access to the documentation evidencing the Collateral Obligations and all other documents regarding the Collateral Obligations included as part of the Collateral and the Related Security in each case, in its possession, in such cases where the Facility Agent or any Lender or Collateral Agent is required in connection with the enforcement of the rights or interests of the Lenders, or by applicable statutes or regulations, to review such documentation, such access being afforded without charge but only (i) upon five (5) days’ prior written notice (so long as no Event of Default has occurred and is continuing), (ii) during normal business hours and (iii) up to twice per calendar year (so long as no Event of Default has occurred and is continuing) or unless necessary to comply with Applicable Law. From and after the Effective Date and periodically thereafter at the reasonable discretion of the Facility Agent, the Facility Agent (who may be accompanied by the Lenders) and the Collateral Agent may review the Borrower’s and the Servicer’s collection and administration of the Collateral Obligations in order to assess compliance by the Servicer with the Servicer’s written policies and procedures, as well as this Agreement and may, no more than twice in any calendar year, conduct an audit of the Collateral Obligations and Records in conjunction with such review, subject to the limits set forth in Section 7.9(e). In connection with the foregoing, the Facility Agent and each applicable Lender shall use commercially reasonable efforts to comply with any applicable confidentiality provisions of any relevant Underlying Instrument.
(d)    Nothing in this Section 7.9 shall derogate from the obligation of the Borrower and the Servicer to observe any Applicable Law prohibiting disclosure of information regarding the Obligors, and the failure of the Servicer to provide access as a result of such obligation shall not constitute a breach of this Section 7.9.
(e)    The Servicer shall bear the costs and expenses of all audits and inspections permitted by this Section 7.9 to the extent set forth herein as well as Section 18.6.
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Section 7.10.    Optional Sales.
(a)    The Borrower shall have the right to sell all or a portion of the Collateral Obligations (each, an “Optional Sale”), subject to the following terms and conditions:
(i)    immediately after giving effect to such Optional Sale:
(A)    each Collateral Quality Test is satisfied (or, if any Collateral Quality Test is not satisfied, it is improved);
(B)    the Minimum Equity Test is satisfied; and
(C)    no Event of Default, Unmatured Event of Default or Specified Borrowing Base Breach shall have occurred and be continuing; provided that if a Specified Borrowing Base Breach exists before giving effect to an Optional Sale, then either (x) the Specified Borrowing Base Breach will be cured after giving effect to such Optional Sale or (y) if the Specified Borrowing Base Breach would not be cured but would be improved after giving effect to such Optional Sale, then upon request by the Borrower, the Facility Agent may provide its prior written consent to such Optional Sale in its sole discretion;
provided, that notwithstanding the above, the Borrower may at any time make (x) any Optional Sale of any Collateral Obligation that, in the Servicer’s reasonable judgment, has a significant risk of declining in credit quality and, with the lapse of time, becoming a Defaulted Collateral Obligation, if after giving effect to such Optional Sale, no Event of Default is continuing or (y) any Optional Sale of any Collateral Obligation if (I) the sale price is equal to or greater than the Principal Balance of such Collateral Obligation and (II) the proceeds from such Optional Sale are applied to reduce the Advances;
(ii)    unless otherwise consented to by the Facility Agent pursuant to Section 7.10(a)(i)(C)(y), the Borrowing Base is greater than or equal to the Advances outstanding both before and immediately after giving effect to such Optional Sale, or if a Specified Borrowing Base Breach exists before giving effect to an Optional Sale, immediately after giving effect to such Optional Sale and the application of the proceeds therefrom, such Specified Borrowing Base Breach would be cured;
(iii)    at least one (1) Business Day prior to the date of any Optional Sale, the Servicer, on behalf of the Borrower, shall give the Facility Agent, the Collateral Custodian, the Collateral Agent and each Lender (via the Collateral Agent’s Website) written notice of such Optional Sale, which notice shall identify the related Collateral subject to such Optional Sale and the expected proceeds from such Optional Sale and include (x) an Officer’s Certificate computed as of the date of such request and after giving effect to such Optional Sale, demonstrating compliance with clauses (a)(i)(A), (B) and (C) above and all other conditions set forth in this Section 7.10 are satisfied and (y) a certificate of the Servicer substantially in the form of Exhibit F-3 requesting the release of the related Collateral Obligation File in connection with such Optional Sale;
(iv)    such Optional Sale shall be made by the Servicer, on behalf of the Borrower (A) in accordance with the Servicing Standard, (B) reflecting arm’s length market terms and (C) in a transaction in which the Borrower makes no representations, warranties or covenants and provides no indemnification for the benefit of any other party (other than those which are customarily made or provided in connection with the sale of assets of such type);
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(v)    if such Optional Sale is to an Affiliate of the Borrower or the Servicer, the Facility Agent has given its prior written consent (which consent, if such Optional Sale is at par, shall not be unreasonably withheld, conditioned or delayed); provided, that the aggregate Principal Balance of all Collateral Obligations and any Collateral Obligations for which a Revaluation Event as set forth in clauses (a), (b), (c) or (d) of the definition thereof shall have occurred, sold pursuant to Optional Sales to an affiliate of the Borrower or the Servicer from and after the Effective Date shall not exceed 30% of the highest Facility Amount in effect during the Revolving Period (excluding sales at par); provided further that the Principal Balance of all Collateral Obligation that are Defaulted Collateral Obligations sold pursuant to Optional Sales to an affiliate of the Borrower or the Servicer from and after the Effective Date shall not exceed 15% of the highest Facility Amount in effect during the Revolving Period (excluding sales at par). Solely for the purposes of the provisos set forth in this clause, the Principal Balance shall be determined without respect to any provision of this Agreement which would deem the value of such Collateral Obligation to be zero; and
(vi)    on the date of such Optional Sale, all proceeds from such Optional Sale will be deposited directly into the Collection Account.
(b)    In connection with any Optional Sale, following deposit of all proceeds from such Optional Sale into the Collection Account, the Collateral Agent shall be deemed to release and transfer to the Borrower without recourse, representation or warranty all of the right, title and interest of the Collateral Agent for the benefit of the Secured Parties in, to and under such Collateral Obligation(s) and related Collateral subject to such Optional Sale and such portion of the Collateral so transferred shall be released from the Lien of this Agreement.
(c)    The Borrower hereby agrees to pay the reasonable and documented outside counsel legal fees and out-of-pocket expenses of the Facility Agent, the Collateral Agent, the Collateral Custodian and each Lender in connection with any Optional Sale (including, but not limited to, expenses incurred in connection with the release of the Lien of the Collateral Agent, on behalf of the Secured Parties, in the Collateral in connection with such Optional Sale).
(d)    In connection with any Optional Sale, the Collateral Agent shall, at the sole expense of the Borrower, execute such instruments of release with respect to the portion of the Collateral subject to such Optional Sale to the Borrower, in recordable form if necessary, as the Borrower may reasonably request.
Section 7.11.    Repurchase or Substitution of Warranty Collateral Obligations.
(a)    In the event of (A) a breach of Section 9.5 or Section 9.13 or (B) a material breach of any other representation or warranty set forth in Section 7.4(j) or Article IX with respect to a Collateral Obligation (or the Related Security and other related collateral constituting part of the Collateral related to such Collateral Obligation) (each such Collateral Obligation, a “Warranty Collateral Obligation”), in each case, as of the applicable trade date with respect thereto, no later than 30 days after the earlier of (x) knowledge of such breach on the part of the Equityholder or the Servicer and (y) receipt by the Equityholder or the Servicer of written notice thereof given by the Facility Agent, the Borrower shall either (a) repay Advances outstanding in an amount equal to the aggregate Repurchase Amount of such Warranty Collateral Obligation(s) to which such breach relates on the terms and conditions set forth below or (b) substitute for such Warranty Collateral Obligation one or more Eligible Collateral Obligations with an aggregate Collateral Obligation Amount at least equal to the Repurchase Amount of the Warranty Collateral Obligation(s) being replaced; provided, that no such repayment or substitution shall be required to be made with respect to any Warranty Collateral Obligation (and such Collateral Obligation shall cease to be a Warranty Collateral Obligation) if, on or before the expiration of such 30 day period, the representations and warranties set forth in clause (A) above
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with respect to such Warranty Collateral Obligation shall be made true and correct and the representations, warranties, undertakings and covenants set forth in clause (B) above with respect to such Warranty Collateral Obligation shall be made true and correct in all material respects (or if such representation and warranty is already qualified by the words “material”, “materially” or “Material Adverse Effect”, then such representation and warranty shall be true and correct in all respects) with respect to such Warranty Collateral Obligation as if such Warranty Collateral Obligation had become part of the Collateral on such day or if (during the Revolving Period only) the Advances outstanding do not exceed the Borrowing Base, the Maximum Availability or the Facility Amount. For the avoidance of doubt, any breach of a representation or warranty as set forth in the first sentence of this Section 7.11 shall not constitute an Event of Default if the Servicer otherwise complies with this Section 7.11.
Section 7.12.    Servicing of REO Assets.
(a)    If, in the reasonable business judgment of the Servicer, it becomes necessary to convert any Collateral Obligation that is secured by real property into an REO Asset, the Servicer shall first cause the Borrower to transfer and assign such Collateral Obligation (or the portion thereof owned by the Borrower) to a special purpose vehicle (the “REO Asset Owner”) using a contribution agreement reasonably acceptable to the Facility Agent. All equity interests of the REO Asset Owner acquired by the Borrower shall immediately become a part of the Collateral and be subject to the grant of a security interest under Section 12.1 and, if certificated shall be promptly delivered to the Collateral Agent, each undated and duly indorsed in blank. The REO Asset Owner shall be formed and operated pursuant to organizational documents reasonably acceptable to the Facility Agent. After execution thereof, the Servicer shall prevent the REO Asset Owner from agreeing to any amendment or other modification of the REO Asset Owner’s organizational documents which could reasonably be expected to be materially adverse to the interests of the Secured Parties under this Agreement, as determined by the Servicer in accordance with the Servicing Standard, without first obtaining the written consent of the Facility Agent. The Servicer shall cause each REO Asset to be serviced (i) in accordance with Applicable Laws, (ii) with reasonable care and diligence and (iii) in accordance with the applicable REO Asset Owner’s operating agreement (collectively, the “REO Servicing Standard”). The Servicer will cause all “Distributable Cash” (or comparable definition set forth in the REO Asset Owner’s organization documents) to be deposited into the Collection Account within five (5) Business Days of receipt thereof.
(b)    In the event that title to any Related Property is acquired on behalf of the REO Asset Owner for the benefit of its members in foreclosure, by deed in lieu of foreclosure or upon abandonment or reclamation from bankruptcy, the deed or certificate of sale shall be taken in the name of a REO Asset Owner. The Servicer shall cause the REO Asset Owner to manage, conserve, protect and operate each REO Asset for its members solely for the purpose of its prompt disposition and sale.
(c)    Notwithstanding any provision to the contrary contained in this Agreement, the Servicer shall not (and shall not permit the REO Asset Owner to) obtain title to any Related Property as a result of or in lieu of foreclosure or otherwise, obtain title to any direct or indirect partnership interest in any Obligor pledged pursuant to a pledge agreement and thereby be the beneficial owner of Related Property, have a receiver of rents appointed with respect to, and shall not otherwise acquire possession of, or take any other action with respect to, any Related Property if, as a result of any such action, the REO Asset Owner would be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of, such Related Property within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, or any comparable state or local Environmental Law, unless the Servicer has previously determined in accordance with the REO Servicing Standard, based on an updated Phase I environmental
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assessment report generally prepared in accordance with the ASTM Phase I Environmental Site Assessment Standard E 1527-05, as may be amended or, with respect to residential property, a property inspection and title report, that:
(i)    such Related Property is in compliance in all material respects with applicable Environmental Laws, and
(ii)    there are no circumstances present at such Related Property relating to the use, management or disposal of any Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation would reasonably be expected to be required by the owner, occupier or operator of the Related Property under applicable federal, state or local law or regulation.
(d)    In the event that the Phase I or other environmental assessment first obtained by the Servicer with respect to Related Property indicates that such Related Property may not be in compliance with applicable Environmental Laws or that Hazardous Materials may be present but does not definitively establish such fact, the Servicer shall cause the Borrower to immediately sell the related Collateral Obligation in accordance with Section 7.10 to the extent permitted thereunder.
Section 7.13.    Acknowledgment. The Servicer acknowledges that the Borrower has assigned its rights under the Sale Agreement as collateral security to the Collateral Agent for the benefit of the Secured Parties. Each of the Borrower and the Servicer acknowledges and agrees that the Collateral Agent may in turn assign its rights under the Sale Agreement, including such rights as are set forth in Section 2.4(b) thereof, and that the obligations of the Servicer under the Sale Agreement insure to the benefit of the Collateral Agent, for the benefit of the Secured Parties.
ARTICLE VIII

ACCOUNTS; PAYMENTS
Section 8.1.    Accounts.
(a)    On or prior to the Effective Date, the Servicer shall establish each Account in the name of the Borrower and each Account shall be a segregated, non-interest bearing account established with the Securities Intermediary, who shall forward funds from the Collection Account to the Collateral Agent upon its request for application by the Collateral Agent pursuant to Section 8.3. If at any time a Responsible Officer of the Collateral Agent obtains actual knowledge that any Account ceases to be an Eligible Account (with notice to the Servicer and the Facility Agent and each Lender (via the Collateral Agent’s Website)), then the Servicer shall transfer such account to another institution such that such account shall meet the requirements of an Eligible Account.
Except as set forth below and the proviso hereof, amounts on deposit in the Unfunded Exposure Account may be withdrawn by the Borrower or the Servicer (i) to fund any draw requests of the relevant Obligors under any Variable Funding Asset included in the Collateral as of such date, or (ii) to make a deposit into the Collection Account as Principal Collections if, after giving effect to such withdrawal, the aggregate amount on deposit in the Unfunded Exposure Account plus, solely during the Revolving Period, the undrawn portion of the Commitments available to be drawn hereunder, is equal to or greater than the Aggregate Unfunded Amount; provided that, notwithstanding the foregoing, upon an event described in Section 2.2(c) (as notified by the Facility Agent to the Collateral Agent), amounts on deposit in
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the Unfunded Exposure Account may only be withdrawn with the consent of the Facility Agent (in its sole discretion).
Following the Facility Termination Date, any draw request made by an Obligor under a Variable Funding Asset included in the Collateral as of such date, along with wiring instructions for the applicable Obligor, shall be forwarded by the Servicer to the Collateral Agent (with a copy to the Facility Agent and each Lender (via the Collateral Agent’s Website)) along with an instruction to the Collateral Agent to withdraw the applicable amount from the Unfunded Exposure Account and a certification that the conditions to fund such draw are satisfied, and the Collateral Agent shall, subject to the proviso in the immediately above paragraph, fund such draw request in accordance with such instructions from the Servicer.
Following the end of the Revolving Period, if the Borrower shall receive any Principal Collections from an Obligor with respect to a Variable Funding Asset included in the Collateral as of such date and, as of the date of such receipt (and after taking into account such repayment), the aggregate amount on deposit in the Unfunded Exposure Account is less than the Aggregate Unfunded Amount (the amount of such shortfall, in each case, the “Unfunded Exposure Shortfall”), the Servicer shall direct the Collateral Agent to and the Collateral Agent shall deposit into the Unfunded Exposure Account an amount of such Principal Collections equal to the lesser of (a) the aggregate amount of such Principal Collections and (b) the Unfunded Exposure Shortfall.
(b)    All amounts held in any Account shall, to the extent permitted by Applicable Laws, be invested by the Collateral Agent, as directed by the Servicer in writing or, if the Servicer fails to provide such direction, as directed by the Facility Agent (or, if the Servicer and the Facility Agent each fail to provide such direction, such amounts shall remain uninvested), in Permitted Investments that mature (i) with respect to the Collection Account, not later than one Business Day prior to the Distribution Date for the Collection Period to which such amounts relate and (ii) with respect to the Unfunded Exposure Account, on the immediately following Business Day. Any such written direction shall certify that any such investment is authorized by this Section 8.1. Investments in Permitted Investments shall be made in the name of the Collateral Agent on behalf of the Secured Parties, and, except as specifically required below, such investments shall not be sold or disposed of prior to their maturity. If any amounts are needed for disbursement from the Collection Account and sufficient uninvested funds are not available therein to make such disbursement, the Collateral Agent shall cause to be sold or otherwise converted to cash a sufficient amount of the investments in such account to make such disbursement in accordance with and upon the written direction of the Servicer or, if the Servicer shall fail to give such direction, the Facility Agent. The Collateral Agent shall, upon written request, provide the Facility Agent with all information in its possession regarding transfer into and out of the Collection Account (including, but not limited to, the identity of the counterparty making or receiving such transfer). In no event shall the Collateral Agent be liable for the selection of any investments or any losses in connection therewith, or for any failure of the Servicer or the Facility Agent, as applicable, to timely provide investment instruction or disposition instruction, as applicable, to the Collateral Agent. The Collateral Agent or the Collateral Custodian and their respective Affiliates shall be permitted to receive additional compensation that could be deemed to be in the Collateral Agent’s or the Collateral Custodian’s economic self-interest for (i) serving as investment adviser, administrator, shareholder, servicing agent, custodian or sub-custodian with respect to certain of the Permitted Investments, (ii) using Affiliates to effect transactions in certain Permitted Investments, and (iii) effecting transactions in certain investments. Such compensation shall not be considered an amount that is reimbursable or payable pursuant to this Agreement.
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(c)    Neither the Borrower nor the Servicer shall have any rights of direction or withdrawal, with respect to amounts held in any Account, except to the extent explicitly set forth herein.
Subject to the other provisions hereof, the Collateral Agent shall have sole Control (within the meaning of the UCC) over each Account and each such investment and the income thereon, and any certificate or other instrument evidencing any such investment, if any, shall be delivered to the Collateral Agent or its agent, together with each document of transfer, if any, necessary to transfer title to such investment to the Collateral Agent in a manner that complies with this Section 8.1. All interest, dividends, gains upon sale and other income from, or earnings on, investments of funds in the Accounts shall be deposited or transferred to the Interest Collection Account and distributed pursuant to Section 8.3(a).
(d)    The Equityholder may, from time to time in its sole discretion deposit amounts into the Principal Collection Account. All such amounts will be included in each applicable compliance calculation under this Agreement, including, without limitation, calculation of the Borrowing Base, the Maximum Availability and the Minimum Equity Test.
Section 8.2.    Excluded Amounts. The Servicer may direct the Collateral Agent and the Securities Intermediary to withdraw from the applicable Account and pay to the Person entitled thereto any amounts credited thereto constituting Excluded Amounts if the Servicer has, prior to such withdrawal and consent, delivered to the Facility Agent and the Collateral Agent a report setting forth the calculation of such Excluded Amounts in form and substance reasonably satisfactory to the Facility Agent, which report shall include a brief description of the facts and circumstances supporting such request and designate a date for the payment of such reimbursement, which date shall not be earlier than two (2) Business Days following delivery of such notice.
Section 8.3.    Distributions, Reinvestment and Dividends.
(a)    On each Distribution Date, the Collateral Agent shall distribute from the Collection Account (except to the extent provided below), in accordance with the applicable Collateral Report prepared by the Collateral Agent and approved by the Facility Agent pursuant to Section 8.5, the Amount Available for such Distribution Date as follows:
(I)    On each Distribution Date, prior to the distribution of any Principal Collections, Interest Collections shall be applied as follows:
(i)    FIRST, to the payment of taxes and governmental fees owing by the Borrower, if any, which expenses shall not exceed $50,000 on any Distribution Date;
(ii)    SECOND, (x) first, to the Collateral Agent, the Securities Intermediary and the Collateral Custodian, any accrued and unpaid Collateral Agent Fees and Expenses and Collateral Custodian Fees and Expenses for the related Collection Period, including any amounts payable in connection with the preparation of any Transparency Reports (if applicable), which expenses shall not exceed the amount of the Capped Fees/Expenses and (y) second, to the payment of Other Administrative Expenses owing by the Borrower, if any, which expenses shall not exceed $10,000 on any Distribution Date;
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(iii)    THIRD, to the extent not deferred by the Servicer, to the Servicer, any accrued and unpaid Servicing Fee for the related Collection Period;
(iv)    FOURTH, pro rata, based on the amounts owed to such Persons under this Section 8.3(a)(I)(iv), (A) to the Lenders, an amount equal to the Yield on the Advances accrued during the Accrual Period with respect to such Distribution Date (and any Yield with respect to any prior Accrual Period to the extent not paid on a prior Distribution Date), (B) to the Lenders and the Facility Agent, all accrued and unpaid Fees due to the Lenders and the Facility Agent and (C) to the Hedge Counterparties, any amounts owed for the current and prior Distribution Dates to the Hedge Counterparties under Hedging Agreements (other than Hedge Breakage Costs), together with interest accrued thereon;
(v)    FIFTH, to the Lenders (1) other than with respect to a Specified Borrowing Base Breach, in the amount necessary to reduce the Advances outstanding to an amount not to exceed the lower of the Borrowing Base and the Maximum Availability as of such Distribution Date, (2) if the Minimum Equity Test is not satisfied on such Distribution Date, in the amount necessary to reduce the Advances outstanding until the Minimum Equity Test is satisfied and (3) if the Diversity Score of all Eligible Collateral Obligations included in the Collateral as of such Distribution Date is less than 6, in the amount necessary to reduce the Advances outstanding until paid in full;
(vi)    SIXTH, if any Unmatured Event of Default, Event of Default or Specified Borrowing Base Breach has occurred and is continuing, all remaining Amount Available constituting Interest Collections to remain in the Collection Account pending the exercise of remedies by the Collateral Agent;
(vii)    SEVENTH, (i) after the end of the Revolving Period of any Non-Extending Lender (which, for the avoidance of doubt, shall mean such Lender’s Revolving Period in effect immediately prior to becoming a Non-Extending Lender pursuant to Section 2.6) but prior to the end of the Revolving Period applicable generally, an amount equal to (x) all remaining Amount Available constituting Interest Collections multiplied by (y) a fraction, the numerator of which is the aggregate Commitments held by the Non-Extending Lenders and the denominator of which is the aggregate amount of all Commitments, in each case as of the end of the 30-day period referred to in the second sentence of Section 2.6 multiplied by (z) the applicable Lender Allocation Percentage, to the Non-Extending Lenders pro rata based on the aggregate Commitments held by such Non-Extending Lenders to repay the Advances outstanding of any Non-Extending Lenders and (ii) after the end of the Revolving Period, to the Lenders (including the Non-Extending Lenders) pro rata to repay the Advances outstanding, an amount equal to all remaining Amount Available constituting Interest Collections multiplied by the applicable Lender Allocation Percentage;
(viii)    EIGHTH, pro rata based on amounts owed to such Persons under this Section 8.3(a)(I)(viii) to the Hedge
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Counterparties, any unpaid Hedge Breakage Costs, together with interest accrued thereon;
(ix)    NINTH, to the extent not previously paid pursuant to Section 8.3(a)(I)(i) above, to the payment of taxes and governmental fees owing by the Borrower, if any;
(x)    TENTH, to the extent not previously paid by or on behalf of the Borrower, to each Indemnified Party, any Indemnified Amounts then due and owing to each such Indemnified Party;
(xi)    ELEVENTH, to the extent not previously paid pursuant to Section 8.3(a)(I)(ii) above, (x) first, to the Collateral Agent, the Securities Intermediary and the Collateral Custodian, any Collateral Agent Fees and Expenses and Collateral Custodian Fees and Expenses due to the Collateral Agent and the Collateral Custodian and (y) second, to any other Person in respect of Other Administrative Expenses due to such Person;
(xii)    TWELFTH, (x) first, to the Servicer, any accrued and unpaid Servicing Fee to the extent deferred by the Servicer in respect of prior Collection Periods and (y) second, to any Affected Persons, any Increased Costs then due and owing;
(xiii)    THIRTEENTH, to pay any other amounts due under this Agreement and the other Transaction Documents and not previously paid pursuant to this Section 8.3(a)(I);
(xiv)    FOURTEENTH, during the Revolving Period, all remaining Amount Available constituting Interest Collections to the Borrower or, at the discretion of the Borrower, to remain in the Collection Account for use by the Borrower to purchase additional Collateral Obligations; and
(xv)    FIFTEENTH, after the Revolving Period, the remaining Amount Available constituting Interest Collections to the Borrower.
(II)    On each Distribution Date, following the distribution of all Interest Collections as set forth in Section 8.3(a)(I) above, Principal Collections shall be applied as follows:
(i)    FIRST, (i) to the payment of the amounts referred to in clauses (i) through (v) of subsection (I) above (in the priority stated therein), but only to the extent not paid in full thereunder and (ii) to the Lenders, in the amount necessary to reduce the Advances outstanding until a Specified Borrowing Base Breach is cured;
(ii)    SECOND, after the end of the Revolving Period, to the Lenders (including the Non-Extending Lenders) pro rata to repay the Advances outstanding, an amount equal to all remaining Amount Available constituting Principal Collections; and
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(iii)    THIRD, after the end of any Non-Extending Lender’s Revolving Period (which, for the avoidance of doubt, shall mean such Lender’s Revolving Period in effect immediately prior to becoming a Non-Extending Lender pursuant to Section 2.6), an amount equal to (x) all remaining Amount Available constituting Principal Collections multiplied by (y) a fraction, the numerator of which is the aggregate Commitments held by such Non-Extending Lender and the denominator of which is the aggregate amount of all Commitments, in each case as of the end of the 30-day period referred to in the second sentence of Section 2.6, to all such Non-Extending Lenders pro rata based on the aggregate Commitments held by such Non-Extending Lenders to repay the Advances outstanding of any Non-Extending Lenders;
(iv)    FOURTH, to the payment of amounts referred to in clauses (viii) through (xiii) of subsection (I) above, in the priority set forth therein but only to the extent not paid in full thereunder; and
(v)    FIFTH, (i) so long as no Unmatured Event of Default or Event of Default has occurred and is continuing, all remaining Amounts Available to remain in the Collection Account for use by the Borrower to purchase additional Collateral Obligations or to make a distribution pursuant to Section 10.16 and (ii) if an Unmatured Event of Default or Event of Default has occurred, to remain in the Collection Account pending the exercise of remedies by the Collateral Agent.
(b)    During the Revolving Period, the Borrower may withdraw from the Collection Account any Principal Collections (and to the extent expressly permitted by Section 8.3(a), Interest Collections) and apply such Principal Collections first to prepay the Advances outstanding of Non-Extending Lenders on a pro rata basis and second (A) prepay any other Advances outstanding in accordance with Section 2.4, (B) make a distribution pursuant to Section 10.16, or (C) subject to the following conditions, acquire additional Collateral Obligations (each such reinvestment of Collections, a “Reinvestment”):
(i)    the Borrower shall have given written notice to the Collateral Agent, the Facility Agent and each Lender of the proposed Reinvestment at or prior to 3:00 p.m., New York City time, two Business Days prior to the proposed date of such Reinvestment (the “Reinvestment Date”) and shall have delivered an Asset Approval Notice. Such notice (the “Reinvestment Request”) shall be in the form of Exhibit C-2 and shall include (among other things) the proposed Reinvestment Date, the amount of such proposed Reinvestment and a Schedule of Collateral Obligations setting forth the information required therein with respect to the Collateral Obligations to be acquired by the Borrower on the Reinvestment Date (if applicable);
(ii)    each condition precedent set forth in Section 6.2 shall be satisfied;
(iii)    upon the written request of the Borrower (or the Servicer on the Borrower’s behalf) delivered to the Collateral Agent no later than 11:00 a.m. New York City time on the applicable Reinvestment Date, the Collateral Agent shall have provided to the Facility Agent and each Lender (via the Collateral Agent’s Website) (to be received no later than 1:30 p.m. New York City time on that same day) a statement reflecting the total amount on deposit on such day in the Collection Account; and
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(iv)    any Reinvestment Request given by the Borrower pursuant to this Section 8.3(b), shall be irrevocable and binding on the Borrower.
Subject to the Collateral Agent’s receipt of an Officer’s Certificate of the Servicer as to the satisfaction of the conditions precedent set forth in Section 6.2 and this Section 8.3, the Collateral Agent will release funds from the Collection Account to the Borrower in an amount not to exceed the lesser of (A) the amount requested by the Borrower and (B) the amount of Collections on deposit in the Collection Account.
(c)    At any time, the Borrower may withdraw from the Principal Collection Account the proceeds of any Advance on deposit therein as may be needed to settle any pending acquisition of an Eligible Collateral Obligation.
Section 8.4.    Fees. In addition, the Borrower shall pay the Undrawn Fee, the Utilization Fee, the Upfront Fee, the Non-Call Fee and any other fees (collectively, “Fees”) in the amounts and on the dates set forth herein, in the Agent Fee Letter or in one or more other fee letter agreements, dated the date hereof (or dated the date any Lender becomes a party hereto pursuant to an assignment or otherwise), signed by the Borrower, the applicable Lender or Lenders, the Collateral Agent and/or the Facility Agent (as the Agent Fee Letter or any such other fee letter agreement may be amended, restated, supplemented or otherwise modified from time to time, each a “Fee Letter”).
Section 8.5.    Collateral Report. The Collateral Agent shall prepare (based on information provided to it by the Servicer, the Facility Agent and the Lenders as set forth herein) a Collateral Report in the form of Exhibit D determined as of the close of business on each Determination Date and make available such Collateral Report to the Facility Agent (including by electronic delivery to csg.india@db.com, abs.conduits@db.com, thorben.wedderien@db.com, anuar.atiye-manzur@db.com and mercedes.crestanello@db.com), each Lender (via the Collateral Agent’s Website), the Borrower and the Servicer on each Reporting Date starting with the Reporting Date in May 2024. Each Collateral Report shall specify the amounts for payment pursuant to each clause of Section 8.3(a). If any party receiving any Collateral Report disagrees with any items of such report, it shall contact the Collateral Agent and notify it of such disputed item, and provide reasonably sufficient information to correct such item, with (if other than the Facility Agent) a copy of such notice and information to the Facility Agent and the Servicer. If the Collateral Agent agrees with any such correction and unless the Collateral Agent is otherwise timely directed by the Facility Agent, the Collateral Agent shall distribute a revised Collateral Report on the Business Day after it receives such information. If the Collateral Agent does not agree with any such correction or it is directed by the Facility Agent that the Collateral Agent should not make such correction, the Collateral Agent shall (within one Business Day) contact the Facility Agent and request instructions on how to proceed. The Facility Agent’s reasonable determination with regard to any disputed item in the Collateral Report shall be conclusive (absent manifest error).
The Servicer shall cooperate with the Collateral Agent in connection with the preparation of the Collateral Reports and any supplement thereto. Without limiting the generality of the foregoing, the Servicer shall supply any information maintained by it that the Collateral Agent may from time to time reasonably request with respect to the Collateral and reasonably needs to complete the reports, calculations and certificates required to be prepared by the Collateral Agent hereunder or required to permit the Collateral Agent to perform its obligations hereunder. Without limiting the generality of the foregoing, in connection with the preparation of a Collateral Report, (i) the Servicer shall be responsible for providing the Collateral Agent the information required for parts (a) through (c) of Exhibit D for such Collateral Report (which shall include an Officer’s Certificate of the Borrower or the Servicer of the Borrowing Base calculations in connection with part (a)(iii) of Exhibit D) and (ii) the Facility Agent and the
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Lenders shall be responsible for providing to the Collateral Agent the information required by Section 3.4 for part (d) of Exhibit D for such Collateral Report on which the Collateral Agent may conclusively rely. The Servicer shall review and verify the contents of the aforesaid reports (including the Collateral Report), instructions, statements and certificates. Upon receipt of approval from the Servicer, the Collateral Agent shall send such reports, instructions, statements and certificates to the Borrower and the Servicer for execution. For avoidance of doubt, the Collateral Agent shall not be obligated to include a risk retention report under Section 10.22 unless timely received by it and shall have no obligation to monitor such delivery.
ARTICLE IX

REPRESENTATIONS AND WARRANTIES OF THE BORROWER
In order to induce the other parties hereto to enter into this Agreement and, in the case of the Lenders, to make Advances hereunder, the Borrower hereby represents and warrants to the Facility Agent and the Lenders as to itself, as of the Effective Date and each Funding Date, as follows:
Section 9.1.    Organization and Good Standing. It has been duly organized and is validly existing under the laws of the jurisdiction of its organization, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted. It had at all relevant times and now has, power, authority and legal right (x) to acquire and own the Collateral Obligations and the Related Security, and to grant to the Collateral Agent a security interest in the Collateral Obligations and the Related Security and the other Collateral and (y) to enter into and perform its obligations under this Agreement and the other Transaction Documents to which it is a party.
Section 9.2.    Due Qualification. It is duly qualified to do business and has obtained all necessary licenses and approvals and made all necessary filings and registrations in all jurisdictions, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 9.3.    Power and Authority. It has the power, authority and legal right to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder; it has full power, authority and legal right to grant to the Collateral Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in the Collateral Obligations and the other Collateral and has duly authorized such grant by all necessary action, and the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party have been duly authorized by all necessary action.
Section 9.4.    Binding Obligations. This Agreement and the Transaction Documents to which it is a party have been duly executed and delivered by the Borrower and are enforceable against the Borrower in accordance with their respective terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights generally, (b) equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law and (c) implied covenants of good faith and fair dealing.
Section 9.5.    Security Interest. This Agreement creates a valid and continuing Lien on the Collateral in favor of the Collateral Agent, on behalf of the Secured Parties, which security interest is validly perfected under Article 9 of the UCC, and is enforceable as such against creditors of and purchasers from the Borrower; the Collateral is comprised of “accounts” (as defined in the UCC), Instruments, Security Entitlements, General Intangibles, Certificated
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Securities, Uncertificated Securities, Securities Accounts, Supporting Obligations, Investment Property and Proceeds and such other categories of collateral under the applicable UCC as to which the Borrower has complied with its obligations as set forth herein; with respect to Collateral that constitute Security Entitlements (a) all of such Security Entitlements have been credited to the Accounts and the Securities Intermediary has agreed to treat all assets credited to the Accounts as Financial Assets, (b) the Borrower has taken all steps necessary to enable the Collateral Agent to obtain Control with respect to the Accounts and (c) the Accounts are not in the name of any Person other than the Borrower, subject to the Lien of the Collateral Agent for the benefit of the Secured Parties; the Borrower has not instructed the Securities Intermediary to comply with the entitlement order of any Person other than the Collateral Agent; provided that, until the Collateral Agent delivers a Notice of Exclusive Control (as defined in the Account Control Agreement), the Borrower and the Servicer may cause cash in the Accounts to be invested or distributed in accordance with this Agreement; all Accounts constitute Securities Accounts; the Borrower owns and has good and marketable title to the Collateral free and clear of any Lien (other than Permitted Liens); the Borrower has received all consents and approvals required by the terms of any Collateral Obligation to the transfer and granting of a security interest in the Collateral Obligations hereunder to the Collateral Agent, on behalf of the Secured Parties; the Borrower has taken all necessary steps to file or authorize the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in that portion of the Collateral in which a security interest may be perfected by filing pursuant to Article 9 of the UCC as in effect in Delaware; all original executed copies of each underlying promissory note constituting or evidencing any Collateral Obligation have been or, subject to the delivery requirements contained herein and/or Section 18.3, will be delivered to the Collateral Custodian; the Borrower has received, or subject to the delivery requirements contained herein will receive, a written acknowledgment from the Collateral Custodian that the Collateral Custodian or its bailee is holding each underlying promissory note evidencing a Collateral Obligation solely on behalf of the Collateral Agent for the benefit of the Secured Parties; none of the underlying promissory notes that constitute or evidence the Collateral Obligations has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Collateral Agent on behalf of the Secured Parties; with respect to Collateral that constitutes a Certificated Security, such certificated security has been delivered to the Collateral Custodian and, if in registered form, has been specially Indorsed (within the meaning of the UCC) to the Collateral Custodian or in blank by an effective Indorsement or has been registered in the name of the Collateral Custodian upon original issue or registration of transfer by the Borrower of such Certificated Security, in each case to be held by the Collateral Custodian on behalf of the Collateral Agent for the benefit of the Secured Parties; and in the case of an Uncertificated Security, by (A) causing the Collateral Custodian to become the registered owner of such uncertificated security and (B) causing such registration to remain effective.
Section 9.6.    No Violation. The execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party, the consummation of the transactions contemplated hereby and thereby, and the fulfillment of the terms of this Agreement and the other Transaction Documents to which it is a party, shall not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, its organizational documents, or any indenture, agreement, mortgage, deed of trust or other instrument to which the Borrower is a party or by which it is bound or any of its properties are subject, or result in the creation or imposition of any Lien (other than Permitted Liens) upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument, or violate in any material respect any Applicable Law or in any way materially adversely affect the Borrower’s ability to perform its obligations under this Agreement or the other Transaction Documents to which it is a party.
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Section 9.7.    No Proceedings. There are no proceedings or investigations pending or, to the Borrower’s knowledge, threatened against the Borrower, before any Official Body having jurisdiction over it or its properties (a) asserting the invalidity of this Agreement or any of the other Transaction Documents, (b) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the other Transaction Documents, (c) seeking any determination or ruling that might materially and adversely affect the performance by the Borrower of its obligations under, or the validity or enforceability of, this Agreement or any of the other Transaction Documents or (d) seeking any determination or ruling that would reasonably be expected to have a material adverse effect on the aggregate value of the Collateral or on the assignments and security interest granted by the Borrower in this Agreement.
Section 9.8.    No Consents. It is not required to obtain the material consent of any other Person or any material approval, authorization, consent, license, approval or authorization, or registration or declaration with, any Official Body having jurisdiction over it or its properties in connection with the execution, delivery, performance, validity or enforceability of this Agreement or the other Transaction Documents to which it is a party, in each case other than consents, licenses, approvals, authorizations, orders, registrations, declarations or filings which have been obtained or made and continuation statements and renewals in respect thereof.
Section 9.9.    Solvency. It is solvent and will not become insolvent after giving effect to the transactions contemplated by this Agreement and the Transaction Documents. After giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, it will have an adequate amount of capital to conduct its business in the foreseeable future.
Section 9.10.    Compliance with Laws. It has complied and will comply in all material respects with all Applicable Laws, judgments, agreements with Official Bodies, decrees and orders with respect to its business and properties and all Collateral.
Section 9.11.    Taxes. For U.S. federal income tax purposes, it is, and always has been, an entity disregarded as separate from the Equityholder and the Equityholder is a U.S. Person. It has filed on a timely basis all federal, state, local and all other material Tax returns (including foreign, state, local and otherwise) required to be filed, if any, and has paid all federal and other Taxes due and payable by it and any assessments made against it or any of its property and all other Taxes, fees or other Charges imposed on it or any of its property by any Official Body (other than any amount the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower). No Lien or similar Adverse Claim has been filed, and no claim is being asserted, with respect to any Tax, assessment or other governmental charge. Any Taxes, fees and other governmental Charges payable by the Borrower in connection with the execution and delivery of this Agreement and the other Transaction Documents and the transactions contemplated hereby or thereby including the transfer of each Collateral Obligation and the Related Security to the Borrower have been paid or shall have been paid if and when due at or prior to the Effective Date or the Advance Date, as applicable.
Section 9.12.    Collateral Report. Each Collateral Report is accurate in all material respects as of the date thereof.
Section 9.13.    No Liens, Etc. The Collateral and each part thereof is owned by the Borrower free and clear of any Adverse Claim (other than Permitted Liens) or restrictions on transferability and the Borrower has the full right, power and lawful authority to assign, transfer and pledge the same and interests therein, and upon the making of each Advance, the Collateral Agent, for the benefit of the Secured Parties, will have acquired a perfected, first priority and valid security interest (except, as to priority, for any Permitted Liens) in such Collateral, free and clear of any Adverse Claim or restrictions on transferability. The Borrower has not pledged,
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assigned, sold, granted a security interest in or otherwise conveyed any of the Collateral and no effective financing statement (other than with respect to Permitted Liens) or other instrument similar in effect naming or purportedly naming the Borrower or any of its Affiliates as debtor and covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of the Collateral Agent as “Secured Party” pursuant hereto or as necessary or advisable in connection with the Sale Agreement. There are no judgments or Liens for Taxes with respect to the Borrower and no claim is being asserted with respect to the Taxes of the Borrower.
Section 9.14.    Information True and Correct. All information (other than projections, forward-looking information or information relating to third parties that are not Affiliates of the Borrower, the Equityholder or the Servicer) heretofore furnished by or on behalf of the Borrower in writing to any Lender, the Collateral Agent or the Facility Agent in connection with this Agreement or any transaction contemplated hereby (including, without limitation, prior to the Effective Date but after taking into account all updates, modifications and supplements to such information) is (when taken as a whole) true and correct in all material respects (or if not prepared by or under the direction of the Borrower, is true and correct in all material respects to the Borrower’s knowledge) and does not omit to state a material fact necessary to make the statements contained therein (when taken as a whole) not misleading (or, if not prepared by or under the direction of the Borrower, does not omit to state such a fact to the Borrower’s knowledge). Any projections heretofore prepared by the Borrower or its Affiliates and furnished by or on behalf of the Borrower in writing to any Lender, the Collateral Agent or the Facility Agent in connection with this Agreement or any transaction contemplated hereby have been prepared in good faith based on assumptions that the Servicer or its Affiliates, as applicable, believes to be reasonable.
Section 9.15.    Bulk Sales. The grant of the security interest in the Collateral by the Borrower to the Collateral Agent, for the benefit of the Secured Parties, pursuant to this Agreement, is in the ordinary course of business for the Borrower and is not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction.
Section 9.16.    Collateral. Except as otherwise expressly permitted or required by the terms of this Agreement, no item of Collateral has been sold, transferred, assigned or pledged by the Borrower to any Person.
Section 9.17.    Selection Procedures. In selecting the Collateral Obligations hereunder and for Affiliates of the Borrower, no selection procedures were employed which are intended to be adverse to the interests of the Facility Agent or any Lender.
Section 9.18.    Indebtedness. The Borrower has no Indebtedness or other indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (i) Indebtedness permitted under the Transaction Documents and (ii) Indebtedness incurred pursuant to certain ordinary business expenses arising pursuant to the transactions contemplated by this Agreement and the other Transaction Documents.
Section 9.19.    No Injunctions. No injunction, writ, restraining order or other order of any nature adversely affects the Borrower’s performance of its obligations under this Agreement or any Transaction Document to which the Borrower is a party.
Section 9.20.    No Subsidiaries. The Borrower has no Subsidiaries other than any REO Asset Owners.
Section 9.21.    ERISA Compliance.
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(a)    The Borrower does not sponsor, maintain, or contribute to, and has never sponsored, maintained, or contributed to, and, except as would not reasonably be expected to have a Material Adverse Effect, no ERISA Affiliate sponsors, maintains, contributes to, or has any liability in respect of, or has ever sponsored, maintained, contributed to, or had any liability in respect of, a Plan.
(b)    No ERISA Event has occurred on or prior to the date that this representation is made or deemed made that, whether alone or together with all other ERISA Events that have occurred, would reasonably be expected to have a Material Adverse Effect.
(c)    The Borrower is not, and will not become at any time while any Obligations are outstanding, a Benefit Plan Investor.
Section 9.22.    Investment Company Status. It is not an “investment company” within the meaning of the 1940 Act or a company directly controlled by an entity that is required to be registered as an “investment company” within the meaning of the 1940 Act.
Section 9.23.    Set-Off, Etc. No Collateral Obligation has been compromised, adjusted, extended, satisfied, subordinated, rescinded, set off or modified by the Borrower or the Obligor thereof, and no Collateral is subject to compromise, adjustment, extension, satisfaction, subordination, rescission, set off, counterclaim, defense, abatement, suspension, deferment, deduction, reduction, termination or modification, whether arising out of transactions concerning the Collateral or otherwise, by the Borrower or the Obligor with respect thereto, except, in each case, pursuant to the Transaction Documents and for amendments, extensions and modifications, if any, to such Collateral otherwise permitted hereby and in accordance with the Servicing Standard.
Section 9.24.    Collections. The Borrower acknowledges that all Collections received by it or its Affiliates with respect to the Collateral pledged hereunder are held and shall be held in trust for the benefit of the Collateral Agent, on behalf of the Secured Parties until deposited into the Collection Account in accordance with Section 10.10.
Section 9.25.    Value Given. The Borrower has given fair consideration and reasonably equivalent value to the Equityholder in exchange for the purchase of the Collateral Obligations (or any number of them). No such transfer has been made for or on account of an antecedent debt and no such transfer is or may be voidable or subject to avoidance under any section of the Bankruptcy Code.
Section 9.26.    Use of Proceeds. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock and none of the proceeds of the Advances will be used, directly or indirectly, for a purpose that violates Regulation T, Regulation U, Regulation X or any other regulation promulgated by the FRS Board from time to time.
Section 9.27.    Separate Existence. The Borrower is operated as an entity with assets and liabilities distinct from those of any of its Affiliates, the Equityholder, the Servicer and any Affiliates of the foregoing, and the Borrower hereby acknowledges that the Facility Agent and each of the Lenders are entering into the transactions contemplated by this Agreement in reliance upon the Borrower’s identity as a separate legal entity. Since its formation, the Borrower has been (and will be) operated in such a manner as to comply with the covenants set forth in Section 10.5.
There is not now, nor will there be at any time in the future, any agreement or understanding between the Borrower and the Servicer (other than as expressly set forth herein
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and the other Transaction Documents) providing for the allocation or sharing of obligations to make payments or otherwise in respect of any Taxes, fees, assessments or other governmental charges.
Section 9.28.    Transaction Documents. The Transaction Documents delivered to the Facility Agent represent all material agreements between the Equityholder, on the one hand, and the Borrower, on the other. Upon the purchase and/or contribution of each Collateral Obligation (or an interest in a Collateral Obligation) pursuant to this Agreement or the Sale Agreement, the Borrower shall be the lawful owner of, and have good title to, such Collateral Obligation and all assets relating thereto, free and clear of any Adverse Claim. All such assets are transferred to the Borrower without recourse to the Equityholder except as described in the Sale Agreement. The purchases of such assets by the Borrower constitute valid and true sales for consideration (and not merely a pledge of such assets for security purposes) and the contributions of such assets received by the Borrower constitute valid and true transfers for consideration, each enforceable against creditors of the Equityholder, and no such assets shall constitute property of the Equityholder.
Section 9.29.    EEA Financial Institution. The Borrower is not an EEA Financial Institution.
Section 9.30.    Anti-Terrorism, Anti-Money Laundering. (a) None of the Borrower, the Servicer nor any Affiliate, officer, employee or director of the Borrower or the Servicer is (i) a country, territory, organization, person or entity named on any sanctions list administered or imposed by the U.S. Government including, without limitation, the Office of Foreign Asset Control (“OFAC”) list, or any other list maintained for the purposes of sanctions enforcement by any of the United Nations, the European Union, His Majesty’s Treasury in the UK, Germany, Canada, Australia, and any other country or multilateral organization (collectively, “Sanctions”), including but not limited to Afghanistan, the Crimean region of Ukraine, Cuba, Democratic People’s Republic of Korea (North Korea), Iran, the occupied territories in the “Donetsk People’s Republic” region of Ukraine, the occupied territories in the “Kherson” region of Ukraine, the occupied territories in the “Luhansk People’s Republic” region of Ukraine, the occupied territories in the “Zaporizhzhia” region of Ukraine and Syria (the “Sanctioned Countries”); (ii) a Person that resides, is organized or located in any of the Sanctioned Countries or which is designated as a “Non-Cooperative Jurisdiction” by the Financial Action Task Force on Money Laundering, or whose subscription funds are transferred from or through such a jurisdiction or any Sanctioned Countries (a “Sanction Target”) or is owned 50% or more or otherwise controlled, directly or indirectly by, or acting on behalf of, one or more Person who is the subject or target of Sanctions; (iii) a “Foreign Shell Bank” within the meaning of the USA Patriot Act, i.e., a foreign bank that does not have a physical presence in any country and that is not affiliated with a bank that has a physical presence and an acceptable level of regulation and supervision; or (iv) a Person that resides in or is organized under the laws of a jurisdiction designated by the United States Secretary of the Treasury under Sections 311 or 312 of the USA Patriot Act as warranting special measures due to money laundering concerns. Each of the Borrower and the Servicer is and each Affiliate, officer, employee or director of the Borrower and the Servicer is (and is taking no action which would result in any such Person not being) in compliance with (a) all OFAC rules and regulations, (b) all United States of America, United Kingdom, United Nations, European Union, German, Canadian, Australian and all other sanctions, embargos and trade restrictions that the Borrower or any of its Affiliates is subject and (c) the Anti-Money Laundering Laws. In addition, the described purpose (“trade related business activities”) does not include any kind of activities or business of or with any Person or in any country or territory that is subject to or the target of any sanctions administered by the U.S. Government, OFAC, the United Kingdom, the European Union, Germany, Canada, Australia or the United Nations Security Council (including the Sanctioned Countries) and does not involve commodities or services of a Sanctioned Country origin or shipped to, through or from a
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Sanctioned Country, or on vessels or aircrafts owned or registered by a Sanctioned Country, or financed or subsidized any of the foregoing.
(b)    Each of the Borrower and the Servicer has complied, in all material respects, with all applicable anti-money laundering laws and regulations, including without limitation the USA Patriot Act (collectively, the “Anti-Money Laundering Laws”). No actions, suits, proceedings or investigations by any court, governmental, or regulatory agency are ongoing or pending against the Borrower, the Servicer, or any director, officer or employee or anyone acting on behalf of the Borrower or the Servicer in relation to a breach of the Anti-Money Laundering Laws, or, to the knowledge of the Borrower and the Servicer, threatened.
Section 9.31.    Anti-Bribery and Corruption. (a) Neither the Borrower nor, to the best of the Borrower’s knowledge, any director, officer, employee, or anyone acting on behalf of the Borrower has engaged in any activity, or will take any action, directly or indirectly, which would breach applicable anti-bribery and corruption laws and regulations, including but not limited to the US Foreign and Corrupt Practices Act 1977, as amended, and the Bribery Act 2010 of the United Kingdom (the “Anti-Bribery and Corruption Laws”).
(b)    The Borrower and its Affiliates have each conducted their businesses in compliance with Anti-Bribery and Corruption Laws and have instituted and maintain policies and procedures reasonably designed to promote and ensure continued compliance with all Anti-Bribery and Corruption Laws and with the representation and warranty contained herein.
(c)    No actions, suits, proceedings or investigations by any court, governmental, or regulatory agency are ongoing or pending against the Borrower, its directors, officers or employees or anyone acting on its behalf in relation to a breach of the Anti-Bribery and Corruption Laws, or, to the knowledge of the Borrower, threatened.
(d)    The Borrower will not directly or indirectly use, lend or contribute the proceeds of the Advances for any purpose that would breach the Anti-Bribery and Corruption Laws.
Section 9.32.    Volcker Rule. To the best of the Borrower’s knowledge and belief, the Advances do not constitute an “ownership interest” in the Borrower for purposes of the Volcker Rule.
Section 9.33.    AIFMD. The Borrower is not (i) an AIFM or an AIF managed by an AIFM required to be authorized or registered in accordance with AIFMD or (ii) an AIFM or an AIF managed by an AIFM (as such term is defined in the UK AIFM Regulations) required to be authorized or registered in accordance with the UK AIFM Regulations.
ARTICLE X

COVENANTS
From the date hereof until the first day following the Facility Termination Date on which all Obligations shall have been finally and fully paid and performed (other than contingent indemnification obligations for which no claim giving rise thereto has been asserted and other than as expressly survive the termination of this Agreement), the Borrower hereby covenants and agrees with the Lenders and the Facility Agent that:
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Section 10.1.    Protection of Security Interest of the Secured Parties.
(a)    At or prior to the Effective Date, the Borrower shall have filed or caused to be filed a UCC 1 financing statement, naming the Borrower as debtor and the Collateral Agent (for the benefit of the Secured Parties) as secured party and describing the Collateral, with the office of the Secretary of State of the State of Delaware. From time to time thereafter, the Borrower shall file (and the Borrower hereby authorizes the Collateral Agent to so file) such financing statements and cause to be filed such continuation statements, all in such manner and in such places as may be required by Applicable Law fully to preserve, maintain and protect the interest of the Collateral Agent in favor of the Secured Parties under this Agreement in the Collateral and in the proceeds thereof. The Borrower shall deliver (or cause to be delivered) to the Collateral Agent file stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. In the event that the Borrower fails to perform its obligations under this subsection, the Collateral Agent or the Facility Agent may (but shall have no obligation to) do so, in each case at the expense of the Borrower, however neither the Collateral Agent nor the Facility Agent shall have any liability in connection therewith.
(b)    The Borrower shall not change its name, identity or corporate structure in any manner that would make any financing statement or continuation statement filed by the Borrower (or by the Collateral Agent on behalf of the Borrower) in accordance with Section 10.1(a) above seriously misleading or change its jurisdiction of organization, unless the Borrower shall have given the Facility Agent and the Collateral Agent at least 30 days prior written notice thereof, and shall promptly file appropriate amendments to all previously filed financing statements and continuation statements (and shall provide a copy of such amendments to the Collateral Agent, each Lender and Facility Agent together with an Officer’s Certificate to the effect that all appropriate amendments or other documents in respect of previously filed statements have been filed).
(c)    The Borrower shall maintain its computer systems, if any, so that, from and after the time of the first Advance under this Agreement, the Borrower’s master computer records (including archives) that shall refer to the Collateral indicate clearly that such Collateral is subject to the first priority security interest in favor of the Collateral Agent, for the benefit of the Secured Parties. Indication of the Collateral Agent’s (for the benefit of the Secured Parties) security interest shall be deleted from or modified on the Borrower’s computer systems when, and only when, the Collateral in question shall have been paid in full, the security interest under this Agreement has been released in accordance with its terms, or otherwise as expressly permitted by this Agreement.
(d)    Without limiting any of the other provisions hereof, if at any time the Borrower shall propose to sell, grant a security interest in, or otherwise transfer any interest in loan receivables to any prospective lender or other transferee, the Borrower shall give to such prospective lender or other transferee computer tapes, records, or print outs (including any restored from archives) that, if they shall refer in any manner whatsoever to any Collateral shall indicate clearly that such Collateral is subject to a first priority security interest in favor of the Collateral Agent, for the benefit of the Secured Parties.
Section 10.2.    Other Liens or Interests. Except for the security interest granted hereunder and as otherwise permitted pursuant to Sections 7.10, 7.11 and 10.16, 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 the Collateral or any interest therein (other than Permitted Liens), and the Borrower shall defend the right, title, and interest of the Collateral Agent (for the benefit of the Secured Parties) and the Lenders in and to the Collateral against all claims of third parties claiming through or under the Borrower (other than Permitted Liens).
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Section 10.3.    Costs and Expenses. The Borrower shall pay (or cause to be paid) all of its reasonable costs and disbursements in connection with the performance of its obligations hereunder and under the Transaction Documents.
Section 10.4.    Reporting Requirements. The Borrower (or the Servicer, as applicable) shall furnish, or cause to be furnished, to the Facility Agent, the Collateral Agent and each Lender:
(a)    as soon as possible and in any event within three Business Days after a Responsible Officer of the Borrower shall have knowledge of the occurrence of an Event of Default or Unmatured Event of Default, the statement of an Executive Officer of the Borrower setting forth complete details of such event and the action which the Borrower has taken, is taking and proposes to take with respect thereto;
(b)    promptly, from time to time, such other information, documents, records or reports respecting the Collateral Obligations or the Related Security, the other Collateral or the condition or operations, financial or otherwise, of the Borrower as such Person may, from time to time, reasonably request;
(c)    notification of, in reasonable detail, (i) any Adverse Claim known to it that is made or asserted against any of the Collateral and (ii) the occurrence of any Revaluation Event or any Material Modification with respect to any Collateral Obligation, in each case, promptly upon a Responsible Officer of the Borrower having knowledge thereof;
(d)    promptly, in reasonable detail, any new or updated information reasonably requested by a Lender or the Collateral Agent in connection with “know your customer” laws or any similar regulations;
(e)    promptly, from time to time, copies or other evidence of the separate financials required by Section 10.5(m) as such Person may, from time to time, reasonably request;
(f)    complete and correct copies of (A) the unaudited consolidated financial statements of the Servicer for the fiscal year ended March 31, 2024, as soon as available and in any event within 90 days of the end of such fiscal year, (B) beginning with the fiscal year ending March 31, 2025, the audited consolidated financial statements of the Servicer for the fiscal year most recently ended, as soon as available and in any event within 90 days of the end of such fiscal year, and (C) beginning with the fiscal quarter ending June, 2024, the unaudited consolidated financial statements of the Servicer for the fiscal quarter most recently ended, as soon as available and in any event within 45 days of the end of such fiscal quarter, in each case with a representation that such financial statements (including the related notes) fairly present the financial condition of the Servicer as of the respective dates thereof and the results of operations for the periods covered thereby in all material respects, each in accordance with GAAP, except in the case of unaudited financial statements, the absence of footnotes and year-end adjustments;
(g)    written notification, containing reasonable detail, of any material litigation, investigation or proceeding against the Servicer (which notification with respect to Capital Southwest Corporation may be in the form of a notification to the Facility Agent of a filing, by Capital Southwest Corporation with the Securities and Exchange Commission, of a report filed with the Securities and Exchange Commission); and
(h)    promptly following any request therefor, the Borrower shall deliver to the Facility Agent information and documentation reasonably requested by the Facility Agent for purposes of compliance with its Beneficial Ownership Certification.
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Section 10.5.    Separate Existence.
(a)    The Borrower shall conduct its business solely in its own name through its duly authorized officers or agents so as not to mislead others as to the identity of the entity with which such persons are concerned, and shall use its best efforts to avoid the appearance that it is conducting business on behalf of any Affiliate thereof or that the assets of the Borrower are available to pay the creditors of any of its equityholders or any Affiliate thereof.
(b)    It shall maintain records and books of account separate from those of any other Person.
(c)    It shall pay its own operating expenses and liabilities from its own funds.
(d)    It shall ensure that the annual consolidated financial statements of the Borrower and the Equityholder shall disclose the effects of the transactions contemplated hereby in accordance with GAAP.
(e)    It shall not hold itself out as being liable for the debts of any other Person. It shall not pledge its assets to secure the obligations of any other Person. It shall not guarantee any obligation of any Person, including any Affiliate or become obligated for the debts of any other Person or hold out its credit or assets as being available to pay the obligations of any other Person.
(f)    It shall keep its assets and liabilities separate from those of all other entities. Except as expressly contemplated herein with respect to Excluded Amounts, it shall not commingle its assets with assets of any other Person.
(g)    It shall maintain bank accounts or other depository accounts separate from any other person or entity, including any Affiliate.
(h)    To the extent required under GAAP, it shall ensure that any consolidated financial statements including the Borrower, if any, have notes to the effect that the Borrower is a separate entity whose creditors have a claim on its assets prior to those assets becoming available to its equity holders.
(i)    It shall not (A) amend, supplement or otherwise modify the Special Purpose Provisions contained in its organizational documents (as defined therein), except in accordance therewith and with the prior written consent of the Facility Agent (which consent shall not be unreasonably withheld, delayed or conditioned) or (B) divide or permit any division of itself.
(j)    It shall at all times hold itself out to the public and all other Persons as a legal entity separate from its member and its Affiliates and from any other Person.
(k)    It shall file its own tax returns separate from those of any other Person, except to the extent that it is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under Applicable Law, and shall pay any taxes required to be paid under Applicable Law.
(l)    It shall conduct its business only in its own name and comply with all organizational formalities necessary to maintain its separate existence.
(m)    It shall maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person and not have its assets listed on any
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financial statement of any other Person; provided, that its assets may be included in a consolidated financial statement of its Affiliate so long as (i) appropriate notation shall be made on such consolidated financial statements (if any) to indicate its separateness from such Affiliate and to indicate that its assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (ii) such assets shall also be listed on its own separate balance sheet.
(n)    It shall not, except for capital contributions or capital distributions permitted under the terms and conditions of its organizational documents and properly reflected on its books and records, enter into any transaction with an Affiliate except on commercially reasonable terms similar to those available to unaffiliated parties in an arm’s-length transaction.
(o)    It shall maintain a sufficient number of employees (which number may be zero) in light of its contemplated business purpose and pay the salaries of its own employees, if any, only from its own funds.
(p)    It shall use separate invoices bearing its own name.
(q)    It shall correct any known misunderstanding regarding its separate identity and not identify itself as a department or division of any other Person.
(r)    It shall maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, that the foregoing shall not require its equityholders to make additional capital contributions.
(s)    It shall not acquire any obligation or securities of its members or of any Affiliate other than the Collateral in compliance with the Transaction Documents.
(t)    It shall not make or permit to remain outstanding any loan or advance to, or own or acquire any stock or securities of, any Person, except that it may invest in those investments permitted under the Transaction Documents and may hold the equity of REO Asset Owners.
(u)    It shall not, to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, merger, sale or transfer of all or substantially all of its assets other than such activities as are expressly permitted pursuant to the Transaction Documents.
(v)    It shall not buy or hold evidence of indebtedness issued by any other Person, except as expressly contemplated by the Transaction Documents.
(w)    Except as expressly permitted by the Transaction Documents (which permits, for the avoidance of doubt, the formation of REO Asset Owners), it shall not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity.
(x)    It shall not own any asset or property other than Collateral and such other financial assets as permitted by the Transaction Documents.
(y)    It shall not engage, directly or indirectly, in any business other than as required or permitted to be performed by the Transaction Documents.
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(z)    It shall allocate fairly and reasonably any overhead expenses that are shared with any of its Affiliates, including for shared office space and for services performed by an employee of any Affiliate.
(aa)    Neither the Borrower nor the Equityholder shall take any action contrary to the “Assumptions” section in the opinion or opinions of Eversheds Sutherland (US) LLP, dated the date hereof, relating to certain nonconsolidation matters or the “Facts and Assumptions” section in the opinion of Eversheds Sutherland (US) LLP, dated the date hereof, relating to certain true sale matters.
(bb)    Neither the Servicer nor any other person shall be authorized or empowered, nor shall they permit the Borrower to take any Material Action without the prior written consent of at least one Independent Manager (or the unanimous written consent of all Independent Managers, if more than one). The organizational documents of the Borrower shall include the following provisions: (a) at all times there shall be, and Borrower shall cause there to be, at least one Independent Manager (or the unanimous written consent of all Independent Managers, if more than one); (b) the Borrower shall not, without the prior written consent of at least one Independent Manager, on behalf of itself or Borrower, take any Material Action or any action that might cause such entity to become insolvent, and when voting with respect to such matters, the Independent Manager(s) shall consider only the interests of the Borrower, including its creditors; and (c) no Independent Manager of the Borrower may be removed or replaced unless the Borrower provides Lender with not less than five (5) Business Days’ prior written notice of (i) any proposed removal of an Independent Manager, together with a statement as to the reasons for such removal, and (ii) if a replacement, the identity of the proposed replacement Independent Manager, together with a certification that such replacement satisfies the requirements set forth in the organizational documents of the Borrower for an Independent Manager. No resignation or removal of an Independent Manager shall be effective until a successor Independent Manager is appointed and has accepted his or her appointment. No Independent Manager may be removed other than for Cause.
Section 10.6.    Hedging Agreements.
(a)    With respect to any Fixed Rate Collateral Obligation (other than Fixed Rate Collateral Obligations not counted as “excess” pursuant to clause (f) of the definition of “Excess Concentration Amount”), the Borrower hereby covenants and agrees that, upon the direction of the Facility Agent in its sole discretion as notified to the Borrower and the Servicer on or prior to the related Funding Date for such Collateral Obligation, the Borrower shall obtain and deliver to the Collateral Agent (with a copy to the Facility Agent and each Lender (via the Collateral Agent’s Website)) one or more Hedging Agreements from qualified Hedge Counterparties having, singly or in the aggregate, an Aggregate Notional Amount not less than the amount determined by the Facility Agent in its reasonable discretion, which (1) shall each have a notional principal amount equal to or greater than the lesser of (I) the Principal Balance of such Fixed Rate Collateral Obligation and (II) $1,000,000, (2) may provide for reductions of the Aggregate Notional Amount on each Distribution Date on an amortization schedule for such Aggregate Notional Amount assuming a 0.0 ABS prepayment speed (or such other ABS prepayment speed as may be approved in writing by the Facility Agent) and zero losses, and (3) shall have other terms and conditions and be represented by Hedging Agreements otherwise acceptable to the Facility Agent in its sole discretion.
(b)    In the event that any Hedge Counterparty defaults in its obligation to make a payment to the Borrower under one or more Hedging Agreements on any date on which payments are due pursuant to a Hedging Agreement, the Borrower shall make a demand no later than the Business Day following such default on such Hedge Counterparty, or any guarantor, if applicable, demanding payment under the applicable Hedging Agreement in accordance with the
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terms of such Hedging Agreement. The Borrower shall give notice to the Lenders (with a copy to the Collateral Agent) upon the continuing failure by any Hedge Counterparty to perform its obligations during the two Business Days following a demand made by the Borrower on such Hedge Counterparty, and shall take such action with respect to such continuing failure as may be directed by the Facility Agent.
(c)    In the event that any Hedge Counterparty no longer maintains the ratings specified in the definition of “Hedge Counterparty,” then within 30 days after receiving notice of such decline in the creditworthiness of such Hedge Counterparty as determined by any Rating Agency, the Borrower shall provide the Hedge Counterparty notice of the potential termination event resulting from such downgrade and, if the Hedge Counterparty fails to cure such potential termination event within the time frame specified in the related Hedging Agreement, the Borrower shall, at the written direction of the Facility Agent, (i) provided that a Replacement Hedging Agreement or Qualified Substitute Arrangement meeting the requirements of Section 10.6(d) has been obtained, (A) provide written notice to such Hedge Counterparty (with a copy to the Collateral Agent, each Lender and the Facility Agent) of its intention to terminate the applicable Hedging Agreement within the 30 day period following the expiration of the cure period set forth in the applicable Hedging Agreement and (B) terminate the applicable Hedging Agreement within such 30 day period, request the payment to it of all amounts due to the Borrower under the applicable Hedging Agreement through the termination date and deposit any such amounts so received, on the day of receipt, to the Collection Account, or (ii) establish any other arrangement (including an arrangement or arrangements in addition to or in substitution for any prior arrangement made in accordance with the provisions of this Section 10.6(c)) with the written consent (in its sole discretion) of the Facility Agent (a “Qualified Substitute Arrangement”); provided, that in the event at any time any alternative arrangement established pursuant to the above shall cease to be satisfactory to the Facility Agent, then the provisions of this Section 10.6(c), shall again be applied and in connection therewith the 30 day period referred to above shall commence on the date the Borrower receives notice of such cessation or termination, as the case may be.
(d)    Unless an alternative arrangement pursuant to Section 10.6(c) is being established, the Borrower shall use its best efforts to obtain a Replacement Hedging Agreement or Qualified Substitute Arrangement meeting the requirements of this Section 10.6 during the 30 day period following the expiration of the cure period set forth in the applicable Hedging Agreement. The Borrower shall not terminate the Hedging Agreement unless, prior to the expiration of such 30 day period, the Borrower delivers to the Collateral Agent (with a copy to the Facility Agent and each Lender (via the Collateral Agent’s Website)) (i) a Replacement Hedging Agreement or Qualified Substitute Arrangement, (ii) to the extent applicable, an Opinion of Counsel reasonably satisfactory to the Facility Agent as to the due authorization, execution and delivery and validity and enforceability of such Replacement Hedging Agreement or Qualified Substitute Arrangement, as the case may be, and (iii) evidence that the Facility Agent has consented in writing to the termination of the applicable Hedging Agreement and its replacement with such Replacement Hedging Agreement or Qualified Substitute Arrangement.
(e)    The Servicer or the Borrower shall notify the Facility Agent, each Lender and the Collateral Agent within five Business Days after a Responsible Officer of such Person shall obtain knowledge that the senior unsecured debt rating of a Hedge Counterparty has been withdrawn or reduced by any Rating Agency.
(f)    The Borrower may at any time obtain a Replacement Hedging Agreement with the consent (in its sole discretion) of the Facility Agent.
(g)    The Borrower shall not agree to any amendment to any Hedging Agreement without the consent (in its sole discretion) of the Facility Agent.
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(h)    The Borrower shall notify the Facility Agent, each Lender and the Collateral Agent after a Responsible Officer of the Borrower shall obtain actual knowledge of the transfer by the related Hedge Counterparty of any Hedging Agreement, or any interest or obligation thereunder.
(i)    The Borrower, with the consent of the Facility Agent in its sole discretion, may sell all or a portion of the Hedging Agreements. The Borrower shall have the duty of obtaining a fair market value price for the sale of any Hedging Agreement, notifying the Facility Agent, each Lender and the Collateral Agent of prospective purchasers and bids, and selecting the purchaser of such Hedging Agreement. The Borrower and, at the Borrower’s request, the Collateral Agent, upon receipt of the purchase price in the Collection Account shall, with the prior written consent of the Facility Agent, execute all documentation necessary to release the Lien of the Collateral Agent on such Hedging Agreement and proceeds thereof.
Notwithstanding anything to the contrary in this Section 10.6, the parties hereto agree that should the Borrower fail to observe or perform any of its obligations under this Section 10.6 with respect to any Hedging Agreement, the sole result will be that the Collateral Obligation or Collateral Obligations that are the subject of such Hedging Agreement shall immediately cease to be Eligible Collateral Obligations for all purposes under this Agreement.
Section 10.7.    Tangible Net Worth. The Borrower shall maintain at all times a positive Tangible Net Worth.
Section 10.8.    Taxes. For U.S. federal income tax purposes, the Borrower will be an entity disregarded as separate from the Equityholder and the Equityholder will be a U.S. Person. The Borrower will file on a timely basis all Tax returns (including foreign, federal, state, local and otherwise) required to be filed, if any, and will pay all Taxes due and payable by it and any assessments made against it or any of its property (other than any amount the validity of which is contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP are provided on the books of the Borrower). No more than 50% of the debt obligations (as determined for U.S. federal income tax purposes) held by the Borrower may at any time consist of real estate mortgages as determined for purposes of Section 7701(i) of the Code unless, based on written advice of Eversheds Sutherland (US) LLP, Dechert LLP or an opinion of other tax counsel of nationally recognized standing in the United States experienced in such matters, the ownership of such debt obligations will not cause the Borrower to be treated as a taxable mortgage pool for U.S. federal income tax purposes.
Section 10.9.    Merger, Consolidation, Etc. The Borrower shall not merge or consolidate with any other Person or permit any other Person to become the successor to all or substantially all of its business or assets without the prior written consent of the Facility Agent in its sole discretion.
Section 10.10.    Deposit of Collections. Without limiting the obligations under Section 7.5(k), the Borrower shall transfer, or cause to be transferred, all Collections to the Collection Account by the close of business on the Business Day following the date such Collections are received by the Borrower, the Equityholder, the Servicer, any advisor or sub-advisor of the Equityholder, the Servicer or any of their respective Affiliates.
Section 10.11.    Indebtedness; Guarantees. The Borrower shall not create, incur, assume or suffer to exist any Indebtedness other than Indebtedness permitted under the Transaction Documents. The Borrower shall incur no Indebtedness secured by the Collateral other than the Obligations. The Borrower shall not assume, guarantee, endorse or otherwise be or become directly or contingently liable for the obligations of any Person by, among other things, agreeing to purchase any obligation of another Person, agreeing to advance funds to such Person or
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causing or assisting such Person to maintain any amount of capital, other than as expressly permitted under the Transaction Documents.
Section 10.12.    Limitation on Purchases from Affiliates. Other than pursuant to the Sale Agreement, the Borrower shall not purchase any asset from the Equityholder or the Servicer or any Affiliate of the Borrower, the Equityholder or the Servicer.
Section 10.13.    Documents. Except as otherwise expressly permitted herein, it shall not cancel or terminate any of the Transaction Documents to which it is party (in any capacity), or consent to or accept any cancellation or termination of any of such agreements, or amend or otherwise modify any term or condition of any of the Transaction Documents to which it is party (in any capacity) or give any consent, waiver or approval under any such agreement, or waive any default under or breach of any of the Transaction Documents to which it is party (in any capacity) or take any other action under any such agreement not required by the terms thereof, unless (in each case) the Facility Agent shall have consented thereto in its sole discretion.
Section 10.14.    Preservation of Existence. It shall do or cause to be done all things necessary to (i) preserve and keep in full force and effect its existence as a limited liability company and take all reasonable action to maintain its rights and franchises in the jurisdiction of its formation and (ii) qualify and remain qualified as a limited liability company in good standing in each jurisdiction where the failure to qualify and remain qualified would reasonably be expected to have a Material Adverse Effect.
Section 10.15.    Limitation on Investments. The Borrower shall not form, or cause to be formed, any Subsidiaries other than REO Asset Owners; or 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 Affiliate or any other Person except investments as otherwise permitted herein and pursuant to the other Transaction Documents.
Section 10.16.    Distributions.
(a)    The Borrower shall not declare or make (i) payment of any distribution on or in respect of any equity interests, or (ii) any payment on account of the purchase, redemption, retirement or acquisition of any option, warrant or other right to acquire such equity interests; provided that so long as no Event of Default, Unmatured Event of Default or Specified Borrowing Base Breach shall have occurred and be continuing, (A) the Borrower may make a distribution of amounts paid to it pursuant to Section 8.3(a) on the applicable Distribution Date and (B) on any Business Day prior to the termination of the Revolving Period, the Borrower may make a distribution to the Equityholder from the proceeds of Advances or Principal Collections on deposit in the Principal Collection Account (in each case, excluding any amounts necessary to settle the acquisition of Eligible Collateral Obligations), in an amount not to exceed (I) 20% of the Aggregate Eligible Collateral Obligation Amount as of the most recent Measurement Date minus (II) all distributions paid by the Borrower to the Equityholder pursuant to this clause (B) within the trailing twelve (12) month period prior to the date of such distribution (calculated on a rolling basis), so long as, with respect to clause (C), after giving effect to such distribution (w) as certified in writing by the Borrower and the Servicer to the Facility Agent, sufficient proceeds remain for all payments to be made pursuant to Section 8.3(a)(II) (other than Section 8.3(a)(II)(v), but including any shortfall of payments under Section 8.3(a)(I) that are payable pursuant to Section 8.3(a)(II)(i)) on the next Distribution Date, (x) each Collateral Quality Test is satisfied, (y) the Minimum Equity Test is satisfied and (z) the Advances Outstanding do not exceed the Borrowing Base.
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(b)    Prior to foreclosure by the Facility Agent upon any Collateral pursuant to Section 13.3(c), nothing in this Section 10.16 or otherwise in this Agreement shall restrict the Borrower from exercising any Warrant Assets issued to it by Obligors from time to time to the extent funds are available to the Borrower under Section 8.3(a) or made available to the Borrower.
Section 10.17.    Performance of Borrower Assigned Agreements. The Borrower shall (i) perform and observe in all material respects all the terms and provisions of the Transaction Documents (including each of the Borrower Assigned Agreements) to which it is a party to be performed or observed by it, maintain such Transaction Documents in full force and effect, and enforce such Transaction Documents in accordance with their terms, and (ii) upon reasonable request of the Facility Agent, make to any other party to such Transaction Documents such demands and requests for information and reports or for action as the Borrower is entitled to make thereunder.
Section 10.18.    Material Modifications. During the existence of an Event of Default, the Borrower shall not consent to a Material Modification with respect to any Collateral Obligation without the express written consent of the Facility Agent (in its sole discretion). If no Event of Default exists, the Borrower shall not consent to a Material Modification with respect to any Collateral Obligation without the express written consent of the Facility Agent (in its sole discretion) if, after giving effect to such Material Modification, (i) the Advances outstanding would be greater than the Borrowing Base or the Maximum Availability or (ii) any of the Collateral Quality Tests or any Concentration Limitation would not be satisfied. Notwithstanding the foregoing, if the Borrower consents to a Material Modification at any time without the consent of the Facility Agent such Collateral Obligation shall have a Collateral Obligation Amount of zero from and after the date of such Material Modification until such Material Modification is consented to in writing by the Facility Agent (in its sole discretion).
Section 10.19.    Further Assurances; Financing Statements.
(a)    The Borrower agrees that at any time and from time to time, at its expense and upon reasonable request of the Facility Agent or the Collateral Agent, it shall promptly execute and deliver all further instruments and documents, and take all reasonable further action, that is necessary or desirable to perfect and protect the assignments and security interests granted or purported to be granted by this Agreement or to enable the Collateral Agent or any of the Secured Parties to exercise and enforce its rights and remedies under this Agreement with respect to any Collateral. Without limiting the generality of the foregoing, the Borrower authorizes the filing of such financing or continuation statements, or amendments thereto, and such other instruments or notices as may be necessary or desirable or that the Collateral Agent (acting solely at the Facility Agent’s request) may reasonably request to protect and preserve the assignments and security interests granted by this Agreement. Such financing statements filed against the Borrower may describe the Collateral in the same manner specified in Section 12.1 or in any other manner as the Facility Agent may reasonably determine is necessary to ensure the perfection of such security interest (without disclosing the names of, or any information relating to, the Obligors thereunder), including describing such property as all assets or all personal property of the Borrower whether now owned or hereafter acquired.
(b)    The Borrower and each Secured Party hereby severally authorize the Collateral Agent, upon receipt of written direction from the Facility Agent, to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral.
(c)    It shall furnish to the Collateral Agent and the Facility Agent from time to time such statements and schedules further identifying and describing the Related Security and
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such other reports in connection with the Collateral as the Collateral Agent (acting solely at the Facility Agent’s request) or the Facility Agent may reasonably request, all in reasonable detail.
Section 10.20.    Obligor Payment Instructions. The Borrower acknowledges that the power of attorney granted in Section 13.10 to the Collateral Agent permits the Collateral Agent to send (at the Facility Agent’s written direction after the occurrence of an Event of Default) Obligor notification forms to give notice to the Obligors of the Collateral Agent’s interest in the Collateral and the obligation to make payments as directed by the Collateral Agent (at the written direction of the Facility Agent). The Borrower further agrees that it shall (or it shall cause the Servicer to) provide prompt notice to the Facility Agent of any misdirected or errant payments made by any Obligor with respect to any Collateral Obligation and direct such Obligor to make payments as required hereunder.
Section 10.21.    Delivery of Collateral Obligation Files. (a) The Borrower (or the Servicer on behalf of the Borrower) shall deliver to the Collateral Custodian (with a copy to the Facility Agent at the following e-mail addresses (for electronic copies): amit.patel@db.com, anuar.atiye-manzur@db.com, thorben.wedderien@db.com and mercedes.crestanello@db.com), the documents listed in clauses (i), (ii) and (iv) of the definition of “Collateral Obligation File” and identified on the related Document Checklist promptly upon receipt but in no event later than five (5) Business Days after the related Funding Date; provided that any other Collateral Obligation File shall be delivered as soon as it is reasonably available, but no in event later than thirty (30) Business Days after the related Funding Date. In addition, promptly following the occurrence of an Event of Default, the Borrower shall deliver to the Collateral Custodian (with a copy to the Facility Agent at the email addresses set forth above) a fully executed assignment in blank for each Collateral Obligation for which the Servicer or any of its Affiliates is the loan agent. The Borrower shall maintain (or cause to be maintained) for the Secured Parties in accordance with their respective interests all Records that evidence or relate to the Collections not previously delivered to the Collateral Agent and shall, as soon as reasonably practicable upon demand of the Facility Agent, make available, or, upon the Facility Agent’s demand following the occurrence and during the continuation of an Event of Default, deliver to the Facility Agent copies of all such Records which evidence or relate to the Collections.
(b)    The Borrower shall deliver the following: (i) all Asset Approval Requests to lenderfinance_collatreview@list.db.com, (ii) Collateral Reports delivered in connection with Section 8.5 to csg.india@db.com, abs.conduits@db.com, dbinvestor@list.db.com, amit.patel@db.com, anuar.atiye-manzur@db.com, thorben.wedderien@db.com and mercedes.crestanello@db.com, (iii) requests or notices delivered in accordance with Sections 2.2, 2.4 or 8.3(b), to abs.conduits@db.com, lenderfinance_collatreview@list.db.com, amit.patel@db.com, anuar.atiye-manzur@db.com, thorben.wedderien@db.com and mercedes.crestanello@db.com and (iv) obligor reports delivered in connection with Section 7.5(j) to gcrt.ratingrequests@db.com and lenderfinance_collatreview@list.db.com.
Section 10.22.    Risk Retention.
(a)    For so long as any Obligations are outstanding: the Equityholder represents and undertakes that:
(i)    as an “originator” for the purposes of the EU Securitization Rules, the Equityholder holds and will retain on an on-going basis, a net economic interest in the securitization transaction contemplated by this Agreement, which shall not be less than 5.0% of the aggregate nominal value of all the Collateral Obligations (the “Retained Economic Interest”) measured at the time of origination (being the occasion of each origination and acquisition of a Collateral Obligation by the Borrower);
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(ii)    the Retained Economic Interest takes the form of a first loss tranche in accordance with paragraph (d) of Article 6(3) of the EU Securitization Regulation, as represented by the Equityholder’s direct limited liability company interests in the Borrower (the “Equity Interests”);
(iii)    the Equityholder directly holds and will directly retain 100% of the Equity Interests and the Borrower shall have no other issued equity interests;
(iv)    the aggregate capital contributions made by the Equityholder with respect to the Equity Interests shall represent at least 5.0% of the aggregate of the nominal value of all the Collateral Obligations measured at the time of origination as described in (i) above;
(v)    the Equityholder shall not, and it will procure that its Affiliates (including, without limitation, the Borrower) do not (x) short, hedge, or otherwise mitigate its credit risk arising from or associated with the Retained Economic Interest, or (y) sell, transfer or otherwise surrender all or part of the rights, benefits or obligations arising from or associated with the Retained Economic Interest (except, in each case, as permitted by the EU Securitization Rules); and
(vi)    more than 50% of all of the Collateral Obligations will be Retention Holder Originated Collateral Obligations, with such proportion of the Retention Holder Originated Collateral Obligations being measured on the basis of the aggregate outstanding principal balance of the Collateral Obligations following the settlement of each acquisition and origination of a Collateral Obligation by the Borrower.
(b)    Each Collateral Report shall contain or be accompanied by a certification from the Equityholder containing a representation that it is, and has at all times been, in compliance with its obligations set forth in clause (a) above up to and on each date of the related Collection Period. In addition, the Equityholder shall provide to the Facility Agent and/or the SR Lenders, at its own cost and expense:
(i)    prompt written notice of any breach of its obligations set forth in clause (a) above;
(ii)    at the request of any SR Lender, confirmation that all of the obligations set forth in clause (a) above continue to be complied with (x) in the event of a material change in the structure of the transaction contemplated by the Transaction Documents that could have a material impact on the performance of the Advances, or the risk characteristics of the Collateral Obligations and the Advances made with respect thereto; (y) upon the occurrence of any Event of Default or becoming aware of any breach of the obligations contained in any Transaction Documents; and (z) upon any material amendment of any Transaction Document or any additional Advances being made; and
(iii)    all information, documents, reports and notifications that the SR Lenders may require in connection with their obligations under the EU Securitization Rules, including without limitation, any information, documentation, reports or notifications that the SR Lenders require for the purposes of Article 5(1)(e) of the EU Securitization Regulation, in such form, in such manner and at such times as prescribed by the Article 7 Transparency and Reporting Requirements, in respect of which it is agreed as follows:
(A)    the Borrower hereby agrees to ensure (or procure) continued compliance with, and is hereby appointed as to be designated as the reporting entity for the purposes of, the Article 7 Transparency and Reporting Requirements and agrees to make available to the SR Lenders the Transparency Reports at the following
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times (each a “Submission Date”): (x) on a date that is no later than one month after the Distribution Date in May 2024, and (y) thereafter on a quarterly basis, on a date that is no later than three months after the then most recent Submission Date (and no later than one month after the then most recent Distribution Date);
(B)    the data cut-off date in respect of each Transparency Report shall be no earlier than two months prior to such Transparency Report’s Submission Date (except as may otherwise be permitted or required at any time by the Article 7 Transparency and Reporting Requirements);
(C)    the Borrower shall only be required to provide notification of any significant event of the type specified by Article 7(1)(g) of the EU Securitization Regulation to the extent that a notification or report in respect of the relevant event has not otherwise been provided by any person pursuant to any other provision of any Transaction Document;
(D)     the Borrower shall not be required to provide any information, documents, reports or notifications: (x) that is/are the subject of contractual confidentiality requirements; or (y) that is/are subject to laws governing the protection of confidentiality of information and the processing of personal data (all such information, documents, reports and notifications referred to in sub-clauses (x) and (y) being collectively referred to as “Restricted Information”), unless, if it is Restricted Information that cannot be anonymized or aggregated, and there is no existing confidentiality agreement permitting the disclosure of Restricted Information to the SR Lenders, the Facility Agent and/or the SR Lenders enter into a confidentiality agreement reasonably acceptable to the Borrower, with respect to such Restricted Information, so that it can be furnished to the Facility Agent and the SR Lenders; and
(E)    the Borrower is permitted to, and the SR Lenders should expect that the Borrower may, delegate all or any portion of its reporting obligations in respect of the Transparency Reports a third party service provider. Notwithstanding any such delegation, the Borrower shall remain obligated and liable for the performance of its obligations and duties under this Section 10.22(b) with respect to the preparation and provision of the Transparency Reports in accordance with the provisions hereof to the same extent and under the same terms and conditions as if it alone were preparing the Transparency Reports as required hereby.
(c)    The Equityholder represents that: (i) its Equity Interests in the Borrower were duly approved in accordance with its organizational documents and investment policies; and (ii) in its capacity as Servicer, it established the transaction contemplated by the Transaction Documents by: (A) causing the formation of the Borrower as a wholly-owned subsidiary that is consolidated with the Equityholder for accounting purposes; (B) approving the eligibility criteria for the origination and acquisition of Collateral Obligations; (C) determining the transaction structure and negotiating and approving the terms of the Transaction Documents.
(d)    The Equityholder represents that: (i) it was not established for, and does not operate for, the sole purpose of securitizing exposures; (ii) it has, and reasonably expects to continue to have, a strategy and the capacity to meet its payment obligations consistent with a broader business model that involves material support from capital, assets, fees or other sources of income, by virtue of which it does not rely on (A) the Collateral Obligations or other assets securitized by it; (B) the Equity Interests; or (C) the Retained Economic Interest or any other interest retained or proposed to be retained by it for purposes of the EU Risk Retention Requirement, and in each case, any related corresponding income as its sole or predominant source of revenue; and (iii) it has, and reasonably expects to continue to retain (or retain the
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services of) a management body with members that have the necessary experience to enable the Equityholder to pursue its established business strategy, as well as an adequate corporate governance structure.
(e)    The Equityholder further represents and undertakes that:
(i)    the Retention Holder Originated Collateral Obligations have been, and will continue to be, originated pursuant to a sound and well-defined credit granting criteria and clearly established processes for approving, amending, renewing and financing the Collateral Obligations and it has, and shall maintain effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the Obligor’s creditworthiness; and
(ii)    in relation to each other Collateral Obligation that is acquired by the Borrower, it has verified, and will continue to verify, the entity which was, directly or indirectly, involved in the original agreement which created the Collateral Obligation applied a sound and well-defined credit granting criteria to the origination of the Collateral Obligation and clearly established processes for approving, amending, modifying, renewing and financing the Collateral Obligation, and had effective systems in place to apply those criteria and processes to ensure that the Collateral Obligation was granted and approved based on a thorough assessment of the relevant Obligor’s creditworthiness.
(f)    Unless the Equityholder also serves as the Servicer hereunder, the Equityholder is, and will remain, ultimately responsible for and retain discretion over the actions of the Servicer; and any actions taken by the Servicer in relation to the matters outlined in clause (c) above are taken for, and on behalf of, the Equityholder.
Section 10.23.    Proceedings. As soon as possible and in any event within three (3) Business Days after a Responsible Officer of the Borrower receives notice or obtains knowledge thereof, notice of any settlement of, material judgment (including a material judgment with respect to the liability phase of a bifurcated trial) in or commencement of any material labor controversy, material litigation, material action, material suit or material proceeding before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Collateral (taken as a whole), the Transaction Documents, the Collateral Agent’s interest in the Collateral, or the Borrower; provided that, notwithstanding the foregoing, any settlement, judgment, labor controversy, litigation, action, suit or proceeding affecting the Collateral (taken as a whole), the Transaction Documents, the Collateral Agent’s interest in the Collateral, or the Borrower in excess of $100,000 or more shall be deemed to be material for purposes of this Section 10.23.
Section 10.24.    Officer’s Certificate. On each anniversary of the date of this Agreement, the Borrower shall deliver an Officer’s Certificate, in form and substance acceptable to the Facility Agent, providing (i) a certification, based upon a review and summary of UCC search results, that there is no other interest in the Collateral perfected by filing of a UCC financing statement other than in favor of the Collateral Agent and (ii) a certification, based upon a review and summary of tax and judgment Lien searches satisfactory to the Facility Agent, that there is no other interest in the Collateral based on any tax or judgment Lien.
Section 10.25.    Policies and Procedures for Sanctions. The Borrower has instituted and maintained policies and procedures designed to ensure compliance with Sanctions.
Section 10.26.