jmpllc20180726_8k.htm

  


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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): July 26, 2018 

 


 

JMP Group LLC

(Exact Name of Registrant as Specified in Charter) 

 


 

                    Delaware                    

 

                001-36802                

 

                  47-1632931                  

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

 

 

600 Montgomery Street, Suite 1100, San Francisco, California 94111

(Address of Principal Executive Offices, including zip code)

 

 

415-835-8900

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report) 

 


 

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:

 

  Written communication 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 communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     

 

Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

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 July 26, 2018, JMP Group LLC (the “Company”) closed a $407.8 million collateralized loan obligation (“CLO”) transaction.  The senior notes offered in this transaction (the “Secured Notes”) will be issued by JMP Credit Advisors CLO V Ltd., a newly formed special purpose Cayman vehicle (the “Issuer”), and co-issued by JMP Credit Advisors CLO V LLC, a newly formed special purpose Delaware vehicle (the “Co-Issuer”), and will be backed by a diversified portfolio of broadly syndicated leveraged loans.  The Secured Notes are subject to a two-year non-call period.  The CLO has a four-year reinvestment period that allows for the use of the proceeds from any principal repayments on, or any sales of, collateral assets towards the purchase of qualifying replacement assets, subject to certain conditions and limitations.

 

The capital structure of the CLO is as follows:

 

Class

 

Par Amount

 

Preliminary
Moody’s/Fitch Rating

 

Maturity Date

 

Coupon

 

A

  $ 256,000,000  

Aaa / AAA

 

July 17, 2030

 

LIBOR + 1.19%

 

B

    48,000,000  

Aa2 / NR

 

July 17, 2030

 

LIBOR + 1.90%

 

C

    22,000,000  

A2 / NR

 

July 17, 2030

 

LIBOR + 2.35%

 

D

    22,000,000  

Baa3 / NR

 

July 17, 2030

 

LIBOR + 3.35%

 

E

    20,000,000  

Ba3 / NR

 

July 17, 2030

 

LIBOR + 6.32%

 

Senior Sub Notes

    10,000,000  

NR / NR

 

July 17, 2030

 

LIBOR + 6.90%(1)

 

Junior Sub Notes

    29,825,000  

NR / NR

 

July 17, 2030

     N/A  

Total

  $ 407,825,000                

 

 

(1)

On each Payment Date, the Senior Subordinated Notes will be entitled to receive the coupon stated above and 55% of all remaining interest proceeds and all remaining principal proceeds prior to any distributions on the Junior Subordinated Notes on such Payment Date.

 

The Notes were sold in transactions exempt from registration under the Securities Act of 1933, as amended, and have not been, and will not be, registered under the Securities Act of 1933, as amended, or any state “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from registration. The Secured Notes were issued pursuant to an indenture, dated as of July 26, 2018.

 

The Company, through a wholly-owned subsidiary, purchased $2,500,000 of the Senior Subordinated Notes and 100% of the Junior Subordinated Notes of the Issuer (collectively, the “Subordinated Notes” and together with the Secured Notes, the “Notes”). The Junior Subordinated Notes do not bear interest and are not rated.  The stated maturity dates of the Notes are set forth in the table above.  The Secured Notes will be the secured obligations of the Issuer and of the Co-Issuer, and an indenture governing the Notes includes customary covenants and events of default.

 

The Company (through JMP Credit Advisors LLC) will serve as collateral manager to the Issuer under a collateral management agreement, which contains customary representations, warranties and covenants. Under the collateral management agreement, the Company will perform certain investment management functions, including supervising and directing the investment and reinvestment of the Issuer's assets, as well as performing certain administrative and advisory functions.  

 

U.S. Bank National Association serves as collateral administrator to the Issuer under a collateral administration agreement.  The Company (through JMP Credit Advisors LLC) made customary representations, warranties and covenants in the collateral administration agreement.

 

The Company intends to consolidate the loan investment portfolio and expects to account for the transaction on its balance sheet as non-recourse debt.

 

The descriptions of the documentation relating to this transaction contained in this Current Report on Form 8-K do not purport to be complete and are qualified in their entirety by reference to the underlying agreements, attached hereto as exhibits and incorporated into this Current Report on Form 8-K by reference.

 

 

 

 

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

 

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits

 

(d)  Exhibits

Exhibit No.

Description

   

10.22

Indenture, dated as of July 26, 2018, among JMP Credit Advisors CLO V Ltd., as Issuer, JMP Credit Advisors CLO V LLC, as Co-Issuer, and U.S. Bank National Association, as Trustee.

   

 99.1

Press Release issued by the Company, dated July 27, 2018.

 

 

 

 

Signature(s)

 

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.

 

 

JMP Group LLC

 

 

 

 

 

 

 

 

 

    Date: July 27, 2018

By:

/s/ Raymond Jackson                       

 

 

 

Raymond Jackson

 

 

 

Chief Financial Officer

 

ex_118642.htm

Exhibit 10.22

 

 

CONFORMED VERSION



 

 

 

 

 

 

JMP CREDIT ADVISORS CLO V LTD.

Issuer,

 

JMP CREDIT ADVISORS CLO V LLC

Co-Issuer,

 

 

AND

 

U.S. BANK NATIONAL ASSOCIATION

Trustee

 

INDENTURE

 

Dated as of July 26, 2018

 

COLLATERALIZED LOAN OBLIGATIONS

 

 

 

 

 

 

 



 

 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I DEFINITIONS

2

   

Section 1.1

Definitions.

2

Section 1.2

Rules of Construction.

69

Section 1.3

Assumptions as to Pledged Obligations.

69

   

ARTICLE II THE NOTES

72

   

Section 2.1

Forms Generally.

72

Section 2.2

Forms of Notes.

72

Section 2.3

Authorized Amount; Stated Maturity; Denominations.

74

Section 2.4

Additional Notes.

76

Section 2.5

Execution, Authentication, Delivery and Dating.

77

Section 2.6

Registration, Registration of Transfer and Exchange.

78

Section 2.7

Mutilated, Defaced, Destroyed, Lost or Stolen Note.

91

Section 2.8

Payment of Principal and Interest and Other Amounts; Principal and Interest Rights Preserved.

92

Section 2.9

Persons Deemed Owners.

95

Section 2.10

Surrender of Notes; Cancellation.

95

Section 2.11

Certificated Notes.

95

Section 2.12

Notes Beneficially Owned by Persons Not QIB/QPs, IAI/QPs or AI/QPs or in Violation of ERISA Representations.

96

Section 2.13

Deduction or Withholding from Payments on Notes; No Gross Up.

98

Section 2.14

Tax Treatment; Tax Certifications.

98

   

ARTICLE III CONDITIONS PRECEDENT

100

   

Section 3.1

Conditions to Issuance of Notes on Closing Date.

100

Section 3.2

Conditions to Issuance of Additional Notes.

103

Section 3.3

Custodianship; Delivery of Collateral Obligations and Eligible Investments.

105

   

ARTICLE IV SATISFACTION AND DISCHARGE

106

   

Section 4.1

Satisfaction and Discharge of Indenture.

106

Section 4.2

Application of Trust Money.

108

Section 4.3

Repayment of Monies Held by Paying Agent.

108

Section 4.4

Limitation on obligation to incur Administrative Expenses.

108

   

ARTICLE V REMEDIES

109

   

Section 5.1

Events of Default.

109

Section 5.2

Acceleration of Maturity; Rescission and Annulment.

111

Section 5.3

Collection of Indebtedness and Suits for Enforcement by Trustee.

112

Section 5.4

Remedies.

114

 

-i-

 

 

Section 5.5

Optional Preservation of Assets.

116

Section 5.6

Trustee May Enforce Claims without Possession of Notes.

118

Section 5.7

Application of Money Collected.

118

Section 5.8

Limitation on Suits.

118

Section 5.9

Unconditional Rights of Secured Noteholders to Receive Principal and Interest.

119

Section 5.10

Restoration of Rights and Remedies.

119

Section 5.11

Rights and Remedies Cumulative.

119

Section 5.12

Delay or Omission Not Waiver.

120

Section 5.13

Control by Majority of Controlling Class.

120

Section 5.14

Waiver of Past Defaults.

120

Section 5.15

Undertaking for Costs.

121

Section 5.16

Waiver of Stay or Extension Laws.

121

Section 5.17

Sale of Assets.

121

Section 5.18

Action on the Notes.

122

   

ARTICLE VI THE TRUSTEE

123

   

Section 6.1

Certain Duties and Responsibilities.

123

Section 6.2

Notice of Default.

125

Section 6.3

Certain Rights of Trustee.

125

Section 6.4

Not Responsible for Recitals or Issuance of Notes.

128

Section 6.5

May Hold Notes.

129

Section 6.6

Money Held in Trust.

129

Section 6.7

Compensation and Reimbursement.

129

Section 6.8

Corporate Trustee Required; Eligibility.

130

Section 6.9

Resignation and Removal; Appointment of Successor.

131

Section 6.10

Acceptance of Appointment by Successor.

132

Section 6.11

Merger, Conversion, Consolidation or Succession to Business of Trustee.

133

Section 6.12

Co trustees.

133

Section 6.13

Certain Duties of Trustee Related to Delayed Payment of Proceeds.

134

Section 6.14

Authenticating Agents.

135

Section 6.15

Withholding.

135

Section 6.16

Representative for Secured Noteholders Only; Agent for each Hedge Counterparty and the Holders of the Subordinated Notes.

136

Section 6.17

Representations and Warranties of the Bank.

136

Section 6.18

Communication with Rating Agencies.

136

Section 6.19

Provisions related to the Collateral Management Agreement.

137

   

ARTICLE VII COVENANTS

137

   

Section 7.1

Payment of Principal and Interest.

137

Section 7.2

Maintenance of Office or Agency.

137

Section 7.3

Money for Note Payments to Be Held in Trust.

138

Section 7.4

Existence of Co Issuers.

140

Section 7.5

Protection of Assets.

141

Section 7.6

Opinions as to Assets.

142

 

-ii-

 

 

Section 7.7

Performance of Obligations.

142

Section 7.8

Negative Covenants.

143

Section 7.9

Statement as to Compliance.

146

Section 7.10

Co Issuers May Consolidate, etc. only on Certain Terms

146

Section 7.11

Successor Substituted.

148

Section 7.12

No Other Business.

148

Section 7.13

Annual Rating Review.

148

Section 7.14

Reporting.

148

Section 7.15

Calculation Agent.

149

Section 7.16

Certain Tax Matters.

150

Section 7.17

Ramp Up Period; Purchase of Additional Collateral Obligations.

157

Section 7.18

Representations Relating to Security Interests in the Assets.

160

Section 7.19

Acknowledgement of Collateral Manager Standard of Care.

162

Section 7.20

[Reserved].

162

Section 7.21

Section 3(c)(7) Procedures.

162

   

ARTICLE VIII SUPPLEMENTAL INDENTURES

163

   

Section 8.1

Supplemental Indentures without Consent of Holders of Notes.

163

Section 8.2

Supplemental Indentures with Consent of Holders of Notes.

168

Section 8.3

Supplemental Indentures with consent of the Section 13 Banking Entities.

172

Section 8.4

Execution of Supplemental Indentures.

172

Section 8.5

Effect of Supplemental Indentures.

173

Section 8.6

Reference in Notes to Supplemental Indentures.

173

   

ARTICLE IX REDEMPTION OF NOTES

173

   

Section 9.1

Mandatory Redemption.

173

Section 9.2

Optional Redemption.

173

Section 9.3

Partial Redemption by Refinancing.

176

Section 9.4

Tax Redemption.

177

Section 9.5

Redemption Procedures.

177

Section 9.6

Notes Payable on Redemption Date.

179

Section 9.7

Special Redemption.

180

Section 9.8

Clean-Up Call Redemption.

180

   

ARTICLE X ACCOUNTS, ACCOUNTINGS AND RELEASES

182

   

Section 10.1

Collection of Money.

182

Section 10.2

Collection Accounts.

182

Section 10.3

Payment Account; Custodial Account; Ramp Up Account; Expense Reserve Account; Interest Reserve Account; Unfunded Exposure Account.

184

Section 10.4

Hedge Counterparty Collateral Account.

187

Section 10.5

Reinvestment of Funds in Accounts; Reports by Trustee.

188

Section 10.6

Accountings.

190

Section 10.7

Release of Securities.

198

Section 10.8

Reports by Independent Accountants.

199

 

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Section 10.9

Reports to Rating Agencies.

201

Section 10.10

Procedures Relating to the Establishment of Accounts Controlled by the Trustee.

201

   

ARTICLE XI APPLICATION OF MONIES

201

   

Section 11.1

Disbursements of Monies from Payment Account.

201

   

ARTICLE XII SALE OF COLLATERAL OBLIGATIONS; PURCHASE OF ADDITIONAL COLLATERAL OBLIGATIONS

209

   

Section 12.1

Sales of Collateral Obligations.

209

Section 12.2

Purchase of Additional Collateral Obligations.

211

Section 12.3

Disposition of Illiquid Assets.

217

Section 12.4

Conditions Applicable to All Sale and Purchase Transactions.

218

   

ARTICLE XIII NOTEHOLDERS' RELATIONS

219

   

Section 13.1

Subordination.

219

Section 13.2

Standard of Conduct.

220

Section 13.3

Provision of Information.

220

   

ARTICLE XIV MISCELLANEOUS

220

   

Section 14.1

Form of Documents Delivered to Trustee.

220

Section 14.2

Acts of Holders.

221

Section 14.3

Notices, etc., to Trustee, the Co Issuers, the Collateral Administrator, the Collateral Manager, the Hedge Counterparty, the Paying Agent, the Administrator and the Rating Agencies

222

Section 14.4

Notices to Holders; Waiver.

224

Section 14.5

Effect of Headings and Table of Contents.

225

Section 14.6

Successors and Assigns.

225

Section 14.7

Separability.

225

Section 14.8

Benefits of Indenture.

225

Section 14.9

Intentionally Omitted.

225

Section 14.10

Governing Law.

225

Section 14.11

Submission to Jurisdiction.

226

Section 14.12

Counterparts.

226

Section 14.13

Acts of Issuer.

226

Section 14.14

Confidential Information.

227

Section 14.15

Liability of Co Issuers.

228

Section 14.16

17g-5 Information.

228

Section 14.17

Moody's Rating Condition.

231

Section 14.18

Waiver of Jury Trial.

231

Section 14.19

Escheat.

231

Section 14.20

Records.

232

   

ARTICLE XV ASSIGNMENT OF COLLATERAL MANAGEMENT AGREEMENT

232

   

Section 15.1

Assignment of Collateral Management Agreement.

232

   

ARTICLE XVI HEDGE AGREEMENTS

233

   

Section 16.1

Hedge Agreements.

233

 

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Schedule 1 – Moody's Industry Classification Group List

Schedule 2–

S&P Industry Classifications

Schedule 3–

Diversity Score Calculation

Schedule 4–

Moody's Rating Definitions

Schedule 5– Fitch Rating Definitions

 

Exhibit A   –     Forms of Notes

A1

Form of Class A Note

A2

Form of Class B Note

A3

Form of Class C Note

A4

Form of Class D Note

A5

Form of Class E Note

A6

Form of Senior Subordinated Note

A7

Form of Junior Subordinated Note

 

Exhibit B   –     Forms of Transfer and Exchange Certificates

B1

Form of Transferor Certificate for Transfer of Rule 144A Global Notes or Certificated Notes to Regulation S Global Notes

B2A

Form of Transferor Certificate for Transfer of Regulation S Global Notes to Rule 144A Global Notes or Certificated Notes

B2B

Form of Transferor Certificate for Transfer of Certificated Notes to Rule 144A Global Notes

B3

Form of Transferee Certificate for Transfer of Regulation S Global Notes or Certificated Notes to Rule 144A Global Notes

B4

Form of Transferee Certificate for Transfer of Rule 144A Global Notes, Regulation S Global Notes or Certificated Notes to Certificated Notes

B5

Form of Transferee Certificate for Transfer of Rule 144A Global Notes or Certificated Notes to Regulation S Global Notes

B6

Form of ERISA Subscription Agreement

 

Exhibit C   –    Calculation of LIBOR

Exhibit D   –    Form of Note Owner Certificate

Exhibit E   –    Form of NRSRO Certification

Exhibit F   –    Form of Banking Entity Notice

 

 

 

 

INDENTURE, dated as of July 26, 2018, among JMP Credit Advisors CLO V Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands (the "Issuer"), JMP Credit Advisors CLO V LLC, a limited liability company formed under the laws of the State of Delaware (the "Co-Issuer" and, together with the Issuer, the "Co-Issuers"), and U.S. Bank National Association, as trustee (herein, together with its permitted successors and assigns in the trusts hereunder, the "Trustee").

 

PRELIMINARY STATEMENT

 

The Co-Issuers are duly authorized to execute and deliver this Indenture to provide for the Notes issuable as provided in this Indenture. Except as otherwise provided herein, all covenants and agreements made by the Co-Issuers herein are for the benefit and security of the Secured Parties. The Co-Issuers are entering into this Indenture, and the Trustee is accepting the trusts created hereby, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

 

All things necessary to make this Indenture a valid agreement of the Co-Issuers in accordance with the agreement's terms have been done.

 

GRANTING CLAUSE

 

The Issuer hereby Grants to the Trustee, for the benefit and security of the Holders of the Secured Notes, the Trustee, the Bank (in all of its capacities hereunder), the Collateral Administrator, the Collateral Manager, the Administrator and each Hedge Counterparty (collectively, the "Secured Parties"), all of its right, title and interest in, to and under the following property, in each case, whether now owned or existing, or hereafter acquired or arising, and wherever located, (a) the Collateral Obligations and all payments thereon or with respect thereto, (b) each of the Accounts, to the extent permitted by the applicable Hedge Agreement, each Hedge Counterparty Collateral Account, any Eligible Investments purchased with funds on deposit therein, and all income from the investment of funds therein, (c) the equity interest in any Issuer Subsidiary and Equity Securities and all payments and rights thereunder, (d) the Issuer's right under the Collateral Management Agreement as set forth in Article XV hereof, the Hedge Agreements (provided that there is no such Grant to the Trustee on behalf of any Hedge Counterparty in respect of its related Hedge Agreement), the Collateral Administration Agreement and the Administration Agreement, (e) all Cash or Money delivered to the Trustee (or its bailee) for the benefit of the Secured Parties, (f) all accounts, chattel paper, deposit accounts, financial assets, general intangibles, payment intangibles, instruments, investment property and supporting obligations (as such terms are defined in the UCC), (g) any other property otherwise delivered to the Trustee by or on behalf of the Issuer (whether or not constituting Collateral Obligations, Equity Securities or Eligible Investments), and (h) all proceeds (as defined in the UCC) and products, in each case, with respect to the foregoing (the assets referred to in (a) through (h) are collectively referred to as the "Assets"); provided that such Grant shall not include (i) the U.S.$250 transaction fee paid to the Issuer in consideration of the issuance of the Secured Notes and Subordinated Notes, (ii) the funds attributable to the issuance and allotment of the Issuer's ordinary shares, (iii) the bank account in the Cayman Islands in which such funds are deposited (or any interest thereon), and (iv) the membership interests of the Co-Issuer (the assets referred to in (i) through (iv), collectively, the "Excepted Property").

 

 

 

 

The above Grant is made in trust to secure the Secured Notes and the Issuer's obligations to the Secured Parties under this Indenture and each Hedge Agreement (together, the "Secured Obligations"). Except as set forth in the Priority of Payments and Article XIII of this Indenture, the Secured Notes are secured equally and ratably without prejudice, priority or distinction between any Secured Note and any other Secured Note by reason of difference in time of issuance or otherwise, except as expressly provided in this Indenture, and to secure, in accordance with the priorities set forth in the Priority of Payments, (i) the payment of all amounts due on the Secured Notes in accordance with their terms, (ii) the payment of all other sums payable under this Indenture and all amounts payable under each Hedge Agreement, and (iii) compliance with the provisions of this Indenture and each Hedge Agreement, all as provided in this Indenture and each Hedge Agreement, respectively. The foregoing Grant shall, for the purpose of determining the property subject to the lien of this Indenture, be deemed to include any securities and any investments granted to the Trustee by or on behalf of the Issuer, whether or not such securities or investments satisfy the criteria set forth in the definitions of "Collateral Obligation" or "Eligible Investments," as the case may be.

 

The Trustee acknowledges such Grant, accepts the trusts hereunder in accordance with the provisions hereof, and agrees to perform its duties expressly stated herein in accordance with the provisions hereof.

 

ARTICLE I

DEFINITIONS

 

Section 1.1     Definitions. Except as otherwise specified herein or as the context may otherwise require, the following terms shall have the respective meanings set forth below for all purposes of this Indenture:

 

"17g-5 Information": The meaning specified in Section 14.16.

 

"17g-5 Website": A password-protected internet website which shall initially be located at https://www. structuredfn.com. Any change of the 17g-5 Website shall only occur after notice has been delivered by the Issuer to the Information Agent, the Trustee, the Collateral Administrator, the Collateral Manager, the Initial Purchaser, and the Rating Agencies setting the date of change and new location of the 17g-5 Website.

 

"Accountants' Report": A certificate of the firm or firms appointed by the Issuer pursuant to Section 3.2(a)(vi) or Section 10.8(a), as applicable.

 

"Accounts": Each of (i) the Payment Account, (ii) the Collection Account, (iii) the Ramp-Up Account, (iv) the Expense Reserve Account, (v) the Interest Reserve Account, (vi) the Custodial Account, (vii) the Unfunded Exposure Account and (viii) each Hedge Counterparty Collateral Account (if any).

 

-2-

 

 

"Accredited Investor" or "AI": An accredited investor as defined in Regulation D under the Securities Act.

 

"Act" and "Act of Holders": The respective meanings specified in Section 14.2.

 

"Additional Notes": Any Notes issued pursuant to Section 2.4.

 

"Additional Notes Closing Date": The closing date for the issuance of any Additional Notes pursuant to Section 2.4 as set forth in an indenture supplemental to this Indenture pursuant to Section 8.1(viii).

 

"Adjusted Collateral Principal Amount": As of any date of determination, (a) the Aggregate Principal Balance of the Collateral Obligations (excluding Defaulted Obligations, Deferring Obligations and Discount Obligations), plus (b) without duplication, the amounts on deposit in the Accounts (including Eligible Investments therein) representing Principal Proceeds, plus (c) the sum of (i) with respect to each Defaulted Obligation or Deferring Obligation that has been a Defaulted Obligation or Deferring Obligation for 30 days or less, the product of (A) the Moody's Recovery Rate for such Defaulted Obligation or Deferring Obligation and (B) the principal amount of such Defaulted Obligation or Deferring Obligation, (ii) with respect to each Defaulted Obligation or Deferring Obligation that has been a Defaulted Obligation or Deferring Obligation for more than 30 days but less than three years, the Moody's Collateral Value of such Defaulted Obligation or Deferring Obligation and (iii) with respect to each Defaulted Obligation or Deferring Obligation that has been a Defaulted Obligation or Deferring Obligation for three years or more, zero, plus (d) with respect to each Discount Obligation, the product (expressed as a dollar amount) of (i) the purchase price of such Discount Obligation (excluding accrued interest and any syndication or upfront fees paid to the Issuer, but including, at the discretion of the Collateral Manager, the amount of any assignment fees paid by the Issuer to the seller of the Collateral Obligation or its agent) expressed as a percentage of par multiplied by (ii) the Principal Balance of such Discount Obligation, excluding accrued interest, minus (e) the Excess CCC/Caa Adjustment Amount, plus (f) unpaid Principal Financed Accrued Interest (other than with respect to Defaulted Obligations); provided that with respect to any Collateral Obligation that satisfies more than one of the definitions of Defaulted Obligation, Discount Obligation, Deferring Obligations or any asset that falls into the Excess CCC/Caa Adjustment Amount, such Collateral Obligation will, for the purposes of this definition, be treated as belonging to the category of Collateral Obligations which results in the lowest Adjusted Collateral Principal Amount on any date of determination.

 

"Administration Agreement": An agreement dated as of the Closing Date between the Administrator (as administrator and share owner) and the Issuer relating to the various corporate management functions the Administrator will perform on behalf of the Issuer, including communications with shareholders and the general public, and the provision of certain clerical, administrative and other corporate services in the Cayman Islands, as such agreement may be amended, supplemented or varied from time to time.

 

-3-

 

 

"Administrative Expense Cap": An amount equal on any Payment Date (when taken together with any Administrative Expenses paid during the period since the preceding Payment Date or, in the case of the first Payment Date, the Closing Date) to the sum of (a) 0.03% per annum (prorated for the related Interest Accrual Period on the basis of a 360-day year and the actual number of days elapsed) of the Maximum Investment Amount on the Determination Date related to the immediately preceding Payment Date (or, for purposes of calculating this clause (a) in connection with the first Payment Date, on the Closing Date) and (b) U.S.$200,000 per annum (prorated for the related Interest Accrual Period on the basis of a 360-day year and the actual number of days elapsed); provided that, if the amount of Administrative Expenses paid pursuant to Section 11.1(a)(i)(A), Section 11.1(a)(ii)(A) or Section 11.1(a)(iii)(A) (including any excess applied in accordance with this proviso) on the three immediately preceding Payment Dates or during the related Collection Periods is less than the aggregate of the stated Administrative Expense Caps (without regard to any excess amounts applied in accordance with this proviso) for such three preceding Payment Dates, then the amounts by which such aggregated Administrative Expense Caps exceed such aggregated Administration Expenses may be applied to increase the Administrative Expense Cap with respect to the then-current Payment Date; provided, further, that in respect of each of the first three Payment Dates from the Closing Date, such excess amount shall be calculated based on the Payment Dates, if any, preceding such Payment Date.

 

"Administrative Expenses": The fees, expenses (including indemnities as set forth below) and other amounts due or accrued with respect to any Payment Date (including, with respect to any Payment Date, any such amounts that were due and not paid on any prior Payment Date) and payable in the following order by the Issuer or the Co-Issuer: first, to the Trustee and the Bank (including indemnities) in each of its capacities pursuant to this Indenture and the other Transaction Documents (including as financial reporting agent), second, to the Collateral Administrator for its fees and expenses (including indemnities) under the Collateral Administration Agreement, third, to make any capital contribution to an Issuer Subsidiary necessary to pay any taxes, registered office or governmental fees owing by such Issuer Subsidiary, and then fourth, on a pro rata basis (including indemnities) to (i) the Independent accountants, agents (other than the Collateral Manager) and counsel of the Co-Issuers for fees and expenses; (ii) the Rating Agencies for fees and expenses (including amendment and surveillance fees) in connection with any rating of the Secured Notes or in connection with the rating of (or provision of credit estimates in respect of) any Collateral Obligations; (iii) the Collateral Manager for fees, costs, expenses and indemnities under this Indenture and the Collateral Management Agreement, but excluding the Management Fees; (iv) the Administrator for fees and expenses pursuant to the Administration Agreement; (v) the independent manager of the Co-Issuer for fees and expenses; and (vi) any other Person in respect of any other fees or expenses permitted under this Indenture and the documents delivered pursuant to or in connection with this Indenture (including expenses incurred in connection with setting up and administering Issuer Subsidiaries, any expenses related to FATCA compliance or compliance with any non-U.S. law that is similar to FATCA, the payment of facility rating fees, fees associated with attempted or executed Refinancings, issuances of Additional Notes or redemptions (including any original issue or other discounts in respect of a Refinancing or a reserve established for a future Refinancing) and all legal and other fees and expenses incurred in connection with the purchase or sale of any Collateral Obligations and any other expenses incurred in connection with the Collateral Obligations, including any Excepted Advances) and the Notes, including but not limited to, amounts owed to the Co-Issuer pursuant to Section 7.1, any amounts due in respect of the listing of the Notes on any stock exchange or trading system and any costs associated with producing Certificated Notes; provided that (x) amounts due in respect of actions taken on or before the Closing Date shall not be payable as Administrative Expenses but shall be payable only from the Expense Reserve Account pursuant to Section 10.3(d), (y) for the avoidance of doubt, amounts that are specified as payable under the Priority of Payments that are not specifically identified therein as Administrative Expenses (including, without limitation, interest and principal in respect of the Notes and amounts owing to Hedge Counterparties) shall not constitute Administrative Expenses and (z) the Collateral Manager may direct the payment of Rating Agency fees (only out of amounts available pursuant to clause (b) of the definition of "Administrative Expense Cap") other than in the order required above, if, in the Collateral Manager's commercially reasonable judgment such payments are necessary to avoid the withdrawal of any currently assigned rating on any Outstanding Class of Secured Notes.

 

-4-

 

 

"Administrator": Estera Trust (Cayman) Limited and any successor thereto.

 

"Affected Class": Any Class of Secured Notes that, as a result of the occurrence of a Tax Event, has not received 100% of the aggregate amount of principal and interest that would otherwise be due and payable to such Class on any Payment Date.

 

"Affiliate" or "Affiliated": With respect to a Person, (a) any other Person who, directly or indirectly, is in control of, or controlled by, or is under common control with, such Person or (b) any other Person who is a director, officer or employee (i) of such Person, (ii) of any subsidiary or parent company of such Person or (iii) of any Person described in clause (a) above; provided that neither the Administrator nor any special purpose entity for which it acts as share trustee or administrator shall be deemed to be an Affiliate of the Issuer or the Co-Issuer solely because the Administrator or any of its Affiliates serves as administrator or share trustee for the Issuer or the Co-Issuer. For the purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote more than 50% of the securities having ordinary voting power for the election of directors of any such Person or (y) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; provided that no entity to which the Administrator provides shares trustee and/or administration services, including the provision of directors, will be considered to be an Affiliate of the Issuer solely by reason thereof.

 

"Agent Members": Members of, or participants in, DTC, Euroclear or Clearstream.

 

"Aggregate Outstanding Amount": With respect to any of the Notes as of any date, the aggregate unpaid principal amount of such Notes Outstanding on such date.

 

"Aggregate Principal Balance": When used with respect to all or a portion of the Collateral Obligations or the Pledged Obligations, the sum of the Principal Balances of all or of such portion of the Collateral Obligations or Pledged Obligations, respectively.

 

"Aggregate Ramp-Up Par Amount": An amount equal to U.S.$400,000,000.

 

-5-

 

 

"Aggregate Ramp-Up Par Condition": A condition satisfied as of the end of the Ramp-Up Period if the Aggregate Principal Balance of the Collateral Obligations that the Issuer has purchased, or entered into binding commitments to purchase, including Collateral Obligations acquired by the Issuer on or prior to the Closing Date, together with the amount of any proceeds of prepayments, maturities or redemptions of Collateral Obligations purchased by the Issuer prior to such date (other than any proceeds that have been reinvested in Collateral Obligations held by the Issuer as of the end of the Ramp-Up Period), equals or exceeds the Aggregate Ramp-Up Par Amount; provided that the Principal Balance of any Defaulted Obligation shall be its Moody's Collateral Value.

 

"AI/QP": Any Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Notes is both (a) an Accredited Investor and (b) a Qualified Purchaser or a Knowledgeable Employee with respect to the Issuer or an entity owned exclusively by Qualified Purchasers and/or Knowledgeable Employees.

 

"Alternative Base Rate": The meaning specified in Section 8.1(xxviii).

 

"Applicable Issuer" or "Applicable Issuers": With respect to the Secured Notes of any Class, the Issuer or each of the Co-Issuers, as specified in Section 2.3 and with respect to the Subordinated Notes, the Issuer only.

 

"Approved Index": Any of Merrill Lynch High Yield Master II Constrained Index, the CSFB High Yield II Index or such other nationally recognized index as the Collateral Manager selects and provides notice of to the Rating Agencies.

 

"ARRC": The Alternative Reference Rates Committee of the Federal Reserve Bank of New York, or any successor thereto.

 

"Asset Quality Matrix": The following chart is used to determine which of the "row/column combinations" (or the linear interpolation between two adjacent rows and/or two adjacent columns, as applicable) are applicable for purposes of determining compliance with the Moody's Diversity Test, the Maximum Moody's Rating Factor Test and the Minimum Floating Spread Test, as set forth in Section 7.17(e).

 

 

Minimum
Weighted

Minimum Diversity Score

Average
Spread

40

45

50

55

60

65

70

75

80

85

90

95

100

2.10%

1710

1733

1752

1773

1785

1800

1812

1822

1832

1837

1843

1851

1857

2.20%

1805

1830

1846

1864

1880

1890

1901

1913

1920

1927

1933

1939

1945

2.30%

1890

1910

1925

1940

1950

1964

1982

1997

2009

2013

2018

2029

2038

2.40%

1969

1983

2020

2038

2054

2066

2076

2085

2093

2101

2106

2115

2130

2.50%

2037

2071

2101

2114

2129

2146

2155

2166

2174

2188

2206

2211

2217

2.60%

2078

2138

2181

2206

2222

2233

2245

2259

2266

2273

2287

2296

2303

2.70%

2126

2176

2228

2269

2291

2304

2316

2331

2349

2362

2380

2390

2396

2.80%

2162

2221

2271

2309

2350

2378

2399

2417

2433

2448

2461

2472

2482

2.90%

2204

2266

2311

2357

2390

2426

2453

2473

2488

2503

2516

2528

2540

3.00%

2248

2304

2356

2395

2436

2467

2497

2523

2544

2559

2573

2585

2595

3.10%

2290

2347

2396

2441

2476

2511

2539

2566

2589

2611

2628

2641

2653

3.20%

2325

2390

2437

2479

2520

2550

2582

2608

2632

2653

2673

2691

2707

3.30%

2370

2425

2480

2521

2559

2594

2622

2650

2673

2695

2715

2733

2750

3.40%

2410

2466

2518

2564

2600

2633

2664

2689

2714

2737

2756

2775

2793

3.50%

2445

2512

2559

2601

2641

2674

2704

2731

2756

2777

2798

2817

2833

3.60%

2483

2545

2599

2643

2679

2714

2745

2771

2796

2819

2840

2857

2875

 

-6-

 

 

3.70%

2527

2584

2635

2682

2721

2754

2785

2813

2838

2859

2879

2899

2916

3.80%

2564

2627

2677

2720

2760

2794

2826

2853

2877

2900

2921

2940

2957

3.90%

2598

2661

2715

2761

2800

2834

2865

2893

2918

2940

2960

2980

2997

4.00%

2638

2698

2752

2798

2839

2873

2904

2932

2957

2980

3000

3019

3036

4.10%

2678

2739

2792

2837

2877

2912

2943

2971

2996

3019

3039

3058

3076

4.20%

2712

2776

2830

2876

2915

2950

2980

3009

3034

3057

3078

3097

3114

4.30%

2744

2811

2866

2913

2953

2989

3020

3047

3072

3095

3116

3135

3151

4.40%

2776

2849

2903

2949

2988

3025

3056

3083

3109

3132

3153

3171

3190

4.50%

2809

2883

2940

2986

3026

3062

3093

3121

3147

3167

3190

3209

3227

4.60%

2842

2910

2972

3023

3063

3099

3130

3158

3183

3205

3227

3246

3264

4.70%

2869

2939

3003

3056

3098

3135

3166

3195

3220

3240

3264

3282

3300

4.80%

2896

2972

3033

3085

3130

3170

3203

3230

3255

3278

3299

3317

3336

4.90%

2924

3002

3062

3112

3160

3200

3235

3265

3291

3313

3333

3353

3369

5.00%

2958

3031

3091

3141

3190

3227

3266

3296

3325

3348

3369

3387

3404

5.10%

2989

3056

3119

3172

3217

3259

3296

3326

3354

3380

3401

3420

3437

5.20%

3016

3085

3151

3201

3248

3290

3324

3357

3384

3410

3432

3450

3470

5.30%

3043

3116

3177

3232

3279

3318

3353

3385

3414

3440

3462

3483

3501

5.40%

3068

3145

3208

3261

3308

3347

3383

3414

3443

3469

3491

3515

3535

5.50%

3098

3173

3236

3291

3335

3377

3410

3443

3471

3498

3523

3546

3566

5.60%

3131

3202

3266

3319

3363

3404

3440

3471

3500

3530

3554

3577

3597

5.70%

3157

3230

3295

3346

3394

3431

3469

3500

3532

3561

3587

3610

3627

5.80%

3185

3257

3320

3373

3420

3460

3496

3531

3562

3591

3616

3638

3659

5.90%

3207

3287

3345

3400

3444

3485

3524

3558

3589

3619

3644

3667

3687

6.00%

3233

3310

3369

3425

3470

3510

3551

3585

3616

3645

3671

3695

3715

 

Maximum Moody's Weighted Average Rating Factor

   

 

"Assets": The meaning assigned in the Granting Clause hereof.

 

"Assigned Moody's Rating": The monitored publicly available rating or the estimated rating expressly assigned to a debt obligation (or facility) by Moody's that addresses the full amount of the principal and interest promised.

 

"Assumed Reinvestment Rate": LIBOR (as determined on the most recent Interest Determination Date relating to an Interest Accrual Period beginning on a Payment Date or the Closing Date) minus 0.50% per annum; provided, that the Assumed Reinvestment Rate shall not be less than 0%.

 

"Authenticating Agent": With respect to the Notes, the Person designated by the Trustee to authenticate such Notes on behalf of the Trustee pursuant to Section 6.14.

 

"Authorized Integrals": The meaning specified in Section 2.3.

 

"Authorized Officer": With respect to the Issuer or the Co-Issuer, any Officer or any other Person who is authorized to act for the Issuer or the Co-Issuer, as applicable, in matters relating to, and binding upon, the Issuer or the Co-Issuer. With respect to the Collateral Manager, any Officer, employee, member or agent of the Collateral Manager who is authorized to act for the Collateral Manager in matters relating to, and binding upon, the Collateral Manager with respect to the subject matter of the request, certificate or order in question. With respect to the Collateral Administrator, any Officer, employee, partner or agent of the Collateral Administrator who is authorized to act for the Collateral Administrator in matters relating to, and binding upon, the Collateral Administrator with respect to the subject matter of the request, certificate or order in question. With respect to the Trustee or any other bank or trust company acting as trustee of an express trust or as custodian, a Trust Officer. With respect to any Authenticating Agent, any Officer of such Authenticating Agent who is authorized to authenticate the Notes. Each party may receive and accept a certification (which shall include the email address, if available, of each authorized person) of the authority of any other party as conclusive evidence of the authority of any person to act, and such certification may be considered as in full force and effect until receipt by such other party of written notice to the contrary.

 

-7-

 

 

"Average Life": On any date of determination with respect to any Collateral Obligation, the quotient obtained by dividing (i) the sum of the products of (a) the number of years (rounded to the nearest one hundredth thereof) from such date of determination to the respective dates of each successive Scheduled Distribution of principal of such Collateral Obligation and (b) the respective amounts of principal of such Scheduled Distributions by (ii) the sum of all successive Scheduled Distributions of principal on such Collateral Obligation.

 

"Balance": On any date, with respect to Cash or Eligible Investments in any Account, the aggregate (i) current balance of Cash, demand deposits, time deposits, certificates of deposit and federal funds; (ii) principal amount of interest-bearing corporate and government securities, money market accounts and repurchase obligations; and (iii) purchase price (but not greater than the face amount) of non-interest-bearing government and corporate securities and commercial paper.

 

"Bank": U.S. Bank National Association, in its individual capacity and not as Trustee, and any successor thereto.

 

"Bankruptcy Law": The federal Bankruptcy Code, Title 11 of the United States Code, as amended from time to time, and any successor statute or any other applicable federal or state bankruptcy law or similar law, including, without limitation, Part V of the Companies Law (2018 Revision) of the Cayman Islands and the Companies Winding Up Rules, 2018 of the Cayman Islands, each as amended from time to time, and any bankruptcy, insolvency, winding-up, reorganization or similar law enacted under the laws of the Cayman Islands or any other applicable jurisdiction, each as amended from time to time.

 

"Bankruptcy Subordination Agreement": The meaning specified in Section 5.4(d)(ii).

 

"Base Rate Amendment": The meaning specified in Section 8.1(xxviii).

 

"Base Rate Modifier": A modifier applied to a reference or base rate in order to cause such rate to be comparable to three month LIBOR, that (i) with respect to a Designated Base Rate recognized or acknowledged by the LSTA, is equal to the corresponding modifier recognized or acknowledged by LSTA, (ii) with respect to a Designated Base Rate recognized or acknowledged by the ARRC, is equal to the corresponding modifier recognized or acknowledged by the ARRC, (iii) with respect to a Market Replacement Rate that uses Market Replacement Rate (x), is consistent with the modifier used by at least 50% (by principal amount) of the Collateral Obligations for such quarterly floating rate assets, (iv) with respect to a Market Replacement Rate that uses Market Replacement Rate (y), is consistent with the modifier used by at least 50% (by principal amount) of the quarterly pay floating rate securities issued in the new-issue collateralized loan obligation market in the prior three months that bear interest based on a base rate other than LIBOR, or (v) with respect to any other Alternative Base Rate, such modifier selected by the Collateral Manager and consented to by a Majority of the Controlling Class, and, in each of the foregoing cases, which modifier may include an addition or subtraction to the unadjusted reference or base rate; provided that if no such modifier is capable of being determined (as determined by the Collateral Manager, in its sole discretion), the Base Rate Modifier shall be deemed to be zero. For the avoidance of doubt, if a court of competent jurisdiction is appointed to determine the Alternative Base Rate, references in this definition to the Collateral Manager shall be deemed to refer to such court and no consents of any Holders shall be required.

 

-8-

 

 

"Benefit Plan Investor": (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, or (c) any entity whose underlying assets include "plan assets" (within the meaning of 29 C.F.R. §2510.3-101 as modified by Section 3(42) of ERISA) by reason of any such employee benefit plan's or plan's investment in the entity.

 

"BNPP": BNP Paribas Securities Corp.

 

"Board of Directors": With respect to the Issuer, the board of directors of the Issuer appointed pursuant to the current articles of association of the Issuer, and with respect to the Co-Issuer, the managers of the Co-Issuer duly appointed by the members of the Co-Issuer.

 

"Board Resolution": With respect to the Issuer, a resolution of the Board of Directors of the Issuer passed in accordance with the current articles of association of the Issuer and, with respect to the Co-Issuer, an action in writing by the sole member of the Co-Issuer.

 

"Bridge Loan": Any obligation or debt security 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 the Bridge Loan 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).

 

"Business Day": Any day other than (i) a Saturday or a Sunday or (ii) a day on which commercial banks are authorized or required by applicable law, regulation or executive order to close in New York, New York or in the city in which the Corporate Trust Office of the Trustee is located or, for any final payment of principal, in the relevant place of presentation.

 

-9-

 

 

"Caa Collateral Obligation": A Collateral Obligation (other than a Defaulted Obligation or a Deferring Obligation) with a Moody's Default Probability Rating of "Caa1" or lower.

 

"CCC Collateral Obligation": A Collateral Obligation (other than a Defaulted Obligation or a Deferring Obligation) with an S&P Rating of "CCC+" or lower.

 

"CCC/Caa Collateral Obligations": The CCC Collateral Obligations and/or the Caa Collateral Obligations, as the context requires.

 

"CCC/Caa Excess": The amount equal to the greater of: (i) the excess, if any, of (x) the Aggregate Principal Balance of all CCC Collateral Obligations over (y) 7.5% of the Collateral Principal Amount as of the most recent Measurement Date and (ii) the excess, if any, of (x) the Aggregate Principal Balance of all Caa Collateral Obligations over (y) 7.5% of the Collateral Principal Amount as of the most recent Measurement Date; provided that in determining which of the Collateral Obligations shall be included in the CCC/Caa Excess, the Collateral Obligations with the lowest Market Value (expressed as a percentage of par) shall be deemed to constitute such CCC/Caa Excess.

 

"Calculation Agent": The meaning specified in Section 7.15.

 

"Cash": Such coin or currency of the United States of America as at the time shall be legal tender for payment of all public and private debts.

 

"Cayman FATCA Legislation": The Cayman Islands Tax Information Authority Law (2017 Revision) and the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard (each as amended) (including any implementing legislation, rules, regulations and guidance notes with respect to such laws). For purposes of this definition, "OECD" means the Organisation for Economic Co-operation and Development.

 

"CEA": The Commodity Exchange Act of 1936, as amended.

 

"Certificate of Authentication": The meaning specified in Section 2.1.

 

"Certificated Notes": Collectively, the Certificated Secured Notes and the Certificated Subordinated Notes.

 

"Certificated Secured Note": The meaning specified in Section 2.2(b).

 

"Certificated Securities": The meaning specified in Section 8.1-102(a)(4) of the UCC.

 

"Certificated Subordinated Note": The meaning specified in Section 2.2(b).

 

"Certificated Subordinated Note Subscription Agreement": The meaning specified in Section 2.6(c).

 

-10-

 

 

"Class": In the case of (x) the Secured Notes, all of the Secured Notes having the same Note Interest Rate, Stated Maturity and designation and (y) the Subordinated Notes, all of the Subordinated Notes having the same designation.

 

"Class A Notes": The Class A Senior Secured Floating Rate Notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

 

"Class A/B Coverage Tests": The Par Value Ratio Test and the Interest Coverage Test, each as applied with respect to the Class A Notes and the Class B Notes collectively.

 

"Class B Notes": The Class B Senior Secured Floating Rate Notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

 

"Class C Coverage Tests": The Par Value Ratio Test and the Interest Coverage Test, each as applied with respect to the Class C Notes.

 

"Class C Notes": The Class C Mezzanine Secured Deferrable Floating Rate Notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

 

"Class D Coverage Tests": The Par Value Ratio Test and the Interest Coverage Test, each as applied with respect to the Class D Notes.

 

"Class D Notes": The Class D Mezzanine Secured Deferrable Floating Rate Notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

 

"Class E Coverage Tests": The Par Value Ratio Test and the Interest Coverage Test, each as applied with respect to the Class E Notes.

 

"Class E Notes": The Class E Mezzanine Secured Deferrable Floating Rate Notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

 

"Clean-Up Call Purchase Price": The meaning specified in Section 9.8(c).

 

"Clean-Up Call Redemption": The meaning specified in Section 9.8(a).

 

"Clean-Up Call Redemption Date": The meaning specified in Section 9.8(b).

 

"Clean-Up Call Rescission": The meaning specified in Section 9.8(a).

 

"Clearing Agency": An organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act.

 

"Clearing Corporation": Each of (i) Clearstream, (ii) DTC, (iii) Euroclear and (iv) any entity included within the meaning of "clearing corporation" under Section 8-102(a)(5) of the UCC.

 

"Clearing Corporation Security": Securities which are in the custody of or maintained on the books of a Clearing Corporation or a nominee subject to the control of a Clearing Corporation and, if they are Certificated Securities in registered form, properly endorsed to or registered in the name of the Clearing Corporation or such nominee.

 

-11-

 

 

"Clearstream": Clearstream Banking, société anonyme, a corporation organized under the laws of the Duchy of Luxembourg (formerly known as Cedelbank, société anonyme).

 

"Closing Date": July 26, 2018.

 

"Code": The United States Internal Revenue Code of 1986, as amended from time to time, and the Treasury regulations promulgated thereunder.

 

"Co-Issuer": JMP Credit Advisors CLO V LLC, until a successor Person shall have become the Co-Issuer pursuant to the applicable provisions of this Indenture, and thereafter "Co-Issuer" shall mean such successor Person.

 

"Co-Issuers": The Issuer and the Co-Issuer.

 

"Collateral Administration Agreement": An agreement dated as of the Closing Date among the Issuer, the Collateral Manager and the Collateral Administrator, as amended from time to time, in accordance with the terms thereof.

 

"Collateral Administrator": U.S. Bank National Association, in its capacity as such under the Collateral Administration Agreement, and any successor thereto.

 

"Collateral Interest Amount": As of any date of determination, without duplication, the aggregate amount of Interest Proceeds that has been received or that is expected to be received (other than Interest Proceeds expected to be received from Defaulted Obligations or Deferrable Obligations, but including Interest Proceeds actually received from Defaulted Obligations or Deferrable Obligations (each in accordance with the definition of "Interest Proceeds")), in each case during the Collection Period in which such date of determination occurs (or after such Collection Period but on or prior to the fifth Business Day prior to the related Payment Date if such Interest Proceeds would be treated as Interest Proceeds with respect to such Collection Period).

 

"Collateral Management Agreement": The Collateral Management Agreement, dated as of the Closing Date, between the Issuer and the Collateral Manager relating to the management of the Collateral Obligations and the other Assets and the performance of certain other advisory functions by the Collateral Manager on behalf of the Issuer, as amended from time to time in accordance with the terms hereof and thereof.

 

"Collateral Manager": JMP Credit Advisors LLC, a Delaware limited liability company, until a successor Person shall have become the Collateral Manager pursuant to the provisions of the Collateral Management Agreement, and thereafter "Collateral Manager" shall mean such successor Person.

 

"Collateral Manager Securities": Any Notes owned by the Collateral Manager, an Affiliate thereof, or any account, fund, client or portfolio established and controlled by the Collateral Manager or an Affiliate thereof or for which the Collateral Manager or an Affiliate thereof acts as the investment adviser or with respect to which the Collateral Manager or an Affiliate thereof exercises discretionary control thereover.

 

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"Collateral Obligation": Any loan, specifically, interests in bank loans, acquired by way of a purchase or assignment) or Participation Interest that as of the date of acquisition by the Issuer (or the date the Issuer commits to acquire):

 

(i)      is a Secured Loan Obligation or Senior Unsecured Loan;

 

(ii)     is U.S. Dollar denominated and is not convertible by (a) the Issuer or (b) the Obligor of such Collateral Obligation into, nor payable in, any other currency, with any payments under such Collateral Obligation to be made only in U.S. Dollars;

 

(iii)    is not a Defaulted Obligation or a Credit Impaired Obligation;

 

(iv)    is not a Letter of Credit and does not support a Letter of Credit;

 

(v)     is not a lease;

 

(vi)    is not a Structured Finance Obligation;

 

(vii)   is not a Deferrable Obligation or a Deferring Obligation;

 

(viii)  provides for a fixed amount of principal payable on scheduled payment dates and/or at maturity and does not by its terms provide for earlier amortization or prepayment at a price of less than par;

 

(ix)    does not pay scheduled interest less frequently than semi-annually;

 

(x)     does not constitute Margin Stock;

 

(xi)    has only payments that do not and will not subject the Issuer or the relevant Issuer Subsidiary to withholding tax or other similar tax (other than withholding on commitment fees, amendment fees, consent fees, extension fees and similar fees or fees that by their nature are letter of credit or commitment fees or similar fees) unless the related Obligor is required to make "gross-up" payments that ensure that the net amount actually received by the Issuer or the relevant Issuer Subsidiary after payment of all taxes, whether imposed on such Obligor, the Issuer or the relevant Issuer Subsidiary will equal the full amount that the Issuer or the relevant Issuer Subsidiary would have received had no such taxes been imposed;

 

(xii)    has an S&P Rating of at least "CCC-" or a Moody's Default Probability Rating of at least "Caa3";

 

(xiii)   is not a debt obligation whose repayment is subject to substantial non-credit related risk as determined by the Collateral Manager;

 

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(xiv)   does not have an "sf" subscript assigned by Moody's;

 

(xv)     will not require the Issuer, the Co-Issuer or the pool of Assets to be registered as an investment company under the Investment Company Act;

 

(xvi)    is not subject to a tender offer, voluntary redemption, exchange offer, conversion or other similar action for a price less than its outstanding principal balance plus all accrued and unpaid interest;

 

(xvii)   is issued by a Non-Emerging Market Obligor;

 

(xviii)  is not issued by an obligor in the tobacco industry;

 

(xix)     is not a Zero-Coupon Security or a Step-Up Obligation;

 

(xx)      is not a Synthetic Security;

 

(xxi)     (A) is not (1) an Equity Security, (2) by its terms convertible into or exchangeable for an Equity Security or (3) a warrant and (B) does not (1) have Equity Securities attached thereto as part of a "unit" or (2) otherwise include a warrant to purchase Equity Securities;

 

(xxii)    except for Delayed Drawdown Collateral Obligations and Revolving Collateral Obligations, is not an obligation pursuant to which any future advances or payments to the borrower or the Obligor thereof may be required to be made by the Issuer;

 

(xxiii)   is not issued by a sovereign, or by a corporate Obligor located in a country, which sovereign or country on the date on which such obligation is acquired by the Issuer imposed foreign exchange controls that effectively limit the availability or use of U.S. Dollars to make when due the scheduled payments of principal thereof and interest thereon;

 

(xxiv)    the purchase price of such obligation shall be at least 50% of such obligation's par amount;

 

(xxv)     is not a Related Obligation;

 

(xxvi)    is Registered;

 

(xxvii)   is able to be pledged to the Trustee pursuant to its Underlying Instruments and is not subject to any securities lending agreement;

 

(xxviii)  does not mature after the shortest Stated Maturity of any of the Secured Notes still Outstanding; and

 

(xxix)     is not (A) a bond, (B) a Senior Secured Note, (C) a commodity forward contract or (D) any other debt security not constituting a loan.

 

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"Collateral Principal Amount": As of any date of determination, the sum of (a) the Aggregate Principal Balance of the Collateral Obligations and (b) without duplication, the amounts on deposit in the (i) Collection Account (including Eligible Investments therein) representing Principal Proceeds and (ii) the Ramp-Up Account (including Eligible Investments therein).

 

"Collection Account": Collectively, the Interest Collection Subaccount and the Principal Collection Subaccount.

 

"Collection Period": With respect to any Payment Date, the period commencing immediately following the prior Collection Period (or on the Closing Date, in the case of the Collection Period relating to the first Payment Date) and ending on the day that is eight (8) Business Days prior to (but excluding) the Payment Date; provided that (i) the final Collection Period preceding the latest Stated Maturity of any Class of Notes shall commence immediately following the prior Collection Period and end on the day preceding such Stated Maturity, (ii) the final Collection Period preceding a Redemption by Liquidation, Tax Redemption or Clean-Up Call Redemption in whole of the Notes shall commence immediately following the prior Collection Period and end on such Redemption Date, and (iii) the final Collection Period preceding the Redemption by Refinancing and Partial Redemption by Refinancing of any Class of Notes shall commence immediately following the prior Collection Period and end seven (7) Business Days prior to the Redemption Date; provided, further, that with respect to any Payment Date and any amounts payable to the Issuer under a Hedge Agreement, the Collection Period will commence on the day after the prior Payment Date and end on such Payment Date.

 

"Concentration Limitations": Limitations satisfied, if as of any date of determination at or subsequent to, the end of the Ramp-Up Period, in the aggregate, the Collateral Obligations owned (or in relation to a proposed purchase of a Collateral Obligation, proposed to be owned) by the Issuer comply with all of the requirements set forth below, calculated in each case as required by Section 1.2 (or, if not in compliance at the time of reinvestment, the relevant requirements must be maintained or improved).

 

(i)     no more than the percentage listed below of the Collateral Principal Amount may be issued by Obligors Domiciled in the country or countries set forth opposite such percentage:

 

% Limit

 

Country or Countries

20.0%

 

all countries (in the aggregate) other than the United States;

15.0%

 

Canada;

10.0%

 

the United Kingdom;

10.0%

 

all countries (in the aggregate) other than the United States, Canada and the United Kingdom;

15.0%

 

all Group I Countries in the aggregate;

10.0%

 

any individual Group I Country;

10.0%

 

all Group II Countries in the aggregate;

7.5%

 

any individual Group II Country;

7.5%

 

all Group III Countries in the aggregate;

5.0%

 

any individual Group III Country;

0%

 

all Group IV Countries in the aggregate;

0%

 

any individual Group IV Country;

5.0%

 

all Tax Advantaged Jurisdictions in the aggregate;

3.0%

 

any individual Tax Advantaged Jurisdiction;

0.0%

 

Greece, Ireland, Italy, Portugal and Spain in the aggregate; and

0.0%

 

any individual country other than the United States, the United Kingdom, Canada, any Group I Country, any Group II Country, any Group III Country or any Group IV Country or any Tax Advantaged Jurisdiction;

 

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(ii)     with respect to any Participation Interest, the Moody's Counterparty Criteria are met;

 

(iii)     not less than 90.0% of the Collateral Principal Amount may consist of Collateral Obligations that are Senior Secured Loans and Eligible Investments representing Principal Proceeds;

 

(iv)     not more than 10.0% of the Collateral Principal Amount may consist of Collateral Obligations that are Second Lien Loans, First Lien Last Out Loans and Senior Unsecured Loans;

 

(v)      not more than 2.5% of the Collateral Principal Amount may consist of Current Pay Obligations;

 

(vi)     not more than 2.5% of the Collateral Principal Amount may consist of fixed rate Collateral Obligations;

 

(vii)    not more than 10.0% of the Collateral Principal Amount may consist of Participation Interests;

 

(viii)   not more than 7.5% of the Collateral Principal Amount may consist of DIP Collateral Obligations;

 

(ix)     not more than 2.0% of the Collateral Principal Amount may consist of Collateral Obligations issued by a single Obligor, except that Collateral Obligations issued by up to five (5) Obligors may each constitute up to 2.5% of the Collateral Principal Amount; provided that for each such single Obligor not more than 1.0% of the Collateral Principal Amount may consist of Collateral Obligations that are not Senior Secured Loans, except that for up to one (1) single Obligor Collateral Obligations that are not Senior Secured Loans may constitute up to 1.5% of the Collateral Principal Amount; provided further, that one Obligor shall not be considered an affiliate of another Obligor solely because they are controlled by the same financial sponsor;

 

(x)     not more than 10.0% of the Collateral Principal Amount may consist of Collateral Obligations that are issued by Obligors that belong to any single Moody's Industry Classification, except that one (1) Moody's Industry Classification may represent up to 15.0% of the Collateral Principal Amount and three (3) Moody's Industry Classifications may each represent up to 12.0% of the Collateral Principal Amount;

 

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(xi)     not more than 10.0% of the Collateral Principal Amount may consist of Collateral Obligations that are issued by Obligors that belong to any single S&P Industry Classification, except that one (1) S&P Industry Classification may represent up to 15.0% of the Collateral Principal Amount and three (3) S&P Industry Classifications may each represent up to 12.0% of the Collateral Principal Amount;

 

(xii)     not more than 7.5% of the Collateral Principal Amount may consist of Caa Collateral Obligations;

 

(xiii)    not more than 7.5% of the Collateral Principal Amount may consist of CCC Collateral Obligations;

 

(xiv)     not more than 3.0% of the Collateral Principal Amount may consist of Collateral Obligations that are required to pay interest less frequently than quarterly;

 

(xv)      not more than 65.0% of the Collateral Principal Amount may consist of Cov-Lite Loans;

 

(xvi)     no portion of the Collateral Principal Amount may consist of Step-Down Obligations;

 

(xvii)    not more than 10.0% of the Collateral Principal Amount may consist of Delayed Drawdown Collateral Obligations and Revolving Collateral Obligations;

 

(xviii)   no portion of the Collateral Principal Amount may consist of Bridge Loans;

 

(xix)     no portion of the Collateral Principal Amount may consist of Small Obligor Loans;

 

(xx)      not more than 2.5% of the Collateral Principal Amount may consist of Collateral Obligations that are issued by obligors organized in Ireland, but not Domiciled in Ireland due to the application of clause (c) of the definition of "Domicile";

 

(xxi)     not more than 10.0% of the Collateral Principal Amount may consist of Collateral Obligations with a purchase price of between 50% and 65% of each such obligation's par amount; and

 

(xxii)    not more than 20.0% of the Collateral Principal Amount may consist of Discount Obligations.

 

"Confidential Information": The meaning specified in Section 14.14(b).

 

"Controlling Class": The Class A Notes so long as any Class A Notes are Outstanding; then the Class B Notes so long as any Class B Notes are Outstanding; then the Class C Notes so long as any Class C Notes are Outstanding; then the Class D Notes so long as any Class D Notes are Outstanding; then the Class E Notes so long as any Class E Notes are Outstanding; then the Senior Subordinated Notes if no Secured Notes are Outstanding; and then the Junior Subordinated Notes if no Secured Notes and Senior Subordinated Notes are Outstanding.

 

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"Controlling Person": A Person (other than a Benefit Plan Investor) who has discretionary authority or control with respect to the assets of the Issuer or any Person who provides investment advice for a fee (direct or indirect) with respect to such assets, or any affiliate of such a Person. For purposes of this definition of Controlling Person only, an "affiliate" of a Person includes any Person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Person and "control", with respect to a Person other than an individual, means the power to exercise a controlling influence over the management or policies of such Person.

 

"Corporate Trust Office": The designated corporate trust office of the Trustee, currently located at: (a) for Note transfer purposes and presentment of the Notes for final payment thereon, 111 Fillmore Avenue East, St. Paul, Minnesota 55107-2292, Attention: Global Corporate Trust Services – JMP Credit Advisors CLO V Ltd.; (b) for all other purposes, 190 S. LaSalle Street, 8th Floor, Chicago, Illinois 60603, Attention: Global Corporate Trust Services – JMP Credit Advisors CLO V Ltd., or (c) the principal corporate trust office of any successor Trustee. It is understood that the Trustee may designate another address from time to time by giving notice to the Holders, the Collateral Manager, any Hedge Counterparty, the Issuer and the Rating Agencies.

 

"Cov-Lite Loan": A loan that does not contain any financial covenants; provided that a loan that (a) requires the underlying Obligor to comply with one or more Maintenance Covenants (regardless of whether compliance with one or more Incurrence Covenants is otherwise required by the Underlying Instruments) or (b) contains a cross-default provision to, or is pari passu with, another loan of the underlying obligor forming part of the same loan facility that requires the underlying obligor to comply with one or more financial covenants or Maintenance Covenants shall be deemed not to be a Cov-Lite Loan.

 

"CR Assessment": The counterparty risk assessment published by Moody’s.

 

"Credit Amendment": Any Maturity Amendment that, in the Collateral Manager's judgment exercised in accordance with the Collateral Management Agreement, is necessary with respect to the related Collateral Obligation (a "Credit Amendment Obligation") (i) to prevent such Credit Amendment Obligation from becoming a Defaulted Obligation or (ii), due to the materially adverse financial condition of the related obligor, to minimize material losses on such Credit Amendment Obligation.

 

"Coverage Tests": The Class A/B Coverage Tests, the Class C Coverage Tests, the Class D Coverage Tests and the Class E Coverage Tests.

 

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"Credit Impaired Obligation": Any Collateral Obligation that in the Collateral Manager's judgment exercised in accordance with the Collateral Management Agreement has a significant risk of declining in credit quality and, with a lapse of time, becoming a Defaulted Obligation and, provided that, at any time a Restricted Trading Period is in effect a Collateral Obligation will be a Credit Impaired Obligation only if, in addition to the foregoing:

 

(a)     such Collateral Obligation has been downgraded or put on a watch list for possible downgrade or on negative outlook by either of the Rating Agencies since the date on which such Collateral Obligation was acquired by the Issuer;

 

(b)     if such Collateral Obligation is a fixed rate obligation, there has been an increase in the difference between its yield compared to the yield on the relevant U.S. Treasury security of the same duration of more than 7.5% of its yield since the date of purchase;

 

(c)     if the obligor of such Collateral Obligation has a projected cash flow interest coverage ratio (earnings before interest and taxes divided by cash interest expense as determined by the Collateral Manager) that is less than 1.00 or expected to be less than 0.85 times the current year's projected cash flow interest coverage ratio;

 

(d)     the Market Value of such Collateral Obligation has decreased by at least 1.00% of the price paid by the Issuer for such Collateral Obligation due to a deterioration in the related obligor's financial ratios or financial results in accordance with the Underlying Instruments relating to such Collateral Obligation;

 

(e)     if such Collateral Obligation is a loan, the price of such loan has changed during the period from the date on which it was acquired by the Issuer to the proposed sale date by a percentage either at least 0.25% more negative, or at least 0.25% less positive, as the case may be, than the percentage change in the average price of an average price of any Approved Index as determined by the Collateral Manager over the same period; or

 

(f)     with respect to which a Majority of the Controlling Class consents to treat such Collateral Obligation as a Credit Impaired Obligation.

 

"Credit Improved Obligation":

 

(a)       So long as a Restricted Trading Period is not in effect, any Collateral Obligation that in the Collateral Manager's judgment exercised in accordance with the Collateral Management Agreement has significantly improved in credit quality after it was acquired by the Issuer, which improvement may (but need not) be evidenced by one of the following:

 

(i)      such Collateral Obligation has been upgraded or put on a watch list for possible upgrade by either of the Rating Agencies since the date on which such Collateral Obligation was acquired by the Issuer;

 

(ii)     if such Collateral Obligation is a fixed rate obligation, there has been a decrease in the difference between its yield compared to the yield on the U.S. Treasury security of the same duration more than 7.5% of its yield since the date of purchase;

 

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(iii)    if the obligor of such Collateral Obligation has a projected cash flow interest coverage ratio (earnings before interest and taxes divided by cash interest expense as determined by the Collateral Manager) that is expected to be more than 1.15 times the current year's projected cash flow interest coverage ratio;

 

(iv)    if the Market Value of such Collateral Obligation has increased since the date of its acquisition by at least 1.0% of the original purchase price at which such Collateral Obligation was acquired by the Issuer; or

 

(v)     if such Collateral Obligation is a loan, the price of such loan has changed during the period from the date on which it was acquired by the Issuer to the proposed sale date by a percentage either at least 0.25% more positive, or 0.25% less negative, as the case may be, than the percentage change in the average price of any Approved Index over the same period.

 

(b)       If a Restricted Trading Period is in effect, in addition to the foregoing, a Collateral Obligation will qualify as a Credit Improved Obligation only if:

 

(i)       such Collateral Obligation has been upgraded or put on a watch list for possible upgrade by either of the Rating Agencies since the date on which such Collateral Obligation was acquired by the Issuer;

 

(ii)      if such Collateral Obligation is a fixed rate obligation, there has been a decrease in the difference between its yield compared to the yield on the U.S. Treasury security of the same duration more than 7.5% of its yield since the date of purchase;

 

(iii)     if the obligor of such Collateral Obligation has a projected cash flow interest coverage ratio (earnings before interest and taxes divided by cash interest expense as determined by the Collateral Manager) that is expected to be more than 1.15 times the current year's projected cash flow interest coverage ratio;

 

(iv)     if the Market Value of such Collateral Obligation has increased since the date of its acquisition by at least 1.0% of the original purchase price at which such Collateral Obligation was acquired by the Issuer;

 

(v)     if such Collateral Obligation is a loan, the price of such loan has changed during the period from the date on which it was acquired by the Issuer to the proposed sale date by a percentage either at least 0.25% more positive, or 0.25% less negative, as the case may be, than the percentage change in the average price of any Approved Index over the same period; or

 

(vi)     with respect to which a Majority of the Controlling Class votes to treat such Collateral Obligation as a Credit Improved Obligation.

 

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"Current Pay Obligation": Any Collateral Obligation (other than a DIP Collateral Obligation) that:

 

(i)     would otherwise be a Defaulted Obligation but for the exclusion of Current Pay Obligations from the definition of Defaulted Obligation pursuant to the proviso at the end of such definition;

 

(ii)     (a) if the issuer of such Collateral Obligation is subject to a bankruptcy proceeding, the relevant court has authorized the issuer to make payments of principal and interest on such Collateral Obligation and no such authorized payments that are due and payable are unpaid and (b) otherwise, no payments that are contractually due and payable on such Collateral Obligation pursuant to its Underlying Instruments are unpaid (provided that for each of (a) and (b) any forbearance or grace period in excess of 90 days shall be disregarded with respect to any payment that is unpaid but would be due and payable but for such forbearance or grace period); and

 

(iii)     for so long as Moody's is a Rating Agency in respect of any Class of Secured Notes, such Collateral Obligation has a facility rating from Moody's of either (A) at least "Caa1" (and if "Caa1," not on watch for downgrade) and its Market Value is at least 80% of its par value or (B) at least "Caa2" (and if "Caa2," not on watch for downgrade) and its Market Value is at least 85% of its par value (provided that for purposes of this definition, with respect to a Collateral Obligation already owned by the Issuer whose facility rating from Moody's is withdrawn, the facility rating shall be the last outstanding facility rating before the withdrawal);

 

provided that to the extent the Principal Balance of all Collateral Obligations that would otherwise be Current Pay Obligations exceeds 2.5% of the Collateral Principal Amount, such excess over 2.5% will constitute Defaulted Obligations; provided, further, that in determining which of the Collateral Obligations will be included in such excess, the Collateral Obligations with the lowest Market Value expressed as a percentage will be deemed to constitute such excess; provided, further, that each such Collateral Obligation included in such excess will be treated as a Defaulted Obligation for all purposes until such time as the Aggregate Principal Balance of Collateral Obligations that would otherwise be Current Pay Obligations would not exceed, on a pro forma basis including such Defaulted Obligation, 2.5% of the Collateral Principal Amount; provided even further, that each such Collateral Obligation for which the Market Value thereof is not determined in accordance with the provisions of clauses (i) or (ii) of the definition of "Market Value" shall not be a Current Pay Obligation.

 

"Custodial Account": The custodial account established pursuant to Section 10.3(b).

 

"Custodian": The meaning specified in the first sentence of Section 3.3(a) with respect to items of collateral referred to therein, and each entity with which an Account is maintained, as the context may require, each of which shall be a Securities Intermediary.

 

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"Default": Any Event of Default or any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.

 

"Defaulted Obligation": Any Collateral Obligation included in the Assets shall constitute a "Defaulted Obligation" if:

 

(a)     there has occurred and is continuing a default with respect to the payment of interest or principal with respect to such Collateral Obligation, without regard to any grace period, waiver or forbearance thereof except as set forth in this clause (a); provided that such default shall have not been cured; provided, further, that any such default shall be subject to a grace period of the lesser of (i) five Business Days (or seven calendar days, whichever is greater) and (ii) the grace period specified in the applicable Underlying Instruments, in each case measured from the date of such default if the Collateral Manager has certified to the Trustee in writing that the payment failure is not due to credit-related reasons;

 

(b)     a default known to the Collateral Manager as to the payment of principal and/or interest has occurred and is continuing on another debt obligation of the same issuer which is senior or pari passu in right of payment to such Collateral Obligation, without regard to any grace period, waiver or forbearance thereof except as set forth in this clause (b) (provided that both the Collateral Obligation and the other debt obligation are full recourse obligations and secured by the same collateral and the default with respect to such other debt obligation shall not have been cured); provided, further, that any such default shall be subject to a grace period of the lesser of (i) five Business Days (or seven calendar days, whichever is greater) and (ii) the grace period specified in the applicable Underlying Instruments, in each case measured from the date of such default if the Collateral Manager has certified to the Trustee in writing that the payment failure is not due to credit-related reasons;

 

(c)     the issuer or others have instituted proceedings to have the issuer adjudicated as bankrupt or insolvent or placed into receivership and such proceedings have not been stayed or dismissed or such issuer has filed for protection under Chapter 11 of the United States Bankruptcy Code;

 

(d)     such Collateral Obligation has a Moody's probability of default rating (as published by Moody's) of "D" or "LD" or had such rating before such rating was withdrawn, such Collateral Obligation has a Fitch Rating of "D" or had such rating before such rating was withdrawn or such Collateral Obligation has an S&P Rating of "D" or had such rating before such rating was withdrawn;

 

(e)     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 issuer which has a Fitch Rating of "D", an S&P Rating of "D" or 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 issuer);

 

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(f)     the Collateral Manager has received written notice or has actual knowledge that a default has occurred under the Underlying Instruments and any applicable grace period has expired such that 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)     the Collateral Manager has in its reasonable commercial judgment otherwise declared such debt obligation to be a "Defaulted Obligation";

 

(h)     such Collateral Obligation is a Participation Interest with respect to which the Selling Institution has defaulted in the performance of any of its payment obligations under the Participation Interest (except to the extent such defaults were cured within the applicable grace period under the Underlying Instruments of the Obligor thereof);

 

(i)     such Collateral Obligation is a Participation Interest in a loan that would, if such loan were a Collateral Obligation, constitute a "Defaulted Obligation" (other than under this clause (i)) or with respect to which the Selling Institution has 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; or

 

(j)     a Distressed Exchange has occurred in connection with such Collateral Obligation;

 

provided, that a Collateral Obligation will not constitute a Defaulted Obligation pursuant to clauses (a) through (e), (i) and (j) above if: (x) in the case of clauses (a), (b), (c), (d), (e), (i) and (j), such Collateral Obligation is a Current Pay Obligation (provided that, in the case of clause (i) above, the applicable Selling Institution shall also be required to continue to make current payments to the Issuer under the Participation Interest), or (y) in the case of clauses (b), (c) and (e), such Collateral Obligation is a DIP Collateral Obligation.

 

"Deferrable Obligation": A Collateral Obligation that by its terms permits the deferral or capitalization of payment of accrued, unpaid interest.

 

"Deferred Interest": With respect to any specified Class of Deferred Interest Notes, the meaning specified in Section 2.8(a).

 

"Deferred Interest Notes": The Notes specified as such in Section 2.3.

 

"Deferred Subordinated Management Fee": The meaning specified in Section 11.1(f).

 

"Deferred Subordinated Management Fee Interest": The meaning specified in Section 11.1(f).

 

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"Deferring Obligation": A Deferrable Obligation that is deferring the payment of interest due thereon and has been so deferring the payment of interest due thereon (i) with respect to Collateral Obligations that have a Moody's Rating of at least "Baa3," for the shorter of two consecutive accrual periods or one year, and (ii) with respect to Collateral Obligations that have a Moody's Rating of "Ba1" or below, for the shorter of one accrual period or six consecutive months, which deferred capitalized interest has not, as of the date of determination, been paid in cash; provided that such Deferrable Obligation will cease to be a Deferring Obligation at such time as it (a) ceases to defer or capitalize the payment of interest, (b) pays in cash all accrued and unpaid interest, including all deferred amounts, and (c) commences payment of all current interest in cash.

 

"Delayed Drawdown Collateral Obligation": Any Asset that (a) requires the Issuer to make one or more future advances to the borrower under the Underlying Instruments relating thereto, (b) specifies a maximum amount that can be borrowed on one or more fixed borrowing dates, and (c) does not permit the re borrowing of any amount previously repaid by the borrower thereunder; provided that any such Collateral Obligation will be a Delayed Drawdown Collateral Obligation only until all commitments by the Issuer to make advances to the borrower expire or are terminated or reduced to zero.

 

"Deliver" or "Delivered" or "Delivery": The taking of the following steps:

 

(i)     in the case of each Certificated Security (other than a Clearing Corporation Security), Instrument or Participation Interest in which the underlying loan is represented by an Instrument,

 

(1)     causing the delivery of such Certificated Security or Instrument to the Custodian by registering the same in the name of the Custodian or its affiliated nominee or by endorsing the same to the Custodian or in blank;

 

(2)     causing the Custodian to continuously indicate on its books and records that such Certificated Security or Instrument is credited to the applicable Account; and

 

(3)     causing the Custodian to maintain continuous possession of such Certificated Security or Instrument;

 

(ii)     in the case of each Uncertificated Security (other than a Clearing Corporation Security),

 

(1)     causing such Uncertificated Security to be continuously registered on the books of the issuer thereof to the Custodian; and

 

(2)     causing the Custodian to continuously indicate on its books and records that such Uncertificated Security is credited to the applicable Account;

 

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(iii)     in the case of each Clearing Corporation Security,

 

(1)     causing the relevant Clearing Corporation to credit such Clearing Corporation Security to the securities account of the Custodian, and

 

(2)     causing the Custodian to continuously indicate on its books and records that such Clearing Corporation Security is credited to the applicable Account;

 

(iv)     in the case of each security issued or guaranteed by the United States of America or agency or instrumentality thereof and that is maintained in book entry records of a Federal Reserve Bank ("FRB") (each such security, a "Government Security"),

 

(1)     causing the creation of a Security Entitlement to such Government Security by the credit of such Government Security to the securities account of the Custodian at such FRB, and

 

(2)     causing the Custodian to continuously indicate on its books and records that such Government Security is credited to the applicable Account;

 

(v)     in the case of each Security Entitlement not governed by clauses (i) through (iv) above,

 

(1)     causing a Securities Intermediary (x) to indicate on its books and records that the underlying Financial Asset has been credited to the Custodian's securities account, (y) to receive a Financial Asset from a Securities Intermediary or acquiring the underlying Financial Asset for a Securities Intermediary, and in either case, accepting it for credit to the Custodian's securities account or (z) to become obligated under other law, regulation or rule to credit the underlying Financial Asset to a Securities Intermediary's securities account,

 

(2)     causing such Securities Intermediary to make entries on its books and records continuously identifying such Security Entitlement as belonging to the Custodian and continuously indicating on its books and records that such Security Entitlement is credited to one of the Custodian's Accounts, which shall at all times be securities accounts, and

 

(3)     causing the Custodian to continuously indicate on its books and records that such Security Entitlement (or all rights and property of the Custodian representing such Security Entitlement) is credited to the applicable Account;

 

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(vi)     in the case of Cash or Money,

 

(1)     causing the delivery of such Cash or Money to the Trustee for credit to the applicable Account or to the Custodian,

 

(2)     if delivered to the Custodian, causing the Custodian to treat such Cash or Money as a Financial Asset maintained by such Custodian for credit to the applicable Account in accordance with the provisions of Article 8 of the UCC or causing the Custodian to deposit such Cash or Money to a deposit account over which the Custodian has control (within the meaning of Section 9-104 of the UCC), and

 

(3)     causing the Custodian to continuously indicate on its books and records that such Cash or Money so held is credited to the applicable Account; and

 

(vii)     in the case of each general intangible (including any Participation Interest in which the Participation Interest is not represented by an Instrument),

 

(1)     causing the filing of a Financing Statement in the office of the Recorder of Deeds of the District of Columbia, Washington, D.C., and

 

(2)     causing the registration of the security interests granted by this Indenture in the register of mortgages and charges of the Issuer maintained at the Issuer's registered office in the Cayman Islands.

 

In addition, the Collateral Manager on behalf of the Issuer will obtain any and all consents required by the Underlying Instruments relating to any such general intangibles for the transfer of ownership and/or pledge hereunder (except to the extent that the requirement for such consent is rendered ineffective under Section 9-406 of the UCC).

 

"Designated Base Rate": The reference or base rate recognized or acknowledged as being the industry standard for leveraged loans (which recognition may be in the form of a press release, a member announcement, a member advice, letter, protocol, publication of standard terms or otherwise) by the LSTA or the ARRC, which shall include a Base Rate Modifier recognized or acknowledged by either of such organizations.

 

"Designated Principal Proceeds": The meaning specified in Section 10.2(a).

 

"Designated Proceeds": Any Designated Principal Proceeds or Designated Unused Proceeds.

 

"Designated Proceeds Cap": As of any date, (x) 1.0% of the Aggregate Ramp-Up Par Amount minus (y) the aggregate amount of all Designated Proceeds deposited into the Interest Collection Subaccount on or prior to such date.

 

"Designated Proceeds Period": The meaning specified in Section 10.3(c).

 

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"Designated Unused Proceeds": The meaning specified in Section 10.3(c).

 

"Determination Date": The last day of each Collection Period.

 

"DIP Collateral Obligation": Any interest in a loan or financing facility that has a public or private facility rating from Moody's and is purchased directly or by way of assignment (a) which is an obligation of (i) a debtor-in-possession as described in §1107 of the Bankruptcy Code or (ii) a trustee if appointment of such trustee has been ordered pursuant to §1104 of the Bankruptcy Code (in either such case, a "Debtor") organized under the laws of the United States or any state therein, or (b) on which the related Obligor is required to pay interest on a current basis and, with respect to either clause (a) or (b) above, the terms of which have been approved by an order of the United States Bankruptcy Court, the United States District Court, or any other court of competent jurisdiction, the enforceability of which order is not subject to any pending contested matter or proceeding (as such terms are defined in the Federal Rules of Bankruptcy Procedure) and which order provides that: (i) (A) such DIP Collateral Obligation is fully secured by liens on the Debtor's otherwise unencumbered assets pursuant to §364(c)(2) of the Bankruptcy Code or (B) such DIP Collateral Obligation is secured by liens of equal or senior priority on property of the Debtor's estate that is otherwise subject to a lien pursuant to §364(d) of the Bankruptcy Code and (ii) such DIP Collateral Obligation is fully secured based upon a current valuation or appraisal report. Notwithstanding the foregoing, such a loan will not be deemed to be a DIP Collateral Obligation following the emergence of the related debtor-in-possession from bankruptcy protection under Chapter 11 of the Bankruptcy Code.

 

"Discount Obligation": Any Collateral Obligation forming part of the Assets that is a loan acquired by the Issuer with respect to which, if such Collateral Obligation as determined by the Collateral Manager (i) has a Moody's Rating below "B3", the purchase price thereof is less than 85% of its Principal Balance (or, in the case of a Revolving Collateral Obligation, 80% of its Principal Balance) or (ii) has a Moody's Rating "B3" or higher, the purchase price thereof is less than 80% of its Principal Balance (or, in the case of a Revolving Collateral Obligation, 75% of its Principal Balance), in each case until the Market Value of the Collateral Obligation for any period of 30 consecutive days equals or exceeds 90% of its Principal Balance (or, in the case of a Revolving Collateral Obligation, 85% of its Principal Balance), in which case such Collateral Obligation shall cease to be a Discount Obligation.

 

Any Collateral Obligation that would otherwise be considered a Discount Obligation but that is purchased with the proceeds of a sale of a Collateral Obligation that was not a Discount Obligation at the time of its purchase and was sold at a price (i) below 85% if such Collateral Obligation has a Moody's Rating lower than "B3" (or, in the case of a Revolving Collateral Obligation, 80%) or (ii) below 80% (or, in the case of a Revolving Collateral Obligation, 75%) if such Collateral Obligation has a Moody's Rating "B3" or higher will not be considered a Discount Obligation, so long as such purchased Collateral Obligation: (x) has a Moody's Rating no lower than the Moody's Rating of the previously sold Collateral Obligation, (y) is purchased or committed to be purchased within ten Business Days of such sale, (z) when included in the aggregate Principal Balance of all Collateral Obligations not considered Discount Obligations due to this paragraph, does not cause such aggregate Principal Balance to exceed 10% of the Aggregate Ramp-Up Par Amount at any time and (aa) is purchased at a purchase price that equals or exceeds both (1) the sale price of the sold Collateral Obligation and (2) 60% of its Principal Balance; provided that to the extent the Aggregate Principal Balance of Collateral Obligations purchased since the Closing Date under this paragraph exceeds 15% of the Aggregate Ramp-Up Par Amount, such excess shall be considered Discount Obligations; provided, further, that such Collateral Obligation shall cease to be a Discount Obligation at such time as the Market Value of the Collateral Obligation for any period of 30 consecutive days equals or exceeds 90% of its Principal Balance (or, in the case of a Revolving Collateral Obligation, 85% of its Principal Balance).

 

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"Distressed Exchange": In connection with any Collateral Obligation, a distressed exchange or other debt restructuring has occurred, as reasonably determined by the Collateral Manager, pursuant to which the issuer or Obligor of such Collateral Obligation has issued to the holders of such Collateral Obligation a new security or package of securities or obligations that, in the sole judgment of the Collateral Manager, amounts to a diminished financial obligation or has the purpose of helping the issuer of such Collateral Obligation avoid default; provided that no Distressed Exchange shall be deemed to have occurred if the securities or obligations received by the Issuer in connection with such exchange or restructuring meet the definition of "Collateral Obligation".

 

"Distribution Report": The meaning specified in Section 10.6(b).

 

"Diversity Score": A single number that indicates collateral concentration in terms of both issuer and industry concentration, calculated as set forth in Schedule 2.

 

"Domicile" or "Domiciled": With respect to any issuer of or Obligor with respect to a Collateral Obligation: (a) except as provided in clauses (b), (c) and (d) below, its country of organization; (b) if it is organized in a Tax Advantaged Jurisdiction, each of such jurisdiction and the country in which, in the Collateral Manager's good faith estimate, a substantial portion of its operations are located or from which a substantial portion of its revenue is derived, in each case directly or through subsidiaries; (c) if it is organized in Ireland, its "Domicile" shall be deemed to be the country in which, in the Collateral Manager's good faith estimate, a substantial portion of its operations are located or from which a substantial portion of its revenue is derived, in each case directly or through subsidiaries; or (d) if its payment obligations in respect of such Collateral Obligation are guaranteed by a person or entity (in a guarantee agreement with such person or entity, which guarantee agreement complies with Moody's then-current public guidelines with respect to guarantees) that is organized in the United States, then the United States.

 

"DTC": The Depository Trust Company, its nominees, and their respective successors.

 

"Due Date": Each date on which any payment is due on a Pledged Obligation in accordance with its terms.

 

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"Effective Spread": With respect to any floating rate Collateral Obligation, the current per annum rate at which it pays interest minus LIBOR or, if such floating rate Collateral Obligation bears interest based on a floating rate index other than a London interbank offered rate-based index, the Effective Spread shall be the then-current base rate applicable to such floating rate Collateral Obligation plus the rate at which such floating rate Collateral Obligation pays interest in excess of such base rate minus three-month LIBOR; provided that (i) with respect to any unfunded commitment of any Revolving Collateral Obligation or Delayed Drawdown Collateral Obligation, the Effective Spread means the commitment fee payable with respect to such unfunded commitment, (ii) with respect to the funded portion of any commitment under any Revolving Collateral Obligation or Delayed Drawdown Collateral Obligation, the Effective Spread means the current per annum rate at which it pays interest minus LIBOR or, if such funded portion bears interest based on a floating rate index other than a London interbank offered rate-based index, the Effective Spread will be the then-current base rate applicable to such funded portion plus the rate at which such funded portion pays interest in excess of such base rate minus three-month LIBOR and (iii) with respect to any LIBOR Floor Obligation, the stated interest rate spread on such Collateral Obligation above the applicable index shall be deemed to be equal to the sum of (A) the stated interest rate spread over the applicable index and (B) the excess, if any, of the specified "floor" rate relating to such Collateral Obligation over the LIBOR rate applicable to the Secured Notes on the immediately preceding Interest Determination Date; provided, further, that the Effective Spread of any floating rate Collateral Obligation shall (i) be deemed to be zero to the extent that the Issuer or the Collateral Manager has actual knowledge that no payment of cash interest on such floating rate Collateral Obligation will be made by the Obligor thereof during the applicable due period and (ii) not include any non-cash interest; provided, further, that the Effective Spread of any Letter of Credit shall not include any amounts that the Issuer or the Collateral Manager have actual knowledge are being withheld by the related agent bank or will be deposited into a Letter of Credit Reserve Account. Notwithstanding the foregoing, if a Base Rate Amendment has been adopted and the Alternative Base Rate specified in the Base Rate Amendment is the same benchmark rate currently in effect for determining interest on a floating rate Collateral Obligation, references to "London interbank offered rate-based index" in this definition of Effective Spread with respect to such floating rate Collateral Obligation shall be deemed to be a reference to such benchmark rate that is the same as the Alternative Base Rate.

 

"Eligible Investment Required Ratings": (a) If such obligation or security (i) has both a long term and a short term credit rating from Moody's, such ratings are "Aa3" or higher (not on credit watch for possible downgrade) and "P-1" (not on credit watch for possible downgrade), respectively, (ii) has only a long term credit rating from Moody's, such rating is at least equal to or higher than the current Moody's long term ratings of the U.S. government, and (iii) has only a short term credit rating from Moody's, such rating is "P-1" (not on credit watch for possible downgrade) and (b) so long as any Class A Note is rated by Fitch, from Fitch (i) for obligations or securities with remaining maturities up to 30 days, a short-term credit rating of at least "F1" and a long-term credit rating of at least "A" (if such long-term rating exists) or (ii) for obligations or securities with remaining maturities of more than 30 days but not in excess of 60 days, a short-term rating of "F1+" and a long-term credit rating of at least "AA-" (if such long-term rating exists).

 

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"Eligible Investments": (a) Cash or (b) any United States dollar investment that, at the time it is Delivered to the Trustee (directly or through an intermediary or bailee), is one or more of the following obligations or securities:

 

(i)     direct obligations of, and obligations the timely payment of principal and interest on which is fully and expressly guaranteed by, the United States of America or any agency or instrumentality of the United States of America the obligations of which are expressly backed by the full faith and credit of the United States of America and which satisfy the Eligible Investment Required Ratings.

 

(ii)     demand and time deposits in, certificates of deposit of, trust accounts with, bankers' acceptances issued by, or federal funds sold by any depository institution or trust company incorporated under the laws of the United States of America (including the Bank and any Affiliates of the Bank) or any state thereof and subject to supervision and examination by federal and/or state banking authorities, in each case payable within 183 days of issuance, so long as the commercial paper and/or the debt obligations of such depository institution or trust company at the time of such investment or contractual commitment providing for such investment have the Eligible Investment Required Ratings;

 

(iii)     commercial paper or other short term obligations with the Eligible Investment Required Ratings and that either bear interest or are sold at a discount from the face amount thereof and have a maturity of not more than 183 days from their date of issuance; provided that this clause (iii) shall not include extendible commercial paper or asset backed commercial paper; and

 

(iv)     registered money market funds domiciled outside of the United States which funds have credit ratings of (x) "Aaa-mf" by Moody's and (y) "AAAmmf" by Fitch or equivalent ratings at that time by Moody's and Fitch;

 

provided that Eligible Investments purchased with funds in the Collection Account shall be held until maturity except as otherwise specifically provided herein and shall include only such obligations or securities, other than those referred to in clause (iv) above, as mature (or are putable at par to the issuer thereof) no later than the earlier of 60 days and the Business Day prior to the next Payment Date; provided, further, that none of the foregoing obligations or securities shall constitute Eligible Investments if (a) all, or substantially all, of the remaining amounts payable thereunder consist of interest and not principal payments, (b) such obligation or security is subject to withholding tax unless the issuer of the security is required to make "gross-up" payments that ensure that the net amount actually received by the Issuer (after payment of all taxes, whether imposed on such Obligor or the Issuer) will equal the full amount that the Issuer would have received had no such taxes been imposed, (c) such obligation or security is secured by real property, (d) such obligation or security is purchased at a price greater than 100% of the principal or face amount thereof or (e) in the Collateral Manager's sole judgment, such obligation or security is subject to material non-credit related risks. Eligible Investments may include, without limitation, those investments for which the Trustee or an Affiliate of the Trustee is the obligor or depository institution, or provides services and receives compensation.

 

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Notwithstanding the foregoing clauses (b)(i) through (iv) or any other criteria set forth in this definition of Eligible Investments, Eligible Investments may only include obligations or securities that constitute "cash equivalents" for purposes of Section _10.(c)(8)(iii)(A) of the regulations implementing the Volcker Rule. Any direction given by the Collateral Manager to the Trustee to invest in an Eligible Investment shall be deemed to be a confirmation from the Collateral Manager to the Trustee that such Eligible Investment complies with the requirements of the foregoing sentence.

 

"Eligible Post-Reinvestment Principal Proceeds": As of any date of determination (and on a cumulative basis), 50% of the aggregate amount of Principal Proceeds (whether received in the current Collection Period or in any prior Collection Period (or portion thereof), in each case, after the end of the Reinvestment Period) actually received by the Issuer after the end of the Reinvestment Period in respect of (i) sales of Credit Improved Obligations and Credit Impaired Obligations and (ii) Unscheduled Principal Payments, in each case, as of such date of determination.

 

"Entitlement Holder": The meaning specified in Section 8-102(a)(7) of the UCC.

 

"Entitlement Order": The meaning specified in Section 8-102(a)(8) of the UCC.

 

"Equity Security": Any security or debt obligation which at the time of acquisition, conversion or exchange does not satisfy one or more of the requirements of the definition of "Collateral Obligation" (other than clause (xxi)) and is not an Eligible Investment; it being understood that Equity Securities may not be purchased by the Issuer but may be received by the Issuer in exchange for a Collateral Obligation or a portion thereof in connection with an insolvency, bankruptcy, reorganization, debt restructuring or workout of the issuer thereof, such that the Equity Security would be considered "received in lieu of debts previously contracted" with respect to the Collateral Obligations under the Volcker Rule.

 

"ERISA": The United States Employee Retirement Income Security Act of 1974, as amended from time to time.

 

"ERISA Subscription Agreement": A subscription agreement containing ERISA-related representations, warranties and covenants substantially in the form set forth in Exhibit B6 hereto.

 

"Euroclear": Euroclear Bank S.A./N.V. as operator of the Euroclear System.

 

"Event of Default": The meaning specified in Section 5.1.

 

"Excepted Advances": Customary advances made to protect or preserve rights against the borrower of or Obligor under a Collateral Obligation or to indemnify an agent or representative for lenders pursuant to the Underlying Instruments.

 

"Excepted Property": The meaning specified in the Granting Clause.

 

"Excess CCC/Caa Adjustment Amount": As of any date of determination, an amount equal to the product of (i) the Aggregate Principal Balance of all Collateral Obligations included in the CCC/Caa Excess multiplied by (ii) 1 minus the weighted average Market Value (expressed as a percentage of the par amount of each such Collateral Obligation) of all Collateral Obligations included in the CCC/Caa Excess.

 

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"Excess Weighted Average Fixed Coupon": As of any Measurement Date, a percentage equal to the product obtained by multiplying (a) the greater of zero and the excess, if any, of the Weighted Average Fixed Coupon over the Minimum Weighted Average Fixed Coupon by (b) the number obtained by dividing the Aggregate Principal Balance of all fixed rate Collateral Obligations (excluding any Defaulted Obligation and, to the extent of any non-cash interest, any Deferrable Obligation) by the Aggregate Principal Balance of all floating rate Collateral Obligations (excluding any Defaulted Obligation and, to the extent of any non-cash interest, any Deferrable Obligation).

 

"Excess Weighted Average Floating Spread": As of any Measurement Date, an amount equal to the product obtained by multiplying (a) the greater of zero and the excess, if any, of the Weighted Average Floating Spread over the Minimum Floating Spread by (b) the number obtained by dividing the Aggregate Principal Balance of all floating rate Collateral Obligations (excluding any Defaulted Obligation and, to the extent of any non-cash interest, any Deferrable Obligation) by the Aggregate Principal Balance of all fixed rate Collateral Obligations (excluding any Defaulted Obligation and, to the extent of any non-cash interest, any Deferrable Obligation).

 

"Exchange Act": The United States Securities Exchange Act of 1934, as amended from time to time.

 

"Expense Reserve Account": The trust account established pursuant to Section 10.3(d).

 

"FATCA": Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any U.S. or non-U.S. fiscal or regulatory legislation, rules, guidance notes or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code or analogous provisions of non-U.S. law.

 

"Federal Reserve Board": The Board of Governors of the Federal Reserve System.

 

"Financial Asset": The meaning specified in Section 8-102(a)(9) of the UCC.

 

"Financing Statements": The meaning specified in Section 9-102(a)(39) of the UCC.

 

"First Lien Last Out Loan": A loan that would otherwise be a Senior Secured Loan, but which can by its terms become subordinate in right of payment to another obligation of the Obligor of the loan with respect to liquidation.

 

"Fitch": Fitch Ratings, Inc., and any successor in interest, provided that if Fitch is no longer rating the Class A Notes at the request of the Issuer, references to it hereunder and under and for all purposes of this Indenture and the other Transaction Documents shall be inapplicable and shall have no force or effect.

 

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"Fitch Eligible Counterparty Ratings": With respect to an institution, investment or counterparty, a short-term credit rating of at least "F1" and a long-term credit rating of at least "A" by Fitch.

 

"Fitch Rating" has the meaning specified in Schedule 4 hereto.

 

"GAAP": The meaning specified in Section 6.3(j).

 

"Global Notes": Any Regulation S Global Notes or Rule 144A Global Notes.

 

"Global Rating Agency Condition": With respect to any action taken or to be taken by or on behalf of the Issuer, satisfaction of the Moody's Rating Condition (to the extent applicable) and the delivery of prior written notice of such action to Fitch.

 

"Grant" or "Granted": To grant, bargain, sell, convey, assign, transfer, mortgage, pledge, create and grant a security interest in and right of setoff against, deposit, set over and confirm. A Grant of the Pledged Obligations, or of any other instrument, shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including, the immediate continuing right to claim for, collect, receive and receipt for principal and interest payments in respect of the Pledged Obligations, and all other Monies payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise, and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto.

 

"Group Country": Any Group I Country, Group II Country, Group III Country or Group IV Country.

 

"Group I Country": Australia, The Netherlands, The United Kingdom and New Zealand.

 

"Group II Country": Germany, Sweden and Switzerland.

 

"Group III Country": Austria, Belgium, Denmark, Finland, France, Iceland, Liechtenstein, Luxembourg and Norway.

 

"Group IV Country": Greece, Italy, Portugal and Japan.

 

"Hedge Agreements": Any interest rate swap, floor and/or cap agreements, between the Issuer and any Hedge Counterparty, as amended from time to time, and any replacement agreement entered into pursuant to Section 16.1.

 

"Hedge Counterparty": Any one or more institutions entering into or guaranteeing a Hedge Agreement with the Issuer that satisfies the Required Hedge Counterparty Rating that has entered into a Hedge Agreement with the Issuer, including any permitted assignee or successor under the Hedge Agreements.

 

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"Hedge Counterparty Collateral Account": Each account established pursuant to Section 10.4.

 

"Hedge Counterparty Credit Support": As of any date of determination, any cash or cash equivalents on deposit in, or otherwise to the credit of, the Hedge Counterparty Collateral Account in an amount required to satisfy the then-current Rating Agency criteria.

 

"Holder": With respect to any Note, the Person whose name appears on the Register as the registered holder of such Note or the holder of a beneficial interest in (i.e. a beneficial owner of) such Note, except as otherwise provided for in this Indenture.

 

"IAI": An institutional Accredited Investor as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D of the Securities Act.

 

"IAI/QP": Any Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Notes is both (a) an IAI and (b) a Qualified Purchaser or an entity owned exclusively by Qualified Purchasers.

 

"Illiquid Asset": The meaning specified in Section 12.3.

 

"Incentive Management Fee": The fee payable to the Collateral Manager on each Payment Date on and after which the Incentive Management Fee Threshold has been met, pursuant to Section 8(a) of the Collateral Management Agreement and the Priority of Payments, in an amount equal to 20% of any remaining Interest Proceeds and Principal Proceeds, as applicable, on such Payment Date.

 

"Incentive Management Fee Threshold": The threshold that will be satisfied on any Payment Date if the Holders of the Junior Subordinated Notes have received an annualized internal rate of return (computed using the "XIRR" function in Microsoft® Excel or an equivalent function in another software package and based on the respective dates of issuance and an aggregate purchase price of $26,216,294 for the Junior Subordinated Notes) of at least 12% on the outstanding investment in the Junior Subordinated Notes as of such Payment Date after giving effect to all payments made or to be made on such Payment Date.

 

"Incurrence Covenant": A covenant by the underlying Obligor under a loan to comply with one or more financial covenants only upon the occurrence of certain actions of the underlying Obligor or certain events relating to the underlying Obligor, including, but not limited to, a debt issuance, dividend payment, share purchase, merger, acquisition or divestiture, unless, as of any date of determination, such action was taken or such event has occurred, in each case the effect of which causes such covenant to meet the criteria of a Maintenance Covenant.

 

"Indenture": This instrument as originally executed and, if from time to time supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, as so supplemented or amended.

 

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"Independent": As to any Person, any other Person (including, in the case of an accountant or lawyer, a firm of accountants or lawyers, and any member thereof, or an investment bank and any member thereof) who (i) does not have and is not committed to acquire any material direct or any material indirect financial interest in such Person or in any Affiliate of such Person, and (ii) is not connected with such Person as an Officer, employee, promoter, underwriter, voting trustee, partner, director or Person performing similar functions. "Independent" when used with respect to any accountant may include an accountant who audits the books of such Person if in addition to satisfying the criteria set forth above the accountant is independent with respect to such Person within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants. For purposes of this definition, no manager or director of any Person will fail to be Independent of such Person solely because such manager or director acts as an independent manager or independent director thereof or of any affiliates of such Person.

 

Whenever any Independent Person's opinion or certificate is to be furnished to the Trustee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof.

 

Any pricing service, certified public accountant or legal counsel that is required to be Independent of another Person under this Indenture must satisfy the criteria above with respect to the Issuer and the Collateral Manager.

 

"Independent Fiduciary": The meaning specified in Section 2.6(c)(iv).

 

"Index Maturity": With respect to any Class of Notes, the period indicated with respect to such Class in Section 2.3.

 

"Information": S&P's "Credit Estimate Information Requirements" dated August 2011 and any other available information S&P reasonably requests in order to produce a credit estimate for a particular asset.

 

"Information Agent": The meaning specified in Section 14.16.

 

"Initial Purchaser": BNPP, in its capacity as the initial purchaser under the Purchase Agreement.

 

"Initial Rating": With respect to any Class of Secured Notes, the rating or ratings, if any, indicated in Section 2.3.

 

"Instrument": The meaning specified in Section 9-102(a)(47) of the UCC.

 

"Interest Accrual Period": (i) With respect to the initial Payment Date (or, in the case of a Class that is subject to Refinancing, the first Payment Date following the Refinancing), the period from and including the Closing Date (or, in the case of a Refinancing, the date of issuance of the Replacement Notes), to but excluding such Payment Date; and (ii) with respect to each succeeding Payment Date, the period from and including the immediately preceding Payment Date to but excluding the following Payment Date until the principal of the Notes is paid or made available for payment; provided, that any interest bearing notes issued after the Closing Date in accordance with the terms of this Indenture shall accrue interest during the Interest Accrual Period in which such additional notes are issued from and including the applicable date of issuance of such additional notes to but excluding the last day of such Interest Accrual Period at the applicable Interest Rate.

 

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"Interest Collection Subaccount": The meaning specified in Section 10.2(a).

 

"Interest Coverage Ratio": With respect to any designated Class or Classes of Secured Notes, as of any date of determination, on or after the Determination Date immediately preceding the third Payment Date, the percentage derived by dividing:

 

(a)     the sum of (i) the Collateral Interest Amount as of such date of determination minus (ii) amounts payable (or expected as of the date of determination to be payable) on the following Payment Date as set forth in clauses (A), (B) and (C) of Section 11.1(a)(i); by

 

(b)     interest due and payable on the Secured Notes of such Class or Classes and each Priority Class of Secured Notes on such Payment Date (excluding Deferred Interest and any interest on the Deferred Interest with respect to any such Class or Classes).

 

"Interest Coverage Test": A test that is satisfied with respect to any specified Class or Classes of Secured Notes, if as of the Determination Date immediately preceding the third Payment Date, and at any date of determination occurring thereafter (i) the Interest Coverage Ratio for such Class or Classes is at least equal to the applicable Required Coverage Ratio for such Class or Classes, or (ii) such Class or Classes is no longer outstanding.

 

"Interest Determination Date": (i) With respect to the first Interest Accrual Period, the second London Banking Day preceding the Closing Date and (ii) for each Interest Accrual Period after the first Interest Accrual Period, the second London Banking Day preceding the first day of each Interest Accrual Period.

 

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"Interest Proceeds": With respect to any Collection Period or Determination Date, without duplication, the sum of: (i) all payments of interest and other income (including delayed compensation but excluding any interest due on any Deferrable Obligation that has been deferred or capitalized at the time of acquisition) received by the Issuer during the related Collection Period on the Collateral Obligations and Eligible Investments, including the accrued interest received in connection with a sale thereof during the related Collection Period, less any such amount that represents Principal Financed Accrued Interest; (ii) all principal and interest payments received by the Issuer during the related Collection Period on Eligible Investments purchased with Interest Proceeds; (iii) all amendment and waiver fees, late payment fees, ticking fees and other fees received by the Issuer during the related Collection Period, except for those in connection with (a) the lengthening of the maturity of the related Collateral Obligation or (b) the reduction of the par amount of the related Collateral Obligation as determined by the Collateral Manager at its discretion (with notice to the Trustee and the Collateral Administrator); (iv) any payment received with respect to any Hedge Agreement other than (a) an upfront payment received upon entering into such Hedge Agreement or (b) a payment received as a result of the termination of any Hedge Agreement to the extent not used by the Issuer to enter into a new or replacement Hedge Agreement (for purposes of this subclause (iv), any such payment received or to be received on or before the last day of the Collection Period in respect of such Payment Date will be deemed received in respect of the preceding Collection Period and included in the calculation of Interest Proceeds received in such Collection Period); (v) any payments received as repayment for Excepted Advances; (vi) any amounts deposited in the Interest Collection Subaccount from the Principal Collection Subaccount pursuant to Section 10.2(a) and/or the Expense Reserve Account and/or the Ramp-Up Account pursuant to Section 10.3, in each case, during such Collection Period or in respect of the related Determination Date; (vii) any proceeds from an Issuer Subsidiary Asset characterized as "Interest Proceeds" received by the Issuer from any Issuer Subsidiary; and (viii) commitment fees, letter of credit fees and other similar fees received by the Issuer during such Collection Period in respect of Revolving Collateral Obligations and Delayed Drawdown Collateral Obligations; provided that except as set forth in clause (vi) above, any amounts received in respect of (1) any Defaulted Obligation or (2) from an Issuer Subsidiary, in respect of an Issuer Subsidiary Asset that was acquired or received in connection with a workout or restructuring of such Defaulted Obligation will constitute (A) Principal Proceeds (and not Interest Proceeds) until the aggregate of all recoveries in respect of such Defaulted Obligation (including any such proceeds from such Issuer Subsidiary, in respect of such Issuer Subsidiary Asset) since immediately before it became a Defaulted Obligation equals the outstanding Principal Balance (excluding any unfunded commitment on any Revolving Collateral Obligation or Delayed Drawdown Collateral Obligation) of such Collateral Obligation immediately before it became a Defaulted Obligation, and then (B) Interest Proceeds thereafter; provided, further, that amounts described in clause (i) of the definition of Principal Financed Accrued Interest may be designated by the Collateral Manager as Interest Proceeds as long as the Aggregate Principal Balance on the date of such designation of the (a) Collateral Obligations and (b) Eligible Investments representing Principal Proceeds equals or exceeds the Aggregate Ramp-Up Par Amount (on a pro forma basis); provided, further, that amounts that would otherwise constitute Interest Proceeds may be designated as Principal Proceeds pursuant to Section 7.17(c) with notice to the Collateral Administrator; provided, further, that all payments (interest, principal and otherwise) from any Credit Amendment that does not satisfy the Weighted Average Life Test shall be designated as Principal Proceeds. Notwithstanding the foregoing, in the Collateral Manager's sole discretion (to be exercised on or before the related Determination Date), on any date after the first Payment Date, Interest Proceeds in any Collection Period may be deemed to be Principal Proceeds so long as no such designation would result in an interest deferral on any Class of Secured Notes. Under no circumstances shall Interest Proceeds include the Excepted Property or any interest earned thereon.

 

"Interest Reserve Account": The trust account established pursuant to Section 10.3(e).

 

"Investment Advisers Act": The Investment Advisers Act of 1940, as amended from time to time.

 

"Investment Company Act": The Investment Company Act of 1940, as amended from time to time.

 

"Investment Criteria": The criteria specified in Section 12.2.

 

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"Investment Criteria Adjusted Balance": With respect to any Asset, the Principal Balance of such Asset; provided that for all purposes the Investment Criteria Adjusted Balance of any: (i) Deferring Obligation shall be the Moody's Collateral Value of such Deferring Obligation, (ii) Discount Obligation shall be the purchase price (expressed as a dollar amount) of such Discount Obligation; and (iii) CCC/Caa Collateral Obligation included in the CCC/Caa Excess shall be the Market Value of such Collateral Obligation; provided, further, that the Investment Criteria Adjusted Balance for any Collateral Obligation that satisfies more than one of the definitions of Deferring Obligation, Discount Obligation or is included in the CCC/Caa Excess shall be the lowest amount determined pursuant to clauses (i), (ii) or (iii).

 

"Issuer": JMP Credit Advisors CLO V Ltd., until a successor Person shall have become the Issuer pursuant to the applicable provisions of this Indenture, and thereafter "Issuer" shall mean such successor Person.

 

"Issuer Order": A written order dated and signed in the name of the Issuer or the Co-Issuer (which written order may be a standing order) by an Authorized Officer of the Issuer or the Co-Issuer, as applicable, or, to the extent permitted herein or in the Collateral Management Agreement, by the Collateral Manager by an Authorized Officer thereof, on behalf of the Issuer. For the avoidance of doubt, an order or request provided in an email or other electronic communication acceptable to the Trustee sent by an Authorized Officer of the Issuer or Co-Issuer or by an Authorized Officer of the Collateral Manager on behalf of the Issuer or the Co-Issuer shall constitute an Issuer Order, in each case except to the extent that the Trustee requests otherwise.

 

"Issuer Request": A written request dated and signed in the name of the Issuer or the Co-Issuer (which written request may be a standing request) by an Authorized Officer of the Issuer or the Co-Issuer, as applicable, or, to the extent permitted herein or in the Collateral Management Agreement, by the Collateral Manager by an Authorized Officer thereof, on behalf of the Issuer.

 

"Issuer Subsidiary": The meaning specified in Section 7.16(e).

 

"Issuer Subsidiary Asset": The meaning specified in Section 7.16(g).

 

"Junior Class": With respect to a particular Class of Notes, each Class of Notes that is subordinated to such Class, as indicated in Section 2.3.

 

"Junior Subordinated Notes": The junior subordinated notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

 

"Knowledgeable Employee": The meaning specified in Rule 3c-5 under the Investment Company Act.

 

"Letter of Credit": A facility whereby (i) a fronting bank ("LOC Agent Bank") issues or will issue a letter of credit ("LC") for or on behalf of a borrower pursuant to an underlying instrument, (ii) in the event that the LC is drawn upon and the borrower does not reimburse the LOC Agent Bank, the lender/participant is obligated to fund its portion of the facility and (iii) the LOC Agent Bank passes on (in whole or in part) the fees it receives for providing the LC to the lender/participant.

 

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"Letter of Credit Reserve Account": The meaning specified in Section 7.16(h).

 

"LIBOR": (i) With respect to the Secured Notes and the Senior Subordinated Notes, the meaning set forth in Exhibit C and (ii) with respect to a Collateral Obligation, the "Libor" rate determined in accordance with the terms of such Collateral Obligation. Notwithstanding the foregoing, (i) from and after the first Interest Accrual Period to begin after the execution and effectiveness of a Base Rate Amendment or selection of an Alternative Base Rate by a court of competent jurisdiction, "LIBOR" with respect to the Secured Notes and the Senior Subordinated Notes will be calculated by reference to the Alternative Base Rate specified in such Base Rate Amendment or as selected by such court and (ii) LIBOR (or, if a Base Rate Amendment or selection of an Alternative Base Rate by a court of competent jurisdiction has occurred, the relevant Alternative Base Rate) for any Interest Accrual Period will equal the greater of (x) LIBOR as determined pursuant to this definition or such Alternative Base Rate and (y) 0.00% per annum.

 

"Libor": The London interbank offered rates.

 

"LIBOR Floor Obligation": As of any date, a floating rate Collateral Obligation (a) for which the related Underlying Instruments allow a Libor rate option, (b) that provides that such Libor rate is (in effect) calculated as the greater of (i) a specified "floor" rate per annum and (ii) the London interbank offered rate for the applicable interest period for such Collateral Obligation and (c) that, as of such date, bears interest based on such Libor rate option, but only if as of such date the London interbank offered rate for the applicable interest period is less than such floor rate.

 

"Listed Notes": The Notes specified as such in Section 2.3.

 

"LOC Agent Bank": The meaning specified in the definition of "Letter of Credit" in this Section 1.1.

 

"London Banking Day": A day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London, England.

 

"LSTA" means the Loan Syndication and Trading Association, or any successor thereto.

 

"Maintenance Covenant": As of any date of determination, a covenant by the underlying Obligor of a loan to comply with one or more financial covenants during each reporting period applicable to such loan, whether or not any action by, or event relating to, the underlying Obligor occurs after such date of determination.

 

"Majority": With respect to any Class of Notes, the Holders of more than 50% of the Aggregate Outstanding Amount of the Notes of such Class.

 

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"Management Fee Interest": Collectively, the Subordinated Management Fee Interest and the Deferred Subordinated Management Fee Interest.

 

"Management Fees": Collectively, the Senior Management Fee, the Subordinated Management Fee and the Incentive Management Fee.

 

"Margin Stock": "Margin Stock" as defined under Regulation U issued by the Federal Reserve Board, including any debt security which is by its terms convertible into "Margin Stock."

 

"Market Replacement Rate": The base rate, other than LIBOR, that is used on at least (x) 50% (by principal amount) of the Collateral Obligations; provided that such rate is a quarterly floating rate or (y) 50% (by principal amount) of the quarterly pay floating rate securities issued in the new-issue collateralized loan obligation market in the prior three months, which in each case shall include a Base Rate Modifier that corresponds to the selected rate.

 

"Market Value": With respect to any loans or other assets, the amount (determined by the Collateral Manager) equal to the product of the principal amount thereof and the price determined in the following manner:

 

(i)       the quote determined by any of Loan Pricing Corporation, MarkIt Partners, or any other nationally recognized loan pricing service selected by the Collateral Manager, or

 

(ii)      if such quote described in clause (i) is not available, the average of the bid-side quotes determined by three broker-dealers active in the trading of such asset that are Independent (with respect to each other and the Collateral Manager); or

 

(A)     if only two such bids can be obtained, the lower of the bid-side quotes of such two bids; or

 

(B)     with respect to determining Market Value in connection with calculating the Adjusted Collateral Principal Amount only, if only one such bid can be obtained, such bid; provided that this subclause (B) shall not apply at any time at which the Collateral Manager is not a registered investment adviser under the Investment Advisers Act; or

 

(iii)     if such quote or bid described in clause (i) or (ii) is not available, then the Market Value of such Collateral Obligation shall be the lower of (x) the Market Value determined by the Collateral Manager, consistent with the manner in which it would determine the market value of an asset for purposes of other funds or accounts managed by it and (y) the purchase price of such Collateral Obligation; provided that, if the Collateral Manager is not a registered investment adviser under the Investment Advisers Act, the Market Value of any such asset may not be determined in accordance with this clause (iii) for more than thirty days; or

 

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(iv)     if the Market Value of an asset is not determined in accordance with clause (i), (ii) or (iii) above, then the Market Value shall be deemed to be zero until such determination is made in accordance with clause (i) or (ii) above;

 

provided that, for purposes of determining the Market Value of any CCC/Caa Collateral Obligation included in the Excess CCC/Caa Adjustment Amount, such Market Value may not exceed the principal amount of such Collateral Obligation.

 

"Maturity": With respect to any Note, the date on which the unpaid principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

 

"Maximum Investment Amount": As of any date of determination, the sum of, without duplication, (a) the Collateral Principal Amount, (b) the outstanding principal amount of all Defaulted Obligations that have been Defaulted Obligations for longer than three years and (c) the aggregate amount of all Principal Financed Accrued Interest.

 

"Maximum Moody's Rating Factor Test": A test that will be satisfied on any date of determination if the Moody's Adjusted Weighted Average Rating Factor of the Collateral Obligations is less than or equal to the lesser of (i) the sum of (a) the number set forth in the applicable column entitled "Maximum Moody's Weighted Average Rating Factor" in the Asset Quality Matrix, based upon the applicable "row/column combination" chosen by the Collateral Manager with notice to the Collateral Administrator (or the linear interpolation between two adjacent rows and/or two adjacent columns, as applicable) in accordance with Section 7.17(e), plus (b) the Moody's Weighted Average Recovery Adjustment and (ii) 3250.

 

"Measurement Date": (i) Any day on which the Issuer purchases, or enters into a commitment to purchase, a Collateral Obligation or promptly after an Officer of the Collateral Manager becomes aware that a default of a Collateral Obligation has occurred, (ii) any Determination Date, (iii) the date as of which the information in any Monthly Report or Distribution Report is calculated, (iv) with five (5) Business Days prior written notice, any Business Day requested by the Rating Agencies and (v) the last day of the Ramp-Up Period; provided that in the case of (i) through (iv), no "Measurement Date" can occur prior to the last day of the Ramp-Up Period.

 

"Memorandum and Articles": The Issuer's Memorandum and Articles of Association, as they may be amended, revised or restated from time to time.

 

"Merging Entity": The meaning specified in Section 7.10.

 

"Minimum Fixed Coupon Test": A test that will be satisfied on any date of determination if the Weighted Average Fixed Coupon plus the Excess Weighted Average Floating Spread equals or exceeds the Minimum Weighted Average Fixed Coupon.

 

"Minimum Floating Spread": The number set forth in the column entitled "Minimum Weighted Average Spread" in the Asset Quality Matrix based upon the applicable "row/column combination" chosen by the Collateral Manager with notice to the Trustee and the Collateral Administrator (or the linear interpolation between two adjacent rows and/or two adjacent columns, as applicable) in accordance with Section 7.17(e), reduced by the Moody's Weighted Average Recovery Adjustment; provided that the Minimum Floating Spread shall not be lower than 2.10%.

 

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"Minimum Floating Spread Test": The test that is satisfied on any date of determination if the Weighted Average Floating Spread plus the Excess Weighted Average Fixed Coupon equals or exceeds the Minimum Floating Spread.

 

"Minimum Weighted Average Fixed Coupon" means (i) if any of the Collateral Obligations are fixed rate obligations, 7.00% and (ii) otherwise 0.00%.

 

"Money": The meaning specified in Section 1.1-201(24) of the UCC.

 

"Monthly Report": The meaning specified in Section 10.6(a).

 

"Monthly Report Determination Date": The meaning specified in Section 10.6(a).

 

"Moody's": Moody's Investors Service, Inc. and any successor thereto.

 

"Moody's Adjusted Weighted Average Rating Factor": As of any date of determination, a number equal to the Moody's Weighted Average Rating Factor determined in the following manner: for purposes of determining a Moody's Default Probability Rating, Moody's Rating or Moody's Derived Rating in connection with determining the Moody's Weighted Average Rating Factor for purposes of this definition, the last paragraph of the definition of "Moody's Default Probability Rating" and "Moody's Derived Rating" and the penultimate paragraph of the definition of "Moody's Rating" shall each be disregarded, and instead each applicable rating on credit watch by Moody's that is on (a) positive watch will be treated as having been upgraded by one rating subcategory, (b) negative watch will be treated as having been downgraded by two rating subcategories, (c) positive outlook will be treated with no change to the rating subcategory, and (d) negative outlook will be treated as having been downgraded by one rating subcategory.

 

"Moody's Collateral Value": As of any date of determination, with respect to any Defaulted Obligation or Deferring Obligation, the lesser of (i) the Moody's Recovery Amount of such Defaulted Obligation or Deferring Obligation as of such date and (ii) the Market Value of such Defaulted Obligation or Deferring Obligation as of such date.

 

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"Moody's Counterparty Criteria": With respect to any Participation Interest proposed to be acquired by the Issuer, criteria that will be met if immediately after giving effect to such acquisition, (x) the percentage of the Collateral Principal Amount that consists in the aggregate of Participation Interests with Selling Institutions that have the same or a lower Moody's credit rating does not exceed the "Aggregate Percentage Limit" set forth below for such Moody's credit rating and (y) the percentage of the Collateral Principal Amount that consists in the aggregate of Participation Interests with any single Selling Institution that has the Moody's credit rating set forth below or a lower credit rating does not exceed the "Individual Percentage Limit" set forth below for such Moody's credit rating:

 

Moody's credit rating of

Selling Institution
(at or below)

 

Aggregate
Percentage
Limit

 

Individual
Percentage
Limit

Aaa

 

20.0%

 

20.0%

Aa1

 

20.0%

 

10.0%

Aa2

 

20.0%

 

10.0%

Aa3

 

15.0%

 

10.0%

A1

 

10.0%

 

5.0%

A2 and "P-1"

 

5.0%

 

5.0%

A3

 

0%

 

0%

 

 

"Moody's Default Probability Rating": With respect to any Collateral Obligation, the rating determined pursuant to Schedule 3.

 

"Moody's Derived Rating": With respect to any Collateral Obligation whose Moody's Rating or Moody's Default Probability Rating cannot otherwise be determined pursuant to the definitions thereof, the rating determined for such Collateral Obligation as set forth in Schedule 3.

 

"Moody's Diversity Test": A test that will be satisfied on any date of determination if the Diversity Score (rounded to the nearest whole number) equals or exceeds the number set forth in the column entitled "Minimum Diversity Score" in the Asset Quality Matrix based upon the applicable "row/column combination" chosen by the Collateral Manager with notice to the Trustee and the Collateral Administrator (or the linear interpolation between two adjacent rows and/or two adjacent columns, as applicable) in accordance with Section 7.17(e).

 

"Moody's Industry Classification": The industry classifications set forth in Schedule 1, as such industry classifications shall be updated at the sole option of the Collateral Manager (with notice to the Trustee and the Collateral Administrator) if Moody's publishes revised industry classifications.

 

"Moody's Minimum Weighted Average Recovery Rate Test": The test that will be satisfied on any date of determination if the Moody's Weighted Average Recovery Rate equals or exceeds 44%.

 

"Moody's Non-Senior Secured Loan": Any assignment of or Participation Interest in or other interest in a loan that is not a Moody's Senior Secured Loan.

 

"Moody's Ramp-Up Condition": A condition that will be satisfied if the Issuer or the Collateral Manager, as the case may be, has provided to Moody's both (1) a Ramp-Up Period Report that shows that the Aggregate Ramp-Up Par Condition was satisfied, each Par Value Ratio Test was satisfied, the Concentration Limitations were complied with and the Portfolio Quality Test was satisfied and (2) the Ramp-Up Period Issuer Certificate that (i) indicates the Issuer has received a Ramp-Up Period Accountants' Report that recalculates information set forth on the Ramp-Up Period Report, (ii) certifies, based on the information in such Ramp-Up Period Accountants' Report and the comparisons performed by the Trustee and the Collateral Manager in accordance with Section 7.17(b), that the information in the Ramp-Up Period Report is accurate in all material respects and (iii) attributes such conclusions from the foregoing review to the Issuer. For the avoidance of doubt, neither the Ramp-Up Period Report nor the Ramp-Up Period Issuer Certificate will include the Ramp-Up Period Accountants' Report.

 

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"Moody's Ramp-Up Failure": The meaning specified in Section 7.17(c).

 

"Moody's Rating": With respect to any Collateral Obligation, as of any date of determination, the rating determined in accordance with the following methodology:

 

(i)     With respect to a Collateral Obligation (A) that is publicly rated by Moody's, such public rating (B) that is not publicly rated by Moody's but for which a rating or rating estimate has been assigned by Moody's upon the request of the Issuer or the Collateral Manager, such rating or, in the case of a rating estimate, the applicable rating estimate for such obligation or (C) for which neither clause (A) nor (B) applies but that has a private point-in-time rating assigned to it by Moody's within the preceding 12 months, such private point-in-time rating;

 

(ii)    With respect to a Collateral Obligation that is a Moody's Senior Secured Loan or Participation Interest in a Moody's Senior Secured Loan, if not determined pursuant to clause (i) above, if the obligor of such Collateral Obligation has a corporate family rating by Moody's, then the Moody's rating that is one subcategory higher than such corporate family rating;

 

(iii)    With respect to a Collateral Obligation, if not determined pursuant to clause (i) or (ii) above, if the obligor of such Collateral Obligation has one or more senior unsecured obligations publicly rated by Moody's, then the Moody's public rating on any such obligation (or, if such Collateral Obligation is a Moody's Senior Secured Loan, the Moody's rating that is two subcategories higher than the Moody's public rating on any such senior unsecured obligation) as selected by the Collateral Manager in its sole discretion;

 

(iv)     With respect to a Collateral Obligation (other than a Moody's Senior Secured Loan or Participation Interest in a Moody's Senior Secured Loan), if not determined pursuant to clause (i) through (iii) above, if the obligor of such Collateral Obligation has a corporate family rating by Moody's, then the Moody's rating that is one subcategory lower than such corporate family rating;

 

(v)      With respect to a Collateral Obligation (other than a Moody's Senior Secured Loan or Participation Interest in a Moody's Senior Secured Loan), if not determined pursuant to clause (i) through (iv) above, if the obligor of such Collateral Obligation has one or more subordinated obligations publicly rated by Moody's, then the Moody's rating that is one subcategory higher than the Moody's public rating on any such obligation as selected by the Collateral Manager in its sole discretion;

 

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(vi)     With respect to a Collateral Obligation, if not determined pursuant to clause (i) through (v) above, the Moody's Derived Rating; and

 

(vii)    With respect to a Collateral Obligation, if not determined pursuant to clause (i) through (vi) above, "Caa3".

 

For purposes of calculating a Moody's Rating, each applicable rating, at the time of calculation, (i) on credit watch by Moody's with positive implications will be treated as having been upgraded by one rating subcategory, (ii) on credit watch by Moody's with negative implications will be treated as having been downgraded by one rating subcategory and (iii) on either negative outlook or positive outlook by Moody's will not be treated as having been downgraded or upgraded by any rating subcategories.

 

With respect to any credit estimate assigned by Moody's to a Collateral Obligation hereunder, the Issuer (or the Collateral Manager on the Issuer's behalf) shall send to Moody's the related Obligor's updated financial information upon receipt thereof from such Obligor and will use commercially reasonable efforts to obtain such information at least (x) annually and (y) upon any significant change in the financial condition of such Obligor or any Specified Amendment (in each case, as determined by the Collateral Manager in its commercially reasonable business judgment) but (in each case) only to the extent such Obligor is required to provide it pursuant to the Underlying Instruments.

 

In the case of a request for a renewal of an estimate assigned by Moody's to a Collateral Obligation hereunder following any significant change in the financial condition of such Obligor or a Specified Amendment, the Issuer (or the Collateral Manager on the Issuer's behalf) will continue using the previous estimated rating assigned by Moody's until such time as (x) Moody's renews such estimated rating or assigns a new estimated rating for such Collateral Obligation or (y) the criteria in connection with an annual request for a renewal of a rating estimate becomes applicable in respect of such Collateral Obligation.

 

"Moody's Rating Condition": For so long as Moody's is a Rating Agency, a condition that is satisfied if:

 

(i)     with respect to the end of the Ramp-Up Period rating confirmation procedure described in Sections 7.17(a) through (d), Moody's provides written confirmation (including by means of electronic message, facsimile transmission, press release, posting to its internet website, or other means then considered industry standard) that Moody's will not downgrade or withdraw its Initial Rating of the Secured Notes of each Class; or

 

(ii)     with respect to any other event or action, Moody's has, upon request of the Collateral Manager or the Issuer, confirmed in writing (including by means of electronic message, facsimile transmission, press release, posting to its internet website, or other means then considered industry standard) to the Issuer, the Trustee, the Collateral Administrator and the Collateral Manager that no immediate withdrawal or reduction with respect to its then-current rating by Moody's of the Secured Notes of each Class will occur as a result of such event or action; provided that the Moody's Rating Condition will not be applicable if no Secured Notes remain Outstanding;

 

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provided further that if Moody's (a) makes a public announcement or informs the Issuer, the Collateral Manager or the Trustee that (i) it believes the Moody's Rating Condition is not required with respect to an action or (ii) its practice is to not give such confirmations, or (b) it no longer constitutes a Rating Agency under this Indenture, the Moody's Rating Condition will not apply.

 

"Moody's Rating Factor": For each Collateral Obligation, the number set forth in the table below opposite the Moody's Default Probability Rating of such Collateral Obligation.

 

Moody's Default

Probability Rating

 

Moody's Rating

Factor

 

Moody's Default

Probability Rating

 

Moody's Rating

Factor

Aaa

   

1

 

Ba1

   

940

Aa1

   

10

 

Ba2

   

1,350

Aa2

   

20

 

Ba3

   

1,766

Aa3

   

40

 

B1

   

2,220

A1

   

70

 

B2

   

2,720

A2

   

120

 

B3

   

3,490

A3

   

180

 

Caa1

   

4,770

Baa1

   

260

 

Caa2

   

6,500

Baa2

   

360

 

Caa3

   

8,070

Baa3

   

610

 

Ca or lower

   

10,000

 

"Moody's Recovery Amount": With respect to any Collateral Obligation, an amount equal to the product of (i) the applicable Moody's Recovery Rate and (ii) the Principal Balance of such Collateral Obligation.

 

"Moody's Recovery Rate": With respect to any Collateral Obligation, as of any date of determination, the recovery rate determined in accordance with the following, in the following order of priority:

 

(i)      if the Collateral Obligation has been specifically assigned a recovery rate by Moody's (for example, in connection with the assignment by Moody's of an estimated rating), such recovery rate;

 

-46-

 

 

(ii)     if the preceding clause does not apply to the Collateral Obligation, and the Collateral Obligation is a Moody's Senior Secured Loan or a Moody's Non-Senior Secured Loan (in each case other than a DIP Collateral Obligation), the rate determined pursuant to the table below based on the number of rating subcategories difference between the Collateral Obligation's Moody's Rating and its Moody's Default Probability Rating (for purposes of clarification, if the Moody's Rating is higher than the Moody's Default Probability Rating, the rating subcategories difference will be positive and if it is lower, negative):

 

Number of
Moody's Ratings

Subcategories

Difference Between

the Moody's Rating

and the Moody's

Default Probability

Rating

 

Moody's Senior

Secured Loans

 

Second Lien Loans

and First Lien Last

Out Loans (provided

that such Collateral

Obligations must

have both a

corporate family

rating and an

instrument rating

assigned by

Moody's)

 

Unsecured Loans

and all other

Collateral

Obligations that do

not fall under the

previous two

columns

+2 or more

 

60.0%

 

55.0%

 

45.0%

+1

 

50.0%

 

45.0%

 

35.0%

0

 

45.0%

 

35.0%

 

30.0%

-1

 

40.0%

 

25.0%

 

25.0%

-2

 

30.0%

 

15.0%

 

15.0%

-3 or less

 

20.0%

 

5.0%

 

5.0%

or

           

 

(iii)     if the Collateral Obligation is a DIP Collateral Obligation (other than a DIP Collateral Obligation which has been specifically assigned a recovery rate by Moody's), 50%.

 

"Moody's Senior Secured Loan": The meaning specified in Schedule 3.

 

"Moody's Weighted Average Rating Factor": The number (rounded up to the nearest whole number) determined by the following calculation:

 

The Principal Balance of each Collateral Obligation (excluding any Current Pay Obligation and Defaulted Obligation)

X

The Moody's Rating Factor of such Collateral Obligation (as described above)

 

divided by

 

The Aggregate Principal Balance of all such Collateral Obligations.

 

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"Moody's Weighted Average Recovery Adjustment": As of any date of determination, the greater of (a) zero and (b) the product of (i)(A) the Moody's Weighted Average Recovery Rate as of such date of determination multiplied by 100 minus (B) 44 and (ii) (A) with respect to the adjustment of the Maximum Moody's Rating Factor Test, the number set forth in the applicable column entitled "Moody's Recovery Rate Modifier" in the Recovery Rate Modifier Matrix, based on the applicable "row/column combination" then in effect as determined in accordance with this Indenture, and (B) with respect to the adjustment of the Minimum Floating Spread, the number set forth in the column entitled "Spread Modifier" in the Recovery Rate Modifier Matrix, based on the applicable "row/column combination" then in effect as determined in accordance with this Indenture; provided that if the Weighted Average Moody's Recovery Rate for purposes of determining the Moody's Weighted Average Recovery Adjustment is greater than 60%, then such Weighted Average Moody's Recovery Rate will equal 60% unless the Moody's Rating Condition is satisfied; provided, further, that the amount specified in clause (b)(i) above may only be allocated once on any date of determination and the Collateral Manager shall designate to the Collateral Administrator in writing on each such date the portion of such amount that shall be allocated to clause (b)(ii)(A) and the portion of such amount that shall be allocated to clause (b)(ii)(B) (it being understood that, absent an express designation by the Collateral Manager, all such amounts shall be allocated to clause (b)(ii)(A)).

 

"Moody's Weighted Average Recovery Rate": As of any date of determination, the number, expressed as a percentage, obtained by summing the product of the Moody's Recovery Rate on such Measurement Date of each Collateral Obligation (excluding any Defaulted Obligation) and the Principal Balance of such Collateral Obligation, dividing such sum by the Aggregate Principal Balance of all such Collateral Obligations and rounding up to the first decimal place.

 

"Non-Call Period": The period from the Closing Date to but excluding the Payment Date in July 2020.

 

"Non-Emerging Market Obligor": An Obligor that is Domiciled in (x) any country that has a country ceiling for foreign currency bonds of at least "Aa2" by Moody's or (y) without duplication, the United States.

 

"Non-Permitted ERISA Holder": The meaning specified in Section 2.12(d).

 

"Non-Permitted Holder": The meaning specified in Section 2.12(b).

 

"Note Interest Amount": With respect to any specified Class of Secured Notes and any Payment Date, the amount of interest for the next Interest Accrual Period payable in respect of each U.S.$100,000 Outstanding principal amount of such Class of Secured Notes.

 

"Note Interest Rate": With respect to any specified Class of Secured Notes, the per annum interest rate payable on the Secured Notes of such Class with respect to each Interest Accrual Period equal to LIBOR for such Interest Accrual Period plus the spread specified in Section 2.3 with respect to such Secured Notes.

 

"Noteholder" or "Noteholders": With respect to any Note, the Person(s) whose name(s) appear(s) on the Register as the registered holder(s) of such Note.

 

"Notes": Collectively, the Secured Notes and the Subordinated Notes authorized by, and authenticated and delivered under, this Indenture (as specified in Section 2.3) or any supplemental indenture (and including any Additional Notes issued hereunder pursuant to Section 2.4).

 

"NRSRO": Any nationally recognized statistical rating organization, other than the Rating Agencies.

 

-48-

 

 

"NRSRO Certification": A certification substantially in the form of Exhibit E executed by a NRSRO in favor of the Issuer and the Information Agent that states that such NRSRO has provided the Issuer with the appropriate certifications under Exchange Act Rule 17g-5(a)(3)(iii)(B) and that such NRSRO has access to the 17g-5 Website.

 

"Obligor": The obligor or guarantor under a loan.

 

"Offer": The meaning specified in Section 10.7(c)

 

"Offering": The offering of the Notes pursuant to the Offering Circular.

 

"Offering Circular": The offering circular, dated July 23, 2018 relating to the Notes, including any supplements thereto.

 

"Officer": With respect to the Issuer, the Co-Issuer and any corporation or limited liability company, any director, manager, the Chairman of the Board of Directors, the President, any Vice President, the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of such entity or any Person authorized by such entity and shall, for the avoidance of doubt, include any duly appointed attorney-in-fact of the Issuer; with respect to any partnership, any general partner thereof or any Person authorized by such entity; with respect to a limited liability company, any member thereof or any Person authorized by such entity; and with respect to the Trustee, any Trust Officer.

 

"offshore transaction": The meaning specified in Regulation S.

 

"Opinion of Counsel": A written opinion addressed to the Trustee and, if required by the terms hereof, the Rating Agencies, in form and substance reasonably satisfactory to the Trustee (and if so addressed, the Rating Agencies), of a nationally or internationally recognized law firm or an attorney admitted to practice (or law firm, one or more of the partners of which are admitted to practice) before the highest court of any State of the United States or the District of Columbia (or the Cayman Islands, in the case of an opinion relating to the laws of the Cayman Islands) in the relevant jurisdiction, which attorney (or law firm) may, except as otherwise expressly provided in this Indenture, be counsel for the Issuer or the Co-Issuer, as the case may be, and which firm or attorney, as the case may be, shall be reasonably satisfactory to the Trustee. Whenever an Opinion of Counsel is required hereunder, such Opinion of Counsel may rely on opinions of other counsel who are so admitted and so satisfactory, which opinions of other counsel shall accompany such Opinion of Counsel and shall either be addressed to the Trustee (and, if required by the terms hereof, the Rating Agencies) or shall state that the Trustee (and, if required by the terms hereof, the Rating Agencies) shall be entitled to rely thereon.

 

"Optional Redemption": A redemption of the Notes in accordance with Section 9.2.

 

"Other Plan Law": Any other federal, state, local or non-U.S. law, regulation or other legal restriction that is substantially similar to the prohibited transaction provisions contained in Section 406 of ERISA or Section 4975 of the Code.

 

-49-

 

 

"Outstanding": With respect to the Notes of any specified Class, as of any date of determination, all of the Notes or all of the Notes of such Class, as the case may be, theretofore authenticated and delivered under this Indenture, except:

 

(i)       Notes theretofore canceled by the Registrar or delivered to the Registrar for cancellation;

 

(ii)     Notes or portions thereof for whose payment or redemption funds in the necessary amount have been theretofore irrevocably deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes pursuant to Section 4.1(a)(ii); provided that if such Notes or portions thereof are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

 

(iii)     Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, unless proof satisfactory to the Trustee is presented that any such Notes are held by a Protected Purchaser;

 

(iv)     Notes alleged to have been mutilated, defaced, destroyed, lost or stolen for which replacement Notes have been issued as provided in Section 2.7;

 

provided that in determining whether the Holders of the requisite Aggregate Outstanding Amount have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under the Collateral Management Agreement, (I)(x) any Notes owned by the Issuer, the Co-Issuer, or any other obligor upon the Notes or any Affiliate thereof or (y) only in the case of a vote on (i) the removal of the Collateral Manager for "cause" upon the occurrence of the events specified in Section 12(c) of the Collateral Management Agreement, (ii) any objection rights with regard to the replacement of any Key Persons (as defined in the Collateral Management Agreement) and (iii) the waiver of any event constituting "cause" under Section 12(c) of the Collateral Management Agreement, Collateral Manager Securities, shall each be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes a Trust Officer of the Trustee has actual knowledge (or has been provided written notice of) to be so owned shall be so disregarded, (II) Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the reasonable satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Issuer, the Co-Issuer, any other obligor upon the Notes or any Affiliate of the Issuer, the Co-Issuer, or such other obligor (or the Collateral Manager, any Affiliate of the Collateral Manager or any account or investment fund over which the Collateral Manager or any Affiliate has discretionary voting authority) and (III) for purposes of the procedures described under Section 12 of the Collateral Management Agreement, if any Section 13 Banking Entity delivers a notice in the form set forth in Exhibit F (a "Banking Entity Notice") to the Issuer, the Collateral Manager and the Trustee (including via e-mail) then, effective on the date on which such Banking Entity Notice is delivered, the Notes held by such Section 13 Banking Entity shall be disregarded and deemed not to be outstanding so long as such Notes are held by such Section 13 Banking Entity with respect to any vote, consent, waiver, objection or similar action in connection with any matter described under Section 12 of the Collateral Management Agreement. Such Notes shall be deemed outstanding and such Section 13 Banking Entity may vote, consent, waive, object or take any similar action in connection with any other matters under the Collateral Management Agreement or under any other Transaction Document. For the avoidance of doubt, (i) no subsequent notice or other action by a Section 13 Banking Entity purporting to modify, amend or rescind a Banking Entity Notice shall be effective and shall be void ab initio, (ii) no Holder or beneficial owner of Notes shall be required to provide a Banking Entity Notice (regardless of whether such Holder or beneficial owner is or is not a Section 13 Banking Entity) and (iii) whether a Banking Entity Notice shall bind any subsequent transferee of a holder or beneficial owner delivering such Banking Entity Notice will be specified in the Banking Entity Notice, and the Section 13 Banking Entity, by delivering such notice, will be deemed to have agreed to inform any Person to whom it transfers its Notes if such notice is binding on transferees (unless such transferee also delivers a Banking Entity Notice) and, if not binding, any vote, consent, waiver, objection or similar action of such transferee shall be effective for all purposes described under Section 12 of the Collateral Management Agreement.

 

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"Pari Passu Class": With respect to each Class of Notes, each Class of Notes that ranks pari passu with such Class, as indicated in Section 2.3.

 

"Partial Redemption by Refinancing": The meaning specified in Section 9.3.

 

"Par Value Ratio": With respect to any specified Class or Classes of Secured Notes as of the last day of the Ramp-Up Period or any Measurement Date thereafter, the percentage derived from dividing: (a) the Adjusted Collateral Principal Amount by (b) the sum of (i) the Aggregate Outstanding Amounts of the Secured Notes of such Class or Classes and each Priority Class of Secured Notes, plus (ii) Deferred Interest with respect to such Class or Classes and each Priority Class of Secured Notes.

 

"Par Value Ratio Test": A test that is satisfied with respect to any Class or Classes of Secured Notes as of any date of determination at, or subsequent to, the last day of the Ramp-Up Period, if (i) the Par Value Ratio for such Class or Classes is at least equal to the applicable Required Coverage Ratio for such Class or Classes or (ii) such Class or Classes of Secured Notes is no longer Outstanding.

 

"Participation Interest": A participation interest in a loan that, at the time of acquisition, or the Issuer's commitment to acquire the same, satisfies each of the following criteria: (i) such loan would constitute a Collateral Obligation were it acquired directly, (ii) the seller of the participation interest is the lender on the loan, (iii) the aggregate participation interests in the loan does not exceed the principal amount or commitment of such loan, (iv) such participation interest does not grant, in the aggregate, to the participant in such participation interest a greater interest than the seller holds in the loan or commitment that is the subject of the participation interest, (v) the entire purchase price for such participation interest is paid in full (without the benefit of financing from the Selling Institution or its affiliates) at the time of its acquisition (or, in the case of a participation interest in a Revolving Collateral Obligation or Delayed Drawdown Collateral Obligation, at the time of the funding of such loan), (vi) the participation interest 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 and (vii) such participation interest is documented under a Loan Syndications and Trading Association, Loan Market Association or similar agreement standard for loan participation transactions among institutional participants. For the avoidance of doubt, a Participation Interest shall not include a sub-participation interest in any loan.

 

-51-

 

 

"Paying Agent": Any Person authorized by the Issuer to pay the principal of or interest on any Notes on behalf of the Issuer as specified in Section 7.2.

 

"Payment Account": The payment account of the Trustee established pursuant to Section 10.3(a).

 

"Payment Date": The 17th day of January, April, July and October of each year (or if such day is not a Business Day, the next succeeding Business Day), commencing in October 2018; provided that following the redemption or repayment in full of the Secured Notes, Holders of Subordinated Notes may receive payments (including in respect of an Optional Redemption of the Subordinated Notes) on any dates designated by the Collateral Manager (which dates may or may not be the dates stated above) upon eight (8) Business Days prior written notice to the Trustee and the Collateral Administrator (which notice the Trustee shall promptly forward to the Holders of the Subordinated Notes) and such dates shall thereafter constitute "Payment Dates"; provided, further, that each Redemption Date shall be deemed to be a "Payment Date."

 

"PBGC": The United States Pension Benefit Guaranty Corporation.

 

"Person": An individual, corporation (including a business trust), partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated association or government or any agency or political subdivision thereof.

 

"Pledged Obligations": As of any date of determination, the Collateral Obligations, the Eligible Investments and any Equity Security which forms part of the Assets that have been Granted to the Trustee.

 

"Portfolio Quality Test": A test satisfied if, as of any date on which a determination is required hereunder at, or subsequent to, the end of the Ramp-Up Period, in the aggregate, the Collateral Obligations owned (or in relation to a proposed purchase of a Collateral Obligation, proposed to be owned) by the Issuer satisfy each of the tests set forth below (or, unless otherwise explicitly provided for in Section 12.2(a), if any such test is not satisfied, the results of such test are maintained or improved), calculated in each case as required by Section 1.2:

 

(i)       the Minimum Fixed Coupon Test;

 

(ii)      the Minimum Floating Spread Test;

 

(iii)     the Maximum Moody's Rating Factor Test;

 

(iv)     the Moody's Diversity Test;

 

(v)      the Moody's Minimum Weighted Average Recovery Rate Test; and

 

(vi)     the Weighted Average Life Test.

 

-52-

 

 

"Post-Acceleration Payment Date": Any Payment Date after the principal of the Secured Notes has been declared to be or has otherwise become immediately due and payable pursuant to Section 5.2; provided that such declaration has not been rescinded or annulled.

 

"Post-Reinvestment Period Settlement Obligation": The meaning set forth in Section 12.2(f).

 

"Principal Balance": Subject to Section 1.2, with respect to (a) any Pledged Obligation (other than a Revolving Collateral Obligation or Delayed Drawdown Collateral Obligation) as of any date of determination, the outstanding principal amount of such Pledged Obligation and (b) any Revolving Collateral Obligation or Delayed Drawdown Collateral Obligation, as of any date of determination, the outstanding principal amount of such Revolving Collateral Obligation or Delayed Drawdown Collateral Obligation, plus (except as expressly set forth in this Indenture) any undrawn commitments that have not been irrevocably reduced with respect to such Revolving Collateral Obligation or Delayed Drawdown Collateral Obligation; provided that for all purposes (i) the Principal Balance of any Equity Security or Collateral Obligation that has been a Defaulted Obligation for three years or more shall be deemed to be zero, (ii) the Principal Balance of any Collateral Obligation that, at the time of its purchase by the Issuer, was subject to an Offer for a price of less than its par amount, shall be, until the expiration of such Offer in accordance with its terms, the Offer price (expressed as a dollar amount) of such Collateral Obligation, (iii) the Principal Balance of a Deferrable Obligation (x) shall not include any deferred interest that has been added to principal since its acquisition and remains unpaid and (y) shall only include interest that has been deferred or capitalized at the time of acquisition if (1) in the Collateral Manager's commercially reasonable business judgment, such interest remains unpaid for any reason other than due to the related Obligor's ability to repay such amounts and (2) such Deferrable Obligation has a Moody's Default Probability Rating of "B3" or better (and, for the avoidance of doubt, such interest shall constitute Principal Proceeds upon receipt thereof by the Issuer), (iv) the Principal Balance of a Deferring Obligation shall not include any deferred or capitalized interest referred to in clause (iii)(y) above and (v) the Principal Balance of a Zero-Coupon Security which, by its terms, does not at any time pay cash interest thereon shall be deemed to be the accreted value of such Collateral Obligation (other than a Defaulted Obligation) or Eligible Investment as of the date of determination; provided further, that for the purposes of determining any of the Coverage Tests or any of the Portfolio Quality Tests, the Principal Balance of any Pledged Obligation or any other security or debt obligation that forms part of the Assets, in each case, that matures after the shortest Stated Maturity of any of the Secured Notes still Outstanding shall be deemed to be zero.

 

"Principal Collection Subaccount": The meaning specified in Section 10.2(a).

 

-53-

 

 

"Principal Financed Accrued Interest": With respect to: (i) any Collateral Obligation owned or purchased by the Issuer on the Closing Date, an amount equal to the unpaid interest on such Collateral Obligation that accrued prior to the Closing Date that is owing to the Issuer and remains unpaid as of the Closing Date and (ii) any Collateral Obligation purchased after the Closing Date, the amount of Principal Proceeds, if any, applied towards the purchase of accrued interest on such Collateral Obligation; provided that in the case of this clause (ii), Principal Financed Accrued Interest shall not include any accrued interest purchased with Interest Proceeds deemed to be Principal Proceeds as set forth in the definition of "Interest Proceeds;" provided, further, that once any Principal Financed Accrued Interest is actually received by the Issuer, it shall no longer constitute Principal Financed Accrued Interest hereunder.

 

"Principal Proceeds": With respect to any Collection Period or Determination Date, all amounts received by the Issuer during the related Collection Period that do not constitute Interest Proceeds and any other amounts that have been designated as Principal Proceeds pursuant to the terms of this Indenture; provided that for the avoidance of doubt, under no circumstances shall Principal Proceeds include the Excepted Property.

 

"Priority Class": With respect to any specified Class of Notes, each Class of Notes that ranks senior to such Class, as indicated in Section 2.3.

 

"Priority Hedge Termination Event": The occurrence of (a) the Issuer's failure to make required payments or deliveries pursuant to a Hedge Agreement with respect to which the Issuer is the sole Defaulting Party (as defined in the relevant Hedge Agreement), (b) the occurrence of certain events of bankruptcy, dissolution or insolvency with respect to the Issuer with respect to which the Issuer is the sole Defaulting Party (as defined in the relevant Hedge Agreement), (c) the liquidation of the Assets due to an Event of Default under this Indenture, (d) a change in law after the Closing Date which makes it unlawful for either the Issuer or a Hedge Counterparty to perform its obligations under a Hedge Agreement or (e) any termination of a Hedge Agreement as a result of actions taken by the Trustee in response to a reduction in the Collateral Principal Amount with respect to which the Issuer is the sole Defaulting Party or Affected Party (as defined in the relevant Hedge Agreement).

 

"Priority of Payments": The meaning specified in Section 11.1(a).

 

"Proceeding": Any suit in equity, action at law or other judicial or non-judicial enforcement or administrative proceeding.

 

"Protected Purchaser": The meaning specified in Section 8-303 of the UCC.

 

"Purchase Agreement": The agreement dated as of July 26, 2018 by and among the Co-Issuers and the Initial Purchaser relating to the initial purchase of the Notes purchased by the Initial Purchaser, as amended from time to time.

 

"QEF": The meaning specified in Section 7.16(b).

 

"QIB/QP": Any Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Notes is both a Qualified Institutional Buyer and a Qualified Purchaser.

 

-54-

 

 

"Qualified Institutional Buyer": The meaning specified in Rule 144A under the Securities Act.

 

"Qualified Purchaser": The meaning specified in Section 2(a)(51) of the Investment Company Act and Rule 2a51-2 under the Investment Company Act.

 

"Ramp-Up Account": The account established pursuant to Section 10.3(c).

 

"Ramp-Up Period": The period commencing on the Closing Date and ending upon the earlier of (a) 30 days prior to the Determination Date relating to the second Payment Date and (b) any date selected by the Collateral Manager in its sole discretion on or after which the Aggregate Ramp-Up Par Condition has been satisfied.

 

"Ramp-Up Period Accountants' Report": The meaning specified in Section 7.17(b).

 

"Ramp-Up Period Issuer Certificate": The meaning specified in Section 7.17(b).

 

"Ramp-Up Period Report": The meaning specified in Section 7.17(b).

 

"Ramp-Up Period Special Redemption": The meaning specified in Section 9.7.

 

"Rating Agency": Each of Moody's and Fitch, only for so long as Notes rated by such entity on the Closing Date are Outstanding and rated by such entity.

 

"Record Date": As to any applicable Payment Date, the 15th day (whether or not a Business Day) prior to such Payment Date.

 

"Recovery Rate Modifier Matrix" means the following chart, used to determine which of the "row/column combinations" (or the linear interpolation between two adjacent rows and/or two adjacent columns, as applicable) are applicable for purposes of determining the Moody's Weighted Average Recovery Adjustment (for the avoidance of doubt, the option chosen or interpolated by the Collateral Manager with respect to the Recovery Rate Modifier Matrix will be consistent with the option chosen or interpolated by the Collateral Manager with respect to the Asset Quality Matrix):

 

Minimum
Weighted

Minimum Diversity Score

Spread

Modifier

Average
Spread

40

45

50

55

60

65

70

75

80

85

90

95

100

 

2.10%

49

48

47

43

44

45

45

45

43

45

45

45

44

0.0500%

2.20%

44

43

46

45

47

49

49

46

46

47

47

47

49

0.0500%

2.30%

47

47

53

51

50

52

51

52

49

50

50

50

48

0.0400%

2.40%

52

54

48

53

51

49

48

53

53

52

52

53

50

0.0500%

2.50%

51

56

53

55

57

58

60

60

60

57

53

56

56

0.0500%

2.60%

54

52

54

56

54

55

55

52

55

58

56

54

54

0.0550%

2.70%

53

54

54

54

59

61

61

61

61

60

57

57

59

0.0600%

2.80%

54

56

54

56

55

56

59

60

60

60

60

61

61

0.0625%

2.90%

55

54

56

55

57

56

56

58

61

61

62

62

61

0.0700%

3.00%

56

56

55

58

56

57

57

57

58

60

62

63

63

0.0750%

3.10%

55

57

57

56

57

57

57

57

58

58

59

61

62

0.0825%

3.20%

57

56

58

59

57

58

58

58

58

59

59

59

59

0.0875%

 

-55-

 

 

3.30%

57

58

57

58

59

58

59

59

59

59

59

59

60

0.0950%

3.40%

57

59

59

58

59

59

59

60

60

60

60

60

60

0.0975%

3.50%

58

56

58

60

60

60

60

60

60

61

60

60

60

0.1100%

3.60%

59

59

58

59

61

61

61

61

61

60

60

61

61

0.1200%

3.70%

59

61

61

61

61

61

61

61

61

61

61

61

61

0.1275%

3.80%

59

59

61

62

62

62

61

61

62

61

61

61

61

0.1300%

3.90%

61

61

61

61

61

62

62

62

62

62

62

62

62

0.1400%

4.00%

61

62

62

62

62

62

62

62

62

62

62

62

62

0.1450%

4.10%

61

62

62

62

63

62

62

62

62

62

62

62

62

0.1500%

4.20%

62

62

62

62

63

63

63

63

63

63

62

62

62

0.1500%

4.30%

62

62

63

63

63

63

63

63

62

62

62

62

62

0.1500%

4.40%

62

62

63

63

64

63

63

63

63

63

63

63

63

0.1500%

4.50%

62

61

63

63

64

65

66

65

65

65

65

64

65

0.1500%

4.60%

62

63

63

63

64

64

65

65

65

65

65

65

65

0.1500%

4.70%

62

63

63

62

65

64

64

64

65

65

65

65

65

0.1500%

4.80%

64

63

63

63

64

64

64

64

64

64

65

65

66

0.1500%

4.90%

63

63

63

64

64

64

64

65

63

64

64

65

66

0.1500%

5.00%

63

63

63

64

64

65

65

64

64

64

64

64

65

0.1500%

5.10%

63

63

64

64

65

65

64

64

65

65

65

65

65

0.1500%

5.20%

64

63

64

64

65

65

64

65

65

66

65

66

66

0.1500%

5.30%

64

64

64

64

65

65

65

66

66

66

67

66

67

0.1500%

5.40%

65

66

65

66

65

65

66

66

67

67

67

67

68

0.1500%

5.50%

65

66

66

66

65

66

66

67

67

68

68

68

68

0.1700%

5.60%

65

66

66

66

66

67

67

67

68

68

68

68

68

0.1700%

5.70%

66

65

66

66

67

68

68

69

68

69

68

68

68

0.2000%

5.80%

67

66

66

67

67

68

68

68

68

68

69

68

68

0.2000%

5.90%

67

66

65

67

67

67

68

68

68

67

67

67

66

0.2000%

6.00%

65

66

66

66

67

67

67

68

67

67

67

67

67

0.2000%

 

Moody's Recovery Rate Modifier

     

 

"Redemption Date": Any Business Day specified for a redemption of Notes pursuant to Article IX.

 

"Redemption by Refinancing": The meaning specified in Section 9.2(a).

 

"Redemption Price": When used with respect to (i) any Class of Secured Notes (a) an amount equal to 100% (or such lesser amount as agreed in writing by the applicable Holder) of the Aggregate Outstanding Amount thereof plus (b) accrued and unpaid interest thereon (including, but not limited to, Deferred Interest), to the Redemption Date, and (ii) any Subordinated Note, its proportional share allocated in accordance with the Priority of Payments (based on the Aggregate Outstanding Amount of such Subordinated Notes) of the amount of the proceeds of the Assets (including proceeds created when the lien of this Indenture is released) remaining after giving effect to the redemption of the Secured Notes in full and payment in full of (and/or creation of a reserve for) all expenses of the Co-Issuers; provided that solely with respect to a Tax Redemption or Optional Redemption of the Secured Notes in whole, Holders of 100% of the Aggregate Outstanding Amount of any Class of Secured Notes may elect, by written notice to the Issuer, the Trustee, the Paying Agent and the Collateral Manager, to receive less than 100% of the Redemption Price that would otherwise be payable to the Holders of such Class of Secured Notes, in which case such reduced price shall be the "Redemption Price" for such Note.

 

"Reference Banks": The meaning specified in Exhibit C.

 

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"Refinancing": The meaning specified in Section 9.2(a).

 

"Refinancing Proceeds": With respect to any Refinancing, the Cash proceeds received by the Issuer therefrom.

 

"Register" and "Registrar": The respective meanings specified in Section 2.6(a).

 

"Registered": In registered form for U.S. federal income tax purposes and issued after July 18, 1984.

 

"Regulation D": Regulation D, as amended, under the Securities Act.

 

"Regulation S": Regulation S, as amended, under the Securities Act.

 

"Regulation S Global Note": Collectively, the Regulation S Global Secured Notes and the Regulation S Global Subordinated Notes.

 

"Regulation S Global Secured Note": The meaning specified in Section 2.2(b)(i).

 

"Regulation S Global Subordinated Note": The meaning specified in Section 2.2(b)(i).

 

"Reinvestment Diversion Test": A test that shall be satisfied as of any Measurement Date during the Reinvestment Period (but on or after the last day of the Ramp-Up Period) on which Class E Notes remain outstanding, if the Par Value Ratio with respect to the Class E Notes as of such Measurement Date is at least equal to 105.70%.

 

"Reinvestment Period": The period from and including the Closing Date to and including the earliest of (i) the Payment Date in July 2022, (ii) the date of the acceleration of the Maturity of any Class of Secured Notes pursuant to Section 5.2 (subject to reinstatement upon the rescission, if any, of the related declaration of acceleration), and (iii) the date on which the Collateral Manager reasonably determines and notifies the Issuer, the Rating Agencies, the Trustee and the Collateral Administrator that it can no longer reinvest in additional Collateral Obligations in accordance with Section 12.2 or the Collateral Management Agreement; provided that in the case of clause (iii), (a) the Collateral Manager notifies the Issuer, the Trustee (who shall notify the Holders of Notes) and the Collateral Administrator thereof in writing at least one Business Day prior to such date and (b) if the Collateral Manager notifies the Issuer, the Trustee (who shall notify the holders of Notes) and the Collateral Administrator thereof in writing that it is withdrawing such notice, then the Reinvestment Period shall be reinstated within one Business Day after the date of such notification. The Collateral Manager shall provide Fitch with notice of any such reinstatement of the Reinvestment Period.

 

Once terminated, the Reinvestment Period cannot be reinstated without the consent of the Collateral Manager and, in the case of termination under clause (ii), without the acceleration having been rescinded, no other events that would terminate the Reinvestment Period having occurred and continuing to occur and, if the default giving rise to such termination has occurred as a result of an Event of Default under clause (f) or (g) of the definition thereof, a Majority of the Controlling Class having consented to such reinstatement.

 

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"Reinvestment Period Settlement Condition": The meaning specified in Section 12.2(f).

 

"Reinvestment Period Special Redemption": The meaning specified in Section 9.7.

 

"Reinvestment Target Par Balance": The Aggregate Ramp-Up Par Amount minus (A) any reduction in the Aggregate Outstanding Amount of the Notes through the payment of Principal Proceeds or Interest Proceeds plus (B) the aggregate amount of Principal Proceeds that result from the issuance of any Additional Notes (after giving effect to such issuance of any Additional Notes).

 

"Related Obligation": An obligation issued by the Collateral Manager, any of its Affiliates that are collateralized debt obligation funds or any other Person that is a collateralized debt obligation fund whose investments are primarily managed by the Collateral Manager or any of its Affiliates.

 

"Replacement Notes": The meaning specified in Section 9.2(a) hereof.

 

"Report Date": The meaning specified in Section 9.8(a).

 

"Requesting Party": The meaning specified in Section 14.17.

 

"Required Coverage Ratio": With respect to a specified Class of Secured Notes and the related Interest Coverage Test or Par Value Ratio Test as the case may be, as of any date of determination, the applicable percentage indicated below opposite such specified Class:

 

Class

 

Required Par Value Ratio

A/B

 

121.58%

C

 

114.70%

D

 

108.94%

E

 

104.70%

 

Class

 

Required Interest Coverage Ratio

A/B

 

120.00%

C

 

115.00%

D

 

110.00%

E

 

105.00%

 

"Required Hedge Counterparty Rating": With respect to any Hedge Counterparty (or its guarantor under a guarantee satisfying the then-current Rating Agency criteria with respect to guarantees), the ratings required by the criteria of each Rating Agency in effect at the time of execution of the related Hedge Agreement as determined by the Collateral Manager (except to the extent that such Rating Agency indicates in writing that any such criteria need not be satisfied with respect to such Hedge Counterparty).

 

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"Reset Amendment": The meaning specified in Section 8.2(a).

 

"Restricted Trading Period": Each day during which (1)(A) the Fitch rating of the Class A Notes or the Moody's rating of the Class A Notes or Class B Notes is withdrawn (and not reinstated) or is one or more sub-categories below its rating on the Closing Date or (B) the Moody's rating of the Class C Notes, Class D Notes or Class E Notes is withdrawn (and not reinstated) or is two or more sub-categories below its rating on the Closing Date and (2) after giving effect to any sale or purchase of the relevant Collateral Obligation, (A) as a result of the use of "Restricted Trading Period" pursuant to Section 12.2(b), any of the Par Value Ratio Tests will not be satisfied and (B) as a result of the use of "Restricted Trading Period" pursuant to any other provision, the Adjusted Collateral Principal Amount of Collateral Obligations (excluding the Collateral Obligations being sold) and Eligible Investments constituting Principal Proceeds (including, without duplication, the anticipated net Sale Proceeds of such sale) will be less than the Reinvestment Target Par Balance; provided that such period will not be a Restricted Trading Period upon the direction of a Majority of the Controlling Class, which direction by the Majority of the Controlling Class shall remain in effect until the earlier of (i) a subsequent direction by a Majority of the Controlling Class to declare the beginning of a Restricted Trading Period or (ii) a further downgrade or withdrawal of any Class of Notes that notwithstanding such direction would cause the conditions set forth in clauses (1)(A) or (1)(B) to be true. No Restricted Trading Period shall restrict any sale of a Collateral Obligation entered into by the Issuer at the time when a Restricted Trading Period is not in effect, regardless of whether such sale has settled.

 

"Reuters Screen": The rates for deposits in dollars which appear on the Reuters Screen LIBOR 01 Page (or such other page that may replace that page on such service for the purpose of displaying comparable rates) on the Bloomberg Financial Markets Commodities News as of 11:00 a.m., London time, on the Interest Determination Date.

 

"Revolving Collateral Obligation": Any Asset (other than a Delayed Drawdown Collateral Obligation) that is a loan (including, without limitation, revolving loans, including funded and unfunded portions of revolving credit lines, unfunded commitments under specific facilities and other similar loans and investments) that by its terms may require one or more future advances to be made to the borrower by the Issuer; provided that any such Collateral Obligation shall be a Revolving Collateral Obligation only until all commitments to make advances to the borrower expire or are terminated or irrevocably reduced to zero.

 

"Risk Retention Issuance": An additional issuance of any Class of Notes for purposes of enabling the Collateral Manager to comply with the U.S. Risk Retention Rules as determined by the Collateral Manager in its commercially reasonable judgment (based on the written advice of a nationally recognized counsel experienced in such matters).

 

"Rule 17g-5": The meaning specified in Section 14.16.

 

"Rule 144A": Rule 144A, as amended, under the Securities Act.

 

"Rule 144A Global Notes": Collectively, the Rule 144A Global Secured Notes and the Rule 144A Global Subordinated Notes.

 

"Rule 144A Global Secured Note": The meaning specified in Section 2.2(b)(ii).

 

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"Rule 144A Global Subordinated Note": The meaning specified in Section 2.2(b)(ii).

 

"Rule 144A Information": The meaning specified in Section 7.14.

 

"S&P": Standard & Poor's Global Ratings, an S&P Global business, and any successor thereto.

 

"S&P Industry Classification": The industry classifications set forth in Schedule 2, as such industry classifications shall be updated at the option of the Collateral Manager (with notice to the Trustee and the Collateral Administrator) if S&P publishes revised industry classifications.

 

"S&P Rating": With respect to any Collateral Obligation, as of any date of determination, the rating determined in accordance with the following methodology:

 

(a)     with respect to a Collateral Obligation that is not a DIP Collateral Obligation (i) if there is an issuer credit rating of the issuer of such Collateral Obligation by S&P as published by S&P, or the guarantor which unconditionally and irrevocably guarantees such Collateral Obligation then the S&P Rating shall be such rating (regardless of whether there is a published rating by S&P on the Collateral Obligations of such issuer held by the Issuer), (ii) if there is no issuer credit rating of the issuer by S&P but (A) if there is a senior unsecured rating on any obligation or security of the issuer, the S&P Rating of such Collateral Obligation shall equal such rating; (B) if there is a senior secured rating on any obligation or security of the issuer, then the S&P Rating of such Collateral Obligation shall be one subcategory below such rating; and (C) if there is a subordinated rating on any obligation or security of the issuer, then the S&P Rating of such Collateral Obligation shall be one subcategory above such rating if such rating is higher than "BB+," and shall be two subcategories above such rating if such rating is "BB+" or lower or (iii) if the above clauses are not applicable and such Collateral Obligation has a Moody's rating, then the S&P Rating of such Collateral Obligation shall be the S&P equivalent of the rating assigned by Moody's;

 

(b)     with respect to any Collateral Obligation that is a DIP Collateral Obligation, the S&P Rating thereof shall be the credit rating assigned to such issue by S&P (provided, that if any such Collateral Obligation that is a DIP Collateral Obligation is newly issued and the Collateral Manager expects an S&P credit rating within 90 days, the S&P Rating of such Collateral Obligation shall be "B-" until such credit rating is obtained from S&P);

 

provided that for purposes of the determination of the S&P Rating, (x) if the applicable rating assigned by S&P to an Obligor or its obligations is on "credit watch positive" by S&P, such rating shall be treated as being one subcategory above such assigned rating, (y) if the applicable rating assigned by S&P to an Obligor or its obligations is on "credit watch negative" by S&P, such rating shall be treated as being one subcategory below such assigned rating and (z) any reference to the S&P rating in this definition shall mean the public S&P rating and shall not include any private or confidential S&P rating unless (1) the Obligor and any other relevant party has provided written consent to S&P for the use of such rating; and (2) such rating is subject to continuous monitoring by S&P.

 

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"Sale": The meaning specified in Section 5.17.

 

"Sale Proceeds": All proceeds (excluding accrued interest, if any) received with respect to Assets as a result of sales of such Assets less any reasonable expenses incurred by the Collateral Manager, the Collateral Administrator or the Trustee (other than amounts payable as Administrative Expenses) in connection with such sales.

 

"Scheduled Distribution": With respect to any Pledged Obligation, for each Due Date, the scheduled payment of principal and/or interest due on such Due Date with respect to such Pledged Obligation, determined in accordance with the assumptions specified in Section 1.3.

 

"Second Lien Loan": (A) Any assignment of or Participation Interest in or other interest in a 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 Obligor of the loan other than a Senior Secured Loan with respect to the liquidation of such Obligor or the collateral for such loan and other than with respect to liquidation, trade claims, capitalized leases or similar obligations, and (ii) is secured by a valid second priority perfected security interest or lien to or on specified collateral securing the Obligor's obligations under the loan, which security interest or lien is not subordinate to the security interest or lien securing any other debt for borrowed money other than a Senior Secured Loan on such specified collateral (subject to customary exemptions for permitted liens, including, without limitation, any tax liens) or (B) any First Lien Last Out Loan.

 

"Section 13 Banking Entity": An entity that (i) is defined as a "banking entity" under the Volcker Rule regulations (Section __.2(c)), (ii) provides written certification thereof to the Issuer and the Trustee, and (iii) identifies the Class or Classes of Notes held by such entity and the outstanding principal amount thereof.

 

"Secured Loan Obligation": Any Senior Secured Loan or Second Lien Loan.

 

"Secured Notes": The Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes.

 

"Secured Parties": The meaning specified in the Granting Clause.

 

"Securities Account Control Agreement": An agreement dated as of the Closing Date among the Issuer, the Trustee and the Bank, as securities intermediary, as amended from time to time.

 

"Securities Act": The United States Securities Act of 1933, as amended from time to time.

 

"Securities Intermediary": The meaning specified in Section 8-102(a)(14) of the UCC.

 

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"Security Entitlement": The meaning specified in Section 8-102(a)(17) of the UCC.

 

"Selling Institution": The entity obligated to make payments to the Issuer under the terms of a Participation Interest.

 

"Senior Management Fee": The fee payable to the Collateral Manager in arrears on each Payment Date (prorated for the related Interest Accrual Period), including any Redemption Date, pursuant to Section 8(a) of the Collateral Management Agreement and Section 11.1, in an amount equal to 0.15% per annum (calculated on the basis of a 360-day year and the actual number of days elapsed during the related Collection Period) of the Maximum Investment Amount at the beginning of the Collection Period relating to such Payment Date.

 

"Senior Secured Loan": Any assignment of, Participation Interest in or other interest in a loan that (i) is secured by a first priority perfected security interest or lien on specified collateral (subject to customary exemptions for permitted liens, including, without limitation, any tax liens), (ii) has the most senior pre-petition priority (including pari passu with other obligations of the Obligor) in any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings, (iii) the value of the collateral securing the loan at the time of its purchase by the Issuer together with the attributes of the Obligor (including, without limitation, its general financial condition, ability to generate cash flow available for debt service and other demands for such cash flow) is adequate (in the commercially reasonable judgment of the Collateral Manager) to repay or refinance the loan in accordance with the terms of its Underlying Instruments and to repay all other loans of equal seniority secured by a first priority perfected security interest or lien on the same collateral and (iv) by its terms is not permitted to become subordinate in right of payment to any other obligation of the Obligor thereof (other than with respect to trade claims, capitalized leases or similar obligations).

 

"Senior Secured Note": Any assignment of or Participation Interest in or other interest in a senior secured note issued pursuant to an indenture or equivalent document by a corporation, partnership, limited liability company, trust or other person that is secured by a first or second priority perfected security interest or lien in or on specified collateral securing the issuer's obligations under such note.

 

"Senior Subordinated Note Amount": With respect to the Senior Subordinated Notes, the amount accrued during the related Interest Accrual Period at a per annum rate of the Senior Subordinated Note Rate on the Outstanding Senior Subordinated Notes as of the first day of such Interest Accrual Period.

 

"Senior Subordinated Note Rate": LIBOR plus 6.90%.

 

"Senior Subordinated Notes": The senior subordinated floating rate notes issued pursuant to this Indenture and having the characteristics specified in Section 2.3.

 

"Senior Unsecured Loan": Any assignment of or Participation Interest in or other interest in an Unsecured Loan that is not subordinated to any other unsecured indebtedness of the Obligor (other than with respect to liquidation, trade claims, capitalized leases or similar obligations).

 

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"Sequential Note Redemption": The application, in accordance with the Priority of Payments, of Interest Proceeds or Principal Proceeds, as applicable, in the following order:

 

(i)       to the payment of principal of (including any defaulted interest on) the Class A Notes until such amount has been paid in full (or, with respect to any Class A Note, has been paid in such lesser amount as the Holder of such Class A Note elects to receive);

 

(ii)      to the payment of principal of (including any defaulted interest) the Class B Notes until such amount has been paid in full (or, with respect to any Class B Note, has been paid in such lesser amount as the Holder of such Class B Note elects to receive);

 

(iii)     to the payment of accrued and unpaid interest (including any defaulted interest) and any Deferred Interest on the Class C Notes until such amounts have been paid in full;

 

(iv)     to the payment of principal of the Class C Notes until such amount has been paid in full (or, with respect to any Class C Note, has been paid in such lesser amount as the Holder of such Class C Note elects to receive);

 

(v)       to the payment of accrued and unpaid interest (including any defaulted interest) and any Deferred Interest on the Class D Notes until such amounts have been paid in full;

 

(vi)      to the payment of principal of the Class D Notes until such amount has been paid in full (or, with respect to any Class D Note, has been paid in such lesser amount as the Holder of such Class D Note elects to receive);

 

(vii)     to the payment of accrued and unpaid interest (including any defaulted interest) and any Deferred Interest on the Class E Notes until such amounts have been paid in full; and

 

(viii)    to the payment of principal of the Class E Notes until such amount has been paid in full (or, with respect to any Class E Note, has been paid in such lesser amount as the Holder of such Class E Note elects to receive).

 

"Similar Law": Any state, local, non-U.S. or other law, regulation or other legal restriction that could cause the underlying assets of the Issuer to be treated as assets of the investor by virtue of its interest in such Notes and thereby subject the Issuer or the Collateral Manager (or other persons responsible for the investment and operation of the Issuer's assets) to any Other Plan Law.

 

"Small Obligor Loan": Any obligation made pursuant to Underlying Instruments governing the issuance of indebtedness having an aggregate principal amount (whether drawn or undrawn) of less than U.S. $200,000,000.

 

"Special Redemption": The meaning specified in Section 9.7.

 

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"Special Redemption Amount": The meaning specified in Section 9.7.

 

"Special Redemption Date": The meaning specified in Section 9.7.

 

"Specified Amendment": With respect to any Collateral Obligation that is the subject of a rating estimate or is a private or confidential rating by Moody's, any waiver, modification, amendment or variance that would:

 

(i)     modify the amortization schedule with respect to such Collateral Obligation in a manner that:

 

(A)     reduces the Dollar amount of any Scheduled Distribution by more than the greater of (x) 20% and (y) $250,000;

 

(B)     postpones any Scheduled Distribution by more than two payment periods or eliminates a Scheduled Distribution; or

 

(C)     causes the Weighted Average Life of the applicable Collateral Obligation to increase by more than 10%;

 

(ii)     reduce or increase the Cash interest rate payable by the Obligor thereunder by more than 100 basis points (excluding any increase in an interest rate arising by operation of a default or penalty interest clause under a Collateral Obligation);

 

(iii)    extend the stated maturity date of such Collateral Obligation by more than 24 months; provided that (x) any such extension shall be deemed not to have been made until the Business Day following the original stated maturity date of such Collateral Obligation and (y) such extension shall not cause the Weighted Average Life of such Collateral Obligation to increase by more than 25%;

 

(iv)     release any party from its obligations under such Collateral Obligation, if such release would have a material adverse effect on the Collateral Obligation;

 

(v)      reduce the principal amount thereof; or

 

(vi)     in the reasonable business judgment of the Collateral Manager, have a material adverse impact on the value of such Collateral Obligation.

 

"STAMP": The meaning specified in Section 2.6(a).

 

"Standby Directed Investment": The meaning specified in Section 10.5.

 

"Stated Maturity": With respect to any security, the maturity date specified in such security or applicable Underlying Instrument; and with respect to the Notes of any Class, the date specified as such in Section 2.3.

 

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"Step-Down Obligation": Any Collateral Obligation (other than a LIBOR Floor Obligation) the Underlying Instruments of which contractually mandate decreases in coupon payments or spread over time (in each case other than decreases that are conditioned upon an improvement in the creditworthiness of the Obligor or changes in a pricing grid or based on improvements in financial ratios or other similar coupon or spread-reset features); provided, that a Collateral Obligation providing for payment of a constant rate of interest at all times after the date of acquisition by the Issuer shall not constitute a Step-Down Obligation.

 

"Step-Up Obligation": Any Collateral Obligation which by the terms of the related Underlying Instruments provides for an increase, in the case of a Collateral Obligation which bears interest at a fixed rate, in the per annum interest rate on such Collateral Obligation or, in the case of a Collateral Obligation which bears interest at a floating rate, in the spread over that applicable index or benchmark rate, solely as a function of the passage of time; provided, that a Collateral Obligation providing for payment of a constant rate of interest at all times after the date of acquisition by the Issuer shall not constitute a Step-Up Obligation.

 

"Structured Finance Obligation": Any obligation of a special purpose vehicle secured directly by, referenced to, or representing ownership of, a pool of receivables or other assets, including collateralized debt obligations and mortgage-backed securities.

 

"Subordinated Management Fee": The fee payable to the Collateral Manager in arrears on each Payment Date (prorated for the related Interest Accrual Period), including any Redemption Date, pursuant to Section 8(a) of the Collateral Management Agreement and Section 11.1, in an amount equal to 0.35% per annum (calculated on the basis of a 360-day year and the actual number of days elapsed during the related Collection Period) of the Maximum Investment Amount at the beginning of the Collection Period relating to such Payment Date.

 

"Subordinated Management Fee Interest": Interest on any accrued and unpaid Subordinated Management Fee (other than any Deferred Subordinated Management Fee), which shall accrue at the rate of three-month LIBOR in effect at such periods plus 3.00% for the period from (and including) the date on which such Subordinated Management Fee shall be payable through (but excluding) the date of payment thereof (calculated on the basis of a 360 day year and the actual number of days elapsed).

 

"Subordinated Notes": Collectively, the Senior Subordinated Notes and the Junior Subordinated Notes.

 

"Successor Entity": The meaning specified in Section 7.10(a).

 

"Supermajority": With respect to any Class of Notes, the Holders of at least 66⅔% of the Aggregate Outstanding Amount of the Notes of such Class.

 

"Synthetic Security": A security or swap transaction, other than a Participation Interest, that has payments associated with either payments of interest and/or principal on a reference obligation or the credit performance of a reference obligation.

 

"Tax": Any tax, levy, impost, duty, charge, assessment, deduction, withholding or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority other than a stamp, registration, documentation or similar tax.

 

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"Tax Advantaged Jurisdiction": The Bahamas, Bermuda, the British Virgin Islands, the Cayman Islands, the Channel Islands, the Netherlands Antilles or Singapore and any other tax advantaged jurisdiction that satisfies the Moody's Rating Condition.

 

"Tax Event": (i) Any portion of any payment due from any Obligor under any Collateral Obligation becoming subject to the imposition of U.S. or foreign withholding tax (other than a withholding tax on letter of credit fees or commitment fees, to the extent that such withholding tax does not exceed 30% of the amount of such fees), which withholding tax is not compensated for by a "gross-up" provision under the terms of such Collateral Obligation, (ii) any jurisdiction's imposing net income, profits or similar tax on the Issuer, (iii) any portion of any payment due under a Hedge Agreement by the Issuer becoming subject to the imposition of U.S. or foreign withholding tax, which withholding tax is compensated for by a "gross-up" provision under the terms of the Hedge Agreement or (iv) any portion of any payment due under a Hedge Agreement by a Hedge Counterparty becoming subject to the imposition of U.S. or foreign withholding tax, which withholding tax is not compensated for by a "gross-up" provision under the terms of the Hedge Agreement; provided that the total amount of (A) the tax or taxes imposed on the Issuer as described in clause (ii) of this definition, (B) the total amount withheld from payments to the Issuer which is not compensated for by a "gross-up" provision as described in clauses (i) and (iv) of this definition and (C) the total amount of any tax "gross-up" payments that are required to be made by the Issuer as described in clause (iii) of this definition are determined to be in excess of either (1) 5.0% of the aggregate interest due and payable on the Collateral Obligations during the related Collection Period or (2) more than $1,000,000 during the related Collection Period.

 

"Tax Guidelines": The provisions set forth in Annex A to the Collateral Management Agreement.

 

"Trading Plan": The meaning specified in Section 12.2(d).

 

"Trading Plan Period": The meaning specified in Section 12.2(d).

 

"Transaction Documents": This Indenture, the Securities Account Control Agreement, the Collateral Management Agreement, the Collateral Administration Agreement, the Purchase Agreement and the Administration Agreement.

 

"Transaction Parties": The meaning specified in Section 2.6(c)(iv).

 

"Transfer Agent": The Person or Persons, which may be the Issuer, authorized by the Issuer to exchange or register the transfer of Notes.

 

"Trust Officer": When used with respect to the Trustee or the Bank in any other capacity hereunder, any officer within the Corporate Trust Office (or any successor group of the Trustee) including any director, vice president, assistant vice president, associate or other officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the Corporate Trust Office because of such person's knowledge of and familiarity with the particular subject and in each case having direct responsibility for the administration of this Indenture.

 

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"Trustee": As defined in the first sentence of this Indenture and any successor thereto.

 

"UCC": The Uniform Commercial Code as in effect in the State of New York or, if different, the political subdivision of the United States that governs the perfection of the relevant security interest as amended from time to time.

 

"Uncertificated Security": The meaning specified in Section 8-102(a)(18) of the UCC.

 

"Underlying Instrument": The indenture or other agreement pursuant to which a Pledged Obligation has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Pledged Obligation or of which the holders of such Pledged Obligation are the beneficiaries.

 

"Unfunded Exposure Account": The trust account established pursuant to Section 10.3(f).

 

"Unregistered Securities": The meaning specified in Section 5.17(c).

 

"Unscheduled Principal Payments": All Principal Proceeds received as a result of prepayments, redemptions, exchange offers, tender offers or other unscheduled payments (but not sales) with respect to a Collateral Obligation (including unscheduled mandatory prepayments); provided that, the term "Unscheduled Principal Payments" shall also include any amounts transferred from the Unfunded Exposure Account to the Principal Collection Subaccount for treatment as Unscheduled Principal Payments upon the unscheduled termination or reduction of the Issuer's funding commitment with respect to a Delayed Drawdown Collateral Obligation or a Revolving Collateral Obligation.

 

"Unsecured Loan": Any assignment of or other interest in an unsecured loan that is not subordinated to any other unsecured indebtedness of the Obligor.

 

"Unused Proceeds": The meaning specified in Section 10.3(c).

 

"U.S. Dollar" or "$": A dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be legal tender for all debts, public and private.

 

"U.S. Person": The meaning specified in Section 7701(a)(30) of the Code.

 

"U.S. person": The meaning specified in Regulation S.

 

"U.S. Risk Retention Rules": The final rules implementing the credit risk retention requirements of Section 941 of the Dodd-Frank Act.

 

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"Volcker Rule": Section 13 of the U.S. Bank Holding Company Act of 1956, as amended, and the applicable rules and regulations promulgated thereunder.

 

"Weighted Average Fixed Coupon": As of any Measurement Date, an amount equal to the number, expressed as a percentage, obtained by dividing:

 

(a)     in the case of each fixed rate Collateral Obligation (excluding any Deferrable Obligation to the extent of any non-cash interest), the product of (1) the stated interest coupon on such Collateral Obligation and (2) the Principal Balance of such Collateral Obligation (excluding the unfunded portion of any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation); by

 

(b)     an amount equal to the lesser of (i) the product of (A) the Aggregate Ramp-Up Par Amount and (B) a fraction, the numerator of which is equal to the Aggregate Principal Balance of fixed rate Collateral Obligations and the denominator of which is equal to the Aggregate Principal Balance of all Collateral Obligations as of such Measurement Date (in each case excluding (1) any Deferrable Obligation to the extent of any non-cash interest and (2) the unfunded portion of any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation that is a fixed rate Collateral Obligation) and (ii) the Aggregate Principal Balance of the fixed rate Collateral Obligations as of such Measurement Date (excluding (1) any Deferrable Obligation to the extent of any non-cash interest and (2) the unfunded portion of any Delayed Drawdown Collateral Obligation or Revolving Collateral Obligation that is a fixed rate Collateral Obligation);

 

provided that in the case of each of the foregoing clauses (a) and (b), in calculating the Weighted Average Fixed Coupon in respect of (i) any Step-Down Obligation, the coupon of such Collateral Obligation shall be the lowest permissible coupon pursuant to the Underlying Instruments of the Obligor of such Step-Down Obligation and (ii) any Letter of Credit, the coupon of such Collateral Obligation shall not include any amounts that the Issuer or the Collateral Manager have actual knowledge are being withheld by the related agent bank or will be deposited into a Letter of Credit Reserve Account.

 

"Weighted Average Floating Spread": As of any Measurement Date, a fraction (expressed as a percentage) obtained by (i)(A) multiplying the Principal Balance of each floating rate Collateral Obligation (including the unfunded portions of all Revolving Collateral Obligations and Delayed Drawdown Collateral Obligations) held by the Issuer as of such Measurement Date by its Effective Spread and (B) multiplying (1) the amount equal to LIBOR applicable to the Secured Notes during the Interest Accrual Period in which such Measurement Date occurs by (2) the excess (if any) of the Aggregate Principal Balance (including for this purpose, for any Collateral Obligation that is neither a Defaulted Obligation nor a Deferring Obligation, any capitalized interest) of the Collateral Obligations as of such Measurement Date minus the Reinvestment Target Par Balance, (ii) summing the amounts determined pursuant to clause (i), and (iii) dividing the sum determined pursuant to clause (ii) by the Aggregate Principal Balance of all floating rate Collateral Obligations plus the unfunded portions of all Revolving Collateral Obligations and Delayed Drawdown Collateral Obligations held by the Issuer as of such Measurement Date; provided that Defaulted Obligations shall not be included in the calculation of the Weighted Average Floating Spread; provided, further, that in calculating the Weighted Average Floating Spread in respect of any Step Down Obligation, the Effective Spread of such Collateral Obligation shall be the lowest permissible Effective Spread pursuant to the Underlying Instruments of the Obligor of such Step Down Obligation.

 

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"Weighted Average Life": As of any Measurement Date, with respect to each Collateral Obligation (other than any Defaulted Obligations) 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 Collateral Obligation by (b) the Principal Balance of such Collateral Obligation and (ii) dividing such sum by the Aggregate Principal Balance at such time of all Collateral Obligations (excluding any Defaulted Obligations).

 

"Weighted Average Life Test": A test satisfied on any date of determination if the Weighted Average Life of all Collateral Obligations as of such date is less than the number of years (rounded to the nearest one hundredth thereof) during the period from such date of determination to July 26, 2026.

 

"Zero Coupon Security": Any Collateral Obligation that at the time of purchase does not by its terms provide for the payment of cash interest; provided that if, after such purchase such Collateral Obligation provides for the payment of cash interest, it will cease to be a Zero-Coupon Security.

 

Section 1.2     Rules of Construction. Except as otherwise specified herein or as the context may otherwise require, the definitions of the terms defined in Section 1.1 are equally applicable both to the singular and plural forms of such terms and to the masculine, feminine and neuter genders of such terms. The word "including" shall mean "including without limitation." All references in this Indenture to designated "Articles," "Sections," "Subsections" and other subdivisions are to the designated articles, sections, subsections and other subdivisions of this Indenture. The words "herein," "hereof," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular article, section, subsection or other subdivision.

 

Section 1.3     Assumptions as to Pledged Obligations. Unless otherwise specified, the assumptions described below shall be applied in connection with all calculations required to be made pursuant to this Indenture with respect to Scheduled Distributions on any Pledged Obligation, or any payments on any other assets inclu