ocsi-8k_20200322.DOCX.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 25, 2020 (March 22, 2020)

 

Oaktree Strategic Income Corporation

(Exact name of registrant as specified in its charter)

 

Delaware

814-01013

61-1713295

(State or other jurisdiction

of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

 

333 South Grand Avenue, 28th Floor, Los Angeles, CA

90071

(Address of principal executive offices)

(Zip Code)

 

Registrant's telephone number, including area code: (213) 830-6300

 

Not Applicable

 

(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 communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common stock, par value $0.01 per share

 

OCSI

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (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 March 22, 2020, OCSI Senior Funding Ltd. (“Funding”), a wholly owned subsidiary of Oaktree Strategic Income Corporation (the “Company”), entered into an amendment (the “DB Credit Facility Amendment”) to the documents governing Funding’s loan financing and servicing agreement (as amended, the “Deutsche Bank Facility”) with the Company, as equityholder and servicer, the lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as facility agent, and the other agents parties thereto and Wells Fargo Bank, National Association, as collateral agent and collateral custodian.

The DB Credit Facility Amendment, among other things, (a) extended the expiration of the revolving period during which Funding may make drawdowns under the Deutsche Bank Facility to September 30, 2020 unless there is an earlier termination or event of default, (b) extended the maturity date from June 30, 2020 until the earliest of March 30, 2021, the occurrence of an event of default or completion of a securitization transaction, (c) decreased the size of the Deutsche Bank Facility from $250 million to $200 million and (d) modified the interest rate to a rate equal to three-month LIBOR plus 2.25% through September 30, 2020, following which the interest rate will reset to three-month LIBOR plus 2.40% for the remaining term of the Deutsche Bank Facility.  The non-usage fee remains 0.50% per annum payable on the undrawn amount under the Deutsche Bank Facility, and the DB Credit Facility Amendment adds a minimum utilization fee should the drawn amount under the Deutsche Bank Facility fall below 80%. The other material terms of the Deutsche Bank Facility were unchanged.

The description above is only a summary of the material provisions of the DB Credit Facility Amendment and is qualified in its entirety by reference to the DB Credit Facility Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d)Exhibits

10.1

Amendment No. 4 to Loan Financing and Servicing Agreement, dated as of March 22, 2020, among OCSI Senior Funding Ltd., as borrower, the Company, as servicer, and Deutsche Bank AG, New York Branch as facility agent and as committed lender


 


 

SIGNATURE

 

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.

 

 

 

 

Date: March 25, 2020

OAKTREE STRATEGIC INCOME CORPORATION

 

By:  /s/ Mel Carlisle                                                                

Name: Mel Carlisle

Title: Chief Financial Officer and Treasurer

 

 

 

 

 

 

  

 

 

 

ocsi-ex101_6.htm

Exhibit 10.1

 

AMENDMENT NO. 4 TO LOAN FINANCING AND SERVICING AGREEMENT, dated as of March 22, 2020 (this “Amendment”), among OCSI Senior Funding Ltd., as borrower (the “Borrower”), Oaktree Strategic Income Corporation, as servicer (the “Servicer”) and Deutsche Bank AG, New York Branch (“DBNY”), as facility agent (in such capacity, the “Facility Agent”) and as a committed lender (in such capacity, a “Lender”).

WHEREAS, the Borrower, Oaktree Strategic Income Corporation, as equityholder, the Servicer, Wells Fargo Bank, National Association, as collateral agent and collateral custodian, the Facility Agent and each Lender party thereto are party to the Loan Financing and Servicing Agreement, dated as of September 24, 2018 (as amended, supplemented, amended and restated and otherwise modified from time to time, the “Loan Agreement”); and

WHEREAS, the Borrower, the Servicer and the Facility Agent have agreed to amend the Loan Agreement in accordance with Section 17.2 of the Loan Agreement and subject to the terms and conditions set forth herein.

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

ARTICLE I

Definitions

Defined Terms.

  Terms used but not defined herein have the respective meanings given to such terms in the Loan Agreement.

ARTICLE II

Amendments to the Loan Agreement

SECTION 2.1.As of the date of this Amendment, the Loan Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the bold and double-underlined text (indicated textually in the same manner as the following example: bold and double-underlined text) as set forth on the pages of the Loan Agreement attached as Appendix A hereto.

SECTION 2.2.As of the date of this Amendment, the Schedules and Exhibits to the Loan Agreement are hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the bold and double-underlined text (indicated textually in the same manner as the following example: bold and double-underlined text) as set forth on the pages of the Schedules and Exhibits to the Loan Agreement attached as Appendix B hereto.

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ARTICLE III

Conditions to Effectiveness

SECTION 3.1.This Amendment shall become effective as of the date hereof upon satisfaction of the following conditions:

(a)the execution and delivery of this Amendment by each party hereto; and

(b)the Facility Agent’s receipt of (i) the signed legal opinion of Walkers, counsel to the Borrower, in form and substance acceptable to the Facility Agent in its reasonable discretion, (ii) a good standing certificate for the Borrower issued by the applicable Official Body of its jurisdiction of organization and (iii) satisfactory evidence that the Borrower has obtained all required consents and approvals of all Persons to the execution, delivery and performance of this Amendment and the consummation of the transactions contemplated hereby.

ARTICLE IV

Representations and Warranties

SECTION 4.1.The Borrower hereby represents and warrants to the Facility Agent that, as of the date first written above, (i) no Event of Default, Unmatured Event of Default, Servicer Default or Unmatured Servicer Default has occurred and is continuing and (ii) the representations and warranties of the Borrower contained in the Loan Agreement are true and correct in all material respects on and as of such day (other than any representation and warranty that is made as of a specific date).

ARTICLE V

Miscellaneous

Governing Law.

THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Severability Clause.

  In case any provision in this Amendment shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Ratification.

  Except as expressly amended and waived hereby, the Loan Agreement is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  

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Counterparts.

  The parties hereto may sign one or more copies of this Amendment in counterparts, all of which together shall constitute one and the same agreement.  Delivery of an executed signature page of this Amendment by facsimile or email transmission shall be effective as delivery of a manually executed counterpart hereof.

Headings.

  The headings of the Articles and Sections in this Amendment are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

No Proceedings; Limited Recourse.

  The provisions of Sections 17.11 and 17.12 of the Loan Agreement are incorporated herein mutatis mutandis.

 

[Signature pages follow]

 

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

OCSI SENIOR FUNDING LTD., as Borrower

 

By:

/s/ Dianne Farjallah
Name: Dianne Farjallah
Title: Director

 

 


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OAKTREE STRATEGIC INCOME CORPORATION, as Servicer

By: Oaktree Capital Management, L.P., its Investment Adviser

 

By:

/s/ Matt Stewart
Name:  Matt Stewart
Title:    Senior Vice President

 

By:

/s/ Mary Gallegly
Name:  Mary Gallegly
Title:    Senior Vice President

 


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DEUTSCHE BANK AG, NEW YORK BRANCH, as Facility Agent

 

By:

/s/ Amit Patel
Name: Amit Patel
Title: Managing Director

 

By:

/s/ Andrew Goldsmith
Name: Andrew Goldsmith
Title: Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Appendix A

 

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EXECUTION VERSION Conformed through Amendment No. 3

 

4 dated as of March 22, 2020

 

 

 

LOAN FINANCING AND SERVICING AGREEMENT

 

 

 

 

 

dated as of September 24, 2018

 

 

 

 

 

OCSI SENIOR FUNDING LTD. as Borrower

 

 

 

 

 

OAKTREE STRATEGIC INCOME CORPORATION

as Equityholder,

 

 

 

 

 

OAKTREE STRATEGIC INCOME CORPORATION

as Servicer,

 

 

 

 

 

THE LENDERS FROM TIME TO TIME PARTIES HERETO,

 

 

 

 

 

DEUTSCHE BANK AG, NEW YORK BRANCH, as Facility Agent

 

 

 

 

 

THE OTHER AGENTS PARTIES HERETO,

 

 

 

 

 

and

 

 

 

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TABLE OF CONTENTS

 

Page

 

 

 

ARTICLE IDEFINITIONS 1

 

 

Section 1.1Defined Terms 1

 

Section 1.2Other Definitional Provisions 5051

 

 

ARTICLE IITHE FACILITY, ADVANCE PROCEDURES AND NOTES 5152

 

 

Section 2.1Advances 5152

 

Section 2.2Funding of Advances 52

 

Section 2.3Notes 5354

 

Section 2.4Repayment and Prepayments 5354

 

Section 2.5Permanent Reduction of Facility Amount 5455

 

Section 2.6Extension of Revolving Period 5455

 

Section 2.7Calculation of Discount Factor 5455

 

Section 2.8Increase in Facility Amount 5657

 

Section 2.9Defaulting Lenders 5657

 

 

ARTICLE IIIYIELD, UNDRAWN FEE, MINIMUM UTILIZATION FEE ETC 5758

 

 

Section 3.1Yield and, Undrawn Fee 57 and Minimum Utilization Fee 58

 

Section 3.2Yield Distribution Dates 5758

 

Section 3.3Yield Calculation 5758

 

Section 3.4Computation of Yield, Fees, Etc 5859

 

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ARTICLE IVPAYMENTS; TAXES 5859

 

 

Section 4.1Making of Payments 5859

 

Section 4.2Due Date Extension 5859

 

Section 4.3Taxes 5859

 

 

ARTICLE VINCREASED COSTS, ETC 6263

 

 

Section 5.1Increased Costs, Capital Adequacy 6263

 

 

ARTICLE VIEFFECTIVENESS; CONDITIONS TO ADVANCES 6465

 

 

Section 6.1Effectiveness 6465

 

Section 6.2Advances and Reinvestments 6667

 

Section 6.3Transfer of Collateral Obligations and Permitted Investments 6869

 

 

 

23050501911350030480018605500ARTICLE VII

ADMINISTRATION AND SERVICING OF COLLATERAL OBLIGATIONS 6970

 

 

 

Section 7.1Retention and Termination of the Servicer 6970

 

Section 7.2Resignation and Removal of the Servicer; Appointment of

Successor Servicer 6970

 

Section 7.3Duties of the Servicer 7172

 

Section 7.4Representations and Warranties of the Servicer 7273

 

Section 7.5Covenants of the Servicer 7576

 

Section 7.6Servicing Fees; Payment of Certain Expenses by Servicer 7879

 

Section 7.7Collateral Reporting 7879

 

Section 7.8Notices 7879

 

Section 7.9Procedural Review of Collateral Obligations; Access to

Servicer and Servicer’s Records 7879

 

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Section 7.10Optional Sales 8081

 

Section 7.11Repurchase or Substitution of Warranty Collateral Obligations 8182

 

Section 7.12Servicing of REO Assets 8283

 

 

ARTICLE VIIIACCOUNTS; PAYMENTS 8384

 

 

Section 8.1Accounts 8384

 

Section 8.2Excluded Amounts 8586

 

Section 8.3Distributions, Reinvestment and Dividends 8687

 

Section 8.4Fees 8990

 

Section 8.5Monthly Report 8990

 

 

ARTICLE IXREPRESENTATIONS AND WARRANTIES OF THE BORROWER 9091

 

 

Section 9.1Organization and Good Standing 9091

 

Section 9.2Due Qualification 9091

 

Section 9.3Power and Authority 9091

 

Section 9.4Binding Obligations 9091

 

Section 9.5Security Interest 9091

 

Section 9.6No Violation 9192

 

Section 9.7No Proceedings 9293

 

Section 9.8No Consents 9293

 

Section 9.9Solvency 9293

 

Section 9.10Compliance with Laws 9293

 

Section 9.11Taxes 9293

 

Section 9.12Monthly Report 9394

 

Section 9.13No Liens, Etc 9394

 

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Section 9.14Information True and Correct 9394

 

Section 9.15Bulk Sales 9495

 

Section 9.16Collateral 9495

 

Section 9.17Selection Procedures 9495

 

Section 9.18Indebtedness 9495

 

Section 9.19No Injunctions 9495

 

Section 9.20No Subsidiaries 9495

 

Section 9.21ERISA Compliance 9495

 

Section 9.22Investment Company Status 9496

 

Section 9.23Set-Off, Etc 9596

 

Section 9.24Collections 9596

 

Section 9.25Value Given 9596

 

Section 9.26Use of Proceeds 9596

 

Section 9.27Separate Existence 9596

 

Section 9.28Transaction Documents 9597

 

Section 9.29Anti-Terrorism, Anti-Money Laundering 9697

 

Section 9.30Anti-Bribery and Corruption 9798

 

 

ARTICLE XCOVENANTS 9798

 

 

Section 10.1Protection of Security Interest of the Secured Parties 9798

 

Section 10.2Other Liens or Interests 9899

 

Section 10.3Costs and Expenses 98100

 

Section 10.4Reporting Requirements 99100

 

Section 10.5Separate Existence 99100

 

Section 10.6Hedging Agreements 101102

 

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Section 10.7Tangible Net Worth 103104

 

Section 10.8Taxes 103105

 

Section 10.9Merger, Consolidation, Etc 104105

 

Section 10.10Deposit of Collections 104105

 

Section 10.11Indebtedness; Guarantees 104105

 

Section 10.12Limitation on Purchases from Affiliates 104105

 

Section 10.13Documents 104105

 

Section 10.14Preservation of Existence 104106

 

Section 10.15Limitation on Investments 105106

 

Section 10.16Distributions 105106

 

Section 10.17Performance of Borrower Assigned Agreements105Transaction Documents106

 

Section 10.18Reserved 105106

 

Section 10.19Further Assurances; Financing Statements 105106

 

Section 10.20Obligor Payment Instructions 106107

 

Section 10.21Delivery of Collateral Obligation Files 106107

 

Section 10.22Collateral Obligation Schedule 107108

 

Section 10.23Notice to Specified Obligors 107108

 

Section 10.24Risk Retention 107108

 

Section 10.25Moody’s RiskCalc 109110

 

Section 10.26Repurchase of Preference Shares 109111

 

Section 10.27Ineligible Collateral 109111

 

 

ARTICLE XITHE COLLATERAL AGENT 109111

 

 

Section 11.1Appointment of Collateral Agent 109111

 

Section 11.2Monthly Reports 110111

 

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Section 11.3Collateral Administration 110111

 

Section 11.4Removal or Resignation of Collateral Agent 113115

 

Section 11.5Representations and Warranties 114115

 

Section 11.6No Adverse Interest of Collateral Agent 114116

 

Section 11.7Reliance of Collateral Agent 114116

 

Section 11.8Limitation of Liability and Collateral Agent Rights 115116

 

Section 11.9Tax Reports 117119

 

Section 11.10Merger or Consolidation 118119

 

Section 11.11Collateral Agent Compensation 118119

 

Section 11.12Anti-Terrorism Laws 118120

 

 

ARTICLE XIIGRANT OF SECURITY INTEREST 118120

 

 

Section 12.1Borrower’s Grant of Security Interest 118120

 

Section 12.2Borrower Remains Liable 120121

 

Section 12.3Release of Collateral 120122

 

 

ARTICLE XIIIEVENTS OF DEFAULT 121122

 

 

Section 13.1Events of Default 121122

 

Section 13.2Effect of Event of Default 123124

 

Section 13.3Rights upon Event of Default 123125

 

Section 13.4Collateral Agent May Enforce Claims Without Possession of

Notes 124126

 

Section 13.5Collective Proceedings 125126

 

Section 13.6Insolvency Proceedings 125126

 

Section 13.7Delay or Omission Not Waiver 126127

 

Section 13.8Waiver of Stay or Extension Laws 126127

 

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Section 13.9Limitation on Duty of Collateral Agent in Respect of Collateral126128

 

Section 13.10Power of Attorney 127128

 

 

ARTICLE XIVTHE FACILITY AGENT 127129

 

 

Section 14.1Appointment 127129

 

Section 14.2Delegation of Duties 128129

 

Section 14.3Exculpatory Provisions 128129

 

Section 14.4Reliance by Note Agents 128130

 

Section 14.5Notices 129130

 

Section 14.6Non-Reliance on Note Agents 129131

 

Section 14.7Indemnification 130131

 

Section 14.8Successor Note Agent 130132

 

Section 14.9Note Agents in their Individual Capacity 131132

 

 

ARTICLE XVASSIGNMENTS 131132

 

 

Section 15.1Restrictions on Assignments by the Borrower and the Servicer 131132

 

Section 15.2Documentation 131132

 

Section 15.3Rights of Assignee 131133

 

Section 15.4Assignment by Lenders 131133

 

Section 15.5Registration; Registration of Transfer and Exchange 132133

 

Section 15.6Mutilated, Destroyed, Lost and Stolen Notes 133134

 

Section 15.7Persons Deemed Owners 133135

 

Section 15.8Cancellation 134135

 

Section 15.9Participations; Pledge 134135

 

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ARTICLE XVIINDEMNIFICATION 135136

 

 

Section 16.1Borrower Indemnity 135136

 

Section 16.2Servicer Indemnity 136137

 

Section 16.3Contribution 136137

 

Section 16.4Risk Retention Indemnity 136138

 

 

ARTICLE XVIIMISCELLANEOUS 137138

 

 

Section 17.1No Waiver; Remedies 137138

 

Section 17.2Amendments, Waivers 137139

 

Section 17.3Notices, Etc 138140

 

Section 17.4Costs and Expenses 138140

 

Section 17.5Binding Effect; Survival 139141

 

Section 17.6Captions and Cross References 139141

 

Section 17.7Severability 139141

 

Section 17.8GOVERNING LAW 140141

 

Section 17.9Counterparts 140141

 

Section 17.10WAIVER OF JURY TRIAL 140141

 

Section 17.11No Proceedings 140142

 

Section 17.12Limited Recourse 141142

 

Section 17.13ENTIRE AGREEMENT 142144

 

Section 17.14Confidentiality 142144

 

Section 17.15Non-Confidentiality of Tax Treatment 143145

 

Section 17.16Replacement of Lenders 144145

 

Section 17.17Consent to Jurisdiction 145146

 

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Section 17.18Option to Acquire Rating 145147

 

Section 17.19Acknowledgement and Consent to Bail-In of EEA Financial

Institutions 145147

 

Section 17.20Acknowledgement Regarding Any Supported QFCs 147

 

 

ARTICLE XVIII COLLATERAL CUSTODIAN 146148

 

 

Section 18.1Designation of Collateral Custodian 146148

 

Section 18.2Duties of the Collateral Custodian 146148

 

Section 18.3Delivery of Collateral Obligation Files 148150

 

Section 18.4Collateral Obligation File Certification 148151

 

Section 18.5Release of Collateral Obligation Files 149152

 

Section 18.6Examination of Collateral Obligation Files 151153

 

Section 18.7Lost Note Affidavit 151154

 

Section 18.8Transmission of Collateral Obligation Files 151154

 

Section 18.9Merger or Consolidation 152154

 

Section 18.10Collateral Custodian Compensation 152154

 

Section 18.11Removal or Resignation of Collateral Custodian 152155

 

Section 18.12Limitations on Liability 153155

 

Section 18.13Collateral Custodian as Agent of Collateral Agent 154157

 

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EXHIBIT AForm of Note

EXHIBIT BAudit Standards

EXHIBIT C-1Form of Advance Request

EXHIBIT C-2Form of Reinvestment Request

EXHIBIT C-3Form of Electronic Asset Approval Request

EXHIBIT DForm of Monthly Report

EXHIBIT EForm of Electronic Approval Notice EXHIBIT F-1Authorized Representatives of Servicer EXHIBIT F-2Request for Release and Receipt

EXHIBIT F-3Request for Release of Request for Release and Receipt

EXHIBIT G-1U.S. Tax Compliance Certificate (Foreign Lender - non-Partnerships) EXHIBIT G-2U.S. Tax Compliance Certificate (Foreign Participant - non-Partnerships) EXHIBIT G-3U.S. Tax Compliance Certificate (Foreign Participants - Partnerships) EXHIBIT G-4U.S. Tax Compliance Certificate (Foreign Lenders - Partnerships) EXHIBIT HSchedule of Collateral Obligations Certification

 

SCHEDULE 1Diversity Score Calculation

SCHEDULE 2Moody’s Industry Classification Group List

SCHEDULE 3Collateral Obligations SCHEDULE 4Moody’s RiskCalc Calculation SCHEDULE 5Moody’s Definitions

 

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Account means the Unfunded Exposure Account, the Principal Collection Account and the Interest Collection Account, together with any sub-accounts deemed appropriate or necessary by the Securities Intermediary after consultation with the Borrower, for convenience in administering such accounts.

 

Account Collateral” has the meaning set forth in Section 12.1(d).

 

Account Control Agreement means the Securities Account Control Agreement, dated as of the Effective Date, by and among the Borrower, as pledgor, the Collateral Agent on behalf of the Secured Parties, as secured party, and the Collateral Custodian, as Securities Intermediary.

 

Accrual Period means, with respect to any Distribution Date, the period from and including the previous Distribution Date (or, in the case of the first Distribution Date, from and including the Effective Date) through and including the day preceding such Distribution Date.

 

Adjusted Aggregate Eligible Collateral Obligation Balance means, as of any date, the Aggregate Eligible Collateral Obligation Amount minus the Excess Concentration Amount on such date.

 

Administration Agreement means the administration agreement entered into or to be entered into on or about the date hereof between the Borrower and the Cayman Administrator (as administrator and as share owner), as amended from time to time.

 

Advance” has the meaning set forth in Section 2.1(a). “Advance Date” has the meaning set forth in Section 2.1(a).

Advance Rate means, with respect to any Eligible Collateral Obligation on any date of determination, as determined by the Facility Agent with the approval of the Borrower, (x) other than during the Post-Pricing Period, (a) that is a First Lien Loan and a Broadly Syndicated Loan,

75%, (b) that is a First Lien Loan that is not a Broadly Syndicated Loan, 70%, (c) that is a Second Lien Loan, 40%, or (d) that is not a First Lien Loan or Second Lien Loan, 40% (or any other percentage set forth in the related Approval Notice by the Facility Agent in its sole discretion) and (y) during the Post-Pricing Period, the Maximum Portfolio Advance Rate.

 

Advance Request” has the meaning set forth in Section 2.2(a).

 

Adverse Claim means any claim of ownership or any Lien, title retention, trust or other charge or encumbrance, or other type of preferential arrangement having the effect or purpose of creating a Lien, other than Permitted Liens.

 

Affected Person” has the meaning set forth in Section 5.1.

 

Affiliate of any Person means any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person (excluding any trustee under, or any committee with responsibility for administering, any employee benefit plan). For the purposes of this definition, Control means the possession, directly or indirectly (including through

 

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Aggregate Unfunded Amount shall mean, as of any date of determination, the sum of the unfunded commitments and all other standby or contingent commitments associated with each Variable Funding Asset included in the Collateral as  of  such  date.   The  Aggregate Unfunded Amount shall not include any commitments under Variable Funding Assets that have expired, terminated or been reduced to zero, and shall be reduced concurrently (and upon notice thereof to the Collateral Agent, the Facility Agent and each Agent) with each documented reduction in commitments of the Borrower under such Variable Funding Assets.

 

Agreement means this Loan Financing and Servicing Agreement (including each annex hereto), as it may be amended, restated, supplemented or otherwise modified from time to time.

 

Alternate Base Rate means a fluctuating rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the higher of:

 

(a)       the rate of interest announced publicly by DBNY in New York, New York, from time to time as DBNY’s base commercial lending rate; and

 

(b)½ of one percent above the Federal Funds Rate.

 

Amount Available means, with respect to any Distribution Date, the sum of (a) the amount of Collections with respect to the related Collection Period (excluding any Principal Collections necessary to settle the acquisition of Eligible Collateral Obligations), plus (b) any investment income earned on amounts on deposit in the Collection Account since the immediately prior Distribution Date (or since the Effective Date in the case of the first Distribution Date).

 

Anti-Bribery and Corruption Laws” has the meaning set forth in Section 9.30(a). “Anti-Money Laundering Laws” has the meaning set forth in Section 9.29(b).

Applicable Law means for any Person all existing and future laws, rules, regulations (including temporary and final income tax regulations), statutes, treaties, codes, ordinances, permits, certificates, orders, licenses of and interpretations by any Official Body applicable to such Person (including, without limitation, predatory and abusive lending laws, usury laws, the Federal Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson Moss Warranty Act, the Federal Reserve Boards Regulations “B” and “Z”, the Servicemembers Civil Relief Act of 2003 and state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code and all other consumer credit laws and equal credit opportunity and disclosure laws) and applicable judgments, decrees, injunctions, writs, awards or orders of  any  court,  arbitrator  or  other  administrative,  judicial,  or  quasi-judicial tribunal or agency of competent jurisdiction.

 

Applicable Margin means (i) prior to the occurrence of any Event of Default, (x) prior to the Applicable Margin Step-Up Date, 2.00end of the Revolving Period, 2.25% per annum and (y) on and after the Applicable Margin Step-Up Date, 2.10end of the Revolving Period, 2.40%

 

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per annum and (ii) on and after the occurrence of any Event of Default, the Applicable Margin shall be increased by 2.00% per annum.

 

Applicable Margin Step-Up Date means, if the Pricing Date has not occurred on or prior to such date, December 31, 2019.

 

Appraised Value means, with respect to any Asset Based Loan, the most recently calculated appraised value of the pro rata portion of the underlying collateral securing such Collateral Obligation as determined by an Approved Valuation Firm.

 

Approval Notice means, with respect to any Collateral Obligation, a copy of a notice executed by the Facility Agent in the form of Exhibit E, evidencing, among other things, an electronic notice containing the information from Exhibit E and that provides the approval of the Facility Agent, in its sole discretion, of such Collateral Obligation and the applicable Discount Factor, the loan type and lien priority (including the division of any unitranche Loan), the Original Leverage Multiple (including, for Advance Rate purposes, the attaching Leverage Multiple of any FILO Loan), the Original Effective LTV (if such Collateral Obligation is an Asset Based Loan) and each other item listed in Section 6.2(h).to the acquisition (or incremental pledge) of one or more Collateral Obligations.

 

Approved Custodian means Bank of New York Mellon Trust Company, National Association, State Street, Wells Fargo Bank, National Association or any other custodian mutually agreed to by the Facility Agent and the Servicer.

 

Approved Valuation Firm means, with respect to any Collateral Obligation, each of (a) Murray Devine, (b) Houlihan Lokey, (c) Lincoln International LLC, (d) Duff & Phelps and (e) any other nationally recognized valuation firm approved by the Borrower and the Facility Agent.

 

Asset Approval Request means a notice in the form of Exhibit C-3 which requests an Approval Notice with respect to one or more Collateral Obligations and shall include (among other things):

 

(a)the proposed date of each related acquisition;

 

(b)       the Agency Rating for each such Collateral Obligation from each Rating Agency and, if such Agency Rating is determined pursuant to clause (b), as applicable, of the definition thereof, the date of the applicable credit estimate and the applicable Rating Agency;

 

(c)       the Original Leverage Multiple and Original Effective LTV (if such Collateral Obligation is an Asset Based Loan) for each such Collateral Obligation, measured as of the date of such notice;

 

(d)a related Schedule of Collateral Obligations;

 

(e)       any related Permitted Working Capital Liens; and   (f)        all                   Obligor Information (unless (x) such information is included in the Servicer’s internal credit memo or (y) the Servicer has notified the Facility Agent that such information is not available and the Facility Agent determines, in its sole discretion, that such information is not required to obtain favorable

 

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capital treatment in connection with the related Collateral Obligation).an electronic notice to the Facility Agent in the form of an email that (a) either (i) is in the form of Exhibit C-3 or (ii) notifies the Facility Agent that the information required by Exhibit C-3 has been posted to the relevant data site and (b) requests the approval of the Facility Agent, in its sole discretion, of one or more Collateral Obligations.

 

Asset Based Loan means any Loan where (i) the underwriting of such Loan was based primarily on the appraised value of the assets securing such Loan and (ii) advances in respect of such Loan are governed by a borrowing base relating to the assets securing such Loan.

 

Attachment Point means the following fraction expressed as a percentage: (i) the aggregate principal amount of all rated notes to be issued in connection with a CLO Takeout divided by (ii) the Target CLO Amount less the aggregate amount of deal expenses related to the CLO Takeout.

 

Available Funds” has the meaning set forth in Section 17.12(c).

 

Average Lifemeans, as of any day and with respect to any Collateral Obligation, the quotient obtained by dividing (i) the sum of the products of (a) the number of years (rounded up to the nearest one hundredth thereof) from such day to the respective dates of each successive Scheduled Collateral Obligation Payment of principal on such Collateral Obligation (assuming, for purposes of this definition, the full exercise of any option to extend the maturity date or otherwise lengthen the maturity schedule that is exercisable without the consent of the Borrower) multiplied by (b) the respective amounts of principal of such Scheduled Collateral Obligation Payments by (ii) the sum  of all successive Scheduled Collateral Obligation Payments of principal on such Collateral Obligation.

 

Bail-In Action means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

Bail-In Legislation means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

Bankruptcy Code means the United States Bankruptcy Code, 11 U.S.C. § 101, et seq., as amended.

 

Base Rate for any Advance means a rate per annum equal to the LIBOR Rate for such

Advance or portion thereof; provided, that in the case of

 

(a)       any day on or after the first day on which a Committed Lender shall have notified the Facility Agent that the introduction of or any change in or in the interpretation of any law or regulation  makes  it  unlawful,  or  any  central  bank  or  other  Official  Body  asserts that it is unlawful, for such Committed Lender to fund such Advance at the Base Rate set forth above (and such Committed Lender shall not have subsequently notified the Facility Agent that such circumstances no longer exist), or

 

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(b)       any period in the event the LIBOR Rate is not reasonably available to any Lender for such period,

 

the Base Rate shall be a floating rate per annum equal to the Alternate Base Rate in effect on each day of such period; provided, further, for the avoidance of doubt, immediately following the termination of any event set forth in clauses (a) or (b) above, the “Base Rate” shall have the meaning set forth in the first part of this definition.

 

Basel III Regulation means, with respect to any Affected Person, any rule, regulation or guideline applicable to such Affected Person and arising directly or indirectly from (a) any of the following documents prepared by the Basel Committee on Banking Supervision of the Bank of International Settlements: (i) Basel III: International Framework for Liquidity Risk Measurement, Standards and Monitoring (December 2010), (ii) Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems (June 2011), (iii) Basel III: The Liquidity Coverage Ratio and Liquidity Risk Monitoring Tools (January 2013), or (iv) any document supplementing, clarifying or otherwise relating to any of the foregoing, or (b) any accord, treaty, statute, law, rule, regulation, guideline or pronouncement (whether or not having the force of law) of any governmental authority implementing, furthering or complementing any of the principles set forth in the foregoing documents of strengthening capital and liquidity, in each case as from time to time amended, restated, supplemented or otherwise modified. Without limiting the generality of the foregoing, Basel III Regulation shall include Part 6 of the European Union regulation 575/2013 on prudential requirements for credit institutions and investment firms (the CRR”) and any law, regulation, standard, guideline, directive or other publication supplementing or otherwise modifying the CRR.

 

Benefit Plan Investor means (a) any “employee benefit plan” (as defined in Section

3(3) of Title I of ERISA) that is subject to the fiduciary responsibility provisions of Title I of ERISA, (b) any “plan” as defined in Section 4975(e) of the Code that is subject to Section 4975 of the Code, or (c) any governmental or other plan or arrangement that is not subject to ERISA or to Section 4975 of the Code or (d) any entity whose underlying assets include “plan assets” of the foregoing employee benefit plan or plans (within the meaning of the DOL Regulations or otherwise).

 

BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

Borrower” has the meaning set forth in the Preamble.

Borrower Assigned Agreements” has the meaning set forth in Section 12.1(c). “Borrowing Base means, on any day of determination, the sum of (a)(i) the product of

the lower of (x) the Weighted Average Advance Rate and (y) the Maximum Portfolio Advance Rate multiplied by the Adjusted Aggregate Eligible Collateral Obligation Balance plus (b) the amount of Principal Collections on deposit in the Principal Collection Account minus (c) the Aggregate Unfunded Amount plus (d) the amount on deposit in the  Unfunded  Exposure Account.

 

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Broadly Syndicated Loan means, as of any date of determination, any Loan that (i) is rated  B-/B3CCC/Caa2 or higher as of the Cut-Off Date, (ii) has a tranche size of at least

$200,000,000, (iii) has a quote depth of at least two (2) by MarkitLoan Pricing Corporation, Markit Group Limited, Loan X Mark-It Partners or Thompson Reuters Pricing Service and (iv) the related Obligor has EBITDA greater than or equal to $50,000,000.

 

Business Day means any day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York or the city in which the offices of the Collateral Agent or Collateral Custodian are located are authorized or obligated by law, executive order or government decree to remain closed; provided that, when used in connection with the LIBOR Rate, the term “Business Day” shall also exclude any day on which dealings in deposits in Dollars are not carried out in the London interbank market. All references to any “day” or any particular day of any “calendar month” shall mean calendar day unless otherwise specified.

 

Capital Requirements Regulation means the European Union Capital Requirements

Regulation (Regulation (EU) No 575/2013), as amended.

 

Capped Fees/Expenses means, on any Distribution Date, the sum of the Collateral Agent Fees and Expenses and the Collateral Custodian Fees and Expenses in an amount not to exceed $43,500 (the (Quarterly Cap”); provided that, if the aggregate amount of the Collateral Agent Fees and Expenses and the Collateral Custodian Fees and Expenses paid to the Collateral Agent and the Collateral Custodian under clause (ii) of Section 8.3(a) and clause (i) of Section

8.3(b) on any Distribution Date is less than the Quarterly Cap, the unused portion  of  the Quarterly Cap may be carried forward to the next succeeding Distribution Date and added to the Quarterly Cap for such Distribution Date; provided further that the aggregate amount of the Collateral Agent Fees and Expenses and the Collateral Custodian Fees and Expenses paid to the Collateral Agent or the Collateral Custodian under clause (ii) of Section 8.3(a) and clause (i) of Section 8.3(b) may not exceed $150,000 in any calendar year.

Cayman Administratormeans Walkers Fiduciary Limited and any successor thereto. “Change of Control means (x) the Equityholder shall cease to own at least 51% of the

outstanding Preference Shares of the Borrower or (y) Oaktree Strategic Income Corporation or an Affiliate thereof ceases to be the Servicer.

 

Charges means (i) all federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to the PBGC at the time due and payable); (ii) all levies, assessments, charges, or claims of any governmental entity or any claims of statutory lienholders, the nonpayment of which could give rise by operation of law to a Lien on the Collateral Obligations or any other property of the Borrower and (iii) any such taxes, levies, assessment, charges or claims which constitute a Lien or encumbrance on any property of the Borrower.

 

CLO Marketing Period means the date on which DBSI commences marketing of the

CLO Securities with the consent of the Servicer.

 

CLO Securities” has the meaning set forth in the definition of “CLO Takeout”.

 

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Connection Income Taxes means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Corporate Trust Office means the applicable designated corporate trust office of the Collateral Agent or the Collateral Custodian, as applicable, specified on Annex A hereto, or such other address within the United States as it may designate from time to time by notice to the Facility Agent.

 

Cost of Funds Rate means, for any Accrual Period and any Lender, the rate determined as set forth below:

 

(a)       with respect to each Conduit Lender and each day of such Accrual Period, such Conduit Lender’s Commercial Paper Rate for such day; provided, that if and to the extent that, and only for so long as, a Conduit Lender at any time determines in good faith that it is unable to raise or is precluded or prohibited from raising, or that it is not advisable to raise, funds through the issuance of commercial paper notes in the commercial paper market of the United States to finance its making or maintenance of its portion of any Advance or any portion thereof (which determination may be based on any allocation method employed in good faith by such Conduit Lender), upon notice from such Conduit Lender to the Agent for its Lender Group and the Facility Agent, such Conduit Lender’s portion of such Advance shall bear interest at a rate per annum equal to the Alternate Base Rate; and

 

(b)with respect to each Committed Lender, the Base Rate.

 

Cov-Lite Loan means a Collateral Obligation whose Underlying Instrument: (a) does not contain any financial covenants; or (b) does not require the underlying Obligor to comply with a Maintenance Covenant; provided that, for all purposes, a loan described in clause (a) or (b) above which either contains a cross-default or cross-acceleration provision to, or is pari passu with, another loan of the underlying Obligor that requires the underlying Obligor to comply with either an Incurrence Covenant or a Maintenance Covenant will be deemed not to be a Cov-Lite Loan. For the avoidance of doubt, a loan that is capable of being described in clause (a) or (b) above only (x) until the expiration of a certain period of time after the initial issuance thereof or (y) for so long as there is no funded balance in respect thereof, in each case as set forth in the related Underlying Instruments, will be deemed not to be a Cov-Lite Loan.

 

“Covered Entitymeans any of the following:

 

(a)a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

 

(b)a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

 

(c)a “covered FSI as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

 

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“Covered Party” has the meaning set forth in Section 17.20.

 

Credit Agreement means the loan agreement, credit agreement or other customary agreement pursuant to which a Collateral Obligation has been created or issued.

 

Critical Component means, in respect of a weapons system referred to in the definition of Prohibited Defense Asset, a component (other than software) manufactured with the sole purpose of being used in, and is used specifically in the production of the weapon system or plays a direct role in the lethality of the weapon system.

 

Cut-Off Date means, with respect to each Collateral Obligation, the date such

Collateral Obligation becomes a part of the Collateral.

 

DBNYmeans Deutsche Bank AG, New York Branch, and its successors.

 

DBSI means Deutsche Bank Securities, Inc., as sole structuring and debt placement agent in respect of the CLO Securities.

 

“Default Right has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

 

Defaulted Collateral Obligation means any Collateral Obligation as to which any one of the following events has occurred:

 

(a)       any Scheduled Collateral Obligation Payment or part thereof is unpaid more than five Business Days beyond the grace period (if any) permitted by the related Underlying Instrument;

 

(b)an Insolvency Event occurs with respect to the Obligor thereof, unless the related

Loan is a DIP Loan;

 

(c)       a Responsible Officer of the Servicer has actual knowledge of the occurrence of a default as to the payment of principal and/or interest that has occurred and is continuing for more than five (5) Business Days beyond the grace period (if any) permitted by the related Underlying Instruments with respect to another debt obligation of the same Obligor secured by the same collateral which is either full recourse or senior to or pari passu with in right of payment to such Collateral Obligation unless the related Loan is a DIP Loan;

 

(d)       such Collateral Obligation has (x) a rating by S&P of “CC” or below or “SD” or (y) a Moody’s probability of default rating (as published by Moody’s) of “D” or “LD” or, in each case, had such ratings before they were withdrawn by S&P or Moody’s, as applicable;

 

(e)       a Responsible Officer of the Servicer or the Borrower has actual knowledge that such Collateral Obligation is pari passu or junior in right of payment as to the payment of principal and/or interest to another debt obligation of the same Obligor which has (i) a rating by S&P of “CC” or below or “SD” or (ii) a Moody’s probability of default rating (as published by Moody’s) of “D” or “LD”, and in each case such other debt obligation remains outstanding

 

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of such Collateral Obligation having an effective rate of current interest paid in cash on such day of not less than (i) if such Deferrable Collateral Obligation is a Fixed Rate Collateral Obligation,

5.00% per annum over the LIBOR Rate or (ii) otherwise, 6.00% per annum over the applicable index rate.

 

Determination Date means the last calendar day of each month, or if such day is not a

Business Day, the next succeeding Business Day.

 

DIP Loan means any Loan made to a debtor-in-possession pursuant to Section 364 of the Bankruptcy Code having the priority allowed by either Section 364(c) or 364(d) of the Bankruptcy Code and fully secured by senior Liens.

 

Discount Factor means, (i) with respect to each Collateral Obligation (other than a Non-Revalued Broadly Syndicated Loan) and as of any date of determination, the value (expressed as a percentage of par) of such Collateral Obligation as determined by the Facility Agent in its sole discretion in accordance with Section 2.7.2.7 or (ii) with respect to each Collateral Obligation that is a Non-Revalued Broadly Syndicated Loan, the Market Value of such Broadly Syndicated Loan.

 

Distribution Date means the 15th calendar day of each January, April, July and

October, or if such date is not a Business Day, the next succeeding Business Day.

 

Diversity Score means, as of any day, a single number that indicates collateral concentration in terms of both issuer and industry concentration, calculated as set forth in Schedule 1 hereto, as such Diversity Scores shall be updated at the option of the Facility Agent in its sole discretion if Moody’s publishes revised criteria.

 

Document Checklist means an electronic list delivered by the Borrower (or by the Servicer on behalf of the Borrower) to the Collateral Custodian that identifies each of the documents that have been included in each Collateral Obligation  File and whether such document is an original or a copy and whether a hard copy or electronic copy will be delivered to the Collateral Custodian related to a Collateral Obligation and includes the name of the Obligor with respect to such Collateral Obligation, in each case as of the related Funding Date.

 

DOL Regulations means regulations promulgated by the U.S. Department of Labor at

29 C.F.R. § 2510.3 101, as modified by Section 3(42) of ERISA and/or at 20 C.F.R. §

2550.401c-1.

Dollar(s)” and the sign “$mean lawful money of the United States of America. “EBITDA means, with respect to any period and any Collateral Obligation, the meaning

of “EBITDA,” “Adjusted EBITDA” or any comparable definition in the Underlying Instruments for each such Collateral Obligation. In any case that “EBITDA, “Adjusted EBITDA” or such comparable definition is not defined in such Underlying Instruments, an amount, for the related Obligor and any of its parents or Subsidiaries that are obligated with respect to such Collateral Obligation pursuant to its Underlying Instruments (determined on a consolidated basis without duplication in accordance with GAAP) equal to earnings from continuing operations for such period plus interest expense, income taxes, depreciation, amortization and, to the extent

 

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Collateral Custodian appointed in accordance with the terms hereunder are deemed to be acceptable securities intermediaries to the Facility Agent.

 

Eligible Collateral Obligation means, on any Measurement Date, each Collateral Obligation that satisfies the following conditions (unless otherwise added or waived by the Facility Agent in its sole discretion in the  applicablerelated Approval Notice); provided that, prior to the date that is five (5) days after the Effective Date, the Collateral Obligation in respect of SMS Systems Maintenance Services Inc. shall be deemed to be an Eligible Collateral Obligation:

 

(a)       the Facility Agent in its sole discretion has delivered an Approval Notice with respect to such Collateral Obligation which has been acknowledged and agreed to by the Borrower;

 

(b)such Collateral Obligation is not a Defaulted Collateral Obligation;

 

(c)such Collateral Obligation is not an Equity Security and is not convertible into an

 

Equity Security at the option of the applicable Obligor or any Person other than the Borrower; (d)

such Collateral Obligation is not a Structured Finance Obligation;

 

(e)such Collateral Obligation is denominated in Dollars and is not convertible by the

Obligor thereof into any currency other than Dollars;

 

(f)        such Collateral Obligation is not a single-purpose real estate based loan (unless the related real estate is a hotel, casino or other operating company), a construction loan or a project finance loan;

 

(g)such Collateral Obligation is not a lease (including a financing lease);

 

(h)       if such Collateral Obligation is a Deferrable Collateral Obligation, it provides for periodic payments of interest thereon in cash no less frequently than semi-annually and the portion of interest required to be paid in cash under the terms of the related Underlying Instruments results in the outstanding principal amount of such Collateral Obligation having an effective rate of current interest paid in cash on such day of not less than (i) if such Deferrable Collateral Obligation is a Fixed Rate Collateral Obligation, 5.00% per annum over the LIBOR Rate or (ii) otherwise, 6.00% per annum over the applicable index rate;

 

(i)       as of the date of acquisition, the related Obligor had EBITDA greater than or equal to $5,000,000;

 

(j)        such Collateral Obligation is not incurred or issued in connection with a merger, acquisition, consolidation, sale of all or substantially all of the assets of a Person, restructuring or similar transaction, which obligation or security by its terms is required to be repaid within one year of the incurrence thereof with proceeds from additional borrowings or other refinancings (other than any additional borrowing or refinancing if one or more financial institutions has provided the issuer of such obligation or security with a binding written commitment to provide the same, so long as (i) such commitment is equal to the outstanding principal amount of such

 

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to any assignee of the Facility Agent permitted or contemplated under this Agreement, (iii) to any Person at any foreclosure or strict sale or other disposition initiated by a secured creditor in furtherance of its security interest, and (iv) to commercial banks, financial institutions, offshore and other funds (in each case, including transfer permitted by operation of the UCC), subject, in the cases of clauses (iii) and (iv), to customary and market restrictions on assignment;

 

(w)     the proceeds of such Collateral Obligation will not be used to finance activities of the type engaged in by businesses classified under NAICS Codes 2361 (Residential Building Construction), 2362 (Nonresidential Building Construction), 2371 (Utility System Construction), or 2372 (Land Subdivision);

 

(x)the Related Security for such Collateral Obligation is primarily located in the

United States;

 

(y)       (i) as of the Cut-Off Date, such Collateral Obligation, if rated by such Rating Agency, does not have either (x) a public rating by S&P of “CCC-” or below or (y) a Moody’s probability of default rating (as published by Moody’s) of “Caa3” or below or (ii) if not rated by either Rating Agency, the Borrower (or the Servicer on behalf of the Borrower) shall have requested from such Rating Agency a credit estimate, shadow rating or similar rating within 10

Business Days of the applicable Cut-Off Date;

 

(z)such Collateral Obligation has an Agency Rating;

 

(aa)     such Collateral Obligation is not the subject of an Offer, exchange or tender by the related Obligor for cash, securities or any other type of consideration, other than a Permitted Offer, but only to the extent of such Offer and to the extent set forth on the related Asset Approval Request (or, in the case of a Collateral Obligation that becomes subject to an Offer that is a Permitted Offer after the Cut-Off Date with respect to such Collateral Obligation, to the extent notified by the Servicer to the Facility Agent);

 

(bb)such Collateral Obligation is purchased for a Purchase Price of at least 85%;

 

(cc)     such Collateral Obligation does not have an Obligor in a Prohibited Industry; or any other industry which is illegal under Applicable Law at the time of acquisition of such Collateral Obligation; and

 

(dd)   if it is a registration-required obligation within the meaning of the Code, such Collateral Obligation is Registered; and(ee) the proceeds of such Collateral Obligation will not be used (A) to the knowledge of the Borrower and the Servicer, to finance activities within the marijuana industry, nor (B) to provide financing to any other industry which is illegal under Applicable Law at the time of acquisition of such Collateral Obligation.

 

Eligible Obligor means, on any day, any Obligor that (i) is a Person (other than a natural person) that is duly organized and validly existing under the laws of, the United States or any State thereof, (ii) is a legal operating entity or holding company, (iii) is not an Official Body, and (iv) is not an Affiliate of, or controlled by, the Borrower, the Servicer or the Equityholder.

 

Enterprise Value Loanmeans any Loan that is not an Asset Based Loan.

 

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(j)        the excess, if any, of the sum of the Principal Balances of all Collateral Obligations with Obligors in any single Moody’s Industry Classification (other than a Moody’s Industry Classification described in the following proviso) over 12.0% of the Target CLO Amount; provided that (i) the sum of the Principal Balances of all Collateral Obligations with Obligors in any single Moody’s Industry Classification may be up to 20.0% of the Target CLO Amount and (ii) in addition, the sum of the Principal Balances of all Collateral Obligations with Obligors in any single Moody’s Industry Classification (other than a Moody’s Industry Classification described in clause (i)) may be up to 15.0% of the Target CLO Amount;

 

(k)       the excess, if any, of the sum of the Principal Balances of all Collateral Obligations that pay interest less frequently than quarterly  over  5.0%  of  the  Target  CLO Amount;

 

(l)the sum of the Principal Balances of all Collateral Obligations that are Cov-Lite

Loans over 15.0% of the Target CLO Amount;

 

(m)      the sum  of the Principal Balances of  all Collateral Obligations (other than Defaulted Obligations) that have a Moody’s probability of default rating (as published by Moody’s) of “Caa1” or below over (x) prior to the date that is five (5) days after the Effective Date, 22.5% of the Excess Concentration Measure and (y) thereafter, 17.5% of the Excess Concentration Measure;

 

(n)       the sum  of the Principal Balances of  all Collateral Obligations (other than Defaulted Obligations) that have a public rating by S&P of “CCC+” or below over 17.5% of the Excess Concentration Measure;

 

(o)       the sum of the Principal Balances of all Collateral Obligations the Agency Rating for which is determined pursuant to clause (c) of the definition thereof on any date of determination that is eight (8) weeks after the applicable Cut-Off Date over 10.020.0% of the Excess Concentration Measure;

 

(p)       the excess, if any, of the sum of the Principal Balances of all Collateral Obligations that are in a Permitted Gaming Industry (other than in respect of hotels and resorts) over 7.5% of the Excess Concentration Measure; and

 

(1q)     the excess, if any, of the sum of the Principal Balances of all Collateral Obligations that are in the defense industry (other than a Prohibited Defense Asset) over 7.5% of the Excess Concentration Measure.;

 

(r)       the excess, if any, of the sum of the Principal Balances of all Collateral Obligations that neither (x) are Broadly Syndicated Loans nor (y) have an Agency Rating which is determined pursuant to clause (a) of the definition thereof, over 40.0% of the Excess Concentration Measure;

 

(s)       the excess, if any, of the sum of the Principal Balances of all Collateral Obligations that are Broadly Syndicated Loans with fewer than three (3) dealer bid-side quotes, over 25.0% of the Excess Concentration Measure; and

 

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(t)        the excess, if any, of the sum of the Principal Balances of all Collateral Obligations that were purchased for a Purchase Price of less than 90%, over 10.0% of the Excess Concentration Measure.

 

Excess Concentration Measure means the sum of (i) the Principal Balances for all Eligible Collateral Obligations plus  (ii) all amounts  on  deposit  in  the  Principal  Collection Account plus (iii) all amounts on deposit in the Unfunded Exposure Account.

 

Excess Funds means, as of any date of determination and with respect to any Conduit Lender, funds of such Conduit Lender not required, after giving effect to all amounts on deposit in its commercial paper account, to pay or provide for the payment of (i) all of its matured and maturing commercial paper notes on such date of such determination and (ii) the principal of and interest on all of its loans outstanding on such date of such determination.

 

Excluded Amounts means (i) any amount deposited into the Collection Account with respect to any Collateral Obligation, which amount is attributable to the reimbursement of payment by or on behalf of the Borrower of any Tax, fee or other charge imposed by any Official Body on such Collateral Obligation or on any Related Security, (ii) any  interest  or  fees (including origination, agency, structuring, management or other up-front fees) that are for the account of the applicable Person from whom the Borrower purchased such Collateral Obligation, (iii) any reimbursement of insurance premiums, (iv) any escrows relating to Taxes, insurance and other amounts in connection with Collateral Obligations which are held in an escrow account for the benefit of the Obligor and the secured party pursuant to escrow arrangements under Underlying Instruments, (v) to the extent paid using amounts other  than  Collections  and proceeds of Advances, any amount paid in respect of reimbursement for expenses owed in respect of any Collateral Obligation pursuant to the related Underlying Instrument or (vi) any amount deposited into the Collection Account in error (including any amounts relating to any portion of an asset sold by the Borrower and occurring after the date of such sale).

 

Excluded Taxes means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in the Obligations pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Obligations (other than pursuant to Section 17.16(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 4.3, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 4.3(f) and (d) any withholding Taxes imposed under FATCA.

 

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Executive Officer means, with respect to the Borrower, the Servicer or the Equityholder, the Chief Executive Officer, the Chief Operating Officer of such Person or any other Person included on the incumbency of the Borrower, Servicer or Equityholder, as applicable, delivered pursuant to Section 6.1(g) and, with respect to any other Person, the President, Chief Financial Officer or any Vice President.

 

Extension Requestmeans any of the events described in Section 2.6. “Facility Agent” has the meaning set forth in the Preamble.

Facility   Amountmeans(a)priortotheendoftheRevolvingPeriod,

$250,000,000,200,000,000, unless this amount is permanently reduced pursuant to Section 2.5 or increased pursuant to Section 2.8, in which event it means such lower or higher amount and (b) from and after the end of the Revolving Period, the Advances outstanding.

 

Facility Termination Date means the earliest of (i) the date that is threesix (36) months after the last day of the Revolving Period (or, if such day is not a Business Day, the next succeeding Business Day), (ii) the date of the CLO Takeout and (iii) the effective date on which the facility hereunder is terminated pursuant to Section 13.2.

 

FATCA means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), and any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with such sections of the Code and any legislation, law, regulation or practice enacted or promulgated pursuant to such intergovernmental agreement including, for the avoidance of doubt, the Cayman Islands Tax Information Authority Law (2017 Revision) together with regulations and guidance notes made pursuant to such law.

 

Federal Funds Rate means, for any period, a fluctuating rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Facility Agent from three federal funds brokers of recognized standing selected by it.

 

Fee Letter” has the meaning set forth in Section 8.4. “Fees” has the meaning set forth in Section 8.4.

FILO Loan means any Loan that (i) becomes, by its terms, subordinate in right of payment to one or more other obligations of the related Obligor, in each case issued under the same Underlying Instruments as such Loan (other than any Loan subject to a Permitted Working Capital Lien), in any bankruptcy, reorganization, arrangement, insolvency, moratorium or

 

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Fitch means Fitch Ratings, Inc., Fitch Ratings Ltd. and their subsidiaries, including

Derivative Fitch Inc. and Derivative Fitch Ltd. and any successor thereto.

 

Fixed Rate Collateral Obligation means any Collateral Obligation that bears a fixed rate of interest.

 

Floating Rate Note means a floating rate 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.

Foreign Lendermeans a Lender that is not a U.S. Person. “Fourth Amendment Effective Datemeans March 22, 2020.

 

FRS Board means the Board of Governors of the Federal Reserve System and, as applicable, the staff thereof.

Funding Datemeans any Advance Date or any Reinvestment Date, as applicable. “GAAP means generally accepted accounting principles in the United States, which are

applicable to the circumstances as of any day.

 

Group I Country means The Netherlands, Australia, New Zealand and the United Kingdom (or such other countries as may be specified in publicly available published criteria from Moody’s from time to time).

 

Group II Country means Germany, Ireland, Sweden and Switzerland (or such other countries as may be specified in publicly available published criteria from Moody’s from time to time).

 

Group III Country means Austria, Belgium, Denmark, Finland, France, Hong Kong, Iceland, Liechtenstein, Luxembourg, Norway and Singapore (or such other countries as may be specified in publicly available published criteria from Moody’s from time to time).

 

Hazardous Materials means all materials subject to any Environmental Law, including materials listed in 49 C.F.R. § 172.101, materials defined as hazardous pursuant to § 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, flammable, explosive or radioactive materials, hazardous or toxic wastes or substances, lead-based materials, petroleum or petroleum distillates or asbestos or material containing   asbestos,   polychlorinated biphenyls, radon gas, urea formaldehyde and any substances classified as being “in inventory”, “usable work in process” or similar classification that would, if classified as unusable, be included in the foregoing definition.

 

Hedge Breakage Costs means, with respect to each Hedge Counterparty upon the early termination of any Hedge Transaction with such Hedge Counterparty, the net amount, if any,

 

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under capital leases; (v) all non-contingent obligations of such Person to reimburse or prepay any bank or other Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument; (vi) all debt of others secured by a Lien on any asset of such Person, whether or not such debt is assumed by such Person; and (vii) all debt of others guaranteed by such Person and other contingent obligations to purchase, to provide funds for payment, to supply funds  to  invest  in  any  Person  or  otherwise  to  assure  a  creditor against  loss  (in  each  case excluding any unfunded commitments of the Borrower with respect to any Variable Funding Asset).

 

Indemnified Amounts” has the meaning set forth in Section 16.1. “Indemnified Party” has the meaning set forth in Section 16.1.

Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Transaction Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

Independent Accountants means a firm of nationally recognized independent certified public accountants.

 

“Initial Weighted Average Market Value” means, as of any date of determination following the Fourth Amendment Effective Date, the number obtained by (i) summing the products obtained by multiplying (a) the Market Value of each Broadly Syndicated Loan and Reclassified Broadly Syndicated Loan by (b) the aggregate Principal Balance of each such Loan, in each case of clauses (a) and (b), as of the Fourth Amendment Effective Date and (ii) dividing such sum by the aggregate Principal Balance of all Broadly Syndicated Loans and the aggregate Principal Balance of all Reclassified Broadly Syndicated Loans, in each case, as of the Fourth Amendment Effective Date.

 

Insolvency Event means, with respect to any Person, (a) the entry of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person  or  any substantial part of its property in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person’s affairs, or the commencement of an involuntary case under the federal bankruptcy laws, as now or hereinafter in effect, or another present or future federal or state bankruptcy, insolvency or similar law and such case is not dismissed within 60 days; (b) the commencement by such Person of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to  the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or such Person shall admit in writing its inability to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing, (c) the passing of a resolution by

 

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on that service for the purpose of displaying London interbank offered rates of major banks as of

11:00 a.m., London time, two Business Days prior to the first day of such Accrual Period (it being understood that if at least two such rates appear on such page, the rate will be the arithmetic mean of such displayed rates); provided, further, that in the event fewer than two such rates are displayed, or if no such rate is relevant, the LIBOR Rate shall be a rate per annum at which deposits in Dollars are offered by the principal office of the Facility Agent in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Accrual Period for delivery on such first day and for a period equal to three (3) months or (y) if a LIBOR Replacement Rate has been selected in accordance with the definition thereof, the LIBOR Replacement Rate.

 

LIBOR Replacement Rate means the alternative rate, including any applicable spread adjustments thereto, selected by the Servicer (on behalf of the Borrower) with the consent of the Facility Agent (with notice to the Equityholder, the Borrower and each Lender), at any time there is a material disruption to LIBOR Rate or LIBOR Rate ceases to exist or be reported as described in the definition of “LIBOR Rate” that, in its commercially reasonable judgment, is commonly used on the applicable date of determination with respect to the Loans, in each case, as a successor or replacement benchmark for “LIBOR Rate”. In connection with any LIBOR Replacement Rate, the Servicer, with the consent of the Facility Agent, may make related changes determined by the Servicer in its commercially reasonable judgment to be advisable or necessary to implement the use of such replacement rate, including, without limitation, any required change to the definition of “Business Day.”

 

Lien means any security interest, lien, charge, pledge, preference, equity or encumbrance of any kind, including tax liens, mechanics’ liens and any liens that attach by operation of law.

 

Loanmeans any commercial loan.

 

Loan Register” has the meaning set forth in Section 15.5(a). “Loan Registrar” has the meaning set forth in Section 15.5(a).

Maintenance Covenant means a covenant by any borrower to comply with one or more financial covenants during each reporting period (but not more  frequently  than  quarterly), whether or not such borrower has taken any specified action; provided that a covenant that otherwise satisfies the definition hereof and only applies when amounts are outstanding under the related loan shall be a Maintenance Covenant.

 

 

 

 

Board.

Margin Stock means “Margin Stock” as defined under Regulation U issued by the FRS

 

 

“Market Value” means, with respect to any Broadly Syndicated Loan or Reclassified Broadly Syndicated Loan on any date of determination, the lower of (I) the Purchase Price of such Loan (without giving effect to the first proviso in the definition of “Purchase Price”) or (II) the amount (determined by the Servicer) expressed as a percentage equal to (i) the bid price determined by the Loan Pricing Corporation, Markit Group Limited, Loan X Mark-It Partners,

 

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Thompson Reuters Pricing Service, or any other nationally recognized loan pricing service selected by the Servicer; or (ii) if a price described in clause (i) is not available, (A) the average of the bid prices determined by three broker-dealers active in the trading of such asset that are independent from each other and the Borrower and the Servicer; and (B) if only two such bids can be obtained, the lower of the bid prices of such two bids.

 

Master Participation Agreement means the Master Participation Agreement dated on or about the date hereof by and among the Borrower, as buyer, the Equityholder, as seller collateral manager and FS Senior Funding Ltd., as seller, as amended, modified, waived, supplemented or restated from time to time.

 

Material Action means an action to institute proceedings to have the Borrower be adjudicated bankrupt or insolvent, to file any insolvency case or proceeding, to institute proceedings under any applicable insolvency law, to seek relief under any law relating to relief from debts or the protection of debtors, or consent to the institution of bankruptcy or insolvency proceedings against the Borrower or file a petition seeking, or consent to, reorganization or relief with respect to the Borrower under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Borrower or a substantial part of its property, or make any assignment for the benefit of creditors of the Borrower, or admit in writing the Borrower’s inability to pay its debts generally as they become due, or take action in furtherance of any such action.

 

Material Adverse Effect means a material adverse effect on: (a) the assets, operations, properties, financial condition, or business of the Borrower or the Servicer; (b) the ability of the Borrower or the Servicer to perform its obligations under this Agreement or any of the other Transaction Documents; (c) the validity or enforceability of this Agreement, any of the other Transaction Documents, or the rights  and  remedies  of  the  Secured  Parties  hereunder  or thereunder taken as a whole; or (d) the aggregate value of the Collateral or on the assignments and security interests granted by the Borrower in this Agreement.

 

Material   Modification”   means,   other   than   during   the   Post-Pricing   Period,   any amendment or waiver of, or modification or supplement to, any Underlying Instrument governing a Collateral Obligation executed or effected on or after the related Cut-Off Date which:

 

 

(a) Collateral Obligation;

reduces or forgives any or all of the principal amount due under such

 

 

 

(b)

(i) waives one or more interest payments, (ii) permits any interest due in

 

cash to be deferred or capitalized and added to the principal amount of such Collateral Obligation (other than any deferral or capitalization already allowed by the terms of any Deferrable Collateral Obligation as of the related Cut-Off Date) or (iii) reduces the spread or coupon payable on such Collateral Obligation below the spread or coupon as of the applicable Cut-Off Date (excluding any increase in an interest rate arising by operation of a default or penalty interest clause under a Collateral Obligation and any reduction or an increase pursuant to a contractual pricing grid set forth in the related Underlying Instruments on the applicable Cut-Off Date) unless (x) the Servicer certifies that the credit quality of the related Obligor has

 

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“Minimum Utilization Fee” means a fee payable pursuant to Section 3.2 to each Committed Lender for each day of the related Accrual Period equal to the product of (A) the Applicable Margin and (B) the positive difference (if