CREDIT AGREEMENT Dated as of September 29, 2006 among ALESCO FINANCIAL HOLDINGS, LLC Borrower ALESCO FINANCIAL TRUST Guarantor and ROYAL BANK OF CANADA Lender

Exhibit 10.9

$10,000,000

CREDIT AGREEMENT

Dated as of

September 29, 2006

among

ALESCO FINANCIAL HOLDINGS, LLC

Borrower

ALESCO FINANCIAL TRUST

Guarantor

and

ROYAL BANK OF CANADA

Lender

TABLE OF CONTENTS


ARTICLE I DEFINITIONS AND ACCOUNTING TERMS; RULES OF CONSTRUCTION			1

	1.01	DEFINITIONS AND RULES OF CONSTRUCTION	1
	1.02	COMPUTATION OF TIME PERIODS	10
	1.03	ACCOUNTING TERMS	10
	1.04	PRINCIPLES OF CONSTRUCTION	10

ARTICLE II THE CREDIT FACILITY			11

	2.01	LOANS	11
	2.02	PROCEDURE FOR BORROWING	11
	2.03	CONVERSION AND CONTINUATION	11
	2.04	EVIDENCE OF INDEBTEDNESS, NOTE	12
	2.05	PREPAYMENTS	12
	2.06	REDUCTION OR TERMINATION OF COMMITMENT	13
	2.07	FEES	13
	2.08	INTEREST RATES AND PAYMENTS DATES	13
	2.09	INTEREST AND FEE BASIS	14
	2.10	METHOD OF PAYMENT	15
	2.11	EXTENSION OF COMMITMENT	15
	2.12	ADJUSTMENTS TO VALUE	15
ARTICLE III CHANGE IN CIRCUMSTANCES			16

	3.01	YIELD PROTECTION	16
	3.02	CHANGES IN CAPITAL ADEQUACY REGULATIONS	16
	3.03	AVAILABILITY OF EURODOLLAR LOANS	17
	3.04	FUNDING REIMBURSEMENT	17
	3.05	TAXES	17
	3.06	LENDER STATEMENTS, SURVIVAL OF INDEMNITY	18

ARTICLE IV CONDITIONS PRECEDENT			18

	4.01	CONDITIONS PRECEDENT TO INITIAL LOAN	18
	4.02	CONDITIONS PRECEDENT TO EACH LOAN	20

ARTICLE V REPRESENTATIONS AND WARRANTIES			21

	5.01	EXISTENCE AND GOOD STANDING; TRUST AGREEMENT; SUBSIDIARIES	21
	5.02	POWER AND AUTHORITY; NO CONFLICT	21
	5.03	NO FILINGS OR APPROVALS	22
	5.04	EXECUTION; VALIDITY	22
	5.05	FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT	22
	5.06	NO LITIGATION	22
	5.07	NOT A REGULATED BORROWER	23
	5.08	COMPLIANCE WITH LAW, AGREEMENTS, ETC.	23
	5.09	GOOD TITLE	23
	5.10	TAXES	23

(i)


	5.11	MARGIN REGULATIONS	24
	5.12	MATERIAL ADVERSE EFFECT	24
	5.13	NO IMMUNITY FROM JURISDICTION	24
	5.14	RANKING OF LOANS; DEBT	24
	5.15	MANAGEMENT AGREEMENT	24
	5.16	DAIN ACCOUNT	24
	5.17	ACCURATE INFORMATION	25

ARTICLE VI COVENANTS			25

	6.01	AFFIRMATIVE COVENANTS	25
	6.02	NEGATIVE COVENANTS	29

ARTICLE VII DEFAULTS			32

	7.01	EVENTS OF DEFAULT	32

ARTICLE VIII GUARANTY			34

	8.01	GUARANTY BY GUARANTOR	34
	8.02	OBLIGATIONS UNCONDITIONAL	35
	8.03	STAY OF ACCELERATION	36
	8.04	SUBROGATION	36
	8.05	SUBORDINATION	36
	8.06	CUMULATIVE REMEDIES	36
	8.07	WAIVERS	36
	8.08	SURVIVAL OF GUARANTY	37

ARTICLE IX MISCELLANEOUS			37

	9.01	AMENDMENTS AND WAIVERS	37
	9.02	NOTICES	37
	9.03	PRESERVATION OF RIGHTS	38
	9.04	EXPENSES; INDEMNITY	39
	9.05	BINDING EFFECT	39
	9.06	SUCCESSORS AND ASSIGNS; PARTICIPATIONS	39
	9.07	JUDGMENT CURRENCY	40
	9.08	SEVERABILITY	41
	9.09	COUNTERPARTS	41
	9.10	SURVIVAL	41
	9.11	NO FIDUCIARY RELATIONSHIP; NO JOINT VENTURE	41
	9.12	RIGHT OF SET-OFF	41
	9.13	ENTIRE AGREEMENT	42
	9.14	GOVERNING LAW	42
	9.15	SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITY	42
	9.16	CUSTOMER IDENTIFICATION PROGRAM REQUIREMENTS	42
	9.17	RECORDINGS	43
	9.18	WAIVER OF JURY TRIAL	43
	9.19	WAIVER OF CERTAIN CLAIMS	43

(ii)


EXHIBITS

Exhibit A:		Form of Note
Exhibit B:		Form of Notice of Borrowing
Exhibit C:		Form of Notice of Conversion
Exhibit D:		Form of Request for Extension

SCHEDULES

Schedule 5.01:		Subsidiaries
Schedule 5.09:		Existing Liens
Schedule 5.14:		Existing Debt

(iii)

CREDIT AGREEMENT dated as of September 29, 2006 among ALESCO FINANCIAL HOLDINGS, LLC, a Delaware limited liability company (“Borrower”), ALESCO FINANCIAL TRUST, a Maryland real estate investment trust (“Guarantor”), and ROYAL BANK OF CANADA (“Lender”).

WHEREAS, Borrower has requested that Lender make loans to it in an aggregate principal amount not exceeding $10,000,000 at any one time outstanding and Lender is willing to make such loans upon the terms and conditions hereof;

WHEREAS, Guarantor owns all outstanding shares of the capital stock of Borrower and will benefit from the loans made by Lender to Borrower;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS; RULES OF CONSTRUCTION

1.01 Definitions and Rules of Construction. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. In the case of Borrower, “Affiliate” shall include Xxxxx Brothers Management and any Affiliate of Xxxxx Brothers Management.

“Agreement” means this Credit Agreement, as it may be amended, supplemented, restated or otherwise modified from time to time.

“Alesco Funding” means Alesco Preferred Funding X, Ltd., an exempted company incorporated under the laws of the Cayman Islands.

“Alesco Funding Preferred Shares” means Preferred Shares, par value $0.01 per share, issued by Alesco Funding.

“Alesco Funding Securities” means Alesco Funding Preferred Shares and other securities or notes issued by Alesco Funding.

“Applicable Margin” means (i) 2.75% in the case of Eurodollar Loans and (ii) 1.50% in the case of Base Rate Loans.

“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978, Title 11 of the United States Code, as amended from time to time, and any successor statute.

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“Base Rate” means, for any day, the higher of (a) the Federal Funds Rate plus 0.50% and (b) the Prime Rate.

“Base Rate Loan” means a Loan at such time as it bears interest based on the Base Rate.

“Borrowing Date” means a date on which a Loan is made.

“Business Day” means (a) with respect to any borrowing or payment of, or determination of LIBOR with respect to, a Eurodollar Loan or when used in the definition of Interest Period or with respect to a Notice of Conversion, any day on which dealings in U.S. Dollars are carried on in the London interbank market other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or obligated by Law or by local proclamation to close, [(b) for purposes of Section 2.02 only, a day referred to in the preceding clause (a) on which commercial banks in Toronto, Ontario are not authorized or obligated by Law or by local proclamation to close,] and (c) for all other purposes, any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York, are authorized or obligated by Law or by local proclamation to close.

“Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent and/or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person prepared in accordance with GAAP and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Change in Management” means (i) Xxxxx Brothers Management ceasing to manage Guarantor pursuant to the Management Agreement, (ii) Xxxxx Brothers Management ceasing to be a direct or indirect wholly-owned subsidiary of Xxxxx Brothers LLC, (iii) any resignation or removal of any of Xxxxxx Xxxxx as the Chairman or Xxx XxXxxxx as the President and Chief Executive Officer of Guarantor or Xxxxx Brothers Management or ceasing to have substantially the responsibility or authority at Guarantor and Xxxxx Brothers Management customarily possessed by a Chairman or Chief Executive Officer, respectively.

“Change of Control” means that a “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) (other than (i) the beneficial owners of Guarantors or Xxxxx Brothers LLC, as applicable, as of the date hereof, (ii) Lender and its Affiliates) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 50% or more of the total voting equity interests of Guarantor or Xxxxx Brothers LLC, or otherwise has the power to direct or cause the direction of the management or policies of Borrower or Xxxxx Brothers LLC Equity interests whose holders do not possess voting power except upon the happening of contingencies or which entitle their holders to vote only with regard to matters as to which holders of nonvoting preferred shares or limited partnership interests are customarily entitled to vote shall not constitute voting shares or voting equity interests for purposes of determining whether a Change of Control has occurred; provided that the consummation of the Sunset Merger shall not constitute a Change of Control.

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“Cleanup Payment” has the meaning specified in Section 2.05(b).

“Cleanup Period” means a period of at least four (4) consecutive Business Day during which no loans are outstanding. For purposes of determining whether any four Business Days are consecutive, any intervening non-Business Days shall be disregarded.

“Closing Date” means the earliest date on which the conditions precedent to Lender’s obligation to make Loans to Borrower are satisfied or waived.

“Code” means the United States Internal Revenue Code of 1986, as amended from time to time.

“Xxxxx Brothers Management” means Xxxxx Brothers Management LLC, a Delaware limited liability company.

“Xxxxx Securities” means Xxxxx & Company Securities, LLC, a Delaware limited liability company.

“Collateral” has the meaning specified in the Security Agreement and includes all Pledged Alesco Funding Securities.

“Collateral Account” means the Dain Account or each other securities account or deposit account to which is credited any Collateral.

“Collateralized Debt Obligation” or “Collateralized Loan Obligation” means an offering, by a special purpose entity, of interests in secured debt obligations, and other investments permitted under the organizational and operating documents of such entity, which interests are sold to third party investors.

“Commitment” means Lender’s obligation to make Loans in an aggregate principal amount not exceeding $10,000,000 (as such amount may be reduced pursuant to the terms hereof) at any one time outstanding.

“Commitment Period” means the period from the Effective Date to the Termination Date.

“Consolidated VIE” means a variable interest entity that is required under GAAP to be consolidated with Borrower.

“Conversion Date” means any date on which a Loan is converted from one Type to another pursuant to Section 2.03(c) or any other provision of this Agreement.

“Credit Date” means (a) each Borrowing Date, (b) each date on which a Loan is continued as the same Type of Loan for an additional Interest Period and (c) each date on which a Loan is converted to a different Type of Loan.

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“Credit Documents” means this Agreement, the Security Agreement, the Dain Control Agreement, any other Control Agreement, the Note and all documents and instruments related to any of the foregoing.

“Dain” means RBC Xxxx Xxxxxxxx Inc.

“Dain Account” means (i) Account No. 12Y3-5204-6135 maintained by Dain for Borrower and (ii) each securities account established by Dain for Borrower in substitution thereof or replacement thereof or to which any Pledged Alesco Funding Securities or other items of Collateral are credited.

“Dain Account Agreement” means the Account Agreement dated September 25, 2006 between Borrower and Dain establishing the Dain Account.

“Dain Control Agreement” means the Control Agreement dated the date hereof among the Borrower, Xxxxx Securities, Lender and Dain granting to Lender Control of the Dain Account.

“Debt” of any Person means (a) indebtedness of such Person for borrowed money, (b) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) obligations of such Person to pay the deferred purchase price of property or services (excluding trade payables and other accounts payable incurred in the ordinary course of business of such Person and not more than 90 days overdue), (d) Capital Lease Obligations of such Person, (e) Debt of others secured by a Lien on the property of such Person, whether or not the Debt so secured has been assumed by such Person, (f) the maximum amount available to be drawn under all letters of credit issued for the account of such Person and all unpaid drawings in respect of such letters of credit, (g) all obligations, contingent or otherwise, in respect of bankers’ acceptances, (h) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (i) all obligations of such Person created or arising under any conditional sale or other title retention agreement or incurred as financing, (j) the net obligations of such Person under derivative transactions (including but not limited to under Swap Agreements) or commodity transactions (determined in the case of any such transaction on the basis specified in the relevant Swap Agreement, commodity contract or other agreement governing such transaction or (absent such specification) on a xxxx-to-market basis for the date of determination), and (k) obligations of such Person under any Guaranty of Debt of others of the kinds referred to in the foregoing clauses (a) through (j).

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

“Depository Bank” means any bank maintaining a Collateral Account.

“Dollars” and “$” mean lawful money of the United States of America. Any reference in this Agreement or any other Credit Document to payment in “Dollars” or “$” means payment in immediately available Dollar funds.

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“Effective Date” means the date on which this Agreement is executed and delivered by Borrower and Lender.

“Eurodollar Loan” means a Loan at such time as it bears interest based on LIBOR.

“Events of Default” has the meaning specified in Section 7.01.

“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if such rate is not so published for a particular day, the Federal Funds Rate for such day shall be the average rate quoted to Lender on such day for such transactions as determined by Lender in good faith.

“GAAP” means United States generally accepted accounting principles consistently applied.

“Guaranty” by any Person means any obligation of such Person guaranteeing or in effect guaranteeing any Debt of another Person, including but not limited to any obligation of such Person to purchase or pay (or supply or advance funds for the purchase or payment of) such Debt (whether arising by virtue of a partnership agreement, agreement to keep well, to purchase property or assets or services, to take or pay, or to maintain financial statement conditions or otherwise), or any obligation incurred for the purpose of assuring the holder of such Debt of the payment thereof in whole or in part; provided that the term “Guaranty” shall not include any endorsement of an instrument for deposit or collection in the ordinary course of business.

“Indemnified Party” has the meaning specified in Section 8.04.

“Insolvency Proceeding” means (i) a voluntary or involuntary case under the Bankruptcy Code and/or (ii) any other case or proceeding under the laws of any jurisdiction relating to bankruptcy, insolvency, reorganization, or relief of debtors.

“Interest Payment Date” means (i) with respect to any Eurodollar Loan, the last day of each Interest Period for such Loan and (ii) with respect to any Base Rate Loan, the last Business Day of each calendar month.

“Interest Period” means, as to any Eurodollar Loan, the period commencing on the Borrowing Date of such Loan or on the date on which the Loan is converted into or continued as a Eurodollar Loan, and ending on the date one, two or three months thereafter, as selected by a Borrower pursuant to Section 2.03(a) or in a Notice of Conversion, provided that:

(i) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day

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unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;

(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period shall extend beyond the Stated Termination Date.

“Intermediary” means Dain or any other securities intermediary (as defined in Section 8-102(a) of the UCC) maintaining a Collateral Account.

“Law” means any constitution, treaty, convention, statute, law, code, ordinance, decree, order, rule, regulation, guideline, interpretation, directive or policy of a governmental, regulatory, or administrative body or an applicable order or decree of a court or arbitrator.

“LIBOR” means, with respect to any Eurodollar Loan for any Interest Period, the quotient of (a) the rate appearing on Page 3750 of Dow Xxxxx Markets (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by Lender from time to time for purposes of providing quotations of interest rates applicable to deposits in Dollars in the London interbank market) at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period, as the rate for deposits in Dollars with a maturity comparable to such Interest Period (or if such rate is not available at such time for any reason, then the rate determined for this clause (a) shall be the rate per annum (rounded to the next higher multiple of 1/16% if the rate is not such a multiple) at which deposits in Dollars are offered to Lender by leading banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, for delivery on the first day of such Interest Period in the approximate amount of such Loan and having a maturity approximately equal to such Interest Period) divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period (if any).

“Lien” means any lien, pledge, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including but not limited to the lien or retained security title of a conditional vendor and the interest of a lessor under a lease intended as security (but not including the interest of a lessor under any operating lease), and any filed Uniform Commercial Code financing statement or comparable filing in any other jurisdiction.

“LLC Agreement” means the Limited Liability Company Agreement dated as of February 9, 2006 for the Borrower.

“Loan” has the meaning specified in Section 2.01.

“Loan Limit” means the lesser of (i) the Commitment and (ii) an amount equal to the LTV Ratio (expressed as a decimal) multiplied by the Value of the Collateral.

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“LTV Ratio” means 50%.

“Management Agreement” means the Management Agreement dated as of January 31, 2006 between Guarantor and Xxxxx Brothers Management, as from time amended, modified, supplemented or restated.

“Margin Stock” means margin stock as defined in Regulation U of the Board of Governors of the Federal Reserve System, 12 CFR §221.2, as in effect from time to time and any successor thereto, or other regulation or official interpretation of such Board relating to the extension of credit by banks for the purpose of purchasing or carrying margin stock applicable to member banks of the Federal Reserve System.

“Material Adverse Effect” means a material adverse effect on (a) the business, financial or other condition, assets or results of operations of an Obligor and its Subsidiaries, taken as a whole or Alesco Funding, (b) either Obligor’s ability to perform its obligations under any Credit Document, (c) the validity or enforceability of any Credit Document or the rights or remedies of Lender thereunder, or (d) Borrower’s title to the Collateral or the validity, enforceability, perfection or priority of Lender’s security interest on the Collateral.

“Note” means Borrower’s promissory note evidencing Loans, substantially in the form of Exhibit A, payable to the order of Lender in the amount of the Commitment, and any other promissory note acceptable to and accepted by Lender from time to time in substitution or exchange therefor or renewal thereof.

“Notice of Borrowing” has the meaning specified in Section 2.02.

“Notice of Conversion” means a notice of conversion of a Loan or Loans from one Type to the other Type, substantially in the form of Exhibit C.

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of each Obligor to Lender or any Indemnified Party arising under or in connection with any of the Credit Documents.

“Obligor” means Borrower or Guarantor, and “Obligors” means Borrower and Guarantor collectively.

“Other Taxes” has the meaning specified in Section 3.05.

“Participant” has the meaning specified in Section 9.06.

“Permitted Lien” means a Lien specified in clauses (i), (ii) and (iii) of Section 6.02(c).

“Person” means any natural person, partnership, corporation, trust (including a business trust), limited liability company, joint stock company, unincorporated association, joint venture or other entity (or any segregated portfolio, segregated subfund, account, cell or other similar legally respected subdivision of the foregoing which may contract on its own behalf or on whose behalf the entity may contract) or any government or any political subdivision or agency, department or instrumentality thereof.

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“Pledged Alesco Funding Securities” means all Alesco Funding Securities pledged from time to time by Borrower to Lender pursuant to the Security Agreement or otherwise subject to the security interest granted by the Security Agreement and all security entitlements of Borrower in respect thereof.

“Prime Rate” means for any day, the rate of interest per annum determined by Lender from time to time as its prime commercial lending rate for Dollar loans in the United States for such day. The Prime Rate is not necessarily the lowest rate charged by Lender for such loans.

“Request for Extension” has the meaning specified in Section 2.11.

“Reserve Requirement” means, with respect to any Interest Period, the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including but not limited to any emergency, supplemental or other marginal reserve requirement) for Lender with respect to liabilities or assets consisting of or including Eurocurrency liabilities (as defined in Regulation D of such Board, as in effect from time to time) having a term most closely corresponding to the term of such Interest Period.

“Responsible Officer” means any designee thereof, or any other authorized officer or representative of an Obligor acceptable to Lender, in each case for whom an incumbency certificate in form and manner reasonably acceptable to Lender has been provided by such Obligor to Lender.

“Security Agreement” means the Security Agreement dated as of the date hereof between Borrower and Lender, as amended, supplemented, restated or otherwise modified from time to time.

“Shareholder Equity” means, at any time, the amount shown as “shareholders equity” on the then most recent consolidated financial statements of Guarantor furnished to Lender pursuant to Section 6.01(c).

“Stated Termination Date” means September 28, 2007 or such later date as may be determined pursuant to Section 2.11.

“Subsidiary” means, with respect to any Person, any other Person of which more than 50% of the securities or other ownership interests, having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions for such other Person (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such other Person shall have or might have voting power by reason of the happening of any contingency), are at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

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“Sunset Financial” means Sunset Financial Resources, Inc., a Maryland corporation.

“Sunset Financial Merger” means the merger between Guarantor and Sunset Financial.

“Sunset Financial Merger Agreement” means the merger agreement between Sunset Financial and Guarantor.

“Swap Agreement” means (i) any “swap agreement” as defined in §101(53B) of the Bankruptcy Code or any successor provision, or (ii) any “Transaction” as defined in the form 1992 ISDA Master Agreement or the form 2002 ISDA Master Agreement, in either such case as published by the International Swaps and Derivatives Association, Inc.

“Taxes” means any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, including penalties and interest, imposed by any governmental or other authority of any country, including any political subdivision thereof, other than taxes imposed on or measured by gross or net income of Lender, and franchise taxes and branch profits taxes and similar taxes imposed on Lender, by (i) the jurisdiction under the Law of which it is organized or any political subdivision thereof, (ii) any jurisdiction as a result of it being engaged or deemed to be engaged in a trade or business in such jurisdiction for reasons other than its extension of credit pursuant to this Agreement, or (iii) the jurisdiction in which is located the office through which it is acting hereunder or any political subdivision thereof.

“Termination Date” means the Stated Termination Date or any earlier date on which the Commitment is terminated pursuant hereto.

“Trust Agreement” means the Articles of Amendment and Restatement of Guarantor dated January 30, 2006 establishing Guarantor, as amended, modified, supplemented or restated from time to time.

“Trustee” means any member of the Board of Trustees of Guarantor.

“Type” means, with respect to any Loan, its nature as a Eurodollar Loan or a Base Rate Loan.

“UCC” means the Uniform Commercial Code as in effect in the State of New York.

“Unutilized Commitment” at any time the amount by which the Commitment in effect at such time exceeds the aggregate principal amount of all loans outstanding at such time.

“Utilization Period” means each period (i) commencing on the last day of a Cleanup Period and (ii) ending on the first day the immediately succeeding Cleanup Period, provided that the first Utilization Period shall commence on the first Borrowing Date and end on the first day of the first Cleanup Period thereafter.

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“Valuation Report” has the meaning specified in Section 6.01(d).

“Value” means, as further provided in Section 2.12, (i) with respect to Cash, the amount thereof, and (ii) with respect to Pledged Alesco Funding Securities, the value thereof as set forth in the most recent Valuation Report delivered to Lender, subject to such adjustments in such value as Lender shall in good xxxxx xxxx appropriate to reflect circumstances arising or occurring after the date of such Valuation Report, and (iii) with respect to any other item of Collateral, the fair market value of such item, as determined by Lender in its reasonable discretion.

1.02 Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” mean “to but excluding.”

1.03 Accounting Terms. All accounting and financial terms not specifically defined herein shall be construed in accordance with GAAP. All banking terms not specifically defined herein shall be construed in accordance with general practice among commercial banks in New York, New York.

1.04 Principles of Construction. (a) Unless otherwise expressly specified herein, (i) references to Articles, Sections, Schedules and Exhibits are to Articles, Sections, Schedules and Exhibits of this Agreement, (ii) the words “hereof”, “herein”, “hereunder” and other similar words refer to this Agreement as a whole, and (iii) words of any gender mean and include correlative words of the other genders.

(b) Unless otherwise specified, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto.

(c) The Table of Contents and the captions in this Agreement are for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

(d) All references herein to times of day shall be New York City time unless otherwise expressly specified herein. All references to “days” shall be to calendar days unless Business Days are specified.

(e) Each party hereto and its counsel have reviewed this Agreement and the other Credit Documents and have participated in the preparation of this Agreement and the other Credit Documents. Accordingly, any rules of construction requiring that ambiguities are to be resolved against a particular party shall not be applicable in the construction and interpretation of this Agreement and the other Credit Documents.

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ARTICLE II

THE CREDIT FACILITY

2.01 Loans. Subject to the terms and conditions hereof, Lender agrees to make loans (each, a “Loan”) to Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed the Loan Limit. The Loans may from time to time be (i) Eurodollar Loans, (ii) Base Rate Loans, or (iii) a combination thereof, as determined by Borrower and notified to Lender in accordance with Sections 2.02 and 2.03. During the Commitment Period, Borrower may utilize the Commitment by borrowing hereunder, prepaying Loans in whole or in part and reborrowing hereunder, all in accordance with the terms and conditions hereof. Each Loan shall be payable on the Termination Date.

2.02 Procedure for Borrowing. Borrower may borrow under the Commitment during the Commitment Period on any Business Day by delivering to Lender a notice of borrowing substantially in the form of Exhibit B (a “Notice of Borrowing”) (which notice, to be effective on the requested Borrowing Date, must be received by Lender (a) prior to 12:00 noon, three Business Days before the requested Borrowing Date, if the requested Loan is initially to be a Eurodollar Loan or (b) prior to 11:00 a.m., on the requested Borrowing Date, if the requested Loan is initially to be a Base Rate Loan), specifying (i) the amount to be borrowed, which shall be $500,000 or whole multiples of $100,000 in excess thereof, (ii) the proposed Borrowing Date, and (iii) whether the requested Loan is to be a Eurodollar Loan or a Base Rate Loan and, in the case of a Eurodollar Loan, the initial Interest Period therefor. Lender shall, unless it determines that any applicable condition specified in Article IV has not been satisfied, make the amount of the requested Loan available to Borrower in immediately available funds before 3:00 p.m. on the requested Borrowing Date [by crediting the amount in the Borrower’s operating account at the Lender’s branch at One Liberty Plaza, New York, New York, or as otherwise specified by the Borrower to Lender] [in the notice of Borrowing].

2.03 Conversion and Continuation. (a) At least three Business Days prior to the expiration of each Interest Period for a Eurodollar Loan, Borrower shall notify Lender of the requested duration of the succeeding Interest Period unless Borrower shall have given a timely Notice of Conversion with respect to such Eurodollar Loan pursuant to paragraph (b) of this Section 2.03 or unless Borrower shall have given notice of its intention to prepay such Eurodollar Loan on or before the first day of any such succeeding Interest Period. If Borrower fails to timely notify Lender of the desired duration of the Interest Period succeeding an expiring Interest Period for a Eurodollar Loan, or to timely give notice of a conversion or a notice of prepayment of such Loan, it shall be deemed to have requested a one-month duration for such succeeding Interest Period; provided that (i) no Eurodollar Loan may be continued as such when an Event of Default has occurred and is continuing and (ii) if such continuation is not permitted pursuant to the preceding clause (i), such Eurodollar Loan shall be automatically converted to a Base Rate Loan on the last day of the then expiring Interest Period.

(b) Borrower may elect from time to time to convert Loans from one Type to the other Type, by delivering to Lender a Notice of Conversion (which Notice to be effective on the requested conversion date (a “Conversion Date”) must be received by Lender by the time

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prescribed in Section 2.02 for receipt of a Notice of Borrowing for a Loan of the Type being converted to); provided that (i) any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto, and (ii) no Base Rate Loan may be converted into a Eurodollar Loan when an Event of Default has occurred and is continuing.

2.04 Evidence of Indebtedness, Note. Lender shall open and maintain on its books accounts and records evidencing the Loans made to Borrower. Lender shall record therein the amount of the Loans, the interest rate applicable thereto, each payment of principal of or interest on the Loans, interest, fees, expenses and other amounts payable by Borrower hereunder and all other amounts paid by Borrower under this Agreement. Such accounts and records maintained by Lender will constitute, in the absence of manifest error, prima facie evidence of the indebtedness of Borrower to Lender pursuant to this Agreement, including the date Lender made each Loan to Borrower, the amount of such Loan, interest accrued on such Loan and the amounts Borrower has paid from time to time on account of the principal of and interest on the Loans and fees, expenses and other amounts payable by Borrower hereunder. The Loans shall also be evidenced by the Note. Lender is hereby authorized to record the date and amount of each Loan and the date and amount of each payment or prepayment of principal thereof on the schedule annexed to and constituting a part of the Note; provided that Lender’s failure to make any such recordation (or any error in such recordation) shall not limit or otherwise affect Borrower’s obligations hereunder or under the Note.

2.05 Prepayments. (a) If at any time the aggregate outstanding principal amount of the Loans exceeds the Loan Limit, Borrower shall, within two Business Days after Lender’s written demand, prepay the Loans and/or provide additional Collateral consisting of Cash or Alesco Funding Securities or such other Collateral as may be mutually agreed upon by Borrower and Lender having a Value sufficient to eliminate such excess, provided that if the aggregate outstanding principal amount of the Loans exceeds the Commitment, Borrower shall immediately prepay the Loans by an amount at least equal to such excess.

(b) Borrower shall not permit any Utilization Period to exceed one hundred and twenty (120) days. Accordingly Borrower shall prepay all outstanding Loans and all accrued interest thereon on the 120th day of each Utilization Period (such a prepayment herein called a “Cleanup Payment”) and shall not make any borrowing hereunder for four consecutive Business Days following such prepayment.

(c) Borrower may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty, upon prior notice to Lender (which notice must be received by Lender prior to 11:00 a.m. two Business Days prior to the prepayment date) specifying the date and amount of prepayment and the Type of Loan to be prepaid; provided that each prepayment of a Eurodollar Loan on a day other than the last day of an Interest Period shall require the payment of all amounts payable by Borrower pursuant to Section 3.04. Any such notice shall be irrevocable, and the payment amount specified in such notice shall be due and payable on the date specified, together with accrued interest to such date on the amount prepaid. Partial prepayments of principal shall be in an amount of $500,000 or a whole multiple of $100,000 in excess thereof.

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(d) Partial prepayments of the Loans shall be applied first to Base Rate Loans and then to Eurodollar Loans in such order as will minimize the amount payable by Borrower pursuant to Section 3.04.

(e) Together with each mandatory or optional prepayment of principal hereunder, Borrower shall also prepay all interest accrued on such amount prepaid.

2.06 Reduction or Termination of Commitment. Borrower may at any time, upon 5 Business Days’ prior notice to Lender, permanently terminate, or from time to time permanently reduce, the Commitment; provided that each partial reduction of the Commitment shall be in an amount that is $1,000,000 or any whole multiple of $500,000 in excess thereof. In the case of a reduction of the Commitment, the Borrower shall, on the effective date of such reduction, prepay in accordance with Section 2.05 so much of the aggregate outstanding principal amount of the Loans as exceeds the amount of the Commitment as so reduced together with all interest accrued thereon. In the case of the termination of the Commitment, Borrower shall, on the effective date of any such termination, prepay the principal amount of all outstanding Loans, all accrued and unpaid interest thereon and all fees, expenses and any other amounts due hereunder or under any other Credit Document. Once such termination or reduction has occurred, the Commitment, or the amount of such reduction, may not be reinstated.

2.07 Fees. (a) As consideration for the credit facility made available hereunder, Borrower shall pay to Lender a non-refundable structuring fee in the amount of $45,000, which fee shall be due on the earlier of the Closing Date and the Termination Date. Without limiting Borrower’s liability for payment of such fee, Borrower hereby authorizes Lender to deduct such fee from the proceeds of the initial Loan.

(b) Borrower agrees to pay to Lender a fee (the “Commitment Fee”) at the rate of 0.50% (fifty basis points) per annum on the amount of the Unutilized Commitment during the Commitment Period. The Commitment Fee shall be payable in arrears on the last Business Day of each calendar month during the Commitment Period (commencing on the first such day to occur after the Effective Date) and on the Termination Date and shall be calculated on the average daily amount of the Unutilized Commitment for each period for which the Commitment Fee is paid.

2.08 Interest Rates and Payments Dates. (a) Each Eurodollar Loan shall bear interest on the outstanding principal amount thereof for each Interest Period applicable thereto until it becomes due and payable or is converted into a Loan of another Type, at a rate per annum equal to LIBOR for such Interest Period plus the Applicable Margin. Interest accrued on each Eurodollar Loan shall be payable in arrears on each Interest Payment Date, on any date on which such Loan is prepaid (on the amount prepaid), whether due to acceleration or otherwise, and at maturity.

(b) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, from the date such Loan is made until it becomes due and payable or is converted into a Loan of another Type, at a rate per annum equal to the Base Rate for plus the Applicable Margin. Interest accrued on each Base Rate Loan shall be payable in arrears on each Interest Payment Date, commencing with the first such date to occur after the Borrowing Date of such Loan, on any date on which such Loan is prepaid (on the amount prepaid), whether due to acceleration or otherwise, and at maturity.

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(c) If all or a portion of (i) the principal amount of any Loan, or (ii) any interest payable thereon or any other amount due hereunder or under any other Credit Document shall not be paid when due (whether at the stated maturity, by acceleration, on the 100th day of a Utilization Period or otherwise), such overdue amount shall bear interest at a rate per annum that is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto pursuant to paragraphs (a) or (b), as applicable, of this Section 2.08 plus 2.00% and (y) in the case of overdue interest or any such other amount, the Base Rate plus the Applicable Margin plus 2.00%, in each case from the date of such non-payment until such amount is paid in full (after as well as before judgment). Any such interest shall be payable in arrears on demand or, if no earlier demand for payment is made, on the last Business Day of each calendar month.

(d) In no event shall the interest charged with respect to any Loan or any other obligation of Borrower hereunder or under the Note exceed the maximum amount permitted by applicable Law. Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable for the account of Lender hereunder or under the Note (the “Stated Rate”) would exceed the highest rate of interest permitted under any applicable law to be charged by Lender (the “Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable for the account of Lender shall be equal to the Maximum Lawful Rate; provided that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, Borrower shall, to the extent permitted by law, continue to pay interest for the account of Lender at the Maximum Lawful Rate until such time as the total interest received by Lender is equal to the total interest which Lender would have received had the Stated Rate been (but for the operation of this provision) the interest rate payable. Thereafter, the interest rate payable for the account of Lender shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest received by Lender exceed the amount which Lender could lawfully have received had the interest been calculated for the full term hereof at the Maximum Lawful Rate. If Lender has received interest hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or to other amounts (other than interest) payable hereunder, and if no such principal or other amounts are then outstanding, such excess or part thereof remaining shall be paid to Borrower.

2.09 Interest and Fee Basis. (a) Commitment Fee and, whenever it is calculated on the basis of the Prime Rate, interest on Base Rate Loans shall be calculated on the basis of a 365-day (or 366-day, as the case may be) year for the actual days elapsed; otherwise, interest shall be calculated on the basis of a 360-day year for the actual days elapsed. Lender shall as soon as practicable notify Borrower of each determination of LIBOR. Any change in the interest rate on a Loan resulting from a change in the Base Rate shall become effective as of the opening of business on the day on which such change in the Base Rate is announced. Lender shall as soon as practicable notify Borrower of the effective date and the amount of each such change in interest rate, but failure to give such notice shall not limit or otherwise affect Lender’s entitlement to receive interest on the Loans, and on other amounts payable hereunder, at the rate and on the dates specified herein. Each determination of an interest rate by Lender pursuant to any provision of this Agreement shall be conclusive and binding on Borrower in the absence of manifest error.

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(b) Interest shall be payable for the day a Loan is made but not for the day of any repayment thereof on the amount repaid if payment is received prior to 12:00 noon. If any principal of or interest on a Loan shall become due on a day that is not a Business Day, such due date shall be extended to the next succeeding Business Day and, in the case of principal, such extension of time shall be included in computing interest payable on such principal. For purposes of the Interest Act (Canada), the annual rate of interest or fees charged to Borrower to which the rate calculated in accordance with this Agreement is equivalent is the rate so calculated multiplied by a fraction, the numerator of which is the actual number of days in the calendar year in which such calculation is made and the denominator of which is the number of days comprising the basis on which such interest is calculated.

2.10 Method of Payment. (a) All payments (including prepayments) by Borrower on account of principal, interest, fees and other amounts payable hereunder shall be made in Dollars and immediately available funds to Lender by 12:00 noon on the date when due at the office of Lender located at the address specified in Section 9.02 for notices to Lender or as otherwise specified by Lender to Borrower in writing.

(b) If, on the due date for the payment of interest on any Loan or any Commitment, Lender has not received from Borrower notice that it intends to pay such interest or fee from another source, then Lender is authorized (but shall not be required) to debit any deposit account of Borrower at the Lender for such payment.

2.11 Extension of Commitment. Not less than 30 days and not more than 45 days before the Stated Termination Date then in effect, Obligors may, by written notice to Lender substantially in the form of Exhibit D (a “Request for Extension”), request that the Stated Termination Date be extended for a period of up to 364 days from the Stated Termination Date then in effect. Such request shall not be effective unless Lender consents thereto in writing no later than 15 days prior to the Stated Termination Date. Lender may grant or withhold its consent in its sole and absolute discretion, provided that any failure of Lender to respond to such request in such time period shall be deemed to be a refusal to extend. If Lender shall consent in writing as provided herein to a request to extend the Stated Termination Date, then the Stated Termination Date shall be extended to the date specified in such request.

2.12 Adjustments to Value. Without limiting Lender’s discretion to determine Value (as provided in the definition of such term herein) of any item of collateral, (i) the Value of the Collateral shall be reduced by the amount of any claims of, and liabilities or indebtedness to, third parties secured by a Lien on such item of Collateral, (ii) any item of Collateral as to which Lender reasonably determines there is insufficient current information may be assigned such Value as Lender determines in its reasonable discretion, including a Value of zero (provided that Lender agrees that the provision of the Valuation Report pursuant to Section 6.01(d) will constitute sufficient information regarding the Pledged Alesco Funding Securities covered thereby), (iii) if Lender determines that for any reason, other than its own fault, it does not possess a valid, enforceable and perfected Lien on any item of Collateral, which Lien is senior to all other Liens thereon, such item of Collateral may be assigned by Lender such

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Value as Lender determines in its reasonable discretion, including a Value of zero, and (iv) if Lender is notified by Borrower, or otherwise learning of any event that could reasonably be expected to have a Material Adverse Effect on any item of Collateral, such item of Collateral may be assigned such Value as Lender in its reasonable discretion shall determine, including a Value of zero. No such reduction in the Value of any item of Collateral shall limit Lender’s rights or Borrower’s obligation under Sections 6.02 and 7.01.

ARTICLE III

CHANGE IN CIRCUMSTANCES

3.01 Yield Protection. If after the date hereof the introduction of, or any change in, any Law or governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), any interpretation thereof or compliance by Lender therewith:

(a) subjects Lender or any applicable lending office to any Tax on or from payments due from Borrower, excluding any Taxes or Other Taxes required to be paid by Borrower pursuant to Section 3.05 hereof, or changes the basis of taxation of payments to Lender in respect of the Loans or other amounts due it hereunder;

(b) imposes or increases or deems applicable any reserve (other than the Reserve Requirement), assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, Lender or any applicable lending office; or

the result of which is to increase the cost to Lender or any applicable lending office of making, funding or maintaining Loans, to reduce any amount received by Lender or any applicable lending office in connection with Loans or to require Lender or any applicable lending office to make any payment calculated by reference to the amount of loans held or interest received by it, by an amount deemed material by Lender, then, within fifteen days after demand by Lender, Borrower shall pay Lender that portion of such increased cost incurred or reduction in amount received that Lender determines is attributable to making, funding and/or maintaining the Loans and/or the Commitment.

3.02 Changes in Capital Adequacy Regulations. If Lender determines that, after the date hereof, the adoption or implementation of any applicable Law regarding capital requirements for banks or bank holding companies, or any change therein (including, without limitation, any change according to a prescribed schedule of increasing requirements, whether or not known on the date hereof), or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Lender with any request or directive of any such Person regarding capital adequacy (whether or not having the force of law) has the effect of reducing the return on Lender’s capital to a level below that which Lender could have achieved (taking into consideration Lender’s policies with respect to capital adequacy

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immediately before such adoption, implementation, change or compliance and assuming that Lender’s capital was fully utilized prior to such adoption, implementation, change or compliance) but for such adoption, implementation, change or compliance as a consequence of Lender’s Commitment or outstanding Loans by any amount deemed by Lender to be material, Borrower shall pay to Lender from time to time on demand, as an additional fee, such amount as Lender determines to be necessary to compensate it for such reduction. The determination by Lender of such amount shall be conclusive in the absence of manifest error. Lender may use any reasonable averaging and attribution methods.

3.03 Availability of Eurodollar Loans. If Lender determines that the making or maintenance of Eurodollar Loans would violate any applicable Law, whether or not having the force of law, or if Lender determines that funds of a type and maturity appropriate to match fund Eurodollar Loans are not available, then the availability of Eurodollar Loans shall be suspended, any requested Eurodollar Loan shall be made as a Base Rate Loan and any outstanding Eurodollar Loans shall be converted to Base Rate Loans at the end of the then current Interest Period therefor or at such earlier time as may be required by applicable Law.

3.04 Funding Reimbursement. If any payment of a Eurodollar Loan occurs on a date that is not the last day of an Interest Period for such Eurodollar Loan, whether because of demand for payment, acceleration, mandatory prepayment, optional prepayment or otherwise, (including a Cleanup Payment), or a Eurodollar Loan is not made on the date specified by Borrower for any reason other than default by Lender, Borrower shall reimburse Lender for any loss or cost (excluding lost profits) incurred by it resulting therefrom, including (but not limited to) any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Loan.

3.05 Taxes. (a) Any and all payments by Borrower hereunder or under the Note shall be made free and clear of, and without deduction for, any and all Taxes now or hereafter imposed. If Borrower shall be required by law to deduct or withhold Taxes from or in respect of any sum payable hereunder or under the Note, (i) Borrower shall pay Lender such additional amount as may be necessary in order that the net amount received by Lender after every required deduction or withholding (including any required deduction from, or withholding with respect to, any such additional amount) shall equal the amount Lender would have received had no such deduction or withholding been made, (ii) Borrower shall make such deduction or withholding, (iii) Borrower shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with applicable Law, and (iv) Borrower shall obtain and deliver to Lender official receipts from the relevant taxing authority evidencing such payment, a copy of the return reporting such payment, or other evidence of such payment satisfactory to Lender in its sole discretion.

(b) In addition, Borrower agrees to pay any present or future stamp or documentary taxes and all other excise or property taxes, charges or similar levies (excluding any tax on any transfer or assignment of, or any participation in, this Agreement, the Note or any other Credit Document (or any portion thereof) that is not made or granted at Borrower’s request) which arise from any payment made hereunder or under the Note or from the execution or delivery of, or otherwise with respect to, this Agreement, the Note or any other Credit Document (“Other Taxes”). Within 30 days after payment by Borrower of any Other Taxes

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pursuant to this Section 3.05(b), Borrower shall obtain and deliver to Lender official receipts from the relevant taxing authority evidencing such payment, a copy of the return reporting such payment, or other evidence of such payment satisfactory to Lender in its sole discretion.

(c) Borrower will indemnify Lender for the full amount of Taxes or Other Taxes required to be paid by Borrower pursuant to Section 3.05(a) or 3.05(b) but which are asserted directly against Lender and paid by Lender in respect of any payment hereunder or the execution and delivery of any Credit Document (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 3.05), and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 15 days after the date Lender makes demand therefor, accompanied by a certificate of Lender setting forth in reasonable detail the amount to be paid to it under this paragraph (c), which certificate shall be, absent manifest error, prima facie evidence of such amount. Nothing contained herein shall impose any obligation on Lender to apply for any refund or credit, or disclose to Borrower or any other Person its tax returns or any document or information regarding or containing its proprietary information with respect to its tax affairs and computations.

3.06 Lender Statements, Survival of Indemnity. To the extent reasonably possible, Lender shall (upon Borrower’s written request and agreement to reimburse Lender for its costs and expenses incurred in connection therewith) designate an alternate lending office with respect to Eurodollar Loans to reduce any liability of Borrower to Lender under Sections 3.01 and 3.02 or to avoid the unavailability of Eurodollar Loans under Section 3.03, so long as such designation is not, in Lender’s judgment, disadvantageous to Lender. Lender shall deliver to Borrower a written statement as to the amount due (if any) under Section 3.01, 3.02 or 3.04. Such written statement shall set forth in reasonable detail the calculations upon which Lender determined such amount and shall be final, conclusive and binding on Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though Lender funded such Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the LIBOR applicable to such Loan, whether or not that is in fact the case. Unless otherwise provided herein, the amount specified in any such written statement shall be payable on demand after the receipt by Borrower of the written statement. Borrower’s obligations under Sections 3.01, 3.02, 3.04 and 3.05 shall survive the payment of the Obligations and termination of this Agreement.

ARTICLE IV

CONDITIONS PRECEDENT

4.01 Conditions Precedent to Initial Loan. Lender’s obligation to make the initial Loan hereunder is subject to the fulfillment, to the satisfaction of Lender and its counsel, of each of the following conditions:

(a) Lender shall have received the following, each (as applicable) duly executed and in form and substance satisfactory to Lender in its sole discretion:

(i) the Note, duly executed by Borrower, payable to the order of Lender;

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(ii) the Security Agreement duly executed by Borrower and all documents contemplated thereby;

(iii) the Dain Control Agreement duly executed by Borrower and Dain;

(iv) a copy of the Dain Account Agreement;

(v) copy of the Certificate of Formation and LLC Agreement of Borrower as then in effect;

(vi) copy of the Trust Agreement of Guarantor as then in effect;

(vii) a copy of the Management Agreement as in effect on the date hereof;

(viii) certified copies of (A) resolutions of the Board of Managers of Borrower and of the Board of Trustees of Guarantor authorizing and approving the execution, delivery and performance by Borrower and Guarantor of this Agreement and the other Credit Documents and the borrowings hereunder, and (B) documents evidencing all other necessary actions and governmental approvals, if any, with respect to this Agreement and any other Credit Document and the transactions contemplated hereby and thereby;

(ix) a certificate of Borrower, executed by an authorized officer, certifying the names, titles and true signatures of the officers of Borrower authorized to sign this Agreement or any other Credit Document to which Borrower is a party and to make Borrowings hereunder and otherwise to act on behalf of Borrower hereunder and stating that Lender is authorized to rely thereon until notified of any change by Borrower.

(x) a certificate of Guarantor, executed by an authorized officer, certifying the names, titles and true signatures of the officers of Guarantor authorized to sign this Agreement or any other Credit Document to which Guarantor is a party and authorized to act on behalf of Guarantor hereunder and stating that Lender is entitled to rely thereon until notified of any change by Guarantor in writing;

(xi) a certificate issued by the Secretary of State of Delaware, dated a date not more than ten Business Days prior to the Closing Date, as to the valid existence and good standing of Borrower;

(xii) a certificate issued by the Secretary of State of the State of Maryland dated a date not more than ten Business Days prior to the Closing Date, as to the valid existence and good standing of Guarantor;

(xiii) written opinion(s) of counsel to Borrower and Guarantor;

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(xiv) evidence that not less than 34,530 Alesco Funding Preferred Shares are credited to the Dain Account.

(xv) evidence of the due filing in each appropriate jurisdiction of such documents, and the taking of all such other actions, as the Bank shall specify to obtain a first priority, perfected Lien on the Collateral;

(xvi) the results of tax, judgment and lien searches on Borrower in all jurisdictions specified by Lender, each dated a date not more than ten Business Days prior to the Closing Date;

(xvii) a copy of a Valuation Report as of a date not more than five (5) Business Days prior to the initial Borrowing Date.

(xviii) if available, a copy of the Sunset Financial Merger Agreement; and

(xix) such other approvals, opinions and documents relating to the organization, existence and good standing of each Obligor, this Agreement and the transactions contemplated hereby as Lender shall have requested.

(b) Borrower shall have reimbursed Lender for legal fees incurred by Lender pursuant to Section 9.04 that have been invoiced to Borrower.

4.02 Conditions Precedent to Each Loan. Lender shall not be required to make any Loan (including the initial Loan), to continue a Loan for an additional Interest Period or to convert Loans of one Type to the other Type, unless on the applicable Credit Date:

(a) Lender has received, in the case of (i) the making of a Loan, the relevant Notice of Borrowing, or (ii) the conversion of a Loan, the relevant Notice of Conversion, in each case duly executed by Borrower;

(b) no Default exists or would result from such borrowing or the application of the proceeds thereof, such continuation or such conversion;

(c) each Obligor’s representations and warranties contained in Article V or in the Security Agreement, are true and correct in all material respects on and as of such Credit Date as though made on and as of such Credit Date;

(d) there has not been promulgated, enacted, entered or enforced by any governmental or regulatory authority, body or entity any Law applicable to the transactions contemplated hereby, nor is there pending any action or proceeding by or before any such authority, body or entity involving a substantial likelihood of an order, that would prohibit, restrict, delay or otherwise materially affect the execution, delivery, performance or enforceability of the Credit Documents, or the making of the Loans or the enforceability, perfection or priority of Lender’s Lien on the Collateral;

(e) Lender has received from counsel to Borrower and Guarantor (who shall be reasonably satisfactory to Lender) a written opinion, in form and substance

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satisfactory to Lender, addressed to Lender and dated the date of such borrowing, conversion or continuation covering such matters incident to the transactions contemplated hereby as Lender may request, if as a result of a change in Law or change in other circumstances, Lender has requested such an opinion;

(f) all legal matters incident to the making, continuation or conversion of such Loan are satisfactory to Lender and its counsel; and

(g) there shall have occurred no event, condition or circumstance which Lender reasonably determines constitutes, or could constitute, a Material Adverse Effect.

Each borrowing, continuation or conversion of a Loan shall constitute a representation and warranty by Borrower that the conditions contained in Sections 4.02 (b), (c), and (d) have been satisfied.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Borrower and Guarantor represent and warrant, jointly and severally, to Lender on and as of the date hereof and each Credit Date that:

5.01 Existence and Good Standing; Trust Agreement; Subsidiaries. Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware. Guarantor is a real estate investment trust duly organized, validly existing and in good standing under the laws of Maryland. Each Obligor is duly qualified and in good standing as a foreign company in each other jurisdiction in which its ownership or leasing of property or the conduct of its business requires it to so qualify or be licensed and where failure so to qualify and be in good standing or to be licensed could have a Material Adverse Effect. The Borrower has all requisite power and authority to own the Collateral, and each Obligor has the requisite power and authority to own or lease and operate its other properties, and to carry on its business as now conducted and as proposed to be conducted. Guarantor qualifies as a real estate investment trust under Section 856 of the Code. The LLC Agreement and the Trust Agreement are each in full force and effect. The copies of the LLC Agreement and the Trust Agreement delivered to Lender pursuant to Section 4.01 are true and correct copies thereof as in effect on the date hereof. Guarantor owns all outstanding capital stock of Borrower. Schedule 5.01 sets forth as of the date hereof a list of all Subsidiaries of Borrower on the date hereof and its percentage ownership interest therein.

5.02 Power and Authority; No Conflict. The execution, delivery and performance by each Obligor of this Agreement and the other Credit Documents to which it is a party, and the grant by Borrower to Lender of the Lien contemplated hereby with respect to the Collateral, are within its powers, have been duly authorized by all necessary action of the relevant Obligor and do not (a) contravene or violate the LLC Agreement or Trust Agreement, as applicable, (b) contravene or violate any contractual restriction binding on the relevant Obligor or require any consent under any agreement or instrument to which it or any of its Affiliates is a

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party or by which it or any of its properties or assets is bound, (c) result in or require the creation or imposition of any Lien upon any property or assets of any Obligor other than Liens permitted by Section 6.02(c), or (d) violate any Law, order, writ, judgment, injunction, decree, determination or award.

5.03 No Filings or Approvals. Except for any filings specifically provided for in the Security Agreement or in Section 4.01 hereof, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption or waiver by, any governmental or regulatory authority, body or entity or any other third party (except such as have been obtained or made and are in full force and effect) is required to authorize, or is required in connection with (a) the execution, delivery and performance by an Obligor of any Credit Document to which it is a party or the grant of the Security Interest to the Lender under (and as defined in) the Security Agreement, (b) the legality, validity, binding effect or enforceability of any Credit Document, or (c) the validity, enforceability, perfection or priority of any Lien created under any Credit Document.

5.04 Execution; Validity. This Agreement and the other Credit Documents have been duly executed and delivered and are, and any other Credit Document entered into after the date hereof will be duly executed and delivered and will be, legal, valid and binding obligations of each Obligor party thereto, enforceable against such Obligor in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar Law affecting the enforcement of creditors’ rights generally or by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

5.05 Financial Statements; No Material Adverse Effect. (a) The audited consolidated financial statements of Guarantor and the unaudited consolidated financial statements of Borrower as at and for fiscal year ended December 31, 2005, the audited consolidated financial statements of the Guarantor for the two months ended March 31, 2006 and the unaudited consolidated financial statements of each Obligor for the five-month period ended June 30, 2006, heretofore delivered to Lender, fairly present, in accordance with GAAP, the consolidated financial condition and results of operations of such Obligor as of the dates thereof and for the periods covered thereby. There are no material liabilities, contingent or otherwise, of either Obligor or its Subsidiaries which are not reflected in such financial statements or the notes thereto.

(b) There has occurred no material adverse change in the financial condition or results of operations of either Obligor from those reflected in its financial statements referred to in Section 5.05(a), and there does not exist on the date hereof, and there has not occurred since the date of such financial statements, any event, condition or circumstance which has or can reasonably be expected to have, a Material Adverse Effect.

5.06 No Litigation. There is no pending or threatened action or proceeding affecting an Obligor before any court, governmental agency or arbitrator that (i) could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement or any other Credit Document.

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5.07 Not a Regulated Borrower. Neither Obligor is (i) an “investment company” or a Person “controlled by” an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended, required to register under such act or (ii) a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company” within the meaning of the Public Utility Holding Company Act of 2005, as amended.

5.08 Compliance with Law, Agreements, Etc.

(a) Each of Obligor and its Subsidiaries is, and since the date of its formation has been, in compliance with all Laws binding on or applicable to it or its properties except for any such noncompliance which could not reasonably be expected to have a Material Adverse Effect.

(b) Each material agreement or instrument to which an Obligor is a party or which relates to the Collateral is in full force and effect, and Borrower is not in default under any provision of any such material agreement or instrument.

(c) All licenses, permits, approvals, concessions or other authorizations necessary to the conduct of the business of each Obligor and each of its Subsidiaries have been duly obtained and are in full force and effect except where the failure to obtain and maintain any of the foregoing would not have a Material Adverse Effect. There are no restrictions or requirements which limit either Obligor’s ability lawfully to conduct its business or perform its obligations under this Agreement or any other Credit Document.

5.09 Good Title. Borrower has good and marketable title to all Collateral and good and marketable title to, or valid leasehold interests in, all its other material properties and assets, and Guarantor has good and marketable title to, or a valid leasehold interest in, all of its material properties and assets, in each case free and clear of Liens other than Liens permitted by Section 6.02(c) and (in the case of assets other than the Collateral) Liens set forth on Schedule 5.09. Except as set forth on Schedule 5.09, no Obligor has made any registrations, filings or recordations in any jurisdiction evidencing or referring to a Lien on any Collateral, including but not limited to UCC-1 financing statements.

5.10 Taxes. Each Obligor and its Subsidiaries has filed all income tax returns and all other material tax returns that are required to be filed by it in all jurisdictions and has paid all taxes, assessments, claims, governmental charges or levies imposed on it or its properties, except for taxes contested in good faith as to which adequate reserves have been provided in accordance with GAAP. No Obligor nor any of its Subsidiaries has entered into any agreement or waiver or been requested to enter into any agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of such Obligor or such Subsidiary or is aware of any circumstances that would cause the taxable years or other taxable periods of such Obligor or such Subsidiary not to be subject to the normally applicable statute of limitations.

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5.11 Margin Regulations. (a) No Obligor nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

(b) None of the Pledged Alesco Funding Securities constitutes Margin Stock. None of the transactions contemplated hereby, including the borrowings hereunder and the use of any of the proceeds of the Loans, violates or will violate any provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System. No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, to acquire Margin Stock or for any purpose that would result in a violation of said Regulations T, U, or X. Immediately following the making and application of each Loan, not more than 25% of the value of the assets of Borrower will consist of Margin Stock, and none of the Collateral includes or will include Margin Stock.

5.12 Material Adverse Effect. Except as disclosed to Lender in writing prior to the date hereof, no Obligor has knowledge of event or circumstance that could reasonably be expected to have a Material Adverse Effect.

5.13 No Immunity from Jurisdiction. No Obligor, nor any of its assets, properties or revenues, has any right of immunity on the grounds of sovereignty or otherwise from jurisdiction of any court or from set-off or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the Law of any jurisdiction.

5.14 Ranking of Loans; Debt. The Borrower’s obligations to repay the Loans and Guarantor’s obligations under Article VIII, and each Obligor’s other obligations hereunder, constitute direct, general, unconditional and unsubordinated obligations of such Obligor. On the date hereof no Obligor has any Debt, other than Debt under the Credit Documents and Debt set forth for such Obligor on Schedule 5.14.

5.15 Management Agreement. The Management Agreement is in full force and effect and neither Guarantor nor, to Guarantor’s knowledge, Xxxxx Brothers Management is in default thereunder. The copy of the Management Agreement delivered to Lender pursuant to Section 4.01 is a true and correct copy thereof as in effect on the date hereof.

5.16 Dain Account. The Dain Account Agreement is in full force and effect and the Dain Account has been duly established pursuant thereto. Borrower and Dain are the sole parties to the Dain Account Agreement, and Lender and (to the limited extent provided in the Dain Control Agreement) Borrower are the sole Persons entitled to originate entitlement orders in respect of the Dain Account or security entitlements relating thereto. Xxxxx Securities has no interest in the Dain Account. The copy of the Dain Account Agreement delivered to Lender pursuant to Section 4.01(a)(iv) is a true and correct copy thereof. Neither Borrower nor to Borrower’s knowledge, Dain is a default under the Dain Account. The number of Alesco Funding Preferred Shares credited to the Dain Account on the Closing Date is not less than 34,530.

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5.17 Accurate Information. All information provided to Lender with respect to each Obligor and its Affiliates or its or their assets, including the Collateral, or with respect to Alesco Funding or Xxxxx Brothers Management, by or on behalf of an Obligor, Alesco Funding or Xxxxx Brothers Management, in connection with the negotiation, execution and delivery of this Agreement and the other Credit Documents or the transactions contemplated hereby and thereby was (or will be), on or as of the applicable date of provision thereof, complete and correct in all material respects and does not (or will not) contain any untrue statement of a material fact or omit to state a fact necessary to make the statements contained therein not misleading in light of the time and circumstances under which such statements were made.

ARTICLE VI

COVENANTS

6.01 Affirmative Covenants. So long as the Commitment is in effect and until the full payment and performance of all of the Obligations, the Obligors agree, jointly and severally, that, unless Lender otherwise consents in writing:

(a) Existence, Compliance with Laws. Each Obligor will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises and remain or become qualified to engage in business and in good standing in all jurisdictions in which the character of its properties or the transaction of its business makes such qualification necessary, except where the failure to be so qualified or in good standing would not reasonably be expected to have a Material Adverse Effect and except that the survivor of the Sunset Financial Merger may be Sunset Financial or an Affiliate thereof. Each Obligor will, and will cause each of its Subsidiaries to, observe and comply in all material respects with all Laws that now or at any time hereafter may be applicable to it, noncompliance with which would reasonably be expected to have a Material Adverse Effect except for those Laws the necessity of compliance with which is being contested in good faith by appropriate proceedings provided such contest does not pose risk of forfeiture or impairment of any Collateral or impairment of the validity, perfection or priority of Lender’s Lien thereon.

(b) Preservation of Rights. Each Obligor will, and will cause each of its Subsidiaries to, preserve all of its rights, licenses and other assets that are used or useful in the conduct of its business.

(c) Financial Information and Reports, Notices. Each Obligor will keep proper books, records and accounts in which full, true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs in accordance with GAAP and Guarantor will furnish to Lender the following:

(i) as soon as available and in any event within 90 days after the end of each fiscal year of Guarantor, the audited consolidated financial statements of the Guarantor and its Subsidiaries, and the unaudited consolidated financial statements of Borrower and its Subsidiaries, for such fiscal year, which financial statements shall

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include a statement of financial position as of the end of such fiscal year and statements of operations and of cash flows for such fiscal year, all setting forth in comparative form the corresponding figures from the previous fiscal year, all prepared in conformity with GAAP and accompanied (in the case of Guarantor’s financial statements) by an unqualified report and opinion of independent certified public accountants of national standing and reputation, which shall state that such financial statements, in the opinion of such accountants, fairly present the financial position of Borrower and its Subsidiaries as of the date thereof and the results of its operations and cash flows for the period covered thereby in conformity with GAAP;

(ii) as soon as available but in any event within 45 days after the end of each fiscal quarter of each Obligor, the consolidated financial statements of such Obligor and its Subsidiaries for such quarter and for the portion of the fiscal year then ended, which financial statements shall include a statement of financial position as of the end of such fiscal quarter and a statement of operation and cash flows for such fiscal quarter and fiscal period and shall be prepared in accordance with GAAP (subject to normal year-end audit adjustments);

(iii) Together with the financial statements referred to in clauses (i) and (ii) above, a certificate of the Chief Financial Officer of Guarantor (x) certifying that said financial statements have been prepared in accordance with GAAP (subject, in the case of the financial statements referred to in clause (ii) above, to normal year-end audit adjustments) and fairly present the financial condition and results of operation and cash flows of each Obligor and its subsidiaries as at the end of and for the periods covered thereby, and (y) containing calculations showing Guarantor’s compliance with the provisions of Section 6.02(a) and (z) stating there does not exist as of the date of such certificate, and that there has not occurred during the period covered by the financial statements referred to in such certificate, any Default (or if a Default exists or has occurred describing the nature thereof and the action which the Obligors have taken or proposes to take in respect thereof), and if such financial statements are delivered to Lender after the occurrence of the Sunset Financial Merger but the period covered thereby ends prior to the Sunset Financial Merger, pro forma balance sheet and statement of operations reflecting the effect of the Sunset Financial Merger as if it occurred on the last day of such fiscal period;

(iv) as soon as possible and in any event within two Business Days after an Obligor obtains actual knowledge of the occurrence of:

(A) any Default that has occurred and is continuing,

(B) any actual or threatened litigation involving an Obligor or any Subsidiary thereof, Xxxxx Brothers Management or Alesco Funding that, if adversely determined to such Obligor, such Subsidiary, Xxxxx Brothers Management or Alesco Funding, could have a Material Adverse Effect,

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(C) any insolvency of Alesco Funding or any event or circumstance which has, or could reasonably be expected to have, a Material Adverse Effect,

(D) any default by Borrower or Dain under the Dain Account Agreement; or

(E) the Dain Account or any other Collateral Account becoming subject to any writ of garnishment, attachment or execution, restraining order or similar court process of

a statement of a Responsible Officer of such Obligor setting forth the details thereof and the action Borrower has taken and proposes to take with respect thereto;

(v) at least 10 days’ prior written notice of any proposed change to the Dain Account Agreement;

(vi) at least 30 days’ prior written notice of any proposed amendment of the LLC Agreement, the Trust Agreement or the Management Agreement together with copies of the proposed amendment;

(vii) at least 30 days’ prior written notice of any proposed Change in Management;

(viii) promptly, copies of all financial statements and reports furnished by Guarantor or Alesco Funding to holders of its securities;

(ix) promptly after Lender’s request therefor, the then most recent annual and interim financial statements of Sunset Financial available to Borrower; and

(x) promptly after request therefor, such other business and financial information respecting the financial or other condition or operations of an Obligor or any of its Subsidiaries or any Consolidated VIE or Sunset Financial as Lender may from time to time reasonably request.

(d) Valuation Reports. Not later than five (5) Business Days after the end of each calendar month, and not later than five (5) days after any request by Lender therefor, a report of [Xxxxxxx Xxxxx] (or such other valuation expert as Lender shall specify if [Xxxxxxx Xxxxx] cease to issue Valuation Reports) in reasonable detail satisfactory to Lender (a “Valuation Report”) setting forth (i) the value of the Pledged Alesco Funding Securities constituting part of the Collateral, (ii) the basis for such valuation and (iii) the manner in which such value was determined (including any assumptions made in determining such value).

(e) Change in Nature of Business. Guarantor will remain qualified as, and principally engaged in the business as, a real estate investment trust under Section 856 of the Code investing primarily in securities that evidence ownership in collateralized debt obligations or collateralized loan obligations.

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(f) Use of Proceeds. Borrower will use the proceeds of the Loans for operating and working capital purposes. Borrower will not use any proceeds of the Loans to pay dividends or other distributions to Guarantor. Borrower shall specify in each Borrowing Notice the purpose for which such borrowing is made.

(g) Payment of Taxes, Etc. Each Obligor will, and will cause each of its Subsidiaries to, pay and discharge, before the same become delinquent, all taxes, assessments, claims and governmental charges or levies imposed upon it or upon its property; provided that no Obligor or its Subsidiaries shall be required to pay or discharge any such tax, assessment, claim or charge if (i) such tax, assessment or claim is being diligently contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, and (ii) such failure to pay does not create a risk of forfeiture or loss of the Collateral or the impairment of Lender’s Lien thereon.

(h) Visitation Rights. Each Obligor will, at any reasonable time during normal business hours and upon reasonable prior notice, from time to time permit Lender or any agent or representative thereof to (i) visit the properties and offices of such Obligor and discuss the affairs, finances, assets and accounts of such Obligor, its Subsidiaries and any Consolidated VIEs with any of its officers or directors and examine and make copies of and abstracts from its records and books of account, and (ii) discuss the affairs, finances, assets and accounts of such Obligor, its Subsidiaries and any Consolidated VIEs with its accountants, including any independent certified public accountants retained by such Obligor.

(i) Management Agreement. Guarantor will notify Lender of any default by Guarantor or Xxxxx Brothers Management under the Management Agreement promptly upon Guarantor acquiring knowledge thereof, and Guarantor will deliver to Lender copies of all notices delivered or received by Guarantor asserting the existence of a default under the Management Agreement or purporting to terminate the Management Agreement.

(j) Sunset Financial Merger. Guarantor will deliver to Lender a copy of the proposed Sunset Financial Merger Agreement and each proposed amendment thereto at least 10 Business Days prior to the execution thereof by Guarantor, and Guarantor will deliver to Lender a copy of the executed Sunset Financial Merger Agreement, and each amendment thereto or waiver of Sunset Financial’s obligations thereunder, no later than 10 Business Days after the execution thereof by Guarantor. At least 10 Business Days (and not more than 30 Business Days) prior to the Sunset Financial Merger Borrower shall deliver to Lender a UCC, tax and judgment lien search with respect to Sunset Financial showing that there exists no Liens on the assets of Sunset Financial and its Subsidiaries that could upon the consummation of the Sunset Financial Merger become a Lien on the Collateral or other assets of Borrower or Guarantor other than (i) Permitted Liens and (ii) Liens which Lender notifies Borrower in writing are acceptable to Lender in its sole discretion. Guarantor will give prompt written notice to Lender of the occurrence of the Sunset Financial Merger and will concurrently therewith deliver to Lender pro-forma financial statements showing Borrower’s financial condition and results of operations as though the Sunset Financial Merger occurred on the last day of the then most recent fiscal period for which financial statements of Guarantor have been delivered to Lender. If Lender determines and notifies Guarantor that any terms of the proposed Sunset Financial Merger Agreement or any proposed amendment thereto are not satisfactory to Lender and Guarantor

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nevertheless executes and delivers the Sunset Financial Merger Agreement or any amendment thereto containing such objectionable terms, Lender may terminate the Commitment and require Borrower to immediately prepay the Loans all accrued interest thereon and all fees and other amounts payable hereunder.

6.02 Negative Covenants. So long as the Commitment is in effect and until the full payment and performance of all of the Obligations, the Obligors agree, jointly and severally, that, unless Lender otherwise consents in writing:

(a) Shareholders Equity. Guarantor will not permit Shareholders Equity to be less than $85,000,000 at any time.

(b) Debt. The Obligors will not, and will not cause or permit any of their respective Subsidiaries to, incur, create, assume or suffer to exist any Debt except:

(i) Debt hereunder;

(ii) Debt incurred in connection with the purchase by Borrower or one of its Subsidiaries of securities, specifically including, without limitation, trust preferred securities, that are to be packaged into a Collateralized Debt Obligation, a Collateralized Loan Obligation, warehouse lines entered into in connection therewith, or any other similar structured finance transactions, including that Debt, if any, which is required to be included in Borrower’s or Guarantor’s consolidated financial statements pursuant to GAAP or the Financial Accounting Standards Board’s Interpretation Number 46; and

(iii) Debt described in Schedule 5.14.

(c) Liens. The Obligors will not, and will not permit any of their respective Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any item of Collateral or any of their other assets, whether now owned or hereafter acquired, except:

(i) Liens in favor of Lender created under the Credit Documents;

(ii) Liens described in Schedule 5.09;

(iii) Liens created in connection with transactions described in Section 6.02(b)(ii) above on property other than the Collateral; and

(iv) Liens imposed by law for taxes that are not yet due or are being contested in good faith by appropriate proceedings.

(d) Mergers, Transfer of Assets, Etc. No Obligor will, and no Obligor will permit any of its Subsidiaries to, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of, whether in one transaction or in a series of transactions, all or substantially all of its property and assets (whether now owned or hereafter acquired) to, any Person; provided that (i) any of an Obligor’s Subsidiaries may merge or consolidate with or into (or convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets to) such

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Obligor or any wholly-owned Subsidiary of such Obligor and (ii) Guarantor may enter into and consummate the Sunset Financial Merger; if, in each such case, (x) no Default has occurred and is continuing at the time of such merger consolidation, disposition and (y) in the case of any merger, consolidation, or transfer of assets referred to in clause (d) above to which an Obligor is a party, such Obligor is the surviving company and (z) if Guarantor is not the surviving company in Sunset Financial Merger, then the surviving company assumes all obligations of Guarantor hereunder pursuant to an instrument in writing satisfactory in form and substance to Lender.

(e) Dividends, Etc. If there exists any Default, no Obligor will declare or make any dividend payment or other distribution of assets, property, cash, rights, obligations or securities on account of any equity interests of such Obligor, or purchase, redeem, retire or otherwise acquire for value any equity interests of such Obligor, or any warrants, rights or options to acquire any such interests or shares, now or hereafter outstanding. Borrower shall not in any event, whether or not a Default exists, use any proceeds of the Loan to make any Restricted Payments.

(f) Advances and Investments. The Obligors will not, and will not permit any of their respective Subsidiaries to, lend money or credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any other Person, except for capital contributions to its Subsidiaries, provided that no such investment may in any event be made if there exists any Default.

(g) LLC Agreement and Trust Agreement. Borrower will not amend or modify the LLC Agreement and Guarantor will not amend or modify the Trust Agreement, in a manner which would have a Material Adverse Effect.

(h) Management Agreement. Guarantor will not terminate, or consent to the termination of, the Management Agreement. Guarantor will not amend or modify the Management Agreement if such amendment or modification would have a Material Adverse Effect.

(i) Voluntary Payments and Modification of Debt. The Obligors will not, and will not permit any of their respective Subsidiaries to, (i) make any voluntary or optional payment or prepayment on or redemption or acquisition for value of any Debt other than any amounts outstanding hereunder or under the other Credit Documents (including but not limited to by way of depositing with the trustee with respect thereto money or securities before the due date thereof for the purpose of paying such Debt when due), or (ii) amend or modify, or permit the amendment or modification of, any provision of any Debt or of any agreement (including but not limited to any purchase agreement, subscription agreement, indenture, loan agreement or security agreement) relating to any Debt. The foregoing restrictions in the paragraph (i) shall not apply to Collateralized Debt Obligations or Collateralized Loan Obligations incurred by Subsidiaries of the Obligors in the ordinary course of business.

(j) Restrictions of Subsidiary Dividends and Distributions. The Obligors will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, create or cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make any other distributions on its capital stock or any

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other interest or participation in its profits owned by an Obligor or any Subsidiary of an Obligor, or pay any Debt owed to an Obligor or a Subsidiary of an Obligor, (ii) make loans or advances to an Obligor, or (iii) transfer any of its properties or assets to an Obligor, except for such encumbrances or restrictions existing under or by reason of (x) applicable Law, (y) this Agreement, or (z) any other Credit Document.

(k) Sunset Financial Merger. Guarantor will not consummate the Sunset Financial Merger if there exists, or after giving effect to the Sunset Financial Merger there would exist, an Event of Default or if the consummation of the Sunset Financial Merger would impair or otherwise adversely affect the validity, perfection or priority of the Lender’s security interest in the Pledged Alesco Funding Securities or other Collateral.

(l) Dain Account. Borrower will not terminate or cancel the Dain Account or originate any entitlement orders in respect of any financial assets credited thereto.

(m) Transactions with Affiliates. No Obligor will, directly or indirectly, (i) make any investment in an Affiliate of an Obligor (whether by means of share purchase, capital contribution, loan, advance or any other extension of credit, including repurchase agreements, securities lending transactions or any other transaction, deposit, or otherwise, including any agreement or commitment to enter into any of the foregoing) or (ii) transfer, sell, lease, assign or otherwise dispose of any tangible or intangible property to an Affiliate or enter into any other transaction, directly or indirectly, with or for the benefit of an Affiliate (including but not limited to Guaranties and assumptions of obligations of an Affiliate) except (x) the Management Agreement and (y) transactions constituting investments in an entity engaged in a Collateralized Debt Obligation or Collateralized Loan Obligation, structured finance transaction or any other similar transaction, including investments of restricted cash securing any Subsidiary’s obligations under a “warehouse” credit facility entered into in connection with a Collateralized Debt Obligation or Collateralized Loan Obligation and any guaranty required in connection therewith; provided that (i) any Affiliate who is an individual may serve as a director, officer, manager or employee of, or otherwise have management authority with respect to, an Obligor or any of its Subsidiaries or other Affiliates and receive reasonable compensation for his or her services in such capacity, (ii) an Obligor may enter into transactions with Affiliates of an Obligor providing for the leasing of property, the rendering or receipt of services or the purchase or sale of tangible or intangible property in the ordinary course of business if (x) the monetary and business terms of such transaction are substantially as advantageous to Borrower as the monetary and business terms which would obtain in a comparable transaction by Borrower with a Person who is not an Affiliate of Borrower and (y) such transaction is of the kind that would be entered into by a prudent Person in the position of Borrower with a Person that is not one of its Affiliates and (iii) Guarantor may make capital contributions to Borrower and (subject to the provisions of the Section 6.01(f) and 6.02(e)) Borrower may pay dividends to Guarantor. Obligors and their respective Subsidiaries will not be party to any tax sharing or similar arrangement if the effect of such arrangement would be to increase the tax liability or adversely affect the cash flow or any tax loss carry forward (or other tax benefit) of the Obligors in an amount greater than would have been the case in the absence of such an arrangement.

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ARTICLE VII

DEFAULTS

7.01 Events of Default. If any one or more of the following events (“Events of Default”) occurs and is continuing:

(a) Borrower fails to pay when due any principal of any Loan, including any Cleanup Payment when due and any payment required by Section 6.01(j);

(b) Borrower fails to pay when due any interest on any Loan or any Obligor fails to pay when due any other amount payable hereunder or under any other Credit Document (other than principal), and such failure remains unremedied for three (3) Business Days;

(c) any representation or warranty made by an Obligor herein or in any other Credit Document or by an Obligor (or any officers or representatives thereof) in connection with this Agreement or any other Credit Document is incorrect in any material respect when made or deemed to have been made;

(d) an Obligor fails to perform or observe any term, covenant or agreement contained in Section 6.01(a) (with respect to itself), 6.01(d), 6.01(e), 6.01(j) or 6.02;

(e) an Obligor fails to perform or observe any other term, covenant or agreement contained in this Agreement or any other Credit Document on its part to be performed or observed and such failure remains unremedied for thirty (30) Business Days after notice thereof has been given to Borrower by Lender;

(f) an Obligor fails to pay all or any portion of the principal of any Debt of such Obligor (other than the Loans) for or in respect of borrowed money that is outstanding in an aggregate principal amount of at least $2,000,000 when the same becomes due and payable (whether at scheduled maturity, by required prepayment, acceleration, demand or otherwise); or any event occurs or condition exists under any agreement or instrument relating to any such other Debt and if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt is declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease any such Debt is required to be made, in each case prior to the stated maturity thereof;

(g) an Obligor or any of its Subsidiaries or Xxxxx Brothers Management fails to pay its debts generally as such debts become due, or admits in writing its inability to pay its debts generally, or makes a general assignment for the benefit of creditors; or any proceeding is instituted by or against an Obligor or any of its Subsidiaries or Xxxxx Brothers Management seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Law of any

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jurisdiction relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and assets and, in the case of any such proceeding instituted against an Obligor or any of its Subsidiaries or Xxxxx Brothers Management, such proceeding remains undismissed or unstayed for a period of 30 days; or a receiver, trustee, custodian or similar official is appointed for an Obligor or any of its Subsidiaries or Xxxxx Brothers Management or for all or a substantial part of the property of any of the foregoing; or an Obligor or any of its Subsidiaries or Xxxxx Brothers Management is adjudicated bankrupt or insolvent, or an order for relief is entered in respect of an Obligor or any of its Subsidiaries or Xxxxx Brothers Management under the Bankruptcy Code; or an Obligor, Xxxxx Brothers Management is dissolved or liquidated; or an Obligor or any of its Subsidiaries or Xxxxx Brothers Management takes any action to authorize any of the actions set forth above in this paragraph;

(h) any judgment or order for the payment of money in excess of $1,000,000 is rendered against an Obligor or any of its Subsidiaries and either (x) enforcement proceedings are commenced by any creditor upon such judgment or order that are not stayed or dismissed within 30 days after the commencement of such proceedings or (y) there is any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect, or such judgment remains unpaid, or (ii) any non-monetary judgment is entered against an Obligor or Xxxxx Brothers Management or any of its Affiliates which has or could reasonably be expected to have a Material Adverse Effect;

(i) any Default under (and as defined in) the Security Agreement occurs and is continuing;

(j) Lender’s security interest on the Collateral cease to be valid, enforceable perfected and through no fault of Lender, senior security interest therein subject to no other Lien;

(k) an Obligor denies or disaffirms any of its obligations under this Agreement or any other Credit Document to which it is a party or asserts that such obligations are unenforceable or invalid; or any Law purports to render invalid, or preclude enforcement of, any provision of this Agreement or any other Credit Document or the Security Interest or impairs the performance of an Obligor’s obligations hereunder or under any other Credit Document to which it is a party;

(l) a Change of Control occurs [other than as a result of the Sunset Financial Merger];

(m) the Management Agreement terminates;

(n) a Change in Management occurs which, in Lender’s good faith judgment, could have a Material Adverse Effect;

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(o) Guarantor ceases to be the beneficial and record owner of all outstanding capital stock of Borrower;

(p) any writ of garnishment, attachment or any restraining order, is issued in respect of the Dain Account or any financial assets credited thereto and remains in effect for a period exceeding 30 days; or

(q) any other event or condition occurs or exists that, in Lender’s good faith judgment, has or could have a Material Adverse Effect;

then, and at any time thereafter, Lender may by notice to Borrower, (x) declare the Commitment to be terminated, whereupon it shall immediately terminate, and/or (y) declare the Loans, all interest thereon and all other amounts payable under this Agreement or any other Credit Document to be forthwith due and payable, whereupon the Loans, all such interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Borrower; provided that upon the occurrence with respect to Borrower of any Event of Default specified in paragraph (g) of this Section 7.01, the Commitment shall automatically terminate immediately and the Loans, all such interest and all such other amounts shall automatically be immediately due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by Borrower.

ARTICLE VIII

GUARANTY

8.01 Guaranty by Guarantor. (a) For valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and to induce Lender to enter into this Agreement and to make and maintain Loans to Borrower hereunder, Guarantor hereby irrevocably and unconditionally guarantees, as primary obligor and not merely as surety, to Lender, the prompt and complete payment when due (whether at the stated maturity, by acceleration or otherwise) of all Obligations of Borrower to Lender, now existing or hereafter incurred, under this Agreement or any other Credit Document, whether for principal, interest, fees, expenses indemnities or otherwise (including (i) amounts which would become due but for the operation of any automatic stay in any case under the Bankruptcy Code and (ii) interest which would have accrued on the Obligations following the commencement of any Insolvency Proceeding by or against Borrower, whether or not such interest constitutes an allowable claim against Borrower in any such case or Insolvency Proceeding). Guarantor hereby irrevocably and unconditionally agrees that, upon default by Borrower in the payment when due of any amount owing by Borrower hereunder or under any other Credit Document to Lender, Guarantor will immediately pay the same to Lender in Dollars and in immediately available funds, at the place and in the manner specified for such defaulted payment in this Agreement or such other Credit Document and otherwise in accordance with the terms of this agreement and each other Credit Documents, together with any and all reasonable expenses that are incurred by the Lender in collecting the same, without further notice or demand (other than notice to the Guarantor of the amount due Lender hereunder and of Borrower’s failure to make such payment).

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(b) Guarantor’s guaranty contained in this Section 8.01 is a guaranty of payment and not of collection. Lender may proceed immediately against Guarantor upon any default by Borrower in the payment when due of any Obligation, and Lender shall not be required to (i) obtain or enforce any judgment against Borrower, (ii) file a claim in any bankruptcy, insolvency or reorganization proceeding involving Borrower, (iii) resort to any Collateral or (iv) enforce or exhaust any rights against Borrower or any other Person or their respective assets.

8.02 Obligations Unconditional. (a) The obligations of the Guarantor under Section 8.01 shall be continuing, absolute and unconditional irrespective of (i) the legality, genuineness, validity, regularity or enforceability (as against Borrower or Lender) of this Agreement or any other Credit Document, (ii) the existence, value, validity or extent of any collateral for the Obligations or the validity, perfection or priority of Lender’s Liens thereon, (iii) any provision of applicable law or regulation purporting to prohibit the payment by Borrower of the Obligations, (iv) any default, failure or delay, willful or otherwise, in the performance by Borrower of the Obligations, or any other act by Borrower that may or might in any manner or to any extent vary the risk of Borrower or Guarantor, (v) any extension of the Stated Termination Date or any other extension of time given to Borrower by Lender or any failure on the part of Lender to exercise recourse against Borrower or other person or the renunciation of any such recourse, (vi) any default by Dain under the Dain Account Agreement or Dain Control Agreement or any default by any other Intermediary in respect of any Collateral Account or any Control Agreement in respect thereof, (vii) the discharge of Borrower from the Obligations in any case under the Bankruptcy Code or other Insolvency Proceedings, or otherwise, or any modification of the Obligations under any plan or reorganization in any bankruptcy case or other Insolvency Proceeding, (viii) Lender’s election, in any case instituted with respect to Borrower under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (ix) any borrowing or grant of a security interest by Borrower as debtor-in-possession under Section 364 of the Bankruptcy Code, (x) the disallowance under Section 502 of the Bankruptcy Code of all or any portion of Lender’s claim against Borrower or (xi) any other circumstances which might constitute in legal or equitable discharge or defense of a guarantor.

(b) Without limiting the generality of the foregoing, Guarantor hereby agrees that Lender may at any time, or from time to time, in Lender’s discretion, but subject to the terms of this Agreement, (i) renew and/or extend or accelerate the time of payment, and/or the manner, place or terms of payment of, all or any part of the Obligations, or any renewal or renewals thereof, (ii) extend the time for Borrower’s performance of, or compliance with, any term, covenant or agreement contained in this Agreement or any other Credit Document or waive such compliance or performance, (iii) waive any condition specified herein to the Closing Date or to the extension of credit hereunder, (iv) extend the Stated Termination Date or any other dates for any payment hereunder or under any other Credit Document, (v) exchange, release and/or surrender all or any part of any Collateral or other security that may hereafter be held by, or on behalf of, Lender in connection with any or all of the Obligations, (vi) sell and/or purchase any or all of such collateral or other security at public or private sale, or any broker’s board, and after deducting all costs and expenses of every kind for collection, sale or delivery, apply the proceeds of any such sale or sales to any of the Obligations (with Guarantor remaining liable for any deficiency) and (vii) settle or compromise any and all of the Obligations with Borrower

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and/or any other Person(s) liable thereon and/or subordinate the payment of same or any part thereof to the payment of any other debts or claims that may at any time be due or owing by Borrower to Lender and/or any other Person(s), all in such manner and upon such terms as Lender may see fit, and without notice to or further assent from the Guarantor.

(c) The obligations of Guarantor under this Article VIII shall not be subject to any defense, set-off, counterclaim, recoupment or termination whatsoever by reason of any circumstance or occurrence, including without limitation any of the actions or circumstances set forth in paragraphs (a) or (b) above.

8.03 Stay of Acceleration. If demand for, or acceleration of the time for, payment by Borrower to Lender of any Obligations of Borrower is stayed upon the commencement of any case under the Bankruptcy Code or any other Insolvency Proceeding for Borrower, all such Obligations otherwise subject to demand for payment or acceleration under the terms of this Agreement or any other Credit Document shall nonetheless be payable by Guarantor hereunder forthwith on demand by the Agent.

8.04 Subrogation. No payment by Guarantor pursuant to Article VIII or other satisfaction of the Obligations of Guarantor under Article VIII shall entitle it, by subrogation to the rights of Lender, or by right of contribution, reimbursement, exoneration or otherwise, to any payment from Borrower or out of the property of Borrower, except after the payment in full to all Lender of all sums which are or may become payable to it at any time or from time to time by the Borrowers and the Guarantor under this Agreement or any other Credit Document. Upon the payment in full of all sums referred to in the immediately preceding sentence, Guarantor shall be subrogated to the rights of Lender hereunder to the extent of any payments made by Guarantor under its guaranty contained herein.

8.05 Subordination. Guarantor agrees that (i) all existing and future Debt and other indebtedness of Borrower to the Guarantor shall be subject and subordinate to the Obligations of Borrower to Lender hereunder or under any other Credit Document and (ii) so long as there exists any Default hereunder, Borrower shall not pay the Guarantor, and the Guarantor shall not accept payment from Borrower of any Debt or other indebtedness owing by Borrower or any Subsidiary thereof to Guarantor until all Obligations of Borrower to Lender are paid in full.

8.06 Cumulative Remedies. Lender may pursue its rights and remedies under this Article VIII and shall be entitled to payment from Guarantor under this Article VIII notwithstanding any other guarantee of or security for all or any part of the Obligations of Borrower or any other Person, and notwithstanding any action taken or omitted to be taken by Lender to enforce any of its rights or remedies against Borrower or any other Person hereunder or under such other guarantee or with respect to any other security.

8.07 Waivers. Except for notices and demands expressly provided for herein, Guarantor hereby waives diligence, presentment, demand of payment, protest and all notices (whether of nonpayment, dishonor, protest or otherwise) with respect to the Obligations, notice of acceptance of the guaranty by Guarantor contained in this Article VIII and of the incurrence by Borrower of any Obligation and all demands whatsoever.

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8.08 Survival of Guaranty. The provisions of Article VIII shall continue in effect and be binding upon Guarantor until all of the Obligations have been paid in full. The liability of Guarantor under this Article VIII shall be reinstated and revived with respect to any amount at any time paid to or for the account of Lender by Borrower or any other Person which is thereafter required to be, and that is, restored and returned by Lender to Borrower or such Person, or its trustee or receiver or similar official, upon the bankruptcy, insolvency or reorganization of Borrower or such Person, or for any other reason, all as though such amount had not been paid by Borrower or such Person.

ARTICLE IX

MISCELLANEOUS

9.01 Amendments and Waivers. (a) No amendment or modification of any provision of this Agreement or any other Credit Document shall be effective unless it is in writing and signed by Lender and the Obligor or Obligors party thereto.

(b) No waiver of any provision of this Agreement shall be effective unless it is in writing and signed by Lender. Any waiver shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any other Credit Document shall operate as a waiver thereof or an acquiescence therein, nor shall the making of a Loan or acquiescence to the conversion of a Base Rate Loan to a Eurodollar Loan when a Default exists or Borrower is unable to satisfy the conditions precedent thereto (and notwithstanding that Lender may have had notice or knowledge or reason to believe that such Default or inability existed at the time of such Loan or conversion) constitute any such waiver or acquiescence. No single or partial exercise of any right, power or privilege under this Agreement or the Note shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

9.02 Notices. Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto under or with respect to any Credit Document shall be in writing unless otherwise specified in the relevant Credit Document. Written notices shall be deemed to have been duly given or made (x) five (5) Business Days after being mailed, properly addressed with first class postage prepaid, or (y) upon actual receipt thereof by the receiving party, if delivered by hand, overnight courier or facsimile transmission (and, if received on any day that is not a Business Day or after close of business on a Business Day, at the opening of business of the receiving party on the next succeeding Business Day); provided that notice to Lender shall not be effective until actually received by it. Each such notice shall be addressed to the addressee at its address or facsimile number set forth below or at such other address or facsimile number as such addressee shall have hereafter (and prior to the delivery of such notice) specified by a written notice to the other party.

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As of the date hereof, the address, telephone number, and facsimile number of each party are:


Borrower:		Alesco Financial Holdings, LLC
		0000 Xxxx Xxxxxx – Xxxxx 0000
		Xxxxxxxxxxxx, Xx. 19104
		Attention: Xxxx Xxxxxxx,
		Chief Financial Officer
		Telephone Number: 000-000-0000
		Facsimile Number: 000-000-0000

Guarantor:		Alesco Financial Trust
		0000 Xxxx Xxxxxx – Xxxxx 0000
		Xxxxxxxxxxxx, Xx. 19104
		Attention: Xxxx Xxxxxxx,
		Chief Financial Officer
		Telephone Number: 000-000-0000
		Facsimile Number: 000-000-0000

Lender:		Royal Bank of Canada
		New York Branch
		Xxx Xxxxxxx Xxxxx, 0^xx Xxxxx
		Xxx Xxxx, XX 00000-0000
		Attention: Loans Administration
		Telephone Number: 000-000-0000
		Facsimile Number: 000-000-0000

		with copies to:

		Royal Bank of Canada
		Xxx Xxxxxxx Xxxxx, 0xx Xxxxx
		Xxx Xxxx, XX 00000-0000
		Attention: Xxxxxxxxx Xxxx
		Telephone Number: 000-000-0000
		Facsimile Number: 212-428-6201

A copy of each notice to Borrower or Guarantor shall also be sent to (but shall not be a condition to an effective notice to Borrower or Guarantor):


		Lamb XxXxxxxx PC

		00 X. Xxxxxx Xxxxxx
		Xxxx Xxxxxxx, Xx. 00000-0000
		Attention: Xxxxxxx Xxxxxxx, Esq.
		Telephone Number: 000-000-0000
		Facsimile Number: 000-000-0000.

9.03 Preservation of Rights. All rights and remedies contained in the Credit Documents or afforded by law or equity shall be cumulative, and all shall be available to Lender until this Agreement has terminated and the Obligations have been paid in full.

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9.04 Expenses; Indemnity. (a) The Obligors agree, jointly and severally, to pay and reimburse on demand all of Lender’s reasonable costs and expenses, including (but not limited to) the fees and expenses of its counsel, in connection with (i) the negotiation, preparation, execution and delivery of this Agreement, the other Credit Documents and other documents to be delivered hereunder or in respect of the transactions contemplated hereby or (ii) any amendment, consent or waiver with respect to any of the foregoing (provided that the maximum amount of the Obligors’ liability for Lender’s legal fees shall not exceed $50,000 plus reasonable out-of-pocket costs and disbursements of Lender’s counsel) and (iii) the Sunset Financial Merger. The Obligors further agree, jointly and severally, to pay on demand all costs and expenses (including but not limited to reasonable counsel fees and expenses), if any, incurred by Lender in connection with administration, modification and supplementation of this Agreement or any other Credit Document or the Collateral, and the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, any other Credit Document or any other document delivered hereunder or thereunder or in respect of the transactions contemplated hereby or thereby.

(b) The Obligors shall, jointly and severally, indemnify Lender and each of its Affiliates and the respective officers, directors, employees, agents and advisors of Lender and its Affiliates (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including but not limited to fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to any investigation, litigation, proceeding, or claim or the preparation of any defense with respect thereto arising out of or in connection with or relating to this Agreement, any other Credit Document, the transactions contemplated hereby or thereby, the Collateral, any consent (or lack of consent) rendered by Lender in connection with Collateral, or any use made or proposed to be made of the proceeds of the Loans, whether or not such investigation, litigation, proceeding or claim is brought or asserted by an Obligor, any of its members, shareholders or creditors, an Indemnified Party or any other Person, or an Indemnified Party is otherwise a party thereto, and whether or not the conditions precedent set forth in Article IV are satisfied or the transactions contemplated by this Agreement are consummated, except, as to any Indemnified Party, to the extent such claim, damage, loss, liability or expense results from such Indemnified Party’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable judgment of such court.

9.05 Binding Effect. This Agreement shall become effective when it has been executed and delivered by each of Borrower and Lender.

9.06 Successors and Assigns; Participations. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Obligor may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Lender (and any assignment by an Obligor without such consent shall be null and void). Lender may assign or otherwise transfer any of its rights or obligations hereunder and under the Note and each other Credit Document (i) to an assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (c) of this Section, or (iii) by way of pledge, assignment or grant of a Lien subject to

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the restrictions of paragraph (d) of this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent provided in paragraph (c) of this Section, Participants) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Lender may at any time, with the consent of Borrower (such consent not to be unreasonably withheld or delayed), assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including all or a portion of the Commitment and the Loans at the time owing to it); provided that no such consent by Borrower shall be required if (x) a Default has occurred and is continuing at the time of such assignment or (y) such assignment is to an Affiliate of Lender. From and after the effective date of the assignment, the assignee shall be a party to this Agreement as a lender with respect to the interest assigned and, to the extent of the interest assigned to it, have the rights and obligations of Lender under this Agreement, and the assignor shall, to the extent of the interest assigned by it, be released from its obligations under this Agreement (and, in the case of an assignment covering all of the assignor’s rights and obligations under this Agreement, the assignor shall cease to be a party hereto) but shall continue to be entitled to the benefits of Article III and Sections 9.04 and 9.19 with respect to facts and circumstances occurring prior to the effective date of such assignment.

(c) Lender may at any time, without the consent of or notice to Borrower, sell participations to any Person (a “Participant”) in all or a portion of Lender’s rights and/or obligations under this Agreement (including all or a portion of the Commitment and/or the Loans owing to it); provided that (i) Lender’s obligations under this Agreement shall remain unchanged, (ii) Lender shall remain solely responsible to Borrower for the performance of such obligations, and (iii) Borrower shall continue to deal solely and directly with Lender in connection with Lender’s rights and obligations under this Agreement. The Obligors agree that each Participant shall be entitled to the benefits of Article III to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 9.12 as though it were a Lender.

(d) Notwithstanding the foregoing, Lender may at any time pledge, assign or xxxxx x Xxxx on all or any portion of its rights under this Agreement (including the Loans and the Note) to secure obligations of Lender, including without limitation any pledge, assignment or grant of a Lien to a Federal Reserve Bank; provided that no such pledge, assignment or grant of a Lien shall release Lender from any of its obligations hereunder or substitute the pledgee, assignee or grantee for Lender as a party hereto.

9.07 Judgment Currency. If a judgment, order or award is rendered by any court or tribunal for the payment of any amounts owing to Lender under this Agreement or any other Credit Document or for the payment of damages in respect of a judgment or order of another court or tribunal for the payment of such amount or damages, and such judgment, order or award is expressed in a currency (the “Judgment Currency”) other than Dollars, each Obligor agrees (a) that its obligations in respect of any such amounts owing shall be discharged only to the extent of the amount of Dollars that Lender may purchase with a payment in the Judgment Currency on the Business Day following Lender’s receipt of such payment and (b) to indemnify

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and hold harmless Lender against any deficiency in Dollars in the amounts actually received by Lender following any such purchase (after deduction of any premiums and costs of exchange payable in connection with the purchase of, or conversion into, Dollars). The indemnity of each Obligor set forth in the preceding sentence shall (notwithstanding any judgment referred to in the preceding sentence) constitute an obligation of such Obligor separate and independent from its other obligations hereunder and shall apply irrespective of any time or other indulgence granted by Lender.

9.08 Severability. Any provision in this Agreement or any other Credit Document that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of such Credit Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate such provision or render it unenforceable in any other jurisdiction.

9.09 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement. Any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of a signature page of this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement. Any party delivering a counterpart of this Agreement by facsimile transmission shall, if so requested by the other party, deliver an original manually signed to the other party, but failure by a party to make such delivery shall not impair the effectiveness of the delivery by such party of such counterpart by facsimile transmission.

9.10 Survival. Each Obligor’s obligations hereunder shall remain in full force and effect during the term of this Agreement. Each Obligor’s obligations under Sections 3.01, 3.02, 3.04, 3.05, 9.04, 9.07, 9.15, 9.18 and 9.19 shall survive termination of this Agreement.

9.11 No Fiduciary Relationship; No Joint Venture. Each Obligor acknowledges that (i) Lender does not have a fiduciary relationship with, or fiduciary duty to, such Obligor arising out of or in connection with the Credit Documents and (ii) the relationship between Lender and each Obligor is solely that of creditor and debtor. This Agreement does not create a joint venture among the parties.

9.12 Right of Set-off. In addition to, and without limitation of, any rights of Lender under applicable Law, if any Event of Default occurs, Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Obligor or to any other Person, any such notice being hereby expressly waived, to set-off and to appropriate and apply any and all deposits (general or special) and any other indebtedness matured or not yet due at any time held or owing by Lender or any of its Affiliates (including but not limited to by any of its or their branches and agencies wherever located), and in whatever currency denominated, to or for the credit or the account of any Obligor against and on account of the Obligations, including but not limited to all claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, whether or not Lender shall have made any demand hereunder or thereunder and although such obligations, liabilities or claims, or any of them, shall be contingent or unmatured or denominated in a currency other than

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Dollars. For purposes of effecting any such set-off, Lender may convert any deposit or other indebtedness from one currency to another at the exchange rate prevailing on the date of such set-off, as determined by Lender.

9.13 Entire Agreement. This Agreement and the other Credit Documents constitute the entire agreement between the parties hereto relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, between the parties hereto relating to the subject matter hereof.

9.14 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES THAT WOULD MAKE THE LAWS OF ANY OTHER JURISDICTION APPLICABLE TO THIS AGREEMENT.

9.15 Submission to Jurisdiction; Waiver of Immunity. (a) For purposes of any suit, action or proceeding involving this Agreement or any other Credit Document or any judgment entered by any court in respect of such suit, action or proceeding, each Obligor expressly submits to the non-exclusive jurisdiction of any New York state or U.S. federal court sitting in the Borough of Manhattan, The City of New York, New York, and agrees that any order, process or other paper may be served upon such Obligor within or without such court’s jurisdiction by mailing a copy by registered or certified mail, postage prepaid, to such Obligor at such Obligor’s address for notices provided in this Agreement, such service to become effective 30 days after such mailing. Each Obligor irrevocably waives any objection it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Credit Document brought in any such court and further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. A final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Nothing contained in this Agreement or any other Credit Document shall affect Lender’s right to serve legal process in any manner permitted by Law or to bring any action or proceeding against Borrower or Borrower’s property in the courts of other jurisdictions.

(b) To the extent that any Obligor has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such Obligor hereby irrevocably waives such immunity in respect of its obligations under this Agreement and the other Credit Documents and, without limiting the generality of the foregoing, agrees that the waivers set forth herein shall have the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.

9.16 Customer Identification Program Requirements. Lender hereby notifies each Obligor pursuant to the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), amending the Bank Secrecy Act (31 U.S.C. § 5311 et seq.), Lender is required to obtain, verify and record information that identifies such Obligor, which information includes the name and address of such Obligor and other information that will allow

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Lender to identify such Obligor in accordance with such Acts. Lender may also request identifying documents of Borrower. Each Obligor agrees that it will promptly comply with any request by Lender for any such information. Lender may also screen each Obligor against various databases and lists to determine whether such Obligor appears thereon.

9.17 Recordings. Each Obligor and Lender consent to the recording of all telephonic or electronic communications made in respect hereof or in respect of the other Credit Documents and agree that either may produce telephonic or electronic recordings or computer records as evidence in any proceedings brought in connection with this Agreement or any other Credit Document.

9.18 Waiver of Jury Trial. THE OBLIGORS AND LENDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER AND AGREE THAT ANY SUCH PROCEEDING SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

9.19 Waiver of Certain Claims. EACH OBLIGOR AGREES THAT IT WILL NOT ASSERT AGAINST LENDER AND ITS OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS, AND HEREBY WAIVES, ANY CLAIMS IT MAY AT ANY TIME HAVE FOR PUNITIVE, CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGE IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

[Remainder of page intentionally left blank; signature page following]

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


Borrower:

ALESCO FINANCIAL HOLDINGS, LLC

By		/s/ Xxxx X. Xxxxxxx
Name:		Xxxx X. Xxxxxxx
Title:		CFO and Treasurer

Guarantor:

ALESCO FINANCIAL TRUST

By		/s/ Xxxx X. Xxxxxxx
Name:		Xxxx X. Xxxxxxx
Title:		CFO and Treasurer

Lender:

ROYAL BANK OF CANADA

By		/s/ Xxxxxxxxx Xxxx
Name:		Xxxxxxxxx Xxxx
Title:		Authorized Signatory

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CREDIT AGREEMENT Dated as of September 29, 2006 among ALESCO FINANCIAL HOLDINGS, LLC Borrower ALESCO FINANCIAL TRUST Guarantor and ROYAL BANK OF CANADA Lender

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