York Enhanced Strategies Fund, LLC – ‘N-2/A’ on 11/28/05 – EX-25.2(A)(3)

On:  Monday, 11/28/05, at 5:57pm ET   ·   As of:  11/29/05   ·   Accession #:  1282695-5-518   ·   File #:  811-21834

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Pre-Effective Amendment to Registration Statement of a Closed-End Investment Company   —   Form N-2
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-2/A       Amendment No.1                                       216    942K 
 2: EX-25.2(A)(2)  Operating Agreement                               177    673K 
 3: EX-25.2(A)(3)  Indenture                                         175    695K 
 4: EX-25.2(G)  Investment Management Agreement                       21     87K 
 5: EX-25.2(H)(1)  Placement Agency Agreement for Common Shares       42    142K 
 6: EX-25.2(H)(2)  Placemt Agency Agmt-Pref Shares & Revolving        30    105K 
                          Notes                                                  
 7: EX-25.2(J)(1)  Custodial Agreement                                62    308K 
 8: EX-25.2(J)(2)  Sub-Custodial Agreement                             8     35K 
 9: EX-25.2(K)  Fund Services Agreement                               23     62K 

EX-25.2(A)(3)   —   Indenture
Exhibit Table of Contents

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                                                              EXHIBIT 25.2(a)(3)

================================================================================

YORK ENHANCED STRATEGIES FUND, LLC
Issuer

And 

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION 
Trustee 

INDENTURE 

Dated as of November 17, 2005 

$216,000,000 SENIOR REVOLVING NOTES 

================================================================================

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                                                                            PAGE

ARTICLE 1           DEFINITIONS................................................1
         Section 1.1.   Definitions............................................1
Section 1.2.   References to Collateral Valuation Schedules;  
                        Accounting Matters; Asset Coverage Determinations.....22
ARTICLE 2           THE NOTES.................................................23
         Section 2.1.   Forms Generally.......................................23
         Section 2.2.   Forms of Securities; Certificate of Authentication....23
   Section 2.3.   Authorized Amount; Interest Rate; Stated Maturity;
                        Denominations.........................................24
         Section 2.4.   Execution, Authentication, Delivery and Dating........24
         Section 2.5.   Registration, Registration of Transfer and Exchange...25
Section 2.6.   Mutilated, Defaced, Destroyed, Lost or Stolen  
                        Securities............................................29
Section 2.7.   Payment in Respect of the Securities; Rights   
                        Preserved.............................................30
         Section 2.8.   Persons Deemed Owners.................................33
         Section 2.9.   Cancellation..........................................33
         Section 2.10.  Global Securities; Transfer to Physical Securities....33
Section 2.11.  Securities Beneficially Owned by Non-Permitted 
                        Holders...............................................34
         Section 2.12.  Borrowings on the Notes...............................34
         Section 2.13.  Extension of Stated Maturity by the Holders...........35
         Section 2.14.  Additional Issuance...................................35
ARTICLE 3           CONDITIONS PRECEDENT......................................36
         Section 3.1.   Closing Date Issuance.................................36
         Section 3.2.   Additional Issuances..................................37
ARTICLE 4           SATISFACTION AND DISCHARGE................................38
         Section 4.1.   Satisfaction and Discharge of Indenture...............38
         Section 4.2.   Application of Trust Money............................39
         Section 4.3.   Repayment of Monies Held by Paying Agent..............39
ARTICLE 5           EVENTS OF DEFAULT; REMEDIES...............................39
         Section 5.1.   Events of Default.....................................39
    Section 5.2.   Acceleration of Maturity; Rescission and Annulment;
                        Voting Rights.........................................42

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                                                                            PAGE

     Section 5.3.   Collection of Indebtedness and Suits for Enforcement
                        by Trustee............................................43
         Section 5.4.   Remedies..............................................44
 Section 5.5.   Trustee May Enforce Claims Without Possession of
                        Securities............................................45
         Section 5.6.   Application of Money Collected........................45
         Section 5.7.   Limitation on Suits...................................46
 Section 5.8.   Unconditional Rights of Holders of Securities to
                        Receive Principal and Interest........................46
         Section 5.9.   Restoration of Rights and Remedies....................46
         Section 5.10.  Rights and Remedies Cumulative........................47
         Section 5.11.  Delay or Omission Not Waiver..........................47
         Section 5.12.  Control by Securityholders............................47
         Section 5.13.  Waiver of Defaults....................................47
         Section 5.14.  Undertaking for Costs.................................48
         Section 5.15.  Waiver of Stay or Extension Laws......................48
         Section 5.16.  Action on the Securities..............................49
ARTICLE 6           THE TRUSTEE...............................................49
         Section 6.1.   Certain Duties and Responsibilities...................49
         Section 6.2.   Notice of Default.....................................50
         Section 6.3.   Certain Rights of Trustee.............................50
Section 6.4.   Not Responsible for Recitals or Issuance of    
                        Securities............................................52
         Section 6.5.   May Hold Securities...................................52
         Section 6.6.   Money Held in Trust...................................52
         Section 6.7.   Compensation and Reimbursement........................52
         Section 6.8.   Corporate Trustee Required; Eligibility...............53
         Section 6.9.   Resignation and Removal; Appointment of Successor.....53
         Section 6.10.  Acceptance of Appointment by Successor................54
   Section 6.11.  Merger, Conversion, Consolidation or Succession to
                        Business of Trustee...................................55
         Section 6.12.  Authenticating Agents.................................55
ARTICLE 7           COVENANTS.................................................56

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                                                                            PAGE

         Section 7.1.   Payment of Principal and Interest.....................56
         Section 7.2.   Maintenance of Office or Agency.......................57
         Section 7.3.   Money for Payments to be Held in Trust................58
Section 7.4.   Existence of Issuer; Activities; Affiliate     
                        Transactions..........................................59
         Section 7.5.   Protection of Collateral..............................60
         Section 7.6.   Certificate as to Collateral..........................61
         Section 7.7.   Over-Collateralization Tests..........................61
         Section 7.8.   Performance of Obligations............................62
         Section 7.9.   Payment of Taxes and Other Claims.....................62
         Section 7.10.  Insurance.............................................63
         Section 7.11.  Compliance With Laws; Asset Coverage Requirements.....63
         Section 7.12.  Investment Manager; Custodian; Accountants............63
         Section 7.13.  Minimum Net Worth.....................................63
         Section 7.14.  Limitations on Indebtedness or Equity Securities......63
         Section 7.15.  Liens.................................................64
         Section 7.16.  Restricted Payments...................................64
         Section 7.17.  Change of Name, etc...................................65
         Section 7.18.  Merger, Consolidation, Sale of Assets.................65
         Section 7.19.  Investment Dispositions, etc..........................66
Section 7.20.  Modification of Certain Instruments, Organic   
                        Documents, Agreements, etc............................66
         Section 7.21.  Statement as to Compliance............................67
         Section 7.22.  No Other Business.....................................67
         Section 7.23.  Reporting.............................................67
         Section 7.24.  Calculation Agent.....................................68
         Section 7.25.  Margin Stock..........................................69
         Section 7.26.  Pension and Welfare Plans.............................69
         Section 7.27.  Payment of Management or Advisory Fees................70
Section 7.28.  Limitation on Bank Loans and Specified Hedging 
                        Transactions..........................................70
         Section 7.29.  Short Sale Transactions...............................70

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ARTICLE 8           SUPPLEMENTAL INDENTURES...................................71
Section 8.1.   Supplemental Indentures Without Consent of     
                        Securityholders.......................................71
Section 8.2.   Supplemental Indentures with Consent of        
                        Securityholders.......................................72
         Section 8.3.   Execution of Supplemental Indentures..................74
Section 8.4.   Certain Further Limitations on Supplemental    
                        Indentures............................................74
         Section 8.5.   Effect of Supplemental Indentures.....................74
         Section 8.6.   Reference in Securities to Supplemental Indentures....75
ARTICLE 9           PREPAYMENT OF NOTES.......................................75
         Section 9.1.   Mandatory Prepayment..................................75
         Section 9.2.   Voluntary Prepayments of Notes........................75
         Section 9.3.   Commitment Reductions.................................75
ARTICLE 10          ACCOUNTS, ACCOUNTINGS AND RELEASES........................76
         Section 10.1.  Collection of Money; General Account Requirements.....76
         Section 10.2.  Collection Account....................................77
         Section 10.3.  Payment Account;  Advance Funding Account.............78
         Section 10.4.  Collateral Accounts...................................79
         Section 10.5.  Reports by Trustee....................................79
         Section 10.6.  Accountings...........................................79
         Section 10.7.  Reports to Rating Agencies: Ratings Changes...........81
ARTICLE 11          APPLICATION OF MONIES.....................................82
      Section 11.1.  Disbursements of Monies from Payment Account Prior to
                        Liquidation Direction.................................82
 Section 11.2.  Disbursements of Monies from Payment Account and
                        Collection Account After Liquidation Direction........82
ARTICLE 12          MISCELLANEOUS.............................................82
         Section 12.1.  Form of Documents Delivered to Trustee................83
         Section 12.2.  Acts of Securityholders...............................83
      Section 12.3.  Notices, etc., to Trustee, the Issuer, the Investment
                        Manager, Moody's and S&P..............................84
         Section 12.4.  Notices to Holders; Waiver............................85
         Section 12.5.  Effect of Headings and Table of Contents..............86

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                                                                            PAGE

         Section 12.6.  Successors and Assigns................................86
         Section 12.7.  Separability..........................................86
         Section 12.8.  Benefits of Indenture.................................86
         Section 12.9.  Governing Law.........................................86
         Section 12.10. Submission to Jurisdiction............................86
         Section 12.11. Counterparts..........................................87
         Section 12.12. Limited Recourse......................................87
         Section 12.13. Acts of Issuer........................................87
         Section 12.14. Waiver of Jury Trial..................................87
         Section 12.15. Escheat...............................................87

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INDENTURE   

 INDENTURE, dated as of November 17, 2005, between YORK ENHANCED
STRATEGIES FUND, LLC, a Delaware limited liability company (the "Issuer"), and  
JPMorgan Chase Bank, National Association, a national banking association, as   
trustee (herein, together with its permitted successors in the trusts hereunder,
called the "Trustee").                                                          

PRELIMINARY STATEMENT 

        The Issuer is duly authorized to execute and deliver this Indenture to
provide for the Securities issuable as provided in this Indenture. All covenants
and agreements made by the Issuer herein are for the benefit of the             
Securityholders and the Trustee. The Issuer is entering into this Indenture, and
the Trustee is accepting the trusts created hereby, for good and valuable       
consideration, the receipt and sufficiency of which are hereby acknowledged.    

      All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with the agreement's terms have been done. Each party      
hereto agrees as follows for the benefit of each other party hereto:            

ARTICLE 1   

DEFINITIONS   

Section 1.1.    Definitions.                                                    

      Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for   
all purposes of this Indenture, and the definitions of such terms are equally   
applicable both to the singular and plural forms of such terms and to the       
masculine, feminine and neuter genders of such terms. Whenever any reference is 
made to an amount the determination of which is governed by Section 1.2, the    
provisions of Section 1.2 shall be applicable to such determination or          
calculation, whether or not reference is specifically made to Section 1.2,      
unless some other method of calculation or determination is expressly specified 
in the particular provision.                                                    

       "Acceleration Notice": An Acceleration Notice under and as defined in
the Pledge Agreement.                                                           

     "Account": The Collection Account, the Payment Account, each of the
Collateral Accounts and any other account established by the Trustee under or in
connection with this Indenture.                                                 

        "Act" and "Act of Securityholders":  The meanings specified in Section
12.2.                                                                           

    "Additional Costs":  All accrued and unpaid Commitment Fee Amount,
Break Funding Cost, Increased Costs and Tax Gross-Up Amount.                    

       "Adjusted Contributed Company Capital": At any time of determination,
Contributed Company Capital at such date minus Expensed Transaction Fees.       

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       "Administrative Expense Limit": An amount equal to the following: (a)
during the first year after the Closing Date, an amount not in excess of 2% of  
the sum of (i) the aggregate amount of the Commitments, (ii) the maximum        
aggregate liquidation preference of the Preferred Shares the Issuer would be    
authorized to issue under the Investment Company Act based upon the total amount
of the capital commitments in respect of Preferred Shares and assuming that the 
Issuer has issued the maximum number of Notes hereunder it would be permitted to
issue, regardless of whether the Issuer has issued such Preferred Shares, and   
(iii) the aggregate amount of Equity Capital Commitments, regardless of whether 
the Issuer has drawn down or repaid such Equity Capital Commitments; and (b)    
during any year thereafter, an amount not in excess of 2% of the Net Asset Value
of the Issuer; provided, however that notwithstanding the foregoing, the        
Administrative Expense Limit for any year shall not include any Administrative  
Expenses paid on the Closing Date.                                              

   "Administrative Expenses": Amounts (including indemnities) due or
accrued with respect to any Payment Date to (a) the Trustee, the Collateral     
Administrator, the Custodian, the Collateral Agent or the Note Agent pursuant to
this Indenture or any other Transaction Document; (b) the Investment Manager    
pursuant to the Investment Management Agreement; and (c) fees and expenses of   
the feeder funds and any Person in respect of any other fees, expenses or       
payments permitted under this Indenture and the documents delivered pursuant to 
or in connection with the Indenture and the Securities and the other Transaction
Documents.                                                                      

  "Advance Funding Account":  The trust account established by the
Trustee in accordance with Section 10.3(b).                                     

      "Affiliate" or "Affiliated": With respect to a Person, (a) any other
Person who, directly or indirectly, is in control of, or controlled by, or is   
under common control with, such Person or (b) any other Person who is a         
director, Officer or employee (i) of such Person, (ii) of any subsidiary or     
parent company of such Person or (iii) of any Person described in clause (a)    
above. For the purposes of this definition, control of a Person shall mean the  
power, direct or indirect, (x) to vote more than 50% of the securities having   
ordinary voting power for the election of directors of such Person, or (y) to   
direct or cause the direction of the management and policies of such Person     
whether by contract or otherwise.                                               

   "Agent Members":  Members of, or participants in, the Depository.

   "Agreed-Upon-Procedures Report": The meaning specified in Section
10.6(f).                                                                        

"Aggregate Liquidation Preference": At any time, the aggregate
outstanding amount of the liquidation preference of the Preferred Shares.       

    "Aggregate Outstanding Amount":  On any date of determination, the
aggregate Drawn Amount.                                                         

         "Aggregate Undrawn Amount": At any time, with respect to the Notes, the
excess, if any, of (a) the aggregate amount of the Commitments in respect of all
Notes over (b) the aggregate Drawn Amount.                                      

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        "Applicable Law": With respect to any Person or matter, any law, rule,
regulation, order, decree or other requirement having the force of law relating 
to such Person or matter and, where applicable, any interpretation thereof by   
any Person having jurisdiction with respect thereto or charged with the         
administration or interpretation thereof.                                       

        "Applicable Margin": With respect to an Interest Accrual Period, 0.40%
per annum.                                                                      

        "Approved Dealer":  The meaning specified in the applicable Collateral
Valuation Schedule.                                                             

"Approved Exchange":  The meaning specified in the applicable 
Collateral Valuation Schedule.                                                  

   "Approved Investment Banking Firm":  The meaning specified in the
applicable Collateral Valuation Schedule.                                       

 "Approved Third-Party Appraisal":  The meaning specified in the
applicable Collateral Valuation Schedule.                                       

         "Asset Category" : A Moody's Asset Category or S&P Asset Category, each
having the meaning specified in the applicable Collateral Valuation Schedule.   

    "Authenticating Agent": With respect to the Securities, the Person
designated by the Trustee to authenticate such Securities on behalf of the      
Trustee pursuant to Section 6.12 hereof.                                        

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

      "Authorized Officer": With respect to (a) the Issuer, any Officer or
other Person (including any duly appointed attorney-in-fact) who is authorized  
to act for the Issuer in matters relating to, and binding upon, the Issuer or,  
in respect of particular matters for which the Investment Manager has authority 
to act on behalf of the Issuer and in respect of which matters the Investment   
Manager has determined to act on behalf of the Issuer, any officer, employee or 
agent of the Investment Manager who is authorized to act for the Investment     
Manager, (b) the Investment Manager, any officer, employee or agent of the      
Investment Manager who is authorized to act for the Investment Manager in       
matters relating to, and binding upon, the Investment Manager with respect to   
the subject matter of the request, certificate or order in question, and (c) the
Trustee or any other bank or trust company acting as trustee of an express trust
or as custodian, a Trust Officer. Each party may receive and accept a           
certification of the authority of any other party as conclusive evidence of the 
authority of any Person to act, and such certification may be considered as in  
full force and effect until receipt by such other party of written notice to the
contrary.                                                                       

  "Bank Loans": The meaning specified in the applicable Collateral
Valuation Schedule.                                                             

      "Bankruptcy Code":  The U.S. Bankruptcy Code, Title 11 of the United
States Code, as amended from time to time.                                      

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        "Board of Directors": With respect to the Issuer, the directors of the
Issuer duly appointed by the holders of the shares or membership interests of   
the Issuer authorized to appoint such directors.                                

      "Board Resolution":  With respect to the Issuer, a resolution of the
Board of Directors.                                                             

"Borrowing":  The meaning specified in Section 2.12(a).       

"Borrowing Date":  The meaning specified in Section 2.12(a).  

         "Break Funding Costs": With respect to any Prepayment on the Notes on a
date that is not a Payment Date, a fee payable to the Holders of the Notes in an
amount equal to the excess (if any) of (a) the Applicable Margin times the      
amount of such Prepayment for the period from and including the Prepayment Date 
to and excluding the next Payment Date (or, if there are one or more subsequent 
Borrowings before the next Payment Date, the date of the next such Borrowing)   
minus (b) the Commitment Fee payable for such period with respect to the amount 
of such Prepayment; provided, that such Break Funding Costs will be zero with   
respect to such Prepayment of any Drawn Amount that was required under the Note 
Purchase Agreement to be drawn following the failure of a holder of the Notes to
meet the Rating Criteria.                                                       

        "Business Day": Any day other than (a) Saturday or Sunday or (b) a day
on which commercial banks in New York, New York, Los Angeles, California or the 
city in which the Corporate Trust Office is located are authorized or required  
by Applicable Law to close or, for final payment of principal, in the relevant  
place of presentation and any day on which the Bond Market Association          
recommends a closed day for the U.S. Bond Market.                               

 "Calculation Agent":  The meaning specified in Section 7.24(a).

      "Capital Stock":  The meaning specified in the applicable Collateral
Valuation Schedule.                                                             

      "Cash": The meaning specified in the applicable Collateral Valuation
Schedule.                                                                       

       "Cash Equivalent": The meaning specified in the applicable Collateral
Valuation Schedule.                                                             

"Certificatable Securities":  Any of the Notes.               

  "Certificate Date": The meaning specified in Section 7.7(a)(ii).

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

         "Change in Law": The enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs after the Closing Date.                  

     "Clearstream":  Clearstream Banking Luxembourg, S.A., a corporation
organized under the laws of the Grand Duchy of Luxembourg.                      

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    "Closed-end Company": A "Closed-end company" as defined in Section
5(a)(2) of the Investment Company Act.                                          

"Closing Date":  November 17, 2005.                           

       "Code":  The United States Internal Revenue Code of 1986, as amended.

"Collateral":  The meaning specified in the Pledge Agreement. 

"Collateral Account":  The meaning specified in Section 10.4. 

     "Collateral Agent":  The meaning set forth in the Pledge Agreement.

        "Collateral Administrator": JPMorgan Chase Bank, National Association.

      "Collateral Administration Agreement": The Collateral Administration
Agreement dated as of the Closing Date among the Issuer, the Investment Manager 
and the Collateral Administrator, as the same may be amended, supplemented or   
otherwise modified from time to time.                                           

   "Collateral Valuation Schedule": The Moody's Collateral Valuation
Schedule or the S&P Collateral Valuation Schedule.                              

  "Collection Account":  The trust account established pursuant to
Section 10.2(a).                                                                

         "Commitment": At any time in respect of any Note, the maximum aggregate
outstanding principal amount of advances (whether at the time funded or         
unfunded) that the Holder of such Note is obligated to make to the Issuer from  
time to time under the Note Purchase Agreement.                                 

      "Commitment Fee": With respect to the Notes, the Commitment Fee Rate
multiplied by the Aggregate Undrawn Amount of the Notes for each day during the 
Draw Period, except that no Commitment Fee shall be paid with respect to the    
Aggregate Undrawn Amount attributable to a Holder that has breached its         
obligation to fund a request for a Borrowing from the date of such breach to and
until the date such breach has been cured.                                      

      "Commitment Fee Amount": With respect to the Notes as of any Payment
Date, the sum of (a) the aggregate amount of Commitment Fee accrued and unpaid  
as of such Payment Date plus (b) interest accrued for the Interest Accrual      
Period for such Payment Date at the Interest Rate of the Notes on any accrued   
and unpaid Commitment Fees that became payable on any prior Payment Date.       

"Commitment Fee Rate":  a rate per annum equal to 0.20%.      

    "Common Shareholder": At any date, with respect to any outstanding
Common Share, the record holder of such Common Share as reflected in the        
register held by the Issuer.                                                    

    "Common Shares": The common shares issued from time to time by the
Issuer pursuant to the Operating Agreement.                                     

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        "Company Equity": At any date, the equity of the Issuer represented by
the Common Shares (determined in accordance with GAAP as of such date);         
provided, that for purposes of Section 7.13, Company Equity will not be reduced 
by Expensed Transaction Fees of the Issuer. For purposes of this Indenture,     
Company Equity shall be deemed to be the Company Equity as of the end of the    
most recently completed fiscal quarter for which financial statements are       
available as adjusted to give effect to any capital contributions and           
distributions that occurred after such fiscal quarter.                          

         "Company Tax Distribution": Any distribution that the Issuer reasonably
and in good faith estimates should be made by it to the Holders of the Preferred
Shares or the Common Shareholders (a) to provide such Persons funds to pay taxes
in respect of the Preferred Shares or Common Shares held by such Persons or (b) 
in order to preserve the U.S. federal income tax status of the Issuer as a      
regulated investment company under the Code.                                    

         "Compliance Certificate": An Officer's Certificate substantially in the
form of Exhibit D.                                                              

        "Contributed Company Capital": The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

   "Controlling Class Representative":  The meaning specified in the
Pledge Agreement.                                                               

     "Corporate Trust Office": The corporate trust office of the Trustee
currently located at 600 Travis Street, 50th Floor, Houston, Texas 77002,       
Attention: Worldwide Securities Services- York Enhanced Strategies Fund, LLC, or
such other address as the Trustee may designate from time to time by notice to  
the Noteholders, the Investment Manager and the Issuer, or the principal        
corporate trust office of any successor Trustee.                                

    "Credit Enhancer":  The meaning set forth in the Pledge Agreement.

      "Credit Enhancer Liquidity Account":  The Ambac Liquidity Account as
defined in the Insurance Agreement.                                             

         "Currency Hedging Transaction": The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

      "Custodial Account":  The meaning specified in the Pledge Agreement.

        "Custodial Agreement": The custodial agreement, in the form of Exhibit
C, dated as of the Closing Date among the Issuer, the Custodian, and the        
Collateral Agent, as the same may be amended, supplemented or otherwise modified
from time to time.                                                              

       "Custodian": JPMorgan Chase Bank, National Association, acting in its
capacity as Custodian under the Custodial Agreement and any successor thereto in
such capacity.                                                                  

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

         "Defaulted Interest": Any interest or the Commitment Fee Amount due and
payable in respect of any Notes or any interest on such Defaulted Interest which
is not punctually paid or                                                       

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duly provided for on the applicable Payment Date or at the Stated Maturity of   
the applicable Note and any Break Funding Cost which is not punctually paid or  
duly provided for on the applicable Prepayment Date and which remains unpaid.   

        "Defensive Hedge Transaction": The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

"Depository" means DTC.                                       

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

      "Dividend Payment Date": The Business Day immediately preceding each
date on which dividends and unissued share fees, if any, are scheduled for      
payment (whether or not declared or earned) on any Insured Obligations (as      
defined in the Insurance Policy) in accordance with the applicable Statement of 
Preferences of the Issuer.                                                      

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

       "Draw Period": The period beginning on the Closing Date and ending on
the earlier to occur of the Stated Maturity of the Notes and the date on which  
the Commitments terminate.                                                      

   "Draw Period Termination Date":  The last day of the Draw Period.

       "Drawn Amount": At any time, with respect to the Notes, the aggregate
principal amount of the Notes funded on the Closing Date or by one or more      
Borrowings after the Closing Date and not repaid hereunder.                     

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

       "Due Period": With respect to any Payment Date, the period commencing
immediately following the eighth Business Day prior to the preceding Payment    
Date (or, on the Closing Date, in the case of the Due Period relating to the    
first Payment Date) and ending on the eighth Business Day prior to such Payment 
Date (or, in the case of a Due Period that is applicable to the Payment Date    
relating to the Stated Maturity of any Note, or the Maturity of all Outstanding 
Notes, ending on the day preceding such Payment Date).                          

  "Eligible Counterparty": The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

 "Eligible Investments": The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

        "Equity Capital Commitments": Commitments of the holders of the Common
Shares of the Issuer to contribute equity capital to the Issuer.                

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

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     "Escrow Account": The meaning specified in the Custodial Agreement.

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

        "Excess Amount":  Shall exist if on any Business Day there is a Senior
Excess Amount or a Total Excess Amount.                                         

      "Excess Date": Any Business Day on which an Excess Amount exists. An
Excess Date shall always follow a Business Day (a) that does not have an Excess 
Amount or (b) on which the Issuer has satisfied both the Senior                 
Over-Collateralization Test and the Total Over-Collateralization Test by        
complying with clause (a)(i) of Section 7.7.                                    

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

  "Excluded Investments":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

         "Expensed Transaction Fees": As of any date, all legal, tax, accounting
software and systems, and other organizational expenditures incurred in         
connection with the offering and issuance of the Securities, the Preferred      
Shares or the Common Shares, the formation of the Issuer and related entities   
and the fees due to the Placement Agents, placement agents and initial          
purchasers in connection with obtaining the Equity Capital Commitments and the  
issuance of the Preferred Shares and the Common Shares and to the Trustee, the  
Custodian and the Holders in connection with the placement of Securities, to the
extent such amounts have been expensed (or capitalized and amortized) on or     
prior to such date.                                                             

   "Extended Maturity Date":  The meaning specified in Section 2.13.

"Extension Notice": The meaning specified in Section 2.13.    

    "Final Maturity Payment Default Notice":  A Final Maturity Payment
Default Notice under and as defined in the Pledge Agreement.                    

"Financing Statement":  The meaning specified in the UCC.     

         "First Extended Maturity Date":  The meaning specified in Section 2.13.

        "Fixed Income Investment":  The meaning specified in the definition of
"Short Sale Advance Amount" as set forth in the Collateral Valuation Schedules. 

"FRB":  The Federal Reserve Bank of New York.                 

        "FRS Board": The Board of Governors of the Federal Reserve System and,
as applicable, the staff thereof.                                               

        "Fund Investments": The meaning specified in the applicable Collateral
Valuation Schedule.                                                             

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       "GAAP":  Generally accepted accounting principles in effect from time
to time in the United States of America.                                        

       "Global Certificatable Securities":  The meaning specified in Section
2.5(c)(ii).                                                                     

"Global Security":  The meaning specified in Section 2.2(b).  

      "Grant": To grant, bargain, sell, warrant, alienate, remise, demise,
release, convey, assign, transfer, mortgage, pledge, create and grant a security
interest in, general lien upon, and right of set-off against, deposit, set over 
and confirm.                                                                    

    "Hedging and Short Sale Transaction": The meaning specified in the
applicable Collateral Valuation Schedule.                                       

        "Holder" or "Securityholder":  With respect to any Security the Person
in whose name such Security is registered in the Security Register.             

        "Increased Costs": With respect to any Payment Date, the amount (other
than any amount that is a tax or a stamp, registration, documentation or similar
tax), as set forth in a certificate of a Holder of a Note, delivered to the     
Issuer and the Note Agent on or prior to the related Determination Date,        
necessary to compensate such Holder, for (a) any increase in the cost of making 
or maintaining any loan or asset purchase under the Note Purchase Agreement (or 
of maintaining its obligation to make any such loan or asset purchase) resulting
from a Change in Law applicable to such Holder, (b) any reduction in any amount 
received or receivable by such Holder under the Note Purchase Agreement         
resulting from a Change in Law applicable to such Holder, and (c) any reduction 
in the rate of return on the capital of such Holder or its bank holding company 
resulting from a Change in Law applicable to such Holder or bank holding company
to a level below that which such Holder or bank holding company could have      
achieved but for such Change in Law.                                            

   "Incur": To create, incur, assume or suffer to exist or otherwise
directly or indirectly become or be liable (and, with correlative meanings,     
"Incurred" and "Incurrence").                                                   

         "Indebtedness": Of the Issuer, means, at any date, without duplication:
(a) all obligations of the Issuer for borrowed money; (b) all obligations of the
Issuer evidenced by bonds, debentures, notes or other similar instruments; (c)  
all obligations of the Issuer to pay the deferred purchase price of property or 
services, except trade accounts payable arising in the ordinary course of       
business; (d) all obligations of the Issuer as lessee under capital leases; (e) 
all non-contingent obligations of the Issuer to reimburse or prepay any bank or 
other Person in respect of amounts paid under a letter of credit, banker's      
acceptance or similar instrument; (f) all Indebtedness of others secured by a   
Lien on any asset of the Issuer, whether or not such Indebtedness is assumed by 
the Issuer; and (g) all Indebtedness of others guaranteed by the Issuer, it     
being acknowledged and understood that Indebtedness shall in no event include   
any obligations under any Hedging and Short Sale Transactions or Structured     
Product Transactions.                                                           

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

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instrument to designated "Articles," "Sections," "Subsections" and other        
subdivisions are to the designated Articles, Sections, Subsections and other    
subdivisions of this instrument as originally executed. The words "herein,"     
"hereof," "hereunder" and other words of similar import refer to this Indenture 
as a whole and not to any particular Article, Section, Subsection or other      
subdivision.                                                                    

      "Independent": As to any Person, any other Person (including, in the
case of an accountant, or lawyer, a firm of accountants or lawyers or any       
investment bank and any member thereof) who (a) does not have and is not        
committed to acquire any material direct or any material indirect financial     
interest in such Person or in any Affiliate of such Person, and (b) is not      
connected with such Person as an Officer, employee, promoter, underwriter,      
voting trustee, partner, director or Person performing similar functions.       
"independent" when used with respect to any accountant may include an accountant
who audits the books of such Person if in addition to satisfying the criteria   
set forth above the accountant is independent with respect to such Person within
the meaning of Rule 101 of the Code of Ethics of the American Institute of      
Certified Public Accountants. Whenever any Independent Person's opinion or      
certificate is to be furnished to the Trustee, such opinion or certificate shall
state that the signer has read this definition and that the signer is           
independent within the meaning hereof.                                          

"Independent Public Accountant": Any one of the four largest  
independent public accounting firms in the United States as of the Closing Date 
or any other Independent public accounting firm reasonably satisfactory to a    
Majority of the Notes.                                                          

        "Index Maturity":  With respect to any Borrowing, the related Interest
Accrual Period.                                                                 

        "Insurance Agreement":  The meaning set forth in the Pledge Agreement.

       "Interest Accrual Period": With respect to each Borrowing, the period
beginning on and including the Borrowing Date with respect to such Borrowing to 
but excluding the first Payment Date following such Borrowing Date and          
thereafter each successive period beginning on and including a Payment Date and 
ending on, but excluding, the next Payment Date, provided, however that with    
respect to any Borrowing made in the period beginning on a Determination Date   
and ending on but excluding the first Payment Date following such Determination 
Date, the Interest Accrual Period shall run from and including the related      
Borrowing Date of such Borrowing to but excluding the second Payment Date       
following such Determination Date and, with respect to any Prepayment on the    
Notes, the last Interest Accrual Period shall end on, but exclude, the date of  
such Prepayment. For purposes of determining any Interest Accrual Period, if any
Payment Date is not a Business Day, then the Interest Accrual Period ending on  
such Payment Date shall be extended to but excluding the date on which payment  
is made and the succeeding Interest Accrual Period shall begin on and include   
such date.                                                                      

"Interest Amount": With respect to each Note and each LIBOR   
Determination Date, the amount of interest for the related Interest Accrual     
Period payable in respect of the principal amount of such Notes.                

         "Interest Rate":  With respect to an Interest Accrual Period, LIBOR for
such Interest Accrual Period plus the Applicable Margin.                        

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   "Interest Rate Hedging Transaction": The meaning specified in the
applicable Collateral Valuation Schedule.                                       

        "Investment Company Act":  The United States Investment Company Act of
1940, as amended.                                                               

        "Investment Management Agreement": The Investment Management Agreement
dated as of the Closing Date between the Issuer and the Investment Manager      
relating to the management of the investment portfolio of the Issuer, as may be 
amended, supplemented or otherwise modified from time to time pursuant to the   
terms thereof and Section 7.20.                                                 

         "Investment Manager" means York Enhanced Strategies Management, LLC, in
its capacity as investment manager under the Investment Management Agreement,   
unless terminated in accordance with the Investment Company Act. In the event of
any such termination or otherwise "Investment Manager" shall mean a replacement 
investment manager only if such replacement investment manager shall have become
investment manager pursuant to the Investment Management Agreement and Section  
7.12.                                                                           

  "Issuer": York Enhanced Strategies Fund, LLC, a Delaware limited
liability company, until a successor Person shall have become the Issuer        
pursuant to the applicable provisions of this Indenture, and thereafter "Issuer"
shall mean such successor Person.                                               

         "Issuer Order": A written order or request (which may be in the form of
a standing order or request) dated and signed in the name of the Issuer by an   
Authorized Officer of the Issuer, or by an Authorized Officer of the Investment 
Manager where permitted, as the context may require or permit.                  

"LIBOR":  The meaning set forth in Schedule C attached hereto.

     "LIBOR Business Day":  The meaning set forth in Schedule C attached
hereto.                                                                         

  "LIBOR Determination Date":  The meaning set forth in Schedule C
attached hereto.                                                                

         "Lien": With respect to any asset, any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), or     
preference, priority or other security agreement or preferential arrangement of 
any kind or nature whatsoever (including, without limitation, any conditional   
sale or other title retention agreement relating to such asset).                

      "Liquidation Acceleration":  A Liquidation Acceleration under and as
defined in the Pledge Agreement.                                                

       "Liquidation Account": The meaning specified in the Pledge Agreement.

       "Liquidation Direction": A Liquidation Direction under and as defined
in the Pledge Agreement.                                                        

        "Majority of the Notes": The Holders of more than 50% of the Aggregate
Outstanding Amount of the Outstanding Notes; provided, however, that in no event
shall any Securities held                                                       

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or controlled by the Issuer or the Investment Manager constitute Outstanding    
Notes for purposes of determining the Majority of the Notes.                    

  "Management Fee" means management fees payable to the Investment
Manager (a) during the period commencing on the Closing Date and ending on      
December 31, 2006 (the "Initial Draw Period"), equal to 0.75% per annum of the  
sum of (i) the aggregate capital commitments with respect to the Common Shares, 
regardless of whether the Issuer has drawn down such commitments, (ii) the      
aggregate capital commitments with respect to the Term Preferred Shares,        
regardless of whether the Issuer has drawn down such commitments, and (iii) the 
aggregate Commitments, regardless of whether the Issuer has drawn down or repaid
such commitments (the sum of (i) through (iii) being referred to as the         
"Committed Capital"), (b) after the Initial Draw Period through December 31,    
2007, equal to 0.75% per annum of the Net Asset Value of the Issuer using the   
applicable quarter-end Net Asset Value (without reduction for any dividends     
accrued on the Common Shares or the Series A-2 Preferred Share), and (c)        
thereafter, equal to 1.0% per annum of the net asset value of the Issuer using  
the applicable quarter-end Net Asset Value (without reduction for any dividends 
accrued on the Common Shares or the Series A-2 Preferred Share).                

        "Margin Securities": "Margin Securities" as defined under Regulation T
issued by the Board of Governors of the Federal Reserve System.                 

        "Margin Stock": "Margin Stock" as defined under Regulation U issued by
the Board of Governors of the Federal Reserve System.                           

    "Market Value": The meaning specified in the applicable Collateral
Valuation Schedule.                                                             

"Market Value Price": The meaning specified in the applicable 
Collateral Valuation Schedule.                                                  

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

"Money":  The meaning specified in Article I of the UCC.      

       "Moody's":  Moody's Investors Service and any successor or successors
thereto.                                                                        

 "Moody's Collateral Valuation Schedule": The Moody's Collateral
Valuation Schedule attached as Schedule A to this Indenture.                    

        "Moody's Net Accrual Amount":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

"Moody's Senior Advance Amount": The meaning specified in the 
applicable Collateral Valuation Schedule. For purposes of determining the       
Moody's Net Accrual Amount on any date in connection with the calculation of the
Moody's Senior Advance Amount, the reference to dividends in subpart (ii) of the
definition of Moody's Net Accrual Amount shall be deemed to include all         
dividends accrued to such date whether or not declared.                         

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         "Moody's Senior Advance Rate":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

         "Moody's Total Advance Amount": The meaning specified in the applicable
Collateral Valuation Schedule. For purposes of determining the Moody's Net      
Accrual Amount on any date in connection with the calculation of the Moody's    
Total Advance Amount, the reference to dividends in subpart (ii) of the         
definition of Moody's Net Accrual Amount shall be deemed to include all         
dividends accrued to such date whether or not declared.                         

        "Moody's Total Advance Rate":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

       "Moody's Valuation Procedures":  The procedures prescribed by Moody's
for determining the Market Value of Fund Investments as set forth in the Moody's
Collateral Valuation Schedule.                                                  

     "Net Asset Value": "Company Equity" as calculated in the definition
thereof determined by the Issuer, at any date, based upon good faith estimates  
for accruals and expenses of the Issuer, which may, but need not, be fully      
compliant with GAAP.                                                            

      "Non-Permitted Holder": A Person that is not a Qualified Investor or
that fails to satisfy the Rating Criteria.                                      

      "Non-Reduction Period": The period from the Closing Date through the
fifth anniversary of the Closing Date.                                          

      "Note Agent":  The meaning specified in the Note Purchase Agreement.

    "Note Purchase Agreement": The Note Purchase Agreement dated as of
November 17, 2005, entered into among the Issuer, the Note Agent and the        
Holders, as from time to time amended, modified or supplemented.                

       "Noteholder": With respect to any Note, the Person in whose name such
Note is registered in the Security Register.                                    

         "Notes": The Senior Revolving Notes, Due 2013, subject to the extension
of the Stated Maturity in accordance with Section 2.13 hereof, issued by the    
Issuer, authenticated by the Trustee or any Authenticating Agent and designated 
as a Note pursuant to this Indenture.                                           

         "Offering Memorandum": The Offering Memorandum, dated November 16, 2005
in connection with the offer and sale of the Securities.                        

         "Officer": With respect (a) to the Issuer or any other corporation, the
Chairman of the Board of Directors, any Director, the President, any Vice       
President, the Secretary, an Assistant Secretary, the Treasurer or an Assistant 
Treasurer of the Issuer or other Person authorized by the Issuer; (b) any       
partnership, any general partner thereof; and (c) any bank or trust company     
acting as trustee of an express trust or as custodian, any Trust Officer.       

"Officer's Certificate":  A certificate from an Officer.      

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       "Operating Agreement": The Operating Agreement of the Issuer dated as
of November 3, 2005 among the initial members and the Common Shareholders as the
same may be amended, supplemented or otherwise modified from time to time.      

      "Opinion of Counsel": A written opinion addressed to the Trustee and
each Rating Agency (except as otherwise provided herein), in form and substance 
reasonably satisfactory to the Trustee and each applicable Rating Agency, of an 
attorney at law admitted to practice before the highest court of any state of   
the United States or the District of Columbia, which attorney may, except as    
otherwise expressly provided in this Indenture, be counsel for the Issuer or the
Investment Manager, and which attorney shall be reasonably satisfactory to the  
Trustee.                                                                        

   "Organic Documents": Of any Person, its certificate of formation,
limited liability company agreement, memorandum and articles of association,    
charter and by-laws, operating agreement or similar constitutive documents and  
includes all agreements, voting trusts and similar arrangements with or among   
the holders of such Person's capital stock or other equity.                     

"Original Stated Maturity":  November 15, 2013.               

        "Outstanding":  As of any date of determination, all of the Securities
theretofore authenticated and delivered under this Indenture except:            

       (a)     Securities theretofore canceled by the Security
    Registrar or delivered to the Security Registrar for cancellation;

              (b)     Securities or portions thereof for whose payment funds
     in the necessary amount have been theretofore irrevocably deposited
       with the Trustee or any Paying Agent in trust for the Holders of such
Securities;                                                   

            (c)     Securities in exchange for or in lieu of which other
   Securities have been authenticated and delivered pursuant to this
       Indenture, unless proof satisfactory to the Trustee is presented that
any such Securities are held by a holder in due course; and   

             (d)     Securities alleged to have been mutilated, destroyed,
     lost or stolen for which replacement Securities have been issued as
provided in Section 2.6.                                      

   "outstanding": When used in the Collateral Valuation Schedules in
relation to the Notes, means the outstanding drawn principal amount of the      
Notes.                                                                          

         "Over-Collateralization Test": Either the Senior Over-Collateralization
Test or the Total Over-Collateralization Test, as applicable.                   

        "Paying Agent": Any Person authorized by the Issuer to pay any amounts
to be paid on any Securities on behalf of the Issuer as specified in Section    
7.2.                                                                            

       "Payment Account":  The trust account established pursuant to Section
10.3(a).                                                                        

         "Payment Date": The 15th of March, June, September and December of each
year, commencing March 15, 2006, or if any such date is not a Business Day, the 
next Business Day; provided that the last Payment Date in respect of any Note   
shall be its Stated Maturity.                                                   

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  "Payment Proceeds": With respect to any Payment Date, all of the
amounts received by the Trustee from the Issuer during the related Due Period in
respect of the payment of any amounts due hereunder.                            

       "Pension Plan":  A "pension plan," as such term is defined in Section
3(2) of ERISA.                                                                  

   "Performing":  The meaning specified in the applicable Collateral
Valuation Schedule.                                                             

"Permitted Equity Issuance": Includes all of the following:   

(a)    the Preferred Shares and the Common Shares; and        

       (b)    with respect to any Fund Investment, any funding obligation of
the Issuer to the issuer of such Fund Investment.                               

   "Permitted Holder":  A Person that is not a Non-Permitted Holder.

"Permitted Indebtedness":  Includes all of the following:     

        (a)    Indebtedness in respect of the Securities (including additional
Securities issued pursuant to Section 2.14) in an Aggregate Outstanding Amount  
not to exceed the Total Maximum Commitment (as increased by any such additional 
Securities and including refinancings, refundings or replacements thereof);     

  (b)    Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against     
insufficient funds in the ordinary course of business; provided, that such      
Indebtedness is extinguished within five Business Days of its incurrence;       

       (c)    with respect to any Fund Investment, any funding obligation of
the Issuer to the issuer of such Fund Investment to the extent constituting     
Indebtedness.                                                                   

"Permitted Lien": Includes any of the following:              

      (a)    Liens in favor of the Collateral Agent for the benefit of the
Secured Parties granted pursuant to the Pledge Agreement;                       

      (b)    any Lien or other encumbrance for taxes, assessments or other
governmental charges or levies not yet subject to penalties for non-payment or  
the validity, applicability or amount of which is being contested in good faith 
by appropriate proceedings and for which adequate reserves in accordance with   
GAAP shall have been established by the Issuer;                                 

      (c)    Liens of broker-dealers and clearing corporations (i) granted
pursuant to the Custodial Agreement or (ii) Incurred in the ordinary course of  
business, but excluding Liens created in connection with the purchase of        
securities on margin, the short sale of securities on margin or Securities      
Lending Transactions (other than Securities Lending Transactions involving U.S. 
Government Securities incurred as Interest Rate Hedging Transactions); provided,
that in the case of broker-dealer Liens relating to trades not settled in the   
ordinary course of business,                                                    

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such Liens shall be Permitted Liens under this clause (c)(ii) only if such Liens
are discharged within five Business Days of the Issuer's obtaining actual       
knowledge thereof;                                                              

      (d)    Liens on a Short Sale Customer Account or a Short Sale Broker
Account created in accordance with Section 3.9 of the Custodial Agreement; and  

      (e)    judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed, in each case, so    
long as the aggregate amount of all such judgment Liens at any time does not    
exceed 1.5% of the Net Asset Value or judgment Liens the payment of which is    
covered in full (subject to a customary deductible) by insurance.               

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

"Physical Securities":  Each physical Note issued hereunder.  

   "Placement Agents":  Morgan Stanley & Co. Incorporated and Morgan
Stanley & Co.  International Limited, in their capacity as placement agents     
under the Private Placement Agency Agreement.                                   

         "Pledge Agreement": The Pledge and Intercreditor Agreement, in the form
of Exhibit B, dated as of the Closing Date, among the Issuer, the Custodian, the
Trustee, the Collateral Agent and the Credit Enhancer, as the same may be       
amended, modified or supplemented from time to time pursuant to the terms hereof
and thereof.                                                                    

       "Pledged Securities":  The meaning specified in the Pledge Agreement.

   "Portfolio Limitations":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

        "Preferred Shares": Any preferred shares issued by the Issuer pursuant
to the Operating Agreement, including, but not limited to, the Term Preferred   
Shares.                                                                         

    "Prepayment":  Any repayment of principal of the Notes pursuant to
Section 9.2 prior to the Maturity of such Notes.                                

"Prepayment Date":  Any date on which a Prepayment occurs.    

         "Private Placement Agency Agreement": An agreement dated as of November
17, 2005, by and between the Issuer and the Placement Agents, relating to the   
offer, sale and placement of the Securities as amended from time to time.       

      "Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding, including, without limitation, the making of a trust,
mortgage or assignment for the benefit of creditors; the voluntary or           
involuntary dissolution, winding up, total or partial liquidation,              
reorganization, bankruptcy, insolvency, receivership or marshalling of assets or
liabilities of any Person; or any other statutory, common law or contractual    
proceeding or                                                                   

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arrangement for the postponement or adjustment of all or a substantial part of  
the liabilities of such Person.                                                 

       "Protected Purchaser":  A protected purchaser as defined in Article 8
of the UCC.                                                                     

        "Qualified Investor" A Person that satisfies all of the following: (a)
such Person is an "accredited investor" within the meaning of Rule 501(a) under 
the Securities Act, (b) such Person is a "qualified client" within the meaning  
of Rule 205-3 under the Investment Advisers Act of 1940, as amended, (c) such   
Person is a "qualified purchaser" as defined in Section 2(a)(51)(A) of the      
Investment Company Act and the rules promulgated thereunder, (d) such Person is 
a "qualified institutional buyer" as defined in Rule 144A(a) of the Securities  
Act, and (e) such Person is acquiring any Securities hereunder for its own      
account for investment and not for resale or distribution.                      

         "Rating Agency": Each of Moody's and S&P, in each case only for so long
as Securities rated by such entity on the Closing Date are Outstanding and rated
by such entity.                                                                 

       "Rating Agency Condition": With respect to any specified action, that
(a) each of Moody's and S&P shall have been given prior written notice thereof  
and (b) each of Moody's and S&P shall have notified the Issuer in writing that  
such action will not result at that time in a downgrading or withdrawal of its  
then current ratings of the Indebtedness under this Indenture or the Preferred  
Shares, as applicable. Notwithstanding the foregoing, where it is provided      
herein or in any Collateral Valuation Schedule in relation to any particular    
action that the Rating Agency Condition must be satisfied with respect to one   
specified Rating Agency, and the other Rating Agency is not specified, it shall 
only be required that such specified Rating Agency shall have been given the    
notice described in clause (a) above and shall have made the notification       
described in clause (b) above in relation to such action.                       

     "Rating Agency Confirmation": Confirmation in writing (which may be
evidenced by an exchange of electronic messages or facsimiles) from each Rating 
Agency (or the specified Rating Agency) that the Rating Agency Condition is     
satisfied.                                                                      

     "Rating Criteria": Criteria that will be satisfied on any date with
respect to any purchaser of any Note if such purchaser has a rating with respect
to its unsupported senior debt obligations, or has a financial strength rating  
with respect to its claims paying ability, that is (a) in the case of a short   
term rating, not lower than "P-1" by Moody's or, in the case of a long term     
rating, not lower than "A3" by Moody's (but if rated "A3" only if such purchaser
is placed on a credit watch with positive implications by Moody's) or not lower 
than "A2" by Moody's (but if rated "A2" only if such purchaser has not been     
placed on a credit watch with negative implications by Moody's), provided that  
if such purchaser has a short term rating, then such short term rating may not  
be lower than "P-1" by Moody's regardless of its long term rating, and (b) in   
the case of a short term rating, not lower than "A-1" by S&P or, in the case of 
a long term rating, "A" by S&P or "A-" by S&P and is placed on a credit watch   
with positive implications by S&P (or its obligations are guaranteed by entities
with such ratings).                                                             

        "Record Date": With respect to (a) any Payment Date, the date on which
the Holders of Securities entitled to receive a payment on such Payment Date are
determined, such date as to any Payment Date being the fifteenth day (whether or
not a Business Day) prior to the applicable                                     

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Payment Date; (b) any Prepayment Date, the date on which the Holders of the     
Notes entitled to receive a Prepayment are determined, such date as to any      
Prepayment Date being the fifteenth day (whether or not a Business Day) prior to
the applicable Prepayment Date.                                                 

  "Reference Banks":  The meaning specified in Schedule C attached
hereto.                                                                         

"Registered Office":  The registered office of the Issuer.    

      "Regulation U": Regulation U issued by the Board of Governors of the
Federal Reserve System.                                                         

      "Reimbursable Expenses": Expenses of the Investment Manager that are
attributable to the Issuer, including, but not limited to, organizational and   
offering fees and expenses relating to the Transaction Documents, the Common    
Shares, the Preferred Shares and the Notes, marketing and travel expenses, due  
diligence and negotiation expenses, research expenses, fees and expenses of     
custodians, administrators, transfer and distribution agents, brokerage fees and
commissions, dealer spreads, legal fees and expenses of the Issuer and the      
Investment Manger incurred in connection with matters relating to or for the    
Issuer, fees and expenses of directors, insurance, including periodic premiums  
payable with respect to the insurance policy for the benefit of the holders of  
the Term Preferred Shares, filings and registrations, proxy expenses, rating    
agencies, expenses of communications to investors, compliance expenses, audit   
expenses, interest, taxes, portfolio transaction expenses, costs of responding  
to regulatory inquiries and reporting to regulatory authorities, costs and      
expenses of preparing and maintaining the books and records of the Issuer,      
indemnification, litigation and other extraordinary fees and expenses and such  
other fees and expenses as are approved by the directors as being reasonably    
related to the organization, offering, capitalization, operation or             
administration of the Issuer and the Fund Investments. For the avoidance of     
doubt, expenses associated with the general overhead of the Investment Manager  
will not be covered by the Issuer.                                              

"Reporting Date": The last Business Day of each calendar week.

        "Required Liquidity Amount": At any time that an obligation exists for
the Issuer to fund any amounts into the Credit Enhancer Liquidity Account       
pursuant to Section 6.2 of the Insurance Agreement, an amount, as determined on 
any date, equal to the amount of all accumulated but unpaid dividends in respect
of the Term Preferred Shares plus the total amount of unissued share fees on the
Series A-1 Preferred Shares of the Issuer, using a dividend rate that is equal  
to the applicable LIBOR (as defined in the Statement of Preferences) for that   
particular Rate Period (as defined in the Statement of Preferences), plus 0.30% 
per annum, plus the Additional Amount (as defined in the Statement of           
Preferences), if any, for the two subsequent Dividend Payment Dates (assuming   
the same LIBOR for such amounts) immediately following such date, whether or not
any such dividends have been earned or declared                                 

      "Restricted Payment": Includes (a) any payment or other distribution
(including, without limitation, dividends) to any Common Shareholder in respect 
of its Common Shares or to any holder in respect of the Preferred Shares; or (b)
any payment or other distribution on account of the purchase, redemption,       
retirement or acquisition of any Common Share, Preferred Share or other equity  
interest in the Issuer; provided, however, that notwithstanding the foregoing   
neither (i) dividends on the Preferred Shares nor (ii) purchases, redemptions,  
retirements or acquisitions                                                     

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of Preferred Shares made pursuant to Section 7.7 or in order to comply with any 
asset coverage test required to be maintained pursuant to Section 18 of the     
Investment Company Act shall constitute Restricted Payments hereunder and,      
subject to compliance with Section 7.7(c) and the limitations set forth in      
Section 7.16(b), may be made or paid by the Issuer at any time. For the         
avoidance of doubt, Restricted Payment shall not include any payment of         
Management Fee to the Investment Manager.                                       

"RIC Distribution": The meaning specified in Section 7.16.    

 "RIC Withholding Taxes": The meaning specified in Section 7.16.

"S&P":  Standard & Poor's Ratings Services, a division of The 
McGraw-Hill Companies, Inc., and any successor or successors thereto.           

   "S&P Collateral Valuation Schedule": The S&P Collateral Valuation
Schedule attached as Schedule B to this Indenture.                              

       "S&P Senior Advance Amount":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

     "S&P Senior Advance Rate":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

      "S&P Total Advance Amount":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

    "S&P Total Advance Rate":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

  "S&P Valuation Procedures": The procedures prescribed by S&P for
determining the Market Value of Fund Investments as set forth in the S&P        
Collateral Valuation Schedule.                                                  

    "Second Extended Maturity Date":  The meaning specified in Section
2.13.                                                                           

"Secured Hedging Advance Amount": The meaning specified in the
applicable Collateral Valuation Schedule.                                       

  "Secured Hedging Creditor":  The meaning specified in the Pledge
Agreement.                                                                      

         "Secured Hedging Net Exposure": The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

        "Secured Hedging Transaction": The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

    "Secured Parties":  The meaning specified in the Pledge Agreement.

"Securities":  The Notes.                                     

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

        "Security Register" and "Security Registrar":  The respective meanings
specified in Section 2.5(a).                                                    

"Securityholder":  See "Holder," above.                       

   "Senior Advance Amount": At any time of determination, subject to
Section 1.2, (a) the lower of (i) the Moody's Senior Advance Amount and (ii) the
S&P Senior Advance Amount minus (b) the Required Liquidity Amount, if any.      

        "Senior Excess Amount": As of any Business Day, the amount, if any, by
which the Aggregate Outstanding Amount as of the close of business of such      
Business Day exceeds the Senior Advance Amount as of such close of business.    

  "Senior Indebtedness": All Indebtedness (including contingent or
guaranteed indebtedness) and other payment obligations (including, without      
limitation, interest that would accrue but for the filing of a petition         
initiating a Proceeding, whether or not a claim for such interest is allowed in 
the Proceeding) of the Issuer arising under or in respect of this Indenture, the
Notes, or the other Transaction Documents or under any Secured Hedging          
Transaction, whether outstanding on the Closing Date or thereafter created or   
incurred, including obligations owing to the Custodian under the Custodial      
Agreement, to the Note Agent under the Note Purchase Agreement, to the Trustee  
under this Indenture or under the Pledge Agreement, and to the Collateral       
Administrator under the Collateral Administration Agreement; provided, however, 
that Senior Indebtedness shall not include any Indebtedness or such other       
obligations incurred in violation of this Indenture.                            

      "Senior Over-Collateralization Test": A test that is satisfied as of
any Business Day if the Aggregate Outstanding Amount as of such Business Day, is
less than or equal to the Senior Advance Amount.                                

  "Short Sale Broker Account": A segregated account established in
accordance with Section 3.9 of the Custodial Agreement in connection with a     
Short Sale Transaction in the name of a broker, dealer, or futures commission   
merchant, or in the name of the Issuer for the benefit of a broker, dealer,     
futures commission merchant, in each case as a pledgee of the Issuer, or        
otherwise, in accordance with an agreement between the Issuer, the Custodian and
a broker, dealer, or futures commission merchant, separate and distinct from the
Custodial Account, the Escrow Account and the Credit Enhancer Liquidity Account,
in which certain Fund Investments and/or Money of the Issuer shall be deposited 
and withdrawn from time to time in connection with any Short Sale Transaction.  

 "Short Sale Customer Account": A segregated account established
pursuant to Section 3.9 of the Custodial Agreement in which certain Fund        
Investments and/or other assets of the Issuer shall be deposited and withdrawn  
from time to time in connection with Short Sale Transactions.                   

    "Short Sale Transaction":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

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       "Specified Hedging Net Exposure": As of any date, as to any Specified
Hedging Transaction for which a determination thereof is required to be made,   
shall be determined as follows: (i) each Eligible Counterparty party to each    
Specified Hedging Transaction shall determine, with respect to the Specified    
Hedging Transactions entered into by it with the Issuer, an amount (the         
"Specified Hedging Net Exposure Component") equal to the net current market     
value on the bid side of the market if the position is long and on the ask/offer
side of the market if the position is short to the Issuer on such date of       
determination of each such Specified Hedging Transaction and (ii) for each      
Specified Hedging Transaction, the "Specified Hedging Net Exposure" will, as of 
any date, be equal to the sum of all applicable Specified Net Exposure          
Components as of such date and may, for purposes of this calculation, be less   
than zero.                                                                      

       "Specified Hedging Transaction": A Hedging and Short Sale Transaction
that is not a Defensive Hedge Transaction, a Secured Hedging Transaction or a   
Short Sale Transaction.                                                         

         "Stated Maturity":  The Original Stated Maturity, as may be extended in
accordance with Section 2.13.                                                   

     "Statement of Preferences":  The meaning specified in the Operating
Agreement.                                                                      

 "Structured Product Transaction":  The meaning specified in the
applicable Collateral Valuation Schedule.                                       

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

  "Tax Gross-Up Amount":  The meaning specified in Section 7.1(c).

         "Term Preferred Shares": The term preferred shares issued by the Issuer
pursuant to the Operating Agreement and the Statement of Preferences.           

  "Total Advance Amount": At any time of determination, subject to
Section 1.2, (a) the lower of (i) the Moody's Total Amount and (ii) the S&P     
Total Advance Amount minus (b) the Required Liquidity Amount, if any.           

  "Total Capitalization":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

       "Total Excess Amount": As of any Business Day, the amount, if any, by
which the sum of the Aggregate Outstanding Amount and the Aggregate Liquidation 
Preference as of the close of business of such Business Day exceeds the Total   
Advance Amount as of such close of business.                                    

      "Total Maximum Commitment": At any date of determination, (a) on and
after the Closing Date and prior to the Draw Period Termination Date,           
$216,000,000 and (b) on and after the Draw Period Termination Date, zero;       
provided, that the Total Maximum Commitment may be increased in accordance with 
Section 2.14 or reduced as provided in Section 9.3.                             

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        "Total Over-Collateralization Test" A test that is satisfied as of any
Business Day if the Aggregate Outstanding Amount and the Aggregate Liquidation  
Preference of the Preferred Shares, as of such Business Day, is less than or    
equal to the Total Advance Amount.                                              

       "Transaction Documents": Collectively, this Indenture, the Notes, the
Note Purchase Agreement, the Pledge Agreement, the Collateral Administration    
Agreement and the Custodial Agreement.                                          

"Transfer Certificate":  A duly executed transfer certificate 
substantially in the form of Exhibit E.                                         

     "Trust Officer": When used with respect to the Trustee or any other
bank or trust company acting as trustee of an express trust or as custodian, any
officer within the Corporate Trust Office (or similar office or department)     
working on the transactions described in this Indenture and authorized to act   
for and on behalf of the Trustee or such other bank or trust company, including 
any vice president, assistant vice president, officer of the Trustee or such    
other bank or trust company working on the transactions described in this       
Indenture.                                                                      

     "Trustee": JPMorgan Chase Bank, National Association, solely in its
capacity as Trustee hereunder, unless a successor Person shall have become the  
Trustee pursuant to the applicable provisions of this Indenture, and thereafter 
"Trustee" shall mean such successor Person.                                     

       "UCC":  The Uniform Commercial Code as in effect from time to time in
the State of New York.                                                          

  "Unquoted Investments":  The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

       "U.S. Government Securities": The meaning specified in the applicable
Collateral Valuation Schedule.                                                  

         "Valuation Statement": A written statement substantially in the form of
Exhibit F.                                                                      

       "Welfare Plan":  A "welfare plan," as such term is defined in Section
3(1) of ERISA.                                                                  

      "Yield-To-Worst": The meaning specified in the applicable Collateral
Valuation Schedule.                                                             

     "York Affiliated Entity":  JGD Management Corp. (d/b/a York Capital
Management), a Delaware corporation, and the Issuer and the respective          
Affiliates of each of the foregoing.                                            

      "York Enhanced Strategies Management, LLC": York Enhanced Strategies
Management, LLC, a New York limited liability company.                          

Section 1.2.    References to Collateral Valuation Schedules; Accounting        
Matters; Asset Coverage Determinations.         

  (a)    References to a term having the meaning set forth in both
Collateral Valuation Schedules shall be applied separately using such term as   
defined in each of the Collateral                                               

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Valuation Schedules; provided, however, that (i) if at any time none of the     
Securities are then rated by Moody's but some or all of the Securities are rated
by S&P, the Moody's Collateral Valuation Schedule shall not be applicable for   
any purpose hereunder and (ii) if at any time none of the Securities are then   
rated by S&P but some or all of the Securities are rated by Moody's, the S&P    
Collateral Valuation Schedule shall not be applicable for any purpose hereunder.

 (b)    For purposes of this Indenture, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity 
with GAAP as in effect on the Closing Date and as applied in the preparation of 
the financial statements of the Issuer referred to in Section 7.23.             

       (c)    For purposes of determining whether any of the asset coverages
required to be maintained pursuant to the Investment Company Act are maintained 
as of any date, such asset coverage may be calculated on the basis of values    
calculated as of a time within 48 hours (not including Sundays or holidays) next
preceding the time of the applicable determination.                             

ARTICLE 2   

THE NOTES   

Section 2.1.    Forms Generally.                                                

      The Notes and the Trustee's or Authenticating Agent's certificate of
authentication thereon (the "Certificate of Authentication") shall be in        
substantially the form required by this Article, with such appropriate          
insertions, omissions, substitutions and other variations as are required or    
permitted by this Indenture, and may have such letters, numbers or other marks  
of identification and such legends or endorsements placed thereon, as may be    
consistent herewith, determined by the Authorized Officers of the Issuer        
executing such Securities as evidenced by their execution of such Securities.   
Any portion of the text of any Security may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Security.              

Section 2.2.    Forms of Securities; Certificate of Authentication.             

 (a)    Form. The form of the Securities shall be (including the
Certificate of Authentication) as set forth on Exhibit A hereto.                

    (b)    Global Securities. Except as provided below, the Securities
shall be issued initially in the form of one or more permanent global securities
in definitive, fully registered form without interest coupons with the          
applicable legends set forth in Exhibit A hereto added to the form of such      
Securities (each, a "Global Security"), which shall be deposited on behalf of   
the subscribers for such Securities represented thereby with the Trustee as     
custodian for the Depository and registered in the name of a nominee of the     
Depository for the respective accounts of DTC and Clearstream, duly executed by 
the Issuer and authenticated by the Trustee as hereinafter provided.            
The aggregate principal amount of the Global Securities may from time to        

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time be increased or decreased by adjustments made on the records of the Trustee
or the Depository or its nominee, as the case may be, as hereinafter provided.  

       (c)    Book-Entry Provisions. This Section 2.2(c) shall apply only to
Global Securities deposited with or on behalf of the Depository.                

         The Issuer shall execute and the Trustee shall, in accordance with this
Section 2.2(c), authenticate and deliver initially one or more Global Securities
that (i) shall be registered in the name of the nominee of the Depository for   
such Global Security or Global Securities and (ii) shall be delivered by the    
Trustee to such Depository or pursuant to such Depository's instructions or held
by the Trustee as custodian for the Depository.                                 

         Agent Members shall have no rights under this Indenture with respect to
any Global Security held on their behalf by the Trustee, as custodian for the   
Depository or under the Global Security, and the Depository may be treated by   
the Issuer, the Trustee, and any agent of the Issuer or the Trustee as the      
absolute owner of such Global Security for all purposes whatsoever.             
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the     
Trustee, or any agent of the Issuer or the Trustee, from giving effect to any   
written certification, proxy or other authorization furnished by the Depository 
or impair, as between the Depository and its Agent Members, the operation of    
customary practices governing the exercise of the rights of a Holder of any     
Global Security.                                                                

        (d)    Physical Securities. Except as provided in Sections 2.5(c)(ii),
2.5(c)(iii) and 2.10 hereof, owners of beneficial interests in Global Securities
will not be entitled to receive physical delivery of certificated Securities.   

Section 2.3.    Authorized Amount; Interest Rate; Stated Maturity;              
Denominations.                                  

       The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is limited to $216,000,000, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange    
for, or in lieu of, other Securities pursuant to Section 2.5, 2.6, 2.10 or 8.6  
of this Indenture and Securities issued pursuant to supplemental indentures in  
accordance with Section 2.14 and Article 8.                                     

       The Securities shall be issued in a single class, shall bear interest
at the Interest Rate and shall mature on the Stated Maturity.                   

  The Securities shall be issuable in the minimum denominations of
$1,000,000 and integral multiples of $1.00 in excess thereof (an "Authorized    
Denomination").                                                                 

Section 2.4.    Execution, Authentication, Delivery and Dating.                 

        The Securities shall be executed on behalf of the Issuer by one of the
Authorized Officers of the Issuer. The signature of such Authorized Officer may 
be manual or facsimile.                                                         

      Securities bearing the manual or facsimile signatures of individuals
who were at any time the Authorized Officers of the Issuer shall bind the       
Issuer, notwithstanding the fact that such                                      

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individuals or any of them have ceased to hold such offices prior to the        
authentication and delivery of such Securities or did not hold such offices at  
the date of issuance of such Securities.                                        

       At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Securities executed by it, to the Trustee
or the Authenticating Agent for authentication and the Trustee or the           
Authenticating Agent, upon Issuer Order, shall authenticate and deliver such    
Securities as provided in this Indenture and not otherwise.                     

 Each Security authenticated and delivered by the Trustee or the
Authenticating Agent to or upon Issuer Order on the Closing Date shall be dated 
as of the Closing Date. All other Securities that are authenticated after the   
Closing Date for any other purpose under the Indenture shall be dated the date  
of their authentication.                                                        

   Securities issued upon transfer, exchange or replacement of other
Securities shall be issued in Authorized Denominations reflecting the original  
aggregate principal amount of the Securities so transferred, exchanged or       
replaced, but shall represent only the current outstanding principal amount of  
the Securities so transferred, exchanged or replaced. In the event that any     
Security is divided into more than one Security in accordance with this Article 
2, the original principal amount of such Security shall be proportionately      
divided among the Securities delivered in exchange therefor and shall be deemed 
to be the original aggregate principal amount of such subsequently issued       
Securities.                                                                     

         No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a    
Certificate of Authentication, substantially in the form provided for herein,   
executed by the Trustee or by the Authenticating Agent by the manual signature  
of one of their Authorized Officers, and such certificate upon any Security     
shall be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder.                                     

Section 2.5.    Registration, Registration of Transfer and Exchange.            

    (a)    The Issuer shall cause to be kept a register (the "Security
Register") at the Registered Office, subject to such reasonable regulations as  
it may prescribe, the Issuer shall provide for the registration of Securities   
and the registration of transfers of Securities. The Trustee is hereby initially
appointed "Security Registrar" for the purpose of registering Securities and    
transfers of such Securities. Upon any resignation or removal of the Security   
Registrar, the Issuer shall promptly appoint a successor or, in the absence of  
such appointment, assume the duties of Security Registrar.                      

  If a Person other than the Trustee is appointed by the Issuer as
Security Registrar, the Issuer will give the Trustee prompt notice of the       
appointment of a Security Registrar and of the location, and any change in the  
location, of the Security Registrar, and the Trustee shall have the right to    
inspect the Security Register at all reasonable times and to obtain copies      
thereof and the Trustee shall have the right to rely upon a certificate executed
on behalf of the Security Registrar by an Officer thereof as to the names and   
addresses of the Holders and the principal amounts and numbers of such          
Securities.                                                                     

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 Subject to this Section 2.5, upon surrender for registration of
transfer of any Securities at the office or agency of the Issuer to be          
maintained as provided in Section 7.2, the Issuer shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or     
transferees, one or more new Securities of any Authorized Denomination and of   
like terms and a like aggregate principal amount.                               

        Except in the case of a transfer of an interest in Notes registered in
the name of the Note Agent made pursuant to a participation or an assignment of 
an interest under the Note Purchase Agreement, every Security presented or      
surrendered for registration of transfer or exchange shall be duly endorsed, or 
be accompanied by a written instrument of transfer in form satisfactory to the  
Issuer and the Security Registrar, duly executed by the Holder thereof or its   
attorney duly authorized in writing.                                            

     No service charge shall be made to a Holder for any registration of
transfer of Securities, but the Trustee may require payment of a sum sufficient 
to cover any tax or other governmental charge payable in connection therewith.  

   (b)    No Security may be sold or transferred (including, without
limitation, by pledge or hypothecation) unless such sale or transfer is exempt  
from the registration requirements of the Securities Act and is exempt under    
applicable state securities laws. None of the Issuer, the Trustee or any other  
Person may register the Securities under the Securities Act or any state        
securities laws.                                                                

        Transfers of the beneficial interests in any of the Securities will be
permitted only to transferees that (i) are Qualified Investors and (ii) except  
to the extent that the Note Purchase Agreement provides or allows otherwise,    
satisfy the Rating Criteria. In addition to the requirements of this Section 2.5
and Section 2.4, all transfers of beneficial interests in the Securities shall  
be made in accordance with the Note Purchase Agreement.                         

     (c)    So long as a Global Security remains Outstanding and is held
by or on behalf of the Depository, transfers of a Global Security, in whole or  
in part, shall only be made in accordance with Section 2.2(c) and this Section  
2.5(c).                                                                         

                (i)     Subject to clause (ii) of this Section 2.5(c), transfers
of a Global Security shall be limited to transfers of such Global Security in   
whole, but not in part, to nominees of the Depository or to a successor of the  
Depository or such successor's nominee.                                         

               (ii)    Global Certificatable Security to Physical Security. If
a holder of a beneficial interest in a Certificatable Security represented by an
interest in a Global Security (together, "Global Certificatable Securities")    
wishes at any time to transfer its interest in such Security to a Person who    
wishes to take delivery thereof in the form of a Physical Security, as          
applicable, such holder may, subject to the rules and procedures of DTC,        
Clearstream or the Depository, as the case may be, transfer or cause the        
transfer of such interest for an equivalent beneficial interest in one or more  
such Physical Securities as described below. Upon receipt by the Trustee, as    
Security Registrar, of:                                                         

              (A)     instructions given in accordance with the Depository's
          procedures from an Agent Member, or instructions from DTC,
Clearstream or the Depository, as the           

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              case may be, directing the Trustee to deliver one or more such
              Physical Securities, designating the registered name or names,
          address, payment instructions and the number and principal
               amounts of the Physical Securities to be executed and delivered
            (the aggregate principal amounts of such Physical Securities
           being equal to the aggregate principal amount of the Global
               Security to be transferred), in an Authorized Denomination, and

              (B)     a Transfer Certificate given by the transferor of such
beneficial interest, and                        

the Trustee, as Security Registrar, will instruct the Depository to reduce the  
applicable Global Security by the aggregate principal amount of the beneficial  
interest in such Global Security to be transferred and the Trustee, as Security 
Registrar, shall record the transfer in the Security Register in accordance with
Section 2.5(a) and shall instruct the Issuer to execute the Physical Securities 
and the Trustee shall authenticate and deliver the Physical Securities          
registered in the names specified in the Transfer Certificate above in principal
amounts designated by the transferee (the aggregate of such amounts being equal 
to the beneficial interest in the Global Securities to be transferred) and an   
Authorized Denomination. Any purported transfer in violation of the foregoing   
requirements shall be null and void ab initio, and the Trustee shall not        
register any such purported transfer and shall not authenticate and deliver such
Physical Securities.                                                            

 If a holder of a beneficial interest in a Global Certificatable
Security wishes at any time to exchange such interest for an interest in one or 
more Physical Securities, such holder may exchange or cause the exchange of such
interest for an equivalent beneficial interest in one or more such Physical     
Securities as provided below. Upon receipt by the Trustee, as Security          
Registrar, of:                                                                  

              (A)     instructions given in accordance with the Depository's
          procedures from an Agent Member, or instructions from DTC,
                Clearstream or the Depository, as the case may be, directing the
      Trustee to deliver one or more Physical Securities and

            (B)    written instructions from such holder designating the
            registered name or names, address, payment instructions, the
       number and principal amounts of the applicable Physical
                Securities to be executed and delivered (the aggregate principal
         amounts of such Physical Securities being the same as the
               beneficial interest in the Global Certificatable Security to be
exchanged),                                     

the Trustee, as Security Registrar, shall instruct the Depository to reduce the 
Global Security by the aggregate principal amount of the beneficial interest in 
the Global Security to be exchanged, shall record the exchange in the Security  
Register in accordance with Section 2.5(a) and shall instruct the Issuer to     
execute the Physical Securities and the Trustee shall authenticate and deliver  
the Physical Securities registered as specified in the instructions described in
clause (B) above, in an Authorized Denomination. Any purported exchange in      
violation of the foregoing requirements shall be null and void ab initio, and   
the Trustee shall not register any such purported exchange and shall not        
authenticate and deliver such Physical Securities.                              

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               (iii)   Other Exchanges. In the event that a Global Security is
exchanged for Securities in definitive registered form without interest coupons 
pursuant to Section 2.5(c)(ii) or Section 2.10 hereof, such Securities may be   
exchanged for one another only in accordance with such procedures as are        
substantially consistent with the provisions above or in this Section           
2.5(c)(iii), as applicable (including certification requirements intended to    
insure that such transfers are made only to holders who are Qualified Investors,
and as may be from time to time adopted by the Issuer).                         

         (iv)    Transfer of Physical Securities. If a holder of a
beneficial interest in a Physical Security wishes at any time to transfer its   
interest in such Physical Security to a Person who wishes to take delivery      
thereof in the form of one or more Physical Securities, such holder may transfer
or cause the transfer of such interest for an equivalent beneficial interest in 
one or more such Physical Securities as provided below. Upon receipt by the     
Issuer and the Trustee, as Security Registrar, of:                              

             (A)     such holder's Physical Security properly endorsed for
              assignment to the transferee (except in the case of a transfer
            of an interest in  a Note registered in the name of the Note
             Agent made pursuant to a participation or an assignment of an
interest under the Note Purchase Agreement), and

              (B)     a Transfer Certificate given by the transferor of such
Physical Security,                              

the Trustee, as Security Registrar, shall cancel such Physical Security (except 
in the case of a transfer of an interest in a Note registered in the name of the
Note Agent made pursuant to a participation or an assignment of an interest     
under the Note Purchase Agreement) in accordance with Section 2.9, record the   
transfer in the Security Register in accordance with Section 2.5(a) and shall   
instruct the Issuer to execute the Physical Securities (except in the case of a 
transfer of an interest in a Note registered in the name of the Note Agent made 
pursuant to a participation or an assignment of an interest under the Note      
Purchase Agreement) and the Trustee shall authenticate and deliver Physical     
Securities (except in the case of a transfer of an interest in a Note registered
in the name of the Note Agent made pursuant to a participation or an assignment 
of an interest under the Note Purchase Agreement) bearing the same designation  
as the Physical Securities endorsed for transfer, registered in the names       
specified in the assignment described in clause (A) above, in principal amounts 
designated by the transferee (the aggregate of such amounts being the same as   
the beneficial interest in the Physical Securities surrendered by the           
transferor), and in Authorized Denominations. Any purported transfer in         
violation of the foregoing requirements (including a purported transfer or      
request to transfer by delivery to the Trustee of any patently false certificate
pursuant to clause (B) above) shall be null and void ab initio, and the Trustee 
shall not register any such purported transfer and shall not authenticate and   
deliver such Physical Securities.                                               

         (v)     Exchange of Physical Securities. If a holder of a
beneficial interest in one or more Physical Securities wishes at any time to    
exchange such Physical Securities for one or more such Physical Securities of   
different principal amounts, such holder may exchange or cause the exchange of  
such interest for an equivalent beneficial interest in the Physical Securities  
bearing the same designation as the Physical Securities endorsed for exchange as
provided below. Upon receipt by the Trustee, as Security Registrar, of:         

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               (A)     such holder's Physical Securities properly endorsed for
such exchange and                               

             (B)     written instructions from such holder designating the
       number and principal amounts of the applicable Physical
                Securities to be issued (the aggregate principal amounts of such
             Physical Securities being the same as the Physical Securities
surrendered for exchange),                      

the Trustee, as Security Registrar, shall cancel such Physical Securities in    
accordance with Section 2.9, record the exchange in the Security Register in    
accordance with Section 2.5(a) and shall instruct the Issuer to execute the     
Physical Securities and the Trustee shall authenticate and deliver one or more  
Physical Securities bearing the same designation as the Physical Securities     
endorsed for exchange, registered in the same names as the Physical Securities  
surrendered by such holder or such different names as are specified in the      
endorsement described in clause (A) above, in different principal amounts       
designated by such holder (the aggregate principal amounts being the same as the
beneficial interest in the Physical Securities surrendered by such holder), and 
in Authorized Denominations.                                                    

    (d)    Any purported transfer of a Security not in accordance with
Section 2.5 shall be null and void and shall not be given effect for any purpose
hereunder.                                                                      

Section 2.6.    Mutilated, Defaced, Destroyed, Lost or Stolen Securities.       

       If (i) there shall be delivered to the Issuer or the Trustee evidence
to their reasonable satisfaction of the destruction, loss or theft of any       
Security, and (ii) there is delivered to the Issuer and the Trustee such        
security or indemnity as may be required by them to save each of them and any   
agent of any of them harmless, then, in the absence of notice to the Issuer, the
Trustee that such Security has been acquired by a Protected Purchaser, the      
Issuer shall execute and, upon Issuer Order, the Trustee shall authenticate and 
deliver, in lieu of any such mutilated, defaced, destroyed, lost or stolen      
Security, a new Security in replacement thereof, of like tenor (including the   
same date of issuance) and equal principal amount registered in the same manner,
dated the date of its authentication, bearing interest from the date to which   
interest has been paid on the mutilated, defaced, destroyed, lost or stolen     
Security and bearing a number not contemporaneously outstanding.                

       If, after delivery of such new Security, a Protected Purchaser of the
predecessor Security presents for payment, transfer or exchange such predecessor
Security, the Issuer and the Trustee shall be entitled to recover such new      
Security from the Person to whom it was delivered or any Person taking          
therefrom, and shall be entitled to recover upon the security or indemnity      
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer and the Trustee in connection therewith.                             

         In case any such mutilated, defaced, destroyed, lost or stolen Security
has become due and payable, the Issuer may in its discretion, instead of issuing
a new Security in replacement thereof, pay such Security without requiring      
surrender thereof except that any mutilated Security shall be surrendered.      

   Upon the issuance of any new Security under this Section 2.6, the
Issuer or the Trustee may require the payment by the registered Holder thereof  
of a sum sufficient to cover any tax or                                         

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other governmental charge that may be imposed in relation thereto and any other 
expenses (including the fees and expenses of the Trustee) connected therewith.  

       Every new Security issued pursuant to this Section 2.6 in lieu of any
mutilated, defaced, destroyed, lost or stolen Security shall constitute an      
original additional contractual obligation of the Issuer, and such new Security 
shall be entitled, subject to the second paragraph of this Section 2.6, to all  
the benefits of this Indenture equally and proportionately with any and all     
other Securities duly issued hereunder.                                         

         The provisions of this Section 2.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, defaced, destroyed, lost or stolen Securities.         

Section 2.7.    Payment in Respect of the Securities; Rights Preserved.         

      (a)    Interest shall accrue on the Drawn Amount of the Notes during
each Interest Accrual Period at the Interest Rate and will be payable in arrears
on each Payment Date. The Commitment Fee shall accrue as specified in the       
definition thereof and will be payable in arrears on each Payment Date. Any     
Break Funding Costs will be payable on the next Payment Date following the      
Prepayment Date. Any Increased Costs shall accrue as specified in the definition
thereof and shall be payable in arrears on each Payment Date. Any Tax Gross-Up  
Amounts shall accrue as specified in the definition thereof and shall be payable
in arrears on each Payment Date.                                                

     Interest on the Notes shall be due and payable on each Payment Date
immediately following the related Interest Accrual Period.                      

         Interest will cease to accrue on each Note or, in the case of a partial
Prepayment, on such part, from the date of Prepayment or Stated Maturity unless 
payment of principal is improperly withheld or unless Default is otherwise made 
with respect to such payments of principal. To the extent lawful and            
enforceable, interest on any Defaulted Interest shall accrue at the applicable  
Interest Rate until paid as provided herein.                                    

  (b)    The Drawn Amount in respect of each Note shall be due and
payable no later than the Stated Maturity unless the unpaid principal of such   
Note becomes due and payable at an earlier date by declaration of acceleration  
or otherwise, or as a Prepayment in accordance with the provisions of this      
Indenture.                                                                      

(c)    As a condition to payments on any Security without the 
imposition of U.S. withholding tax, the Trustee or the Issuer shall require     
certification acceptable to them to enable the Issuer, the Trustee and any      
Paying Agent to determine their duties and liabilities with respect to any taxes
or other charges that any of them may be required to deduct or withhold from    
payments in respect of such Security under any present or future law or         
regulation of the United States or any present or future law or regulation of   
any political subdivision thereof or taxing authority therein or to comply with 
any reporting or other requirements under any such law or regulation.           

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    (d)    Payments on any Security other than the Physical Securities
shall be payable by wire transfer in immediately available funds to a Dollar    
account maintained by the Depository or its nominee or, if a wire transfer      
cannot be effected, by a Dollar check in immediately available funds delivered  
to the Depository or its nominee. Payments, if any, on the Physical Securities  
shall be made by the Issuer by wire transfer in immediately available funds to  
a Dollar account maintained by the Holder or as otherwise directed by the       
Holder, or its nominee, provided, that the Holder thereof shall have provided   
wiring instructions to the Trustee on or before the related Record Date. If     
appropriate instructions for any such wire transfer are not received by the     
related Record Date, then such payment shall be made by check drawn on a U.S.   
bank mailed to the registered holder at its address in the register maintained  
by the Trustee under this Indenture. The Issuer expects that the Depository or  
its nominee, upon receipt of any payment of any of the principal amount of and  
interest on a Global Security held by the Depository or its nominee, will       
immediately credit the applicable Agent Members' accounts with payments in      
amounts proportionate to the respective beneficial interests in such Global     
Security as shown on the records of the Depository or its nominee. The Issuer   
also expects that payments by Agent Members to owners of beneficial interests   
in such Global Security held through Agent Members will be governed by standing 
instructions and customary practices, as is now the case with securities held   
for the accounts of customers registered in the names of nominees for such      
customers. Such payments will be the responsibility of the Agent Members. Upon  
final payment due on the Maturity of a Note, the Holder thereof shall present   
and surrender such Note at the Corporate Trust Office of the Trustee or at the  
office of any Paying Agent on or prior to such Maturity; provided, however, that
if there is delivered to the Issuer and the Trustee such security or indemnity  
as may be required by them to save each of them harmless and an undertaking     
thereafter to surrender such certificate, then, in the absence of notice to the 
Issuer or the Trustee that the applicable Note has been acquired by a Protected 
Purchaser, such final payment shall be made without presentation or surrender.  

       If any Global Securities remain Outstanding 15 Business Days prior to
the Stated Maturity, the Investment Manager shall determine if all liquidation  
proceeds will be received such that final payments will be made with respect to 
such Global Securities on the Stated Maturity. If the Investment Manager        
determines that (due to delayed payment of certain liquidation proceeds or      
otherwise) full and final payment may be delayed beyond the Stated Maturity, the
Investment Manager will provide written notice to the Trustee and the Trustee   
shall promptly notify the Depository and shall request the Depository to post on
its system notices deemed to be acceptable and appropriate under the            
circumstances by the Investment Manager and the Trustee and subject to          
Depository procedures and take such other action that the Investment Manager    
deems to be appropriate under the circumstances, to ensure that final payments  
will be distributed to the Depository for payment to the holders of such Global 
Securities when the funds become available. None of the Issuer, the Trustee nor 
any Paying Agent will have any responsibility or liability for any aspects of   
the records maintained by the Depository or its nominee or any of the Agent     
Members relating to or for payments made thereby on account of beneficial       
interests in, a Global Security. In the case where any final payment of any of  
the principal amount of and interest on any Note (other than on the Stated      
Maturity thereof) is to be made, the Issuer or, upon Issuer Order, the Trustee, 
in the name and at the expense of the Issuer shall, not more than 30 nor less   
than 10 days prior to the date on which such payment is to be made, mail to the 
Persons entitled thereto at their addresses appearing on the Security Register, 
a notice which shall state the date on which such payment will be made,         

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the amount of such payment per $100,000 initial principal amount of Notes and   
shall specify the place where such Notes may be presented and surrendered for   
such payment.                                                                   

        (e)    Subject to the provisions of Sections 2.7(a) and (b) hereof the
Holders of Securities as of the Record Date in respect of a Payment Date shall  
be entitled to the interest, any Commitment Fee, Increased Costs and Tax        
Gross-Up Amount accrued and payable and the principal amount payable on such    
Payment Date. All such payments that are mailed or wired and returned to the    
Paying Agent shall be held for payment as herein provided at the office or      
agency of the Issuer, to be maintained as provided in Section 7.2.              

        (f)    Interest on any Note and any Additional Costs (other than Break
Funding Cost) which are payable, and are punctually paid or duly provided for on
any Payment Date shall be paid to the Person in whose name that Security is     
registered at the close of business on the Record Date for such interest. Any   
Break Funding Cost shall be paid to the Person in whose name the Notes is       
registered on the Record Date for such Prepayment Date.                         

       Payments on the Notes shall be made to Holders in the proportion that
the Aggregate Outstanding Amount of the Notes registered in the name of each    
such Holder on such Record Date bears to the Aggregate Outstanding Amount of all
Notes on such Record Date.                                                      

   (g)    Payment of any Defaulted Interest may be made in any other
lawful manner if notice of such payment is given by the Trustee to the Issuer   
and the Holders of the Notes, and such manner of payment shall be deemed        
practicable by the Trustee.                                                     

      (h)    Interest accrued with respect to the Notes, any Break Funding
Costs, the Commitment Fee, the Increased Costs and the Tax Gross-Up Amounts     
shall be calculated on the basis of the actual number of days elapsed in the    
applicable Interest Accrual Period divided by 360.                              

         (i)    All reductions in the principal amount of a Note (or one or more
predecessor Notes) effected by payments made on any Payment Date or Prepayment  
Date shall be binding upon all future Holders of such Securities and of any     
Security issued upon the registration of transfer thereof or in exchange        
therefor or in lieu thereof, whether or not such payment is noted on such       
Security.                                                                       

         (j)    The obligations of the Issuer with respect to the Securities and
this Indenture are limited recourse obligations of the Issuer payable solely    
from the assets of the Issuer, including, but not limited to, the Collateral,   
and following realization on such assets, any claims of the Holders shall be    
extinguished. No recourse shall be had for the payment of any amount owing in   
respect of the Securities against any past, present or future Officer, director,
employee, stockholder, member agent or incorporator of the Issuer, the          
Securityholders, the Investment Manager, the Trustee, the Placement Agents,     
their respective Affiliates or any of their successors or assigns for any       
amounts payable under the Securities or this Indenture. It is understood that   
the foregoing provisions of this paragraph shall not (i) prevent recourse to any
assets of the Issuer for the sums due or to become due under any security,      
instrument or agreement or (ii) constitute a waiver, release or discharge of any
indebtedness or obligation evidenced by the Securities (to the extent they      
evidence debt) or secured by this Indenture until such assets have been realized
upon, whereupon any outstanding indebtedness or obligation shall be             
extinguished.                                                                   

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It is further understood that the foregoing provisions of this paragraph shall  
not limit the right of any Person to name the Issuer as a party defendant in any
Proceeding or in the exercise of any other remedy under the Securities or this  
Indenture, so long as no judgment in the nature of a deficiency judgment or     
seeking personal liability shall be asked for or (if obtained) enforced against 
any such Person or entity.                                                      

      (k)    Subject to the foregoing provisions of this Section 2.7, each
Security delivered under this Indenture and upon registration of transfer of or 
in exchange for or in lieu of any other Security shall carry the rights to      
unpaid interest, principal and Additional Costs that were carried by such other 
Securities.                                                                     

        (l)    Notwithstanding any of the foregoing provisions with respect to
payments of any of the principal amount of and interest on the Notes, if the    
Notes have become or been declared due and payable following an Event of Default
and such acceleration of Maturity and its consequences have not been rescinded  
and annulled, then payments of any of the principal amount of and interest on   
such Notes shall be made in accordance with Section 5.9.                        

Section 2.8.    Persons Deemed Owners.                                          

       The Issuer, the Trustee, and any of their respective agents may treat
the Person in whose name any Security is registered as the owner of such        
Security on the Security Register on the applicable Record Date for the purpose 
of receiving payments on such Security and on any other date for all other      
purposes whatsoever (whether or not such payments are overdue), and neither the 
Issuer nor the Trustee nor any of their respective agents shall be affected by  
notice to the contrary; provided however, that the Depository, or its nominee,  
shall be deemed the owner of the Global Securities, and owners of beneficial    
interests in Global Securities will not be considered the owners of any         
Securities for the purpose of receiving notices.                                

Section 2.9.    Cancellation.                                                   

   All Securities surrendered for payment, registration of transfer,
exchange or redemption, or deemed lost or stolen, shall, if surrendered to any  
Person other than the Trustee, be delivered to the Trustee, shall be promptly   
canceled by it and may not be reissued or resold. No Securities shall be        
authenticated in lieu of or in exchange for any Securities canceled as provided 
in this Section 2.9, except as expressly permitted by this Indenture. All       
canceled Securities held by the Trustee shall be destroyed or held by the       
Trustee in accordance with its standard retention policy unless the Issuer shall
direct by an Issuer Order that they be returned to it.                          

Section 2.10.   Global Securities; Transfer to Physical Securities.             

    (a)    Except as provided in Section 2.5(c)(ii), a Global Security
deposited with the Depository pursuant to Section 2.2 shall be transferred to   
the beneficial owners thereof only if such transfer complies with Section 2.5 of
this Indenture and the Depository notifies the Issuer that it is unwilling or   
unable to continue as Depository for such Global Security or if at any time such
Depository ceases to be a "Clearing Agency" registered under the Exchange Act   
and a successor depository is not appointed by the Issuer within 90 days after  
such notice.                                                                    

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   (b)    Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.10 shall be surrendered by the        
Depository to the Trustee's office located in the Borough of Manhattan, The City
of New York, to be so transferred, in whole or from time to time in part,       
without charge, and the Trustee shall authenticate and deliver, upon such       
transfer of each portion of such Global Security, an equal aggregate principal  
amount of Securities of Authorized Denominations. Any Security delivered in     
exchange for an interest in a Global Security shall bear the applicable legend  
and shall be subject to the transfer restrictions referred to in such applicable
legends. The Holder of such a registered individual Security may transfer such  
Security by surrendering it at the office or agency maintained by the Issuer for
this purpose in New York, New York, which initially will be the New York office 
of the Trustee specified in Section 7.2 or at the office of any Paying Agent.   

(c)    Subject to the provisions of Section 2.10(b) above, the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through 
Agent Members, to take any action which a Holder is entitled to take under this 
Indenture or the Securities.                                                    

         (d)    In the event of the occurrence of either of the events specified
in paragraph (a) of this Section 2.10, the Issuer will promptly make available  
to the Trustee a reasonable supply of certificated Securities in definitive,    
fully registered form without interest coupons. The definitive Securities shall 
be printed, lithographed or engraved, or provided by any combination thereof, or
in any other manner permitted by the rules and regulations of any applicable    
securities exchange, all as determined by the Officers executing such definitive
Securities.                                                                     

Section 2.11.   Securities Beneficially Owned by Non-Permitted Holders.         

   (a)    Notwithstanding anything to the contrary elsewhere in this
Indenture, except with respect to a transfer made pursuant to Section 2.07(f)   
of the Note Purchase Agreement, any transfer of a beneficial interest in any    
Securities to a Non-Permitted Holder shall be null and void ab initio and any   
such purported transfer of which the Issuer or the Trustee shall have notice may
be disregarded by the Issuer and the Trustee for all purposes.                  

     (b)    Any transfer of a beneficial interest in any Securities to a
Non-Permitted Holder shall be subject to the provisions of Section 2.07 of the  
Note Purchase Agreement.                                                        

Section 2.12.   Borrowings on the Notes.                                        

   (a)    On any Business Day during the Draw Period, amounts may be
borrowed by the Issuer under the Notes (each such amount borrowed, a            
"Borrowing") at the direction of an Authorized Officer; provided, in each case  
that (i) each applicable condition to such Borrowing specified in Section 4 of  
the Note Purchase Agreement is satisfied on the date of such Borrowing (a       
"Borrowing Date"), and (ii) both prior to and after giving effect to any such   
Borrowing no Excess Amount exists and the Aggregate Outstanding Amount is less  
than the Total Maximum Commitment.                                              

         (b)    Notice of any Borrowing shall be given by the Issuer to the Note
Agent, the Investment Manager and the Trustee in accordance with the Note       
Purchase Agreement.                                                             

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        (c)    Except for any Borrowing in an aggregate principal amount equal
to the aggregate unused amount of the Commitments, the aggregate principal      
amount of any Borrowing in respect of the Notes (taken as a whole) shall be an  
integral multiple of U.S. $1,000,000 and at least U.S. $5,000,000. Except as    
otherwise provided by Section 2.03(b) of the Note Purchase Agreement, any       
Borrowing shall be made pro rata according to the unused Commitments in respect 
of the Notes.                                                                   

     (d)    Borrowings may be prepaid in accordance with Section 9.2 and
once an amount under a Note is prepaid, subject to this Section 2.12 and the    
other terms of this Indenture, it may be re-borrowed as a new Borrowing.        

      (e)    If any holder of an interest in any of the Notes shall at any
time during the Draw Period fail to satisfy the Rating Criteria, the Issuer will
enforce its rights under the Note Purchase Agreement.                           

Section 2.13.   Extension of Stated Maturity by the Holders.                    

         Subject to complying with this Section 2.13, (a) upon written direction
to the Trustee by Holders of 100% of the Aggregate Outstanding Amount and with  
the prior written approval of the Credit Enhancer, the Stated Maturity shall be 
extended from the Original Stated Maturity to the date that is 364 days after   
the Original Stated Maturity (the "First Extended Maturity Date"), and (b) upon 
written direction to the Trustee by Holders of not less than 100% of the        
Aggregate Outstanding Amount and with the prior written approval of the Credit  
Enhancer, at the expiration of the First Extended Maturity Date, the Stated     
Maturity shall be extended to a date that is 364 days after the expiration of   
the First Extended Maturity Date (the "Second Extended Maturity Date" and the   
First Extended Maturity Date and the Second Extended Maturity Date shall each be
referred to herein as an "Extended Maturity Date"); provided, that any Extended 
Maturity Date that would otherwise be a day that is not a Business Day shall be 
the preceding Business Day. Upon each extension of the Original Stated Maturity 
to the First Extended Maturity Date or the Second Extended Maturity Date, as the
case may be, each reference in this Indenture to the "Stated Maturity" shall be 
a reference to the Stated Maturity as so extended. Any such written direction to
the Trustee pursuant to the foregoing subparts (a) or (b) (each such notice     
being an "Extension Notice") may be given no more than nine months and no less  
than five months prior to the Stated Maturity, extend the Stated Maturity from  
the Original Stated Maturity to the next available Extended Maturity Date so    
long as on the Original Stated Maturity and on any Extended Maturity Date (i) no
Default exists, (ii) no violation of Section 7.7 (without giving effect to the  
grace periods provided for therein) shall have occurred and be continuing under 
this Indenture and (iii) the Rating Agency Condition is met. The Trustee shall  
notify all of the Holders of its receipt of any Extension Notice within five    
Business Days after the Trustee's receipt thereof that the Stated Maturity has  
been extended in accordance with this Section. The Trustee shall promptly notify
the Issuer, each Holder and each Rating Agency of the effectiveness of any such 
extension pursuant to this Section 2.13.                                        

Section 2.14.   Additional Issuance.                                            

         (a)    At any time prior to the Stated Maturity, subject to at least 10
Business Days' written notice to the Trustee and the prior written approval of  
the Credit Enhancer, the Issuer may issue and sell additional Securities,       
provided that the following conditions are met: (i) such                        

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issue may not exceed 25% of the original issue amount of Securities authorized  
to be issued on the Closing Date; (ii) the terms of the Securities issued (other
than the price thereof or the initial date from which interest accrues) are     
identical to the terms of previously issued Securities; (iii) Rating Agency     
Confirmation has been obtained; (iv) no Default exists at the time of and after 
giving effect to the issuance of such additional Securities, (v) no violation of
any "asset coverage" test required to be maintained pursuant to Section 18 of   
the Investment Company Act shall exist immediately after the issuance of such   
additional Securities; and (vi) no violation of Section 7.7 (without giving     
effect to the grace periods provided for therein) shall exist at the time of and
after giving effect to the issuance of such Securities. Upon the issuance of any
additional Securities in accordance with this Section 2.14, the Total Maximum   
Commitment shall be deemed to have been increased by the aggregate principal    
amount of such newly issued Securities.                                         

        (b)    Any additional issuance pursuant to Section 2.14(a) shall first
be offered on a pro rata basis to the Holders existing at the time of such      
proposed additional issuance. The Issuer shall direct the Trustee to provide    
notice to such existing Holders not less than 20 Business Days prior to the date
of the proposed additional issuance. Such notice shall contain the date and     
proposed amount of the additional issuance. If a Holder intends to accept the   
offer to purchase its pro share of the additional Securities to be issued, such 
Holder shall provide the Trustee, not later than 10 Business Days after receipt 
of such notice of the proposed additional issuance, written notice of such      
acceptance. Any Holder who does not affirmatively respond with a written        
acceptance shall be deemed to have declined the offer to purchase its pro rata  
share of such additional Securities.                                            

ARTICLE 3 

CONDITIONS PRECEDENT  

Section 3.1.    Closing Date Issuance.                                          

      The Securities to be issued on the Closing Date shall be executed by
the Issuer and delivered to the Trustee for authentication and thereupon the    
same shall be authenticated and delivered by the Trustee upon Issuer Order and  
upon receipt by the Trustee of the following:                                   

   (a)    Executed Agreements. An executed counterpart of the Pledge
Agreement, the Custodial Agreement, the Investment Management Agreement and the 
Note Purchase Agreement and such other documents as the Trustee may reasonably  
require;                                                                        

      (b)    Collateral Filings. Evidence that (i) Uniform Commercial Code
Financing Statements (Form UCC-1), naming the Issuer as the debtor and the      
Collateral Agent as the secured party or other similar instruments or documents 
in a form suitable for filing, have been prepared for filing in all             
jurisdictions necessary or advisable to perfect the Liens in the Collateral     
created or purported to be created by the Pledge Agreement, and (ii) the Issuer 
has certified that all other actions necessary or advisable to perfect the Liens
in the Collateral created or purported to be created by the Pledge Agreement    
have been taken;                                                                

        (c)    Officer Certificate. An Officer's Certificate of the Issuer (i)
evidencing the authorization by Board Resolution of the execution and delivery  
of this Indenture, the Note                                                     

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Purchase Agreement, the Pledge Agreement, the Custodial Agreement and the       
execution, authentication and delivery of the Securities applied for by it and  
specifying the Stated Maturity, the principal amount and the Interest Rate for  
the Notes issued by it, and (ii) certifying that (A) the attached copy of the   
Board Resolution is a true and complete copy thereof, (B) such resolutions have 
not been rescinded and are in full force and effect on and as of the Closing    
Date and (C) the Officers authorized to execute and deliver such documents hold 
the offices and have the signatures indicated thereon;                          

        (d)    No Governmental Approvals Required. Either (i) a certificate of
the Issuer or other official document evidencing the due authorization, approval
or consent of any governmental body or bodies, at the time having jurisdiction  
in the premises, together with an Opinion of Counsel of the Issuer satisfactory 
in form and substance to the Trustee that the Trustee is entitled to rely       
thereon and that no other authorization, approval or consent of any governmental
body is required for the valid issuance of such Securities applied for by it, or
(ii) an Opinion of Counsel of the Issuer satisfactory in form and substance to  
the Trustee that no such authorization, approval or consent of any governmental 
body is required for the valid issuance of such Securities except as may have   
been given;                                                                     

       (e)    Opinion of Counsel. Opinions of (i) Jones Day, special counsel
to the Issuer; (ii) Gardere Wynne Sewell LLP, special counsel to the Custodian, 
and (iii) Sonnenschein Nath & Rosenthal, special counsel to the Collateral Agent
and the Note Agent, in each case in form and substance satisfactory to the      
Trustee, dated the Closing Date and addressed to the Trustee, the Rating        
Agencies and the other parties identified in each such opinion;                 

        (f)    No Default. An Officer's Certificate of the Issuer stating that
(i) it is not in Default under this Indenture and that the issuance of the      
Securities applied for by it will not result in a breach of any of the terms,   
conditions or provisions of, or constitute a Default under, its Organic         
Documents, any indenture or other material agreement or instrument to which the 
Issuer is a party or by which it is bound, or any order of any court or         
administrative agency entered in any Proceeding to which the Issuer is a party  
or by which it may be bound or to which it may be subject; (ii) that all        
conditions precedent provided in this Indenture relating to the authentication  
and delivery of the Securities applied for by it have been complied with; and   
(iii) that all expenses due or accrued with respect to the offering of the      
Securities or relating to actions taken on or in connection with the Closing    
Date have been paid or provided for;                                            

   (g)    No Litigation, etc. An Officer's Certificate of the Issuer
stating that no material litigation, arbitration, governmental investigation,   
proceeding or inquiry shall, on the Closing Date, be pending or, to the         
knowledge of the Issuer, threatened with respect to any of the transactions     
contemplated hereby which would be adverse to, or be detrimental to the         
interests of, any of the Holders;                                               

     (h)    Rating of Securities. An Officer's Certificate of the Issuer
certifying that (i) the Securities have received a rating of "Aaa" from Moody's 
and that the Preferred Shares have received a rating of "Aaa" by Moody's after  
giving effect to the issuance of insurance policy to be issued by the Credit    
Enhancer pursuant to the Insurance Agreement and (ii) the Securities have       
received a rating of "AAA" by S&P and that the Preferred Shares have received a 
credit enhanced rating of "AAA" by S&P; and                                     

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Section 3.2.    Additional Issuances.                                           

       Any additional Securities to be issued pursuant to Section 2.14 shall
be executed by the Issuer and delivered to the Trustee for authentication and   
thereupon the same shall be authenticated and delivered by the Trustee upon     
Issuer Order and upon receipt by the Trustee of evidence that the conditions set
forth in Section 3.1(c), (d), (e), (f), (g) and (h) have been satisfied on and  
as of the issuance date of such additional Securities.                          

ARTICLE 4   

SATISFACTION AND DISCHARGE  

Section 4.1.    Satisfaction and Discharge of Indenture.                        

     This Indenture shall be discharged and shall cease to be of further
effect except as to                                                             
        (i)     rights of registration of transfer and exchange,

              (ii)    substitution of mutilated, defaced, destroyed, lost or
stolen Securities,                                                              

              (iii)   rights of Holders of Securities to receive payments of
principal thereof and interest thereon and any Additional Costs as provided     
herein,                                                                         

             (iv)    the rights, obligations and immunities of the Trustee
hereunder; and                                                                  
             (v)     the rights of Securityholders as beneficiaries hereof
with respect to the property deposited with the Trustee and payable to all or   
any of them; and the Trustee, on demand of and at the expense of the Issuer,    
shall execute proper instruments acknowledging satisfaction and discharge of    
this Indenture, when:                                                           

(A)     either:                 

                    (1)     all Securities theretofore authenticated and
 delivered (other than (x) Securities which have been mutilated,
         defaced, destroyed, lost or stolen and which have been replaced or paid
       as provided in Section 2.6 and (y) Securities for whose payment Money
    has theretofore irrevocably been deposited in trust and thereafter
    repaid to the Issuer or discharged from such trust, as provided in
      Section 7.3) have been delivered to the Trustee for cancellation; or

                       (2)     all Securities not theretofore delivered to the
         Trustee for cancellation have become due and payable or will become due
         and payable at their Stated Maturity within one year and the Issuer has
      irrevocably deposited or caused to be deposited with the Trustee, in
      trust for such purpose, Cash, non-callable direct obligations of the
       United States of America, provided, that the obligations are entitled
     to the full faith and credit of the United States of America or are
        debt obligations which are rated "Aaa" by Moody's and "AAA" by S&P, in
 an amount sufficient, as verified by a firm of certified public
        accountants which are internationally recognized, to pay and discharge
         the entire indebtedness on such Securities not theretofore delivered to
the Trustee for                                               

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      cancellation, for principal and interest and any Additional Costs to
       the date of such deposit (in the case of Securities which have become
due and payable), or to the Stated Maturity;                  

                    (B)     the Issuer has paid or caused to be paid all
    other sums payable by it hereunder and under the other Transaction
Documents; and                                                

               (C)     the Issuer has delivered to the Trustee
         Officer's certificates and an Opinion of Counsel, each stating that all
       conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.      

       Notwithstanding the satisfaction and discharge of this Indenture, the
rights and obligations of the Issuer, the Trustee and, if applicable, the       
Securityholders, as the case may be, under Sections 2.7, 4.2, 5.4(c), 5.9, 6.7, 
and 7.1 hereof shall survive.                                                   

Section 4.2.    Application of Trust Money.                                     

        All Monies deposited with the Trustee pursuant to Section 4.1 shall be
held in trust and applied by it in accordance with the provisions of the        
Securities and this Indenture, to the payment of principal and interest and any 
Additional Costs, either directly or through any Paying Agent, as the Trustee   
may determine, to the Person entitled thereto and for whose payment such Money  
has been deposited with the Trustee; but such Money shall be segregated from    
other funds to the extent required herein or required by law.                   

Section 4.3.    Repayment of Monies Held by Paying Agent.                       

     In connection with the satisfaction and discharge of this Indenture
with respect to the Securities, all Monies then held by any Paying Agent other  
than the Trustee under the provisions of this Indenture shall, upon demand of   
the Issuer, be paid to the Trustee to be held and applied pursuant to Section   
7.3 hereof and thereupon such Paying Agent shall be released from all further   
liability with respect to such Monies.                                          

ARTICLE 5   

EVENTS OF DEFAULT; REMEDIES 

Section 5.1.    Events of Default.                                              

"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it  
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation  
of any administrative or governmental body):                                    

        (a)    a default in the payment of any interest on any Notes or of any
Additional Costs when the same becomes due and payable, which default shall     
continue for a period of three Business Days;                                   

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       (b)    a default in the payment of any principal amount when the same
becomes due and payable on any Notes at Stated Maturity or on any date of       
mandatory prepayment pursuant to Section 9.1;                                   

(c) the failure of the Issuer to comply with Section 18 of the
Investment Company Act or any successor provision thereto or any applicable     
"asset coverage" maintenance requirements set forth therein and such failure    
shall continue for a period of 30 days or more after the earlier of (x) notice  
thereof having been given to the Issuer by the Trustee or to the Issuer and the 
Trustee by a Noteholder or (y) the first date on which an Authorized Officer of 
the Issuer or the Investment Manager had actual knowledge of such failure;      

       (d)    the failure of the Issuer to comply with its obligations under
Section 7.7 (Over-Collateralization Tests), or Section 7.13 (Minimum Net        
Worth) ;                                                                        

       (e)    the failure of the Issuer to comply with its obligations under
Section 7.21 (Statement as to Compliance), Section 7.29 (Limitations on Hedging 
and Short Sale Transactions) or Section 10.6 (Accountings) for three (3) days or
more;                                                                           

 (f)    the failure of the Issuer to be a registered "investment
company" under the Investment Company Act for more than 30 days;                

       (g)    except as otherwise provided in this Section 5.1, a default in
the performance, or breach, of any other covenant or other agreement of the     
Issuer in this Indenture (except for a covenant or other agreement a default in 
the performance or breach of which is elsewhere in this Section 5.1 or in       
Article 7 specifically dealt with) and the continuation of such default or      
failure for a period of 30 days after notice thereof shall have been given to   
the Issuer by the Trustee (who shall be acting at the direction of a Majority of
the Notes), or to the Issuer and the Trustee by a Majority of the Notes,        
specifying such default, breach or failure and requiring it to be remedied and  
stating that such notice is a "Notice of Default" hereunder;                    

(h)    any representation or warranty of the Issuer under this
Indenture (other than the representation and warranty relating to any violation 
of Section 18 of the Investment Company Act, or any successor provision thereto,
and any applicable "asset coverage" maintenance requirements set forth therein) 
or of the Issuer in any other Transaction Document or in any certificate        
delivered pursuant hereto or thereto is or shall be incorrect in any material   
respect when made or deemed made and, in the case of any such breach that is    
capable of being cured, such breach continues uncured for a period of thirty    
(30) days or more after the earlier of (x) notice thereof having been given to  
the Issuer by the Trustee or to the Issuer and the Trustee by a Majority of the 
Notes or (y) the first date on which an Authorized Officer of the Issuer or the 
Investment Manager had actual knowledge of such failure;                        

         (i)    an aggregate principal amount equal to or exceeding 0.80% of the
Net Asset Value of any Indebtedness shall become due and payable (whether at    
maturity, by acceleration or otherwise) and not be paid or satisfied in full, or
the holder of such Indebtedness shall be entitled to require the Issuer to      
repay, repurchase, redeem, defease or otherwise retire for value such           
Indebtedness, in whole or in part, prior to its scheduled payment date (in each 
case, after giving effect to any grace periods applicable thereto);             

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     (j)    the Issuer shall default in the payment when due (whether at
stated maturity or by acceleration, mandatory prepayment or otherwise) of any   
amount in excess of 3.0% of the Net Asset Value (after giving effect to any     
grace periods applicable thereto) required to be paid by it under any Secured   
Hedging Transaction (other than any such amount that is being contested in good 
faith by appropriate proceedings and for which adequate reserves in accordance  
with GAAP shall have been set aside on the Issuer's books), and such default    
shall continue unremedied for a period of ten (10) Business Days or more;       

(k)    the Issuer shall:                                      

              (i)     become insolvent or generally fail to pay, or admit in
writing its inability to pay, its debts as they become due;                     

               (ii)    apply for, consent to, or acquiesce in, the appointment
of a trustee, receiver, sequestrator or other custodian for the Issuer or any of
its property, or make a general assignment for the benefit of its creditors;    

      (iii)   in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee, receiver, 
sequestrator or other custodian for the Issuer or for a substantial part of its 
property (which for the avoidance of doubt shall exclude the issuers of and any 
obligors on any Fund Investment), and such trustee, receiver, sequestrator or   
other custodian shall not be discharged within 60 days;                         

         (iv)    permit or suffer to exist the commencement of any
bankruptcy, reorganization, indebtedness arrangement or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution, winding up or       
liquidation proceeding, in respect of the Issuer and, if such case or proceeding
is not commenced by the Issuer, such case or proceeding shall be consented to or
acquiesced in by the Issuer or shall result in the entry of an order for relief 
or shall remain for 60 days undismissed; or                                     

              (v)     take any action authorizing, or in furtherance of, any
of the foregoing;                                                               

      (l)    any judgments by one or more courts of competent jurisdiction
for the payment of money in an aggregate amount in excess of 1.5% of the Net    
Asset Value (after giving effect to insurance, if any, available with respect   
thereto) shall be rendered against the Issuer, and the same shall remain        
unsatisfied, unvacated, unbonded or unstayed for a period of 30 days after the  
date on which the right to appeal has expired;                                  

    (m)    any Lien on any Collateral granted shall, at any time after
delivery of the Pledge Agreement, cease to be fully valid and perfected as a    
first-priority Lien, except (i) for Permitted Liens, (ii) Liens on Fund         
Investments the Market Value of which if excluded from the Collateral would not 
cause a violation of the Over-Collateralization Tests or the covenant in Section
7.13 (in each case, without giving effect to any applicable grace period) or    
(iii) as otherwise expressly permitted hereunder or under the Pledge Agreement; 

(n)    the Issuer shall be dissolved or terminated, and not   
reconstituted substantially simultaneously therewith (and in no event later than
the same day) in accordance with the Operating Agreement; and                   

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        (o)    the Investment Manager is removed or terminated pursuant to the
Investment Management Agreement and a Majority of the Notes have not approved   
the new Investment Manager within thirty (30) days.                             

Section 5.2.    Acceleration of Maturity; Rescission and Annulment; Voting      
Rights.                                         

       (a)    If an Event of Default occurs and is continuing (other than an
Event of Default specified in Section 5.1(k)), the Trustee may, and shall upon  
direction of a Majority of the Notes, terminate the Commitments and declare the 
unpaid principal of all the Securities to be immediately due and payable, and   
upon any such declaration such principal, together with all accrued and unpaid  
interest (if any) thereon, any Additional Costs and other amounts payable       
hereunder, shall become immediately due and payable. If an Event of Default     
specified in Section 5.1(k) occurs, all unpaid principal, together with all     
accrued and unpaid interest thereon, of all the Securities, any Additional      
Costs and other amounts payable hereunder, shall automatically become due and   
payable in accordance with Section 5.7 without any declaration or other act on  
the part of the Trustee or any Securityholder and all Commitments shall         
automatically terminate.                                                        

         (b)    At any time after such a declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the Money due has  
been obtained by the Trustee as hereinafter provided in this Article 5, a       
Majority of the Notes, by notice to the Issuer and the Trustee, may rescind and 
annul such declaration and its consequences if:                                 

               (i)     the Issuer has paid or deposited with the Trustee a sum
sufficient to pay:                                                              

                      (A)     all unpaid installments of interest on and the
       principal amount of the Securities, Commitment Fees and Break Funding
Costs then due,                                               

                      (B)     to the extent that payment of such interest is
        lawful, interest upon Defaulted Interest, Increased Costs and Note Tax
Gross-Up Amounts at the applicable Interest Rate, and         

                    (C)     all unpaid Administrative Expenses and other
      sums paid or advanced by the Trustee hereunder and any other amounts
then payable by the Issuer hereunder.                         

              (ii)    the Trustee has determined that all Events of Default,
other than the non-payment of the interest on or principal amount of Securities 
and any Commitment Fee that have become due solely by such acceleration, have   
been cured and a Majority of the Notes by written notice to the Trustee has     
agreed with such determination (which agreement shall not be unreasonably       
withheld) or waived as provided in Section 5.13.                                

      No such rescission shall affect any subsequent Default or impair any
right consequent thereon.                                                       

    (c)    In addition to the foregoing and any other remedy available
pursuant to this Article 5, if on the last business day of each of 12           
consecutive calendar months, the Securities issued pursuant to this Indenture   
shall have an asset coverage (as defined in and determined in                   

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accordance with Section 18 of the Investment Company Act) of less than 100 per  
centum, then a Majority of the Notes shall be entitled to elect at least a      
majority of the members of the board of directors of the Issuer, such voting    
right to continue until the Securities issued pursuant to this Indenture shall  
have an asset coverage (as defined in and determined in accordance with Section 
18 of the Investment Company Act) of 110 per centum or more on the last business
day of each of three consecutive calendar months.                               

Section 5.3.    Collection of Indebtedness and Suits for Enforcement by Trustee.

      The Issuer covenants that if a Default shall occur in respect of the
payment of any principal, interest, the Commitment Fee or the Break Funding     
Cost, the Issuer, will, upon demand of the Trustee or any affected Holder of    
such Security, pay to the Trustee, for the benefit of the Holder of such        
Security, the whole amount, if any, then due and payable for the principal      
amount of and interest on such Security and any Additional Costs, with interest 
upon the overdue principal and, to the extent that payments of such interest    
shall be legally enforceable, upon overdue installments of interest and any     
Additional Costs, at the applicable Interest Rate and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of        
collection, including the reasonable compensation, expenses, disbursements and  
advances of the Trustee and its agents and counsel.                             

         If the Issuer fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as Trustee of an express trust, may, and shall upon
direction of a Majority of the Notes, institute a Proceeding for the collection 
of the sums so due and unpaid, and may prosecute such Proceeding to judgment or 
final decree, and may enforce the same against the Issuer or any other obligor  
upon the Securities and collect the Monies adjudged or decreed to be payable in 
the manner provided by law, subject, in each case, to the terms and conditions  
of the Pledge Agreement.                                                        

         If an Event of Default occurs and is continuing, the Trustee may in its
discretion, and shall upon written direction of a Majority of the Notes, proceed
to protect and enforce its rights and the rights of the Securityholders by such 
appropriate Proceedings as the Trustee shall deem most effectual (if no such    
direction is received by the Trustee or as the Trustee may be directed by a     
Majority of the Notes), to protect and enforce any such rights, whether for the 
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy 
or legal or equitable right vested in the Trustee by this Indenture or by law.  

      In case there shall be pending Proceedings relative to the Issuer or
any other obligor upon the Securities under any applicable bankruptcy,          
insolvency or other similar law, or in case a receiver, assignee or trustee in  
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Issuer or its property or    
such other obligor or its property, or in case of any other comparable          
Proceedings relative to the Issuer or other obligor upon the Securities, or the 
creditors or property of the Issuer or such other obligor, the Trustee,         
regardless of whether the principal of any Securities shall then be due and     
payable as therein expressed or by declaration or otherwise and regardless of   
whether the Trustee shall have made any demand pursuant to the provisions of    
this Section 5.3, shall be entitled and empowered, by intervention in such      
Proceedings or otherwise:                                                       

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    (a)    to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Securities and to file
such other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for reasonable compensation to   
the Trustee and each predecessor Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all reasonable expenses and liabilities   
incurred, and all advances made, by the Trustee and each predecessor Trustee,   
except as a result of negligence or bad faith) and of the Holders of the        
Securities allowed in any Proceedings relative to the Issuer or other obligor   
upon the Securities or to the creditors or property of the Issuer or such other 
obligor;                                                                        

        (b)    unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of the Securities, upon the direction of such Holders, in 
any election of a trustee or a standby trustee in arrangement, reorganization,  
liquidation or other bankruptcy or insolvency Proceedings or Person performing  
similar functions in comparable Proceedings; and                                

       (c)    to collect and receive any Monies or other property payable to
or deliverable on any such claims, and to distribute all amounts received with  
respect to the claims of the Holders of the Securities and of the Trustee on    
their behalf; and any trustee, receiver or liquidator, custodian or other       
similar official is hereby authorized by each of the Holders of the Securities  
to make payments to the Trustee, and, in the event that the Trustee shall       
consent to the making of payments directly to the Holders of the Securities, to 
pay to the Trustee such amounts as shall be sufficient to cover reasonable      
compensation to the Trustee, each predecessor Trustee and their respective      
agents, attorneys and counsel, and all other reasonable expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee    
except as a result of negligence or bad faith.                                  

       All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the         
possession of any of the Securities or the production thereof in any trial or   
other Proceedings relative thereto, and any action or Proceedings instituted by 
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment, subject to the payment of the reasonable expenses,    
disbursements and compensation of the Trustee, each predecessor trustee and     
their respective agents and attorneys and counsel, shall be for the ratable     
benefit of the Holders of the Securities Parties.                               

       In any Proceedings brought by the Trustee on behalf of the Holders of
the Securities (including any Proceedings involving the interpretation of any   
provision of this Indenture to which the Trustee shall be a party) the Trustee  
shall be held to represent all such Holders.                                    

Section 5.4.    Remedies.                                                       

      (a)    If an Event of Default shall have occurred and be continuing,
the Commitments shall have been terminated, and the Securities shall have been  
declared due and payable and such declaration and its consequences have not been
rescinded and annulled, the Issuer agrees that the Trustee may (after notice to 
the Holders of Securities), and shall, upon direction by a Majority of the      
Notes, to the extent permitted by applicable law, exercise one or more of the   
following rights, privileges and remedies:                                      

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               (i)     institute Proceedings for the collection of all amounts
then payable on the Securities or otherwise payable under this Indenture,       
whether by declaration or otherwise, and, subject to the terms and conditions of
the Pledge Agreement, enforce any judgment obtained;                            

               (ii)    give (or authorize the Controlling Class Representative
to give) the Collateral Agent a Liquidation Direction or exercise any or all    
other rights afforded to the Secured Parties pursuant to the Pledge Agreement;  
and                                                                             

    (iii)   exercise (or authorize the Controlling Class
Representative to exercise) any other rights and remedies that may be available 
at law or in equity,                                                            

     (b)    If an Event of Default as described in Section 5.1(g) hereof
shall have occurred and be continuing the Trustee may, and at the direction of  
the Holders of not less than 25% of the Aggregate Outstanding Amount of the     
Notes shall, institute a Proceeding solely to compel performance of the covenant
or agreement or to cure the representation or warranty, the breach of which gave
rise to the Event of Default under such Section, and enforce any equitable      
decree or order arising from such Proceeding.                                   

   (c)    Notwithstanding any other provision of this Indenture, the
Trustee may not, prior to the date which is one year and one day or, if longer, 
the applicable preference period then in effect, after the payment in full of   
all Securities and the reduction of the Commitment to zero, institute against,  
or join any other Person in instituting against, the Issuer any bankruptcy,     
reorganization, arrangement, insolvency, moratorium or liquidation Proceedings, 
or other Proceedings under federal or state bankruptcy or similar laws. Nothing 
in this Section 5.4 shall preclude, or be deemed to stop, the Trustee (i) from  
taking any action prior to the expiration of the aforementioned one year and one
day period (or, if longer, the applicable preference period then in effect) in  
(A) any case or Proceeding voluntarily filed or commenced by the Issuer or (B)  
any involuntary insolvency Proceeding filed or commenced by a Person other than 
the Trustee, or (ii) from commencing against the Issuer or any of its properties
any legal action which is not a bankruptcy, reorganization, arrangement,        
insolvency, moratorium or liquidation Proceeding.                               

Section 5.5.    Trustee May Enforce Claims Without Possession of Securities.    

        All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of  
the Securities or the production thereof in any Proceeding relating thereto, and
any such Proceeding instituted by the Trustee shall be brought in its own name  
as trustee of an express trust, and any recovery of judgment shall be applied as
set forth in Section 5.6 hereof.                                                

Section 5.6.    Application of Money Collected.                                 

   Any Money collected by the Trustee with respect to the Securities
pursuant to this Article 5, any Money that may then be held or thereafter       
received by the Trustee with respect to the Securities hereunder and any Money  
received by the Trustee from the Collateral Agent prior to a Liquidation        
Direction pursuant to the Pledge Agreement shall be applied and paid in         
accordance with the provisions of Section 11.1, at the date or dates fixed by   
the Trustee. The Trustee may fix a record date and a payment date for any       
payment to the Holders pursuant to this Section 5.6.                            

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Section 5.7.    Limitation on Suits.                                            

 No Holder of any Security shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the  
appointment of a receiver or trustee, or for any other remedy hereunder, unless:

       (a)    such Holder has previously given to the Trustee written notice
of an Event of Default;                                                         

       (b)    the Trustee has received a written request from the Holders of
at least 25% of the then Aggregate Outstanding Amount of the Notes to institute 
Proceedings in respect of such Event of Default in its own name as Trustee      
hereunder and such Holder or Holders have delivered to the Trustee such         
indemnity against the costs, expenses and liabilities to be incurred in         
compliance with such request as the Trustee may deem appropriate;               

  (c)    the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such Proceeding; and 

      (d)    no direction inconsistent with such request has been given to
the Trustee during such 30-day period by a Majority of the Notes;               

it being understood and intended that no one or more Holders of Securities shall
have any right in any manner whatever by virtue of, or by availing of, any      
provision of this Indenture to affect, disturb or prejudice the rights of any   
other Holders of Securities or to obtain or to seek to obtain priority or       
preference over any other Holders of the Securities or to enforce any right     
under this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all the Holders of Securities.                               

    In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of the Note, each     
representing less than a Majority of the Notes, the Trustee shall take direction
from the group representing the largest percentage of the Notes as to what      
action, if any, shall be taken, notwithstanding any other provisions of this    
Indenture.                                                                      

Section 5.8.    Unconditional Rights of Holders of Securities to Receive        
Principal and Interest.                         

Except as expressly provided elsewhere in this Indenture,     
notwithstanding any other provision in this Indenture (other than Section 2.7), 
the Holder of any Note shall have the right, which is absolute and              
unconditional, to receive payment of the principal of and interest on such      
Security and any Additional Costs, as applicable, as such principal and interest
and Additional Costs become due and payable, and subject to the provisions of   
this Section 5.8, to institute Proceedings for the enforcement of any such      
payment, and such right shall not be impaired without the consent of such       
Holder.                                                                         

Section 5.9.    Restoration of Rights and Remedies.                             

       If the Trustee or any Securityholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been   
discontinued or abandoned for any                                               

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reason, or has been determined adversely to the Trustee or to such              
Securityholder, then and in every such case the Issuer, the Trustee and the     
Securityholder shall, subject to any determination in such Proceeding, be       
restored severally and respectively to their former positions hereunder, and    
thereafter all rights and remedies of the Trustee and the Securityholder shall  
continue as though no such Proceeding had been instituted.                      

Section 5.10.   Rights and Remedies Cumulative.                                 

    Except as otherwise provided with respect to the replacement of or
payment in respect of a mutilated, destroyed, lost or stolen Security as set    
forth in Section 2.6, no right or remedy herein conferred upon or reserved to   
the Trustee or to the Securityholders is intended to be exclusive of any other  
right or remedy, and every right and remedy shall, to the extent permitted by   
law, be cumulative and in addition to every other right and remedy given        
hereunder or now or hereafter existing at law or in equity or otherwise. The    
assertion or employment of any right or remedy hereunder, or otherwise, shall   
not prevent the concurrent assertion or employment of any other appropriate     
right or remedy.                                                                

Section 5.11.   Delay or Omission Not Waiver.                                   

       No delay or omission of the Trustee or any Securityholder to exercise
any right or remedy accruing upon any Event of Default shall impair any such    
right or remedy or constitute a waiver of any such Event of Default or an       
acquiescence therein or of a subsequent Event of Default. Every right and remedy
given by this Article 5 or by law to the Trustee or to the Securityholders may  
be exercised from time to time, and as often as may be deemed expedient, by the 
Trustee or by the Securityholders, as the case may be.                          

Section 5.12.   Control by Securityholders.                                     

        A Majority of the Notes shall have the right following the occurrence,
and during the continuance of, an Event of Default to cause the institution of  
and direct the time, method and place of conducting any Proceeding for any      
remedy available to the Trustee or exercising any trust or power conferred upon 
the Trustee under this Indenture; provided, that:                               

       (a)    such direction shall not conflict with any rule of law or with
any express provision of this Indenture;                                        

   (b)    the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; provided, however, that,  
subject to Section 6.1, the Trustee need not take any action that it determines 
might involve it in liability (unless the Trustee has received indemnity as set 
forth below); and                                                               

       (c)    the Trustee shall have been provided with indemnity reasonably
satisfactory to it.                                                             

Section 5.13.   Waiver of Defaults.                                             

         Prior to the time a judgment or decree for payment of the Money due has
been obtained by the Trustee, as provided in this Article 5, a Majority of the  
Notes may on behalf of the Holders of all the Securities waive any Default and  
its consequences, except a Default:                                             

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         (a)    in the payment of principal of any Security, interest thereon or
the Commitment Fee or Break Funding Cost; or                                    

        (b)    in respect of a covenant or provision hereof that under Section
8.2 cannot be modified or amended without the waiver or consent of the Holder of
each Outstanding Security adversely affected thereby; or                        

(c)    arising under Section 5.1(k).                          

         In the case of any such waiver, the Issuer, the Trustee and the Holders
of the Securities shall be restored to their former positions and rights        
hereunder, respectively, but no such waiver shall extend to any subsequent or   
other Default or impair any right consequent thereto. The Trustee shall promptly
give notice of any such waiver to the Investment Manager and each Holder.       

        Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every      
purpose of this Indenture, but no such waiver shall extend to any subsequent or 
any other Default or impair any right consequent thereto.                       

Section 5.14.   Undertaking for Costs.                                          

         All parties to this Indenture agree, and each Holder of any Security by
its acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken, or     
omitted by it as Trustee, the filing by any party litigant in such suit of an   
undertaking to pay the costs of such suit, and that such court may in its       
discretion assess reasonable costs, including reasonable attorneys' fees,       
against any party litigant in such suit, having due regard to the merits and    
good faith of the claims or defenses made by such party litigant; but the       
provisions of this Section 5.14 shall not apply to any suit instituted by the   
Trustee, to any suit instituted by any Securityholder, or group of              
Securityholders, holding in the aggregate more than 10% in Aggregate Outstanding
Amount of the Notes, or to any suit instituted by any Securityholder for the    
enforcement of the payment of amounts due and payable with respect to any       
Securities on or after the Stated Maturity.                                     

Section 5.15.   Waiver of Stay or Extension Laws.                               

         The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,   
now or at any time hereafter in force, which may affect the covenants, the      
performance of or any remedies under this Indenture; and the Issuer (to the     
extent that it may lawfully do so) hereby expressly waives all benefit or       
advantage of any such law, and covenant that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and   
permit the execution of every such power as though no such law had been enacted.

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Section 5.16.   Action on the Securities.                                       

       The Trustee's right to seek and recover judgment on the Securities or
under this Indenture shall not be affected by the seeking or obtaining of or    
application for any other relief under or with respect to this Indenture.       
Neither this Indenture nor any rights or remedies of the Trustee or the         
Securityholders shall be impaired by the recovery of any judgment by the Trustee
against the Issuer or by the levy of any execution by the Collateral Agent under
any judgment upon any portion of the Collateral or upon any of the assets of the
Issuer.                                                                         

ARTICLE 6   

THE TRUSTEE   

Section 6.1.    Certain Duties and Responsibilities.                            

(a)    Except during the continuance of an Event of Default:  

              (i)     the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied     
covenants or obligations shall be read into this Indenture against the Trustee; 
and                                                                             

                (ii)    in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the 
opinions expressed therein, upon certificates or opinions furnished to the      
Trustee and conforming to the requirements of this Indenture; provided, however,
that in the case of any such certificates or opinions which by any provision    
hereof are specifically required to be furnished to the Trustee, the Trustee    
shall be under a duty to examine the same to determine whether or not they      
substantially conform to the requirements of this Indenture and shall promptly, 
but in any event within three Business Days in the case of an Officer's         
certificate furnished by the Investment Manager, notify the party delivering the
same if such certificate or opinion does not conform. If a corrected form shall 
not have been delivered to the Trustee within 15 days after such notice from the
Trustee, the Trustee shall so notify the Holders of Securities.                 

      (b)    In case an Event of Default known to the Trustee has occurred
and is continuing, the Trustee shall, prior to the receipt of directions, if    
any, from a Majority of the Notes, exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in its       
exercise as a prudent person would exercise or use under the circumstances in   
the conduct of such person's own affairs.                                       

         (c)    No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure  
to act, or its own willful misconduct, except that:                             

           (i)     this subsection shall not be construed to limit the
effect of subsection (a) of this Section 6.1;                                   

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        (ii)    the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it shall be proven that  
the Trustee was negligent in ascertaining the pertinent facts; and              

           (iii)   the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the  
direction of the Issuer or the Investment Manager in accordance with this       
Indenture and/or a Majority (or such other percentage as may be required by the 
terms hereof) of the Notes relating to the time, method and place of conducting 
any Proceeding for any remedy available to the Trustee, or exercising any trust 
or power conferred upon the Trustee, under this Indenture.                      

    (d)    No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the  
performance of any of its duties hereunder, or in the exercise of any of its    
rights or powers contemplated hereunder, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk  
or liability is not reasonably assured to it unless such risk or liability      
relates to its ordinary services for which it has already been compensated.     

        (e)    For all purposes under this Indenture, the Trustee shall not be
deemed to have notice or knowledge of any Event of Default described in Section 
5.1(h) or any Default described in Section 5.l(g) unless a Trust Officer        
assigned to and working in the Corporate Trust Office has actual knowledge      
thereof or unless written notice of any event which is in fact such an Event of 
Default or Default is received by the Trustee at the Corporate Trust Office, and
such notice references the Securities generally, the Issuer, the Collateral or  
this Indenture. For purposes of determining the Trustee's responsibility and    
liability hereunder, whenever reference is made in this Indenture to such an    
Event of Default or a Default, such reference shall be construed to refer only  
to such an Event of Default or Default of which the Trustee is deemed to have   
notice as described in this Section 6.1.                                        

         (f)    Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or         
affording protection to the Trustee shall be subject to the provisions of this  
Section 6.1.                                                                    

Section 6.2.    Notice of Default.                                              

   Promptly (and in no event later than two Business Days) after the
occurrence of any Default known to the Trustee or after any declaration of      
acceleration has been made or delivered to the Trustee pursuant to Section 5.2, 
the Trustee shall give notice to the Investment Manager, each Rating Agency and 
all Holders of all Defaults hereunder known to the Trustee, unless such Default 
shall have been cured or waived.                                                

Section 6.3.    Certain Rights of Trustee.                                      

Except as otherwise provided in Section 6.1:                  

 (a)    the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument, 
opinion, report, notice, request, direction,                                    

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consent, order, note or other paper or document believed by it to be genuine    
and to have been signed or presented by the proper party or parties;            

         (b)    any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Order;                                      

     (c)    whenever in the administration of this Indenture the Trustee
shall (i) deem it desirable that a matter be proved or established prior to     
taking, suffering or omitting any action hereunder, the Trustee (unless other   
evidence be herein specifically prescribed) may, in the absence of bad faith on 
its part, rely upon an Officer's Certificate or (ii) be required to determine   
the value of any Collateral or funds hereunder or the cashflows projected to be 
received therefrom, the Trustee may, in the absence of bad faith on its part,   
rely on reports of nationally recognized accountants, investment bankers or     
other Persons qualified to provide the information required to make such        
determination, including nationally recognized dealers in securities of the type
being valued and securities quotation services;                                 

     (d)    as a condition to the taking or omitting of any action by it
hereunder, the Trustee may consult with counsel and the advice of such counsel  
or any opinion of counsel shall be full and complete authorization and          
protection in respect of any action taken or omitted by it hereunder in good    
faith and in reliance thereon;                                                  

         (e)    the Trustee shall be under no obligation to exercise or to honor
any of the rights or powers vested in it by this Indenture at the request or    
direction of any of the Securityholders pursuant to this Indenture, unless such 
Securityholders shall have delivered to the Trustee such security or indemnity  
against the costs, expenses and liabilities as the Trustee reasonably determines
might be incurred by it in compliance with such request or direction;           

      (f)    the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,          
instrument, opinion, report, notice, request, direction, consent, order, note or
other paper documents, but the Trustee, in its discretion, may and, upon the    
direction of a Majority of the Notes and each Rating Agency, shall make such    
further inquiry or investigation into such facts or matters as it may see fit or
as it shall be directed, and, the Trustee shall be entitled, on no less than    
five Business Days advance notice to the Issuer and the Investment Manager, to  
examine the books and records relating to the Securities and the Collateral and 
the premises of the Issuer and the Investment Manager, personally or by agent or
attorney during the Issuer's or the Investment Manager's normal business hours; 
provided, that the Trustee shall, and shall cause its agents, to hold in        
confidence all such information, except (i) to the extent disclosure may be     
required by law by any regulatory authority and (ii) to the extent that the     
Trustee, in its sole judgment, may determine that such disclosure is consistent 
with its obligations hereunder;                                                 

         (g)    the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or         
attorneys; provided, that the Trustee shall not be responsible for any          
misconduct or negligence on the part of any non-affiliated agent appointed      
(subject to the approval of the Investment Manager or the Issuer, which shall   
not be unreasonably withheld) and supervised, or non-affiliated attorney        
appointed, with due care by it hereunder;                                       

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         (h)    the Trustee shall not be liable for any action it takes or omits
to take in good faith that it reasonably believes to be authorized or within its
rights or powers hereunder; and                                                 

     (i)    the permissive rights of the Trustee to take or refrain from
taking any action enumerated in this Indenture shall not be treated as a duty.  

Section 6.4.    Not Responsible for Recitals or Issuance of Securities.         

     The recitals contained herein and in the Securities, other than the
Certificate of Authentication thereon, shall be taken as the statements of the  
Issuer and the Trustee assumes no responsibility for their correctness. The     
Trustee makes no representation as to the validity or sufficiency of this       
Indenture (except as may be made with respect to the validity of the Trustee's  
obligations hereunder), the Collateral or the Securities. The Trustee shall not 
be accountable for the use or application by the Issuer of the Securities or the
proceeds thereof or any Money paid to the Issuer pursuant to the provisions     
hereof.                                                                         

Section 6.5.    May Hold Securities.                                            

         The Trustee, any Paying Agent, Security Registrar or any other agent of
the Issuer or the Investment Manager, in its individual or any other capacity,  
may become the owner or pledgee of Securities and may otherwise deal with the   
Issuer or any of its Affiliates with the same rights it would have if it were   
not Trustee, Paying Agent, Security Registrar or such other agent.              

Section 6.6.    Money Held in Trust.                                            

   Money held by the Trustee hereunder shall be held in trust to the
extent required herein. The Trustee shall be under no liability for interest on 
any Money received by it hereunder except as otherwise agreed upon with the     
Issuer and except to the extent of income or other gain on investments which are
deposits in or certificates of deposit of the Trustee in its commercial capacity
and income or other gain actually received by the Trustee on any of the         
Collateral.                                                                     

Section 6.7.    Compensation and Reimbursement.                                 

      Subject to any limitations set forth in Section 11(a)(i), the Issuer
agrees:                                                                         

        (a)    to pay the Trustee on each Payment Date reasonable compensation
for all services rendered by it hereunder (which compensation shall not be      
limited by any provision of law in regard to the compensation of a trustee of an
express trust);                                                                 

        (b)    except as otherwise expressly provided herein, to reimburse the
Trustee (subject to any written agreement between the Issuer and the Trustee)   
promptly upon its request for all reasonable expenses, disbursements and        
advances incurred or made by the Trustee in accordance with any provision of    
this Indenture (including securities transaction charges and the reasonable     
compensation and expenses and disbursements of its agents and legal counsel and 
of any accounting firm, except any such expense, disbursement or advance as may 
be attributable to its negligence, willful misconduct or bad faith);            

        (c)    to indemnify the Trustee and its Officers, directors, employees
and agents for, and to hold them harmless against, any loss, liability or       
expense incurred without negligence, willful                                    

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misconduct or bad faith on their part, arising out of or in connection with the 
acceptance or administration of this trust, including the costs and expenses of 
defending themselves against any claim or liability in connection with the      
exercise or performance of any of their powers or duties hereunder; and         

       (d)    to pay the Trustee reasonable additional compensation together
with its expenses (including reasonable counsel fees) for any collection action 
taken pursuant to Section 5.14 hereof.                                          

Section 6.8.    Corporate Trustee Required; Eligibility.                        

  There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of 
America or of any state thereof, authorized under such laws to exercise         
corporate trust powers, having a combined capital and surplus of at least       
$200,000,000, subject to supervision or examination by federal or state         
authority, having a long-term debt rating of at least "Baa1" by Moody's and a   
long-term debt rating of at least "BBB+" by S&P, and having an office within the
United States. If such corporation publishes reports of condition at least      
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 6.8, the combined    
capital and surplus of such corporation shall be deemed to be its combined      
capital and surplus as set forth in its most recent report of condition so      
published. If at any time the Trustee shall cease to be eligible in accordance  
with the provisions of this Section 6.8, it shall resign immediately in the     
manner and with the effect hereinafter specified in Section 6.9.                

Section 6.9.    Resignation and Removal; Appointment of Successor.              

        (a)    Notwithstanding anything herein to the contrary, no resignation
or removal of the Trustee and no appointment of a successor Trustee pursuant to 
this Section 6.9 shall become effective until the acceptance of appointment by  
the successor Trustee under Section 6.10. The indemnification in favor of the   
Trustee in Section 6.7 hereof shall survive any resignation or removal (to the  
extent of any indemnified liabilities, costs, expenses and other amounts arising
or incurred prior to, or arising out of actions or omissions occurring prior to 
such resignation or removal).                                                   

    (b)    The Trustee may resign at any time by giving written notice
thereof to the Issuer, the Investment Manager, the Collateral Agent, the Holders
of Securities and each Rating Agency.                                           

       (c)    The Trustee may be removed at any time by Act of a Majority of
the Notes any time when an Event of Default shall have occurred and be          
continuing or when a successor Trustee has been appointed pursuant to Section   
6.9 and Section 6.10, by Act of a Majority of the Notes, delivered to the       
Trustee and to the Issuer.                                                      

(d)    If at any time:                                        

                (i)     the Trustee shall cease to be eligible under Section 6.8
and shall fail to resign after request therefor by the Issuer or by a Majority  
of the Notes; or                                                                

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             (ii)    the Trustee shall become incapable of acting or shall
be adjudged as bankrupt or insolvent or a receiver or liquidator of the Trustee 
or of its property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of         
rehabilitation, conservation or liquidation                                     

then, in any such case, (A) the Issuer, by Issuer Order, may remove the Trustee,
or (B) subject to Section 5.15, any Holder may, on behalf of himself and all    
others similarly situated, petition any court of competent jurisdiction for the 
removal of the Trustee and the appointment of a successor Trustee.              

       (e)    If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any reason,
the Issuer, by Issuer Order, shall promptly appoint a successor Trustee. If the 
Issuer shall fail to appoint a successor Trustee within 60 days after such      
resignation, removal or incapability or the occurrence of such vacancy, a       
successor Trustee may be appointed by Act of a Majority of the Notes delivered  
to the Issuer and the retiring Trustee. The successor Trustee so appointed      
shall, forthwith upon its acceptance of such appointment, become the successor  
Trustee and supersede any successor Trustee proposed by the Issuer. If no       
successor Trustee shall have been so appointed by the Issuer or such Holders or 
such appointed successor Trustee shall not have accepted appointment in the     
manner hereinafter provided, subject to Section 5.15, any Holder may, on behalf 
of himself and all others similarly situated, petition any court of competent   
jurisdiction for the appointment of a successor Trustee.                        

         (f)    The Issuer shall give prompt notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing   
notice of such event by first class mail, postage prepaid, to each Rating       
Agency, to the Holders of the Securities and to the Investment Manager. Each    
notice shall include the name of the successor Trustee and the address of its   
Corporate Trust Office. If the Issuer fails to mail such notice within 10 days  
after acceptance of appointment by the successor Trustee, the successor Trustee 
shall cause such notice to be given at the expense of the Issuer.               

Section 6.10.   Acceptance of Appointment by Successor.                         

        Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer and the retiring Trustee an instrument accepting such 
appointment. Upon delivery of the required instruments, the resignation or      
removal of the retiring Trustee shall become effective and such successor       
Trustee, without any further act, deed or conveyance, shall become vested with  
all the rights, powers, trusts, duties and obligations of the retiring Trustee; 
but, on request of the Issuer or a Majority of the Notes or the successor       
Trustee, such retiring Trustee shall, upon payment of its charges then unpaid,  
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee, and shall duly assign,       
transfer and deliver to such successor Trustee all property and Money held by   
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Issuer shall execute any and all instruments for more fully and certainly       
vesting in and confirming to such successor Trustee all such rights, powers and 
trusts.                                                                         

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Section 6.11.   Merger, Conversion, Consolidation or Succession to Business of  
Trustee.                                        

      Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any       
corporation succeeding to all or substantially all of the corporate trust       
business of the Trustee, shall be the successor of the Trustee hereunder,       
provided such corporation shall be otherwise qualified and eligible under this  
Article 6, without the execution or filing of any paper or any further act on   
the part of any of the parties hereto; provided, that the Trustee shall give    
notice thereof to the Issuer, the Investment Manager, the Holders of Securities,
and each Rating Agency. In case any of the Securities have been authenticated,  
but not delivered, by the Trustee then in office, any successor by merger,      
conversion or consolidation to such authenticating Trustee may adopt such       
authentication and deliver the Securities so authenticated with the same effect 
as if such successor Trustee had itself authenticated such Securities.          

Section 6.12.   Authenticating Agents.                                          

       Upon the request of the Issuer, the Trustee shall, and if the Trustee
so chooses the Trustee may, appoint one or more Authenticating Agents with power
to act on its behalf and subject to its direction in the authentication of      
Securities in connection with issuances and transfers under Sections 2.4, 2.5,  
2.6 and 8.6, as fully to all intents and purposes as though each such           
Authenticating Agent had been expressly authorized by such Sections to          
authenticate such Securities. For all purposes of this Indenture, the           
authentication of Securities by an Authenticating Agent pursuant to this Section
6.12 shall be deemed to be the authentication of Securities "by the Trustee."   

      Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting    
from any merger, consolidation or conversion to which any Authenticating Agent  
shall be a party, or any corporation succeeding to the corporate trust business 
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, without the execution or filing of any further act on the part of the
parties hereto or such Authenticating Agent or such successor corporation.      

         Any Authenticating Agent may at any time resign by giving prior written
notice of resignation to the Trustee and the Issuer. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of    
termination to such Authenticating Agent and the Issuer. Upon receiving such    
notice of resignation or upon such a termination, the Trustee shall promptly    
appoint a successor Authenticating Agent and shall give written notice of such  
appointment of the Issuer.                                                      

     The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services, and reimbursement for its        
reasonable expenses relating thereto and the Trustee shall be entitled to be    
reimbursed for such payments, subject to Section 6.7. The provisions of Sections
2.9, 6.4 and 6.5 shall be applicable to any Authenticating Agent.               

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ARTICLE 7   

COVENANTS   

Section 7.1.    Payment of Principal and Interest.                              

     (a)    The Issuer will duly and punctually pay the principal of and
interest on the Securities and any Additional Costs in accordance with the terms
of such Securities and this Indenture. Amounts properly withheld under the Code 
or other applicable law by any Person from a payment to any Holder of such      
amounts shall be considered as having been paid by the Issuer to such Holder for
all purposes of this Indenture.                                                 

        (b)    Failure of a Holder of a Security to provide the Trustee or any
Paying Agent and the Issuer with appropriate tax certifications will result in  
amounts being withheld from the payment to such Holders.                        

        (c)    All payments under the Notes to any Holder thereof will be made
by the Issuer without any deduction or withholding for or on account of any Tax 
unless such deduction or withholding is required by the tax law of any          
jurisdiction (a "Withholding Jurisdiction"), as modified by the practice of any 
relevant governmental revenue authority in such Withholding Jurisdiction, then  
in effect. If the Issuer is so required to deduct or withhold, then the Issuer  
will: (i) notify the Trustee (which will notify each affected Holder) of such   
requirement no later than 10 days prior to the date of the payment from which   
amounts are required to be withheld (provided that, despite the failure of the  
Issuer to give such notice, amounts withheld pursuant to applicable laws shall  
be considered as having been paid by the Issuer as provided above); (ii) pay to 
the relevant authorities in such Withholding Jurisdiction the full amount       
required to be deducted or withheld (including the full amount required to be   
deducted or withheld from any additional amount paid by the Issuer to an        
affected Holder by reason of clause (4) below) promptly upon the earlier of     
determining that such deduction or withholding is required or receiving notice  
that such amount has been assessed against the affected Holder; (iii) promptly  
forward to the affected Holder the documentation evidencing such payment        
received from such authorities; and (iv) subject to the next sentence, pay to   
the affected Holder the additional amount (a "Tax Gross-Up Amount") necessary   
and the Holder's delivery of the certificate required by Section 2.09(c) of the 
Note Purchase Agreement to ensure that the net amount received by the affected  
Holder equals the full amount the affected Holder would have received had no    
such deduction or withholding been required.                                    

      However, the Issuer will not be required to make any such payment of
Tax Gross-Up Amount for or on account of any one or more of the following:      

       (1)    any tax that would not have been imposed but for the existence
of any present or former connection between such Holder (or between a fiduciary,
settlor or beneficiary of, or a person holding a power over, such Holder, if    
such Holder is an estate or a trust, or a member or shareholder of such Holder, 
if such Holder is a partnership or a corporation) and the Withholding           
Jurisdiction, other than the holding of the Notes or the receipt of payments in 
respect thereof;                                                                

 (2)    any estate, inheritance, gift, sales, transfer, personal
property or similar tax;                                                        

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      (3)    any tax imposed on, or measured by, net income or any similar
base;                                                                           

(4)    any tax that is payable otherwise than by deduction or 
withholding;                                                                    

      (5)    any tax, or portion thereof, that would not have been imposed
but for a failure to timely furnish any certification, documentation,           
information or other instrument that could reasonably have been furnished by or 
on behalf of such Holder without undue burden or expense; or                    

         (6)    any tax imposed on a Holder that actually or constructively owns
10 percent or more of the combined voting power of all classes of stock of the  
Issuer or that is a controlled foreign corporation related to the Issuer through
stock ownership;                                                                

nor shall such Tax Gross-Up Amount be paid with respect to a payment to a Holder
that is an entity other than a corporation to the extent that an owner or       
beneficiary thereof, or settlor thereon, would not have been entitled to the Tax
Gross-Up Amount had such owner, beneficiary or settlor been the Holder.         

Section 7.2.    Maintenance of Office or Agency.                                

       The Issuer hereby appoints the Trustee as a Paying Agent for payments
with respect to the Securities and the Issuer hereby appoints the Trustee, at   
its New York Office located at 4 New York Plaza Ground Floor, New York, New     
York, 10004, Attention: WSS Window - WSS Houston - York Enhanced Strategies, as 
its agent where notices and demands to or upon the Issuer in respect of the     
Securities or this Indenture may be served and where Securities may be          
surrendered for registration of transfer or exchange.                           

        The Issuer may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all of
such purposes; provided, however, that the Issuer will maintain in the Borough  
of Manhattan, The City of New York, an office or agency where notices and       
demands to or upon the Issuer in respect of the Securities and this Indenture   
may be served; provided, further, that no Paying Agent shall be appointed in a  
jurisdiction which subjects payments on the Securities to withholding tax. The  
Issuer shall at all times maintain a duplicate copy of the Security Register    
with respect to the Securities. The Issuer shall give prompt notice to the      
Trustee, each Rating Agency, and the Holders of Securities of the appointment or
termination of any such Paying Agent or agent for notices and of the location   
and any change in the location of any such office or agency.                    

    If at any time the Issuer shall fail to maintain any such required
office or agency in the Borough of Manhattan, The City of New York, or shall    
fail to furnish the Trustee with the address thereof, presentations and         
surrenders may be made (subject to the limitations described in the preceding   
paragraph) at and notices and demands may be served on the Issuer, and          
Securities may be presented and surrendered for payment to the appropriate      
Paying Agent at its main office and the Issuer hereby appoint each Paying Agent 
as their agent to receive such respective presentations, surrenders, notices and
demands.                                                                        

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Section 7.3.    Money for Payments to be Held in Trust.                         

        All payments of amounts due and payable with respect to any Securities
that are to be made from amounts withdrawn from the Payment Account shall be    
made on behalf of the Issuer by the Trustee or a Paying Agent with respect to   
payments on the Securities.                                                     

         When the Issuer shall have a Paying Agent that is not also the Security
Registrar, it shall furnish, or cause the Security Registrar to furnish, no     
later than the fifth calendar day after each Record Date a list, if necessary,  
in such form as such Paying Agent may reasonably request, of the names and      
addresses of the Holders as of such Record Date and of the certificate numbers  
of individual Securities held by each such Holder.                              

       Whenever the Issuer shall have a Paying Agent other than the Trustee,
it shall, on or before the Business Day next preceding each Payment Date direct 
the Trustee to deposit on such Payment Date with such Paying Agent, if          
necessary, an aggregate sum sufficient to pay the amounts then becoming due with
respect to the Securities for which it acts as Paying Agent (to the extent funds
are then available for such purpose in the Payment Account), such sum to be held
in trust for the benefit of the Persons entitled thereto and (unless such Paying
Agent is the Trustee) the Issuer shall promptly notify the Trustee of its action
or failure so to act. Any Monies deposited with a Paying Agent with respect to  
the Securities for which it acts as Paying Agent (other than the Trustee) in    
excess of an amount sufficient to pay the amounts then becoming due on the      
applicable Securities with respect to which such deposit was made shall be paid 
over by such Paying Agent to the Trustee for application in accordance with     
Article 10.                                                                     

      The initial Paying Agent for the Securities shall be as set forth in
Section 7.2. Any additional or successor Paying Agents shall be appointed by    
Issuer Order with written notice thereof to the Trustee; provided however, that,
so long as any Securities are rated by a Rating Agency, with respect to any     
additional or successor Paying Agent, either (i) such Paying Agent has a rating 
of "Aa3" or higher or "P-1" by Moody's and "AA" or "A-1+" by S&P, or (ii) Rating
Agency Confirmation shall have been received. In the event that such successor  
Paying Agent ceases to have any such rating, and Rating Agency Confirmation is  
not received, the Issuer shall promptly remove such Paying Agent and appoint a  
successor Paying Agent. The Issuer shall not appoint any Paying Agent (other    
than the initial Paying Agent) that is not, at the time of such appointment, a  
depository institution or trust company subject to supervision and examination  
by federal and/or state and/or national banking authorities. The Issuer shall   
cause each Paying Agent other than the Trustee to execute and deliver to the    
Trustee an instrument in which such Paying Agent shall agree with the Trustee   
(and if the Trustee acts as Paying Agent, it hereby so agrees), subject to the  
provisions of this Section 7.3, that such Paying Agent will:                    

 (a)    allocate all sums received for payment to the Holders of
Securities for which it acts as Paying Agent on each Payment Date among such    
Holders in the proportion specified in the applicable report to the extent      
permitted by applicable law;                                                    

     (b)    hold all sums held by it for the payment of amounts due with
respect to the Securities in trust for the benefit of the Persons entitled      
thereto until such sums shall be paid to such Persons or otherwise disposed of  
as herein provided and pay such sums to such Persons as herein provided;        

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         (c)    if such Paying Agent is not the Trustee, immediately resign as a
Paying Agent and forthwith pay to the Trustee all sums held by it in trust for  
the payment of Securities if at any time it ceases to meet the standards set    
forth above required to be met by a Paying Agent at the time of its appointment;

      (d)    if such Paying Agent is not the Trustee, immediately give the
Trustee notice of any Default by the Issuer (or any other obligor on the        
Securities) in the making of any payment required to be made hereunder in       
respect of the Securities; and                                                  

       (e)    if such Paying Agent is not the Trustee at any time during the
continuance of any such Default, upon the request of the Trustee, forthwith pay 
to the Trustee all sums so held in trust by such Paying Agent.                  

The Issuer may at any time, for the purpose of obtaining the  
satisfaction and discharge of this Indenture or for any other purpose, pay, or  
by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in 
trust by the Issuer or such Paying Agent, such sums to be held by the Trustee   
upon the same terms as those upon which such sums were held by the Issuer or    
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,   
such Paying Agent shall be released from all further liability with respect to  
such Money.                                                                     

     Except as otherwise required by applicable law, any Money deposited
with the Trustee or any Paying Agent in trust for the payment on any Securities 
and remaining unclaimed for two years after such amounts have become due and    
payable shall be paid to the Issuer on Issuer Order; and the Holder of such     
Security shall thereafter, as an unsecured general creditor, look only to the   
Issuer for payment of such amounts and all liability of the Trustee or such     
Paying Agent with respect to such trust Money (but only to the extent of the    
amounts so paid to the Issuer) shall thereupon cease. The Trustee or such Paying
Agent, before being required to make any such release of payment, may, but shall
not be required to, adopt and employ, at the expense of the Issuer, any         
reasonable means of notification of such release of payment, including, but not 
limited to, mailing notice of such release to Holders whose Securities have been
called but have not been surrendered for redemption or whose right to or        
interest in Monies due and payable but not claimed is determinable from the     
records of any Paying Agent, at the last address of record of each such Holder. 

Section 7.4.    Existence of Issuer; Activities; Affiliate Transactions.        

       (a)    To the extent possible under applicable laws, the Issuer shall
maintain in full force and effect its existence and rights as a limited         
liability company formed under the laws of the State of Delaware and shall      
obtain and preserve its qualification to do business as foreign corporation in  
each jurisdiction in which such qualifications are or shall be necessary to     
protect the validity and enforceability of this Indenture, the Securities or any
of the Collateral; provided however, that the Issuer shall be entitled to change
its jurisdiction of formation from the State of Delaware to any other           
jurisdiction reasonably selected by the Issuer, so long as (i) such change is   
not disadvantageous in any material respect to any of the Holders of the        
Securities, (ii) notice of such change shall have been given by the Trustee to  
the Holders of the Securities and each Rating Agency and (iii) on or prior to   
the fifteenth Business Day following such notice the Trustee shall not have     
received notice from a Majority of the Notes objecting to such change.          

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    (b)    The Issuer shall ensure that all limited liability or other
formalities regarding its existence (including holding regular Board of         
Directors' and shareholders' meetings) are followed. The Issuer shall not take  
any action, or conduct its affairs in a manner, that is likely to result in its 
separate existence being ignored or its assets and liabilities being            
substantively consolidated with any other Person in a bankruptcy, reorganization
or other insolvency proceeding.                                                 

      (c)    The Issuer shall promptly notify the Trustee, each Holder and
the Rating Agencies when the Issuer elects not to be treated as, or becomes     
ineligible to be treated as, a regulated investment company for U.S. federal    
income tax purposes.                                                            

       (d)    The Issuer shall use commercially reasonable efforts to at all
times maintain its classification as a non-diversified Closed-end Company for   
purposes of the Investment Company Act and shall promptly notify the Trustee,   
each Holder and the Rating Agencies when it at any time fails to maintain its   
classification as a Closed-end Company.                                         

        (e)    Except as permitted by the Transaction Documents (including the
Issuer entering into and performing its obligations under the Investment        
Management Agreement and payment or reimbursement of all fees and expenses due  
by the Issuer to the Investment Manager) or any exemptive relief sought from the
Securities and Exchange Commission, the Issuer shall not, directly or           
indirectly: (i) make an investment in any of its Affiliates; (ii) sell, lease or
otherwise transfer any assets to any of its Affiliates; (iii) purchase or       
acquire assets from any of its Affiliates; or (iv) enter into any other         
transaction directly or indirectly with or for the benefit of any of its        
Affiliates (including, without limitation, guarantees and assumptions of        
obligations of any of its Affiliates); provided, however, that the Issuer may,  
in compliance with the Investment Company Act, enter into any such transaction  
with any of its Affiliates or for the benefit of any of its Affiliates in the   
ordinary course of its business if (x) the monetary or business consideration   
arising therefrom is likely to be substantially as advantageous to the Issuer as
the monetary or business consideration which it could obtain in a comparable    
arm's length transaction with a Person not an Affiliate of the Issuer and (y)   
written notice of such transaction is provided to the Trustee.                  

Section 7.5.    Protection of Collateral.                                       

      (a)    The Issuer shall take or cause to be taken such action within
its control as is reasonably necessary in order to maintain the perfection and  
priority of the security interest of the Collateral Agent in the Collateral and 
shall from time to time execute and deliver all such supplements and amendments 
hereto and all such Financing Statements, continuation statements, instruments  
of further assurance and other instruments, and shall take such other action as 
may be reasonably necessary or advisable to secure the rights and remedies of   
the Holders in respect of the Lien granted under the Pledge Agreement and to:   

        (i)     Grant more effectively all or any portion of the
Collateral;                                                                     

              (ii)    maintain, preserve and perfect any Grant made or to be
made by the Pledge Agreement, including, without limitation, the first priority 
nature of the Lien under the Pledge Agreement or to carry out more effectively  
the purposes hereof;                                                            

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             (iii)   perfect, publish notice of or protect the validity of
any Grant made or to be made by the Pledge Agreement (including, without        
limitation, any and all actions necessary or desirable as a result of changes in
law or regulations);                                                            

      (iv)    enforce any of the Pledged Securities or other
instruments or property included in the Collateral;                             

           (v)     preserve and defend title to the Collateral and the
rights therein of the Collateral Agent, and the Secured Parties against the     
claims of all Persons and parties; or                                           

           (vi)    pay or cause to be paid any and all taxes levied or
assessed upon all or any part of the Collateral.                                

       (b)    The Issuer shall pay or cause to be paid taxes, if any, levied
on account of the beneficial ownership by the Issuer of any Pledged Securities  
that secure the Securities.                                                     

         (c)    The Issuer shall enforce all of its material rights and remedies
under the Investment Management Agreement, Note Purchase Agreement and the other
Transaction Documents.                                                          

Section 7.6.    Certificate as to Collateral.                                   

         For so long as any Notes are Outstanding, on or before March 31 in each
calendar year, commencing in 2006, the Issuer shall furnish to the Trustee and  
the Rating Agencies, an Officer's Certificate certifying that as of the date of 
such Officer's Certificate, the Lien created by the Pledge Agreement and the    
other Transaction Documents with respect to the Collateral remains in effect    
with the same priority such Lien had on the Closing Date and stating that no    
further action (other than as specified in such Officer's Certificate) needs to 
be taken (under the UCC) to ensure the continued effectiveness and perfection of
such Lien until June 30 in the following calendar year.                         

Section 7.7.    Over-Collateralization Tests.                                   

 (a)    Upon the occurrence of an Excess Date, the Issuer or the
Investment Manger on behalf of the Issuer shall promptly notify the Trustee in  
writing (which shall provide a copy of such notice to each Holder) and each     
Rating Agency thereof and, at its option (provided, that it is required to take 
the actions described in clause (i) or clause (ii) below), within ten (10)      
Business Days of such Excess Date, either:                                      

       (i)     prepay the Notes (as provided herein) or redeem
Preferred Shares as provided in the Operating Agreement in such amounts or take 
such other actions as shall be necessary to eliminate such Excess Amount; or    

                (ii)    provide a certificate to each Rating Agency, the Trustee
and each Holder as of any date (a "Certificate Date") showing projected         
compliance with the Over-Collateralization Tests as of any subsequent date      
within 20 Business Days of such Excess Date (and continuing compliance with the 
Over-Collateralization Tests during the remainder of such 20 Business Day       
period) based upon reasonably expected settlements of all committed purchases   

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and sales of Fund Investments pledged as Collateral, all anticipated additions  
to the Collateral of Cash and of Fund Investments that are not pledged as       
Collateral, all anticipated removals from the Collateral of Cash, and all       
anticipated prepayments of the Notes (including sources of funds therefor) and  
redemptions of the Term Preferred Shares to be completed within such 20 Business
Days, calculated by reference to the Market Value, Market Value Prices,         
Over-Collateralization Tests, the aggregate Drawn Amount and the aggregate      
liquidation preference of the Term Preferred Shares, as the case may be, as of  
such Certificate Date.                                                          

(b)    The Issuer will be deemed to be in compliance with each
Over-Collateralization Test so long as there is no Excess Amount. In the event  
that the Issuer fails to complete the transactions described in a statement     
delivered pursuant to clause (ii) above or otherwise come into compliance with  
the Over-Collateralization Tests (including as a result of changes in the value 
of the Collateral) within the 20 Business Day period specified therein, the     
Issuer shall make the prepayments required pursuant to clause (i) above not     
later than the last day of such 20 Business Day period.                         

    (c)    Notwithstanding the foregoing, in the event that the Issuer
determines that it would not be in compliance with the Over-Collateralization   
Tests immediately following, and after giving effect to, any proposed prepayment
of the Notes or redemption of the Preferred Shares pursuant to this Section     
7.7 , the Issuer shall instead, to the extent it makes any prepayment pursuant  
to this Section 7.7, prepay such Notes in accordance with the terms of this     
Indenture and no Preferred Shares shall be redeemed or repurchased unless the   
aggregate outstanding principal amount of the Notes has been reduced to zero.   
The preceding sentence shall not in any way limit the ability of the Issuer to  
take other actions to come into compliance with the Over-Collateralization      
Tests.                                                                          

Section 7.8.    Performance of Obligations.                                     

The Issuer is hereby authorized to enter in to the Investment 
Management Agreement and any amendments thereto and to contract with other      
Persons to perform, on behalf of the Issuer, the actions and obligations to be  
performed by the Issuer hereunder, including, without limitation, in respect of 
the Collateral. In such event, the performance of such actions and obligations  
by such Persons shall be deemed to be performance of such actions and           
obligations by the Issuer, except that, to the extent an Officer's Certificate  
is required to be delivered by or on behalf of the Issuer, an Authorized Officer
of the Issuer must execute such Officer's Certificates on behalf of the Issuer. 

Section 7.9.    Payment of Taxes and Other Claims.                              

      The Issuer shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, all material taxes, assessments and    
other governmental charges levied or imposed upon the Issuer or upon any of its 
income, profits or property; provided, that the Issuer shall not be required to 
pay or discharge or cause to be paid or discharged any such tax, assessment or  
charge, the amount, applicability or validity of which is being contested in    
good faith by appropriate proceedings and for which it maintains adequate       
reserves in accordance with GAAP, and the failure of which to pay or discharge  
could not result in a material adverse effect on the Collateral.                

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Section 7.10.   Insurance.                                                      

      The Issuer shall maintain or otherwise be a beneficiary of insurance
(including directors and officers insurance and errors and omissions insurance) 
consistent with the type and amount of insurance carried by Persons engaging in 
similarly situated businesses.                                                  

Section 7.11.   Compliance With Laws; Asset Coverage Requirements.              

     (a)    The Issuer shall comply with all applicable statutes, rules,
regulations, orders and restrictions of any governmental authority, department, 
commission, board, regulatory authority, bureau, agency and instrumentality, in 
respect of the conduct of its business and the ownership of its properties,     
except such as are being contested in good faith and by appropriate proceedings 
in such manner as not to cause any material adverse effect on the business and  
operations of the Issuer, and except for such non-compliance as could not       
reasonably, individually or in the aggregate, be expected to have a material    
adverse effect on the business and operations of the Issuer.                    

      (b)    Without limiting the foregoing, the Issuer shall at all times
comply with Section 18 of the Investment Company Act or any successor provision 
thereto, and any applicable "asset coverage" maintenance requirements set forth 
therein.                                                                        

Section 7.12.   Investment Manager; Custodian; Accountants.                     

        (a)    The Issuer shall at all times maintain York Enhanced Strategies
Management, LLC as the Investment Manager, unless York Enhanced Strategies      
Management, LLC resigns or is removed or terminated pursuant to the Investment  
Management Agreement, in which case a successor Investment Manager acceptable to
the Majority of the Notes shall be appointed within 30 days of such removal or  
termination.                                                                    

        (b)    The Custodian shall at all times be the custodian of all of the
Fund Investments and the Collateral, except as provided under the Custodial     
Agreement.                                                                      

   (c)    The Issuer's auditors shall at all times be an Independent
Public Accountant.                                                              

Section 7.13.   Minimum Net Worth.                                              

The Company Equity shall, at the end of each fiscal quarter 
(determined on the date the related quarterly or annual financial statements are
required to be delivered hereunder by reference to such related quarterly or    
annual financial statements), equal or exceed 50% of Contributed Company        
Capital.                                                                        

Section 7.14.   Limitations on Indebtedness or Equity Securities.               

   The Issuer shall not Incur any Indebtedness or issue any equity
securities, other than Permitted Indebtedness or Permitted Equity Issuances.    

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Section 7.15.   Liens.                                                          

 The Issuer shall not Incur or suffer to exist any Lien upon any
property or assets included in the Collateral, whether now owned or hereafter   
acquired, except for Permitted Liens.                                           

Section 7.16.   Restricted Payments.                                            

    (a)    The Issuer shall not make any Restricted Payment; provided,
however that, subject to Section 7.16(b), the Issuer may:                       

              (i)     make distributions (including dividends) in respect of
the Common Shares or the Preferred Shares, or repurchase, or make payments or   
distributions on account of the purchase, redemption, retirement or acquisition 
of, the Common Shares or the Preferred Shares pursuant to and in accordance with
the Operating Agreement, in each case, so long as, immediately after such       
payments, distributions or repurchases (A) no Default or violation of Section   
7.7 (without giving effect to the grace periods provided for therein) shall have
occurred and be continuing under this Indenture, (B) all representations and    
warranties of the Issuer in this Indenture and the other Transaction Documents  
are true and correct in all material respects, and (C) Company Equity shall be  
equal to or greater than (1) Adjusted Contributed Company Capital or (2) in the 
case of Company Tax Distributions, Adjusted Contributed Company Capital minus   
$35,000,000; provided, however, that notwithstanding the foregoing (1) dividends
on any of the Term Preferred Shares, (2) dividends on the Series A-2 Preferred  
Share up to $40 per annum and (3) purchases, redemptions, retirements or        
acquisitions of any of the Preferred Shares made pursuant to Section 7.7 or in  
order to comply with any asset coverage test required to be maintained pursuant 
to Section 18 of the Investment Company Act shall not constitute Restricted     
Payments prohibited by the foregoing and, subject to compliance with Section    
7.7(c) and the limitations set forth in 7.16(b), may be made or paid by the     
Issuer at any time; and                                                         

           (ii)    in the event that any payment or other distribution
(including, without limitation, any dividend) in respect of the Issuer's Common 
Shares would be required to be made in order to preserve the U.S. federal income
tax status of the Issuer as a regulated investment company or to avoid the      
imposition of the excise tax under Section 4882 of the Code (e.g., because the  
requisite consents from the Common Shareholders for a "consent dividend" (as    
defined in Section 565 of the Code) for U.S. federal income tax purposes have   
not been obtained by the Issuer in accordance with the terms of the Operating   
Agreement), such payment or distribution (a "RIC Distribution") may be          
distributed for the benefit of the Common Shareholders and deposited into the   
Escrow Account established pursuant to the Custodial Agreement. Funds deposited 
in the Escrow Account shall not be released to the Common Shareholders unless   
and until the Issuer shall have provided to the Trustee a certificate stating   
that (A) no violation of the Over-Collateralization Tests or Default exists and 
(B) Company Equity is equal to or greater than Adjusted Contributed Company     
Capital. If the requisite consents from the Common Shareholders for a "consent  
dividend" have been obtained, the Issuer shall be permitted to pay any U.S.     
withholding taxes ("RIC Withholding Taxes") arising in respect of such "consent 
dividend."                                                                      

         (b)    Notwithstanding anything in Section 7.16(a) or elsewhere in this
Indenture to the contrary, the Issuer shall not declare any dividend (except a  
dividend payable in stock of the Issuer), or declare any other distribution,    
upon any class of the capital stock of the Issuer, or                           

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purchase any such capital stock, unless, in every such case, each class of      
"senior securities" (as defined in Section 18 of the Investment Company Act) of 
the Issuer has at the time of declaration of any such dividend or distribution  
or at the time of any such purchase an "asset coverage" (as defined in and      
determined in accordance with Section 18 of the Investment Company Act) of at   
least 300 per centum after deducting the amount of such dividend, distribution, 
or purchase price, as the case may be, except that dividends may be declared    
upon the Preferred Stock if each "senior security representing indebtedness" (as
defined in Section 18 of the Investment Company Act) has an "asset coverage" (as
defined in and determined in accordance with Section 18 of the Investment       
Company Act) of at least 200 per centum at the time of declaration thereof after
deducting the amount of such dividend.                                          

Section 7.17.   Change of Name, etc.                                            

        The Issuer shall not change (a) the location of its principal place of
business, chief executive office, major executive office, chief place of        
business or its records concerning its business and financial affairs, (b) its  
name or the name under or by which it conducts its business or (c) its          
jurisdiction of organization, in each case without first giving the Trustee 30  
days' prior written notice thereof and taking any and all actions that may be   
necessary to maintain and preserve all Liens granted pursuant to the Pledge     
Agreement.                                                                      

Section 7.18.   Merger, Consolidation, Sale of Assets.                          

  The Issuer shall not consolidate or merge with or into any other
Person or sell, lease or otherwise transfer its properties and assets           
substantially as an entirety to any Person, unless the Issuer provides 10 days' 
prior written notice thereof to the Trustee, each Holder and the Rating Agencies
and unless:                                                                     

    (a)    the Issuer shall be the surviving entity, or the Person (if
other than the Issuer) formed by such consolidation or into which the Issuer is 
merged or to which the properties and assets of the Issuer are transferred      
substantially as an entirety shall be a Person organized and existing under the 
laws of the United States of America, any state thereof or the District of      
Columbia, and shall expressly assume, by an amendment or supplement, executed   
and delivered to the Trustee, each Holder and the Rating Agencies, in the case  
of a Person succeeding the Issuer, the due and punctual payment of the principal
of and premium and interest on all of the Securities and all of the other Senior
Indebtedness hereunder and, in the case of a Person succeeding the Issuer, the  
performance of every covenant and every other obligation or liability of this   
Indenture and the other Transaction Documents on the part of the Issuer to be   
performed or observed, all as provided herein;                                  

               (i)     immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;              

         (ii)    the Issuer shall have delivered to the Trustee an
Officer's Certificate stating that such consolidation, merger, conveyance or    
transfer and such amendment or supplement to this Indenture comply with this    
Section 7.18;                                                                   

          (iii)   the Issuer shall have taken all steps necessary to
preserve the effectiveness, perfection and priority of the Liens created under  
the Pledge Agreement;                                                           

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               (iv)    the Issuer shall have delivered to the Trustee and each
Holder evidence that the Rating Agency Condition shall be met;                  

              (v)     the successor entity shall be a registered "investment
company" under the Investment Company Act; and                                  

              (vi)    the Issuer shall have delivered the Trustee an Opinion
of Counsel concerning such of the foregoing matters described in clauses (i) and
(v).                                                                            

      Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Issuer in accordance with this Section 7.18, the successor entity formed 
by such consolidation or into which the Issuer is merged or into which such     
sale, transfer, lease, conveyance or other disposition is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Issuer   
under this Indenture with the same effect as if such successor entity had been  
named as the Issuer herein.                                                     

Section 7.19.   Investment Dispositions, etc.                                   

     The Issuer shall not sell, transfer, lease or otherwise dispose of,
or grant options, warrants or other rights with respect to, any of its assets to
any Person, other than in compliance with the provisions of this Indenture, the 
other Transaction Documents, the Operating Agreement and all Applicable Laws.   
The Issuer shall not transfer any Fund Investment or other asset from the       
Custodial Account to any counterparty under a Structured Product Transaction or 
to any other account of the Issuer unless (a) after giving effect to such       
transfer, no Excess Amount exists (calculated on a pro forma basis giving effect
to such transfer) and the Aggregate Outstanding Amount is less than the Total   
Maximum Commitment and (b) the Issuer shall have delivered to the Trustee an    
Officer's Certificate evidencing its compliance with the foregoing clause (a).  

Section 7.20.   Modification of Certain Instruments, Organic Documents,         
Agreements, etc.                                

The Issuer shall not:                                         

(a)    consent to or permit any amendment, supplement, waiver,
termination or other modification of any of the terms or provisions of the      
Preferred Shares, in each case, other than any amendment, supplement or other   
modification which (i) extends the date or reduces the amount of any required   
payment, repurchase or redemption in respect of any Preferred Shares or (ii) is 
consented to or approved by the Majority of the Notes and as to which the       
Rating Agency Condition is met; the Issuer will give the Rating Agencies and the
Trustee ten Business Days' prior written notice of any such modification,       
supplement, waiver or termination; or                                           

       (b)    to the extent permitted by the Investment Company Act, without
the prior written consent of the Majority of the Notes and unless the Rating    
Agency Condition is met, (i) except in accordance with Section 7.12, terminate  
the Investment Manager, appoint a replacement Investment Manager or consent to  
an assignment of the Investment Management Agreement (except in connection with 
(x) an assignment that results from a change in control (within the meaning of  
the Investment Advisers Act of 1940, as amended) or (y) an assignment to a York 

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Affiliated Entity pursuant to the Investment Management Agreement) or (ii)      
consent to any material amendment, supplement or other modification, in each    
case to the extent that such amendment, supplement or other modification could  
reasonably be expected to have a material adverse effect, of any of the terms or
provisions of (A) its Organic Documents, or (B) the Investment Management       
Agreement (except in connection with a change of Investment Manager that        
otherwise complies with clause (i) above).                                      

Section 7.21.   Statement as to Compliance.                                     

     On or before March 31 in each calendar year, commencing in 2006, or
immediately if there has been a Default under this Indenture, the Issuer shall  
deliver to the Trustee, the Investment Manager, each Holder, and each Rating    
Agency an Officer's Certificate stating, as to each Officer signing such        
Officer's Certificate, that:                                                    

     (a)    a review of the activities of the Issuer and of the Issuer's
performance under this Indenture during the prior calendar year (or from the    
Closing Date until December 31, 2005, in the case of the first such Officer's   
Certificate) has been made under his or her supervision; and                    

      (b)    to the best of his or her knowledge, based on such review, no
Default or Event of Default has occurred during such year, or, if there has been
a Default or Event of Default, specifying each such Default or Event of Default 
known to him and the nature and status thereof.                                 

Section 7.22.   No Other Business.                                              

        The Issuer shall not engage in any business or activity other than (a)
issuing the Notes pursuant to this Indenture, issuing, selling, redeeming and   
repurchasing Preferred Shares (including any permitted refinancings thereof),   
issuing and selling Common Shares, acquiring, owning, holding, selling,         
exchanging, redeeming, pledging, structuring, negotiating, originating,         
syndicating, contracting for the management of and otherwise dealing with Fund  
Investments and other instruments and property in connection therewith and in   
accordance with the terms hereof (including acquiring majority or controlling   
interests in operating companies as a result of such activities) and entering   
into Hedging and Short Sale Transactions and Structured Product Transactions,   
(b) issuing or incurring any other obligations permitted by Section 7.14, (c)   
engaging in other activities permitted by the Operating Agreement, including    
establishing investment committees and investment policies, earning origination,
management, commitment, funding, and break-up fees, increased and break-funding 
costs, premiums and similar fees and amounts with respect to Fund Investments,  
obtaining governance power with respect to certain Fund Investments and         
co-investing with related parties and other Persons and (d) obtaining financial 
guarantee insurance with respect to the Preferred Shares and (e) engaging in any
other activities which are necessary, suitable or appropriate to accomplish the 
foregoing or are incidental thereto, connected therewith or ancillary thereto.  
Notwithstanding anything to the contrary contained in this Section 7.22 or      
elsewhere in this Indenture, the Issuer shall have no subsidiaries.             

Section 7.23.   Reporting.                                                      

    The Issuer shall promptly furnish to the Trustee, each Holder, the
Rating Agencies and the Custodian copies of the following financial statements, 
reports and information:                                                        

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       (a)    as soon as available and in any event within 90 days after the
end of each fiscal year of the Issuer (beginning with the year ended December   
31, 2005) a consolidated balance sheet of the Issuer as of the end of such      
fiscal year and the related consolidated statements of operations, members'     
equity and cash flows for such fiscal year (including a schedule setting forth  
all investments of the Issuer and the Market Value of each such investment at   
year end (regardless of whether such investments are then required under GAAP to
be set forth)), setting forth in comparative form the figures for the previous  
fiscal year, if any, reported on without material qualification by Independent  
Public Accountant, it being understood that a qualification relating only to    
valuation methodology shall not be deemed a material qualification if the Issuer
has otherwise complied with Sections 10.4 and 7.7;                              

       (b)    as soon as available and in any event within 60 days after the
end of each of the first three (3) fiscal quarters of each fiscal year of the   
Issuer (beginning with the quarter ended December 31, 2005) a consolidated      
balance sheet of the Issuer as of the end of such fiscal quarter and the        
related consolidated statements of operations, members' equity and cash flows   
for such fiscal quarter and for the portion of the fiscal year ended at the end 
of such fiscal quarter (including a schedule setting forth all investments of   
the Issuer and the Market Value of each such investment at quarter end          
(regardless of whether such investments are then required under GAAP to be set  
forth)), setting forth in the case of each fiscal quarter ending on or after    
December 31, 2006 in comparative form the figures for the corresponding fiscal  
quarter and the corresponding portion of the previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation, GAAP   
and consistency by an Authorized Officer of the Issuer;                         

  (c)    simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a Compliance Certificate   
(i) setting forth (A) Company Equity as of the last day of the fiscal quarter of
the Issuer most recently ended; (B) the aggregate amount of Restricted Payments 
made during such fiscal quarter; (C) the aggregate principal amount of Permitted
Indebtedness, in each case as of the last day of such fiscal year or quarter;   
(D) the computations relating to the Issuer's compliance with Section 7.13; and 
(E) the aggregate amount of fees and expenses paid by the Issuer; and (ii)      
stating whether any Default exists on the date of such certificate and, if any  
Default then exists, setting forth the details thereof and the action which the 
Issuer is taking or proposes to take with respect thereto; and                  

  (d)    simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the Independent      
Public Accountant which reported on such statements as to whether anything has  
come to their attention to cause them to believe that any Default existed on the
date of such statements and, if such a Default has come to their attention, a   
statement as to the nature thereof.                                             

Section 7.24.   Calculation Agent.                                              

   (a)    The Issuer agrees that there will at all times be an agent
(which does not control or is not controlled or under common control with the   
Issuer or its Affiliates or the Investment Manager or its Affiliates) appointed 
to calculate LIBOR in respect of each Interest Accrual Period in accordance with
the terms of Schedule C hereto (the "Calculation Agent"). The Issuer has        
initially appointed the Trustee (which may delegate its responsibilities to any 
of its Affiliates, provided that the Trustee shall remain responsible for the   
performance of any delegated                                                    

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responsibilities in accordance with the terms hereof) as Calculation Agent for  
purposes of determining LIBOR for each Interest Accrual Period. The Calculation 
Agent may be removed by the Issuer at any time. If the Calculation Agent is     
unable or unwilling to act as such or is removed by the Issuer, or if the       
Calculation Agent fails to determine any of the information required to be      
calculated pursuant to subsection (b), the Issuer will promptly appoint a       
replacement Calculation Agent that does not control or is not controlled by or  
under common control with the Issuer or its Affiliates. No resignation or       
removal of the Calculation Agent shall be effective without a successor having  
been duly appointed.                                                            

       (b)    The Calculation Agent shall be required to agree that, as soon
as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as 
defined in Schedule C hereto), but in no event later than 11:00 a.m. (London    
time) on the LIBOR Business Day immediately following each LIBOR Determination  
Date, the Calculation Agent will calculate the Interest Rates for the Interest  
Accrual Period on the related Payment Date, and will communicate such rates and 
amounts to the Issuer, the Trustee, the Investment Manager, and each Paying     
Agent. The Calculation Agent will also specify to the Issuer and the Investment 
Manager the quotations upon which the Interest Rates are based, and in any event
the Calculation Agent shall notify the Issuer and the Investment Manager before 
5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has
determined or is in the process of determining the Interest Rates and the       
Interest Amounts, or (ii) it has not determined and is not in the process of    
determining the Interest Rates and the Interest Amounts, together with its      
reasons therefor.                                                               

      (c)    The Calculation Agent will cause the Interest Rates, Interest
Accrual Period and Payment Date to be communicated to DTC and Clearstream by the
LIBOR Business Day immediately following each LIBOR Determination Date. The     
determination of the Interest Rates and Interest Amounts by the Calculation     
Agent shall (in the absence of manifest error) be final and binding upon all    
parties.                                                                        

Section 7.25.   Margin Stock.                                                   

    (a)    Upon request of any Holder, the Issuer shall provide a duly
completed and executed Federal Reserve Form U-l or Form G-3, as applicable, to  
such Holder. If at any time the Issuer acquires any Margin Stock, the Issuer    
will take any and all actions as may be necessary, or as may be reasonably      
requested by any Holder to establish compliance with Regulations T, U, and X of 
the FRS Board, including, without limitation, furnishing such information       
relating to such Margin Stock acquired as is required to register and file      
periodic reports with the FRS Board.                                            

   (b)    No proceeds of any Borrowing shall be used in violation of
Applicable Law or, directly or indirectly, to purchase, otherwise acquire or    
carry Margin Stock or Margin Securities in any manner that would result in a    
violation of U.S. margin requirements.                                          

Section 7.26.   Pension and Welfare Plans.                                      

        The Issuer shall not Incur any liability or obligation with respect to
any Pension Plan or any Welfare Plan (other than with respect to a fully insured
Welfare Plan). The Issuer shall not maintain or contribute to (or become        
obligated to contribute to) any Pension Plan or Welfare Plan (other than a fully
insured Welfare Plan).                                                          

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Section 7.27.   Payment of Management or Advisory Fees.                         

      At any time after an Acceleration Notice or a Final Maturity Payment
Default Notice has been delivered to the Issuer or the occurrence of a          
Liquidation Acceleration under the Pledge Agreement, the Issuer shall not pay,  
or cause or permit to be paid, any management or advisory fees (excluding       
Reimbursable Expenses) of any type to the Investment Manager unless otherwise   
consented to by the Majority of the Notes.                                      

Section 7.28.   Limitation on Bank Loans and Specified Hedging Transactions.    

       (a)    The Issuer shall not hold Bank Loans that obligate the Issuer,
whether currently or upon the happening of any contingency, to make any         
revolving extensions of credit to a borrower, unless the Issuer has at all times
available to it, within the notification period specified by the documentation  
governing such Bank Loans for the making of any extensions of credit thereunder,
any combination of (i) Cash, (ii) Cash Equivalents and (iii) availability under 
this Indenture such that the Issuer, upon "regular way" settlement, will have   
funds that are sufficient to cover the amount of any such extensions of credit. 

   (b)    The Issuer shall maintain on a daily basis in a segregated
account within the Custodial Account Cash or Cash Equivalents in an amount equal
to the aggregate amount by which the Specified Hedging Net Exposure is less than
zero. Amounts held in such account pursuant this Section 7.28(b) may only be    
withdrawn and applied to the settlement of any such Specified Hedging Net       
Exposure. Any Cash or Cash Equivalents held in such account shall constitute    
Excluded Investments.                                                           

Section 7.29.   Short Sale Transactions.                                        

   (a)    In connection with each Short Sale Transaction, the Issuer
shall:                                                                          
              (i)     At the time the Bank Loan or Security relating to such
Short Sale Transaction is sold, deposit Cash or U.S. Government Securities in a 
Short Sale Customer Account in an amount as determined by the Investment Manager
equal to the excess, if any, of (A) the Market Value of the Bank Loan or        
Security relating to such Short Sale Transaction as determined as of the time   
the Bank Loan or Security relating to such Short Sale Transaction is sold, over 
(B) the amount of any Cash or U.S. Government Securities required to be         
deposited by the Issuer in a Short Sale Broker Account in connection with such  
Short Sale Transaction; and                                                     

           (ii)    until the Issuer replaces the Bank Loan or Security
borrowed in connection with such Short Sale Transaction, it must maintain on a  
daily basis in a Short Sale Customer Account an amount in Cash or U.S.          
Government Securities such that (A) the amount deposited in such Short Sale     
Customer Account plus the amount of Cash or U.S. Government Securities deposited
by the Issuer in a Short Sale Broker Account in connection with such Short Sale 
Transaction equals the current Market Value of the Bank Loan or Security sold   
short and (B) the amount deposited in such Short Sale Customer Account plus the 
amount of Cash or U.S. Government Securities deposited by the Issuer in a Short 
Sale Broker Account in connection with such Short Sale Transaction is not less  
than the Market Value of the Bank Loan or Security at the time it was sold      
short.                                                                          

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     (b)    The Issuer shall not permit on any date the aggregate Market
Value (as determined as of the date each equity Security was borrowed by the    
Issuer in connection with any Short Sale Transaction) of equity Securities      
borrowed in connection with Short Sale Transactions to exceed the greater of (A)
15% of Total Capitalization and (B) 15% of the Net Asset Value of the Issuer.   

ARTICLE 8   

SUPPLEMENTAL INDENTURES 

Section 8.1.    Supplemental Indentures Without Consent of Securityholders.     

        Without the consent of the Holders of any Securities, the Issuer, when
authorized by Board Resolutions, and the Trustee, at any time and from time to  
time subject to the requirement provided below in this Section 8.1 with respect 
to the ratings on the Notes, may enter into one or more indentures supplemental 
hereto, in form satisfactory to the Trustee (x) if such supplemental indenture  
would have no material adverse effect on the Securities (as evidenced by an     
Opinion of Counsel which may be based as to factual matters on an Officer       
Certificate of the Issuer) or (y) for any of the following purposes:            

       (a)    to evidence the succession of another Person to the Issuer and
the assumption by any such successor Person of the covenants of the Issuer      
herein and in the Securities, in each case in accordance with this Indenture;   

     (b)    to add to the covenants of the Issuer or the Trustee for the
benefit of the Holders of the Securities or to surrender any right or power     
herein conferred upon the Issuer;                                               

        (c)    to convey, transfer, assign, mortgage or pledge any property to
or with the Trustee, or add to the conditions, limitations or restrictions on   
the authorized amount, terms and purposes of the issue, authentication and      
delivery of the Securities;                                                     

  (d)    to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee and to add to or change any of the provisions  
of this Indenture as shall be necessary to facilitate the administration of the 
trusts hereunder by more than one trustee, pursuant to the requirements of      
Sections 6.9 or 6.10 hereof;                                                    

    (e)    to provide for and/or facilitate the issuance of additional
Securities to the extent permitted by Section 2.14 and to extend to such        
Securities the benefits and provisions of this Indenture;                       

     (f)    to correct or amplify the description of any property at any
time subject to the Lien under the Pledge Agreement, or to better assure, convey
and confirm unto the Trustee any property subject or required to be subjected to
the Lien under the Pledge Agreement (including, without limitation, any and all 
actions necessary or desirable as a result of changes in law or regulations) or 
to subject to the lien under the Pledge Agreement any additional property;      

(g)    to reduce the permitted Authorized Denominations;      

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        (h)    to take any action necessary or advisable to prevent the Issuer
from being subject to withholding or other taxes, fees or assessments;          

   (i)    to enter into any amendment, modification or waiver if the
Issuer certifies that such amendment, modification or waiver would not, upon or 
after becoming effective, materially and adversely affect the rights or         
interests of holders of the Securities;                                         

        (j)    otherwise to correct any ambiguities, errors or inconsistencies
in this Indenture, or between any provision of the Indenture and the Offering   
Memorandum; or                                                                  

(k)    to evidence any waiver by any Rating Agency as to any  
requirement or condition, as applicable, of such Rating Agency set forth herein.

       The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and       
stipulations which may be therein contained, but the Trustee shall not be       
obligated to enter into any such supplemental indenture which affects the       
Trustee's own rights, duties, liabilities or immunities under this Indenture or 
otherwise, except to the extent required by law.                                

        The Trustee shall not enter into any such supplemental indenture until
it has received Rating Agency Confirmation. At the cost of the Issuer, the      
Trustee shall provide to each Securityholder and, if applicable, each Rating    
Agency, a copy of any proposed supplemental indenture (or a description of the  
substance thereof) at least 10 days prior to the execution thereof by the       
Trustee and a copy of the executed supplemental indenture after its execution.  

Section 8.2.    Supplemental Indentures with Consent of Securityholders.        

     With the consent of a Majority of the Notes, by Act of said Holders
delivered to the Trustee and the Issuer, the Trustee and Issuer may enter into  
one or more indentures supplemental hereto to add any provisions to, or change  
in any manner or eliminate any of the provisions of, this Indenture or modify in
any manner the rights of the Holders of the Securities under this Indenture,    
provided, that notwithstanding anything in this Indenture to the contrary, no   
such proposed supplemental indenture shall, without the consent of each Holder  
adversely affected thereby:                                                     

       (a)    change the Stated Maturity of the Notes or the due date of any
installment of interest or Additional Costs on the Securities; reduce the       
principal amount thereof or the Interest Rate (if any) thereon; change the      
earliest date on which the Commitments may be terminated or reduced pursuant to 
Section 9.3; change the provisions of this Indenture relating to the application
of proceeds of any Collateral to the payment of principal, interest, Additional 
Costs or other amounts with respect to Notes; change any place where, or the    
coin or currency in which, any Security or the principal thereof or interest, or
Additional Cost thereon is payable; or impair the right to institute suit for   
the enforcement of any such payment on or after the Stated Maturity thereof;    

     (b)    reduce the percentage of the Aggregate Outstanding Amount or
number of Holders of Securities whose consent is required for the authorization 
of any such supplemental                                                        

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indenture or for any waiver of compliance with certain provisions of this       
Indenture or certain Defaults hereunder or their consequences provided for in   
this Indenture;                                                                 

 (c)    materially impair or materially and adversely affect the
Collateral except as otherwise permitted in this Indenture;                     

         (d)    except as permitted by the Indenture, permit the creation of any
Lien ranking prior to or on a parity with the Lien under the Pledge Agreement   
with respect to any part of the Collateral or terminate such Lien on any        
property at any time subject hereto or deprive any Noteholder of the security   
afforded by the Lien of the Pledge Agreement;                                   

     (e)    reduce the percentage of the Aggregate Outstanding Amount of
Holders of Notes whose consent is required to request or instruct the Trustee to
exercise the remedies available to the Noteholders under the Pledge Agreement;  

    (f)    modify any of the provisions of this Section 8.2, except to
increase any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
outstanding Security adversely affected thereby;                                

(g)    modify the definition of the term "Outstanding"; or    

        (h)    modify any of the provisions of this Indenture in such a manner
as to affect the methodology for calculation of the amount of any payment with  
respect to any Security on any Payment Date.                                    

        Not later than 10 Business Days prior to the execution of any proposed
supplemental indenture pursuant to this Section 8.2, the Trustee, at the expense
of the Issuer, shall mail to the Holders of the Securities, the Investment      
Manager and each Rating Agency, a copy of such supplemental indenture and a     
notice reciting in substance the provisions of the next following sentence and  
stating whether or not Rating Agency Confirmation has been or will be solicited 
in connection with such proposed supplemental indenture. The Trustee may, or may
rely on an Opinion of Counsel (a copy of which will be provided to the Rating   
Agencies) to, determine whether or not the Holders of Securities would be       
materially and adversely affected, as applicable, by such change (after giving  
notice of such change to the Holders of such Securities). Such determination    
shall be conclusive and binding on all present and future Holders. The Trustee  
shall not be liable for any such determination made in good faith and in        
reliance upon an Opinion of Counsel delivered to the Trustee as described in    
Section 8.3 hereof.                                                             

   Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section 8.2, the Trustee, at the expense
of the Issuer, shall mail to the Holders of the Securities, the Investment      
Manager and each Rating Agency, a copy thereof. Any failure of the Trustee to   
publish or mail such notice, or any defect therein, shall not, however, in any  
way impair or affect the validity of any such supplemental indenture.           

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Section 8.3.    Execution of Supplemental Indentures.                           

        It shall not be necessary for any Act of Securityholders under Section
8.1 or 8.2 to approve the particular form of any proposed supplemental          
indenture, but it shall be sufficient if such Act shall approve the substance   
thereof.                                                                        

In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article 8 or the modifications thereby 
of the trusts created by this Indenture, the Trustee shall be entitled to       
receive, and (subject to Sections 6.1 and 6.3 hereof) shall be fully protected  
in relying upon an Opinion of Counsel stating that the execution of such        
supplemental indenture is authorized or permitted by this Indenture and that all
conditions precedent thereto have been complied with. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture which affects   
the Trustee's own rights, duties or immunities under this Indenture or          
otherwise; provided, however, that with respect to any amendment or supplement  
to this Indenture which would (i) increase the duties or liabilities of, or that
adversely change the economic consequences to the Investment Manager, or (ii)   
materially expand or restrict the Investment Manager's discretion, the          
Investment Manager shall not be bound thereby unless the Investment Manager     
shall have consented thereto in writing, such consent not to be unreasonably    
withheld or delayed.                                                            

Section 8.4.    Certain Further Limitations on Supplemental Indentures.         

         Notwithstanding anything to the contrary herein, the Issuer agrees that
it will not consent to or enter into any indenture supplemental hereto or any   
amendment to any other document related hereto that:                            

      (a)    amends any provision of this Indenture or such other document
relating to the institution of proceedings for the Issuer to be adjudicated as  
bankrupt or insolvent, or the consent by the Issuer to the institution of       
bankruptcy or insolvency proceedings against it, or the filing with respect to  
the Issuer of a petition or answer or consent seeking reorganization or relief  
under applicable bankruptcy or similar law, or the consent by the Issuer or to  
the filing of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of the Issuer of  
any substantial part of its property; or                                        

      (b)    amends any provision of this Indenture or such other document
that provides that the obligations of the Issuer are limited recourse           
obligations of the Issuer, payable solely from the assets of the Issuer in      
accordance with the terms of the Indenture.                                     

Section 8.5.    Effect of Supplemental Indentures.                              

        Upon the execution of any supplemental indenture under this Article 8,
this Indenture shall be modified in accordance therewith, and such supplemental 
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore and thereafter authenticated and delivered hereunder  
shall be bound thereby.                                                         

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Section 8.6.    Reference in Securities to Supplemental Indentures.             

   Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 8 may, and if required by the   
Trustee shall, bear a notation in form approved by the Trustee as to any matter 
provided for in such supplemental indenture. If the Issuer shall so determine,  
new Securities, so modified as to conform in the opinion of the Trustee and the 
Issuer, to any such supplemental indenture, may be prepared and executed by the 
Issuer, and authenticated and delivered by the Trustee in exchange for          
Outstanding Securities.                                                         

ARTICLE 9   

 PREPAYMENT OF NOTES

Section 9.1.    Mandatory Prepayment.                                           

     (a)    The Issuer shall make a Prepayment of the Notes on each date
when any reduction in the Total Maximum Commitment shall become effective,      
whether pursuant to Section 9.3 or otherwise, in an amount such that no Excess  
Amount exists immediately following such reduction.                             

        (b)    The Issuer shall make a Prepayment of the Notes on any day when
required to comply with the Over-Collateralization Tests pursuant to Section    
7.7.                                                                            

Section 9.2.    Voluntary Prepayments of Notes.                                 

        (a)    The Notes may be prepaid (in whole or in part) at the option of
the Issuer without premium on any Payment Date on which the Issuer has available
Cash. Furthermore, on any Business Day (other than a Payment Date) on which the 
Issuer has available Cash, the Notes may be prepaid (in whole or in part)       
without premium at the option of the Issuer. The Holders of the Notes shall be  
entitled to receive any related Break Funding Costs on the next Payment Date.   
Prepayments will be made by the Issuer on a pro rata basis based on the Drawn   
Amount of the Notes. In connection with a Prepayment, the Issuer shall comply in
all respects with the terms of the Note Purchase Agreement.                     

       (b)    Except with respect to any Prepayment required to be made, the
aggregate principal amount of any Prepayment of the Notes (taken as a whole)    
shall be an integral multiple of $1,000,000 and at least $5,000,000.            

(c)    The Issuer will duly and punctually perform each of its
obligations under the Note Purchase Agreement.                                  

Section 9.3.    Commitment Reductions.                                          

         (a)    The Issuer may not reduce the Commitments at any time during the
Non-Reduction Period unless, in each case, any such Commitment reduction is     
necessary to comply with any asset coverage ratio required to be maintained by  
the Issuer pursuant to Section 18 of the Investment Company Act. At any time    
after the Non-Reduction Period, the Issuer may, from time to time on any Payment
Date, voluntarily reduce, in whole or in part, the amount of the                

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Total Maximum Commitment; provided, that (i) all such reductions shall (x)      
require at least five Business Days' prior notice to the Trustee, the Note Agent
and the Rating Agencies, and (y) permanently reduce the Total Maximum Commitment
by the amount of such reduction (such reduction permanently reducing the amount 
resulting from each calculation of Total Maximum Commitment thereafter), (ii)   
any partial reduction of the Total Maximum Commitment shall be in a minimum     
amount of $5,000,000 and in an integral multiple of $1,000,000 for amounts in   
excess thereof, and (iii) no such reduction shall reduce the Commitments to an  
amount less than the Aggregate Outstanding Amount, unless a mandatory Prepayment
of the Notes shall be made on the date of such reduction pursuant to Section    
9.1(a). Notwithstanding the foregoing, the Issuer will have the right to (i)    
terminate the Commitment of any Holder pursuant to Section 9.3(b), and (ii)     
terminate the Commitment of any Holder that fails to satisfy the Rating Criteria
in accordance with and under the circumstances described in the Note Purchase   
Agreement.                                                                      

        (b)    If, as a result of any Change in Law, the Issuer is required to
pay any Tax Gross-Up Amount or any Increased Costs to any Holder, then in each  
such case the Issuer shall have the right to (i) replace such Holder with       
another Permitted Holder or (ii) terminate the Commitment of such Holder. In the
event the Issuer elects to replace any such Holder or terminate the Commitment  
of any such Holder pursuant to this paragraph (b), the Issuer will give 10      
Business Days advance notice thereof to such Holder, the Trustee and the Note   
Agent and will, on the date of replacement of such Holder or the date of the    
termination of the Commitment of such Holder, pay or cause to be paid to the    
Trustee for the benefit of such Holder an amount equal to the outstanding       
principal amount of the Borrowings owing to such Holder, the accrued and unpaid 
interest thereon and any Additional Costs owing through the date of such        
prepayment or termination; provided, however, that notwithstanding the          
foregoing, if such Holder transfers its Notes (subject to all applicable        
conditions set forth in this Indenture and the Note Purchase Agreement relating 
to the transfer of an interest in any Note) to an Affiliate of such Holder      
within such 10 Business Day period and as a result of such transfer the Issuer  
is no longer required to pay any Tax Gross-Up Amount or any Increased Costs,    
then the Issuer shall not be permitted to exercise the rights referenced in     
subclauses (i) and (ii) above at the end of such 10 Business Day period.        

ARTICLE 10  

ACCOUNTS, ACCOUNTINGS AND RELEASES  

Section 10.1.   Collection of Money; General Account Requirements.              

       (a)    Except as otherwise expressly provided herein, the Trustee may
demand payment or delivery of, and shall receive and collect, directly and      
without intervention or assistance of any fiscal agent or other intermediary,   
all Money and other property payable to or receivable by the Trustee pursuant to
this Indenture. The Trustee shall segregate and hold all such Money and property
received by it in trust for the benefit of the Noteholders and shall apply it as
provided in this Indenture.                                                     

         (b)    The accounts established by the Trustee pursuant to this Article
10 may include any number of sub-accounts deemed necessary by the Trustee or    
requested by the Custodian for convenience in administering any Money received  
by the Trustee. In addition, all Cash deposited in the accounts established     
pursuant to this Article 10 shall be invested in Cash                           

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Equivalents in accordance with the procedures set forth in Sections 10.2(b) and 
10.2(c) and any restrictions applicable to such accounts.                       

    (c)    The Collateral Accounts shall be maintained pursuant to the
Custodial Agreement and the Pledge Agreement providing, inter alia, that the    
establishment and maintenance of such Collateral Account will be governed by the
law of a jurisdiction satisfactory to the Issuer and the Trustee. All Monies    
held by or deposited with the Trustee in any Account shall be deposited in one  
or more trust accounts of a federal depository institution or state-chartered   
depository institution subject to regulations regarding fiduciary funds on      
deposit similar to Title 12 of the Code of Federal Regulations, Section 9.10(b),
which, in either case, has corporate trust powers, acting in its fiduciary      
capacity and having a long-term debt rating of at least "Baa2" by Moody's and   
"BBB" by S&P to be held in trust for the benefit of the Secured Parties. The    
Trustee agrees to give the Issuer and the Collateral Agent immediate notice if  
any Account or any funds on deposit therein, or otherwise to the credit of such 
Account, shall become subject to any writ, order, judgment, warrant of          
attachment, execution or similar process.                                       

Section 10.2.   Collection Account.                                             

  (a)    The Trustee shall, prior to the Closing Date, establish a
single, segregated trust account which shall be designated as the "Collection   
Account" into which the Trustee shall from time to time deposit:                

 (A)     all Payment Proceeds; and

                     (B)     all proceeds received from the disposition of
        any Collateral under the Pledge Agreement not required to otherwise be
applied in accordance with the terms of the Pledge Agreement. 

  In addition, the Issuer may, but under no circumstances shall be
required to, deposit from time to time such other Monies in the Collection      
Account as it deems, in its sole discretion, to be advisable. All Monies        
deposited from time to time in the Collection Account pursuant to this Indenture
shall be held by the Trustee and shall be applied to the purposes herein        
provided.                                                                       

         (b)    All amounts described in Section 10.2(a) received by the Trustee
shall be immediately deposited in the Collection Account. Subject to Sections   
10.2(d) and 10.2(e), all such amounts, together with any securities in which    
funds included in such property are or will be invested or reinvested during the
term of this Indenture, and any income or other gain realized from such         
investments, shall be held by the Trustee in the Collection Account subject to  
disbursement and withdrawal as provided in this Section 10.2. By Issuer Order   
executed by an Authorized Officer of the Issuer (which may be in the form of    
standing instructions), the Issuer shall at all times direct the Trustee to,    
and, upon receipt of such Issuer Order, the Trustee shall, invest all funds     
received into the Collection Account as so directed in Cash Equivalents.        

      (c)    If prior to the occurrence of an Event of Default, the Issuer
shall not have given any investment directions pursuant to Section 10.2(b), the 
Trustee shall invest and reinvest the funds held in the Collection Account, as  
fully as practicable, but only in one or more Cash Equivalents as directed by   
the Investment Manager. If, after the occurrence of an Event of Default, the    
Issuer shall not have given investment directions to the Trustee pursuant to    
Section                                                                         

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10.2(b) for three consecutive days, the Trustee shall invest and reinvest such  
Monies as fully as practicable in Cash Equivalents maturing not later than the  
earlier of (i) 30 days after the date of such investment or (ii) the Business   
Day immediately preceding the next Payment Date. All interest and other income  
from such investments shall be deposited in, any gain realized from such        
investments shall be credited to, and any loss resulting from such investments  
shall be charged to the Collection Account. The Trustee shall not in any way be 
held liable by reason of any insufficiency of the Collection Account resulting  
from any loss relating to any such investment.                                  

       (d)    The Issuer may by Issuer Order direct the Trustee to, and upon
receipt of such Issuer Order the Trustee shall, use Payment Proceeds to make    
Prepayments on the Notes in accordance with Section 9.1 or Section 9.2.         

         (e)    An Authorized Officer of the Issuer shall direct the Trustee to,
and upon the receipt of such written instructions, the Trustee shall, transfer  
to the Payment Account, for application pursuant to Section 11.1(a) of the      
Indenture, on or about the Business Day prior to each Payment Date, any amounts 
then held in the Collection Account; except that, to the extent that Payment    
Proceeds in the Collection Account as of such date are in excess of the amounts 
required to be distributed on the next Payment Date, the Issuer may direct the  
Trustee to either (i) retain such excess amounts in the Collection Account and  
not to transfer such excess amounts to the Payment Account, or (ii) so long as  
no Default or Event of Default then exists, return such excess amounts to the   
Issuer.                                                                         

Section 10.3.   Payment Account;  Advance Funding Account.                      

       (a)    Payment Account. The Trustee shall, prior to the Closing Date,
establish a single, segregated trust account which shall be designated as the   
"Payment Account." Except as otherwise provided in Sections 11.1 and 11.2, the  
only permitted withdrawal from or application of funds on deposit in, or        
otherwise to the credit of, the Payment Account shall be to pay amounts due and 
payable on the Securities in accordance with their terms and the provisions of  
this Indenture, Administrative Expenses, and other amounts specified therein,   
and to make Prepayments in accordance with Section 9.2.                         

         (b)    Advance Funding Account. The Trustee shall, prior to the Closing
Date, establish a segregated trust account designated the "Advance Funding      
Account." Any Aggregate Undrawn Amount deposited with the Trustee pursuant to   
Section 2.12(e) as a result of the failure of a holder of a beneficial interest 
in the Notes to satisfy the Rating Criteria and any subsequent Prepayments in   
respect of such holder's Notes shall be placed in a separate subaccount relating
to such holder in the Advance Funding Account and shall be used by the Trustee  
to fund such holder's pro rata portion of any subsequent Borrowing on the Notes.
Amounts so placed in the Advance Funding Account shall, for all other purposes  
under this Indenture, be part of the Aggregate Undrawn Amount and such holder   
shall be entitled to receive the applicable Commitment Fee thereon. Amounts held
in each subaccount of the Advance Funding Account shall be invested in Cash     
Equivalents at the direction of the Issuer and the income received from such    
investments shall be remitted to such holder on each Payment Date. As soon as   
practical after the holder (or a transferee of such holder) satisfies the Rating
Criteria, any amounts remaining in the Advance Funding Account or the related   
subaccount thereof shall be refunded to the related holder along with any income
and proceeds thereon upon written notice to the                                 

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Trustee. Amounts in the Advance Funding Account shall not be the property of the
Issuer and shall not secure the payment of the Notes, but shall be applied only 
as provided herein.                                                             

Section 10.4.   Collateral Accounts.                                            

      The Collateral Agent shall, prior to the Closing Date, establish the
Custodial Account, the Escrow Account and the Liquidation Account (collectively,
the "Collateral Accounts") in accordance with the terms of the Pledge Agreement 
and shall maintain such accounts in accordance with the Pledge Agreement.       

Section 10.5.   Reports by Trustee.                                             

 The Trustee shall supply in a timely fashion to the Issuer, the
Custodian and the Investment Manager any information regularly maintained by the
Trustee in connection with the transactions described in this Indenture that the
Issuer may from time to time request with respect to the each Account and any   
other information reasonably needed and available in the Trustee's files in     
connection with the transactions described in this Indenture to complete the    
Valuation Statement. The Trustee shall also cause the amount of interest paid on
the Securities on each Payment Date to be communicated to DTC and Clearstream   
(as long as any of the Securities are listed thereon) by the Business Day       
immediately following such Payment Date.                                        

    Nothing in this Section 10.5 shall be construed to impose upon the
Trustee any duty to prepare any report or statement required under this Section 
10.5 or to calculate or compute information required to be set forth in any such
report or statement other than information regularly maintained by the Trustee  
by reason of its acting as Trustee hereunder.                                   

Section 10.6.   Accountings.                                                    

(a)    On each Business Day the Issuer shall in good faith (i)
calculate the Moody's Senior Advance Amount and the Moody's Total Advance Amount
using the Moody's Valuation Procedures using the most recent Market Value for   
each Fund Investment determined in accordance with the Moody's Collateral       
Valuation Schedule and (ii) calculate the S&P Senior Advance Amount and the S&P 
Total Advance Amount using the S&P Valuation Procedures using the most recent   
Market Value for each Fund Investment determined in accordance with the terms of
the S&P Collateral Valuation Schedule. All such calculations by the Issuer shall
be based upon information reflected on the books and records of the Issuer as of
2:00 p.m. New York time on each Business Day. The Market Value of each Fund     
Investment shall be calculated by the Issuer based on the Market Value Price    
from the most recent Valuation Statement (x) for purposes of the Moody's        
Valuation Procedures, when and as set forth in the Moody's Collateral Valuation 
Schedule and (y) for purposes of the S&P Valuation Procedures, when and as set  
forth in the S&P Collateral Valuation Schedule.                                 

      (b)    As soon as reasonably practicable, and in no event later than
five Business Days of each Reporting Date, the Issuer shall furnish to the      
Rating Agencies and the Trustee a Valuation Statement certified by the Issuer as
of such Reporting Date, which shall include:                                    

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                (i)     a schedule of all Fund Investments by issue and by Asset
Category included in the determination of the Senior Advance Amount and the     
Total Advance Amount, setting forth:                                            

             (A)     the current Market Value of each such Fund Investment
   and the original cost of each such Fund Investment;

             (B)     the written quotations from Approved Dealers, closing
           price or closing bid price on an Approved Exchange, and any
            Approved Third-Party Appraisal or quotation from an Approved
               Investment Banking Firm or other means used for calculating the
Market Value of each such Fund Investment;      

           (C)     to the extent applicable, information as to rating,
        maturity, the Yield-to-Worst, and whether each such Fund
        Investment was Performing as of such Reporting Date; and

              (D)     the Advance Rates applied to each such Fund Investment
               to derive the portion of the Senior Advance Amount or the Total
             Advance Amount, as applicable, attributable to each such Fund
Investment;                                     

           (ii)    a schedule of all Unquoted Investments owned by the
Issuer, setting forth the Market Value of each such Unquoted Investment and the 
date of the determination of such Market Value, its Asset Category, its cost    
and, when applicable, the value provided by an Approved Third-Party Appraisal or
Approved Investment Banking Firm and the date of determination of such value;   

               (iii)   the aggregate Market Value of all Eligible Investments,
setting forth a list of Excluded Investments and calculations of applicable     
Portfolio Limitations;                                                          

            (iv)    the calculation of the Senior Advance Amount and the
Total Advance Amount under the Moody's Collateral Valuation Schedule and the S&P
Collateral Valuation Schedule as of such date;                                  

              (v)     a schedule of the Secured Hedging Net Exposure of each
Secured Hedging Transaction then outstanding;                                   

          (vi)    a schedule of the aggregate amount of Indebtedness
incurred as permitted under Section 7.14 and outstanding;                       

       (vii)   a schedule of all of the assets sold with their
respective purchase and sale prices and the date of such purchase and sale of   
such assets sold;                                                               

        (viii)  a statement certifying that, except as otherwise
indicated on the Valuation Statement, the Issuer had determined the current     
Market Value of all Fund Investments using quotations provided since the date of
the immediately prior Valuation Statement;                                      

               (ix)    a schedule identifying all Unquoted Investments and the
Market Value thereof as determined by the Issuer in accordance with the         
Collateral Valuation Schedules; and                                             

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             (x)     a schedule identifying the Market Value of all of the
Fixed Income Investments that are the subject of any Short Sale Transaction.    

         The information provided hereunder identifying the Fund Investments and
Market Values and/or Market Value Prices therefor is intended solely for the    
purpose of credit analysis by the Holders. Each Holder agrees that it shall not 
use any such information for trading purposes or furnish such information to    
trading personnel or to any other Person for any purpose which is inconsistent  
with the foregoing restrictions or this Indenture.                              

        (c)    Notwithstanding the provisions of Section 10.6(b), in the event
that the Issuer in good faith determines that a market disruption makes it      
impracticable to deliver a Valuation Statement to be provided hereunder on its  
due date, the Issuer may deliver such Valuation Statement within four Business  
Days after its due date set forth herein and no Default in respect of Section   
10.6(b) shall occur or be deemed to occur for such four Business Days; provided 
that on such due date the Issuer shall have furnished to the Trustee and the    
Rating Agencies a written statement, certified by the Issuer as of each such    
date, that the Issuer reasonably believes that it is in compliance with the     
Over-Collateralization Tests.                                                   

       (d)    Not later than the Business Day following any Excess Date, the
Issuer will deliver to the Trustee and the Rating Agencies a supplement to the  
most recent Valuation Statement setting forth each of the items included in the 
Valuation Statement as of such Excess Date.                                     

     (e)    The Issuer's determination of the Senior Advance Amount, the
Total Advance Amount and the Market Value Price and the Market Value of Fund    
Investments pursuant to 10.6(a) and (b), respectively, in good faith shall be   
deemed correct for purposes of this Indenture, unless, within 30 days after     
receiving the applicable Valuation Statement, the Trustee acting at the         
direction of any Holder shall object in writing that such determination was made
in a manner inconsistent with the provisions of this Indenture and              
disadvantageous to the Holders or as having been calculated in error. In the    
event of any such dispute as to the calculation of the Senior Advance Amount,   
the Total Advance Amount or Market Value, as the case may be, the good faith,   
reasonable and mutually agreeable determination of the Majority of the Notes    
shall be conclusive.                                                            

(f)    Concurrently with the delivery of the statement of the 
Independent Public Accountant accompanying the consolidated financial statements
of the Issuer as of each fiscal year-end of the Issuer and for the fiscal year  
then ended (beginning with the fiscal year ended December 31, 2005), pursuant to
Section 7.23(d), the Issuer shall cause the Independent Public Accountant to    
provide a report as of such fiscal year-end containing information and          
calculations with respect to the Senior Advance Amount, the Total Advance Amount
and the Aggregate Liquidation Preference as of such fiscal year-end (an         
"Agreed-Upon Procedures Report") in a form acceptable to the Rating Agencies.   
The Issuer shall be responsible for the fees and expenses of the Independent    
Public Accountant for each Agreed-Upon Procedures Report as of each fiscal      
year-end of the Issuer.                                                         

Section 10.7.   Reports to Rating Agencies: Ratings Changes.                    

        In addition to the information and reports specifically required to be
provided to each Rating                                                         

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Agency pursuant to the terms of this Indenture, the Issuer shall provide each   
Rating Agency with all information or reports delivered to the Trustee          
hereunder, and such additional information as each Rating Agency may from time  
to time reasonably request and the Issuer determines in its sole discretion may 
be obtained and provided without unreasonable burden or expense. The Issuer     
shall promptly notify the Trustee if the rating on any of the Notes has been, or
it is known by the Issuer that such rating will be, changed or withdrawn.       

ARTICLE 11

 APPLICATION OF MONIES

Section 11.1.   Disbursements of Monies from Payment Account Prior to           
Liquidation Direction.                          

    (a)    Prior to a Liquidation Direction, the Issuer shall have the
right, subject to Section 2.1(c) of the Pledge Agreement, to direct the         
application of amounts deposited by the Issuer in the Payment Account; provided,
however, that in no event will the amount of any Administrative Expenses paid in
any year period measured from the Closing Date until the first anniversary of   
the Closing Date and each subsequent year period thereafter be in excess of the 
Administrative Expense Limit.                                                   

   (b)    Not later than 12:00 p.m., New York time, on or before the
Business Day preceding each Payment Date, the Issuer shall remit or cause to be 
remitted to the Trustee for deposit in the Payment Account an amount of Cash    
sufficient to pay the amounts described in Section 11.1(a) required to be paid  
on such Payment Date.                                                           

   (c)    If on any Payment Date the amount available in the Payment
Account from amounts received in the related Due Period is insufficient to make 
the full amount of the disbursements required to be made on such date, the      
Trustee shall make the disbursements according to the written direction of the  
Issuer given at least two Business Days prior to the Payment Date pursuant to   
Section 11.1(a) above to the extent funds are available therefor.               

(d)    In connection with the application of funds to pay     
Administrative Expenses of the Issuer in accordance with Section 11.1(a), the   
Trustee shall remit such funds as directed, to the extent available, to the     
appropriate vendor no later than each Payment Date.                             

Section 11.2.   Disbursements of Monies from Payment Account and Collection     
Account After Liquidation Direction.            

        After a Liquidation Direction, and notwithstanding any other provision
in this Indenture, all amounts, if any, in the Payment Account or the Collection
Account shall be delivered by the Trustee to the Collateral Agent to be         
disbursed by the Collateral Agent in accordance with the terms of the Pledge    
Agreement.                                                                      

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ARTICLE 12  

MISCELLANEOUS   

Section 12.1.   Form of Documents Delivered to Trustee.                         

       In any case where several matters are required to be certified by, or
covered by an opinion of; any specified Person, it is not necessary that all    
such matters be certified by, or covered by the opinion of, only one such       
Person, or that they be so certified or covered by only one document, but one   
such Person may certify or give an opinion with respect to some matters and one 
or more other such Persons as to other matters, and any such Person may certify 
or give an opinion as to such matters in one or several documents.              

      Any certificate or opinion of an Authorized Officer of the Issuer or
the Investment Manager may be based, insofar as it relates to legal matters,    
upon a certificate or opinion of, or representations by, counsel, unless such   
Authorized Officer knows, or in the exercise of reasonable care should know,    
that the certificate or opinion or representations with respect to the matters  
upon which its certificate or opinion is based are erroneous. Any such          
certificate of an Authorized Officer of the Issuer or the Investment Manager or 
Opinion of Counsel may be based, insofar as it relates to factual matters, upon 
a certificate or opinion of, or representations by, the Issuer, the Investment  
Manager or any other Person, stating that the information with respect to such  
factual matters is in the possession of the Issuer, the Investment Manager or   
such other Person, unless such Authorized Officer of the Issuer or such counsel 
knows that the certificate or opinion or representations with respect to such   
matters are erroneous. Any Opinion of Counsel may also be based, insofar as it  
relates to factual matters, upon a certificate or opinion of, or representations
by, an Authorized Officer of the Issuer, stating that the information with      
respect to such matters is in the possession of the Issuer, unless such counsel 
knows that the certificate or opinion or representations with respect to such   
matters are erroneous.                                                          

   Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other   
instruments under this Indenture, they may, but need not, be consolidated and   
form one instrument.                                                            

   Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition     
precedent to the taking of any action by the Trustee at the request or direction
of the Issuer, then notwithstanding that the satisfaction of such condition is a
condition precedent to the Issuer's rights to make such request or direction,   
the Trustee shall be protected in acting in accordance with such request or     
direction if it does not have knowledge of the occurrence and continuation of   
such Default or Event of Default as provided in Section 6.1(d).                 

Section 12.2.   Acts of Securityholders.                                        

        (a)    Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by       
Securityholders may be embodied in and evidenced by one or more instruments of  
substantially similar tenor signed by such Securityholders in person or by an   
agent duly appointed in writing; and, except as herein                          

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otherwise expressly provided, such action shall become effective when such      
instrument or instruments are delivered to the Trustee, and, where it is hereby 
expressly required, to the Issuer. Such instrument or instruments (and the      
action or actions embodied therein and evidenced thereby) are herein sometimes  
referred to as the "Act" of the Securityholders signing such instrument or      
instruments. Proof of execution of any such instrument or of a writing          
appointing any such agent shall be sufficient for any purpose of this Indenture 
and conclusive in favor of the Trustee and the Issuer, if made in the manner    
provided in this Section 12.2.                                                  

     (b)    The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee deems       
sufficient.                                                                     

       (c)    The principal amount and registered numbers of Securities held
by any Person, and the date of its holding the same, shall be proved by the     
Security Register.                                                              

        (d)    Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Securities shall bind the Holder    
(and any transferee thereof) of such Security and of every Security issued upon 
the registration thereof or in exchange therefor or in lieu thereof, in respect 
of anything done, omitted or suffered to be done by the Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such      
Security.                                                                       

   (e)    In exercising any of its or their voting rights, rights to
direct and consent or any other rights as a Securityholder under this Indenture,
subject to the terms and conditions of the Indenture, including, without        
limitation, Section 5.12, a Securityholder or Securityholders shall not have any
obligation or duty to any Person or to consider or take into account the        
interests of any Person and shall not be liable to any Person for any action    
taken by it or them or at its or their direction or any failure by it or them to
act or to direct that an action be taken, without regard to whether such action 
or inaction benefits or adversely affects any Securityholder, the Issuer, or any
other Person, except for any liability to which such Securityholder may be      
subject to the extent such liability results from such Securityholder's taking  
or directing an action, or failing to take or direct an action, in bad faith or 
in violation of the express terms of this Indenture.                            

    (f)    Any Securityholder shall have the right, upon five Business
Days' prior notice to the Trustee to obtain a complete list of Securityholders. 

Section 12.3.   Notices, etc., to Trustee, the Issuer, the Investment Manager,  
Moody's and S&P.                                

     Except as otherwise expressly provided herein, any request, demand,
authorization, direction, notice, consent, waiver, confirmation or Act of       
Securityholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with any of the parties indicated    
below shall be sufficient for every purpose hereunder if made, given, furnished 
or filed in writing to and mailed, by certified mail, return receipt requested, 
hand delivered, sent by overnight courier service guaranteeing next day delivery
or by telecopy in legible form at the following address (or at any other address
provided in writing by the relevant party):                                     

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       (a)    the Trustee at its Corporate Trust Office, telephone no. (713)
216-3583, telecopy no. (713) 216-2202, Attention: Worldwide Securities          
Services- York Enhanced Strategies Fund, LLC;                                   

       (b)    the Issuer at 767 Fifth Avenue, 17th Floor, New York, New York
10153, telephone no. (212) 300-1300, telecopy no. (212) 300-1301, Attention:    
Adam J. Semler;                                                                 

    (c)    the Investment Manager at 767 Fifth Avenue, 17th Floor, New
York, New York 10153, telephone no. (212) 300-1300, telecopy no. (212) 300-1301,
Attention: Adam J. Semler;                                                      

        (d)    the Placement Agents at Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, New York 10036, telephone no. (212) 761-4000, telecopy no.  
(212) 507-2790, Attention: Fatima Steiner;                                      

    (e)    Moody's at Moody's Investors Service, 99 Church Street, New
York, New York 10007, telecopy no. (212) 553-0355, cdomonitoring@moodys.com,    
Attention: CBO/CLO Monitoring;                                                  

         (f)    S&P at 55 Water Street, New York, New York, 10041, telephone no.
(212) 438-6234, telecopy no. (212) 438-2658, Attention: Market Value            
Surveillance; or                                                                

      (g)    each Secured Hedging Creditor at the address specified in the
relevant documents relating to the applicable Secured Hedging Transaction.      

Section 12.4.   Notices to Holders; Waiver.                                     

     Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of any event,                                    

(a)    such notice shall be sufficiently given to Holders of  
Securities, if in writing and mailed, first class postage prepaid, to each      
Holder of Securities, as the case may be, of any event, as affected by such     
event, at the address of such Holder as it appears in the Security Register, not
earlier than the earliest date and not later than the latest date, prescribed   
for the giving of such notice; and                                              

(b)    such notice shall be in the English language.          

    Such notices will be deemed to have been given on the date of such
mailing.                                                                        

The Trustee will deliver to the Holders of the Securities, any
information or notice requested in accordance with this Indenture to be so      
delivered by at least 25% of the Aggregate Outstanding Amount of the Securities.

    The Trustee shall deliver or cause to be delivered to each Secured
Hedging Creditor copies of all notices and reports delivered or caused to be    
delivered by the Issuer or the Trustee (including those to be delivered by the  
Investment Manager on behalf of the Issuer) to any Holder pursuant to terms     
hereof by the same means and simultaneously with the delivery thereof to such   
Holder.                                                                         

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         Neither the failure to mail any notice, nor any defect in any notice so
mailed, to any particular Holder of a Security shall affect the sufficiency of  
such notice with respect to other Holders of Securities. In case by reason of   
the suspension of regular mail service or by reason of any other cause it shall 
be impracticable to give such notice by mail, then such notification to Holders 
of Securities as shall be made with the approval of the Trustee shall constitute
a sufficient notification to such Holders for every purpose hereunder.          

         Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either      
before or after the event, and such waiver shall be the equivalent of such      
notice. Waivers of notice by Holders shall be filed with the Trustee and such   
filing shall be a condition precedent to the validity of any action taken in    
reliance upon such waiver.                                                      

Section 12.5.   Effect of Headings and Table of Contents.                       

       The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.              

Section 12.6.   Successors and Assigns.                                         

         All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not.                        

Section 12.7.   Separability.                                                   

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

Section 12.8.   Benefits of Indenture.                                          

       Nothing in this Indenture or in the Securities, expressed or implied,
shall give to any Person, other than the parties hereto and their successors    
hereunder, the Securityholders, the Investment Manager, and each Secured Hedging
Creditor (which shall be express third party beneficiaries of this Indenture)   
any benefit or any legal or equitable right, remedy or claim under this         
Indenture.                                                                      

Section 12.9.   Governing Law.                                                  

        THIS INDENTURE AND EACH SECURITY SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW).                                                                           

Section 12.10.  Submission to Jurisdiction.                                     

         The Issuer hereby irrevocably submits to the non-exclusive jurisdiction
of any New York State or federal court sitting in the Borough of Manhattan in   
The City of New York in any action or proceeding arising out of or relating to  
the Securities or this Indenture, and the Issuer hereby                         

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irrevocably agrees that all claims in respect of such action or proceeding may  
be heard and determined in such New York State or federal court. The Issuer     
hereby irrevocably waives, to the fullest extent that it may legally do so, the 
defense of an inconvenient forum to the maintenance of such action or           
proceeding. The Issuer irrevocably consents to the service of any and all       
process in any action or proceeding by the mailing or delivery of copies of such
process to it at the office of the Issuer's agent set forth in Section 7.2. The 
Issuer agrees that 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.                                            

Section 12.11.  Counterparts.                                                   

        This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts  
shall together constitute but one and the same instrument.                      

Section 12.12.  Limited Recourse.                                               

      The parties hereto hereby covenant and agree that, prior to the date
which is one year and one day or, if longer, the applicable preference period   
then in effect, after the payment in full of all outstanding commercial paper   
and any other debt securities of a Holder, rated by an internationally          
recognized agency, it will not institute against, or join any other person in   
instituting against, such Holder any bankruptcy, reorganization, arrangement,   
insolvency, or liquidation proceedings or other similar proceeding under the    
laws of any jurisdiction. The provisions of this Section 12.12 shall survive the
termination of this Indenture.                                                  

Section 12.13.  Acts of Issuer.                                                 

        Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or performed by the      
Issuer shall be effective if given or performed by the Issuer or by the         
Investment Manager on the Issuer's behalf.                                      

Section 12.14.  Waiver of Jury Trial.                                           

   The Trustee and the Issuer each hereby knowingly, voluntarily and
intentionally waives (to the extent permitted by applicable law) any rights it  
may have to a trial by jury in respect of any litigation based hereon, or       
arising out of under, or in connection with, this Indenture, the Securities or  
any other related documents, or any course of conduct, course of dealing,       
statements (whether verbal or written), or actions of the Trustee or the Issuer.
This provision is a material inducement for the Trustee and the Issuer to enter 
into this Indenture.                                                            

Section 12.15.  Escheat.                                                        

         In the absence of a written request from the Issuer to return unclaimed
funds to the Issuer, the Trustee shall from time to time following the final    
Payment Date with respect to the Securities deliver all unclaimed funds to or as
directed by applicable escheat authorities, as determined by the Trustee in its 
sole discretion, in accordance with the customary practices and procedures of   
the Trustee. Any unclaimed funds held by the Trustee pursuant to this Section   
12.15 shall be held uninvested and without any liability for interest.          

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

                                              YORK ENHANCED STRATEGIES FUND, LLC

                                              By:_______________________________
                           Name:
                            Title:

                                         JPMORGAN CHASE BANK, NATIONAL
                                   ASSOCIATION, as Trustee

                                              By:_______________________________
                           Name:
                            Title:

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SCHEDULE A

MOODY'S COLLATERAL VALUATION SCHEDULE 

CALCULATION OF MOODY'S ADVANCE AMOUNT.                                          

     "Moody's Advance Rate" means the Moody's Senior Advance Rate or the
Moody's Total Advance Rate, as applicable.                                      

      "Moody's Senior Advance Rate" means, for purposes of determining the
Senior Over-Collateralization Test, for each Moody's Asset Category, the        
percentage specified in the table below opposite such Moody's Asset Category:   

                                                                [Download Table]

    MOODY'S                        MOODY'S Aaa 
ASSET CATEGORY                    ADVANCE RATE 
--------------                    -------------
                                               
      A-1                           100.00%    
      A-2                            97.00%    
      A-3                            91.75%    
      A-4                            79.75%    
      A-5                            69.25%    
      A-6                            63.75%    
      B-1                            89.00%    
      B-2                            87.70%    
      B-3                            75.25%    
      B-4                            81.50%    
      B-5                            79.00%    
      B-6                            59.00%    
      B-7                            73.00%    
      B-8                            68.75%    
      B-9                            54.50%    
     B-10                            48.50%    
      C-1                            91.00%    
      C-2                            79.75%    
      C-3                            83.75%    
      C-4                            71.25%    
      C-5                            66.75%    
      C-6                            52.25%    
      D-1                            80.00%    
      D-2                            73.00%    
      D-3                            70.00%    
      D-4                            64.75%    
      D-5                            48.00%    
      D-6                            44.50%    
      E-1                            72.00%    
      E-2                            66.75%    
      E-3                            61.00%    
      E-4                            57.75%    
      E-5                            35.50%    
      E-6                            35.50%    
      F-1                            53.50%    
      F-2                            50.25%    

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                                                                [Download Table]

    MOODY'S                        MOODY'S Aaa 
ASSET CATEGORY                    ADVANCE RATE 
--------------                    -------------
                                               
      F-3                            42.25%    
      F-4                            42.25%    
      F-5                            25.25%    
      F-6                            25.25%    
      G-1                            57.00%    
      G-2                            47.75%    
      G-3                            40.75%    
      G-4                            29.75%    
      H-1                            24.50%    
      H-2                            22.25%    
      H-3                            18.75%    
      H-4                            15.75%    
      I-1                            58.75%    
      I-2                            39.25%    
      I-3                            19.25%    
     J-1(A)                          33.00%    
     J-1(B)                          18.00%    
      J-2                            20.25%    
      J-3                            14.25%    
      J-4                            26.25%    

     "Moody's Total Advance Rate" means, for purposes of determining the
Total Over-Collateralization Test, for each Moody's Asset Category, the         
percentage specified in the table below opposite such Moody's Asset Category:   

                                                                [Download Table]

    MOODY'S                        MOODY'S Aa2
ASSET CATEGORY                    ADVANCE RATE
--------------                    ------------
                                              
      A-1                           100.00%   
      A-2                            97.50%   
      A-3                            93.00%   
      A-4                            82.75%   
      A-5                            73.50%   
      A-6                            67.50%   
      B-1                            90.50%   
      B-2                            89.50%   
      B-3                            79.25%   
      B-4                            85.25%   
      B-5                            83.25%   
      B-6                            66.25%   
      B-7                            78.75%   
      B-8                            74.00%   
      B-9                            61.75%   
     B-10                            55.00%   
      C-1                            93.00%   
      C-2                            84.25%   
      C-3                            86.75%   
      C-4                            76.50%   
      C-5                            71.50%   
      C-6                            55.75%   

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                                                                [Download Table]

    MOODY'S                        MOODY'S Aa2
ASSET CATEGORY                    ADVANCE RATE
--------------                    ------------
                                              
      D-1                            83.75%   
      D-2                            78.00%   
      D-3                            74.50%   
      D-4                            70.00%   
      D-5                            52.00%   
      D-6                            48.00%   
      E-1                            77.00%   
      E-2                            72.50%   
      E-3                            66.75%   
      E-4                            63.70%   
      E-5                            39.25%   
      E-6                            39.25%   
      F-1                            60.75%   
      F-2                            57.75%   
      F-3                            49.00%   
      F-4                            49.00%   
      F-5                            29.50%   
      F-6                            29.50%   
      G-1                            60.75%   
      G-2                            52.00%   
      G-3                            47.00%   
      G-4                            34.25%   
      H-1                            31.25%   
      H-2                            28.50%   
      H-3                            25.50%   
      H-4                            21.50%   
      I-1                            62.75%   
      I-2                            45.00%   
      I-3                            24.50%   
     J-1(A)                          44.00%   
     J-1(B)                          24.50%   
      J-2                            20.50%   
      J-3                            14.75%   
      J-4                            27.00%   

         "Moody's Advance Amount" means the Moody's Senior Advance Amount or the
Moody's Total Advance Amount, as applicable. Notwithstanding the foregoing or   
anything in the definitions of Moody's Senior Advance Amount or Moody's Total   
Advance Amount, for purposes of determining the Moody's Advance Amount,         

     (a)    the Market Value of any Unhedged Foreign Investment shall be
95% of the Market Value thereof otherwise determined in accordance with the     
above procedures; provided that, if the Foreign Issuer of such Unhedged Foreign 
Investment is from a country whose sovereign debt rating in a non-local currency
is not assigned a rating of "Aa2" or better by Moody's (and, if rated "Aa2" by  
Moody's, such rating has not been placed on a credit watch with negative        
implications by Moody's), the Market Value of such Unhedged Foreign Investment  
shall be 85% of the Market Value thereof otherwise determined in accordance with
the above procedures;                                                           

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         (b)    the percentage applicable above to Cash in a currency other than
Dollars shall be 95% (and not 100%; provided that, if such Cash is the currency 
of a country whose sovereign debt rating in a non-local currency is not assigned
a rating of "Aa2" or better by Moody's (and, if rated "Aa2" by Moody's, such    
rating has not been placed on a credit watch with negative implications by      
Moody's), the applicable percentage shall be 85%, unless such Cash is protected 
against currency fluctuations as a result of Currency Hedging Transactions, in  
which case, the percentage applicable shall be 100%;                            

   (c)    the Market Value of any Structured Product Transaction, if
positive, shall be 95% of the Market Value thereof otherwise determined in      
accordance with the above procedures and, in the case of any Structured Product 
Transaction in which the Issuer purchases a CDS, the full amount of the premiums
to be paid by the Issuer for the duration of such CDS will be deducted from the 
Market Value of such Structured Product Transaction; and                        

        (d)    with respect to any Fund Investments in any Foreign Issuer from
a country that becomes an Ineligible Country after the Issuer has invested in   
such Fund Investment (and such Fund Investment does not have a guarantor located
in a currently Eligible Country), so long as such Fund Investment is not an     
Excluded Investment under clause (viii) of the definition thereof, the Market   
Value of such Fund Investment shall be 90% of the Market Value thereof otherwise
determined in accordance with the above procedures.                             

    For purposes of calculating the Moody's Advance Amount, the Issuer
shall assign each Eligible Investment to one of the following categories (each, 
a "Moody's Asset Category") commencing upon the initial acquisition thereof     
(and, for purposes of this categorization, the Market Value Price of a Fund     
Investment trading at par is equal to $1.00):                                   

"Asset Category A-1 Investments" means (a) Cash and (b) Cash  
Equivalents described in clause (vi) of the definition of such term and (c) Cash
Equivalents described in clauses (i), (ii), (iii) or (iv) of the definition of  
such term that mature on the Business Day next following the date of acquisition
thereof or, in the case of any money market accounts, are payable on demand of  
the holder or within one Business Day of demand.                                

     "Asset Category A-2 Investments" means Cash Equivalents (other than
Cash in U.S. dollars, U.S. Government Securities and Cash Equivalents described 
in clauses (b) or (c) of the definition of Asset Category A-1 Investments) and  
U.S. Government Securities with maturities of less than or equal to 183 days.   

        "Asset Category A-3 Investments" means U.S. Government Securities with
final maturities more than 183 days but less than or equal to two (2) years.    

        "Asset Category A-4 Investments" means U.S. Government Securities with
final maturities more than two (2) years but less than or equal to ten (10)     
years.                                                                          

        "Asset Category A-5 Investments" means U.S. Government Securities with
final maturities more than ten (10) years but less than or equal to twenty (20) 
years.                                                                          

        "Asset Category A-6 Investments" means U.S. Government Securities with
final maturities more than twenty (20) years but less than or equal to thirty   
(30) years.                                                                     

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 "Asset Category B-1 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.90 and   
(iii) are rated "Ba3" or better by Moody's.                                     

 "Asset Category B-2 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.90 and   
(iii) are rated "B1", "B2" or "B3" by Moody's.                                  

 "Asset Category B-3 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.90 and   
(iii) are rated "Caa1" or lower by Moody's or are not rated by Moody's.         

 "Asset Category B-4 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.80 and   
less than $0.90 and (iii) are rated "Ba3" or better by Moody's.                 

 "Asset Category B-5 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.80 and   
less than $0.90 and (iii) are rated "B 1", "B2" or "B3" by Moody's.             

 "Asset Category B-6 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.80 and   
less than $0.90 and (iii) are rated "Caa1" or lower by Moody's or are not rated 
by Moody's.                                                                     

 "Asset Category B-7 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.70 and   
less than $0.80 and (iii) are rated "Ba3" or better by Moody's.                 

 "Asset Category B-8 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.70 and   
less than $0.80 and (iii) are rated "B1", "B2" or "B3" by Moody's.              

 "Asset Category B-9 Investments" means Bank Loans which (i) are
Performing, (ii) have a Market Value Price greater than or equal to $0.70 and   
less than $0.80 and (iii) are rated "Caa1" or lower by Moody's or are not rated 
by Moody's.                                                                     

  "Asset Category B-10 Investments" means Bank Loans which (i) are
Performing and (ii) have a Market Value Price less than $0.70.                  

       "Asset Category C-1 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of five (5) years or less and (iv) are rated "Baa3" or better by 
Moody's.                                                                        

       "Asset Category C-2 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of five (5) years or less and (iv) are rated "Baa3" or better by 
Moody's.                                                                        

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       "Asset Category C-3 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of more than five (5) years and less than or equal to ten (10)   
years and (iv) are rated "Baa3" or better by Moody's.                           

       "Asset Category C-4 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of more than five (5) years and less than or equal to ten (10)   
years and (iv) are rated "Baa3" or better by Moody's.                           

       "Asset Category C-5 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of more than ten (10) years and (iv) are rated "Baa3" or better  
by Moody's.                                                                     

       "Asset Category C-6 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of more than ten (10) years and (iv) are rated "Baa3" or better  
by Moody's.                                                                     

       "Asset Category D-1 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of five (5) years or less and (iv) are rated "Ba1", "Ba2" or     
"Ba3" by Moody's.                                                               

       "Asset Category D-2 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of five (5) years or less and (iv) are rated "Ba1", "Ba2" or     
"Ba3" by Moody's.                                                               

       "Asset Category D-3 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of more than five (5) years and less than or equal to ten (10)   
years and (iv) are rated "Ba1", "Ba2" or "Ba3" by Moody's.                      

       "Asset Category D-4 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of more than five (5) years and less than or equal to ten (10)   
years and (iv) are rated "Ba1", "Ba2" or "Ba3" by Moody's.                      

       "Asset Category D-5 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of more than ten (10) years and (iv) are rated "Bal", "Ba2" or   
"Ba3" by Moody's.                                                               

       "Asset Category D-6 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing,                                                   

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(ii) pay interest at a fixed rate, (iii) have a final maturity of more than ten 
(10) years and (iv) are rated "Bal", "Ba2" or "Ba3" by Moody's.                 

       "Asset Category E-1 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of five (5) years or less and (iv) are rated "B1", "B2" or "B3"  
by Moody's.                                                                     

       "Asset Category E-2 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of five (5) years or less and (iv) are rated "B1", "B2" or "B3"  
by Moody's.                                                                     

       "Asset Category E-3 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of more than five (5) years and less than or equal to ten (10)   
years and (iv) are rated "B1", "B2" or "B3" by Moody's.                         

       "Asset Category E-4 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of more than five (5) years and less than or equal to ten (10)   
years and (iv) are rated "B1", "B2" or "B3" by Moody's.                         

       "Asset Category E-5 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of more than ten (10) years and (iv) are rated "B1", "B2" or "B3"
by Moody's.                                                                     

       "Asset Category E-6 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of more than ten (10) years and (iv) are rated "B1", "B2" or "B3"
by Moody's.                                                                     

       "Asset Category F-1 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of five (5) years or less and (iv) are rated "Caa1" or lower by  
Moody's or are not rated by Moody's.                                            

       "Asset Category F-2 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of five (5) years or less and (iv) are rated "Caa1" or lower by  
Moody's or are not rated by Moody's.                                            

       "Asset Category F-3 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of more than five (5) years and less than or equal to ten (10)   
years and (iv) are rated "Caa1" or lower by Moody's or are not rated by Moody's.

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       "Asset Category F-4 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of more than five (5) years and less than or equal to ten (10)   
years and (iv) are rated "Caa1" or lower by Moody's or are not rated by Moody's.

       "Asset Category F-5 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a floating rate, (iii) have a
final maturity of more than ten (10) years and (iv) are rated "Caa1" or lower by
Moody's or are not rated by Moody's.                                            

       "Asset Category F-6 Investments" means High Yield Bonds and Mezzanine
Investments (other than Preferred Stock) which are not convertible securities   
and which (i) are Performing, (ii) pay interest at a fixed rate, (iii) have a   
final maturity of more than ten (10) years and (iv) are rated "Caa1" or lower by
Moody's or are not rated by Moody's.                                            

         "Asset Category G-1 Investments" means convertible High Yield Bonds and
convertible Mezzanine Investments (other than Preferred Stock) which (i) are    
Performing and (ii) are rated "Baa3" or better by Moody's.                      

         "Asset Category G-2 Investments" means convertible High Yield Bonds and
convertible Mezzanine Investments (other than Preferred Stock) which (i) are    
Performing and (ii) are rated "Ba1", "Ba2" or "Ba3" by Moody's.                 

         "Asset Category G-3 Investments" means convertible High Yield Bonds and
convertible Mezzanine Investments (other than Preferred Stock) which (i) are    
Performing and (ii) are rated "B1", "B2" or "B3" by Moody's.                    

         "Asset Category G-4 Investments" means all other convertible High Yield
Bonds and convertible Mezzanine Investments (other than Preferred Stock) which  
are Performing.                                                                 

    "Asset Category H-1 Investments" means convertible Preferred Stock
which (i) is Performing and (ii) is publicly issued Preferred Stock.            

     "Asset Category H-2 Investments" means Preferred Stock which is not
convertible Preferred Stock and which (i) is Performing and (ii) is publicly    
issued Preferred Stock.                                                         

    "Asset Category H-3 Investments" means convertible Preferred Stock
which (i) is Performing and (ii) is privately issued Preferred Stock.           

     "Asset Category H-4 Investments" means Preferred Stock which is not
convertible Preferred Stock and which (i) is Performing and (ii) is privately   
issued Preferred Stock.                                                         

 "Asset Category I-1 Investments" means Bank Loans which (i) are
non-Performing and (ii) have a Market Value Price greater than or equal to      
$0.85.                                                                          

 "Asset Category I-2 Investments" means Bank Loans which (i) are
non-Performing and (ii) have a Market Value Price less than $0.85.              

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       "Asset Category I-3 Investments" means High Yield Bonds and Mezzanine
Investments (convertible and non-convertible) and Preferred Stock, in each case,
which are non-Performing.                                                       

       "Asset Category J-1 (A) Investments" means Equity Securities that are
issued by companies that are included in the S&P 500.                           

       "Asset Category J-1 (B) Investments" means Equity Securities that are
issued by companies that are not included in the S&P 500.                       

         "Asset Category J-2 Investments" means Private Equity Securities (other
than Preferred Stock).                                                          

"Asset Category J-3 Investments" means CDO Debt Securities and
Structured Product Transactions (other than Fully Collateralized Structured     
Product Transactions) and Fund Investments (other than Preferred Stock) in      
Mezzanine Investments not otherwise described in any of the preceding Asset     
Categories.                                                                     

       "Asset Category J-4 Investments" means Fund Investments in Bank Loans
or High Yield Bonds not otherwise described in any of the preceding Asset       
Categories.                                                                     

      Rating Procedures. References herein to any rating by Moody's or S&P
shall include ratings determined by such Rating Agency or in accordance with    
guidelines approved by such Rating Agency (including, in the case of Moody's,   
Moody's Rating Correlation Procedures) and shall also be deemed to include an   
equivalent rating in a successor rating category of Moody's or S&P, as the case 
may be, or if neither of Moody's or S&P is in the business of rating securities,
an equivalent rating from another Rating Agency. Notwithstanding the foregoing, 
for so long as Moody's is in the business of rating securities, unless the      
Rating Agency Condition with respect to Moody's shall have been satisfied or the
Fund Investment in question is issued by Moody's or any Affiliate of Moody's,   
the Moody's Rating Correlation Procedures shall be applied.                     

Notwithstanding any other provision contained above:          

             (i)     for purposes of determining whether a Fund Investment
falls within a specific Moody's Asset Category, to the extent that any Fund     
Investment would fall in more than one of the Moody's Asset Categories, such    
Fund Investment shall be deemed to fall into the Moody's Asset Category with the
lowest specified Moody's Advance Rate unless the Credit Enhancer otherwise      
agrees and the Rating Agency Condition with respect to Moody's has been         
satisfied;                                                                      

             (ii)    Fund Investments that are CDO Debt Securities will be
assigned to an Asset Category for High Yield Bonds using a rating that is (i)   
one rating category (i.e., three rating subcategories) below the Moody's rating,
if such CDO Debt Security is rated by Moody's, and (ii) two rating categories   
(i.e., six rating subcategories) below the actual public S&P's rating, if such  
CDO Debt Security is not rated by Moody's but is publicly rated by S&P;         

            (iii)   any Fund Investments constituting Busted Convertible
Bonds shall be deemed to fall into the Moody's Asset Category into which such   
Fund Investment would otherwise fall if it were not a convertible security;     
provided that the Market Value of any Busted                                    

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Convertible Bonds shall be 95% of the Market Value thereof otherwise            
determined in accordance with the valuation procedures set forth herein;        

               (iv)    for the purpose of determining the Moody's Advance Rate
applicable to a Fully Collateralized Structured Product Transaction, such Fully 
Collateralized Structured Product Transaction shall be deemed to fall into the  
Moody's Asset Category of its reference obligation; all other Structured Product
Transactions shall be Moody's Asset Category J-3 Investments;                   

               (v)     for the purpose of determining the Moody's Advance Rate
applicable to Fund Investments that are Hedging and Short Sale Transactions, at 
any time during the 60-day time period described in clause (vii) of the         
definition of Excluded Investments below, the Moody's Advance Rate will be 90%  
of the Moody's Advance Rate calculated for such Fund Investment pursuant to the 
Moody's Advance Rate table in the definition of Moody's Advance Rate above; and 

               (vi)    for the purpose of determining the Moody's Advance Rate
applicable to Fund Investments in Bank Loan Participations at any time during   
the 60-day time period described in clause (vii) of the definition of Excluded  
Investments below, the Moody's Advance Rate will be 90% of the Moody's Advance  
Rate, calculated for such Fund Investment pursuant to the Moody's Advance Rate  
table above.                                                                    

       "Moody's Senior Advance Amount" as of any date of determination under
the Senior Over-Collateralization Test, means an amount equal to the sum of (i) 
the aggregate for all Eligible Investments (other than Short Sale Transactions  
and Warrant/Option Investments) determined for each such Eligible Investment by 
multiplying (1) the Market Value (determined as described below) of such        
Eligible Investment (determined as described below) by (2) the Moody's Senior   
Advance Rate for the Moody's Asset Category applicable to such Eligible         
Investment under the Senior Over-Collateralization Test, (ii) the aggregate     
Secured Hedging Advance Amounts as of such date, (iii) the Defensive Hedge      
Advance Amount as of such date, (iv) the Moody's Warrant/Option Advance Amount  
as of such date, (v) the Moody's Net Accrual Amount as of such date, and (vi)   
the Aggregate Short Sale Advance Amount as of such date.                        

      "Moody's Total Advance Amount" as of any date of determination under
the Total Over-Collateralization Test, means an amount equal to the sum of (i)  
the aggregate for all Eligible Investments (other than Short Sale Transactions  
and Warrant/Option Investments) determined for each such Eligible Investment by 
multiplying (1) the Market Value (determined as described below) of such        
Eligible Investment (determined as described below) by (2) the Moody's Total    
Advance Rate for the Moody's Asset Category applicable to such Eligible         
Investment under the Total Over-Collateralization Test, (ii) the aggregate      
Secured Hedging Advance Amounts, as of such date, (iii) the Defensive Hedge     
Advance Amount as of such date, (iv) the Moody's Warrant/Option Advance Amount  
as of such date, (v) the Moody's Net Accrual Amount as of such date, and (vi)   
the Aggregate Short Sale Advance Amount as of such date.                        

DETERMINATION OF FUND INVESTMENTS CONSTITUTING ELIGIBLE INVESTMENTS             

        "Eligible Investments" means, at any date, all Fund Investments in the
Collateral on such date other than Excluded Investments.                        

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"Excluded Investments" means (without duplication):           

            (i)     Fund Investments to the extent that they are (A) not
subject to a perfected security interest (subject in priority only to any liens 
permitted under the Indenture) in favor of the Collateral Agent for its benefit 
and the benefit of the other Secured Parties (as defined in the Pledge and      
Intercreditor Agreement) or (B) subject to any Liens other than Permitted Liens 
(the terms "Liens" and "Permitted Liens" as used in this Schedule have the      
meanings ascribed thereto under the Indenture); provided, however, that Liens on
Cash or other Fund Investments held in a Short Sale Customer Account or a Short 
Sale Broker Account shall not be Permitted Liens for purposes of this definition
and Cash or Fund Investments held in any Short Sale Customer Account or Short   
Sale Broker Account shall be Excluded Investments;                              

(ii)    Excess Fund Investments;                

         (iii)   Fund Investments that have been borrowed or lent;

                (iv)    Fund Investments denominated in any currency (A) that is
not a currency freely convertible into Dollars or (B) that is subject to any    
currency exchange restrictions;                                                 

               (v)     Fund Investments denominated in any currency other than
Dollars or Eligible Foreign Currencies, unless at the time of purchase of such  
Fund Investments denominated in any currency other than Dollars or Eligible     
Foreign Currencies, at least 100% of the Market Value of such Fund Investments  
is protected against currency fluctuations pursuant to Currency Hedging         
Transactions;                                                                   

          (vi)    Fund Investments in CDO Debt Securities unless the
applicable agreements governing such CDO Debt Securities do not permit the      
issuer of such CDO Debt Securities to purchase a security issued by a Foreign   
Issuer from a country whose unsupported sovereign non-local currency debt       
obligations are not assigned a rating of "Aa2" or better by Moody's if after    
giving effect to such purchase more than 5% of the total funded debt and        
contributed equity capitalization of the issuer of such CDO Debt Securities     
would be invested in countries whose unsupported sovereign non-local currency   
debt obligations are not assigned a rating of "Aa2" or better by Moody's;       

               (vii)   Fund Investments in any Bank Loan Participation held by
the Issuer for more than 60 consecutive days during any period while the        
participating entity has a long-term debt-rating of below "A3" by Moody's       
(unless the obligation of such participating entity is guaranteed by an entity  
whose long-term debt obligations are rated "A3" or better by Moody's (and, if   
rated "A3" by Moody's, such rating has not been placed in a credit watch with   
negative implications by Moody's);                                              

      (viii)  Fund Investments in any Foreign Issuer from an
Ineligible Country (unless the applicable Fund Investment is unconditionally and
irrevocably guaranteed by a guarantor located in a currently Eligible Country); 
provided, that if a country becomes an Ineligible Country after the Issuer has  
invested in a Fund Investment relating to such country (and such Fund Investment
does not have a guarantor located in a currently Eligible Country), such Fund   
Investment will not be subject to this clause (viii) until such country has been
an Ineligible Country for 180 consecutive days;                                 

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            (ix)    Fund Investments in CDO Debt Securities issued by an
issuer for which the Investment Manager or any of its Affiliates acts as the    
collateral manager or investment manager or in any comparable capacity;         

            (x)     Fund Investments in securities issued by the Issuer;

      (xi)    Fund Investments in any Hedging and Short Sale
Transaction held by the Issuer for more than 60 consecutive days during any     
period while the counterparty to such Hedging and Short Sale Transaction has a  
long-term debt-rating of lower than "A3" by Moody's (unless the obligations of  
such counterparty are guaranteed by an entity whose long-term debt rating is    
"A3" or higher by Moody's) (in each case, if rated "A3" by Moody's, such rating 
has not been placed in a credit watch with negative implications by Moody's);   

  (xii)   Fund Investments in CDO Equity Securities;

           (xiii)  Fund Investments in catastrophe bonds and any other
non-credit risk securities; and                                                 

             (xiv)   Fund Investments not otherwise expressly described in
the Asset Categories above.                                                     

      Excluded Investments are excluded from the calculation of the Market
Value of the Collateral for purposes of the Moody's Valuation Procedures;       
however, the Collateral may include Excluded Investments.                       

APPLICATION OF PORTFOLIO LIMITATIONS                                            

        "Portfolio Limitations" means, at any applicable date of determination
(determined without duplication):                                               

             (i)     the aggregate Market Value of Fund Investments in any
single issuer in excess of 5% of Total Capitalization; provided, however, that  
the foregoing 5% limit will be increased, up to a maximum of 7.5% (not to       
include any Non-Cash Pay Instruments, any Non-Performing Instruments or any     
Company Investments (other than Equity Securities) that are rated "Caal" or     
lower by Moody's), for each of any three issuers;                               

         (ii)    the aggregate Market Value of Fund Investments in
issuers in any single Industry in excess of 15% of Total Capitalization;        
provided, however, that the foregoing 15% limit will be excepted, up to a       
maximum of 20%, for each of any two Industry classifications;                   

             (iii)   the aggregate Market Value of Fund Investments in all
Semi-Liquid Investments, Illiquid Investments and Non-Cash Pay Instruments in   
excess of 45% of Total Capitalization;                                          

             (iv)    the aggregate Market Value of Fund Investments in all
Illiquid Investments in excess of 20% of Total Capitalization;                  

      (v)     the aggregate Market Value of Fund Investments
consisting of(a) Bank Loan Participations wherein the participating entities (or
the entities guaranteeing the obligations                                       

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of such participating entities) with the same rating by Moody's                 
in excess of the applicable percentage of Total Capitalization set forth in the 
table below (or such greater percentage approved by the Credit Enhancer and with
respect to which the Rating Agency Condition with respect to Moody's has been   
satisfied), and (c) Bank Loan Participations wherein the total exposure to any  
single participating entity is in excess of the applicable percentage of Total  
Capitalization set forth in the table below (or such greater percentage approved
by the Credit Enhancer and with respect to which the Rating Agency Condition    
with respect to Moody's has been satisfied);                                    

                                                        [Enlarge/Download Table]

----------------------------------------  --------------------------------------  --------------------------------------
          LONG TERM RATING OF                          ANY SINGLE                               AGGREGATE               
        PARTICIPATING ENTITIES                 PARTICIPATING ENTITY LIMIT             PARTICIPATING ENTITIES LIMIT      
----------------------------------------  --------------------------------------  --------------------------------------
                                                                                                                        
                  Aaa                                     7.5%                                    20.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa1                                     7.5%                                    20.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa2                                     7.5%                                    20.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa3                                     7.5%                                    15.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  A1                                      5.0%                                    15.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  A2                                      2.5%                                    10.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  A3*                                     2.5%                                    5.0%                  
----------------------------------------  --------------------------------------  --------------------------------------
             Baa1 or lower                                0.0%                                    0.0%                  
----------------------------------------  --------------------------------------  --------------------------------------

      Notwithstanding the foregoing, in no event will the aggregate Market
Value of the Bank Loan Participations exceed 20% of Total Capitalization at any 
time.                                                                           

_________________________________                                               
* The percentages in this row apply only if such rating is not on a credit watch
with negative implications by Moody's. If such rating is on a credit watch with 
negative implications by Moody's, both the individual and the aggregate         
percentage limits shall be zero.                                                

                (vi)   the aggregate Market Value of Fund Investments consisting
of (a) Hedging and Short Sale Transactions wherein the counterparties (or the   
entities guaranteeing the obligations of such counterparties) with the same     
rating by Moody's in excess of the applicable percentage of Total Capitalization
set forth below (or such greater percentage approved by the Credit Enhancer and 
the Trustee and with respect to which the Rating Agency Condition with respect  
to Moody's has been satisfied) and (b) Hedging and Short Sale Transactions      
wherein the total exposure to any single counterparty is in excess of the       
applicable percentage of Total Capitalization set forth in the table below (or  
such greater percentage approved by the Credit Enhancer and the Trustee and with
respect to which the Rating Agency Condition with respect to Moody's has been   
satisfied);                                                                     

                                                        [Enlarge/Download Table]

----------------------------------------  --------------------------------------  --------------------------------------
          LONG TERM RATING OF                          ANY SINGLE                               AGGREGATE               
            COUNTERPARTIES                         COUNTERPARTY LIMIT                     COUNTERPARTIES LIMIT          
----------------------------------------  --------------------------------------  --------------------------------------
                                                                                                                        
                  Aaa                                     7.5%                                    20.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa1                                     7.5%                                    20.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa2                                     7.5%                                    20.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa3                                     7.5%                                    15.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  A1                                      5.0%                                    15.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  A2                                      2.5%                                    10.0%                 
----------------------------------------  --------------------------------------  --------------------------------------
                  A3*                                     2.5%                                    5.0%                  
----------------------------------------  --------------------------------------  --------------------------------------
             Baa1 or lower                                0.0%                                    0.0%                  
----------------------------------------  --------------------------------------  --------------------------------------

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      Notwithstanding the foregoing, in no event will the aggregate Market
Value of Hedging and Short Sale Transactions exceed 20% of Total Capitalization 
at any time.                                                                    

_________________________________                                               
* The percentages in this row apply only if such rating is not on a credit watch
with negative implications by Moody's. If such rating is on a credit watch with 
negative implications by Moody's, both the individual and the aggregate         
percentage limits shall be zero.                                                

      (vii)   the aggregate Market Value of Fund Investments
(calculated using the absolute value of each Fund Investment) consisting of     
Structured Product Transactions in excess of 10% of Total Capitalization;       

      (viii)  the aggregate Market Value of Fund Investments
consisting of Non-Performing Instruments in excess of 25% of Total              
Capitalization;                                                                 

      (ix)    the aggregate Market Value of Fund Investments
consisting of convertible securities in excess of 25% of Total Capitalization;  

      (x)     the aggregate Market Value of Fund Investments
consisting of CDO Debt Securities in excess of 5% of Total Capitalization;      

               (xi)    the aggregate Market Value of Fund Investments that are
Preferred Stock in excess of 15% of Total Capitalization;                       

      (xii)   the aggregate Market Value of Fund Investments
consisting of(A) Private Equity Securities of any single issuer in excess of 3% 
of Total Capitalization; provided that the foregoing 3% limit will be increased,
up to a maximum of 4%, for each of any two issuers of Private Equity Securities;
provided, further, that the foregoing 4% limit will be increased, up to a       
maximum of 5%, for one of such two issuers of Private Equity Securities; and (B)
Private Equity Securities in excess of 10% of Total Capitalization;             

               (xiii)  the aggregate Market Value of Fund Investments that are
Asset-Backed Securities in excess of 5% of Total Capitalization;                

               (xiv)   the aggregate Market Value of Fund Investments that are
Dollar-denominated investments (A) in Foreign Issuers domiciled in Designated   
Countries in excess of 10% of Total Capitalization and (B) in any single Foreign
Issuer domiciled in a Designated Country in excess of 5% of Total               
Capitalization;                                                                 

               (xv)    the aggregate Market Value of Fund Investments that are
non-Dollar-denominated investments in excess of 10% of Total Capitalization;    

               (xvi)   the aggregate Market Value of Fund Investments that are
Equity Securities in excess of 20% of Total Capitalization; and                 

               (xvii)  the aggregate Market Value of Fund Investments that are
(determined without duplication) Non-Performing Instruments, Equity Securities  
and Fund Investments that are rated "Caal" or lower by Moody's in excess of 50% 
of Total Capitalization.                                                        

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Notwithstanding the foregoing:                                

           (A)     in the event that a Fund Investment is reclassified
    after its acquisition by the Issuer, for purposes of
      calculating the Moody's Advance Amount, the exclusions
      described above in  clauses (iii) and (iv), that would
           otherwise become applicable following such reclassification
          will not apply to assets owned by the Issuer (or which the
            Issuer had committed to purchase) on or prior to the date of
such reclassification until 30 days after such  
             reclassification but shall apply (on a pro forma basis giving
            effect to such reclassification for all Fund Investments) to
       any asset acquired by the Issuer after the date of such
      reclassification which the Issuer had not committed to
          purchase on or prior to the date of such reclassification;

             (B)     for purposes of clause (i) above, a Related Person of
        any Person shall be considered the same "issuer" as such
            Person unless such Person is a bankruptcy remote entity; and

              (C)     under no circumstances shall any Cash, Cash Equivalent
        or U.S.  Government Securities be excluded from Eligible
          Investments based upon the Portfolio Limitations set forth
above.                                          

DETERMINATION OF THE MARKET VALUE OF FUND INVESTMENTS                           

         The Issuer shall calculate the Market Value (i) of each Fund Investment
that is not an Unquoted Investment on a weekly basis as of the Determination    
Date for each calendar week and (ii) of each Fund Investment that is an Unquoted
Investment as set forth in the definition of "Market Value" below.              

"Market Value" means                                          

(a)    with respect to Cash, the current balance thereof;     

         (b)    with respect to any Cash Equivalent (x) of the type described in
clause (ii) of the definition thereof (excluding banker's acceptances), the     
current balance  thereof, (y) of a type described in clause (iii) of the        
definition thereof (and banker's acceptances described in clause (ii) thereof), 
the original purchase price thereof, and (z) of a type described in clause (v)  
of the definition thereof, the aggregate current net value thereof;             

   (c)    with respect to any Fund Investment (other than Structured
Product  Transactions, Unquoted Investments, Cash and Cash Equivalents described
in clause (b) above) at any date, an amount determined by the Issuer that is not
in excess of the product of (x) the Market Value Price for each unit of such    
Fund Investment on such date (and, with respect to any Securities which have an 
amortizing principal amount, the then current factor related thereto, if        
applicable) times (y) the number of units of such Fund Investment held by the   
Issuer; and                                                                     

     (d)    with respect to any Fund Investment other than Cash and Cash
Equivalents which is an Unquoted Investment at any date, the value thereof most 
recently determined by the Issuer in accordance with the procedures described   
below;                                                                          

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    provided, however, (x) for purposes of making such determinations,

             (A)     the frequency of determination of the Market Value of
             any Illiquid Investment will be at least quarterly as of each
       Quarterly Date and, except as otherwise provided in the
        following clauses, the frequency of determination of the
           Market Value of any Semi-Liquid Investment will be at least
           monthly as of the last Business Day of each calendar month;

          (B)     for Semi-Liquid Investment positions with a Market
              Value of $35 million or greater but less than $70 million (and
        all positions subject to this clause (x)(2) by reason of
          clause (y) below), a quotation from an Approved Investment
          Banking Firm or an Approved Third-Party Appraisal at least
monthly;                                        

          (C)     for Semi-Liquid Investment positions with a Market
             Value of $70 million or greater, a quotation from an Approved
            Investment Banking Firm or an Approved Third-Party Appraisal
         at least monthly and an Approved Third-Party Appraisal at
least quarterly; and                            

             (D)     for Illiquid Investment positions with a Market Value
            of $35 million or greater (and all positions subject to this
        clause (x)(4) by reason of clause (y) below) an Approved
Third-Party Appraisal at least quarterly;       

     (y)    notwithstanding the foregoing, the aggregate Market Value of
              all Unquoted Investment positions whose value is determined by
          the Issuer without relying on the methodology set forth in
        subclauses (2), (3) or (4) of clause (x) above (it being
         understood that such methodology may be used for Unquoted
             Investments with Market Values below the thresholds set forth
             in such subclauses) may not exceed 5% of Total Capitalization
          and all such Unquoted Investment positions (i.e., those in
           excess of such limit and as selected by the Issuer) will be
              subject to subclauses (2) or (4) of clause (x) above depending
          upon whether any such Unquoted Investment is a Semi-Liquid
Investment or an Illiquid Investment; and       

     (z)    in no event will the Market Value of any Unquoted Investment
             exceed the lesser of (i) the most recently obtained quotation
             or appraisal obtained as provided in clauses (x) or (y) above
         and (2) the value most recently determined by the Issuer.

       Notwithstanding the foregoing, if the Investment Manager shall on any
day actually determine that (i) the Market Value of any Semi-Liquid Investment  
determined as of the last Business Day of the preceding calendar month or (ii)  
the Market Value of any Illiquid Investment determined as of the last Quarterly 
Date has decreased since such last Business Day of the preceding calendar month 
or last Quarterly Date, the Market Value of such Fund Investment shall be such  
decreased value, and if the Investment Manager subsequently actually determines 
on any day prior to the next determination of its Market Value that the value of
such Fund Investment has further decreased, the Market Value of such Fund       
Investment shall be such decreased value. If, on the other hand, the Investment 
Manager shall subsequently actually determine that the value of such Fund       
Investment has increased, the Market Value of such Fund Investment shall be such
increased value; provided that in no event shall the Market Value of any such   
Fund Investment whose value is so increased be greater than the Market Value of 
such                                                                            

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Fund Investment previously determined as of the last Business Day of the        
preceding calendar month (in the case of Semi-Liquid Investments) or as of the  
last Quarterly Date (in the case of Illiquid Investments). It is expressly      
understood that the Investment Manager shall have no duty whatsoever to         
specifically monitor or otherwise investigate any value changes described in    
this paragraph.                                                                 

     Prior to the first available quotation or appraisal of any Unquoted
Investment obtained as provided above, the Market Value of such Unquoted        
Investment will be the lower of the value thereof as most recently determined by
the Issuer and cost. In the event that the Issuer elects in its discretion to   
book, for purposes of its own financial accounting records, any Unquoted        
Investment at a value lower than that which would require a valuation by an     
Approved Investment Banking Firm or an Approved Third-Party Appraisal, as the   
case may be, then the Market Value of such Unquoted Investment shall be such    
lower value used by the Issuer for purposes of its own financial accounting     
records.                                                                        

   Notwithstanding the foregoing, the Market Value of any Structured
Product Transaction at any date will be equal to the net settlement amount, if  
any, that the Issuer would receive if such Structured Product Transaction was   
terminated or liquidated early in accordance with its terms on such date as     
determined by the Issuer.                                                       

 The Market Value of any CDO Debt Security shall be based upon a
quotation from an Approved Investment Banking Firm or an Approved Third-Party   
Appraisal.                                                                      

       The Market Value of any Defensive Hedge Transaction where the related
Fund Investment is part of the Collateral shall be the amount, as determined by 
the Issuer, by which the Protected Market Value with respect to such Fund       
Investment exceeds the product of the Market Value of the Fund Investment (or,  
if less, the portion thereof that is an Eligible Investment), as otherwise      
determined in accordance with these procedures, and the applicable Advance Rate 
for such Fund Investment. The Market Value of any Defensive Hedge Transaction   
where the Fund Investment is not part of the Collateral shall be the Protected  
Market Value with respect to such Fund Investment.                              

         For purposes of the definition of Market Value, (i) accrued interest on
any interest-bearing Eligible Investment shall be excluded in the determination 
of Market Value by the party making such determination and (ii) the Market Value
of all non-Dollar Fund Investments shall be converted into Dollars at the then  
current spot rate (after taking into account the effect of any Currency Hedging 
Transactions with respect to such Fund Investment).                             

       "Market Value Price" means with respect to any Fund Investment (other
than Cash, Structured Product Transactions and Unquoted Investments) at any     
date, the price for each unit of such Fund Investment at such date obtained from
an Approved Source, including any of (a) in the case of an Approved Exchange,   
the closing price as of the most recent Determination Date on such Approved     
Exchange, or if such Approved Exchange is NASDAQ, the closing bid price at such 
date (or if such Approved Exchange is closed for business at such date, then the
most recent available closing price or closing bid price, as the case may be),  
provided that bonds may not be priced based upon the price on an Approved       
Exchange pursuant to this clause (a), (i) prior to the termination (without     
replacement) of the Indenture, without the consent of the Trustee and the Credit
Enhancer and (ii) after termination (without replacement) of the Indenture,     
without the                                                                     

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consent of the Credit Enhancer, (b) the average of the bid prices at            
such date quoted by two Approved Dealers, or (c) the price obtained at such date
from an Approved Pricing Service.                                               

For the purpose of this Schedule, any calculation or other    
determination required to be made by the Issuer shall be made by the Investment 
Manager on behalf of the Issuer, subject to the provisions of the Investment    
Management Agreement.                                                           

CERTAIN DEFINITIONS                                                             

      The following are definitions of certain terms used in this Schedule
and elsewhere in the Indenture. Terms used in this Schedule and not defined     
below have the meanings given them elsewhere in this Schedule or in the         
Indenture.                                                                      

"Advance Rate" means the Moody's Advance Rate.                

"Aggregate Short Sale Advance Amount" means as of any date of 
determination, the aggregate of the Short Sale Advance Amount of all Short Sale 
Transactions; provided, however that if on any date the aggregate Market Value  
(as determined as of the date each Bank Loan or Security was borrowed by the    
Issuer in connection with any Short Sale Transaction) of the Bank Loans and     
other Securities comprising all Short Sale Transactions exceeds the greater of  
(A) 15% of Total Capitalization and (B) 15% of the Net Asset Value of the       
Issuer, then the Aggregate Short Sale Advance Amount for that portion of the    
Bank Loans or other Securities comprising such Short Sale Transactions, the     
Market Value (as determined as of the date each Bank Loan or Security was       
borrowed by the Issuer in connection with any Short Sale Transaction) of which  
exceeds the greater of (A) or (B) above, shall be deemed to be zero.            

        "Approved Counterparty" means (i) any financial institutions, banks or
investment banking firms having a long term rating of at least "Al" by Moody's  
and a short term rating of at least "P-1" by Moody's (and, if rated "Al" or     
"P-1" by Moody's, then such rating has not been placed on a credit watch with   
negative implications by Moody's) or (ii) any counterparty set forth in the     
Indenture (or any successor to any such listed counterparty) or any other       
counterparty designated by the Issuer in writing and approved by the Credit     
Enhancer.                                                                       

        "Approved Dealer" means (a) in the case of any Fund Investment that is
not a U.S. Government Security, any bank or broker-dealer designated by the     
Issuer in writing and approved by the Credit Enhancer in its reasonable         
discretion and with respect to which the Rating Agency Condition with respect to
Moody's has been satisfied, (b) in the case of a U.S. Government Security, any  
primary dealer in U.S. Government Securities, as reported by the Federal Reserve
Board, which as of the date hereof maintains a website at http://www.ny.frb.org,
or (c) in the case of either of the foregoing, the banks and broker-dealers set 
forth on Annex I hereto under "Approved Dealers."                               

        "Approved Exchange" means, with respect to any Security, (a) any major
securities or options exchange, the NASDAQ or any other exchange or quotation   
system providing regularly published securities prices designated by the Issuer 
in writing and approved by the Credit Enhancer in its reasonable discretion and 
with respect to which the Rating Agency Condition with respect to Moody's has   
been satisfied, or (b) the exchanges set forth on Annex I hereto under "Approved
Exchanges."                                                                     

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     "Approved Investment Banking Firm" means (a) any investment banking
firm designated by the Issuer in writing and approved by the Credit Enhancer in 
its reasonable discretion and with respect to which the Rating Agency Condition 
with respect to Moody's has been satisfied, or (b) the firms set forth on Annex 
I hereto under "Approved Investment Banking Firms."                             

     "Approved Pricing Service" means (a) a pricing or quotation service
designated by the Issuer in writing and approved by the Credit Enhancer in its  
reasonable discretion and with respect to which the Rating Agency Condition with
respect to Moody's has been satisfied, or (b) the services set forth on Annex I 
hereto under "Approved Pricing Services."                                       

  "Approved Source" means any of (i) two Approved Dealers, (ii) an
Approved Exchange or (iii) an Approved Pricing Service, provided, that, for     
purposes of the Over-Collateralization Tests, a Bank Loan, High Yield Bond or   
Mezzanine Investment which is a Fund Investment shall be considered "quoted" or 
"priced" by an Approved Source only if, in the reasonable judgment of the       
Issuer, such Approved Source will continue to provide quotations with respect to
such Bank Loan, High Yield Bond or Mezzanine Investment on an on-going basis in 
the ordinary course of its business as a pricing service or dealer, as the case 
may be.                                                                         

    "Approved Third-Party Appraisal" means an appraisal by an Approved
Third-Party Appraiser.                                                          

         "Approved Third-Party Appraiser" means (a) a third-party appraiser that
is not an Affiliate of either the Issuer or the Investment Manager (or subject  
to an agreement to become such an Affiliate) designated by the Issuer in writing
and approved by the Credit Enhancer in its reasonable discretion and with       
respect to which the Rating Agency Condition with respect to Moody's has been   
satisfied, or (b) the third-party appraisers set forth on Annex I hereto under  
"Approved Third-Party Appraisers."                                              

     "Asset-Backed Security" means any fixed income Security that is (i)
backed by and paid primarily from the proceeds (or payments or proceeds of a    
disposition) of Eligible Assets, and (ii) issued in a transaction structured to 
(A) isolate the Security and the Eligible Assets backing the Security from the  
credit risk of the sponsor of the transaction and (B) result in the             
creditworthiness of such Security being primarily dependent upon (x) the        
creditworthiness of the Eligible Assets backing such Security and (y) any credit
support provided with respect to the creditworthiness of such Eligible Assets;  
provided, however, that in no event shall an "Asset-Backed Security" include any
of the following: (a) a Security issued to provide debtor-in-possession         
financing, (b) a Security issued in connection with a receivables financing, an 
equipment trust certificate or similar Security, (c) an Equity Security         
(including an Equity Security that is characterized as a note), (d) a Structured
Product Transaction, (e) a CDO Debt Security or (f) a Defensive Hedge           
Transaction.                                                                    

"Bank Loan Participation" means a Bank Loan in the form of a  
participation.                                                                  

        "Bank Loans" means direct purchases of, assignments of, participations
in and other interests in senior debt (including term loans, revolving credit   
lines and other similar loans and investments).                                 

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      "Business Day" means each day other than a Saturday, Sunday or other
day on which banking institutions are not required by law or regulation to be   
open in the State of New York.                                                  

   "Busted Convertible Bond" means any convertible bond that, in the
Issuer's determination, trades like a fixed income investment and has a         
negligible option value.                                                        

         "Capital Stock" of any Person means shares, equity interests (including
limited partnership interests and limited liability company interests),         
participations or other equivalents (however designated) of corporate stock of  
such Person.                                                                    

     "Cash" means any immediately available funds in U.S. dollars or any
currency other than U.S. dollars which is a freely convertible currency         
(including amounts held in the Custodial Account or on deposit with the         
Custodian pursuant to "sweep" arrangements linked to the Custodial Account).    

        "Cash Equivalents" means investments (other than Cash) that are one or
more of the following obligations or Securities:                                

(i)     U.S. Government Securities;             

               (ii)    certificates of deposit of, banker's acceptances issued
by or money market accounts in any depository institution or trust company      
incorporated under the laws of the United States of America or any state thereof
and subject to supervision and examination by Federal and/or state banking      
authorities, so long as the deposits offered by such depository institution or  
trust company at the time of such investment are rated and have a rating of at  
least "P-1" if rated by Moody's or "A- 1+" if rated by S&P (and, if rated "P-1" 
by Moody's, such rating has not been placed on a credit watch with negative     
implications by Moody's) (or, in the case of the principal depository           
institution in a holding company system whose deposits are not so rated, the    
long term debt obligations of such holding company are rated and such rating is 
at least "Al" if rated by Moody's and "A+" if rated by S&P (or, if rated "Al" by
Moody's, such rating has not been placed on a credit watch with negative        
implications by Moody's));                                                      

               (iii)  commercial paper issued by any depository institution or
trust company incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by Federal and/or state
banking authorities, or any corporation incorporated under the laws of the      
United States of America or any state thereof, so long as the commercial paper  
of such issuer is rated and has at the time of such investment a short term     
rating of at least "P- l" if rated by Moody's or "A-1" if rated by S&P (and, if 
rated "P-1" by Moody's, such rating has not been placed on a credit watch with  
negative implications by Moody's);                                              

               (iv)   securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of America  
or any state thereof the obligations of which at the time of such investment are
rated and that have a credit rating of at least "P-1" if rated by Moody's and   
"A- l" if rated by S&P (and, if rated "P-1" by Moody's, such rating has not been
placed on a credit watch with negative implications by Moody's) either at the   
time of such investment or the making of a contractual commitment providing for 
such investment;                                                                

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             (v)     shares of any money market fund or similar investment
vehicle, so long as such money market fund is rated and has at the time of such 
investment a short-term rating of at least "Aaa" and "MRl+" if rated by Moody's 
and "AAA" if rated by S&P (and, if rated "Aaa" and "MRl+" by Moody's, such      
rating has not been placed on a credit watch with negative implications by      
Moody's);                                                                       

       (vi)    unleveraged overnight repurchase obligations on
customary terms with respect to investments described in clauses (i) through (v)
above entered into with a depository institution, trust company or corporation  
of the type described in clause (iii) above or a Subsidiary of any such         
depository institution, trust company or corporation if such depository         
institution, trust company or corporation also has a rating of at least "Al" and
"P-1" if rated by Moody's or "A+" if rated by S&P (and, if rated "Al" and "P-1" 
by Moody's, such rating has not been placed on a credit watch with negative     
implications by Moody's); and                                                   

               (vii)   preferred shares rated in the highest investment rating
category by Moody's and S&P or otherwise with respect to which the Rating Agency
Condition is satisfied;                                                         

provided, that: (i) in no event shall Cash Equivalents include any obligation   
that provides for the payment of interest alone; (ii) Cash Equivalents referred 
to in clauses (ii) and (iii) above shall mature within 183 days of issuance;    
(iii) if any of Moody's or S&P changes its rating system, then any ratings      
included in this definition shall be deemed to be an equivalent rating in a     
successor rating category of Moody's or S&P, as the case may be; (iv) if any of 
Moody's or S&P is not in the business of rating securities, then any ratings    
included in this definition shall be deemed to be an equivalent rating from     
another Rating Agency; (v) Cash Equivalents (other than U.S. Government         
Securities or money market funds maintained by the Custodian) shall not include 
any such investment of more than $100 million in any single issuer; (vi) in no  
event shall Cash Equivalents include any obligation that is not denominated in  
Dollars or Eligible Foreign Currencies; and (vii) none of the foregoing         
obligations or securities will constitute Cash Equivalents (A) if all, or       
substantially all, of the remaining amounts payable thereunder will consist of  
interest and not principal payments, or (B) if such security has an assigned    
rating from S&P with an "r" or "t" subscript, or (C) if such security is a      
mortgage-backed security or (D) if such security is an inverse floater security.

     "CDO Debt Securities" means any Securities that entitle the holders
thereof to receive payments that depend primarily on cash flow from, or proceeds
upon the sale of a pool of Securities serving as collateral for such Securities;
provided that if more than one class or other similar designation of such       
Securities receive payments that depend primarily on cash flow from all or      
substantially all of the underlying collateral Securities, then the class or    
other similar designation the payment of which is most deeply subordinated      
(other than any class or other similar designation constituting only nominal    
capital) and any class or other similar designation that, as indicated in any   
relevant offering documentation, is stated to be at least reasonably likely to  
be treated as equity for U.S. Federal income tax purposes will be excluded from 
"CDO Debt Securities"; provided, further that (x) CDO Debt Securities shall not 
include any Structured Product Transaction and (y) CDO Debt Securities shall    
only include CDO Debt Securities issued in a "cash-flow" or "market value"      
collateralized debt obligation transactions.                                    

   "CDO Equity Securities" means any Securities (other than CDO Debt
Securities) that entitle the holders thereof to receive payments that depend    
primarily on cash flow from, or                                                 

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proceeds upon sale of a pool of Securities serving as collateral for such       
Securities (whether or not such Securities have been rated by a nationally      
recognized statistical rating organization); provided that CDO Equity Securities
shall not include any Structured Product Transaction.                           

         "CDS" means a credit default swap substantially in the form approved by
the Credit Enhancer, which approval shall not be unreasonably withheld.         

       "Contributed Company Capital" means, at any date, the aggregate gross
amount of Cash contributed as equity capital (excluding, for the avoidance of   
doubt, the Preferred Shares) to the Issuer by the holders of the Common Shares  
on or prior to such date (without regard to any other changes in Company        
Equity).                                                                        

       "Currency Hedging Transaction" means (i) any Swap Transaction entered
into by the Issuer with an Eligible Counterparty intended to convert any payment
on a Debt or other obligation of the Issuer or any Company Investment           
denominated in one currency to another currency or to protect against           
fluctuations in the exchange rate of a currency in which a payment to be made or
received by the Issuer is denominated and (ii) any Swap Transaction entered into
by the Issuer intended to convert any payment on a Debt or other obligation of  
the Issuer or any Company Investment denominated in one currency to another     
currency or to protect against fluctuations in the exchange rate of a currency  
in which a payment to be made or received by the Issuer is denominated and      
pursuant to which the Issuer has no on-going payment obligations.               

"Defensive Hedge Advance Amount" means, as of any date of     
determination, 98% of the aggregate Market Value of all Defensive Hedge         
Transactions; provided, however, that the Defensive Hedge Advance Amount shall  
in no event exceed an amount equal to (x) 20% of the Total Capitalization as of 
such date of determination less (y) the sum of the aggregate Market Value as of 
such date of determination of all Fund Investments in Bank Loan Participations  
and Structured Product Transactions and, if the Secured Hedging Advance Amount  
is positive, the Secured Hedging Advance Amount.                                

"Defensive Hedge Transaction" means a Hedging and Short Sale  
Transaction between the Issuer and an Eligible Counterparty intended to protect 
the Issuer against fluctuations in the market value of a Fund Investment and    
pursuant to which (i) the Eligible Counterparty has agreed for a period of time,
at the direction of the Issuer, to (a) purchase the Fund Investment at an agreed
strike price or (b) pay to the Issuer, at the Issuer's election, an amount by   
which an agreed strike price exceeds the current price of the Fund Investment;  
(ii) the Eligible Counterparty does not have recourse to the Collateral or the  
Issuer for any amounts owing to such counterparty thereunder; and (iii) the     
Issuer may (a) pay a fee to the Eligible Counterparty in connection with the    
transaction, (b) remove the Fund Investment from the Custodial Account (whereby 
it is no longer part of the Collateral) and pledge the Fund Investment to the   
counterparty as security for its obligations to the Eligible Counterparty and   
(c) agree to deliver the Fund Investment to the Eligible Counterparty in        
satisfaction of all of its obligations to the Eligible Counterparty in          
connection with the transaction.                                                

"Designated Country" means (i) each of Canada, Great Britain, 
Australia, Denmark, New Zealand, Sweden, Switzerland, Luxembourg, The           
Netherlands and any G-7 nation, (ii) any other country whose unsupported        
sovereign debt obligations are rated at least Aa2 by Moody's                    

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and (iii) each other country identified by the Fund from time to time and with  
respect to which the Rating Agency Condition with respect to Moody's has been   
satisfied.                                                                      

        "Determination Date" means (a) with respect to any regularly scheduled
Valuation Statement prepared pursuant to the Indenture or the Operating         
Agreement and any other Preferred Shares document, the related Reporting Date,  
(b) for the purpose of determining the Market Value Price of a Fund Investment  
at any date when the Issuer is in compliance, or reasonably believes it is in   
compliance, with the covenants relating to the Over-Collateralization Tests, the
last Business Day of the preceding calendar week ending prior to such date and  
(c) for the purpose of determining the Market Value Price of a Fund Investment  
at any date when the Issuer is not, or reasonably believes that it is not, in   
compliance with any covenant relating to the Over-Collateralization Tests, the  
date on which the most current pricing information with respect to such Fund    
Investment is reasonably available.                                             

      "Distressed Debt" means debt Securities and Bank Loans which are, in
the Investment Manager's reasonable business judgment, impaired in fundamental  
ways due to credit, liquidity, interest rate or other issues, which may not be  
performing or may be in default, and which are generally trading at a           
substantial discount to par.                                                    

      "Eligible Assets" means financial assets, either fixed or revolving,
that by their terms convert into cash within a finite time period plus any      
rights or other assets designed to assure the servicing or timely distribution  
of proceeds to security holders.                                                

      "Eligible Counterparty" means, with respect to any Hedging and Short
Sale Transaction (other than a CDS in which the Issuer is the counterparty      
writing or providing the protection with respect to the reference asset), (a)   
any Approved Counterparty or (b) any Person (i) (x) in the case of a Currency   
Hedging Transaction, having a long term rating of at least "Aa3" by Moody's and 
a short term rating of at least "P-1" by Moody's (and, if rated "Aa3" or "P-1"  
by Moody's, then such rating has not been placed on a credit watch with negative
implications by Moody's) and (y) in all other cases, having a long term rating  
of at least "Al" by Moody's and a short term rating of at least "P-1" by Moody's
(and, if rated "Al" or "P-1" by Moody's, then such rating has not been placed on
a credit watch with negative implications by Moody's), (ii) if no short term    
rating is available, (x) in the case of a Currency Hedging Transaction, having a
long term rating of "Aa2" or better by Moody's (and, if rated "Aa2" by Moody's, 
such rating has not been placed on a credit watch with negative implications by 
Moody's) and (y) all other cases, having a long term rating of "Aa3" or better  
by Moody's (and, if rated "Aa3" by Moody's, such rating has not been placed on a
credit watch with negative implications by Moody's) or (iii) whose obligations  
in respect of all Hedging and Short Sale Transactions entered into with the     
Issuer are absolutely and unconditionally guaranteed by an Affiliate of such    
Person having (x) (A) in the case of a Currency Hedging Transaction, having a   
long term rating of at least "Aa3" by Moody's and a short term rating of at     
least "P-1" by Moody's (and, if rated "Aa3" or "P-1" by Moody's, then such      
rating has not been placed on a credit watch with negative implications by      
Moody's) and (B) in all other cases, having a long term rating of at least "Al" 
by Moody's and a short term rating of at least "P-1" by Moody's (and, if rated  
"Al" or "P-1" by Moody's, then such rating has not been placed on a credit watch
with negative implications by Moody's) or (y) if no short term rating is        
available, (A) in the case of a Currency Hedging Transaction, having a long term
rating of "Aa2" or better by Moody's (and, if rated "Aa2" by Moody's, such      
rating has not been placed on a credit watch with negative implications by      
Moody's) and (B) in all other cases, having a                                   

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long term rating of "Aa3" or better by Moody's (and, if rated "Aa3" by Moody's, 
such rating has not been placed on a credit watch with negative implications by 
Moody's); provided that with respect to any counterparty with which the Issuer  
has entered into a Hedging and Short Sale Transaction, such counterparty that   
would qualify as an "Eligible Counterparty" pursuant to clause (b) above but for
the fact that such counterparty had suffered a ratings downgrade shall be deemed
to be an "Eligible Counterparty" for thirty 30 days after the day it would      
otherwise have ceased to qualify as an Eligible Counterparty.                   

       "Eligible Country" means each country (i) whose unsupported sovereign
debt obligations are rated "Aa2" or better by Moody's (and, if rated "M1" by    
Moody's, such rating has not been placed on a credit watch with negative        
implications by Moody's) or (ii) that is a Designated Country whose unsupported 
sovereign debt obligations are rated "A3" or better by Moody's (and, if rated   
"A3" by Moody's, such rating has not been placed on a credit watch with negative
implications by Moody's).                                                       

      "Eligible Foreign Currencies" means (i) Australian Dollars, Canadian
Dollars, Pounds Sterling and Euros and (ii) each other currency identified by   
the Issuer from time to time and confirmed in writing as acceptable by the      
Trustee, the Credit Enhancer and with respect to which the Rating Agency        
Condition with respect to Moody's has been satisfied.                           

      "Eligible Investments" has the meaning assigned to such term in this
Schedule under "Determination of Fund Investments Constituting Eligible         
Investments."                                                                   

 "Equity Securities" means equity securities (including, for the
avoidance of doubt, Private Equity Securities) that will generally consist of   
common or preferred stock of small to medium capitalization companies that have 
either (i) undergone leveraged buyouts or recapitalizations, yet are still      
substantially leveraged, or (ii) been burdened by complex legal, financial or   
ownership issues and are selling at a discount to the underlying asset or       
business value.                                                                 

         "Excess Fund Investments" means any Fund Investments or portion thereof
having a Market Value in excess of the percentages of Total Capitalization set  
forth in the definition of Portfolio Limitations (in each case determined by the
Issuer using the most recent Market Value for the applicable Fund Investments). 

      "Excluded Investments" has the meaning assigned to such term in this
Schedule under "Determination of Fund Investments Constituting Eligible         
Investments."                                                                   

"Foreign Issuer" means any issuer of a Fund Investment that is
incorporated or otherwise formed or organized outside the United States unless  
such Fund Investment is irrevocably and unconditionally guaranteed by any United
States corporation, company, trust or other business entity; provided, however, 
that none of the following shall be a Foreign Issuer: (i) an offshore holding   
company issuer whose operating subsidiaries principally do business, and hold   
their assets, in the United States, or (ii) an issuer of a CDO Debt Security.   

"Fully Collateralized Structured Product Transaction" means a 
Structured Product Transaction relating to a single Bank Loan or High Yield Bond
pursuant to which the Issuer is                                                 

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required to pledge collateral in an amount that is not less than 100% of the    
notional amount of such transaction.                                            

  "Fund Investments" means all Cash, Cash Equivalents, Bank Loans,
Securities, Short Sale Transactions and Structured Product Transactions owned by
the Issuer. Fund Investments which the Issuer has contracted to purchase shall  
not be deemed for purposes of the Indenture to be owned by the Issuer until     
settlement of such purchase and Fund Investments which the Issuer has contracted
to sell shall not cease to be Fund Investments for purposes of the Indenture    
until settlement of such sale.                                                  

         "Hedging and Short Sale Transaction" means any transaction entered into
by the Issuer with an Eligible Counterparty that is (i) a Swap Transaction; (ii)
an Interest Rate Hedging Transaction; (iii) a Currency Hedging Transaction; (iv)
a transaction under which the Issuer borrows a Bank Loan or Security and sells  
or otherwise disposes of such or any substantially similar Bank Loan or Security
prior to the date on which the same must be returned to the lender thereof (and 
commonly known as a "short sale"), (v) a Securities Lending Transaction; (vi) a 
credit derivative transaction (including, but not limited to, a CDS) or         
repurchase agreement; (vii) an obligation to enter into any of the foregoing; or
(viii) any combination of any of the foregoing.                                 

      "High Yield Bonds" means debt Securities (including convertible debt
Securities) that are generally rated below "Baa3" by Moody's, (a) which are     
issued pursuant to a public registration, Rule 144A or as a private placement   
and (b) which are not Cash Equivalents, Bank Loans, Mezzanine Investments or CDO
Debt Securities.                                                                

   "Illiquid Investments" means (a) Unquoted Investments that do not
qualify as Semi-Liquid Investments.                                             

       "Industry" means any industry category listed in Annex I hereto under
"Moody's Industry Classifications" or any other such industry category          
designated by the Issuer in writing and approved by the Credit Enhancer in its  
reasonable discretion and with respect to which the Rating Agency Condition with
respect to Moody's has been satisfied.                                          

        "Ineligible Country" means any country other than the United States or
an Eligible Country.                                                            

        "Interest Only Security" means any security that by its terms provides
for periodic payments of interest and does not provide for the repayment of a   
stated principal amount.                                                        

    "Interest Rate Hedging Transaction" means (i) any Swap Transaction
entered into by the Issuer with an Eligible Counterparty intended to protect the
Issuer against changes in the floating rate of interest payable on all or a     
portion of any Debt or other obligation of the Issuer or its subsidiaries or on 
any Fund Investment or to protect against fluctuations in interest rates, or    
(ii) any Swap Transaction or repurchase agreement entered into by the Issuer, in
each case with an Eligible Counterparty, intended to protect against changes in 
the market value of any Fund Investment resulting from fluctuations in interest 
rates.                                                                          

        "Market Value" has the meaning assigned to such terms in this Schedule
under "Determination of Market Value of Fund Investments."                      

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    "Market Value Price" has the meaning assigned to such term in this
Schedule under "Determination of Market Value of Fund Investments."             

        "Mezzanine Investments" means (i) debt Securities or other obligations
of an issuer (including convertible debt Securities and obligations and         
Securities backed by real estate collateral) that (A) are subordinated to other 
debt of such issuer and (B) may be issued with equity participation features    
such as convertibility, senior equity securities, common stock or warrants or   
(ii) Preferred Stock issued in connection with management buyouts, acquisitions,
refinancings, recapitalizations and later stage growth capital financings.      

   "Moody's" means Moody's Investors Service, Inc., or any successor
thereto.                                                                        

      "Moody's Net Accrual Amount" means, as of any date, an amount, which
may be positive or negative, equal to (i) the aggregate amount of accrued       
interest payable to the Issuer on all interest-bearing Eligible Investments, all
declared but unpaid dividends payable on Eligible Investments that are Equity   
Securities and all due and unpaid commitment fees payable to the Issuer in      
respect of Eligible Investments, in each case as of such date minus (ii) the    
aggregate amount of accrued interest, dividends (including, without duplication,
any Company Tax Distribution), premiums, commitment fees and Unissued Share Fee 
and accrued and unpaid Administrative Expenses, if any, payable by the Issuer as
of such date in respect of the Indebtedness issued pursuant to the Indenture and
the Preferred Shares, respectively; provided that until the earlier of two years
after the Closing Date or the date on which the Issuer shall have drawn $404.5  
million of the Equity Capital Commitments, the Moody's Net Accrual Amount shall 
not be less than zero.                                                          

         "Moody's Rating Correlation Procedures" means the following procedures,
which shall be applied to any Fund Investment for which an Assigned Moody's     
Rating is not otherwise required and does not have an Assigned Moody's Rating:  

                (i)     if another security or obligation of the same issuer has
an Assigned Moody's Rating, then the applicable rating of such Fund Investment  
shall be determined as follows: (a) if there is an Assigned Moody's Rating of a 
security of the issuer of the same priority, then the rating of such Fund       
Investment shall be such rating; (b) if the Assigned Moody's Rating is on a     
senior unsecured obligation of the issuer, then the applicable rating of such   
Fund Investment (1) shall be one subcategory above such Assigned Moody's Rating,
if such Fund Investment is a senior secured obligation of the issuer, with a    
rating of "Aaa" remaining the same; (2) shall be two subcategories below such   
Assigned Moody's Rating, if such rating is "B 1" or higher and if such Fund     
Investment is a subordinated obligation of the issuer, (3) shall be one         
subcategory below such Assigned Moody's Rating if such rating is between "B2"   
and "Ca," inclusive, and if such Fund Investment is a subordinated obligation of
the issuer; and (4) otherwise shall be "C" if such Fund Investment is a         
subordinated obligation of the issuer; (c) if the Assigned Moody's Rating is on 
a subordinated obligation of the issuer and if such Fund Investment is a senior 
secured obligation of the issuer, then the applicable rating of such Fund       
Investment (1) shall be one subcategory above such Assigned Moody's Rating if   
such rating is "Baa3" or higher, (2) shall be two subcategories above such      
Assigned Moody's Rating if such rating is "B2" or higher, but lower than "Baa3,"
(3) shall be one subcategory above such Assigned Moody's Rating if such rating  
is "B 3" and (4) otherwise shall equal such rating; (d) if there is an Assigned 
Moody's Rating on a subordinated obligation of the issuer and if such Fund      

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Investment is a senior unsecured obligation of the issuer, then the applicable  
rating of such Fund Investment (1) shall be one subcategory above such Assigned 
Moody's Rating if such rating is "B3" or higher and (2) otherwise shall equal   
such rating; and (e) if the Assigned Moody's Rating is on a senior secured      
obligation of the issuer, then the applicable rating of such Fund Investment (1)
shall be one subcategory below such Assigned Moody's Rating if such rating is   
"Ca" or higher and such Fund Investment is a senior unsecured obligation of the 
issuer; (2) shall be two subcategories below such Assigned Moody's Rating if    
such rating is "Caa2" or higher and such Fund Investment is a subordinated      
obligation of the issuer; and (3) otherwise shall be "C"; and                   

             (ii)    if no other security or obligation of the same issuer
has an Assigned Moody's Rating, the applicable ratings of such Fund Investment  
shall be determined using any one of the methods below:                         

A.       (1) if such Fund Investment has an Assigned S&P Rating, then the       
       applicable rating of such Fund Investment will be (a) one subcategory
      below the Moody's equivalent of the Assigned S&P Rating if such Fund
        Investment is rated "BBB-" or higher by S&P; and (b) two subcategories
      below the Moody's equivalent of the Assigned S&P Rating if such Fund
Investment is rated "BB+" or lower by S&P; and                

         (2) if such Fund Investment does not have an Assigned S&P
              Rating but another security or obligation of the issuer has an
              Assigned S&P Rating ("parallel security"), then the Issuer may
          elect (x) to apply the Moody's equivalent of the rating of
        such parallel security determined in accordance with the
            methodology set forth in subclause (1) above, in which case,
     the applicable rating of such Fund Investment will be
          determined in accordance with the methodology set forth in
        clause (i) above (for such purpose treating the parallel
         security as if it had an Assigned Moody's Rating with the
           rating determined pursuant to this subclause (2)) or (y) to
          present such Fund Investment to Moody's for an estimate of
            such Fund Investment's rating factor as provided in clause B
below;                                          

B.       if such Fund Investment does not have an Assigned Moody's Rating or    
    Assigned S&P Rating and (x) no other security or obligation of the
     issuer has an Assigned Moody's Rating or Assigned S&P Rating or (y)
  another security or obligation of the issuer has an Assigned S&P
       Rating, and the Issuer so elects as provided in clause A(2)(y) above,
    then the Issuer may present such Fund Investment to Moody's for an
  estimate of such Fund Investment's rating factor, from which its
    corresponding Moody's rating may be determined, which shall be the
       applicable rating; provided that pending receipt from Moody's of such
        estimate, such Fund Investment shall have an applicable rating of "B3"
      if the Issuer certifies to the Trustee that the Issuer believes that
such estimate will be at least "B3";                          

C.       with respect to a Fund Investment issued by a U.S. issuer, if (1)      
neither the issuer nor any of its Affiliates is subject to    
     reorganization or bankruptcy proceedings, (2) no debt securities or
      obligations of the issuer are in default, (3) neither the issuer nor
        any of its Affiliates have defaulted on the payment of any debt during
       the past two years, (4) the issuer has been in existence for the past
        four years, (5) the issuer is current on any cumulative dividends, (6)
         the fixed-charge ratio for the issuer exceeds 120% for each of the past
   two fiscal years (and for the most recent four quarters), (7) the
issuer had a net                                              

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        profit before tax in the past fiscal year and the most recent quarter,
       and (8) the annual financial statements of the issuer are unqualified
and certified by a firm of independent accountants of national
    reputation, and quarterly statements are unaudited but signed by a
       corporate officer, the applicable rating of such Fund Investment will
    be "B3" if such Fund Investment is a senior secured obligation and
    "Caa1" if such Fund Investment is not a senior secured obligation;

D.       with respect to a Fund Investment issued by a U.S. issuer, if (1)      
neither the issuer nor any of its Affiliates is subject to    
   reorganization or bankruptcy proceedings, (2) no debt security or
         obligation of the issuer has been in default in payment during the past
  two years, and (3) such Fund Investment does not fall within the
         immediately preceding paragraph (C), the applicable rating of such Fund
Investment will be "Caa2"; and                                

E.       if a debt security or obligation of the issuer has been in default in  
       payment during the past two years, the applicable rating of such Fund
Investment will be "Ca".                                      

      For the purposes of this definition, "Assigned Moody's Rating" means
 the publicly available rating or the monitored estimated rating
       expressly assigned to a debt obligation (or facility) by Moody's that
       addresses the full amount of the principal and interest promised, and
         "Assigned S&P Rating" means the publicly available rating assigned to a
   debt obligation (or facility) by S&P that includes no subscripts,
asterisks or other qualifications, that is not stated to be an
         unmonitored rating, and that addresses the full amount of the principal
and interest promised.                                        

  "Moody's Warrant/Option Advance Amount" means, as of any date of
determination, an amount equal to the sum for all Warrant/Option Investments of 
the product of (i) the Warrant/Option Intrinsic Value of such Warrant/Option    
Investment multiplied by (ii) the Moody's Advance Rate for the Moody's Asset    
Category applicable to the Related Equity Securities of such Warrant/Option     
Investment.                                                                     

         "NASDAQ" means the electronic inter-dealer quotation system operated by
NASDAQ, Inc., a subsidiary of the National Association of Securities Dealers,   
Inc., or any successor thereto.                                                 

        "Non-Cash Pay Instrument" means a High Yield Bond which falls in Asset
Category C, D, E, F or G that (a) does not provide for the payment of cash      
interest or preferred dividends, or provides for the total deferral of interest 
until the final maturity thereof, (b) is a debt security that has an initial    
current yield on the date of purchase or acquisition thereof of less than 2.5%  
per annum and provides for an increase in the rate of interest payable in       
respect thereof at any time after the date it was purchased or acquired (other  
than any increase resulting from (i) a change in a generally recognized floating
rate interest rate index, (ii) a change in the weighted average interest rate on
underlying collateral in the case of Securities the interest rate on which is   
based on such weighted average interest rate or (iii) a change in an interest   
rate spread or margin resulting from an announced change in the rating of the   
issuer's debt obligations) or (c) is a debt security that provides for the      
partial deferral of interest until the final maturity thereof and which has cash
interest payable without deferral at a rate per annum less than (x) with respect
to Fund Investments bearing interest at a fixed rate, 2.5% per annum and (y)    
with respect to Fund Investments bearing interest at a floating rate, a         
eurodollar rate plus 2% per annum. For                                          

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purposes of clause (b) of this definition, if the current yield is increased to 
2.5% or more per annum, then at the time of the increase of such interest rate, 
the Security will cease to be a "Non-Cash Pay Instrument."                      

      "Non-Credit Risk Security" means a security with respect to which an
institutional money manager would evaluate its value primarily by reference to  
factors other than (a) the coupon (or the coupon as adjusted for any purchase   
discount or premium) in relation to prevailing market yields, (b) the credit    
worthiness of the issuing entity or (c) the adequacy of the underlying financial
assets supporting such security to ensure the repayment of the security         
according to its terms (which adequacy may be measured by a credit analysis of  
the likelihood of the obligors of such underlying assets to pay according to the
terms of such underlying assets and/or an analysis of the sufficiency of the    
income streams thereon to meet the payment terms of the security).              

        "Non-Performing Instrument" means (i) any Fund Investment that is debt
and the issuer of which is in default of any principal or interest payment      
obligations in respect thereof (without giving effect to any applicable grace   
period or waiver), (ii) any Fund Investment that is Preferred Stock and the     
issuer of which has failed to meet any scheduled redemption obligations or to   
pay its latest declared cash dividend or (iii) any Fund Investment that is a CDO
Debt Security and the issuer of which has failed to pay any current interest or 
principal in cash when due.                                                     

"Outstanding Principal Amount" means the outstanding aggregate
principal amount of the Notes under the Indenture at any given time.            

     "Performing" means, (i) with respect to any Fund Investment that is
Bank Loan or other debt, the issuer of such Fund Investment is not in default of
any payment obligations in respect thereof, (ii) with respect to any Fund       
Investment that is Preferred Stock, the issuer of such Fund Investment has not  
failed to meet any scheduled redemption obligations or to pay its latest        
declared cash dividend or (iii) with respect to any Fund Investment that is a   
CDO Debt Security, the issuer of such Fund Investment has not failed to pay any 
current interest or principal in cash when due.                                 

       "Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization, 
including a government or political subdivision or an agency or instrumentality 
thereof.                                                                        

         "Pledge and Intercreditor Agreement" means the Pledge and Intercreditor
Agreement dated as of the Closing Date, among the Trustee, the Credit Enhancer, 
the Custodian, the Issuer and the Collateral Agent identified therein, as       
amended, extended, restated, supplemented or modified from time to time in      
accordance with the terms thereof.                                              

       "Portfolio Limitations" has the meaning assigned to such term in this
Schedule under "Application of Portfolio Limitations."                          

         "Preferred Stock" means, as applied to the Capital Stock of any Person,
Capital Stock of such Person of any class or classes (however designated) that  
ranks prior, as to the payment of dividends or as to the distribution of assets 
upon any voluntary or involuntary liquidation,                                  

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dissolution or winding up of such Person, to any shares (or other interests)    
of Capital Stock of such Person.                                                

     "Private Equity Securities" means, at any time of determination any
Equity Security which the Issuer believes in good faith (based on the facts and 
circumstances available to it) is (i) commonly regarded by investment           
professionals as a "private equity security" and (ii) not traded or listed on   
any national or regional securities exchange, any designated offshore Securities
market (as defined in Regulation S under the Securities Act) or on the NASDAQ   
National Market and is not actively quoted or traded on any automated quotation 
system or in the over-the-counter market; provided, however, that "Private      
Equity Securities" shall not include (a) any Equity Securities convertible or   
exchangeable for any Equity Securities traded or quoted in the markets described
in clause (ii) above, or (b)any equity Securities which may be resold under an  
effective registration statement under the Securities Act at the time of        
determination.                                                                  

     "Protected Market Value" means, with respect to any Fund Investment
that is the subject of a Defensive Hedge Transaction, the Protected Price of    
such Fund Investment times the number of units of such Fund Investment that are 
held by the Issuer and are the subject of such Defensive Hedge Transaction.     

"Protected Price" means, with respect to any Defensive Hedge  
Transaction, (i) the agreed strike price at which the Eligible Counterparty to  
such Defensive Hedge Transaction has agreed to purchase the Fund Investment that
is the subject of such Defensive Hedge Transaction or (ii) the agreed strike    
price under a Defensive Hedge Transaction pursuant to which the Eligible        
Counterparty has agreed to pay the Issuer an amount equal to the excess of the  
agreed strike price over the current price of the Fund Investment that is the   
subject of such Defensive Hedge Transaction.                                    

     "Quarterly Date" means the last Business Day of each February, May,
August and November, commencing November 30, 2005.                              

       "Related Person" means, with respect to any issuer, (a) any Person of
which such issuer is a Subsidiary, (b)any Person that is a Subsidiary of such   
issuer, (c) with respect to a debt obligation, any Person that relies on, or is 
relied upon for, the cash flows of such issuer to service debt obligations or   
does not have a credit rating independent of such Person or (d) with respect to 
a debt obligation, any Person that guarantees the issuer's payment of such debt 
obligation; provided, however, that, in any such case, a Person shall not be a  
Related Person of a second Person solely as a consequence of the common control 
of such Persons by a single financial sponsor.                                  

     "Reporting Date" means the last Business Day of each calendar week,
commencing November 25, 2005.                                                   

   "S&P" means Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc., or any successor thereto.                          

         "Secured Hedging Advance Amount" means as of any date of determination,
(i) if the Secured Hedging Net Exposure is greater than zero and the Secured    
Hedging Transactions entered into, in the judgment of the Issuer, hedge or      
mitigate risks to which the Issuer is exposed                                   

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in the conduct of its business or the management of its liabilities, 90% of the 
Secured Hedging Net Exposure, and (ii) if the Secured Hedging Net Exposure is   
less than zero, 100% of the Secured Hedging Net Exposure; provided that any     
Secured Hedging Transaction having a Secured Hedging Net Exposure greater than  
zero and a counterparty with a rating of less than "A3" by Moody's shall be     
deemed, for purposes of calculating the Secured Hedging Advance Amount, to have 
a Secured Hedging Net Exposure of zero.                                         

  "Secured Hedging Net Exposure" as of any date, as to any Secured
Hedging Transaction for which a determination thereof is required to be made,   
shall be determined as follows: (i) each Eligible Counterparty party to each    
Secured Hedging Transaction shall determine, with respect to the Secured Hedging
Transactions entered into by it with the Issuer, an amount (the "Secured Net    
Exposure Component") equal to the net current market value on the bid side of   
the market if the position is long and on the ask/offer side of the market if   
the position is short to the Issuer on such date of determination of each such  
Secured Hedging Transaction and (ii) for each Secured Hedging Transaction, the  
"Secured Hedging Net Exposure" will, as of any date, be equal to the sum of all 
applicable Secured Net Exposure Components as of such date and may, for purposes
of this calculation, be less than zero.                                         

"Secured Hedging Transaction" means any Interest Rate Hedging 
Transaction or Currency Hedging Transaction entered into by the Issuer with any 
Person that is an Eligible Counterparty which is secured by Collateral pursuant 
to the Pledge and Intercreditor Agreement and for avoidance of doubt shall      
exclude Structured Product Transactions.                                        

      "Securities" means common and preferred stock, partnership units and
participations, member interests in limited liability companies, notes, bonds,  
debentures, trust receipts and other obligations, instruments or evidences of   
indebtedness, including debt instruments of public and private issuers and      
tax-exempt securities (including, without limitation, warrants, rights, put and 
call options and other options and rights relating thereto, or any combination  
thereof), guarantees of indebtedness, choses in action, trade claims, other     
property or interests commonly regarded as securities or any form of interest or
participation therein, but not including Bank Loans or Hedging and Short Sale   
Transactions.                                                                   

    "Securities Lending Counterparty" means any bank, broker-dealer or
other financial institution (other than an insurance company) that has:         

             (i)     in the case of a loan with a term of 90 days or less,
short-term senior unsecured debt ratings of "P-1" from Moody's (or a guarantor  
with such ratings);                                                             

                (ii)    in the case of a loan with a term of longer than 90 days
but less than a year, either (x) a long-term senior unsecured debt rating of at 
least "Al" by Moody's or (y) both a long term senior unsecured debt rating of   
"A2" by Moody's and a short term rating of "P-1" by Moody's; and                

            (iii)   in the case of a loan for a one year term or more, a
long-term senior unsecured debt rating that, individually and together with all 
other Securities Lending Counterparties' ratings, is consistent with the limits 
set forth in the table below (or a guarantor with such ratings).                

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No more than 50% of Total Capitalization may be loaned pursuant to Securities   
Lending Transactions regardless of duration. At the time a Securities Lending   
Transaction for a term of one year or more is entered into by the Issuer, the   
percentage of the Fund Investments loaned to a single counterparty shall not    
exceed the individual percentage set forth below for the credit rating of such  
counterparty, and the percentage of the Fund Investments loaned by the Issuer to
counterparties having the same credit rating shall not exceed the aggregate     
percentage set forth below for such credit rating:                              

                                                        [Enlarge/Download Table]

----------------------------------------  --------------------------------------  --------------------------------------
      LONG-TERM SENIOR UNSECURED                       INDIVIDUAL                               AGGREGATE               
       DEBT RATING OF SECURITIES                   SECURITIES LENDING                      SECURITIES LENDING           
         LENDING COUNTERPARTY                      COUNTERPARTY LIMIT                      COUNTERPARTY LIMIT           
----------------------------------------  --------------------------------------  --------------------------------------
                                                                                                                        
                  Aaa                                      10%                                     20%                  
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa1                                      10%                                     20%                  
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa2                                      10%                                     20%                  
----------------------------------------  --------------------------------------  --------------------------------------
                  Aa3                                      10%                                     15%                  
----------------------------------------  --------------------------------------  --------------------------------------
                  A1                                       10%                                     10%                  
----------------------------------------  --------------------------------------  --------------------------------------
                  A2*                                      5%                                      5%                   
----------------------------------------  --------------------------------------  --------------------------------------
              A3 or lower                                  0%                                      0%                   
----------------------------------------  --------------------------------------  --------------------------------------

_________________________________                                               
* The percentages in this row apply only if such rating is not on a credit watch
with negative implications by Moody's. If such rating is on a credit watch with 
negative implications by Moody's, both the individual and the aggregate         
percentage limits shall be zero.                                                

provided, that the Issuer may enter into a Securities Lending Transaction with a
Securities Lending Counterparty having, at such time, a long-term senior        
unsecured debt rating below "A2" by Moody's, so long as the Rating Agency       
Condition with respect to Moody's has been satisfied.                           

       "Securities Lending Transactions" means all obligations of the Issuer
(i) to purchase investments which arise out of or in connection with the sale of
the same or substantially similar investments or other similar transactions     
having the same economic effect (excluding Swap Transactions); and (ii) incurred
in connection with any security lending transactions described in clause (i)    
with a Securities Lending Counterparty.                                         

        "Semi-Liquid Investments" means (i) Unquoted Investments that are debt
Securities rated "B3" or better by Moody's; (ii) Unquoted Investments that are  
not subject to any enforceable agreement containing a material condition to, or 
material restriction on, the ability of the holder of such Unquoted Investment  
or an assignee of such holder to sell, assign, transfer or otherwise liquidate  
the investment in a commercially reasonable time and manner (other than in any  
such agreement contained in the Collateral Documents and customary securities   
law arrangements or restrictions); (iii) solely for purposes of the definition  
of Portfolio Limitations, Unquoted Investments which are High Yield Bonds or    
Mezzanine Investments and are part of an issue that is greater or equal to $40  
million in original principal amount; or (iv) solely for purposes of the        
definition of Portfolio Limitations, Unquoted Investments which are High Yield  
Bonds that are held by ten or more holders or the issuer thereof has a total    
capitalization in excess of $150.0 million.                                     

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         "Short Sale Advance Amount" means, as of any date of determination with
respect to any Short Sale Transaction for which a determination thereof is      
required to be made, an amount calculated as follows:                           

       (i)    If the Security borrowed by the Issuer in connection with such
Short Sale Transaction is a Non-Fixed Income Investment:                        

Short Sale Advance Amount =      S minus M minus X            

Where:              
                      S=          The aggregate value of the net
                                 proceeds from the sale of the
                                       Non-Fixed Income  Investment in the
                                        Short Sale  Transaction that are not
                                     included in clause (i) of Moody's
                                        Senior Advance Amount  or clause (i)
                                     of Moody's  Total Advance Amount,
                                      determined as of the date of  such
         sale.

                             M=          The lesser of (a) the Market Value of
                                          such Non-Fixed Income Investment as of
                                       the  date of determination, and (b)
                                         the original price of  such Non-Fixed
                                         Income  Investment on the date it was
             borrowed.

                            X=          The product of (a) the Market  Value
                                          of such Non-Fixed Income Investment as
                                 of the date of determination,
                                   multiplied by (b) one minus the
                                       Moody's Advance Rate  applicable to
                                          such Non-Fixed Income Investment as of
                                         the  date of determination; provided,
                                        however, that in no event shall X be
                less then 0.

              (ii)    If the Bank Loan or Security borrowed by the Issuer in
connection with such Short Sale Transaction is a Fixed Income Investment:       

Short Sale Advance Amount =      S minus M minus Y            

Where:              

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                      S=          The aggregate value of the net
                                        proceeds from the sale of such Fixed
                                        Income Investment  in the Short Sale
                                        Transaction that are not included in
                                        clause (i) of Moody's Senior Advance
                                         Amount or clause (i) of Moody's Total
                                         Advance  Amount, determined as of the
                      date of such sale.

                             M=          The lesser of (a) the Market Value of
                                          such Fixed Income Investment as of the
                                      date of determination, and (b) the
                                       original price of such Fixed Income
                                 Investment on the date it was
             borrowed.

                            Y=          The lesser of (a) the product of (i)
                                         the Market Value of such Fixed Income
                                Investment as of the date of
                                         determination, multiplied by (ii) one
                                  minus the Moody's Advance Rate
                                   applicable to such Fixed Income
                                Investment as of the date of
                                          determination, and (b) (i) 110% of the
                                  par value of such Fixed Income
                                     Investment, minus (ii) the Market
                                         Value of such Fixed Income Investment
                                    as of the date of determination;
                                      provided, however that in no event
                           shall Y be less then 0.

(iii)   For purposes of this definition:        
     (A)     "Fixed Income Investment" means any Bank Loan
or Security that (i) provides a return in the form of fixed periodic payments   
and/or a return of a fixed principal amount at maturity, which return is fixed  
at the time of purchase of such security, and (ii) at the time of determination 
constitutes indebtedness of the issuer.                                         

                (B)     "Non-Fixed Income Investment" means any Security that is
borrowed by the Fund in a Short Sale Transaction that is not a Fixed Income     
Investment.                                                                     

     "Short Sale Transaction" means a transaction under which the Issuer
borrows a Bank Loan or Security and sells or otherwise disposes of such or any  
substantially similar Bank Loan or Security prior to the date on which the same 
must be returned to the lender thereof (and commonly known as a "short sale").  

      "Specified Foreign Country" means each Designated Country other than
(x) a country whose sovereign debt rating in a non-local currency is rated "Aaa"
by Moody's or (y) a country whose sovereign debt rating in a non-local currency 
is rated "Aa2" or better by Moody's (and, if rated "Aa2" by Moody's, such rating
has not been placed on a credit watch with negative implications by Moody's) and
in the case of(y) which is (a) a member of the European Union that has adopted  
the Euro as its lawful currency, (b) Canada, (c) Great Britain or (d) Australia.

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 "Structured Product Transaction" means a Hedging and Short Sale
Transaction between the Issuer and a counterparty in which either, (i) the      
Issuer is the counterparty to a CDS purchasing protection from an Eligible      
Counterparty with respect to a reference asset or an index that refers to or is 
based upon a number of reference assets, or (ii) the Issuer is the counterparty 
writing or providing the protection with respect to a CDS relating to a         
reference asset or an index that refers to or is based upon a number of         
reference assets.                                                               

     "Swap Transaction" means: (i) any rate, basis, debt or equity swap;
(ii) any put, cap, collar or floor agreement; (iii) any rate, basis, debt or    
equity futures or forward contract; (iv) any rate, basis, debt or equity option 
representing an obligation to buy or sell a security, debt or equity; and (v)   
any other similar agreement.                                                    

         "Total Capitalization" means the sum of (a) Contributed Company Capital
plus aggregate undistributed net income of the Issuer (as determined quarterly  
in accordance with GAAP and set forth in the Issuer's financial statements)     
minus net loss of the Issuer (determined quarterly in accordance with GAAP and  
set forth in the Issuer's financial statements), in each case excluding any     
reduction in Company Equity as a result of placement or structuring fees and    
organizational expenditures, (b)the aggregate outstanding liquidation preference
of the Preferred Shares plus the aggregate liquidation preference of fully      
subscribed but unissued Preferred Shares and (c) the aggregate Outstanding      
Principal Amount plus the amount, if any, by which the Total Maximum Commitment 
exceeds the Outstanding Principal Amount; provided, however, until June 30,     
2007, for purpose of clauses (i) through (vi) of the Portfolio Limitations,     
"Total Capitalization" will be the greater of (1) the amount determined pursuant
to clauses (a), (b) and (c) above and (ii) $404.5 million; provided, further,   
that, for purposes of the definition of Portfolio Limitations, Total            
Capitalization shall not exceed $809.0 million.                                 

        "Unhedged Foreign Investment" means any portion of any Fund Investment
denominated in a currency other than Dollars which is not protected against     
currency fluctuations as a result of Currency Hedging Transactions.             

       "Unquoted Investments" means Fund Investments other than Cash or Cash
Equivalents for which the Market Value has not been obtained from an Approved   
Source.                                                                         

"U.S. Government Securities" means Securities that are direct 
obligations of, or obligations the timely payment of principal and interest on  
which is fully guaranteed by, the United States of America or any agency or     
instrumentality of the United States of America the obligations of which are    
backed by the full faith and credit of the United States of America and in the  
form of conventional bills, bonds and notes. In no event shall U.S. Government  
Securities include: (i) any security providing for the payment of interest only;
(ii) any Swap Transaction; or (iii) any obligation on which all or any portion  
of the payments thereunder is based, directly or indirectly, on any Swap        
Transaction.                                                                    

"Warrant/Option Intrinsic Value" means, with respect to any   
Warrant/Option Investment, the product of (x) an amount by which the current    
price (based on the price from an Approved Source or an Approved Investment     
Banking Firm) of the applicable Related Equity Securities exceeds the agreed    
strike price of the Related Equity Securities with respect to such              
Warrant/Option Investment, multiplied by (y) the number of shares of the Related
Equity Securities. For the avoidance of doubt, the Warrant/Option Intrinsic     
Value shall always be zero                                                      

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if, in the case of a call Warrant/Option Investment, the agreed strike price of 
the applicable Related Equity Securities for such Warrant/Option Investment is  
equal to or greater than the current price of the applicable Related Equity     
Securities for such Warrant/Option Investment or, in the case of a put          
Warrant/Option Investment, the agreed strike price of the applicable Related    
Equity Securities for such Warrant/Option Investment is equal to or less than   
the current price of the applicable Related Equity Securities for such          
Warrant/Option Investment.                                                      

     "Warrant/Option Investments" means any Fund Investments held by the
Issuer that are warrants or call options or similar rights with respect to      
Equity Securities (the "Related Equity Securities').                            

         "Yield to Worst" means, in respect of any High Yield Bond or other debt
security, the lesser of (a) the yield-to-maturity and (b) the lowest            
yield-to-call calculated on each scheduled call date.                           

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                                                                         ANNEX I

MOODY'S INDUSTRY CLASSIFICATIONS

1.       Aerospace and Defense                                                  
2.       Automobile                                                             
3.       Banking                                                                
4.       Beverage, Food and Tobacco                                             
5.       Buildings and Real Estate                                              
6.       Chemicals, Plastics and Rubber                                         
7.       Containers, Packaging and Glass                                        
8.       Diversified/Conglomerate Manufacturing                                 
9.       Diversified/Conglomerate Service                                       
10.      Diversified Natural Resources, Precious Metals and Minerals            
11.      Ecological                                                             
12.      Electronics                                                            
13.      Finance                                                                
14.      Farming and Agriculture                                                
15.      Grocery                                                                
16.      Healthcare, Education and Childcare                                    
17.      Home and Office Furnishings, Housewares and Durable Consumer Products  
18.      Hotels, Motels, Inns and Gaming                                        
19.      Insurance                                                              
20.      Leisure, Amusement, Motion Pictures                                    
21.      Machinery (Non-Agriculture, Non-Construction and Non-Electronic)       
22.      Mining, Steel, Iron and Nonprecious Metals                             
23.      Oil and Gas                                                            
24.      Personal and Non-Durable Consumer Products (Manufacturing Only)        
25.      Personal, Food and Miscellaneous Services                              
26.      Printing and Publishing                                                
27.      Cargo Transport                                                        
28.      Retail Stores                                                          
29.      Telecommunications                                                     
30.      Textiles and Leather                                                   
31.      Personal Transportation                                                
32.      Utilities                                                              
33.      Broadcasting and Entertainment                                         
34.      Structured Finance Obligations                                         

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APPROVED DEALERS

A.G. Edwards & Sons, Inc.                    Liberty Brokerage                  
ABN AMRO Bank                                Libra Securities                   
Allen & Co.                                  Lincoln Partners                   
Amroc Investments, LLC                       M.J. Whitman, LLC                  
APS Financial Corporation                    McDonald & Company                 
B. Riley & Co.                               Merrill Lynch                      
Bank of America                              Mesirow Financial                  
Bank of Montreal                             Miller Tabak & Co., LLC            
Barclays Capital                             Morgan Joseph & Co.                
Bear Stearns                                 Morgan Stanley                     
BMO Nesbitt Bums                             Prudential Securities              
BNP Paribas                                  Raymond James                      
BNY Capital                                  RBC Dain Rauscher                  
Brown Gibbons Lang & Company                 Robert W. Baird & Co               
Cantor Fitzgerald                            Roth Capital                       
Chanin Capital Partners                      Salomon Smith Barney               
Chicago Corporation                          Schroder Wertheim                  
CIBC World Markets                           Scotia Capital Markets             
CIT Group                                    Seidler Companies, The             
Citigroup                                    SG Cowen                           
Citimark Partners                            Societe Generale                   
Commerzbank                                  Spear, Leeds & Kellogg             
Credit Lyonnais                              SunTrust Robinson-Humphrey Company 
Credit Research & Trading                    Swiss Bank Corporation             
CS First Boston                              TD Securities                      
Delaware Bay, Inc.                           The Blackstone Group               
Deutsche Bank Alex Brown                     U. S. Bancorp                      
First Chicago Trust Company                  UBS Warburg                        
First Security Van Kasper                    Union Bank of California           
Fleet                                        Wachovia Securities                
General Electric                             Wedbush Morgan                     
Goldman Sachs & Co.                          Wells Fargo                        
Hellmond & Associates                        William Blair & Company            

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APPROVED EXCHANGES

ASIAN STOCK EXCHANGES                                                           
Nagoya Stock Exchange,Japan                                   
Osaka Securities Exchange, Japan                              
Tokyo Stock Exchange, Japan                                   
Stock Exchange of Singapore (SES), Singapore                  
   Singapore International Monetary Exchange Ltd. (SIMEX), Singapore

EUROPEAN STOCK EXCHANGES                                                        
Paris Stock Exchange, France                                  
Frankfurt Stock Exchange, Germany                             
FTSE International (London Stock Exchange), United Kingdom    
London InternationalFinancial Futures and Options Exchange,   
United Kingdom                                                

NORTH AMERICAN STOCK EXCHANGES                                                  
Alberta Stock Exchange, Canada                                
Montreal Stock Exchange, Canada                               
Toronto Stock Exchange, Canada                                
Vancouver Stock Exchange, Canada                              
Winnipeg Stock Exchange, Canada                               
AMEX, United States                                           
New York Stock Exchange (NYSE),United States                  
NASDAQ, United States                                         
Chicago Stock Exchange, United States                         
Chicago Board Options Exchange, United States                 
Chicago Board of Trade, United States                         
Chicago Mercantile Exchange, United States                    
Pacific Stock Exchange, United States                         
Philadelphia Stock Exchange, United States                    

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APPROVED INVESTMENT BANKING FIRMS 

A.G. Edwards & Sons, Inc.                    Lehman Brothers                    
ABN AMRO Bank                                Liberty Brokerage                  
Allen & Co.                                  Lincoln Partners                   
Amroc Investments                            M.J. Whitman                       
Bank of America                              McDonald & Company                 
Bank of Montreal                             Merrill Lynch                      
Bank One                                     Mesirow Financial                  
Barclays Capital                             Miller Tabak & Hirsch              
Bear Stearns                                 Morgan Stanley                     
BMO Nesbitt Burns                            Prudential Securities              
Brown, Gibbons, Lang                         RBC Dain Rauscher                  
Cantor Fitzgerald                            Raymond James                      
Chanin Capital Partners                      Robert W. Baird & Co               
JPMorgan Chase Manhattan                     Roth Capital                       
Chicago Corporation                          Solomon Smith Barney               
CIBC World Markets                           Schroder Wertheim                  
CIT Group                                    Scotia Capital Markets             
Citibank Group                               Seidler Companies                  
Citimark Partners                            SG Cowen                           
Credit Research & Trading                    Sun Trust Robinson-Humphrey Company
CS First Boston                              Sutro & Co.                        
Dabney Flannigan                             TD Securities                      
Delaware Bay, Inc.                           The Blackstone Group               
Deutsche Bank Alex Brown                     Union Bank of California           
EVEREN Securities                            US Bancorp Libra                   
First Security Van Kasper                    US Bancorp Piper Jaffray           
Fleet National Bank                          USB Warburg                        
Goldman Sachs & Co.                          Wachovia Securities                
Grantchester Holdings                        Wasserstein Perella Securities Inc.
Greenwich NatWest                            Wedbush Morgan                     
Gruntal                                      Wells Fargo                        
Hambrecht & Quist                            William Blair & Company            
Hellmond & Associates                                                           
Houlihan Lokey Howard & Zukin                                                   
Imperial Capital                                                                
ING (Baring Furman Selz)                                                        
Jefferies & Company, Inc.                                                       
JPMorgan Chase                                                                  
Ladenburg Thalmann                                                              
Lazard Freres                                                                   

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APPROVED PRICING SERVICES 

Advantage Data, Inc.                                                            
Bloomberg                                                                       
Bridge Information Systems, Inc.                                                
Data Resources Inc.                                                             
Fixed Income Pricing System                                                     
Interactive Data Corp                                                           
International Securities Market Association                                     
JJ Kenney                                                                       
KDP                                                                             
Loan Pricing Corp.                                                              
Merrill Lynch Securities Pricing Service                                        
Muller Data Corp.                                                               
Reuters (only for pricing Foreign Issuer Securities)                            
Societe Generale                                                                
Standard & Poor's                                                               
Telerate                                                                        
Wood Gundy (only for pricing Securities issued by the Canadian federal or       
Canadian provincial governments)                        

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APPROVED THIRD PARTY APPRAISERS 

A.G. Edwards & Sons, Inc.                    J.P. Morgan Chase                  
ABN AMRO Bank                                Jefferies & Company, Inc.          
Allen & Co.                                  KPMG International                 
Amroc Investments                            Ladenburg Thalmann                 
Bank of America                              Lazard Freres                      
Barclays Capital                             Lehman Brothers                    
Bear Stearns                                 Liberty Brokerage                  
BMO Nesbitt Burns                            M.J. Whitman                       
Brown, Gibbons, Lang                         McDonald & Company                 
Cantor Fitzgerald                            Merrill Lynch                      
Chanin Capital                               Mesirow Financial                  
Citimark Partners                            Miller Tabak                       
Chicago Corporation                          Morgan Stanley                     
CIBC World Markets                           PriceWaterhouseCoopers             
CIT World Markets                            Raymond James                      
Citigroup                                    RBC Dain Rauscher Robert W. Barry  
Credit Research & Trading                    Schroder Wertheim                  
CS First Boston                              Scotia Capital Markets             
Dabney Flannigan                             Seidler Companies                  
Delaware Bay, Inc.                           Sun Trust Robinson-Humphrey Company
Deloitte & Touche                            Sutro & Co.                        
Deutsche Bank                                Swiss Bank Corporation             
Dresdner Kelinwort Wasserstein               TD Securities                      
Ernst & Young                                The Blackstone Group               
EVEREN Securities                            UBS Warburg                        
First Chicago Trust Company                  Union Bank                         
First Security Van Kasper                    US Bancorp Piper Jaffray           
Goldman Sachs & Co.                          US Bancorp Libra                   
Grantchester  Holdings                       Wachovia Securities                
Greenwich NatWest                            Wedbush Morgan                     
Hambrecht & Quist                            Wells Fargo                        
Hellmond & Associates                        William Blair & Company            
Houlihan Lokey Howard & Zukin                                                   
Imperial Capital                                                                

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SCHEDULE B

S&P COLLATERAL VALUATION SCHEDUL  

CALCULATION OF S&P ADVANCE AMOUNT.                                              

       "S&P Advance Rate" means the S&P Senior Advance Rate or the S&P Total
Advance Rate, as applicable.                                                    

         "S&P Senior Advance Rate" means, for purposes of determining the Senior
Over-Collateralization Test, for each S&P Asset Category, the percentage        
specified in the table below opposite such S&P Asset Category; provided, that:  

           (i)     so long as the aggregate number of issuers (without
duplication) of the Eligible Investments is equal to or greater than 30 and the 
aggregate number of Industries (without duplication) in which the Eligible      
Investments are invested is equal to or greater than 9, the percentage specified
in the column entitled "S&P Advance Rate -- 30/9" in the table below opposite   
such S&P Asset Category; and                                                    

            (ii)    for all other cases, the percentage specified in the
column entitled "S&P Advance Rate -- Others" in the table below opposite such   
S&P Asset Category;                                                             

provided that, for purposes of this definition only, each $7.0 million in Cash  
or Cash Equivalents held by the Issuer or each $7.0 million in available        
unfunded amount under the Indenture shall be treated as one issuer and one      
Industry; provided, further, that a Related Person of any Person shall be       
considered the same "issuer" as such Person unless such Person is a bankruptcy  
remote entity; provided, further, that during the first 365 days following the  
Closing Date only, the S&P Senior Advance Rate for each S&P Asset Category may  
be, at the election of the Investment Manager, the percentage specified in the  
column entitled "S&P Advance Rate --30/9" in the table below opposite such S&P  
Asset Category regardless of the aggregate number of issuers of the Eligible    
Investments or the aggregate number of Industries in which the Eligible         
Investments are invested:                                                       

                                                                [Download Table]

S&P ASSET CATEGORY    S&P ADVANCE RATE- 30/9   S&P ADVANCE RATE- OTHERS
                                                                       
        A-1                   100.00%                   100.00%        
        A-2                    99.00%                    99.00%        
        A-3                    96.00%                    96.00%        
        A-4                    92.00%                    92.00%        
        A-5                    82.20%                    82.20%        
        A-6                    68.20%                    68.20%        
        A-7                    53.20%                    53.20%        
        B-1                    85.99%                    81.36%        
        B-2                    81.14%                    74.82%        
        C-1                    83.92%                    81.84%        
        C-2                    82.86%                    80.63%        
        C-3                    81.64%                    79.18%        
        D-1                    78.31%                    74.90%        
        D-2                    74.92%                    70.79%        
        D-3                    71.69%                    66.92%        
        E-1                    65.64%                    59.02%        
        E-2                    61.10%                    53.58%        

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                                                                [Download Table]

S&P ASSET CATEGORY    S&P ADVANCE RATE- 30/9   S&P ADVANCE RATE- OTHERS
                                                                       
        E-3                    56.59%                   48.21%         
        F-1                    50.34%                   41.46%         
        F-2                    41.97%                   31.64%         
        F-3                    31.26%                   18.35%         
        G-1                    76.92%                   74.84%         
        G-2                    75.86%                   73.63%         
        G-3                    74.64%                   72.18%         
        G-4                    71.31%                   67.90%         
        G-5                    67.92%                   63.79%         
        G-6                    64.69%                   59.92%         
        G-7                    58.64%                   52.02%         
        G-8                    54.10%                   46.58%         
        G-9                    49.59%                   41.21%         
        G-10                   24.26%                   11.35%         
         H                     35.54%                   27.56%         
        I-1                    66.94%                   57.54%         
        I-2                    58.57%                   47.15%         
        I-3                    24.39%                    9.71%         
        J-1                    36.10%                   14.52%         
        J-2                     5.90%                    8.25%         

       "S&P Total Advance Rate" means, for purposes of determining the Total
Over-Collateralization Test, for each S&P Asset Category, the percentage        
specified in the table below opposite such S&P Asset Category; provided, that:  

           (i)     so long as the aggregate number of issuers (without
duplication) of the Eligible Investments is equal to or greater than 30 and the 
aggregate number of Industries (without duplication) in which the Eligible      
Investments are invested is equal to or greater than 9, the percentage specified
in the column entitled "S&P Advance Rate -- 30/9" in the table below opposite   
such S&P Asset Category; and                                                    

            (ii)    for all other cases, the percentage specified in the
column entitled "S&P Advance Rate -- Others" in the table below opposite such   
S&P Asset Category;                                                             

provided that, for purposes of this definition only, each $7.0 million in Cash  
or Cash Equivalents held by the Issuer or each $7.0 million in available        
unfunded amount under the Indenture shall be treated as one issuer and one      
Industry; provided, further, that a Related Person of any Person shall be       
considered the same "issuer" as such Person unless such Person is a bankruptcy  
remote entity; provided, further, that during the first 365 days following the  
Closing Date only, the S&P Total Advance Rate for each S&P Asset Category may   
be, at the election of the Investment Manager, the percentage specified in the  
column entitled "S&P Advance Rate --30/9" in the table below opposite such S&P  
Asset Category regardless of the aggregate number of issuers of the Eligible    
Investments or the aggregate number of Industries in which the Eligible         
Investments are invested:                                                       

                                                                [Download Table]

S&P ASSET CATEGORY    S&P ADVANCE RATE- 30/9   S&P ADVANCE RATE- OTHERS
                                                                       
        A-1                   100.00%                   100.00%        
        A-2                    98.00%                    99.00%        
        A-3                    97.00%                    97.00%        
        A-4                    92.00%                    94.00%        
        A-5                    84.60%                    84.60%        

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                                                                [Download Table]

S&P ASSET CATEGORY    S&P ADVANCE RATE- 30/9   S&P ADVANCE RATE- OTHERS
                                                                       
        A-6                    72.40%                   72.40%         
        A-7                    59.40%                   59.40%         
        B-1                    88.42%                   84.60%         
        B-2                    84.41%                   79.18%         
        C-1                    86.75%                   85.02%         
        C-2                    85.86%                   84.03%         
        C-3                    84.86%                   82.83%         
        D-1                    82.11%                   79.30%         
        D-2                    79.31%                   75.90%         
        D-3                    76.64%                   72.71%         
        E-1                    71.62%                   66.16%         
        E-2                    67.86%                   61.67%         
        E-3                    64.14%                   57.23%         
        F-1                    58.91%                   51.59%         
        F-2                    51.99%                   43.46%         
        F-3                    43.10%                   32.45%         
        G-1                    79.75%                   78.02%         
        G-2                    78.86%                   77.03%         
        G-3                    77.86%                   75.83%         
        G-4                    75.11%                   72.30%         
        G-5                    72.31%                   68.90%         
        G-6                    69.64%                   65.71%         
        G-7                    64.62%                   59.16%         
        G-8                    60.86%                   54.67%         
        G-9                    57.14%                   50.23%         
        G-10                   36.10%                   25.45%         
         H                     49.00%                   38.00%         
        I-1                    72.63%                   64.87%         
        I-2                    65.68%                   56.26%         
        I-3                    37.44%                   25.32%         
        J-1                    47.45%                   29.65%         
        J-2                    22.90%                   16.50%         

     "S&P Advance Amount" means the S&P Senior Advance Amount or the S&P
Total Advance Amount, as applicable. Notwithstanding the foregoing or the       
definition of S&P Senior Advance Amount or S&P Total Advance Amount, for        
purposes of determining the S&P Advance Amount,                                 

           (i)     the Market Value of any Unhedged Foreign Investment
shall be 95% of the Market Value thereof otherwise determined in accordance with
the above procedures; provided that, if the Foreign Issuer of such Unhedged     
Foreign Investment is from a country whose sovereign debt rating in a non-local 
currency is not assigned an S&P OC Test Rating of "AA" or better, the Market    
Value of such Unhedged Foreign Investment shall be 85% of the Market Value      
thereof otherwise determined in accordance with the above procedures;           

             (ii)    the percentage applicable above to Cash in a currency
other than Dollars shall be (a) with respect to Cash in a currency other than   
Dollars, held for a period of five (5) Business Days or less, 95% (and not 100%)
and (b) with respect to Cash in a currency other than Dollars, held for a period
of more than five (5) Business Days, 0%, unless in either case such Cash is     
protected against currency fluctuations as a result of Currency Hedging         
Transactions, in which case, the percentage applicable shall be 100%;           

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             (iii)   the Market Value of any Preferred Stock or Structured
Product Transaction shall be 95% of the Market Value thereof otherwise          
determined in accordance with the above procedures and, in the case of any      
Structured Product Transaction in which the Issuer purchases a CDS, the full    
amount of the premiums to be paid by the Issuer for the duration of such CDS    
will be deducted from the Market Value of such Structured Product Transaction;  

             (iv)    the Market Value of any CDO Debt Security that is not
assigned an S&P OC Test Rating of "CCC" or better shall be zero; and            

               (v)     the Market Value of any Non-Cash Pay Instrument that is
not a U.S. Government Security shall be 95% of the Market Value thereof         
otherwise determined in accordance with the above procedures.                   

      For purposes of the S&P Advance Amount, the Issuer shall assign each
Fund Investment to one of the following categories (each, an "S&P Asset         
Category") commencing upon the initial acquisition thereof (and, for purposes of
this categorization, the Market Value Price of a Fund Investment trading at par 
is equal to $1.00):                                                             

"Asset Category A-1 Investments" means (a) Cash and (b) Cash  
Equivalents described in clause (vi) of the definition of such term and (c) Cash
Equivalents described in clauses (i), (ii), (iii) or (iv) of the definition of  
such term that mature on the Business Day next following the date of acquisition
thereof or are payable on demand of the holder or within one Business Day of    
demand.                                                                         

     "Asset Category A-2 Investments" means Cash Equivalents (other than
Cash in U.S. dollars, U.S. Government Securities and Cash Equivalents described 
in clauses (b) or (c) of the definition of Asset Category A-1 Investments) and  
U.S. Government Securities with maturities of less than or equal to 183 days.   

        "Asset Category A-3 Investments" means U.S. Government Securities with
final maturities more than 183 days but less than or equal to two (2) years.    

        "Asset Category A-4 Investments" means U.S. Government Securities with
final maturities more than two (2) years but less than or equal to five (5)     
years.                                                                          

        "Asset Category A-5 Investments" means U.S. Government Securities with
final maturities more than five (5) years but less than or equal to ten (10)    
years.                                                                          

        "Asset Category A-6 Investments" means U.S. Government Securities with
final maturities more than ten (10) years but less than or equal to twenty (20) 
years.                                                                          

        "Asset Category A-7 Investments" means U.S. Government Securities with
final maturities more than twenty (20) years but less than or equal to thirty   
(30) years.                                                                     

 "Asset Category B-1 Investments" means Bank Loans which (i) are
Performing and (ii) have a Market Value Price greater than or equal to $0.90.   

 "Asset Category B-2 Investments" means Bank Loans which (i) are
Performing and (ii) have a Market Value Price greater than or equal to $0.85 but
less than $0.90.                                                                

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       "Asset Category C-1 Investments" means High Yield Bonds and Mezzanine
Investments which (i) are Performing and (ii) have an S&P OC Test Rating of     
"BBB+" or better.                                                               

       "Asset Category C-2 Investments" means High Yield Bonds and Mezzanine
Investments which (x) (i) are Performing and (ii) have an S&P OC Test Rating of 
"BBB" or (y) Securities (other than securities issued by a Foreign Issuer) which
are fully defeased.                                                             

       "Asset Category C-3 Investments" means High Yield Bonds and Mezzanine
Investments which (i) are Performing and (ii) have an S&P OC Test Rating of     
"BBB-".                                                                         

     "Asset Category D-1 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (i) are Performing and  
(ii) have an S&P OC Test Rating of "BB+".                                       

     "Asset Category D-2 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (i) are Performing and  
(ii) have an S&P OC Test Rating of "BB".                                        

     "Asset Category D-3 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (i) are Performing and  
(ii) have an S&P OC Test Rating of "BB-".                                       

     "Asset Category E-1 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (i) are Performing and  
(ii) have an S&P OC Test Rating of "B+".                                        

     "Asset Category E-2 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (i) are Performing and  
(ii) have an S&P OC Test Rating of "B".                                         

     "Asset Category E-3 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (i) are Performing and  
(ii) have an S&P OC Test Rating of "B-".                                        

     "Asset Category F-1 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (i) are Performing and  
(ii) have an S&P OC Test Rating of "CCC+".                                      

     "Asset Category F-2 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (a) are Performing and  
(b) have an S&P OC Test Rating of "CCC".                                        

     "Asset Category F-3 Investments" means High Yield Bonds (other than
convertible Securities) and Mezzanine Investments which (i) are Performing and  
(ii) have an S&P OC Test Rating of "CCC-" or lower or are not rated.            

        "Asset Category G-1 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of at least "BBB+".              

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        "Asset Category G-2 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of "BBB".                        

        "Asset Category G-3 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of "BBB-".                       

        "Asset Category G-4 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of "BB+".                        

        "Asset Category G-5 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of "BB".                         

        "Asset Category G-6 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of "BB-".                        

        "Asset Category G-7 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of "B+".                         

        "Asset Category G-8 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of "B".                          

        "Asset Category G-9 Investments" means convertible bonds which (i) are
Performing and (ii) have an S&P OC Test Rating of "B-".                         

        "Asset Category G-10 Investments" means convertible bonds (not covered
by Asset Categories G-1 through 0-9) which are Performing.                      

"Asset Category H Investments" means Preferred Stock which is 
Performing.                                                                     

 "Asset Category I-1 Investments" means Bank Loans which (i) are
non-Performing and (ii) have a Market Value Price equal to or greater than      
$0.85.                                                                          

    "Asset Category I-2 Investments" means (i) Bank Loans which have a
Market Value Price less than $0.85 and (ii) Bank Loans described in Asset       
Categories B-1, B-2 or I-1 above that have an S&P OC Test Rating below "B-"     
(including Bank Loans with an S&P OC Test Rating of "NR") to the extent that the
aggregate Market Value of such Bank Loans is in excess of 15% of Total          
Capitalization; (iii) Bank Loans that would otherwise fall in Asset Categories  
B-1, B-2 or I-1 above that are originated under a credit agreement that provided
for aggregate credit facilities at origination of less than $150,000,000 to the 
extent that the aggregate Market Value of such Bank Loans is in excess of 15% of
Total Capitalization; and (iv) Bank Loans that are unsecured or subordinated.   

         "Asset Category I-3 Investments" means non-Performing High Yield Bonds,
Mezzanine Investments, convertible bonds and Preferred Stock.                   

        "Asset Category J-1 Investments" means Equity Securities which are not
Private Equity Securities.                                                      

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        "Asset Category J-2 Investments" means Fund Investments in Bank Loans,
High Yield Bonds, Mezzanine Investments, Private Equity Securities or CDO Debt  
Securities not otherwise described in any of the preceding Asset Categories and 
Structured Product Transactions (other than Fully Collateralized Structured     
Product Transactions).                                                          

      Rating Procedures. References herein to any rating by Moody's or S&P
shall include shadow ratings and shall also be deemed to include an equivalent  
rating in a successor rating category of Moody's or S&P, as the case may be, or 
if neither Moody's nor S&P is in the business of rating securities, an          
equivalent rating from another Rating Agency.                                   

 Notwithstanding any other provision contained in this Schedule:

           (i)     with respect to Fund Investments that are Preferred
Stock, if such Preferred Stock does not have a public rating by S&P, then such  
Preferred Stock shall be assigned a rating for purposes hereof that is (a) two  
rating sub-categories below the S&P OC Test Rating of the issuer if rated above 
"BB+" and (b) one rating category (i.e., three rating sub-categories) below the 
S&P OC Test Rating if the issuer is rated below "BBB-";                         

             (ii)    Fund Investments that are CDO Debt Securities will be
assigned to an Asset Category for High Yield Bonds using a rating that is (i)   
one rating category (i.e., three rating subcategories) below the S&P rating, if 
such CDO Debt Security is rated by S&P, and (ii) two rating categories (i.e.,   
six rating subcategories) below the actual public Moody's rating (and not the   
rating assigned pursuant to the S&P OC Test Rating), if such CDO Debt Security  
is not rated by S&P but is publicly rated by Moody's;                           

               (iii)   Fund Investments that are Busted Convertible Bonds will
be assigned to an S&P Asset Category into which such Fund Investments would     
otherwise fall if they were not convertible securities provided that the Market 
Value of any Busted Convertible Bonds shall be 95% of the Market Value thereof  
otherwise determined in accordance with valuation procedures set forth herein;  

               (iv)    the determination of the S&P Advance Rate applicable to
a Structured Product Transaction shall be subject to the following: (A) each    
Fully Collateralized Structured Product Transaction shall be deemed to fall into
the S&P Asset Category of its reference obligation; (B) each Single Asset       
Structured Product Transaction (other than a Fully Collateralized Structured    
Product Transaction) in which the reference obligation has an S&P OC Test Rating
of "BBB-" or better shall be deemed to fall into the S&P Asset Category of its  
reference obligation and shall have an S&P Advance Rate equal to 95% of the S&P 
Advance Rate applicable to such reference obligation; (C) each Single Asset     
Structured Product Transaction (other than a Fully Collateralized Structured    
Product Transaction) in which the reference obligation has an S&P OC Test Rating
of less than "BBB-" shall be deemed to fall into the S&P Asset Category of its  
reference obligation and shall have an S&P Advance Rate equal to 90% of the S&P 
Advance Rate applicable to such reference obligation; (D) each Indexed          
Structured Product Transaction (other than a Fully Collateralized Structured    
Product Transaction) comprised primarily of reference obligations that have an  
S&P OC Test Rating of "BBB-" or better shall be deemed to fall into the S&P     
Asset Category for High Yield Bonds having an S&P OC Test Rating of "BBB-"and   
shall have an S&P Advance Rate equal to 95% of the S&P Advance Rate applicable  
to High Yield Bonds having such a rating; and (E) each                          

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Indexed Structured Product Transaction (other than a Fully Collateralized       
Structured Product Transaction) comprised primarily of reference obligations    
that have an S&P OC Test Rating of less than "BBB-" shall be deemed to fall into
the S&P Asset Category for High Yield Bonds having an S&P OC Test Rating of     
"CCC"and shall have an S&P Advance Rate equal to 90% of the S&P Advance Rate    
applicable to High Yield Bonds having such a rating.                            

           (v)     for the purpose of determining the S&P Advance Rate
applicable to Fund Investments that are Hedging and Short Sale Transactions, at 
any time during the 60-day time period or 30-day time period, as the case may   
be, described in clause (xvii) of the definition of Excluded Investments below, 
the S&P Advance Rate will be 90% of the S&P Advance Rate calculated for such    
Fund Investment pursuant to the S&P Advance Rate table in the definition of S&P 
Advance Rate above;                                                             

           (vi)    for the purpose of determining the S&P Advance Rate
applicable to Fund Investments in Bank Loan Participations, at any time during  
the 60-day time period described in clause (viii) of the definition of Excluded 
Investments below, the S&P Advance Rate will be 90% of the S&P Advance Rate     
calculated for such Fund Investment pursuant to the S&P Advance Rate table in   
the definition of S&P Advance Rate above;                                       

           (vii)   for the purpose of determining the S&P Advance Rate
applicable to Fund Investments in any Foreign Issuer, at any time during the    
180-day time period described in clause (ix) of the definition of Excluded      
Investments below, the S&P Advance Rate will be 85% of the S&P Advance Rate     
calculated for such Fund Investment pursuant to the S&P Advance Rate table in   
the definition of S&P Advance Rate above;                                       

           (viii)  for the purpose of determining the S&P Advance Rate
applicable to Fund Investments (other than Asset Category 1-3 Investments) that 
are not priced by an Approved Source, the S&P OC Test Rating of such Fund       
Investments will be one rating category (i.e., three rating sub-categories)     
below the S&P OC Test Rating determined without giving effect to this clause    
(viii); and                                                                     

              (ix)    Fund Investments that are Asset-Backed Securities will
be assigned to an S&P Asset Category for High Yield Bonds using a rating that is
(i) one rating category (i.e., three rating sub-categories) below the S&P rating
if such Asset-Backed Security is rated by S&P, and (ii) two rating categories   
(i.e., six rating sub-categories) below the actual public Moody's rating (and   
not the rating assigned pursuant to the S&P OC Test Rating), if such            
Asset-Backed Security is not rated by S&P but is publicly rated by Moody's.     

        "S&P Senior Advance Amount", as of any date of determination under the
Senior Over-Collateralization Test, means an amount equal to the sum of (i) the 
aggregate for all Eligible Investments (other than Warrant/Option Investments)  
determined for each such Eligible Investment by multiplying (1) the Market Value
(determined as described below) of such Eligible Investment (determined as      
described below) by (2) the S&P Senior Advance Rate for the S&P Asset Category  
applicable to such Eligible Investment under the Senior Over-Collateralization  
Test, (ii) the aggregate Secured Hedging Advance Amounts as of such date, (iii) 
the Defensive Hedge Advance Amount as of such date, (iv) the S&P Warrant/Option 
Advance Amount as of such date, (v) the S&P Net Accrual Amount as of such date  
and (vi) the Aggregate Short Sale Advance Amount as of such date.               

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       "S&P Total Advance Amount", as of any date of determination under the
Total Over-Collateralization Test, means an amount equal to the sum of (i) the  
aggregate for all Eligible Investments (other than Warrant/Option Investments)  
determined for each such Eligible Investment by multiplying (1) the Market Value
(determined as described below) of such Eligible Investment (determined as      
described below) by (2) the S&P Total Advance Rate for the S&P Asset Category   
applicable to such Eligible Investment under the Total Over-Collateralization   
Test, (ii) the aggregate Secured Hedging Advance Amounts as of such date, (iii) 
the Defensive Hedge Advance Amount as of such date, (iv) the S&P Warrant/Option 
Advance Amount as of such date, (v) the S&P Net Accrual Amount as of such date, 
and (vi) the Aggregate Short Sale Advance Amount as of such date.               

DETERMINATION OF FUND INVESTMENTS CONSTITUTING ELIGIBLE INVESTMENTS             

        "Eligible Investments" means, at any date, all Fund Investments in the
Collateral on such date other than Excluded Investments.                        

"Excluded Investments" means (without duplication):           

            (i)     Fund Investments to the extent that they are (A) not
subject to a perfected security interest (subject in priority only to any Liens 
permitted under the Indenture) in favor of the Collateral Agent for its benefit 
and the benefit of the other Secured Parties (as defined in the Pledge and      
Intercreditor Agreement) or (B) subject to any Liens (other than Permitted      
Liens); provided, however, that, Liens on Cash or other Fund Investments held in
a Short Sale Customer Account or Short Sale Broker Account shall not be         
Permitted Liens for purposes of this definition and Cash or Fund Investments    
held in any Short Sale Customer Account or Short Sale Broker Account shall be   
Excluded Investments;                                                           

(ii)    Excess Fund Investments;                

         (iii)   Fund Investments that have been borrowed or lent;

                (iv)    Fund Investments denominated in any currency (A) that is
not a currency freely convertible into Dollars or (B) that is subject to any    
currency exchange restrictions;                                                 

               (v)     Fund Investments denominated in any currency other than
Dollars or Eligible Foreign Currencies, unless at the time of purchase of such  
Fund Investments denominated in any currency other than Dollars or Eligible     
Foreign Currencies, at least 95% of the Market Value of such Fund Investments is
protected against currency fluctuations pursuant to Currency Hedging            
Transactions;                                                                   

          (vi)    Fund Investments in CDO Debt Securities unless the
applicable agreements governing such CDO Debt Securities deny borrowing base    
credit to the issuer of such CDO Debt Securities to the extent that more than   
7.5% of the total funded debt and equity capitalization of the issuer of such   
CDO Debt Securities is invested in Foreign Issuers located in Ineligible        
Countries (other than investments which are fully guaranteed by a guarantor     
located in an Eligible Country);                                                

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          (vii)   Fund Investments in CDO Debt Securities unless the
applicable agreements governing such CDO Debt Securities deny borrowing base    
credit to the issuer of such CDO Debt Securities to the extent that more than   
15% of the total funded debt and contributed equity capitalization of the issuer
of such CDO Debt Securities would be invested in Foreign Issuers located in     
countries whose unsupported sovereign non-local currency debt obligations are   
not assigned a rating of "AA-" or better from S&P (other than investments which 
are fully guaranteed by an entity located in a country whose unsupported        
sovereign non-local currency debt obligations are assigned a rating of "AA-" or 
better by S&P);                                                                 

                (viii)  (A) Fund Investments in any Bank Loan Participation held
by the Issuer for more than 60 consecutive days during any period while any bank
or other institution that sold such Bank Loan Participation has a long-term     
debt-rating of below an S&P OC Test Rating of "A-" (unless the obligation of    
such bank or other institution are guaranteed by an entity whose long-term debt 
obligations are assigned an S&P OC Test Rating of "A-" or better); and (B) Fund 
Investments in any Bank Loan Participation if at the date of acquisition of     
such Bank Loan Participation the bank or other institution that sold such Bank  
Loan Participation had a long-term debt rating of below an S&P OC Test Rating of
"A-" (unless the obligations of such bank or other institution are guaranteed by
an entity whose long-term debt obligations are assigned an S&P OC Test Rating of
"A-" or better);                                                                

      (ix)    Fund Investments in any Foreign Issuer from an
Ineligible Country (unless the applicable Fund Investment is fully guaranteed by
a guarantor located in a currently Eligible Country), provided that if a country
becomes an Ineligible Country after the Issuer has invested in a Fund Investment
relating to such country (and such Fund Investment does not have a guarantor    
located in a currently Eligible Country), such Fund Investment will not be      
subject to this clause (ix) until such country has been an Ineligible Country   
for 180 consecutive days;                                                       

            (x)     Fund Investments in CDO Debt Securities issued by an
issuer for which the Investment Manager or any Affiliate of the Investment      
Manager acts as the collateral manager or investment manager or in any          
comparable capacity;                                                            

            (xi)    Fund Investments in securities issued by the Issuer;

             (xii)   Fund Investments in Asset-Backed Securities which are
neither rated by S&P nor publicly rated by Moody's;                             

                (xiii)  Fund Investments in Bank Loans that obligate the Issuer,
whether currently or upon the happening of any contingency, to make any         
revolving extensions of credit to a borrower;                                   

      (xiv)   Fund Investments in any Hedging and Short Sale
Transaction held by the Issuer for more than (i) 60 consecutive days during any 
period while the counterparty to such Hedging and Short Sale Transaction has a  
long-term debt-rating of lower than "A-" by S&P (unless the obligations of such 
counterparty are guaranteed by an entity whose long-term debt rating is "A-" or 
higher by S&P) or has a short-term debt-rating of "A-2" by S&P (unless the      
obligations of such counterparty are guaranteed by an entity whose short-term   
debt rating is "A-1" or higher by S&P) or (ii) 30 consecutive days during any   
period while the counterparty to such Hedging and Short Sale Transaction has a  
short-term debt-rating of lower than "A-2" by                                   

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S&P (unless the obligations of such counterparty are guaranteed by an entity    
whose short-term debt rating is "A-1" or higher by S&P);                        

            (xv)    Fund Investments that do not fall into any S&P Asset
Category as provided herein;                                                    

      (xvi)   Fund Investments in CDO Equity Securities; and

           (xvii)  Fund Investments in catastrophe bonds and any other
non-credit risk securities.                                                     

      Excluded Investments are excluded from the calculation of the Market
Value of the Collateral for purposes of the S&P Valuation Procedures; however,  
the Collateral may include Excluded Investments.                                

APPLICATION OF PORTFOLIO LIMITATIONS                                            

        "Portfolio Limitations" means, at any applicable date of determination
(determined without duplication):                                               

             (i)     the aggregate Market Value of Fund Investments in any
single issuer in excess of 5% of Total Capitalization, provided, however, that  
the foregoing 5% limit will be increased up to a maximum of 7.5% (not to include
any Non-Cash Pay Instruments, any Non-Performing Instruments or any Fund        
Investments (other than Equity Securities) that are rated CCC or lower by S&P), 
for each of any three issuers;                                                  

         (ii)    the aggregate Market Value of Fund Investments in
issuers in any single Industry in excess of 25% of Total Capitalization;        

             (iii)   the aggregate Market Value of Fund Investments in all
Semi-Liquid Investments, Illiquid Investments and Non-Cash Pay Instruments in   
excess of 45% of Total Capitalization;                                          

             (iv)    the aggregate Market Value of Fund Investments in all
Illiquid Investments in excess of 20% of Total Capitalization;                  

      (v)     the aggregate Market Value of Fund Investments
consisting of (a) Bank Loan Participations in excess of 20% of Total            
Capitalization, (b) Bank Loan Participations wherein the participating entities 
are rated "A-" or lower by S&P in excess of 5% (or such greater percentage      
approved by the Credit Enhancer and with respect to which Rating Agency         
Condition with respect to S&P has been satisfied) of Total Capitalization, (c)  
Bank Loan Participations wherein the total exposure to any one participating    
entity is in excess of 5% (or such greater percentage approved by the Credit    
Enhancer and with respect to which Rating Agency Condition with respect to S&P  
has been satisfied) of Total Capitalization; (d) Hedging and Short Sale         
Transactions wherein the counterparties have a long term debt rating of lower   
than "A-" by S&P (unless the obligations of such counterparty are guaranteed by 
an entity whose long term debt rating is "A-" or higher by S&P) in excess of    
7.5% (or such greater percentage approved by the Credit Enhancer and with       
respect to which Rating Agency Condition with                                   

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respect to S&P has been satisfied) of Total Capitalization; (e) Hedging and     
Short Sale Transactions wherein the total exposure to any one counterparty is in
excess of 7.5% (or such greater percentage approved by the Credit Enhancer and  
with respect to which Rating Agency Condition with respect to S&P has been      
satisfied) of Total Capitalization; and (1) Hedging and Short Sale Transactions 
of the kind described in clause (iv) of the definition of "Hedging and Short    
Sale Transactions" wherein the counterparties have a short term debt rating of  
"A-l" by S&P (unless the obligations of such counterparty are guaranteed by an  
entity whose short term debt rating is higher than "A-1" by S&P) in excess of   
25% (or such greater percentage approved by the Credit Enhancer and with respect
to which Rating Agency Condition with respect to S&P has been satisfied) of     
Total Capitalization;                                                           

      (vi)    the aggregate Market Value of Fund Investments
(calculated using the absolute value of each Fund Investment) consisting of     
Structured Product Transactions in excess of 5% of Total Capitalization;        

      (vii)   the aggregate Market Value of Fund Investments
consisting of Non-Performing Instruments in excess of 20% of Total              
Capitalization;                                                                 

      (viii)  the aggregate Market Value of Fund Investments
consisting of convertible securities in excess of 25% of Total Capitalization;  

      (ix)    the aggregate Market Value of Fund Investments
consisting of CDO Debt Securities in excess of 5% of Total Capitalization;    

               (x)     the aggregate Market Value of Fund Investments that are
Preferred Stock in excess of 15% of Total Capitalization;                       

      (xi)    the aggregate Market Value of Fund Investments
consisting of (A) Private Equity Securities of any single issuer in excess of   
3% of Total Capitalization; provided that the foregoing 3% limit will be        
increased, up to a maximum of 4%, for each of any two issuers of Private Equity 
Securities; provided, further, that the foregoing 4% limit will be increased, up
to a maximum of 5%, for one of such two issuers of Private Equity Securities;   
and (B) Private Equity Securities in excess of 10% of Total Capitalization;     

               (xii)   the aggregate Market Value of Fund Investments that are
Asset-Backed Securities in excess of 5% of Total Capitalization;                

               (xiii)  the aggregate Market Value of Fund Investments that are
Dollar-denominated investments (A) in Foreign Issuers domiciled in Designated   
Countries in excess of 10% of Total Capitalization, and (B) in any single       
Foreign Issuer domiciled in a Designated Country in excess of 5% of Total       
Capitalization;                                                                 

               (xiv)   the aggregate Market Value of Fund Investments that are
non-Dollar-denominated investments in excess of 10% of Total Capitalization;    

               (xv)    the aggregate Market Value of Fund Investments that are
Equity Securities in excess of 20% of Total Capitalization;                     

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               (xvi)   the aggregate Market Value of Fund Investments that are
(determined without duplication) Non-Performing Instruments, Equity Securities  
and Fund Investments that are rated "CCC" or lower by S&P in excess of 50% of   
Total Capitalization;                                                           

      (xvii)  the aggregate Market Value of Unhedged Foreign
Investments in excess of 5% of Total Capitalization.                            

Notwithstanding the foregoing:                                

           (A)     in the event that a Fund Investment is reclassified
                after its acquisition by the Issuer, for purposes of calculating
         the S&P Advance Amount, the exclusions described above in
              clauses (iii) and (iv), that would otherwise become applicable
              following such reclassification will not apply to assets owned
             by the Issuer (or which the Issuer had committed to purchase)
              on or prior to the date of such reclassification until 30 days
           after such reclassification but shall apply (on a pro forma
         basis giving effect to such reclassification for all Fund
               Investments) to any asset acquired by the Issuer after the date
              of such reclassification which the Issuer had not committed to
          purchase on or prior to the date of such reclassification;

             (B)     for purposes of clause (i) above, a Related Person of
               any Person shall be considered the same "issuer" as such Person
     unless such Person is a bankruptcy remote entity; and

              (C)     under no circumstances shall any Cash, Cash Equivalent
       or U.S. Government Securities be excluded from Eligible
          Investments based upon the Portfolio Limitations set forth
above.                                          

DETERMINATION OF THE MARKET VALUE OF FUND INVESTMENTS                           

         The Issuer shall calculate the Market Value (i) of each Fund Investment
that is not an Unquoted Investment on a weekly basis as of the Determination    
Date for each calendar week and (ii) of each Fund Investment that is an Unquoted
Investment as set forth in the definition of "Market Value" below.              

"Market Value" means                                          

(a)    with respect to Cash, the current balance thereof;     

         (b)    with respect to any Cash Equivalent (x) of the type described in
clause (ii) of the definition thereof (excluding banker's acceptances), the     
current balance thereof, (y) of a type described in clause (iii) of the         
definition thereof (and banker's acceptances described in clause (ii) thereof), 
the original purchase price thereof, and (z) of a type described in clause (v)  
of the definition thereof, the aggregate current net value thereof;             

 (c)    with respect to any Fund Investment (other than Unquoted
Investments, Structured Product Transactions, Cash and Cash Equivalents         
described in clause (b) above) at any date, an amount determined by the Issuer  
that is not in excess of the product of (x) the Market Value Price for each unit
of such Fund Investment on such date (and, with respect to any                  

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Securities which have an amortizing principal amount, the then current factor   
related thereto, if applicable) times (y) the number of units of such Fund      
Investment held by the Issuer; and                                              

     (d)    with respect to any Fund Investment other than Cash and Cash
Equivalents which is an Unquoted Investment at any date, the value thereof most 
recently determined by the Issuer in accordance with the procedures described   
below;                                                                          

    provided, however, (x) for purposes of making such determinations,

             (A)     the frequency of determination of the Market Value of
             any Illiquid Investment will be at least quarterly as of each
       Quarterly Date and, except as otherwise provided in the
               following clauses, the frequency of determination of the Market
               Value of any Semi-Liquid Investment will be at least monthly as
of the last Business Day of each calendar month;

                (B)     for Semi-Liquid Investment positions with a Market Value
            of $35 million or greater but less than $70 million (and all
               positions subject to this clause (x)(2) by reason of clause (y)
               below), a quotation from an Approved Investment Banking Firm or
   an Approved Third-Party Appraisal at least monthly;

                (C)     for Semi-Liquid Investment positions with a Market Value
       of $70 million or greater, a quotation from an Approved
            Investment Banking Firm or an Approved Third-Party Appraisal
               at least monthly and an Approved Third-Party Appraisal at least
quarterly; and                                  

                (D)     for Illiquid Investment positions with a Market Value of
                $35 million or greater (and all positions subject to this clause
             (x)(4) by reason of clause (y) below) an Approved Third-Party
Appraisal at least quarterly;                   

         (y)    notwithstanding the foregoing, the aggregate Market Value of all
              Unquoted Investment positions whose value is determined by the
      Issuer without relying on the methodology set forth in
        subclauses (2), (3) or (4) of clause (x) above (it being
         understood that such methodology may be used for Unquoted
                Investments with Market Values below the thresholds set forth in
               such subclauses) may not exceed 5% of Total Capitalization, and
                all such Unquoted Investment positions (i.e., those in excess of
            such limit and as selected by the Issuer) will be subject to
                subclauses (2) or (4) of clause (x) above depending upon whether
              any such Unquoted Investment is a Semi-Liquid Investment or an
Illiquid Investment; and                        

     (z)    in no event will the Market Value of any Unquoted Investment
                exceed the lesser of (1) the most recently obtained quotation or
                appraisal obtained as provided in clauses (d)(x) or (d)(y) above
         and (2) the value most recently determined by the Issuer.

       Notwithstanding the foregoing, if the Investment Manager shall on any
day actually determine that (i) the Market Value of any Semi-Liquid Investment  
determined as of the last Business Day of the preceding calendar month or (ii)  
the Market Value of any Illiquid Investment determined as of the last Quarterly 
Date has decreased since such last Business Day                                 

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of the preceding calendar month or last Quarterly Date, the Market Value of such
Fund Investment shall be such decreased value, and if the Investment Manager    
subsequently actually determines on any day prior to the next determination of  
its Market Value that the value of such Fund Investment has further decreased,  
the Market Value of such Fund Investment shall be such decreased value. If, on  
the other hand, the Investment Manager shall subsequently actually determine    
that the value of such Fund Investment has increased, the Market Value of such  
Fund Investment shall be such increased value; provided that in no event shall  
the Market Value of any such Fund Investment whose value is so increased be     
greater than the Market Value of such Fund Investment previously determined as  
of the last Business Day of the preceding calendar month (in the case of        
Semi-Liquid Investments) or as of the last Quarterly Date (in the case of       
Illiquid Investments). It is expressly understood that the Investment Manager   
shall have no duty, in the absence of actual knowledge on its part, to implement
any value changes described in this paragraph.                                  

     Prior to the first available quotation or appraisal of any Unquoted
Investment obtained as provided above, the Market Value of such Unquoted        
Investment will be the lower of the value thereof as most recently determined by
the Issuer and cost. In the event that the Issuer elects in its discretion to   
book, for purposes of its own financial accounting records, any Unquoted        
Investment at a value lower than that which would require a valuation by an     
Approved Investment Banking Firm or an Approved Third-Party Appraisal, as the   
case may be, then the Market Value of such Unquoted Investment shall be such    
lower value used by the Issuer for purposes of its own financial accounting     
records.                                                                        

   Notwithstanding the foregoing, the Market Value of any Structured
Product Transaction at any date will be equal to the net settlement amount, if  
any, that the Issuer would receive if such Structured Product Transaction was   
terminated or liquidated early in accordance with its terms on such date, as    
determined by the Issuer.                                                       

The Market Value of any CDO Debt Security will be based upon a
quotation from an Approved Investment Banking Firm or an Approved Third-Party   
Appraisal, as applicable.                                                       

       The Market Value of any Defensive Hedge Transaction where the related
Fund Investment is part of the Collateral shall be the amount, as determined by 
the Issuer, by which the Protected Market Value with respect to such Fund       
Investment exceeds the product of the Market Value of the Fund Investment (or,  
if less, the portion thereof that is an Eligible Investment), as otherwise      
determined in accordance with these procedures, and the applicable Advance Rate 
for such Fund Investment. The Market Value of any Defensive Hedge Transaction   
where the Fund Investment is not part of the Collateral shall be the Protected  
Market Value with respect to such Fund Investment.                              

         For purposes of the definition of Market Value, (i) accrued interest on
any interest-bearing Eligible Investment shall be excluded in the determination 
of Market Value by the party making such determination and (ii) the Market Value
of all non-Dollar Fund Investments shall be converted into Dollars at the then  
current spot rate (after taking into account the effect of any Currency Hedging 
Transaction with respect to such Fund Investment).                              

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       "Market Value Price" means with respect to any Fund Investment (other
than Cash, Structured Product Transactions and Unquoted Investments) at any     
date, the price for each unit of such Fund Investment at such date obtained from
an Approved Source, including any of:                                           

         (a)    in the case of an Approved Exchange, the closing price as of the
most recent Determination Date on such Approved Exchange, or if such Approved   
Exchange is NASDAQ, the closing bid price at such date (or if such Approved     
Exchange is closed for business at such date, then the most recent available    
closing price or closing bid price, as the case may be), provided that bonds may
not be priced based upon the price on an Approved Exchange pursuant to this     
clause (a), (i) prior to the termination (without replacement) of the Indenture,
without the consent of the Trustee and the Credit Enhancer and (ii) after       
termination (without replacement) of the Indenture, without the consent of the  
Credit Enhancer;                                                                

        (b)    the lower of the bid prices at such date quoted by two Approved
Dealers;                                                                        

   (c)    the average of the bid prices at such date quoted by three
Approved Dealers;                                                               

 (d)    the average of the bid prices at such date quoted by two
Approved Dealers; provided that the Market Value Price of any Fund Investment   
may be determined pursuant to this clause (d) only if the following four        
conditions are met: (1) such Fund Investment is a Special Situations Investment,
(2) using the lower bid price of the two bid prices for such Fund Investment,   
the Over-Collateralization Tests would be satisfied, (3) other than the Issuer's
initial determination of the Market Value Price for such Fund Investment, the   
lower bid price of such Fund Investment must be greater than 85% of, and less   
than 115% of, the immediately previous lowest bid price obtained by the Issuer  
from the Approved Dealers for such Fund Investment, and (4) the aggregate Market
Value of Fund Investments the Market Value Prices of which are determined by    
applying this clause (d) shall not exceed 10% of Total Capitalization; or       

 (e)    the price obtained at such date from an Approved Pricing
Service.                                                                        

CERTAIN DEFINITIONS                                                             

      The following are definitions of certain terms used in this Schedule
and elsewhere in the Indenture. Terms used in this Schedule and not defined     
below have the meanings given them elsewhere in this Schedule or in the         
Indenture.                                                                      

"Advance Rate" means the S&P Advance Rate.                    

"Aggregate Short Sale Advance Amount" means as of any date of 
determination, the aggregate of the Short Sale Advance Amount of all Short Sale 
Transactions.                                                                   

        "Approved Counterparty" means (i) any financial institutions, banks or
investment banking firms having a long term rating of at least "A+" by S&P and a
short term rating of at least "A-1" by S&P or (ii) any counterparty set forth in
the Indenture (or any successor to any such listed counterparty) or any other   
counterparty designated by the Issuer in writing and approved by the Credit     
Enhancer in its reasonable discretion.                                          

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        "Approved Dealer" means (a) in the case of any Fund Investment that is
not a U.S. Government Security, any bank or broker-dealer designated by the     
Issuer in writing and approved by the Credit Enhancer in its reasonable         
discretion and with respect to which the Rating Agency Condition with respect to
S&P has been satisfied and (b) in the case of a U.S. Government Security, any   
primary dealer in U.S. Government Securities, as reported by the Federal Reserve
Board, which as of the date hereof maintains a website at http://www.ny.frb.org,
or (c) in the case of either of the foregoing, the banks and broker-dealers set 
forth on Annex I hereto under "Approved Dealers."                               

        "Approved Exchange" means, with respect to any Security, (a) any major
securities or options exchange, the NASDAQ or any other exchange or quotation   
system providing regularly published securities prices designated by the Issuer 
in writing and approved by the Credit Enhancer in its reasonable discretion and 
with respect to which the Rating Agency Condition with respect to S&P has been  
satisfied, or (b) the exchanges set forth on Annex I hereto under "Approved     
Exchanges."                                                                     

     "Approved Investment Banking Firm" means (a) any investment banking
firm designated by the Issuer in writing and approved by the Credit Enhancer in 
its reasonable discretion and with respect to which the Rating Agency Condition 
with respect to S&P has been satisfied, or (b) the firms set forth on Annex I   
hereto under "Approved Investment Banking Firms."                               

     "Approved Pricing Service" means (a) a pricing or quotation service
designated by the Issuer in writing and approved by the Credit Enhancer in its  
reasonable discretion and with respect to which the Rating Agency Condition with
respect to S&P has been satisfied, or (b) the services set forth on Annex I     
hereto under "Approved Pricing Services."                                       

         "Approved Source" means any of (i) two Approved Dealers (so long as the
lower of two bid prices is being used and three Approved Dealers (if the average
of three bid prices is being used), (ii) an Approved Exchange or (iii) an       
Approved Pricing Service, provided, that, for purposes of the                   
Over-Collateralization Tests, a Bank Loan, High Yield Bond or Mezzanine         
Investment which is a Fund Investment shall be considered "quoted" or "priced"  
by an Approved Source only if, in the reasonable judgment of the Issuer, such   
Approved Source will continue to provide quotations with respect to such Bank   
Loan, High Yield Bond or Mezzanine Investment on an on-going basis in the       
ordinary course of its business as a pricing service or dealer, as the case may 
be.                                                                             

    "Approved Third-Party Appraisal" means an appraisal by an Approved
Third-Party Appraiser.                                                          

         "Approved Third-Party Appraiser" means (a) a third-party appraiser that
is not an Affiliate of either the Issuer or the Investment Manager (or subject  
to an agreement to become such an Affiliate) designated by the Issuer in writing
and approved by the Credit Enhancer in its reasonable discretion and with       
respect to which the Rating Agency Condition with respect to S&P has been       
satisfied, or (b) the third-party appraisers set forth on Annex I hereto under  
"Approved Third-Party Appraisers."                                              

     "Asset-Backed Security" means any fixed income Security that is (i)
backed by and paid primarily from the proceeds (or payments or proceeds of a    
disposition) of Eligible Assets, and                                            

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(ii) issued in a transaction structured to (A) isolate the Security and the     
Eligible Assets backing the Security from the credit risk of the sponsor of the 
transaction and (B) result in the creditworthiness of such Security being       
primarily dependent upon (x) the creditworthiness of the Eligible Assets backing
such Security and (y) any credit support provided with respect to the           
creditworthiness of such Eligible Assets; provided, however, that in no event   
shall an "Asset-Backed Security" include any of the following: (a) a Security   
issued to provide debtor-in-possession financing, (b) a Security issued in      
connection with a receivables financing, an equipment trust certificate or      
similar Security, (c) an Equity Security (including an Equity Security that is  
characterized as a note), (d) a Structured Product Transaction, (e) a CDO Debt  
Security or (f) a Defensive Hedge Transaction.                                  

"Bank Loan Participation" means a Bank Loan in the form of a  
participation.                                                                  

        "Bank Loans" means direct purchases of, assignments of, participations
in and other interests in senior debt (including term loans, revolving credit   
lines and other similar loans and investments).                                 

      "Business Day" means each day other than a Saturday, Sunday or other
day on which banking institutions are not required by law or regulation to be   
open in the State of New York.                                                  

         "Busted Convertible Bond" means any convertible bond that trades like a
fixed income investment.                                                        

         "Capital Stock" of any Person means shares, equity interests (including
limited partnership interests and limited liability company interests),         
participations or other equivalents (however designated) of corporate stock of  
such Person.                                                                    

     "Cash" means any immediately available funds in U.S. dollars or any
currency other than U.S. dollars which is a freely convertible currency         
(including amounts held in the Custodial Account or on deposit with the         
Custodian pursuant to "sweep" arrangements linked to the Custodial Account).    

        "Cash Equivalents" means investments (other than Cash) that are one or
more of the following obligations or Securities:                                

(a)    U.S. Government Securities;                            

      (b)    certificates of deposit of, banker's acceptances issued by or
money market accounts in any depository institution or trust company            
incorporated under the laws of the United States of America or any state thereof
and subject to supervision and examination by Federal and/or state banking      
authorities, so long as the deposits offered by such depository institution or  
trust company at the time of such investment are rated and have a rating of at  
least "A-1+" if rated by S&P (or, in the case of the principal depository       
institution in a holding company system whose deposits are not so rated, the    
long term debt obligations of such holding company are rated and such rating is 
at least "A+" if rated by S&P);                                                 

       (c)    commercial paper issued by any depository institution or trust
company incorporated under the laws of the United States of America or any state
thereof and subject to                                                          

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supervision and examination by Federal and/or state banking authorities, or any 
corporation incorporated under the laws of the United States of America or any  
state thereof, so long as the commercial paper of such issuer is rated and has  
at the time of such investment a short term rating of at least "A-1+" if rated  
by S&P;                                                                         

        (d)    securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any  
state thereof the obligations of which at the time of such investment are rated 
and that have a credit rating of at least "P-1" if rated by Moody's and "A-1" if
rated by S&P either at the time of such investment or the making of a           
contractual commitment providing for such investment;                           

       (e)    shares of any money market fund or similar investment vehicle,
so long as such money market fund is rated and has at the time of such          
investment a short-term rating of at least "Aaa" and "MR1+" if rated by Moody's 
and "AAAm" or "AAAg" if rated by S&P; (f) unleveraged overnight repurchase      
obligations on customary terms with respect to investments described in clauses 
(i) through (iv) above entered into with a depository institution, trust company
or corporation that has a rating of at least "P-1" by Moody's and at least "A+" 
by S&P;                                                                         

      (g)    preferred shares with a maturity of not more than 35 days and
rated in the highest investment rating category by Moody's and S&P or otherwise 
with respect to which the Rating Agency Condition is satisfied; and             

(h)    investments in Qualifying Short-Term Debt;             

provided, that: (i) in no event shall Cash Equivalents include any obligation   
that provides for the payment of interest alone; (ii) Cash Equivalents referred 
to in clauses (i), (ii) and (iii) above shall mature within 183 days of         
issuance; (iii) if any of Moody's or S&P changes its rating system, then any    
ratings included in this definition shall be deemed to be an equivalent rating  
in a successor rating category of Moody's or S&P, as the case may be; (iv) if   
any of Moody's or S&P is not in the business of rating securities, then any     
ratings included in this definition shall be deemed to be an equivalent rating  
from another Rating Agency; (v) Cash Equivalents (other than U.S. Government    
Securities or money market funds maintained by the Custodian) shall not include 
any such investment of more than $100 million in any single issuer; (vi) in no  
event shall Cash Equivalents include any obligation that is not denominated in  
Dollars or Eligible Foreign Currencies; and (vii) none of the foregoing         
obligations or securities will constitute Cash Equivalents (A) if all, or       
substantially all, of the remaining amounts payable thereunder will consist of  
interest and not principal payments, or (B) if such security has an assigned    
rating from S&P with an "r" or "t" subscript, or (C) if such security is a      
mortgage-backed security or (D) if such security is an inverse floater security.

     "CDO Debt Securities" means any Securities that entitle the holders
thereof to receive payments that depend primarily on cash flow from, or proceeds
upon the sale of a pool of Securities serving as collateral for such Securities;
provided that if more than one class or other similar designation of such       
Securities receive payments that depend primarily on cash flow from all or      
substantially all of the underlying collateral Securities, then the class or    
other similar designation the payment of which is most deeply subordinated      
(other than any class or other                                                  

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similar designation constituting only nominal capital) and any class or other   
similar designation that, as indicated in any relevant offering documentation,  
is stated to be at least reasonably likely to be treated as equity for U.S.     
Federal income tax purposes will be excluded from "CDO Debt Securities";        
provided, further that (x) CDO Debt Securities shall not include any Structured 
Product Transaction and (y) CDO Debt Securities shall only include CDO Debt     
Securities issued in a "cash-flow" or "market value" collateralized debt        
obligation transactions.                                                        

   "CDO Equity Securities" means any Securities (other than CDO Debt
Securities) that entitle the holders thereof to receive payments that depend    
primarily on cash flow from, or proceeds upon sale of a pool of Securities      
serving as collateral for such Securities (whether or not such Securities have  
been rated by a nationally recognized statistical rating organization); provided
that CDO Equity Securities shall not include any Structured Product Transaction.

         "CDS" means a credit default swap substantially in the form approved by
the Credit Enhancer, which approval shall not be unreasonably withheld.         

       "Contributed Company Capital" means, at any date, the aggregate gross
amount of Cash contributed as equity capital (excluding, for the avoidance of   
doubt, the Preferred Shares) to the Issuer by the holders of the Common Shares  
on or prior to such date (without regard to any other changes in Company        
Equity).                                                                        

       "Currency Hedging Transaction" means (i) any Swap Transaction entered
into by the Issuer with an Eligible Counterparty intended to convert any payment
on a Debt or other obligation of the Issuer or any Company Investment           
denominated in one currency to another currency or to protect against           
fluctuations in the exchange rate of a currency in which a payment to be made or
received by the Issuer is denominated and (ii) any Swap Transaction entered into
by the Issuer intended to convert any payment on a Debt or other obligation of  
the Issuer or any Company Investment denominated in one currency to another     
currency or to protect against fluctuations in the exchange rate of a currency  
in which a payment to be made or received by the Issuer is denominated and      
pursuant to which the Issuer has no on-going payment obligations.               

"Defensive Hedge Advance Amount" means, as of any date of     
determination, 98% of the aggregate Market Value of all Defensive Hedge         
Transactions; provided, however, that the Defensive Hedge Advance Amount shall  
in no event exceed an amount equal to (x) 20% of the Total Capitalization as of 
such date of determination less (y) the sum of the aggregate Market Value as of 
such date of determination of all Fund Investments in Bank Loan Participations  
and Structured Product Transactions and, if the Secured Hedging Advance Amount  
is positive, the Secured Hedging Advance Amount.                                

"Defensive Hedge Transaction" means a Hedging and Short Sale  
Transaction between the Issuer and an Eligible Counterparty intended to protect 
the Issuer against fluctuations in the market value of a Fund Investment and    
pursuant to which (i) the Eligible Counterparty has agreed for a period of time,
at the direction of the Issuer, to (a) purchase the Fund Investment at an agreed
strike price or (b) pay to the Issuer, at the Issuer's election, an amount by   
which an agreed strike price exceeds the current price of the Fund Investment;  
(ii) the Eligible Counterparty does not have recourse to the Collateral or the  
Issuer for any amounts owing to such counterparty thereunder; and (iii) the     
Issuer may (a) pay a fee to the Eligible Counterparty in connection with the    
transaction, (b) remove the Fund Investment from the Custodial Account          

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(whereby it is no longer part of the Collateral) and pledge the Fund Investment 
to the counterparty as security for its obligations to the Eligible Counterparty
and (c) agree to deliver the Fund Investment to the Eligible Counterparty in    
satisfaction of all of its obligations to the Eligible Counterparty in          
connection with the transaction.                                                

    "Designated Country" shall mean (i) each of Canada, Great Britain,
Australia, Denmark, New Zealand, Sweden, Switzerland, Luxembourg, The           
Netherlands and any G-7 nation and (ii) each other country identified by the    
Issuer from time to time and confirmed as acceptable by S&P.                    

        "Determination Date" means (a) with respect to any regularly scheduled
Valuation Statement prepared pursuant to the Indenture or the Operating         
Agreement and any other Preferred Shares document, the related Reporting Date,  
(b) for the purpose of determining the Market Value Price of a Fund Investment  
at any date when the Issuer is in compliance, or reasonably believes it is in   
compliance, with the covenants relating to the Over-Collateralization Tests, the
last Business Day of the preceding calendar week ending prior to such date and  
(c) for the purpose of determining the Market Value Price of a Fund Investment  
at any date when the Issuer is not, or reasonably believes that it is not, in   
compliance with any covenant relating to the Over-Collateralization Tests, the  
date on which the most current pricing information with respect to such Fund    
Investment is reasonably available.                                             

      "Distressed Debt" means debt Securities and Bank Loans which are, in
the Investment Manager's reasonable business judgment, impaired in fundamental  
ways due to credit, liquidity, interest rate or other issues, which may not be  
performing or may be in default, and which are generally trading at a           
substantial discount to par.                                                    

      "Eligible Assets" means financial assets, either fixed or revolving,
that by their terms convert into cash within a finite time period plus any      
rights or other assets designed to assure the servicing or timely distribution  
of proceeds to security holders.                                                

      "Eligible Counterparty" means, with respect to any Hedging and Short
Sale Transaction (other than a CDS in which the Issuer is the counterparty      
writing or providing the protection with respect to the reference asset), (a)   
any Approved Counterparty or (b) any person (i) having an unsecured,            
unguaranteed and unsupported long-term debt rating of "AA-" or better under the 
S&P OC Test Rating or (ii) whose obligations in respect of all Hedging and Short
Sale Transactions entered into with the Issuer are absolutely and               
unconditionally guaranteed by an Affiliate of such Person having an unsecured,  
unguaranteed and unsupported long-term debt rating of "AA-" or better under the 
S&P OC Test Rating; provided that with respect to any Eligible Counterparty with
which the Issuer has entered into a Hedging and Short Sale Transaction, any     
counterparty that would qualify as an "Eligible Counterparty" pursuant to clause
(b) above but for the fact that such counterparty had suffered a ratings        
downgrade shall be deemed to be an "Eligible Counterparty" for thirty 30 days   
after the day it would otherwise have ceased to qualify as an Eligible          
Counterparty.                                                                   

  "Eligible Country" shall mean each country (i) whose unsupported
sovereign debt obligations are rated "AA+" or better by S&P or (ii) that is a   
Designated Country whose unsupported sovereign debt obligations are rated "A-"  
or better by S&P.                                                               

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      "Eligible Foreign Currencies" means (i) Australian Dollars, Canadian
Dollars, Pounds Sterling and Euros and (ii) each other currency identified by   
the Issuer from time to time and confirmed in writing as acceptable by the      
Trustee, the Credit Enhancer and with respect to which Rating Agency Condition  
with respect to S&P has been satisfied.                                         

      "Eligible Investments" has the meaning assigned to such term in this
Schedule under "Determination of Fund Investments Constituting Eligible         
Investments."                                                                   

 "Equity Securities" means equity securities (including, for the
avoidance of doubt, Private Equity Securities) that will generally consist of   
common or preferred stock of small to medium capitalization companies that have 
either (i) undergone leveraged buyouts or recapitalizations, yet are still      
substantially leveraged, or (ii) been burdened by complex legal, financial or   
ownership issues and are selling at a discount to the underlying asset or       
business value.                                                                 

         "Excess Fund Investments" means any Fund Investments or portion thereof
having a Market Value in excess of the percentages of Total Capitalization set  
forth in the definition of Portfolio Limitations (in each case determined by the
Issuer using the most recent Market Value for the applicable Fund Investments). 

      "Excluded Investments" has the meaning assigned to such term in this
Schedule under "Determination of Fund Investments Constituting Eligible         
Investments."                                                                   

"Foreign Issuer" means any issuer of a Fund Investment that is
incorporated or otherwise formed or organized outside the United States unless  
such Fund Investment is irrevocably and unconditionally guaranteed by any United
States corporation, company, trust or other business entity; provided, however, 
that none of the following shall be a Foreign Issuer: (i) an offshore holding   
company issuer whose operating subsidiaries principally do business, and hold   
their assets, in the United States, or (ii) an issuer of a CDO Debt Security.   

"Fully Collateralized Structured Product Transaction" means a 
Structured Product Transaction relating to a single Bank Loan or High Yield Bond
pursuant to which the Issuer is required to pledge collateral in an amount that 
is not less than 100% of the notional amount of such transaction.               

  "Fund Investments" means all Cash, Cash Equivalents, Bank Loans,
Securities, Short Sale Transactions and Structured Product Transactions owned by
the Issuer. Fund Investments which the Issuer has contracted to purchase shall  
not be deemed for purposes of the Indenture to be owned by the Issuer until     
settlement of such purchase and Fund Investments which the Issuer has contracted
to sell shall not cease to be Fund Investments for purposes of the Indenture    
until settlement of such sale.                                                  

         "Hedging and Short Sale Transaction" means any transaction entered into
by the Issuer with an Eligible Counterparty that is (i) a Swap Transaction; (ii)
an Interest Rate Hedging Transaction; (iii) a Currency Hedging Transaction; (iv)
a transaction under which the Issuer borrows a Bank Loan or Security and sells  
or otherwise disposes of such or any substantially similar Bank Loan or Security
prior to the date on which the same must be returned to the lender thereof (and 
commonly known as a "short sale"), (v) a Securities Lending Transaction; (vi) a 

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credit derivative transaction (including, but not limited to, a CDS) or         
repurchase agreement; (vii) an obligation to enter into any of the foregoing; or
(viii) any combination of any of the foregoing.                                 

      "High Yield Bonds" means debt Securities (including convertible debt
Securities) that are generally rated below "BBB-" by S&P, (a) which are issued  
pursuant to a public registration, Rule 144A or as a private placement and (b)  
which are not Cash Equivalents, Bank Loans, Mezzanine Investments or CDO Debt   
Securities.                                                                     

   "Illiquid Investments" means (a) Unquoted Investments that do not
qualify as Semi-Liquid Investments; (b) Bank Loan Participations (other than (x)
Bank Loan Participations that qualify as Semi-Liquid Investments and (y) Bank   
Loan Participations which may be converted into a Bank Loan assignment at the   
option of the Issuer); and (c) Private Equity Securities.                       

     "Indexed Structured Product Transaction" means a Structured Product
Transaction in which the reference obligation is an index, including, without   
limitation, Dow Jones CDX North American High Yield Composite Index, Dow Jones  
CDX North American BB, Dow Jones CDX North American B, and Dow Jones CDX North  
American Investment Grade Composite.                                            

       "Industry" means any industry category listed in Annex I hereto under
"S&P Industry Classifications" or any other such industry category designated by
the Issuer in writing and approved by the Credit Enhancer in its reasonable     
discretion and with respect to which the Rating Agency Condition with respect to
S&P has been satisfied.                                                         

   "Ineligible Country" shall mean any country other than the United
States or an Eligible Country.                                                  

    "Interest Rate Hedging Transaction" means (i) any Swap Transaction
entered into by, the Issuer with an Eligible Counterparty intended to protect   
the Issuer against changes in the floating rate of interest payable on all or a 
portion of any Debt or other obligation of the Issuer or its subsidiaries or on 
any Fund Investment or to protect against fluctuations in interest rates, or    
(ii) any Swap Transaction or repurchase agreement entered into by the Issuer, in
each case with an Eligible Counterparty, intended to protect against changes in 
the market value of any Fund Investment resulting from fluctuations in interest 
rates.                                                                          

        "Market Value" has the meaning assigned to such terms in this Schedule
under "Determination of Market Value of Fund Investments."                      

    "Market Value Price" has the meaning assigned to such term in this
Schedule under "Determination of Market Value of Fund Investments."             

        "Mezzanine Investments" means (i) debt Securities or other obligations
of an issuer (including convertible debt Securities and obligations, and        
Securities back by real estate collateral) that (A) are subordinated to other   
debt of such issuer and (B) may be issued with equity participation features    
such as convertibility, senior equity securities, common stock or warrants or   
(ii) Preferred Stock issued in connection with management buyouts, acquisitions,
refinancings, recapitalizations and later stage growth capital financings.      

   "Moody's" means Moody's Investors Service, Inc., or any successor
thereto.                                                                        

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         "NASDAQ" means the electronic inter-dealer quotation system operated by
NASDAQ, Inc., a subsidiary of the National Association of Securities Dealers,   
Inc., or any successor thereto.                                                 

        "Non-Cash Pay Instrument" means a High Yield Bond which falls in Asset
Category C, D, E, F or G that (a) does not provide for the payment of cash      
interest or preferred dividends, or provides for the total deferral of interest 
until the final maturity thereof, (b) is a debt security that has an initial    
current yield on the date of purchase or acquisition thereof of less than 2.5%  
per annum and provides for an increase in the rate of interest payable in       
respect thereof at any time after the date it was purchased or acquired (other  
than any increase resulting from (i) a change in a generally recognized floating
rate interest rate index, (ii) a change in the weighted average interest rate on
underlying collateral in the case of Securities the interest rate on which is   
based on such weighted average interest rate or (iii) a change in an interest   
rate spread or margin resulting from an announced change in the rating of the   
issuer' s debt obligations) or (c) is a debt security that provides for the     
partial deferral of interest until the final maturity thereof and which has cash
interest payable without deferral at a rate per annum less than (x) with respect
to Fund Investments bearing interest at a fixed rate, 2.5% per annum and (y)    
with respect to Fund Investments bearing interest at a floating rate, a         
eurodollar rate plus 2% per annum. For purposes of clause (b) of this           
definition, if the current yield is increased to 2.5% or more per annum, then at
the time of the increase of such interest rate, the Security will cease to be a 
"Non-Cash Pay Instrument."                                                      

      "Non-Credit Risk Security" means a security with respect to which an
institutional money manager would evaluate its value primarily by reference to  
factors other than (a) the coupon (or the coupon as adjusted for any purchase   
discount or premium) in relation to prevailing market yields, (b) the credit    
worthiness of the issuing entity or (c) the adequacy of the underlying financial
assets supporting such security to ensure the repayment of the security         
according to its terms (which adequacy may be measured by a credit analysis of  
the likelihood of the obligors of such underlying assets to pay according to the
terms of such underlying assets and/or an analysis of the sufficiency of the    
income streams thereon to meet the payment terms of the security).              

        "Non-Performing Instrument" means (i) any Fund Investment that is debt
and the issuer of which is in default of any principal or interest payment      
obligations in respect thereof (without giving effect to any applicable grace   
period or waiver), (ii) any Fund Investment that is Preferred Stock and the     
issuer of which has failed to meet any scheduled redemption obligations or to   
pay its latest declared cash dividend or (iii) any Fund Investment that is a CDO
Debt Security and the issuer of which has failed to pay any current interest or 
principal in cash when due.                                                     

"Outstanding Principal Amount" means the outstanding aggregate
principal amount of the Notes under the Indenture at any given time.            

       "Performing" means, (i) with respect to any Fund Investment that is a
Bank Loan or other debt, the issuer of such Fund Investment is not in default of
any payment obligations in respect thereof, (ii) with respect to any Fund       
Investment that is Preferred Stock, the issuer of such Fund Investment has not  
failed to meet any scheduled redemption obligations or to pay its latest        
declared cash dividend or (iii) with respect to any Fund Investment that is a   
CDO Debt                                                                        

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Security, the issuer of such Fund Investment has not failed to pay any current  
principal or interest in cash when due.                                         

       "Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization, 
including a government or political subdivision or an agency or instrumentality 
thereof.                                                                        

         "Pledge and Intercreditor Agreement" means the Pledge and Intercreditor
Agreement dated as of the Closing Date, among the Trustee, the Credit Enhancer, 
the Custodian, the Issuer and the Collateral Agent identified therein, as       
amended, extended, restated, supplemented or modified from time to time in      
accordance with the terms thereof.                                              

       "Portfolio Limitations" has the meaning assigned to such term in this
Schedule under "Application of Portfolio Limitations."                          

         "Preferred Stock" means, as applied to the Capital Stock of any Person,
Capital Stock of such Person of any class or classes (however designated) that  
ranks prior, as to the payment of dividends or as to the distribution of assets 
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to any shares (or other interests) of Capital Stock of such Person.     

      "Private Equity Securities" means, at any time of determination, any
Equity Security which the Issuer believes in good faith (based on the facts and 
circumstances available to it) is (i) commonly regarded by investment           
professionals as a "private equity security" and (ii) not traded or listed on   
any national or regional securities exchange, any designated offshore Securities
market (as defined in Regulation S under the Securities Act) or on the NASDAQ   
National Market and is not actively quoted or traded on any automated quotation 
system or in the over-the-counter market; provided, however, that "Private      
Equity Securities" shall not include (a) any Equity Securities convertible or   
exchangeable for any Equity Securities traded or quoted in the markets described
in clause (ii) above, or (b)any equity Securities which may be resold under an  
effective registration statement under the Securities Act at the time of        
determination.                                                                  

     "Protected Market Value" means, with respect to any Fund Investment
that is the subject of a Defensive Hedge Transaction, the Protected Price of    
such Fund Investment times the number of units of such Fund Investment that are 
held by the Issuer and are the subject of such Defensive Hedge Transaction.     

"Protected Price" means, with respect to any Defensive Hedge  
Transaction, (i) the agreed strike price at which the Eligible Counterparty to  
such Defensive Hedge Transaction has agreed to purchase the Fund Investment that
is the subject of such Defensive Hedge Transaction or (ii) the agreed strike    
price under a Defensive Hedge Transaction pursuant to which the Eligible        
Counterparty has agreed to pay the Issuer an amount equal to the excess of the  
agreed strike price over the current price of the Fund Investment that is the   
subject of such Defensive Hedge Transaction.                                    

     "Qualifying Short-Term Debt" means short-term debt of issuers rated
"A-1" by S&P that (i) does not have an "r" suffix attached to their ratings,    
(ii) has a predetermined fixed dollar amount of principal due at maturity that  
cannot vary, (iii) does not constitute more than 20% of                         

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the rated issue's outstanding principal amount, (iv) does not mature beyond 30  
days, and (v) if the debt may be liquidated prior to its maturity, the interest 
thereon should be tied to a single interest rate index plus a single fixed      
spread (if any) and should move proportionately with that index. For purposes   
of this definition, "short-term debt" includes commercial paper, federal funds, 
repurchase agreements, unsecured certificates of deposit, time deposits and     
banker's acceptances.                                                           

     "Quarterly Date" means the last Business Day of each February, May,
August and November, commencing November 30, 2005.                              

       "Related Person" means, with respect to any issuer, (a) any Person of
which such issuer is a Subsidiary, (b) any Person that is a Subsidiary of such  
issuer, (c) with respect to a debt obligation, any Person that relies on, or is 
relied upon for, the cash flows of such issuer to service debt obligations or   
does not have a credit rating independent of such Person or (d) with respect to 
a debt obligation, any Person that guarantees the issuer's payment of such debt 
obligation; provided, however, that, in any such case, a Person shall not be a  
Related Person of a second Person solely as a consequence of the common control 
of such Persons by a single financial sponsor.                                  

     "Reporting Date" means the last Business Day of each calendar week,
commencing November 25, 2005.                                                   

   "S&P" means Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc., or any successor thereto.                          

       "S&P Net Accrual Amount" shall mean, as of any date, an amount, which
may be positive or negative, equal to (i) the aggregate amount of accrued       
interest payable to the Issuer on all interest-bearing Eligible Investments, all
declared but unpaid dividends payable on Eligible Investments that are Equity   
Securities and all due and unpaid commitment fees payable to the Issuer in      
respect of Eligible Investments, in each case as of such date minus (ii) the    
aggregate amount of accrued interest and dividends payable by the Issuer as of  
such date in respect of the Drawn Amount (as defined in the Indenture) and the  
Preferred Shares, respectively, minus (iii) the amount of other anticipated     
expenses of the Issuer for the 90 days subsequent to such date, minus (iv) any  
other current liabilities of the Issuer payable as of such date; provided that  
until the earlier of two years after the Closing Date or the date on which the  
Issuer shall have drawn $404.5 million of the Equity Capital Commitments, the   
S&P Net Accrual Amount shall not be less than zero.                             

"S&P Warrant/Option Advance Amount" means, as of any date of  
determination, an amount equal to the sum for all Warrant/Option Investments of 
the product of (i) the Warrant/Option Intrinsic Value of such Warrant/Option    
Investment multiplied by (ii) the S&P Advance Rate for the S&P Asset Category   
applicable to the Related Equity Securities of such Warrant/Option Investment.  

         "Secured Hedging Advance Amount" means as of any date of determination,
(i) if the Secured Hedging Net Exposure is greater than zero and the Secured    
Hedging Transactions entered into, in the judgment of the Issuer, hedge or      
mitigate risks to which the Issuer is exposed in the conduct of its business or 
the management of its liabilities, 90% of the Secured Hedging                   

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Net Exposure, and (ii) if the Secured Hedging Net Exposure is less than zero,   
100% of the Secured Hedging Net Exposure; provided that any Secured Hedging     
Transaction having a Secured Hedging Net Exposure greater than zero and a       
counterparty with a rating of less than "A-" by S&P shall be deemed, for        
purposes of calculating the Secured Hedging Advance Amount, to have a Secured   
Hedging Net Exposure of zero.                                                   

  "Secured Hedging Net Exposure" as of any date, as to any Secured
Hedging Transaction for which a determination thereof is required to be made,   
shall be determined as follows: (i) each Eligible Counterparty party to each    
Secured Hedging Transaction shall determine, with respect to the Secured Hedging
Transactions entered into by it with the Issuer, an amount (the "Secured Net    
Exposure Component") equal to the net current market value on the bid side of   
the market if the position is long and on the ask/offer side of the market if   
the position is short to the Issuer on such date of determination of each such  
Secured Hedging Transaction and (ii) for each Secured Hedging Transaction, the  
"Secured Hedging Net Exposure" will, as of any date, be equal to the sum of all 
applicable Secured Net Exposure Components as of such date and may, for purposes
of this calculation, be less than zero.                                         

"Secured Hedging Transaction" means any Interest Rate Hedging 
Transaction or Currency Hedging Transaction entered into by the Issuer with any 
Person that is an Eligible Counterparty which is secured by Collateral pursuant 
to the Pledge and Intercreditor Agreement and for avoidance of doubt shall      
exclude Structured Product Transactions.                                        

      "Securities" means common and preferred stock, partnership units and
participations, member interests in limited liability companies, notes, bonds,  
debentures, trust receipts and other obligations, instruments or evidences of   
indebtedness, including debt instruments of public and private issuers and      
tax-exempt securities (including, without limitation, warrants, rights, put and 
call options and other options and rights relating thereto, or any combination  
thereof), guarantees of indebtedness, choses in action, trade claims, other     
property or interests commonly regarded as securities or any form of interest or
participation therein, but not including Bank Loans or Hedging and Short Sale   
Transactions.                                                                   

       "Securities Lending Transactions" means all obligations of the Issuer
(i) to purchase investments which arise out of or in connection with the sale of
the same or substantially similar investments or other similar transactions     
having the same economic effect (excluding Swap Transactions); and (ii) incurred
in connection with any security lending transactions described in clause (i).   

        "Semi-Liquid Investments" means (i) Unquoted Investments that are debt
Securities rated "B-" or better by S&P; (ii) Unquoted Investments that are not  
subject to any enforceable agreement containing a material condition to, or     
material restriction on, the ability of the holder of such Unquoted Investment  
or an assignee of such holder to sell, assign, transfer or otherwise liquidate  
the investment in a commercially reasonable time and manner (other than in any  
such agreement contained in the Collateral Documents and customary securities   
law arrangements or restrictions); (iii) Bank Loan Participations (other than   
Bank Loan Participations which may be converted into a Bank Loan assignment at  
the option of the Issuer) for which the Market Value has been obtained from an  
Approved Source that "quoted" or "priced" the participation interest in the Bank
Loan and not merely the Bank Loan itself; (iv) solely for purposes of the       
definition of Portfolio Limitations, Unquoted Investments which are High Yield  
Bonds or Mezzanine                                                              

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Investments and are part of an issue that is greater or equal to $40 million in 
original principal amount; or (v) solely for purposes of the definition of      
Portfolio Limitations, Unquoted Investments which are High Yield Bonds that are 
held by ten or more holders or the issuer thereof has a total capitalization in 
excess of $150.0 million.                                                       

         "Short Sale Advance Amount" means, as of any date of determination with
respect to any Short Sale Transaction for which a determination thereof is      
required to be made, an amount calculated as follows:                           

Short Sale Advance Amount =      CP+SP-(MV*(2-AR))            

Where:              

                            CP=         The Market Value of the Cash or U.S.
                                         Government Securities held in a Short
                                       Sale Customer Account or Short Sale
                                      Broker Account as security for the
                                          obligations of the Issuer with respect
                                   to such Short Sale Transaction.

                              SP=         The original price of the Bank Loan or
                                        Security borrowed in such Short Sale
                                          Transaction, determined as of the date
                    it was borrowed.

                            MV=         The Market Value of the Bank Loan or
                                        Security borrowed in such Short Sale
                                 Transaction as of the date of
                  determination.

                              AR=         The S&P Advance Rate applicable to the
                                     Bank Loan or Security borrowed in
                                   connection with such Short Sale
                Transaction.

     "Short Sale Transaction" means a transaction under which the Issuer
borrows a Bank Loan or Security and sells or otherwise disposes of such or any  
substantially similar Bank Loan or Security prior to the date on which the same 
must be returned to the lender thereof (and commonly known as a "short sale").  

  "Single Asset Structured Product Transaction" means a Structured
Product Transaction in which the reference obligation is a single debt security.

         "Special Situations Investments" means, as determined in the reasonable
judgment of the Issuer, any Securities or Loans issued by (i) an out-of-favor   
company with visible potential operating cash flows and/or liquidation values,  
and with businesses that are understandable, but may have complex legal,        
operational and financial issues, or (ii) a fundamentally sound operating       
company with sustainable margins that may have a poorly conceived capital       
structure                                                                       

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that, in general, the Issuer has purchased substantial positions in such        
Securities or Loans, often with the goal of influencing the values of           
investments through active management.                                          

      "Specified Foreign Country" shall mean each Designated Country other
than (x) a country whose sovereign debt rating in a non-local currency is rated 
"AAA" by S&P or (y) a country whose sovereign debt rating in a non-local        
currency is rated "AA" or better by S&P and in the case of (y) which is (a) a   
member of the European Union that has adopted the Euro as its lawful currency,  
(b) Canada, (c) Great Britain or (d) Australia.                                 

 "Structured Product Transaction" means a Hedging and Short Sale
Transaction between the Issuer and a counterparty in which either (i) the Issuer
is the counterparty to a CDS purchasing protection from an Eligible Counterparty
with respect to a reference asset or an index that refers to or is based upon a 
number of reference assets, or (ii) the Issuer is the counterparty writing or   
providing the protection with respect to a CDS relating to a reference asset or 
an index that refers to or is based upon a number of reference assets.          

     "Swap Transaction" means: (i) any rate, basis, debt or equity swap;
(ii) any put, cap, collar or floor agreement; (iii) any rate, basis, debt or    
equity futures or forward contract; (iv) any rate, basis, debt or equity option 
representing an obligation to buy or sell a security, debt or equity; and (v)   
any other similar agreement.                                                    

         "Total Capitalization" means the sum of (a) Contributed Company Capital
plus aggregate undistributed net income of the Issuer (as determined quarterly  
in accordance with GAAP and set forth in the Issuer's financial statements)     
minus net loss of the Issuer (determined quarterly in accordance with GAAP and  
set forth in the Issuer's financial statements), in each case excluding any     
reduction in Company Equity as a result of placement or structuring fees and    
organizational expenditures, (b)the aggregate outstanding liquidation preference
of the Preferred Shares plus the aggregate liquidation preference of fully      
subscribed but unissued Preferred Shares and (c) the aggregate Outstanding      
Principal Amount plus the amount, if any, by which the Total Maximum Commitment 
exceeds the Outstanding Principal Amount; provided, however, that until June 30,
2007, for purpose of clauses (i) through (v) of the Portfolio Limitations,      
"Total Capitalization" will be the greater of (i) the amount determined pursuant
to clauses (a), (b) and (c) above and (ii) $404.5 million; provided, further,   
that, for purposes of the definition of Portfolio Limitations, Total            
Capitalization shall not exceed $809.0 million.                                 

        "Unhedged Foreign Investment" means any portion of any Fund Investment
denominated in a currency other than Dollars which is not protected against     
currency fluctuations as a result of Currency Hedging Transactions; provided,   
however, that if 95% or more of the Market Value of a Fund Investment           
denominated in a currency other than Dollars is so protected against currency   
fluctuations, all of such Fund Investment shall be deemed to be protected       
against currency fluctuations for purposes of this definition and the           
calculation of the Over-Collateralization Tests.                                

       "Unquoted Investments" means Fund Investments other than Cash or Cash
Equivalents for which the Market Value has not been obtained from an Approved   
Source.                                                                         

"US. Government Securities" means Securities that are direct  
obligations of, or obligations the timely payment of principal and interest on  
which is fully guaranteed by, the                                               

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United States of America or any agency or instrumentality of the United States  
of America the obligations of which are backed by the full faith and credit of  
the United States of America and in the form of conventional bills, bonds and   
notes. In no event shall U.S. Government Securities include: (i) any security   
providing for the payment of interest only; (ii) any Swap Transaction; or (iii) 
any obligation on which all or any portion of the payments thereunder is based, 
directly or indirectly, on any Swap Transaction.                                

"Warrant/Option Intrinsic Value" means, with respect to any   
Warrant/Option Investment, the product of (x) an amount by which the current    
price (based on the price from an Approved Source or an Approved Investment     
Banking Firm) of the applicable Related Equity Securities exceeds the agreed    
strike price of the Related Equity Securities with respect to such              
Warrant/Option Investment, multiplied by (y) the number of shares of the Related
Equity Securities. For the avoidance of doubt, the Warrant/Option Intrinsic     
Value shall always be zero if, in the case of a call Warrant/Option Investment, 
the agreed strike price of the applicable Related Equity Securities for such    
Warrant/Option Investment is equal to or greater than the current price of the  
applicable Related Equity Securities for such Warrant/Option Investment or, in  
the case of a put Warrant/Option Investment, the agreed strike price of the     
applicable Related Equity Securities for such Warrant/Option Investment is equal
to or less than the current price of the applicable Related Equity Securities   
for such Warrant/Option Investment.                                             

     "Warrant/Option Investments" means any Fund Investments held by the
Issuer that are warrants or call options or similar rights with respect to      
Equity Securities (the "Related Equity Securities").                            

         "Yield to Worst" means, in respect of any High Yield Bond or other debt
security, the lesser of (a) the yield-to-maturity and (b) the lowest            
yield-to-call calculated on each scheduled call date.                           

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                                                                         ANNEX I

S&P INDUSTRY CLASSIFICATIONS

INDUSTRY CODE           DESCRIPTION                                             

0                       Zero Default Risk                                       
1                       Aerospace & Defense                                     
2                       Air transport                                           
3                       Automotive                                              
4                       Beverage & Tobacco                                      
5                       Radio & Television                                      
6                       Brokers, Dealers & Investment houses                    
7                       Building & Development                                  
8                       Business equipment & services                           
9                       Cable & satellite television                            
10                      Chemicals & plastics                                    
11                      Clothing/textiles                                       
12                      Conglomerates                                           
13                      Containers & glass products                             
14                      Cosmetics/toiletries                                    
15                      Drugs                                                   
16                      Ecological services & equipment                         
17                      Electronics/electrical                                  
18                      Equipment leasing                                       
19                      Farming/agriculture                                     
20                      Financial intermediaries                                
21                      Food/drug retailers                                     
22                      Food products                                           
23                      Food service                                            
24                      Forest products                                         
25                      Health care                                             
26                      Home furnishings                                        
27                      Lodging & casinos                                       
28                      Industrial equipment                                    
29                      Insurance                                               
30                      Leisure goods/activities/movies                         
31                      Nonferrous metals/minerals                              
32                      Oil & gas                                               
33                      Publishing                                              
34                      Rail industries                                         
35                      Retailers (except food & drug)                          
36                      Steel                                                   
37                      Surface transport                                       
38                      Telecommunications/cellular                             
39                      Utilities                                               
49                      Project Finance                                         
50                      CDO                                                     
51                      ABS Consumer                                            
52                      ABS Commercial                                          
53                      CMBS Diversified (Conduit and CTL)                      
54                      CMBS (Large Loan, Single Borrower, and Single Property) 
55                      REITs and REOCs                                         
56                      RMBS A                                                  
57                      RMBS B&C, HELs, HELOCs, and Tax Lien                    
58                      Manufactured Housing                                    
59                      U.S. Agency (Explicitly Guaranteed)                     
60                      Monoline/FER Guaranteed                                 
61                      Non-FER Company Guaranteed                              
62                      FFELP Student Loans (Over 70% FFELP)                    

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APPROVED DEALERS

A.G. Edwards & Sons, Inc.                    Liberty Brokerage                  
ABN AMRO Bank                                Libra Securities                   
Allen & Co.                                  McDonald & Company                 
APS Financial Corporation                    Merrill Lynch                      
B. Riley & Co.                               Mesirow Financial                  
Bank of America                              Miller Tabak & Co., LLC            
Bank of Montreal                             Morgan Joseph & Co.                
Barclays Capital                             Morgan Stanley                     
Bear Stearns                                 Prudential Securities              
BMO Nesbitt Bums                             Raymond James                      
BNP Paribas                                  RBC Dain Rauscher                  
BNY Capital                                  Robert W. Baird & Co               
Brown Gibbons Lang & Company                 Salomon Smith Barney               
Cantor Fitzgerald                            Schroder Wertheim                  
Chanin Capital Partners                      Scotia Capital Markets             
Chicago Corporation                          Seidler Companies, The             
CIBC World Markets                           SG Cowen                           
CIT Group                                    Societe Generale                   
Citigroup                                    Spear, Leeds & Kellogg             
Commerzbank                                  SunTrust Robinson-Humphrey Company 
Credit Lyonnais                              Swiss Bank Corporation             
Credit Research & Trading                    TD Securities                      
CS First Boston                              The Blackstone Group               
Delaware Bay, Inc.                           U. S. Bancorp                      
Deutsche Bank Alex Brown                     UBS Warburg                        
First Chicago Trust Company                  Union Bank of California           
Fleet                                        Wachovia Securities                
General Electric                             Wedbush Morgan                     
Goldman Sachs & Co.                          Wells Fargo                        
Houlihan Lokey Howard & Zukin                William Blair & Company            
Imperial Capital                                                                
Indosuez Capital                                                                
ING (Baring Furman Selz)                                                        
J.P. Morgan Chase                                                               
Jefferies & Company, Inc.                                                       
Ladenburg Thalmann                                                              
Lazard Freres & Co., LLC                                                        
Lehman Brothers                                                                 

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APPROVED EXCHANGES

AFRICAN STOCK EXCHANGES                                                         
Johannesburg Stock Exchange, South Africa                     
The South African Futures Exchange(SAFEX), South Africa       

ASIAN STOCK EXCHANGES                                                           
Sydney Futures Exchange, Australia                            
Australian Stock Exchanges, Australia                         
Shenzhen Stock Exchange, China                                
Stock Exchange of Hong Kong,Hong Kong                         
Hong Kong Futures Exchange,Hong Kong                          
National Stock Exchange of India,India                        
Bombay Stock Exchange, India                                  
Jakarta Stock Exchange, Indonesia                             
Indonesia NET Exchange,Indonesia                              
Nagoya Stock Exchange,Japan                                   
Osaka Securities Exchange, Japan                              
Tokyo Grain Exchange, Japan                                   
Tokyo International Financial Futures Exchange (TIFFE), Japan 
Tokyo Stock Exchange, Japan                                   
Korea Stock Exchange, Korea                                   
Kuala Lumpur Stock Exchange, Malaysia                         
New Zealand Stock Exchange, New Zealand                       
Karachi Stock Exchange, Pakistan                              
Lahore Stock Exchange, Pakistan                               
Stock Exchange of Singapore (SES), Singapore                  
   Singapore International Monetary Exchange Ltd. (SIMEX), Singapore
Colombo Stock Exchange, Sri Lanka                             
Sri Lanka Stock Closings, Sri Lanka                           
Taiwan Stock Exchange, Taiwan                                 
The Stock Exchange of Thailand, Thailand                      

EUROPEAN STOCK EXCHANGES                                                        
Vienna Stock Exchange, Austria                                
EASDAQ, Belgium                                               
Zagreb Stock Exchange, Croatia                                
Prague Stock Exchange, Czech Republic                         
Copenhagen Stock Exchange, Denmark                            
Helsinki Stock Exchange, Finland                              
Paris Stock Exchange, France                                  
NouveauMarche, France                                         
MATIF, France                                                 
Frankfurt Stock Exchange, Germany                             
Athens Stock Exchange, Greece                                 
Budapest Stock Exchange, Hungary                              

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Italian Stock Exchange, Italy                                 
National Stock Exchange of Lithuania,Lithuania                
Macedonian Stock Exchange, Macedonia                          
Amsterdam Stock Exchange, The Netherlands                     
Oslo Stock Exchange, Norway                                   
Warsaw Stock-Exchange, Poland                                 
Lisbon Stock Exchange, Portugal                               
Bucharest Stock Exchange, Romania                             
Russian Securities Market News, Russia                        
Ljubljana Stock Exchange,Inc., Slovenia                       
Barcelona Stock Exchange, Spain                               
Madrid Stock Exchange, Spain                                  
MEFF: (Spanish Financial Futures & Options Exchange), Spain   
Stockholm Stock Exchange, Sweden                              
Swiss Exchange, Switzerland                                   
Istanbul Stock Exhange, Turkey                                
FTSE International (London Stock Exchange), United Kingdom    
London Stock Exchange: Daily Price Summary, United Kingdom    
Electronic Share Information, UnitedKingdom                   
London Metal Exchange,United Kingdom                          
    London InternationalFinancial Futures and Options Exchange, United
Kingdom                                                       

MIDDLE EASTERN STOCK EXCHANGES                                                  
Tel Aviv Stock Exchange, Israel                               
Amman Financial Market, Jordan                                
Istanbul Stock Exhange, Turkey                                

NORTH AMERICAN STOCK EXCHANGES                                                  
Alberta Stock Exchange, Canada                                
Montreal Stock Exchange, Canada                               
Toronto Stock Exchange, Canada                                
Vancouver Stock Exchange, Canada                              
Winnipeg Stock Exchange, Canada                               
AMEX, United States                                           
New York Stock Exchange (NYSE),United States                  
NASDAQ, United States                                         
Chicago Stock Exchange, United States                         
Chicago Board Options Exchange, United States                 
Chicago Board of Trade, United States                         
Chicago Mercantile Exchange, United States                    
Pacific Stock Exchange, United States                         
Philadelphia Stock Exchange, United States                    

SOUTH AMERICAN STOCK EXCHANGES                                                  
Bermuda Stock Exchange, Bermuda                               
Rio de Janeiro Stock Exchange, Brazil                         
Sao Paulo Stock Exchange, Brazil                              

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Cayman Islands Stock Exchange, Cayman Islands                 
Chile Electronic Stock Exchange, Chile                        
Santiago Stock Exchange, Chile                                
Bogota Stock Exchange, Colombia                               
Lima Stock Exchange, Peru                                     
Caracas Stock Exchange, Venezuela                             
Venezuela Electronic Stock Exchange, Venezuela                

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APPROVED INVESTMENT BANKING FIRMS 

A.G. Edwards & Sons, Inc.                    Lehman Brothers                    
ABN AMRO Bank                                Liberty Brokerage                  
Allen & Co.                                  McDonald & Company                 
Bank of America                              Merrill Lynch                      
Bank of Montreal                             Mesirow Financial                  
Bank One                                     Miller Tabak & Hirsch              
Barclays Capital                             Morgan Stanley                     
Bear Stearns                                 Prudential Securities              
BMO Nesbitt Burns                            RBC Dain Rauscher                  
Brown, Gibbons, Lang                         Raymond James                      
Cantor Fitzgerald                            Robert W. Baird & Co               
Chanin Capital Partners                      Solomon Smith Barney               
JPMorgan Chase Manhattan                     Schroder Wertheim                  
Chicago Corporation                          Scotia Capital Markets             
CIBC World Markets                           Seidler Companies                  
CIT Group                                    SG Cowen                           
Citibank Group                               Sun Trust Robinson-Humphrey Company
Credit Research & Trading                    Sutro & Co.                        
CS First Boston                              TD Securities                      
Dabney Flannigan                             The Blackstone Group               
Delaware Bay, Inc.                           Union Bank of California           
Deutsche Bank Alex Brown                     US Bancorp Libra                   
EVEREN Securities                            US Bancorp Piper Jaffray           
Fleet National Bank                          USB Warburg                        
Goldman Sachs & Co.                          Wachovia Securities                
Grantchester Holdings                        Wasserstein Perella Securities Inc.
Greenwich NatWest                            Wedbush Morgan                     
Gruntal                                      Wells Fargo                        
Hambrecht & Quist                            William Blair & Company            
Houlihan Lokey Howard & Zukin                                                   
Imperial Capital                                                                
ING (Baring Furman Selz)                                                        
Jefferies & Company, Inc.                                                       
JPMorgan Chase                                                                  
Ladenburg Thalmann                                                              
Lazard Freres                                                                   

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APPROVED PRICING SERVICES 

Advantage Data, Inc.                                                            
Bloomberg                                                                       
Bridge Information Systems, Inc.                                                
Data Resources Inc.                                                             
Fixed Income Pricing System                                                     
Interactive Data Corp                                                           
International Securities Market Association                                     
JJ Kenney                                                                       
KDP                                                                             
Loan Pricing Corp.                                                              
Merrill Lynch Securities Pricing Service                                        
Muller Data Corp.                                                               
Reuters (only for pricing Foreign Issuer Securities)                            
Societe Generale                                                                
Standard & Poor's                                                               
Telerate                                                                        
Wood Gundy (only for pricing Securities issued by the Canadian federal or       
Canadian provincial governments)                        

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APPROVED THIRD PARTY APPRAISERS 

A.G. Edwards & Sons, Inc.                    Jefferies & Company, Inc.          
ABN AMRO Bank                                KPMG International                 
Allen & Co.                                  Ladenburg Thalmann                 
Bank of America                              Lazard Freres                      
Barclays Capital                             Lehman Brothers                    
Bear Stearns                                 Liberty Brokerage                  
BMO Nesbitt Burns                            McDonald & Company                 
Brown, Gibbons, Lang                         Merrill Lynch                      
Cantor Fitzgerald                            Mesirow Financial                  
Chanin Capital                               Miller Tabak                       
Chicago Corporation                          Morgan Stanley                     
CIBC World Markets                           PriceWaterhouseCoopers             
CIT World Markets                            Raymond James                      
Citigroup                                    RBC Dain Rauscher Robert W. Barry  
Credit Research & Trading                    Schroder Wertheim                  
CS First Boston                              Scotia Capital Markets             
Dabney Flannigan                             Seidler Companies                  
Delaware Bay, Inc.                           Sun Trust Robinson-Humphrey Company
Deloitte & Touche                            Sutro & Co.                        
Deutsche Bank                                Swiss Bank Corporation             
Dresdner Kelinwort Wasserstein               TD Securities                      
Ernst & Young                                The Blackstone Group               
EVEREN Securities                            UBS Warburg                        
First Chicago Trust Company                  Union Bank                         
Goldman Sachs & Co.                          US Bancorp Piper Jaffray           
Grantchester Holdings                        US Bancorp Libra                   
Greenwich NatWest                            Wachovia Securities                
Hambrecht & Quist                            Wedbush Morgan                     
Houlihan Lokey Howard & Zukin                Wells Fargo                        
Imperial Capital                             William Blair & Company            
J.P. Morgan Chase                                                               

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SCHEDULE C

CALCULATION OF LIBOR

With respect to the Notes, the London interbank offered rate ("LIBOR") shall be 
determined by the Calculation Agent in accordance with the following provisions 
(in each case rounded to the nearest 0.00001%):                                 

         (1)    On the second LIBOR Business Day (as defined below) prior to the
commencement of an Interest Accrual Period (each such day, a "LIBOR             
Determination Date"), LIBOR for any given Note shall equal the rate, as obtained
by the Calculation Agent from Bloomberg Financial Markets Commodities News, for 
Eurodollar deposits of the Index Maturity that appears on Dow Jones Telerate    
Page 3750 (as defined in the International Swaps and Derivatives Association,   
Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page  
as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR     
Determination Date; provided, that if a rate for the applicable Index Maturity  
does not appear thereon, it shall be determined by the Calculation Agent by     
using Linear Interpolation (as defined in the International Swaps and           
Derivatives Association, Inc. 2000 ISDA Definitions and substituting the term   
"Index Maturity" for the term "Designated Maturity" in such definition)         

       (2)    If, on any LIBOR Determination Date, such rate does not appear
on Dow Jones Telerate Page 3750 or such other page as may replace such Page     
3750, the Calculation Agent shall determine the arithmetic mean of the offered  
quotations of the Reference Banks (as defined below) to leading banks in the    
London interbank market for Eurodollar deposits of the Index Maturity in an     
amount determined by the Calculation Agent by reference to requests for         
quotations as of approximately 11:00 a.m. (London time) on the LIBOR            
Determination Date made by the Calculation Agent to the Reference Banks. If, on 
any LIBOR Determination Date, at least two of the Reference Banks provide such  
quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on   
any LIBOR Determination Date, only one or none of the Reference Banks provide   
such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered 
quotations that leading banks in the City of New York selected by the           
Calculation Agent are quoting on the relevant LIBOR Determination Date for      
Eurodollar deposits of the Index Maturity in an amount determined by the        
Calculation Agent by reference to the principal London offices of leading banks 
in the London interbank market; provided, however, that if the Calculation Agent
is required but is unable to determine a rate in accordance with at least one of
the procedures provided above, LIBOR shall be LIBOR as determined on the        
previous LIBOR Determination Date.                                              

        (3)    As used herein: "Reference Banks" means four major banks in the
London interbank market selected by the Calculation Agent; and "LIBOR Business  
Day" means a day on which commercial banks are open for business (including     
dealings in foreign exchange and foreign currency deposits) in London.          

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘N-2/A’ Filing		Date		First		Last			Other Filings
		11/15/13		20
		12/31/07		18					N-CSR,  NSAR-B,  NT-NCSR,  NT-NCSR/A,  NT-NSAR,  NT-NSAR/A
		6/30/07		129		165			N-CSRS,  N-PX,  NSAR-A
		12/31/06		18		74			N-CSR,  NSAR-B,  NT-NSAR
		3/15/06		20					NSAR-B
		12/31/05		73		87			N-CSR,  NSAR-B,  NT-NCSR,  NT-NSAR
		11/30/05		124		162
Filed as of:		11/29/05
Filed on:		11/28/05
		11/25/05		124		162
		11/17/05		1		22
		11/16/05		19					N-2,  N-8A
		11/3/05		20
									List all Filings