Exhibit 10.2

 

PURCHASE AND SALE AGREEMENT

 

by and between

 

ARES CAPITAL JB FUNDING LLC,

 

as the Purchaser

 

and

 

ARES CAPITAL CORPORATION,

 

as the Seller

 

Dated as of January 20, 2012

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I.

DEFINITIONS

1

 

 

 

Section 1.1.

General

1

Section 1.2.

Specific Terms

2

Section 1.3.

Other Terms

5

Section 1.4.

Computation of Time Periods

5

Section 1.5.

Certain References

5

 

 

 

ARTICLE II.

SALE AND PURCHASE OF THE ELIGIBLE LOAN ASSETS AND OTHER PORTFOLIO ASSETS

5

 

 

 

Section 2.1.

Sale and Purchase of the Eligible Loan Assets and the Other Portfolio Assets

5

Section 2.2.

Purchase Price

8

Section 2.3.

Payment of Purchase Price

8

Section 2.4.

Nature of the Sales

9

 

 

 

ARTICLE III.

CONDITIONS OF SALE AND PURCHASE

10

 

 

 

Section 3.1.

Conditions Precedent to Effectiveness

10

Section 3.2.

Conditions Precedent to All Purchases

12

 

 

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

13

 

 

 

Section 4.1.

Representations and Warranties of the Seller

13

Section 4.2.

Representations and Warranties of the Seller Relating to the Agreement and the
Sale Portfolio

22

Section 4.3.

Representations and Warranties of the Purchaser

24

 

 

 

ARTICLE V.

COVENANTS OF THE SELLER

26

 

 

 

Section 5.1.

Protection of Title of the Purchaser

26

Section 5.2.

Affirmative Covenants of the Seller

29

Section 5.3.

Negative Covenants of the Seller

34

 

 

 

ARTICLE VI.

REPURCHASES AND SUBSTITUTION BY THE SELLER

36

 

 

 

Section 6.1.

Repurchase of Loan Assets

36

Section 6.2.

Substitution of Loan Assets

37

Section 6.3.

Repurchase Limitations

39

 

 

 

ARTICLE VII.

ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE SALE PORTFOLIO

39

 

 

 

Section 7.1.

Rights of the Purchaser

39

Section 7.2.

Rights With Respect to Loan Asset Files

40

Section 7.3.

Notice to Collateral Agent and Administrative Agent

40

 

 

 

ARTICLE VIII.

SELLER TERMINATION EVENTS

40

 

i

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(cont’d)

 

 

 

Page

 

 

 

Section 8.1.

Seller Termination Events

40

Section 8.2.

Remedies

42

Section 8.3.

Survival of Certain Provisions

43

 

 

 

ARTICLE IX.

INDEMNIFICATION

44

 

 

 

Section 9.1.

Indemnification by the Seller

44

Section 9.2.

Assignment of Indemnities

47

 

 

 

ARTICLE X.

MISCELLANEOUS

48

 

 

 

Section 10.1.

Liability of the Seller

48

Section 10.2.

Limitation on Liability

48

Section 10.3.

Amendments; Limited Agency

48

Section 10.4.

Waivers; Cumulative Remedies

48

Section 10.5.

Notices

48

Section 10.6.

Merger and Integration

50

Section 10.7.

Severability of Provisions

50

Section 10.8.

GOVERNING LAW; JURY WAIVER

50

Section 10.9.

Consent to Jurisdiction; Service of Process

50

Section 10.10.

Costs, Expenses and Taxes

51

Section 10.11.

Counterparts

51

Section 10.12.

Bankruptcy Non-Petition and Limited Recourse; Claims

52

Section 10.13.

Binding Effect; Assignability

52

Section 10.14.

Waiver of Setoff

53

Section 10.15.

Headings and Exhibits

53

Section 10.16.

Rights of Inspection

53

Section 10.17.

Subordination

54

Section 10.18.

Breaches of Representations, Warranties and Covenants

54

Section 10.19.

Confidentiality

54

 

SCHEDULES AND EXHIBITS

 

Schedule I

-

Sale Portfolio List

 

 

 

Exhibit A

-

Form of Loan Assignment

Exhibit B

-

Form of Officer’s Purchase Date Certificate

Exhibit C

-

Form of Power of Attorney for Seller

 

ii

--------------------------------------------------------------------------------

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT, dated as of January 20, 2012, by and between
ARES CAPITAL CORPORATION, a Maryland corporation, as the seller (the “Seller”)
and ARES CAPITAL JB FUNDING LLC, a Delaware limited liability company, as the
purchaser (the “Purchaser”).

 

W I T N E S S E T H:

 

WHEREAS, the Purchaser has agreed to Purchase (as hereinafter defined) from the
Seller from time to time, and the Seller has agreed to Sell (as hereinafter
defined) to the Purchaser from time to time, certain Loan Assets and Portfolio
Assets (in each case, as hereinafter defined) related thereto on the terms set
forth herein;

 

WHEREAS, it is contemplated that the Purchaser will grant a security interest in
the Loan Assets and Portfolio Assets Purchased hereunder, to the Collateral
Agent, for the benefit of the Secured Parties, pursuant to the Loan and
Servicing Agreement (as defined herein) and the related Transaction Documents;
and

 

WHEREAS, the Seller agrees that all representations, warranties, covenants and
agreements made by the Seller herein with respect to the Sale Portfolio shall
also be for the benefit of any Secured Party.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter contained, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the Purchaser and the Seller, intending
to be legally bound, hereby agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

Section 1.1.            General.  The specific terms defined in this
Article include the plural as well as the singular.  Words herein importing a
gender include the other gender.  References herein to “writing” include
printing, typing, lithography and other means of reproducing words in visible
form.  References to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Loan and
Servicing Agreement (as hereinafter defined).  References herein to Persons
include their successors and assigns permitted hereunder or under the Loan and
Servicing Agreement.  The terms “include” or “including” mean “include without
limitation” or “including without limitation”.  The words “herein”, “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Article,
Section, Schedule and Exhibit references, unless otherwise specified, refer to
Articles and Sections of and Schedules and Exhibits to this Agreement. 
References to any Applicable Law means such Applicable Law as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect from time to
time, including rules and regulations promulgated thereunder and reference to
any section or other provision of any Applicable Law means that provision of
such Applicable Law from

 

--------------------------------------------------------------------------------

 

time to time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision. 
Capitalized terms used herein but not defined herein shall have the respective
meanings assigned to such terms in the Loan and Servicing Agreement, provided
that if within such definition in the Loan and Servicing Agreement a further
term is used which is defined herein, then such further term shall have the
meaning given to such further term herein.

 

Section 1.2.            Specific Terms.  Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:

 

“Agreement” means this Purchase and Sale Agreement, as the same may be amended,
restated, waived, supplemented and/or otherwise modified from time to time
hereafter.

 

“Early Termination” has the meaning specified in Section 8.1.

 

“Facility Financing Statements” has the meaning specified in Section 3.1(d).

 

“Indemnified Amounts” has the meaning specified in Section 9.1.

 

“Indemnified Party” has the meaning specified in Section 9.1.

 

“Loan and Servicing Agreement” means that certain Loan and Servicing Agreement,
by and among the Purchaser, as the Borrower, the Seller, as the Servicer and as
the Transferor, Sumitomo Mitsui Banking Corporation, as the Administrative
Agent, as the Collateral Agent and as the Lender, and U.S. Bank National
Association, as the Collateral Custodian and as the Bank, as such may be
amended, restated, waived, supplemented and/or otherwise modified from time to
time pursuant to the terms thereof.

 

“Loan Asset” means any commercial loan listed on Schedule I hereto, as the same
may be amended, restated, supplemented and/or otherwise modified from time to
time (and including any commercial loans listed on Schedule I to any Loan
Assignment), and all accounts, payment intangibles, instruments and other
property related to the foregoing.

 

“Loan Assignment” means a Loan Assignment executed by the Seller and the
Purchaser, substantially in the form of Exhibit A attached hereto.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which, in the case of the Seller, the Seller or
any ERISA Affiliate thereof contributed or had any obligation to contribute on
behalf of its employees at any time during the current year or the preceding
five years.

 

“Non-Consolidation/True Sale Opinion” has the meaning specified in
Section 4.1(kk).

 

“Pension Plan” has the meaning specified in Section 4.1(r).

 

2

--------------------------------------------------------------------------------

 

“Portfolio Assets” means all Loan Assets owned by the Seller, together with all
proceeds thereof and other assets or property related thereto, including all
right, title and interest of the Seller in and to:

 

(a)           any amounts on deposit in any cash reserve, collection, custody or
lockbox accounts securing the Loan Assets;

 

(b)           all rights with respect to the Loan Assets to which the Seller is
entitled as lender under the applicable Loan Agreement;

 

(c)           any Underlying Collateral securing a Loan Asset and all Recoveries
related thereto, all payments paid in respect thereof and all monies due, to
become due and paid in respect thereof accruing after the applicable Cut-Off
Date and all liquidation proceeds;

 

(d)           all Required Loan Documents, the Loan Asset Files related to any
Loan Asset, any Records, and the documents, agreements, and instruments included
in the Loan Asset Files or Records;

 

(e)           all Insurance Policies with respect to any Loan Asset;

 

(f)            all Liens, guaranties, indemnities, warranties, letters of
credit, accounts, bank accounts and property subject thereto from time to time
purporting to secure or support payment of any Loan Asset, together with all UCC
financing statements, mortgages or similar filings signed or authorized by an
Obligor relating thereto;

 

(g)           all Records (including computer records) with respect to the
foregoing; and

 

(h)           all collections, income, payments, proceeds and other benefits of
each of the foregoing.

 

“Purchase” means a purchase by the Purchaser of an Eligible Loan Asset and the
related Portfolio Assets from the Seller pursuant to Article II.

 

“Purchase Date” has the meaning specified in Section 2.1(b).

 

“Purchase Price” has the meaning specified in Section 2.2.

 

“Purchaser” has the meaning specified in the Preamble.

 

“Replaced Loan Asset” has the meaning specified in Section 6.2(b)(i).

 

“Repurchase Price” means, with respect to a Loan Asset to be repurchased
pursuant to Article VI hereof, (a) an amount equal to the Purchase Price less
all Principal Collections received in respect of such Loan Asset from the
Purchase Date to the date of repurchase hereunder plus any such Principal
Collections that the Purchaser shall have been required to repay to the Obligor
with respect to such Loan Asset plus any advances that the Purchaser shall have
made with respect to such Loan Asset after the Purchaser’s purchase

 

3

--------------------------------------------------------------------------------

 

thereof, plus (b) any expenses or fees with respect to such Loan Asset and costs
and damages incurred by the Purchaser (or any of its assignees, including the
Administrative Agent or the Lender) in connection with any violation by such
Loan Asset or the related Obligor of any predatory or abusive lending law which
is an Applicable Law.

 

“Restricted Junior Payment” means (a) any dividend or other distribution, direct
or indirect, on account of any class of membership interests of the Purchaser
now or hereafter outstanding, except a dividend paid solely in interests of that
class of membership interests or in any junior class of membership interests of
the Purchaser; (b) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any class of
membership interests of the Purchaser now or hereafter outstanding, (c) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
membership interests of the Purchaser now or hereafter outstanding, and (d) any
payment of management fees by the Purchaser.  For the avoidance of doubt,
(x) payments and reimbursements due to the Servicer in accordance with the
Transaction Documents do not constitute Restricted Junior Payments, and
(y) distributions by the Purchaser to holders of its membership interests of
Loan Assets or of cash or other proceeds relating thereto which have been
substituted by the Purchaser in accordance with the Loan and Servicing Agreement
shall not constitute Restricted Junior Payments.

 

“Sale” and “Sell” have the meanings specified in Section 2.1(a), and the term
“Sold” shall have the corresponding meaning.

 

“Sale Portfolio” means all right, title, and interest (whether now owned or
hereafter acquired or arising, and wherever located) of the Seller in the
property identified below in clauses (a) through (c) and all accounts, cash and
currency, chattel paper, tangible chattel paper, electronic chattel paper,
copyrights, copyright licenses, equipment, fixtures, contract rights, general
intangibles (including payment intangibles), instruments, certificates of
deposit, certificated securities, uncertificated securities, financial assets,
securities entitlements, commercial tort claims, deposit accounts, inventory,
investment property, letter-of-credit rights, software, supporting obligations,
accessions, or other property consisting of, arising out of, or related to any
of the following (in each case excluding the Retained Interest and the Excluded
Amounts):

 

(a)           the Loan Assets, and all monies due or to become due in payment
under such Loan Assets on and after the related Cut-Off Date, including, but not
limited to, all Available Collections;

 

(b)           the Portfolio Assets with respect to the Loan Assets referred to
in clause (a); and

 

(c)           all income and Proceeds of the foregoing.

 

“Schedule I” means the schedule of all Sale Portfolio that is Sold by the Seller
to the Purchaser on a Purchase Date, as supplemented on any subsequent Purchase
Date by the “Schedule I” attached to the applicable Loan Assignment, and
incorporated herein by reference, as such schedule may be supplemented and
amended from time to time pursuant to the terms

 

4

--------------------------------------------------------------------------------

 

hereof, which schedule shall, together with all supplements and amendments
thereto, be included in and made part of the Loan Asset Schedule attached to the
Loan and Servicing Agreement.

 

“SEC” has the meaning specified in Section 5.2(o).

 

“Seller Purchase Event” means with respect to any Loan Asset, the occurrence of
a breach of the Seller’s representations and warranties under Section 4.2 on the
Cut-Off Date for such Loan Asset.

 

“Seller Termination Event” has the meaning specified in Section 8.1(a).

 

“Substitute Eligible Loan Asset” has the meaning specified in Section 6.2(a).

 

“Substitution” has the meaning specified in Section 6.2(a).

 

“Transfer Taxes” means any tax, fee or governmental charge payable by the
Purchaser, the Seller or any other Person to any federal, state or local
government arising from or otherwise related to the Sale of any Loan Asset, the
related Underlying Collateral (if any) and/or any other related Portfolio Assets
from the Seller to the Purchaser under this Agreement (excluding taxes measured
by net income).

 

Section 1.3.            Other Terms.  All accounting terms used but not
specifically defined herein shall be construed in accordance with GAAP.  All
terms used in Article 9 of the New York UCC, and used but not specifically
defined herein, are used herein as defined in such Article 9.

 

Section 1.4.            Computation of Time Periods.  Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
later specified date, the word “from” means “from and including” and the words
“to” and “until” each mean “to but excluding”. Reference to day or days without
further qualification means a calendar day or calendar days. Reference to any
time means New York, New York time.

 

Section 1.5.            Certain References.  All references to the Outstanding
Balance of a Loan Asset as of a Purchase Date shall refer to the close of
business on such day.

 

ARTICLE II.

 

SALE AND PURCHASE OF THE ELIGIBLE LOAN ASSETS
AND OTHER PORTFOLIO ASSETS

 

Section 2.1.            Sale and Purchase of the Eligible Loan Assets and the
Other Portfolio Assets. On or after the Closing Date:

 

(a)           Subject to the terms and conditions of this Agreement (including
the conditions to Purchase set forth in Article III), the Seller hereby agrees
to (i) sell, transfer and otherwise convey (collectively, “Sell” and any such
sale, transfer and/or other conveyance, a “Sale”), from time to time, to the
Purchaser, without recourse (except to the extent specifically provided herein),
and the Purchaser hereby agrees to purchase, all right, title and interest of
the

 

5

--------------------------------------------------------------------------------

 

Seller (whether now owned or hereafter acquired or arising, and wherever
located) in and to certain Sale Portfolio designated by the Seller and
(ii) transfer, or cause the deposit into, the Collection Account of all
Available Collections received by the Seller on account of any Sale Portfolio
hereunder on and after the Purchase Date with respect to such Sale Portfolio, in
each case, within two Business Days of the receipt thereof.  The Seller hereby
acknowledges that each Sale to the Purchaser hereunder is absolute and
irrevocable, without reservation or retention of any interest whatsoever by the
Seller.

 

(b)           The Seller shall on any Business Day prior to a Seller Termination
Event (each a “Purchase Date”) execute and deliver to the Purchaser a proposed
Loan Assignment identifying the Sale Portfolio to be Sold by the Seller to the
Purchaser on such Purchase Date.  From and after such Purchase Date, the Sale
Portfolio listed on Schedule I to the related Loan Assignment shall be deemed to
be listed on Schedule I hereto and constitute part of the Sale Portfolio
hereunder.

 

(c)           On or before any Purchase Date with respect to the Sale Portfolio
to be acquired by the Purchaser on such date, the Seller shall provide the
Purchaser with an Officer’s Certificate, in the form of Exhibit B hereto, signed
by a duly authorized Responsible Officer certifying, as of such Purchase Date,
to each of the items in Section 4.2.

 

(d)           On and after each Purchase Date hereunder and upon payment of the
Purchase Price therefor, the Purchaser shall own the Sale Portfolio Sold by the
Seller to the Purchaser on such Purchase Date, and the Seller shall not take any
action inconsistent with such ownership and shall not claim any ownership
interest in such Sale Portfolio.

 

(e)           Except as specifically provided in this Agreement, the Sale and
Purchase of the Sale Portfolio under this Agreement shall be without recourse to
the Seller; it being understood that the Seller shall be liable to the Purchaser
for all representations, warranties, covenants and indemnities made by the
Seller pursuant to the terms of this Agreement, all of which obligations are
limited so as not to constitute recourse to the Seller for the credit risk of
the Obligors.

 

(f)            The Purchaser and any assignee of the Purchaser shall have the
funding obligations to Obligors pursuant to the terms of the applicable Loan
Agreement for Revolving Loan Assets and Delayed Draw Loan Assets, as applicable,
and any other obligation or liability to Obligors required of the Purchaser or
such assignee as lender of record. The Purchaser and any assignee of the
Purchaser shall not have any obligation or liability to any Obligor or client of
the Seller (including any obligation to perform any obligation of the Seller,
including with respect to any other related agreements) in respect of the Sale
Portfolio other than those obligations and liabilities set forth in the
preceding sentence.  No Secured Party shall have any obligation or liability
pursuant to the terms of the applicable Loan Agreement, no such obligation or
liability is intended to be assumed by the Secured Parties and any such
assumption is expressly disclaimed.  Without limiting the generality of the
foregoing, the Sale of the Sale Portfolio by the Seller to the Purchaser
pursuant to this Agreement does not constitute and is not intended to result in
a creation or assumption by the Purchaser or the Secured Parties of any
obligation of the Seller, as lead agent, collateral agent or paying agent under
any Agented Note.

 

6

--------------------------------------------------------------------------------

 

(g)           In connection with each Purchase of Sale Portfolio hereunder, the
Seller shall cause to be delivered to the Collateral Custodian (with a copy to
the Administrative Agent), no later than 2:00 p.m. one Business Day prior to the
related Purchase Date, a faxed or e-mailed copy of the duly executed original
promissory notes of the Loan Assets (and, in the case of any Noteless Loan
Asset, a fully executed assignment agreement); and the Seller shall cause the
Loan Asset Checklist and the Required Loan Documents to be in the possession of
the Collateral Custodian within five Business Days after the related Purchase
Date.

 

(h)           In accordance with the Loan and Servicing Agreement, certain
documents relating to the Sale Portfolio shall be delivered to and held in trust
by the Collateral Custodian for the benefit of the Purchaser and its assignees,
and the Purchaser hereby instructs the Seller to cause such documents to be
delivered to the Collateral Custodian.  Such delivery to the Collateral
Custodian of such documents and the possession thereof by the Collateral
Custodian is at the will of the Purchaser and its assignees and in a custodial
capacity for their benefit only.

 

(i)            The Seller shall provide all information, and any other
reasonable assistance, to the Servicer, the Collateral Custodian and the
Collateral Agent necessary for the Servicer, the Collateral Custodian and the
Collateral Agent, as applicable, to conduct the management, administration and
collection of the Sale Portfolio Purchased hereunder in accordance with the
terms of the Loan and Servicing Agreement.

 

(j)            In connection with each Purchase of Sale Portfolio hereunder, the
Seller hereby grants to each of the Purchaser and its assigns, the
Administrative Agent, the Lender, the Collateral Agent, the Collateral Custodian
and the Servicer an irrevocable, non—exclusive license to use, without royalty
or payment of any kind, all software used by the Seller to account for the Sale
Portfolio, to the extent necessary to administer the Sale Portfolio, whether
such software is owned by the Seller or is owned by others and used by the
Seller under license agreements with respect thereto; provided that, should the
consent of any licensor of such software be required for the grant of the
license described herein to be effective or for the Purchaser to assign such
licenses to the Servicer or any successor, the Seller hereby agrees that upon
the request of the Purchaser or its assignees, the Administrative Agent, the
Lender, the Collateral Custodian or the Collateral Agent, the Seller shall use
commercially reasonable efforts to obtain the consent of such third—party
licensor.  The license granted hereby shall be irrevocable until the Collection
Date and shall terminate on the date this Agreement terminates in accordance
with its terms.  The Seller shall use its commercially reasonable efforts to
ensure that each of the Purchaser (and its assignees), the Administrative Agent,
the Lender, the Collateral Agent, the Collateral Custodian and the Servicer (or
any successor) has an enforceable right (whether by license or sublicense or
otherwise) to use all of the computer software used to account for the Sale
Portfolio and/or to recreate the related Loan Asset Files.

 

(k)           In connection with the Purchase by the Purchaser of Sale Portfolio
as contemplated by this Agreement, the Seller further agrees that it shall, at
its own expense, indicate clearly and unambiguously in its computer files on or
prior to each Purchase Date, and its financial statements, that such Sale
Portfolio has been purchased by the Purchaser in accordance with this Agreement.

 

7

--------------------------------------------------------------------------------

 

(l)            The Seller further agrees to deliver to the Purchaser on or
before each Purchase Date a computer file containing a true, complete and
correct list of all Loan Assets to be Sold hereunder on such Purchase Date,
identified by Obligor’s name and Outstanding Balance as of the related Cut-Off
Date.  Such file or list shall be marked as Schedule I to the applicable Loan
Assignment and shall be delivered to the Purchaser as confidential and
proprietary, and is hereby incorporated into and made a part of Schedule I to
this Agreement, as such Schedule I may be supplemented and amended from time to
time.

 

(m)          The Seller shall, at all times, continue to fulfill its obligations
under, and in strict conformance with, the terms of all Loan Agreements (other
than with respect to funding obligations to Obligors pursuant to the terms of
the applicable Loan Agreement for Revolving Loan Assets and Delayed Draw Loan
Assets, as applicable, and any other obligations to Obligors or other third
parties pursuant to the terms of the applicable Loan Agreement required of the
Purchaser as lender of record under such Loan Agreement) related to any Sale
Portfolio purchased hereunder, including without limitation any obligations
pertaining to any Retained Interest.

 

(n)           The Seller and the Purchaser each acknowledge with respect to
itself that the representations and warranties of the Seller in Sections 4.1 and
4.2 hereof and of the Purchaser in Section 4.3 hereof, and the covenants and
agreements of the Seller herein, including without limitation, in Article V and
Article VI hereof, will run to and be for the benefit of the Purchaser and the
Collateral Agent (on behalf of the Secured Parties) and the Purchaser and the
Collateral Agent (on behalf of the Secured Parties) may enforce directly
(without joinder of the Purchaser when enforcing against the Seller) the
obligations of the Seller or the Purchaser, as applicable, with respect to
breaches of such representations, warranties, covenants and all other
obligations, as set forth in this Agreement.

 

Section 2.2.            Purchase Price.

 

The purchase price for each item of Sale Portfolio Sold to the Purchaser
hereunder (the “Purchase Price”) shall be in a dollar amount equal to the
greatest of (a) the initial Assigned Value thereof multiplied by the Outstanding
Balance of such Loan Asset on the related Purchase Date, (b) the fair market
value of such Loan Asset, and (c) with respect to any Loan Asset acquired by the
Seller at a discount, the product of (i) the purchase price paid by the Seller
expressed as a percentage of par and (ii) the Outstanding Balance as of the time
of Purchase.  The amount, if any, by which the Purchase Price exceeds the fair
market value of such Loan Asset shall constitute a capital contribution by the
Seller to the Purchaser.

 

Section 2.3.            Payment of Purchase Price.

 

(a)           The Purchase Price for any Sale Portfolio Sold by the Seller to
the Purchaser on any Purchase Date shall be paid in a combination of: 
(i) immediately available funds; and (ii) if the Purchaser does not have
sufficient funds to pay the full amount of the Purchase Price (after taking into
account the Advances the Purchaser expects to receive pursuant to the Loan and
Servicing Agreement), by means of a capital contribution by the Seller to the
Purchaser.

 

8

--------------------------------------------------------------------------------

 

(b)           The portion of such Purchase Price to be paid in immediately
available funds shall be paid by wire transfer on the applicable Purchase Date
to an account designated by the Seller on or before such Purchase Date or by
means of proper accounting entries being entered upon the accounts and records
of the Seller and the Purchaser on the applicable Purchase Date.

 

(c)           In connection with each delivery of a Loan Assignment, the Seller
hereunder shall be deemed to have certified, with respect to the Sale Portfolio
to be Sold by it on such day, that its representations and warranties contained
in Sections 4.1 and 4.2 are true, complete and correct in all material respects
on and as of such day, with the same effect as though made on and as of such day
(other than any representation or warranty that is made as of a specific date),
that no Event of Default has occurred or would result therefrom and no Unmatured
Event of Default exists or would result therefrom.

 

(d)           Upon the payment of the Purchase Price for any Purchase, title to
the Sale Portfolio included in such Purchase shall vest in the Purchaser,
whether or not the conditions precedent to such Purchase and the other covenants
and agreements contained herein were in fact satisfied; provided that the
Purchaser shall not be deemed to have waived any claim it may have under this
Agreement for the failure by the Seller in fact to satisfy any such condition
precedent, covenant or agreement.

 

Section 2.4.            Nature of the Sales.

 

(a)           It is the express intent of the parties hereto that the Sale of
the Sale Portfolio by the Seller to the Purchaser hereunder be, and be treated
for all purposes (other than tax and accounting purposes) as an absolute sale by
the Seller (free and clear of any Lien, security interest, charge or encumbrance
other than Permitted Liens) of such Sale Portfolio.  It is, further, not the
intention of the parties that such Sale be deemed a pledge of the Sale Portfolio
by the Seller to the Purchaser to secure a debt or other obligation of the
Seller.  However, in the event that, notwithstanding the intent of the parties,
the Sale Portfolio is held to continue to be property of the Seller, then the
parties hereto agree that:  (i) this Agreement shall also be deemed to be, and
hereby is, a “security agreement” within the meaning of Article 9 of the UCC;
(ii) the transfer of the Sale Portfolio provided for in this Agreement shall be
deemed to be a grant by the Seller to the Purchaser of a first priority security
interest (subject only to Permitted Liens) in all of the Seller’s right, title
and interest in and to the Sale Portfolio and all amounts payable to the holders
of the Sale Portfolio in accordance with the terms thereof and all proceeds of
the conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including, without limitation, all
amounts from time to time held or invested in the Controlled Accounts, whether
in the form of cash, instruments, securities or other property, to secure the
prompt and complete payment of a loan deemed to have been made in an amount
equal to the aggregate Purchase Price of the Sale Portfolio together with all of
the other obligations of the Seller hereunder; (iii) the possession by the
Purchaser or the Collateral Agent (or the Collateral Custodian on behalf of the
Collateral Agent, for the benefit of the Secured Parties) of Sale Portfolio and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be, subject to clause (iv), for purposes of
perfecting the security interest pursuant to the UCC; and (iv) acknowledgements
from Persons holding such property shall be deemed acknowledgements from
custodians, bailees or agents (as applicable)

 

9

--------------------------------------------------------------------------------

 

of the Purchaser for the purpose of perfecting such security interest under
Applicable Law.  The parties further agree in such event that any assignment of
the interest of the Purchaser pursuant to any provision hereof shall also be
deemed to be an assignment of any security interest created pursuant to the
terms of this Agreement.  The Purchaser shall, to the extent consistent with
this Agreement and the other Transaction Documents, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Sale Portfolio, such security interest would be deemed to be a
perfected security interest of first priority (subject only to Permitted Liens)
under Applicable Law and will be maintained as such throughout the term of this
Agreement.  The Purchaser shall have, in addition to the rights and remedies
which it may have under this Agreement, all other rights and remedies provided
to a secured creditor under the UCC and other Applicable Law, which rights and
remedies shall be cumulative.

 

(b)           It is the intention of each of the parties hereto that the Sale
Portfolio Sold by the Seller to the Purchaser pursuant to this Agreement shall
constitute assets owned by the Purchaser and shall not be part of the Seller’s
estate in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy or similar law.

 

(c)           The Purchaser agrees to treat, and shall cause the Seller to
treat, for all purposes (other than tax and accounting purposes), the
transactions effected by this Agreement as sales of assets to the Purchaser. The
Seller agrees to reflect in the Seller’s financial records and to include a note
in the publicly filed annual and quarterly financial statements of Ares
indicating that: (i) assets related to transactions (including transactions
pursuant to the Transaction Documents) that do not meet SFAS 140 requirements
for accounting sale treatment are reflected in the consolidated balance sheet of
Ares as finance receivables pledged and non-recourse, secured borrowings and
(ii) those assets are owned by a special purpose entity that is consolidated in
the financial statements of Ares, and the creditors of that special purpose
entity have received ownership and/or security interests in such assets and such
assets are not intended to be available to the creditors of sellers (or any
affiliate of the sellers) of such assets to that special purpose entity.

 

ARTICLE III.

 

CONDITIONS OF SALE AND PURCHASE

 

Section 3.1.            Conditions Precedent to Effectiveness.  This Agreement
shall be effective upon the satisfaction of the conditions precedent that the
Purchaser shall have received on or before the Closing Date, in form and
substance satisfactory to the Purchaser, all of the following:

 

(a)           a copy of this Agreement duly executed by each of the parties
hereto;

 

(b)           a certificate of the Secretary or Assistant Secretary of the
Seller, dated the Closing Date, certifying (i) the names and true signatures of
the incumbent officers of the Seller authorized to sign on behalf of the Seller
this Agreement, the Loan Assignments and all other documents to be executed by
the Seller hereunder or in connection herewith (on which certificate the
Purchaser and its assignees may conclusively rely until such time as the
Purchaser and such assignees shall receive from

 

10

--------------------------------------------------------------------------------

 

the Seller, a revised certificate meeting the requirements of this
Section 3.1(b)), (ii) that the copy of the Seller’s articles of incorporation
attached to such certificate is a complete and correct copy and that such
articles of incorporation have not been amended, modified or supplemented and
are in full force and effect, (iii) that the copy of the Seller’s bylaws
attached to such certificate is a complete and correct copy, and that such
bylaws have not been amended, modified or supplemented and are in full force and
effect, and (iv) that the copy of the resolutions of the Seller’s board of
directors attached to such certificate, approving and authorizing the execution,
delivery and performance by the Seller of this Agreement, the Loan Assignments
and all other documents to be executed by the Seller hereunder or in connection
herewith, is a complete and correct copy and such resolutions have not been
amended, modified or supplemented and are in full force and effect;

 

(c)           a good standing certificate, dated as of a recent date for the
Seller, issued by the Secretary of State of the Seller’s State of incorporation;

 

(d)           filed (with the Secretary of State of the State of Maryland),
original copies of proper UCC financing statements (the “Facility Financing
Statements”) describing the Sale Portfolio, and naming the Seller as the
“Debtor/Seller”, the Purchaser as “Secured Party/Buyer” and the Collateral
Agent, for the benefit of the Secured Parties, as “Secured Party/Total
Assignee”, or other similar instruments or documents, in form and substance
sufficient for filing under the UCC or any comparable law of any and all
jurisdictions as may be necessary to perfect the Purchaser’s ownership interest
in all Sale Portfolio;

 

(e)           copies of properly authorized termination statements or statements
of release (on Form UCC-3) or other similar instruments or documents, if any, in
form and substance sufficient for filing under the UCC or any comparable law of
any and all jurisdictions as may be necessary to release all security interests
and similar rights of any Person in the Sale Portfolio previously granted by the
Seller;

 

(f)            copies of tax and judgment lien searches in all jurisdictions
reasonably requested by the Purchaser or its assignees and requests for
information (or a similar UCC search report certified by a party acceptable to
the Purchaser and its assigns), dated a date reasonably near to the Closing
Date, and with respect to such requests for information or UCC searches, listing
all effective UCC financing statements which name the Seller (under its present
name and any previous name) as debtor and which are filed in the State of
Maryland, together with copies of such UCC financing statements (none of which
shall cover any Sale Portfolio);

 

(g)           all instruments in connection with the transactions contemplated
by this Agreement shall be satisfactory in form and substance to the Purchaser
and the Administrative Agent, and the Purchaser and the Administrative Agent
shall have received from the Seller copies of all documents (including, without
limitation, records of corporate proceedings, approvals and opinions) relevant
to the transactions herein contemplated as the Purchaser and the Administrative
Agent may have reasonably requested;

 

11

--------------------------------------------------------------------------------

 

(h)           any necessary third party consents and approvals to the closing of
the transactions contemplated hereby, in form and substance satisfactory to the
Purchaser;

 

(i)            all fees then required to be paid in accordance with the
provisions of the Transaction Documents shall have been paid on the Closing
Date; and

 

(j)            one or more favorable Opinions of Counsel from counsel to the
Seller with respect to the perfection and enforceability of the security
interest hereunder and such other matters as the Purchaser or any assignee
thereof may reasonably request.

 

Section 3.2.            Conditions Precedent to All Purchases.  Each Purchase to
take place on a Purchase Date on or after the Closing Date hereunder shall be
subject to the further conditions precedent that:

 

(a)           The following statements shall be true:

 

(i)            The representations and warranties of the Seller contained in
Sections 4.1 and 4.2 shall be true, complete and correct on and as of such
Purchase Date in all material respects, before and after giving effect to the
Purchase to take place on such Purchase Date and to the application of proceeds
therefrom, as though made on and as of such date (other than any representation
and warranty that is made as of a specific date);

 

(ii)           The Seller is in compliance in all material respects with each of
its covenants and other agreements set forth herein;

 

(iii)          No Seller Termination Event (or event which, with the passage of
time or the giving of notice, or both would constitute a Seller Termination
Event) shall have occurred or would result from such Purchase;

 

(iv)          The Facility Maturity Date has not yet occurred;

 

(v)           No Applicable Law shall prohibit or enjoin, and no order, judgment
or decree of any federal, state or local court or governmental body, agency or
instrumentality shall prohibit or enjoin, the making of any such Purchase by the
Purchaser in accordance with the provisions hereof; and

 

(vi)          No Liens (other than Permitted Liens) exist in respect of Taxes
which are prior to the Lien of the Collateral Agent on the Eligible Loan Assets
to be transferred to the Purchaser on such Purchase Date.

 

(b)           The Purchaser shall have received a duly executed and completed
Loan Assignment along with a Schedule I that is true, complete and correct in
all material respects as of the related Cut-Off Date.

 

(c)           The Seller shall have delivered to the Collateral Custodian on
behalf of the Purchaser and any assignee thereof each item required to be
contained in the Required Loan

 

12

--------------------------------------------------------------------------------

 

Documents and the Loan Asset Checklist of any of the Loan Assets or Portfolio
Assets related thereto being acquired by the Purchaser within five Business Days
of the related Purchase Date.

 

(d)           The Seller shall have taken all steps necessary under all
Applicable Law in order to Sell to the Purchaser the Sale Portfolio being
Purchased on such Purchase Date and, upon the Sale of such Sale Portfolio from
the Seller to the Purchaser pursuant to the terms hereof, the Purchaser will
have acquired good and marketable title to and a valid and perfected ownership
interest in such Sale Portfolio, as lender of record of each Loan Asset included
in such Sale Portfolio, free and clear of any Lien, security interest, charge or
encumbrance (other than Permitted Liens); provided that if such item of Sale
Portfolio contains a restriction on transferability, the applicable Loan
Agreement provides that any consents necessary for future assignments shall not
be unreasonably withheld by the applicable Obligor and/or agent, and the rights
to enforce rights and remedies in respect of the same under the applicable Loan
Agreement inure to the benefit of the holder of such Loan Asset (subject to the
rights of any applicable agent or other lenders).  The Seller shall have caused
to be made, taken or performed all filings (including without limitation UCC
filings) required to be made by any Person and all actions required to be taken
or performed by any Person in any jurisdiction to give the Collateral Agent, for
the benefit of the Secured Parties, a first priority perfected security interest
in such Eligible Loan Assets and the Portfolio Assets related thereto (subject
only to Permitted Liens).

 

(e)           The Seller shall have received a copy of an Approval Notice
executed by the Administrative Agent evidencing the approval of the
Administrative Agent, in its sole and absolute discretion of the Sale to the
Purchaser of the Eligible Loan Assets identified on Schedule I to the applicable
Loan Assignment on the applicable Purchase Date.

 

ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1.            Representations and Warranties of the Seller.  The
Seller makes the following representations and warranties, on which the
Purchaser relies in acquiring the Sale Portfolio Purchased hereunder and each of
the Secured Parties relies upon in entering into the Loan and Servicing
Agreement.  As of each Purchase Date (unless a specific date is specified
below), the Seller represents and warrants to the Purchaser for the benefit of
the Purchaser and each of its successors and assigns that:

 

(a)           Organization and Good Standing.  The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Maryland (subject to Section 5.1), with all requisite
corporate power and authority necessary to own or lease its properties and to
conduct its business as such business is presently conducted and to enter into
and perform its obligations pursuant to this Agreement, and had at all relevant
times, and now has, all necessary power, authority and legal right to acquire
and own the Sale Portfolio and to Sell such Sale Portfolio to the Purchaser
hereunder. Without limiting the generality of the foregoing and for the
avoidance of doubt, all consents or approvals required under the JPM Credit
Documents in connection with the execution, delivery or performance by the
Seller of this Agreement and the other Transaction Documents, including, without
limitation, for the transfer

 

13

--------------------------------------------------------------------------------

 

of the Collateral Portfolio to the Borrower and the pledge of a first priority
perfected security interest in such Collateral Portfolio by the Purchaser to the
Collateral Agent have been obtained.

 

(b)           Due Qualification.  The Seller is duly qualified to do business as
a corporation and is in good standing as a corporation, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of its property and/or the conduct of its business requires such
qualification, licenses or approvals.

 

(c)           Power and Authority; Due Authorization; Execution and Delivery. 
The Seller (i) has all necessary power, authority and legal right to (A) execute
and deliver this Agreement, each Loan Assignment and the other Transaction
Documents to which it is a party and (B) carry out the terms of this Agreement,
each Loan Assignment and the other Transaction Documents to which it is a party
and (ii) has duly authorized by all necessary corporate action the execution,
delivery and performance of this Agreement, each Loan Assignment and the other
Transaction Documents to which it is a party and the sale and assignment of an
ownership interest in the Sale Portfolio on the terms and conditions herein
provided.  This Agreement, each Loan Assignment and each other Transaction
Document to which the Seller is a party have been duly executed and delivered by
the Seller.

 

(d)           Valid Conveyance; Binding Obligations.  This Agreement, each Loan
Assignment and the Transaction Documents to which the Seller is party have been
and, in the case of each Loan Assignment delivered after the Closing Date, will
be, duly executed and delivered by the Seller, and this Agreement, together with
the applicable Loan Assignment in each case, shall effect valid Sales of Sale
Portfolio, enforceable against the Seller and creditors of and purchasers from
the Seller, and this Agreement, each Loan Assignment and such Transaction
Documents shall constitute legal, valid and binding obligations of the Seller
enforceable against the Seller in accordance with their respective terms, except
as enforceability may be limited by Bankruptcy Laws and general principles of
equity (whether such enforceability is considered in a proceeding in equity or
at law).

 

(e)           No Violation.  The consummation of the transactions contemplated
by this Agreement and the other Transaction Documents to which the Seller is a
party and the fulfillment of the terms hereof and thereof will not (i) conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, the Seller’s
articles of incorporation or by-laws or any contractual obligation of the
Seller, (ii) result in the creation or imposition of any Lien (other than
Permitted Liens) upon any of the Seller’s properties pursuant to the terms of
any such contractual obligation, other than this Agreement and the other
Transaction Documents to which it is a party, or (iii) violate any Applicable
Law.

 

(f)            No Proceedings.  There is no litigation or administrative
proceeding or investigation pending or, to the knowledge of the Seller,
threatened against the Seller, before any Governmental Authority (i) asserting
the invalidity of this Agreement, any Loan Assignment or any other Transaction
Document to which the Seller is a party, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, any Loan
Assignment or any other Transaction Document to which the Seller is a party or
(iii) seeking any determination or ruling that could reasonably be expected to
have a Material Adverse Effect.

 

14

--------------------------------------------------------------------------------

 

(g)           All Consents Required.  All approvals, authorizations, consents,
orders, licenses or other actions of any Person or of any Governmental Authority
(if any) required for the due execution, delivery and performance by the Seller
of this Agreement and any other Transaction Document to which the Seller is a
party have been obtained.

 

(h)           State of Organization, Etc.  Except as permitted hereunder, the
Seller’s legal name is as set forth in this Agreement.  Except as permitted
hereunder, the Seller has not changed its name since its incorporation; does not
have tradenames, fictitious names, assumed names or “doing business as” names. 
The chief executive office of the Seller (and the location of the Seller’s
Records regarding the Sale Portfolio (other than those delivered to the
Collateral Custodian)) is at the address of the Seller set forth in Section 10.5
(or at such other address as shall be designated by such party in a written
notice to the other parties hereto).  The Seller’s only jurisdiction of
incorporation is Maryland, and, except as permitted hereunder, the Seller has
not changed its jurisdiction of incorporation.

 

(i)            Bulk Sales.  The execution, delivery and performance of this
Agreement and the transactions contemplated hereby do not require compliance
with any “bulk sales” act or similar law by the Seller.

 

(j)            Solvency.  The Seller is not the subject of any Bankruptcy
Proceedings or Bankruptcy Event.  The transactions contemplated by this
Agreement and any other Transaction Document to which the Seller is a party do
not and will not render the Seller not Solvent.

 

(k)           Selection Procedures; Origination of Loan Assets.  In selecting
the Loan Assets to be transferred to the Purchaser pursuant to the terms of this
Agreement, no selection procedures were employed which are intended to be
adverse to the interests of the Purchaser (or any of its assignees, including
any Secured Party).  Such Loan Assets originated by the Seller were originated
pursuant to and in accordance with the Credit Policy.

 

(l)            Compliance with Law.  The Seller has complied in all material
respects with all Applicable Law to which it may be subject, and no item of Sale
Portfolio contravenes any Applicable Law (including, without limitation, all
applicable predatory and abusive lending laws, laws, rules and regulations
relating to licensing, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy).

 

(m)          Taxes.  The Seller has filed or caused to be filed all tax returns
that are required to be filed by it (subject to any extension to file properly
obtained by the same).  The Seller has paid or made adequate provisions for the
payment of all Taxes and all assessments made against it or any of its property
(other than any amount of tax the validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Seller), and no tax
lien has been filed and, to the Seller’s knowledge, no claim is being asserted,
with respect to any such Tax, assessment or other charge.

 

(n)           Exchange Act Compliance; Regulations T, U and X.  None of the
transactions contemplated herein or in the other Transaction Documents
(including, without limitation, the use of the proceeds from the Sale of the
Sale Portfolio) will violate or result in a

 

15

--------------------------------------------------------------------------------

 

violation of Section 7 of the Exchange Act, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II.  The Seller does
not own or intend to carry or purchase, and no proceeds from the Sale of the
Sale Portfolio will be used to carry or purchase, any Margin Stock or to extend
“purpose credit” within the meaning of Regulation U.

 

(o)           Loan Assignments.  Each Loan Assignment is true, complete and
correct in all material respects.

 

(p)           No Liens, Etc.  The Sale Portfolio to be acquired by Purchaser
hereunder is owned by the Seller free and clear of any Lien, security interest,
charge or encumbrance (subject only to Permitted Liens), and the Seller has the
full right, corporate power and lawful authority to Sell the same and interests
therein and, upon the Sale thereof hereunder, the Purchaser will have acquired
good and marketable title to and a valid and perfected ownership interest in
such Sale Portfolio, free and clear of any Lien, security interest, charge or
encumbrance (subject only to Permitted Liens); provided that if such item of
Sale Portfolio contains a restriction of transferability, the applicable Loan
Agreement provides that any consents necessary for future assignments shall not
be unreasonably withheld by the applicable Obligor and/or agent, and the rights
to enforce rights and remedies in respect of the same under the applicable Loan
Agreement inure to the benefit of the holder of such Loan Asset (subject to the
rights of any applicable agent or other lenders).  No effective UCC financing
statement reflecting the Seller or the Seller’s predecessor in interest, as a
“Debtor”, or other instrument similar in effect covering all or any part of any
Sale Portfolio Purchased hereunder is on file in any recording office, except
such as may have been filed in favor of the Collateral Agent as “Secured Party”
or “Assignee”, in each case, for the benefit of the Secured Parties pursuant to
the Loan and Servicing Agreement.

 

(q)           Information True and Correct.  All information heretofore
furnished by or on behalf of the Seller to the Purchaser or any assignee thereof
in connection with this Agreement, including, without limitation, the JPM Credit
Documents (other than any exhibits and schedules thereto which are not required
to be publicly filed), or any transaction contemplated hereby is true, complete
and correct in all material respects; provided that, solely with respect to
written or electronic information furnished by or on behalf of the Seller which
was provided to the Seller from an Obligor with respect to a Loan Asset, such
information need only be true, complete and correct in all material respects to
the knowledge of the Seller; provided further that the foregoing proviso shall
not apply to any information presented in a Servicer’s Certificate, Servicing
Report, Notice of Borrowing or Borrowing Base Certificate.

 

(r)            ERISA Compliance.  The present value of all vested benefits under
each “employee pension benefit plan”, as such term is defined in Section 3(2) of
ERISA, other than a Multiemployer Plan, that is subject to Title IV of ERISA and
is sponsored or maintained by the Seller or any ERISA Affiliate of the Seller or
to which the Seller or any ERISA Affiliate of the Seller contributes or has an
obligation to contribute, or has any liability (each, a “Pension Plan”) does not
exceed the value of the assets of the Pension Plan allocable to such vested
benefits (based on the value of such assets as of the last annual valuation date
for such Pension Plan) determined in accordance with the assumptions used for
funding such Pension Plan pursuant to Sections 412 and 430 of the Code for the
applicable plan year.  No prohibited transactions

 

16

--------------------------------------------------------------------------------

 

(within the meaning of Section 406(a) or (b) of ERISA or Section 4975 of the
Code) for which an exemption is not available or has not previously been
obtained from the United States Department of Labor, failure to meet the minimum
funding standard set forth in Section 302(a) of ERISA and Section 412(a) of the
Code with respect to any Pension Plan, withdrawal from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which the Seller or any ERISA
Affiliate of the Seller was a “substantial employer” (as defined in
Section 4001(a)(2) of ERISA), or a cessation of operations that is treated as
such a withdrawal under Section 4062(e) of ERISA, or Reportable Events have
occurred with respect to any Pension Plan that, in the aggregate, could subject
the Seller to any material Tax penalty or other liability.  No notice of intent
to terminate a Pension Plan has been filed under Section 4041 of ERISA, nor has
any Pension Plan been terminated under Section 4041 of ERISA, nor has the
Pension Benefit Guaranty Corporation instituted proceedings to terminate, or
appoint a trustee to administer, a Pension Plan under Section 4042 of ERISA and
no event has occurred or condition exists that constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan.

 

(s)           Investment Company Act.  The Seller is an “investment company”
that has elected to be regulated as a “business development company” within the
meaning of the 1940 Act. The Seller conducts its business and other activities
in compliance in all material respects with the applicable provisions of the
1940 Act and any applicable rules, regulations or orders issued by the SEC
thereunder.

 

(t)            Intent of the Seller.  The Seller has not sold, contributed,
transferred, assigned or otherwise conveyed any interest in any Sale Portfolio
to the Purchaser with any intent to hinder, delay or defraud any of the Seller’s
creditors.

 

(u)           Value Given.  The Seller has received fair consideration and
reasonably equivalent value from the Purchaser in exchange for the Sale of the
Loan Assets (or any number of them) to the Purchaser pursuant to this Agreement.
No such transfer has been made for or on account of an antecedent debt owed by
the Purchaser to the Seller and no such transfer is or may be voidable or
subject to avoidance under any section of the Bankruptcy Code.

 

(v)           Accounting.  Other than for tax and consolidated accounting
purposes, the Seller will not account for or treat (whether in financial
statements or otherwise) the transactions contemplated hereby in any manner
other than as a sale of the Sale Portfolio by the Seller to the Purchaser.

 

(w)          No Broker-Dealers.  The Seller is not a broker-dealer or subject to
the Securities Investor Protection Act of 1970, as amended.

 

(x)            Special Purpose Entity.  The Purchaser is an entity with assets
and liabilities separate and distinct from those of the Seller and any
Affiliates thereof, and the Seller hereby acknowledges that the Administrative
Agent, the Lender, the Collateral Agent, the Collateral Custodian and the other
Secured Parties are entering into the transactions contemplated by the Loan and
Servicing Agreement in reliance upon the Purchaser’s identity as a legal entity
that is separate from the Seller and from each other Affiliate of the Seller. 
Therefore, from and after the date of execution and delivery of this Agreement,
the Seller shall

 

17

--------------------------------------------------------------------------------

 

take all reasonable steps, including, without limitation, all steps that the
Administrative Agent, the Lender and the Collateral Agent may from time to time
reasonably request, to maintain the Purchaser’s identity as a separate legal
entity and to make it manifest to third parties that the Purchaser is an entity
with assets and liabilities distinct from those of the Seller and each other
Affiliate thereof and not just a division of the Seller or any such other
Affiliate (other than for tax purposes).  Without limiting the generality of the
foregoing and in addition to the other covenants set forth herein, the Seller
shall take all reasonable steps to ensure that the Purchaser has not and will
not take, refrain from taking, or fail to take (as applicable) any action
described in Section 9(j) of its limited liability company operating agreement
and Sections 5.01(a), 5.01(b), 5.02(a) and 5.02(b) of the Loan and Servicing
Agreement; provided that, for the avoidance of doubt, the Seller shall not be
required to expend any of its own funds to cause the Purchaser to be in
compliance with subsection 5.02(a)(v) of the Loan and Servicing Agreement or
subsection 5.01(b)(xvii) of the Loan and Servicing Agreement (it being
understood that this proviso shall in no way affect the obligation of Seller to
manage the activities and liabilities of the Purchaser such that the Purchaser
maintains compliance with either of the foregoing subsections).

 

(y)           Purchase and Sale Agreement.  This Agreement and the Loan
Assignments (including any assignment or novation instruments and other
documents evidencing the assignment or novation of each Loan Asset in accordance
with the related Loan Agreement) contemplated herein are the only agreements or
arrangements pursuant to which the Seller Sells the Sale Portfolio Sold by it to
the Purchaser.

 

(z)            Security Interest.

 

(i)            This Agreement creates a valid and continuing security interest
(as defined in the applicable UCC) in the Sale Portfolio in favor of the
Purchaser, which security interest is prior to all other Liens (except for
Permitted Liens), and is enforceable as such against creditors of and purchasers
from the Seller;

 

(ii)           the Loan Assets, along with the related Loan Asset Files, are
comprised of “instruments,” “securities entitlements,” “general intangibles”
(including “payment intangibles”), “tangible chattel paper,” “accounts,”
“certificated securities,” “uncertificated securities,” “supporting
obligations,” or “insurance” (each as defined in the applicable UCC), real
property and/or such other category of collateral under the applicable UCC as to
which the Seller has complied with its obligations under this Section 4.1(z);

 

(iii)          the Seller owns and has good and marketable title to (or with
respect to assets securing any Loan Assets, a valid security interest in) the
Sale Portfolio Sold by it to the Purchaser hereunder on such Purchase Date, free
and clear of any Lien (other than Permitted Liens) of any Person;

 

(iv)          the Seller has received all consents and approvals required by the
terms of any Loan Asset, to the Sale thereof and the granting of a security
interest in the Loan Assets hereunder to the Purchaser;

 

18

--------------------------------------------------------------------------------

 

(v)           the Seller has caused the filing of all appropriate UCC financing
statements in the proper filing office in the appropriate jurisdictions under
Applicable Law in order to perfect the security interest in that portion of the
Sale Portfolio in which a security interest may be perfected by any filing of a
UCC financing statement granted hereunder to the Purchaser; provided that
filings in respect of real property shall not be required;

 

(vi)          except as otherwise expressly permitted by the terms of this
Agreement and the Loan and Servicing Agreement and other than the security
interest granted to the Purchaser and the Collateral Agent, on behalf of the
Secured Parties, the Seller has not pledged, assigned, sold, granted a security
interest in or otherwise conveyed any of the Sale Portfolio.  The Seller has not
authorized the filing of and is not aware of any UCC financing statements
against the Seller that include a description of collateral covering the Sale
Portfolio other than any UCC financing statement (A) relating to the security
interest granted to the Purchaser under this Agreement, (B) relating to the
closing of a Permitted Securitization contemplated by Section 2.07(c) of the
Loan and Servicing Agreement or (C) that has been terminated and/or fully and
validly assigned to the Collateral Agent on or prior to the date hereof.  The
Seller is not aware of the filing of any judgment or tax lien filings against
the Seller;

 

(vii)         all original executed copies of each underlying promissory note or
copies of each Loan Asset Register, as applicable, that constitute or evidence
each Loan Asset have been, or subject to the delivery requirements contained
herein, will be delivered to the Collateral Custodian;

 

(viii)        other than in the case of Noteless Loan Assets, the Seller has
received, or subject to the delivery requirements herein will receive, a written
acknowledgment from the Collateral Custodian that the Collateral Custodian, as
the bailee of the Collateral Agent, is holding the underlying promissory notes
that constitute or evidence the Loan Assets solely on behalf of and for the
Collateral Agent, for the benefit of the Secured Parties; provided that the
acknowledgment of the Collateral Custodian set forth in Section 12.11 of the
Loan and Servicing Agreement may serve as such acknowledgment;

 

(ix)           none of the underlying promissory notes or Loan Asset Registers,
as applicable, that constitute or evidence the Loan Assets has any marks or
notations indicating that they have been pledged, assigned or otherwise conveyed
to any Person other than the Collateral Agent, on behalf of the Secured Parties;

 

(x)            with respect to any Sale Portfolio that constitutes a
“certificated security”, such certificated security has been delivered to the
Collateral Custodian, on behalf of the Secured Parties and, if in registered
form, has been specially Indorsed to the Collateral Agent, for the benefit of
the Secured Parties, or in blank by an effective Indorsement or has been
registered in the name of the Collateral Agent, for the benefit of the Secured
Parties, upon original issue or registration of transfer by the Purchaser of
such certificated security;

 

19

--------------------------------------------------------------------------------

 

(xi)           with respect to any Sale Portfolio that constitutes an
“uncertificated security”, that the Seller shall cause the issuer of such
uncertificated security to register the Collateral Agent, on behalf of the
Secured Parties, as the registered owner of such uncertificated security; and

 

(xii)          with respect to any Sale Portfolio that constitutes “security
entitlements”:

 

(A)          all of such security entitlements have been credited to one of the
Controlled Accounts and the securities intermediary for each Controlled Account
has agreed to treat all assets credited to such Controlled Account as “financial
assets” within the meaning of the applicable UCC;

 

(B)           the Seller has taken all steps necessary to cause the securities
intermediary to identify in its records the Purchaser, subject to the Lien of
the Collateral Agent, for the benefit of the Secured Parties, as the Person
having a security entitlement against the securities intermediary in each of the
Controlled Accounts; and

 

(C)           the Controlled Accounts are not in the name of any Person other
than the Purchaser, subject to the Lien of the Collateral Agent, for the benefit
of the Secured Parties. The securities intermediary of any Controlled Account
which is a “securities account” under the UCC has agreed to comply with the
entitlement orders and instructions of the Purchaser, the Servicer and the
Collateral Agent (acting at the direction of the Administrative Agent) in
accordance with the Transaction Documents, including causing cash to be invested
in Permitted Investments; provided that upon the delivery of a Notice of
Exclusive Control (as defined in the Control Agreement) by the Collateral Agent
(acting at the direction of the Administrative Agent), the securities
intermediary has agreed to only follow the entitlement orders and instructions
of the Collateral Agent, on behalf of the Secured Parties, including with
respect to the investment of cash in Permitted Investments.

 

(aa)         Credit Policy.  The Seller has complied in all material respects
with the Credit Policy with respect to all of the Sale Portfolio.

 

(bb)         Instructions to Agents and Obligors.  The Seller has directed the
agent or administrative agent for any Loan Asset to remit all payments and
collections with respect to such Loan Asset, and, if applicable, has directed
the Obligor with respect to such Loan Asset to remit all such payments and
collections with respect to such Loan Asset, directly to the Collection Account.

 

(cc)         Collections.  The Collection Account is the only account to which
Obligors have been instructed to send Interest Collections and Principal
Collections on the Sale Portfolio Sold by the Seller.  The Seller acknowledges
that it has been instructed by the Purchaser to deposit into the Collection
Account the Repurchase Price relating to any Loan Asset required to be
repurchased hereunder.  The Seller acknowledges that all Available Collections

 

20

--------------------------------------------------------------------------------

 

received by it or its Affiliates with respect to the Sale Portfolio Purchased by
the Purchaser pursuant to the terms of this Agreement, along with any funds it
is required to deposit into the Collection Account to effect any repurchase of
any Loan Asset required hereunder, are held and shall be held in trust for the
benefit of the Purchaser (or its assignees) until deposited into the Collection
Account as required by the Loan and Servicing Agreement.

 

(dd)                          Set—Off, Etc.  No Sale Portfolio has been
compromised, adjusted, extended, satisfied, subordinated, rescinded, set-off or
modified by the Seller or the Obligor thereof, and no Sale Portfolio, including
any Loan Assets therein, is subject to compromise, adjustment, extension,
satisfaction, subordination, rescission, set-off, counterclaim, defense,
abatement, suspension, deferment, deduction, reduction, termination or
modification, whether arising out of transactions concerning the Sale Portfolio
or otherwise, by the Seller or the Obligor with respect thereto, except, in each
case, for amendments, extensions and modifications, if any, to such Sale
Portfolio otherwise permitted pursuant to Section 6.04(a) of the Loan and
Servicing Agreement and in accordance with the Credit Policy and the Servicing
Standard.

 

(ee)                            Full Payment.  As of the applicable Purchase
Date thereof, the Seller has no knowledge of any fact which should lead it to
expect that any Sale Portfolio will not be paid in full.

 

(ff)                                Ownership of the Purchaser.  The Seller owns
directly 100% of the membership interests of the Purchaser, free and clear of
any Lien (other than the JPM Lien).  Such membership interests are validly
issued, fully paid and non—assessable, and there are no options, warrants or
other rights to acquire membership interests of the Purchaser.

 

(gg)                          Confirmation from the Seller.  The Seller has
provided written confirmation to the Purchaser that the Seller will not cause
the Purchaser to file a voluntary petition under the Bankruptcy Code.

 

(hh)                          Environmental.  With respect to each item of
Underlying Collateral as of the applicable Cut-Off Date for the Loan Asset
related to such Underlying Collateral, to the actual knowledge of a Responsible
Officer of the Seller:  (a) the related Obligor’s operations comply in all
material respects with all applicable Environmental Laws; (b) none of the
related Obligor’s operations is the subject of a federal or state investigation
evaluating whether any remedial action, involving expenditures, is needed to
respond to a release of any Hazardous Materials into the environment; and
(c) the related Obligor does not have any material contingent liability in
connection with any release of any Hazardous Materials into the environment. As
of the applicable Cut-Off Date for the Loan Asset related to such Underlying
Collateral, the Seller has not received any written or verbal notice of, or
inquiry from any Governmental Authority regarding, any violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Underlying Collateral, nor does the Seller have knowledge or reason to
believe that any such notice will be received or is being threatened.

 

(ii)                                  USA PATRIOT Act.  Neither the Seller nor
any Affiliate of the Seller is (i) a country, territory, organization, Person or
entity named on an Office of Foreign Asset Control (OFAC) list; (ii) a Person
that resides or has a place of business in a country or territory

 

21

--------------------------------------------------------------------------------

 

named on such lists or which is designated as a “Non-Cooperative Jurisdiction”
by the Financial Action Task Force on Money Laundering, or whose subscription
funds are transferred from or through such a jurisdiction; (iii) a “Foreign
Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a foreign bank that
does not have a physical presence in any country and that is not affiliated with
a bank that has a physical presence and an acceptable level of regulation and
supervision; or (iv) a Person or entity that resides in or is organized under
the laws of a jurisdiction designated by the United States Secretary of the
Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting special
measures due to money laundering concerns.

 

(jj)                                  Seller Termination Event.  No event has
occurred which constitutes a Seller Termination Event and no event has occurred
and is continuing which with the passage of time or the giving of notice, or
both would constitute a Seller Termination Event (other than any Seller
Termination Event which has previously been disclosed to the Administrative
Agent as such).

 

(kk)                            Opinion.  The statements of fact in the section
heading “Assumptions” in the non-consolidation and true sale opinion (the
“Non-Consolidation/True Sale Opinion”) of Latham & Watkins LLP, dated as of the
date hereof are true, complete and correct in all material respects.

 

(ll)                                  Designated Subsidiary.  The Seller has
duly and properly designated the Purchaser as a Designated Subsidiary (under and
as defined in the JPM Credit Documents).

 

(mm)                      Accuracy of Representations and Warranties.  Each
representation or warranty by the Seller contained herein, or in any certificate
or other document furnished by the Seller to the Purchaser or the Administrative
Agent in writing pursuant hereto or in connection herewith, is as of its date
true, complete and correct in all material respects.

 

(nn)                          Representations and Warranties for Benefit of the
Purchaser’s Assignees.  The Seller hereby makes each representation and warranty
contained in this Agreement and the other Transaction Documents to which it is a
party and that have been executed and delivered on or prior to such Purchase
Date to, and for the benefit of the Purchaser (and its assignees), the
Administrative Agent, the Lender, the Collateral Agent, the Collateral Custodian
and the other Secured Parties as if the same were set forth in full herein.

 

It is understood and agreed that the representations and warranties provided in
this Section 4.1 shall survive (x) the Sale of the Sale Portfolio to the
Purchaser and (y) the grant of a first priority perfected security interest in,
to and under the Sale Portfolio pursuant to the Loan and Servicing Agreement by
the Purchaser.  Upon discovery by the Seller or the Purchaser of a breach of any
of the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice thereof to the other and to the
Administrative Agent immediately upon obtaining knowledge of such breach.

 

Section 4.2.                                   Representations and Warranties of
the Seller Relating to the Agreement and the Sale Portfolio.  The Seller makes
the following representations and warranties, on which the Purchaser relies in
acquiring the Sale Portfolio Purchased hereunder and each of the Secured Parties
relies upon in entering into the Loan and Servicing Agreement.  As of each
Purchase

 

22

--------------------------------------------------------------------------------

 

Date, the Seller represents and warrants to the Purchaser for the benefit of the
Purchaser and each of its successors and assigns that:

 

(a)                                  Binding Obligation, Valid Transfer and
Security Interest.  This Agreement, together with the Loan Assignments,
constitutes a valid transfer to the Purchaser of all right, title and interest
in, to and under all Sale Portfolio, free and clear of any Lien of any Person
claiming through or under the Seller or its Affiliates, except for Permitted
Liens.  If the conveyances contemplated by this Agreement are determined to be a
transfer for security, then this Agreement constitutes a grant of a security
interest in all Sale Portfolio to the Purchaser which upon the delivery of the
Required Loan Documents and the filing of the UCC financing statements shall be
a valid and first priority perfected security interest in the Loan Assets
forming a part of the Sale Portfolio and in that portion of the Loan Assets in
which a security interest may be perfected by any filing of a UCC financing
statement subject only to Permitted Liens.  Neither the Seller nor any Person
claiming through or under the Seller shall have any claim to or interest in the
Controlled Accounts; provided that if this Agreement constitutes only a grant of
a security interest in such property, then the Seller shall have the rights in
such property as a debtor for purposes of the UCC.

 

(b)                                 Eligibility of Sale Portfolio.  As of each
Purchase Date, (i) Schedule I is an accurate and complete listing of all the
Sale Portfolio as of the related Cut-Off Date and the information contained
therein with respect to the identity of such item of Sale Portfolio and the
amounts owing thereunder is true and correct as of the related Cut-Off Date,
(ii) each item of the Sale Portfolio Purchased by the Purchaser hereunder is an
Eligible Loan Asset and (iii) with respect to each item of the Sale Portfolio
all consents, licenses, approvals or authorizations of or registrations or
declarations of any Governmental Authority or any Person required to be
obtained, effected or given by the Seller in connection with the transfer of an
ownership interest or security interest in each item of Sale Portfolio to the
Purchaser have been duly obtained, effected or given and are in full force and
effect. For the avoidance of doubt, any inaccurate representation that a Loan
Asset is an Eligible Loan Asset hereunder shall not constitute a Seller
Termination Event if the Purchaser complies with Section 2.07(e) of the Loan and
Servicing Agreement and the Seller complies with Section 6.1 hereunder.

 

(c)                                  No Fraud.  Each Loan Asset was originated
or acquired without any fraud or material misrepresentation by the Seller or, to
the best of the Seller’s knowledge, on the part of the Obligor.

 

It is understood and agreed that the representations and warranties provided in
this Section 4.2 shall survive (x) the Sale of the Sale Portfolio to the
Purchaser, (y) the grant of a first priority perfected security interest in, to
and under the Sale Portfolio pursuant to the Loan and Servicing Agreement by the
Purchaser and (z) the termination of this Agreement and the Loan and Servicing
Agreement.  Upon discovery by the Seller or the Purchaser of a breach of any of
the foregoing representations and warranties, the party discovering such breach
shall give prompt written notice thereof to the other and to the Administrative
Agent immediately upon obtaining knowledge of such breach.

 

23

--------------------------------------------------------------------------------

 

Section 4.3.                                   Representations and Warranties of
the Purchaser.  The Purchaser makes the following representations and
warranties, on which the Seller relies in selling the Sale Portfolio Sold to the
Purchaser hereunder and each of the Secured Parties relies upon in entering into
the Loan and Servicing Agreement.  As of each Purchase Date, the Purchaser
represents and warrants to the Seller for the benefit of the Seller and each of
its successors and assigns (and as to any Loan Assets, only with respect to the
Loan Assets being purchased on such Purchase Date) that:

 

(a)                                  Organization and Good Standing.  The
Purchaser is a limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, or such
other jurisdiction as permitted under the terms of the Transaction Documents,
and has the power and all licenses necessary to own its assets and to transact
the business in which it is engaged and is duly qualified and in good standing
under the laws of each jurisdiction where the transaction of such business or
its ownership of the Loan Assets and the Sale Portfolio requires such
qualification. Without limiting the generality of the foregoing and for the
avoidance of doubt, all consents or approvals required under the JPM Credit
Documents in connection with the execution, delivery or performance by the
Purchaser of this Agreement and the other Transaction Documents, including,
without limitation, for the transfer of the Collateral Portfolio to the Borrower
and the pledge of a first priority perfected security interest in such
Collateral Portfolio by the Purchaser to the Collateral Agent have been
obtained.

 

(b)                                 Due Qualification.  The Purchaser is duly
qualified to do business as a limited liability company in good standing, and
has obtained all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of its property or the conduct of its business requires
such qualification, licenses and/or approvals.

 

(c)                                  Power and Authority; Due Authorization;
Execution and Delivery.  The Purchaser has the necessary power, authority and
legal right to make, deliver and perform this Agreement and all of the
transactions contemplated hereby, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement.

 

(d)                                 All Consents Required.  No consent of any
other party and no consent, license, approval or authorization of, or
registration or declaration with, any Governmental Authority, bureau or agency
is required in connection with the execution, delivery or performance by the
Purchaser of this Agreement, any Loan Assignment or any Transaction Document to
which it is a party or the validity or enforceability of this Agreement, any
Loan Assignment or any such Transaction Document or the Loan Assets or the
transfer of an ownership interest or security interest in such Loan Assets,
other than such as have been met or obtained and are in full force and effect.

 

(e)                                  Binding Obligation.  This Agreement
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against it in accordance with its respective terms, except as the
enforceability hereof may be limited by Bankruptcy Laws and by general
principles of equity (whether such enforceability is considered in a proceeding
in equity or at law).

 

24

--------------------------------------------------------------------------------

 

(f)                                    No Violation.  The consummation of the
transactions contemplated by this Agreement, each Loan Assignment, and the other
Transaction Documents to which the Purchaser is a party and the fulfillment of
the terms hereof and thereof will not (i) conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, the Purchaser’s certificate of
formation, operating agreement or any contractual obligation of the Purchaser,
(ii) result in the creation or imposition of any Lien (other than Permitted
Liens) upon any of the Purchaser’s properties pursuant to the terms of any such
contractual obligation, other than this Agreement and the other Transaction
Documents to which it is a party, or (iii) violate any Applicable Law.

 

(g)                                 Value Given.  The Purchaser has given fair
consideration and reasonably equivalent value to the Seller in exchange for the
Sale of such Sale Portfolio, which amount the Purchaser hereby agrees is the
fair market value of such Sale Portfolio.  No such Sale has been made for or on
account of an antecedent debt owed by the Purchaser to the Seller and no such
transfer is or may be voidable or subject to avoidance under any section of the
Bankruptcy Code.

 

(h)                                 No Proceedings.  There is no litigation or
administrative proceeding or investigation pending or, to the knowledge of the
Purchaser, threatened against the Purchaser or any properties of the Purchaser,
before any Governmental Authority (i) asserting the invalidity of this
Agreement, any Loan Assignment or any other Transaction Document to which the
Purchaser is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, any Loan Assignment or any other
Transaction Document to which the Purchaser is a party or (iii) seeking any
determination or ruling that could reasonably be expected to have a Material
Adverse Effect.

 

(i)                                     Purchase and Sale Agreement.  This
Agreement and the Loan Assignments (including any assignment or novation
instruments and other documents evidencing the assignment or novation of each
Loan Asset in accordance with the related Loan Agreement) contemplated herein
are the only agreements or arrangements pursuant to which the Purchaser
Purchases the Sale Portfolio Sold to it by the Seller.

 

(j)                                     Investment Company Act.  The Purchaser
is not required to register as an “investment company” under the provisions of
the 1940 Act.

 

(k)                                  Compliance with Law.  The Purchaser has
complied in all material respects with all Applicable Law to which it may be
subject, and no item of Sale Portfolio contravenes any Applicable Law
(including, without limitation, all applicable predatory and abusive lending
laws, laws, rules and regulations relating to licensing, truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy).

 

(l)                                     Opinions.  The statements of fact in the
section heading “Assumptions” in the Non-Consolidation/True Sale Opinion are
true, complete and correct in all material respects.

 

(m)                               Receipt of Repurchase Price.  The Collection
Account is the only account to which the Seller has been instructed to deposit
the Repurchase Price relating to any Loan Asset required to be repurchased
hereunder.  The Purchaser acknowledges that any funds received by it
attributable to the repurchase of any Loan Asset hereunder are held and shall be

 

25

--------------------------------------------------------------------------------

 

held in trust for the benefit of the Administrative Agent (or its assignees)
until deposited by the Purchaser into the Collection Account as required by the
Loan and Servicing Agreement.

 

(n)                                 Designated Subsidiary.  The Purchaser has
been duly and properly designated as a Designated Subsidiary by the Seller
(under and as defined in the JPM Credit Documents).

 

ARTICLE V.

 

COVENANTS OF THE SELLER

 

Section 5.1.                                   Protection of Title of the
Purchaser.

 

(a)                                  On or prior to the Closing Date, the Seller
shall have filed or caused to be filed UCC financing statements, naming the
Seller as “Debtor/Seller”, naming the Purchaser as “Secured Party/Buyer”, and
naming the Collateral Agent, for the benefit of the Secured Parties, as “Total
Assignee”, and describing the Sale Portfolio to be acquired by the Purchaser,
with the office of the Secretary of State of the state of the jurisdiction of
organization of the Seller.  From time to time thereafter, the Seller shall file
such UCC financing statements and cause to be filed such continuation
statements, all in such manner and in such places as may be required by law (or
deemed desirable by the Purchaser or any assignee thereof) to fully perfect,
preserve, maintain and protect the ownership interest of the Purchaser under
this Agreement and the security interest of the Collateral Agent for the benefit
of the Secured Parties under the Loan and Servicing Agreement, in the Sale
Portfolio acquired by the Purchaser hereunder, as the case may be, and in the
proceeds thereof.  The Seller shall deliver (or cause to be delivered) to the
Purchaser, the Collateral Agent, the Collateral Custodian, the Servicer and the
Administrative Agent file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing. 
The Seller agrees that it will from time to time, at its expense, take all
actions, that the Purchaser, the Collateral Agent or the Administrative Agent
may reasonably request in order to perfect, protect or more fully evidence the
Purchases hereunder and the security and/or interest granted in the Sale
Portfolio, or to enable the Purchaser, the Collateral Agent, the Administrative
Agent or the Secured Parties to exercise and enforce their rights and remedies
hereunder or under any Transaction Document.

 

(b)                                 On or prior to each Purchase Date hereunder,
the Seller shall take all steps necessary under all Applicable Law in order to
Sell to the Purchaser the Sale Portfolio being acquired by the Purchaser on such
Purchase Date to the Purchaser so that, upon the Sale of such Sale Portfolio
from the Seller to the Purchaser pursuant to the terms hereof on such Purchase
Date, the Purchaser will have acquired good and marketable title to and a valid
and perfected ownership interest in such Sale Portfolio, free and clear of any
Lien, security interest, charge or encumbrance or restrictions on
transferability (subject only to Permitted Liens).  On or prior to each Purchase
Date hereunder, the Seller shall take all steps required under Applicable Law in
order for the Purchaser to grant to the Collateral Agent, for the benefit of the
Secured Parties, a first priority perfected security interest (subject only to
Permitted Liens) in the Sale Portfolio being Purchased by the Purchaser on such
Purchase Date and, from time to time thereafter, the Seller shall take all such
actions as may be required by Applicable Law to fully preserve, maintain and
protect the Purchaser’s ownership interest in, and the Collateral Agent’s first

 

26

--------------------------------------------------------------------------------

 

priority perfected security interest in (subject only to Permitted Liens), the
Sale Portfolio which have been acquired by the Purchaser hereunder.

 

(c)                                  The Seller shall direct any agent or
administrative agent for any Sale Portfolio originated or acquired by the Seller
to remit all payments and collections with respect to such Sale Portfolio and
direct the Obligor with respect to such Sale Portfolio to remit all such
payments and collections directly to the Collection Account.  The Seller will
not make any change, or permit the Servicer to make any change, in its
instructions to Obligors regarding payments to be made to the Seller or the
Servicer or payments to be made to the Collection Account, unless the Purchaser
and the Administrative Agent have consented to such change.  The Seller shall
ensure that only (x) funds constituting payments and collections relating to
Sale Portfolio and (y) funds constituting amounts due to the Purchaser in
connection with the repurchase of a Loan Asset required hereunder shall be
deposited into the Collection Account.  In the event any payments relating to
any Sale Portfolio are remitted directly to the Seller or any Affiliate of the
Seller, the Seller will remit (or will cause all such payments to be remitted)
directly to the Collection Account within two Business Days following receipt
thereof, and, at all times prior to such remittance, the Seller will itself hold
or, if applicable, will cause such payments to be held in trust for the
exclusive benefit of the Purchaser and its assignees.  Until so deposited, all
such Interest Collections, all such Principal Collections and any amounts
required to be paid to the Purchaser in connection with a repurchase of a Loan
Asset hereunder shall be held in trust for the Purchaser or its assignees by the
Seller.

 

(d)                                 At any time after the occurrence or
declaration of the Facility Maturity Date, the Purchaser, the Collateral Agent
or the Administrative Agent may direct the Seller or the Servicer to notify the
Obligors, at Seller’s expense, of the Purchaser’s (or its assigns) or the
Secured Parties’ interest in the Sale Portfolio under this Agreement and may
direct that payments of all amounts due or that become due under any or all of
the Sale Portfolio be made directly to the Purchaser (or its assigns), the
Collateral Agent or the Administrative Agent.

 

(e)                                  The Seller shall, not earlier than six
months and not later than three months prior to the fifth anniversary of the
date of filing of the UCC financing statement referred to in Section 3.1 or any
other UCC financing statement filed pursuant to this Agreement or in connection
with any Purchase hereunder, unless the Collection Date shall have occurred:

 

(i)                                     file or cause to be filed an appropriate
continuation statement with respect to such UCC financing statement; and

 

(ii)                                  deliver or cause to be delivered to the
Purchaser, the Collateral Agent and the Administrative Agent an opinion of the
counsel for Seller, in form and substance reasonably satisfactory to the
Purchaser, the Collateral Agent and the Administrative Agent, confirming and
updating the opinion delivered pursuant to Section 3.1 with respect to
perfection and otherwise to the effect that the security interest hereunder
continues to be an enforceable and perfected security interest, subject to no
other Liens of record except as specified therein, provided herein or otherwise
permitted hereunder, which opinion may contain usual and customary assumptions,
limitations and exceptions.

 

27

--------------------------------------------------------------------------------

 

(f)                                    The Seller shall not (x) change its name,
move the location of its principal place of business and chief executive office,
change the offices where it keeps records concerning the Sale Portfolio,
including without limitation the Records, from the address set forth under its
name in Section 10.5, or change the jurisdiction of its formation, or,
(y) subject to Section 2.16 of the Loan and Servicing Agreement, move, or
consent to the Collateral Custodian moving, the Required Loan Documents and Loan
Asset Files from the location thereof on the initial Advance Date, unless the
Seller shall have provided the Administrative Agent with 30 days’ written notice
of such move and such Opinions of Counsel and other documents and instruments as
the Administrative Agent may reasonably request in connection therewith and have
taken all actions required under the UCC of each relevant jurisdiction in order
to continue the first priority perfected security interest of the Collateral
Agent, for the benefit of the Secured Parties, in the Sale Portfolio.

 

(g)                                 The Seller shall at all times maintain each
office from which it services Sale Portfolio and its principal executive office
within the United States of America.

 

(h)                                 The Seller shall on or prior to the Closing
Date mark its master data processing records and other books and records
relating to the Sale Portfolio, including without limitation the Records, so
that, from and after the time of Sale under this Agreement of Sale Portfolio to
the Purchaser and the grant of a security interest in such Sale Portfolio by the
Purchaser to the Collateral Agent for the benefit of the Secured Parties under
the Loan and Servicing Agreement, the Seller’s master data processing records
(including archives) and other books and records that refer to such Sale
Portfolio shall indicate clearly that such Sale Portfolio has been Purchased by
the Purchaser hereunder and that a security interest therein has been granted by
the Purchaser to the Collateral Agent, for the benefit of the Secured Parties,
under the Loan and Servicing Agreement.  Indication of the Collateral Agent’s
security interest for the benefit of the Secured Parties in the Sale Portfolio
shall be deleted from or modified on the Seller’s computer systems when, and
only when, such Sale Portfolio shall be (i) paid off by the related Obligor,
(ii) repurchased or substituted by the Seller in accordance with Section 6.1 or
6.2 hereof or (iii) released by the Collateral Agent pursuant to Section 2.16 of
the Loan and Servicing Agreement.

 

(i)                                     If the Seller fails to perform any of
its obligations hereunder, the Purchaser, the Collateral Agent or the
Administrative Agent may (but shall not be required to) perform, or cause
performance of, such obligation; and the Purchaser’s, the Collateral Agent’s or
the Administrative Agent’s costs and expenses incurred in connection therewith
shall be payable by the Seller as provided in Section 9.1.  The Seller
irrevocably authorizes each of the Purchaser, the Collateral Agent and the
Administrative Agent at any time and from time to time at the Purchaser’s, the
Collateral Agent’s or the Administrative Agent’s sole discretion and appoints
each of the Purchaser, the Collateral Agent and the Administrative Agent as its
attorney—in—fact pursuant to a Power of Attorney substantially in the form of
Exhibit C (to be delivered simultaneously with this Agreement) to act on behalf
of the Seller (i) to file UCC financing statements on behalf of the Seller, as
debtor, necessary or desirable in the Purchaser’s, the Collateral Agent’s or the
Administrative Agent’s sole discretion to perfect and to maintain the perfection
and priority of the interest of the Purchaser or the Collateral Agent in the
Sale Portfolio and (ii) to file a carbon, photographic or other reproduction of
this Agreement or any UCC financing statement with respect to the Sale Portfolio
as a UCC financing statement in such

 

28

--------------------------------------------------------------------------------

 

offices as the Purchaser, the Collateral Agent or the Administrative Agent in
their sole discretion deem necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Purchaser or the Collateral
Agent in the Sale Portfolio.  This appointment is coupled with an interest and
is irrevocable.

 

Section 5.2.                                   Affirmative Covenants of the
Seller.

 

From the Closing Date until the Collection Date:

 

(a)                                  Compliance with Law.  The Seller will
comply in all material respects with all Applicable Law, including those
applicable to the Seller as a result of its interest in the Sale Portfolio or
any part thereof.

 

(b)                                 Preservation of Company Existence.  The
Seller will preserve and maintain its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises, privileges
and qualification could reasonably be expected to have a Material Adverse
Effect.

 

(c)                                  Obligations and Compliance with Sale
Portfolio.  The Seller will, at its expense, duly fulfill and comply in all
material respects with all obligations on its part to be fulfilled or complied
with under or in connection with the administration of each item of Sale
Portfolio and will do nothing to impair the rights of the Collateral Agent, for
the benefit of the Secured Parties, or of the Secured Parties in, to and under
the Sale Portfolio.

 

(d)                                 Keeping of Records and Books of Account. 
The Seller will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing the
Sale Portfolio, including without limitation the Records, in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Sale Portfolio and the identification of the Sale Portfolio,
including without limitation the Records.

 

(e)                                  Separate Identity.  The Seller acknowledges
that the Administrative Agent, the Collateral Agent, the Collateral Custodian,
the Lender and the other Secured Parties are entering into the transactions
contemplated by this Agreement, the Loan and Servicing Agreement and the other
Transaction Documents in reliance upon the Purchaser’s identity as a legal
entity that is separate from the Seller and each other Affiliate of the Seller. 
Therefore, from and after the date of execution and delivery of this Agreement,
the Seller will take all reasonable steps including, without limitation, all
steps that the Administrative Agent, the Collateral Agent, the Lender or the
other Secured Parties may from time to time reasonably request to maintain the
Purchaser’s identity as a legal entity that is separate from the Seller and each
other Affiliate of the Seller and to make it manifest to third parties that the
Purchaser is an entity with assets and liabilities distinct from those of the
Seller and each other Affiliate thereof (other than for tax purposes) and not
just a division of the Seller or any such other Affiliate.  Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, the Seller agrees that:

 

29

--------------------------------------------------------------------------------

 

(i)                                     the Seller will take all other actions
necessary on its part to ensure that the Purchaser is at all times in compliance
with the criteria and the restrictions set forth in Section 9(j) of the limited
liability company operating agreement of the Purchaser and Sections 5.01(a),
5.01(b), 5.02(a) and 5.02(b) of the Loan and Servicing Agreement;

 

(ii)                                  the Seller shall maintain corporate
records and books of account separate from those of the Purchaser;

 

(iii)                               the annual financial statements of the
Seller shall disclose the effects of the Seller’s transactions in accordance
with GAAP and the annual financial statements of the Seller shall not reflect in
any way that the assets of the Purchaser, including, without limitation, the
Sale Portfolio, could be available to pay creditors of the Seller or any other
Affiliate of the Seller;

 

(iv)                              the resolutions, agreements and other
instruments underlying the transactions described in this Agreement shall be
continuously maintained by the Seller as official records;

 

(v)                                 the Seller shall maintain an arm’s—length
relationship with the Purchaser and will not hold itself out as being liable for
the debts of the Purchaser;

 

(vi)                              the Seller shall keep its assets and its
liabilities wholly separate from those of the Purchaser;

 

(vii)                           the Seller will avoid the appearance, and
promptly correct any known misperception of any of the Seller’s creditors, that
the assets of the Purchaser are available to pay the obligations and debts of
the Seller; and

 

(viii)                        to the extent that the Seller services the Loan
Assets and performs other services on the Purchaser’s behalf, the Seller will
clearly identify itself as an agent of the Purchaser in the performance of such
duties.

 

(f)                                    Credit Policy.  The Seller will
(i) comply in all material respects with the Credit Policy in regard to the Sale
Portfolio and (ii) furnish to the Purchaser, the Collateral Agent and the
Administrative Agent, prior to its effective date, prompt written notice of any
changes in the Credit Policy.

 

(g)                                 Taxes.  The Seller will file or cause to be
filed its Tax returns and pay any and all Taxes imposed on it or its property as
required by the Transaction Documents (except as contemplated in
Section 4.1(m)).

 

(h)                                 Cooperation with Requests for Information or
Documents.  The Seller will cooperate fully with all reasonable requests of the
Purchaser and its assigns regarding the provision of any information or
documents, necessary or desirable, including the provision of such information
or documents in electronic or machine—readable format, to allow each of the
Purchaser and its assignees to carry out their responsibilities under the
Transaction Documents.

 

30

--------------------------------------------------------------------------------

 

(i)                                     Payment, Performance and Discharge of
Obligations.  The Seller will pay, perform and discharge all of its obligations
and liabilities, including, without limitation, all Taxes, assessments and
governmental charges upon its income and properties, when due, unless and only
to the extent that such obligations, liabilities, Taxes, assessments and
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by GAAP, proper and adequate book
reserves relating thereto are established by the Seller and then only to the
extent that a bond is filed in cases where the filing of a bond is necessary to
avoid the creation of a Lien against any of its properties.

 

(j)                                     Notices.  The Seller will furnish to the
Purchaser, the Collateral Agent and the Administrative Agent:

 

(i)                                     Notice of Income Tax Liability.  The
Seller shall provide telephonic or facsimile notice within 10 Business Days
(confirmed in writing within five Business Days thereafter) of the receipt of
revenue agent reports or other written proposals, determinations or assessments
of the Internal Revenue Service or any other taxing authority which propose,
determine or otherwise set forth positive adjustments (i) to the Tax liability
of the Seller or any “affiliated group” (within the meaning of
Section 1504(a)(1) of the Code) of which the Seller is a member in an amount
equal to or greater than $25,000,000 in the aggregate, or (ii) to the Tax
liability of the Purchaser in an amount equal to or greater than $1,000,000 in
the aggregate.  Any such notice shall specify the nature of the items giving
rise to such adjustments and the amounts thereof;

 

(ii)                                  Notice of Auditors’ Management Letters. 
The Seller shall provide promptly, after the receipt thereof, any auditors’
management letters that are received by the Seller or by its accountants;

 

(iii)                               Notice of Breaches of Representations and
Covenants.  The Seller shall provide promptly, upon receipt of notice or
discovery thereof, notice (i) if any representation or warranty set forth in
Section 4.1 or Section 4.2 was incorrect at the time it was given or deemed to
have been given or (ii) of the breach of any covenant under Section 5.1,
Section 5.2 or Section 5.3 and at the same time deliver to the Purchaser, the
Collateral Agent, the Administrative Agent a written notice setting forth in
reasonable detail the nature of such facts and circumstances.  In particular,
but without limiting the foregoing, the Seller shall notify the Purchaser, the
Collateral Agent and the Administrative Agent in the manner set forth in the
preceding sentence before any Purchase Date of any facts or circumstances within
the knowledge of the Seller which would render any of the said representations
and warranties untrue at the date when such representations and warranties were
made or deemed to have been made;

 

(iv)                              Notice of ERISA Reportable Events.  The Seller
shall provide promptly, after receiving notice of any Reportable Event with
respect to any Pension Plan of the Seller (or any ERISA Affiliate thereof), a
copy of such notice;

 

(v)                                 Notice of Proceedings.  The Seller shall
provide, as soon as possible and in any event within three Business Days after
the Seller receives notice or obtains knowledge thereof, notice of any
settlement of, material judgment (including a

 

31

--------------------------------------------------------------------------------

 

material judgment with respect to the liability phase of a bifurcated trial) in
or commencement of any material labor controversy, material litigation, material
action, material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Sale Portfolio, the Transaction Documents, the Collateral
Agent’s, for the benefit of the Secured Parties, security interest in the Sale
Portfolio, or the Purchaser, the Servicer or the Seller or any of their
Affiliates.  For purposes of this Section 5.2(j), (A) any settlement, judgment,
labor controversy, litigation, action, suit or proceeding affecting the Sale
Portfolio, the Transaction Documents, the Collateral Agent’s, for the benefit of
the Secured Parties, interest in the Sale Portfolio, or the Purchaser in excess
of $1,000,000 shall be deemed to be material and (B) any settlement, judgment,
labor controversy, litigation, action, suit or proceeding affecting the Servicer
or the Seller or any of their Affiliates (other than the Purchaser) in excess of
$25,000,000 shall be deemed to be material;

 

(vi)                              Notice of Material Events.  The Seller shall
promptly, upon becoming aware thereof, provide notice of any event or other
circumstance that is reasonably likely to have a Material Adverse Effect;

 

(vii)                           Notice of Event of Default.  The Seller shall
provide, within two Business Days, written notice of the occurrence of each
Event of Default of which the Seller has knowledge or has received notice, other
than notice received from the Administrative Agent.  In addition, no later than
two Business Days following the Seller’s knowledge or notice of the occurrence
of any Event of Default, the Seller will provide to the Purchaser, the
Collateral Agent and the Administrative Agent a written statement of a
Responsible Officer of the Seller setting forth the details of such event and
the action that the Seller proposes to take with respect thereto;

 

(viii)                        Notice of Seller Termination Event and Seller
Purchase Event.  The Seller will provide prompt written notice of the occurrence
of each Seller Termination Event and each Seller Purchase Event of which the
Seller has knowledge or has received notice;

 

(ix)                                Notice of Amendments to JPM Credit
Documents. The Seller shall give prior written notice of all amendments to the
JPM Credit Documents that could reasonably be expected to have a material
adverse effect on the ability of the Purchaser, the Seller or the Servicer to
perform their respective obligations under the Transaction Documents.  In
addition, the Seller shall promptly provide true, correct and complete copies of
all amendments to the JPM Credit Documents that are not otherwise publicly filed
(other than any exhibits and schedules thereto which are not required to be
publicly filed); and

 

(x)                                   Notice of Material Adverse Events under
JPM Credit Documents.  The Seller shall promptly, upon becoming aware thereof,
provide notice of any event or other circumstance that could reasonably be
expected to have a material adverse effect on the ability of the Purchaser, the
Seller or the Servicer to perform their respective obligations under the
Transaction Documents.

 

32

--------------------------------------------------------------------------------

 

(k)                                  Other.  The Seller will furnish to the
Purchaser, the Collateral Agent and the Administrative Agent promptly, from time
to time such other information, documents, records or reports respecting the
Sale Portfolio, including without limitation the Records, or the condition or
operations, financial or otherwise, of the Seller as the Purchaser, the
Collateral Agent and the Administrative Agent may from time to time reasonably
request in order to protect the interests of the Purchaser, the Administrative
Agent and the Collateral Agent or the Secured Parties under or as contemplated
by this Agreement and the other Transaction Documents.

 

(l)                                     Costs and Expenses.  The Seller shall
pay all reasonable, documented costs and disbursements in connection with the
performance of its obligations hereunder.

 

(m)                               Officer’s Certificate. (i) Within ten Business
Days (or such later time as agreed to by the Administrative Agent) of any
request by the Administrative Agent (provided that the Administrative Agent
shall be allowed no more than two such requests in any calendar year) or
(ii) upon the occurrence of, and within ten Business Days (or such later time as
agreed to by the Administrative Agent) of any request by the Administrative
Agent, (x) any extension of the Reinvestment Period, (y) any material amendment
of any Transaction Document or (z) any filing of any UCC financing statement or
continuation statement with respect to the Seller or the Sale Portfolio (other
than in connection with the execution of this Agreement as of the Closing Date)
the Seller shall deliver an Officer’s Certificate, in form and substance
acceptable to the Purchaser and the Administrative Agent, providing (I) a
certification, based upon a review and summary of UCC search results reasonably
satisfactory to the Purchaser and the Administrative Agent, that there is no
other interest in the Sale Portfolio perfected by any filing of a UCC financing
statement other than in favor of the Purchaser and the Collateral Agent pursuant
to the terms of the Transaction Documents and (II) a certification, based upon a
review and summary of tax and judgment lien searches satisfactory to the
Purchaser and the Administrative Agent, that there is no other interest in the
Sale Portfolio based on any tax or judgment lien.

 

(n)                                 Compliance with Legal Opinions.  The Seller
shall take all actions necessary to maintain in all material respects the
accuracy of the factual assumptions set forth in the legal opinions of Latham &
Watkins LLP, as special counsel to the Seller, issued in connection with the
Transaction Documents and relating to the issues of substantive consolidation
and true sale of the Loan Assets.

 

(o)                                 Copies of Other Information.  The Seller
will deliver to the Purchaser, the Collateral Agent and the Administrative
Agent:

 

(i)                                     promptly, but in any event within ten
Business Days after the filing thereof, a copy of (a) each report or other
filing made by the Seller or any of its Affiliates with the Securities and
Exchange Commission (the “SEC”) and required by the SEC to be delivered to the
shareholders of the Seller or any such Affiliate, and (b) each report and final
registration statement of the Seller or any Affiliate required to be (x) filed
with the SEC and (y) publicly available; provided that the Seller shall be
deemed to have satisfied the requirements of this Section 5.2(o)(i) if the
reports, documents and information of the types otherwise so required are
publicly available when required to be filed on EDGAR at the www.sec.gov website
or any successor service provided by the Securities and Exchange Commission; and

 

33

--------------------------------------------------------------------------------

 

(ii)                                  promptly, from time to time, such other
information, documents, Records or reports respecting the Sale Portfolio or the
conditions or operations, financial or otherwise, of the Seller (including,
without limitation, reports and notices relating to the Seller’s actions under
and compliance with ERISA and the 1940 Act) as the Purchaser, the Collateral
Agent or the Administrative Agent may from time to time reasonably request in
order to perform their obligations hereunder or under any other Transaction
Document or to protect the interests of the Purchaser under or as contemplated
by this Agreement and the other Transaction Documents.

 

(p)                                 Disregarded Entity. The Seller shall cause
the Purchaser to be disregarded as an entity separate from its owner pursuant to
Treasury Regulation Section 301.7701-3(b) and shall cause that neither the
Purchaser nor any other Person on its behalf shall make an election to be
treated as other than an entity disregarded from its owner under Treasury
Regulation Section 301.7701-3(c).

 

Section 5.3.                                   Negative Covenants of the Seller.

 

From the Closing Date until the Collection Date:

 

(a)                                  Sale Portfolio Not to be Evidenced by
Instruments.  The Seller will take no action to cause any Sale Portfolio that is
not, as of the related Purchase Date, as the case may be, evidenced by an
instrument, to be so evidenced except in connection with the enforcement or
collection of such Sale Portfolio.

 

(b)                                 Security Interests.  Except as otherwise
permitted herein and in the Loan and Servicing Agreement, the Seller will not
sell, pledge, assign or transfer to any other Person, or grant, create, incur,
assume or suffer to exist any Lien on any Sale Portfolio Sold by the Seller to
the Purchaser hereunder, whether now existing or hereafter transferred
hereunder, or any interest, therein, and the Seller will not sell, transfer,
pledge, assign or suffer to exist any Lien (except for Permitted Liens) on its
interest in the Sale Portfolio Sold by the Seller to the Purchaser hereunder. 
The Seller will promptly notify the Purchaser, the Collateral Agent and the
Administrative Agent of the existence of any Lien on any Sale Portfolio and the
Seller shall defend the right, title and interest of the Purchaser and the
Collateral Agent, for the benefit of the Secured Parties, in, to and under the
Sale Portfolio against all claims of third parties; provided that nothing in
this Section 5.3(b) shall prevent or be deemed to prohibit the Seller from
suffering to exist Permitted Liens upon any of the Sale Portfolio.

 

(c)                                  Mergers, Acquisitions, Sales, Etc.  The
Seller will not consolidate with or merge into any other Person or convey or
transfer its properties and assets substantially as an entirety to any Person,
unless the Seller is the surviving entity and unless:

 

(i)                                     the Seller has delivered to the
Administrative Agent an Officer’s Certificate and an Opinion of Counsel each
stating that any such consolidation, merger, conveyance or transfer and any
supplemental agreement executed in connection therewith comply with this
Section 5.3 and that all conditions precedent herein provided for relating to
such transaction have been complied with and, in the case of the Opinion of
Counsel,

 

34

--------------------------------------------------------------------------------

 

that such supplemental agreement is legal, valid and binding with respect to the
Seller and such other matters as the Administrative Agent may reasonably
request;

 

(ii)                                  the Seller shall have delivered notice of
such consolidation, merger, conveyance or transfer to the Administrative Agent;

 

(iii)                               after giving effect thereto, no Event of
Default or Seller Termination Event or event that with notice or lapse of time
would constitute either an Event of Default or a Seller Termination Event shall
have occurred; and

 

(iv)                              the Administrative Agent shall have consented
in writing to such consolidation, merger, conveyance or transfer.

 

(d)                                 Transfer of Purchaser Membership Interests. 
The Seller shall not transfer, pledge, participate or otherwise encumber its
membership interests in the Purchaser without the prior written consent of the
Administrative Agent and the delivery of an acceptable (in the Administrative
Agent’s reasonable discretion) non-consolidation opinion (other than with
respect to the JPM Lien).

 

(e)                                  Restricted Junior Payments.  The Seller
shall not cause or permit the Purchaser to make any Restricted Junior Payment,
except that, so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing or would result therefrom, the Purchaser may declare
and make distributions to its member on its membership interests.

 

(f)                                    Accounting of Purchases.  Other than for
tax and consolidated accounting purposes, the Seller will not account for or
treat (whether in financial statements or otherwise) the transactions
contemplated hereby in any manner other than as a sale of the Loan Assets to the
Purchaser.

 

(g)                                 ERISA.  The Seller will not (a) engage, and
will exercise its best efforts not to permit any ERISA Affiliate of the Seller
to engage, in any prohibited transaction (within the meaning of Sections
406(a) or (b) of ERISA or Section 4975 of the Code) for which an exemption is
not available or has not previously been obtained from the United States
Department of Labor, (b) fail to meet the minimum funding standard set forth in
Section 302(a) of ERISA and Section 412(a) of the Code with respect to any
Pension Plan, (c) fail to make any payments to a Multiemployer Plan that the
Seller or any ERISA Affiliate of the Seller may be required to make under the
agreement relating to such Multiemployer Plan or any law pertaining thereto,
(d) terminate any Pension Plan so as to result, directly or indirectly in any
liability to the Seller, or (e) permit to exist any occurrence of any Reportable
Event with respect to any Pension Plan.

 

(h)                                 Extension or Amendment of Sale Portfolio. 
The Seller will not, except as otherwise permitted in Section 6.04(a) of the
Loan and Servicing Agreement, extend, amend or otherwise modify, or permit the
Servicer to extend, amend or otherwise modify, the terms of any Sale Portfolio
(including the Underlying Collateral).

 

35

--------------------------------------------------------------------------------

 

(i)                                     Limitation on Financing Activities.  The
Seller shall not, directly or indirectly, advance or contribute to the Purchaser
any funds pursuant to any financial accommodation.  For the avoidance of doubt,
this clause (i) shall not prohibit the Seller from contributing Loan Assets to
the Purchaser as contemplated herein or providing cash equity contributions to
the Purchaser.

 

(j)                                     Organizational Documents.  The Seller
will not cause or permit the Purchaser to amend, modify, waive or terminate any
provision of the Purchaser’s organizational or operational documents without the
prior written consent of the Administrative Agent.

 

(k)                                  Deposits to Collection Account.  The Seller
will not deposit or otherwise credit, or cause to be so deposited or credited,
to the Collection Account cash or cash proceeds other than any proceeds realized
from Permitted Investments and any Available Collections in respect of the Sale
Portfolio.  The Seller shall take commercially reasonable steps to ensure that
only funds constituting payments and collections relating to Loan Assets shall
be deposited into the Collection Account.

 

(l)                                     Instructions to Agents and Obligors. 
The Seller will not make any change in its instructions to Obligors (or any
agents with respect to the Loan Agreements) regarding payments to be made with
respect to the Sale Portfolio to the Collection Account, unless the
Administrative Agent has consented to such change (such consent not to be
unreasonably withheld or delayed, it being understood that any such account to
which the Obligors may be instructed to make payments shall be subject to an
account control agreement which provides the Collateral Agent with a first
priority perfected security interest in such account, as evidenced by an Opinion
of Counsel reasonably acceptable to the Administrative Agent).

 

(m)                               Amendment to JPM Credit Documents.  The Seller
will not amend, waive, modify or terminate any term, provision or condition in
the JPM Credit Documents (or in any document executed in connection therewith)
that could have an adverse effect on (i) the designation of the Purchaser as a
Designated Subsidiary (under and as defined in the JPM Credit Documents),
(ii) the exclusion of the Collateral Portfolio from the definition of Portfolio
Interests (under and as defined in the JPM Credit Documents) or (iii) the right,
title or interest of the Purchaser or the Collateral Agent in the Collateral
Portfolio.  Prior to the Collection Date, the Seller will not revoke the
Purchaser’s designation as a Designated Subsidiary (under and as defined in the
JPM Credit Documents).

 

ARTICLE VI.

 

REPURCHASES AND SUBSTITUTION BY THE SELLER

 

Section 6.1.                                   Repurchase of Loan Assets.  In
the event of the occurrence of a Seller Purchase Event, the Seller will within
10 Business Days of the discovery by or notice (from any Person) to the Seller
of the Seller Purchase Event, (i) purchase each Loan Asset hereunder which is
affected by or related to such Seller Purchase Event from the Purchaser, and the
Seller shall pay to the Purchaser (by means of a deposit to the Collection
Account) the Repurchase Price of such Loan Asset as of the date of the purchase
thereof from the Purchaser or (ii) with the prior written consent of the
Administrative Agent and subject to the satisfaction of the conditions in

 

36

--------------------------------------------------------------------------------

 

Section 6.2, substitute for such Loan Asset, a Substitute Eligible Loan Asset. 
It is understood and agreed that the obligation of the Seller to purchase the
Loan Assets or substitute a Substitute Eligible Loan Asset for the Loan Assets
which are affected by or related to such Seller Purchase Event is not intended
to, and shall not, constitute a guaranty of the collectability or payment of any
Loan Asset which is not collected, not paid or uncollectible on account of the
insolvency, bankruptcy or financial inability to pay of the related Obligor. 
Upon deposit in the Collection Account of the Repurchase Price for any Loan
Asset purchased by the Seller, the Purchaser shall, automatically and without
further action be deemed to transfer, assign and set over such Loan Asset to the
Seller, without recourse, representation or warranty of any kind, except as to
the absence of Liens, charges or encumbrances created by or arising solely as a
result of actions of the Purchaser or the Collateral Agent.  Such Sale shall be
a sale outright, and not for security, of all the right, title and interest of
the Purchaser, in, to and under such Loan Asset and all future monies due or to
become due with respect thereto, the Underlying Collateral, all Proceeds of such
Loan Asset and Recoveries and Insurance Proceeds relating thereto, all rights to
security for such Loan Asset and all Proceeds and products of the foregoing. The
Purchaser shall (and shall request the Collateral Agent to), at the sole expense
of the Seller, execute such documents and instruments of transfer as may be
prepared by the Seller and take such other actions as may be reasonably
requested by the Seller in order to effect the transfer of such Loan Asset
pursuant to this Section 6.1. Such Sale shall be a sale outright, and not for
security.

 

Section 6.2.                                   Substitution of Loan Assets.

 

(a)                                  The Seller shall have the right, but not
the obligation, subject to the prior written consent of the Administrative Agent
and the Purchaser, in their sole discretion, to substitute one or more Eligible
Loan Assets (“Substitute Eligible Loan Asset”) for a Loan Asset (each such act,
a “Substitution”).

 

(b)                                 The Substitution shall not occur unless the
following conditions are satisfied as of the date of such Substitution:

 

(i)                                     the Seller has recommended to the
Purchaser and the Administrative Agent (with a copy to the Collateral Agent and
the Collateral Custodian) in writing that the Loan Asset to be replaced should
be replaced (each, a “Replaced Loan Asset”);

 

(ii)                                  no event has occurred, or would result
from such Substitution, which constitutes an Event of Default and no event has
occurred and is continuing, or would result from such Substitution, which
constitutes an Unmatured Event of Default or a Borrowing Base Deficiency;
provided that a Borrowing Base Deficiency (and any Unmatured Event of Default
arising therefrom) shall not impair the right of the Seller to effect an
otherwise permitted substitution as necessary to facilitate a cure of such
Borrowing Base Deficiency (and any Unmatured Event of Default arising therefrom)
so long as immediately after giving effect to such substitution and any other
sale or transfer substantially contemporaneous therewith, such Borrowing Base
Deficiency shall be cured or closer to being cured and simultaneously therewith,
the Seller shall cause a Substitute Eligible Loan Asset to be transferred to the
Purchaser;

 

37

--------------------------------------------------------------------------------

 

(iii)                               each Substitute Eligible Loan Asset is an
Eligible Loan Asset on the date of Substitution;

 

(iv)                              solely in the case of Substitutions pursuant
to this Section 6.2 undertaken because a Seller Purchase Event has occurred, the
sum of the initial Assigned Value multiplied by the Outstanding Balances of such
Substitute Eligible Loan Assets shall be equal or greater than the sum of the
initial Assigned Value of the Replaced Loan Assets multiplied by the Outstanding
Balance thereof;

 

(v)                                 all representations and warranties contained
in Sections 4.1 and 4.2 shall be true, complete and correct in all material
respects as of the date of Substitution (other than any representation and
warranty that is made as of a specific date);

 

(vi)                              no selection procedures adverse to the
interests of the Purchaser, the Administrative Agent, the Lender or the other
Secured Parties were utilized by the Seller in the selection of the Loan Asset
to be replaced by the Substitute Eligible Loan Asset.  The Loan Assets were
selected for sale, repurchase or substitution in a manner consistent with and
pursuant to the Credit Policy;

 

(vii)                           the Outstanding Balance of all Loan Assets
(other than Warranty Loan Assets removed from the Sale Portfolio pursuant to
Section 2.07(e) of the Loan and Servicing Agreement), substituted pursuant to
this Section 6.2 or Section 2.07(a) of the Loan and Servicing Agreement, sold
pursuant to Sections 2.07(c) and (g) of the Loan and Servicing Agreement or
dividended from the Purchaser to the Seller in accordance with
Section 2.07(d) of the Loan and Servicing Agreement during the term of this
Agreement shall not exceed 25% of the Net Purchased Loan Balance;

 

(viii)                        the Outstanding Balance of all Defaulted Loan
Assets (other than Warranty Loan Assets removed from the Sale Portfolio pursuant
to Section 2.07(e) of the Loan and Servicing Agreement), substituted pursuant to
this Section 6.2 or Section 2.07(a) of the Loan and Servicing Agreement, sold
pursuant to Sections 2.07(c) and (g) of the Loan and Servicing Agreement or
dividended from the Purchaser to the Seller in accordance with
Section 2.07(d) of the Loan and Servicing Agreement during the term of this
Agreement shall not exceed 15% of the Net Purchased Loan Balance;

 

(ix)                                each Loan Asset that is replaced pursuant to
the terms of this Section 6.2 shall be substituted only with another Eligible
Loan Asset that meets the foregoing conditions;

 

(x)                                   all terms, provisions, representations,
warranties and covenants hereunder with respect to Loan Assets that have been
Sold by the Seller to the Purchaser hereunder shall apply equally to Substitute
Eligible Loan Assets; and

 

(xi)                                the Seller shall deliver to the Purchaser on
the date of such Substitution a certificate of a Responsible Officer certifying
that each of the foregoing is true and correct as of such date.

 

38

--------------------------------------------------------------------------------

 

(c)                                  In addition, in connection with such
Substitution, the Seller shall deliver or cause to be delivered to the
Collateral Custodian the related Required Loan Documents as set forth in
Section 2.1(g).  On the date any such Substitution is completed, the Purchaser
shall, automatically and without further action, release and shall transfer to
the Seller, free and clear of any Lien created pursuant to this Agreement, all
of the right, title and interest of the Purchaser in, to and under such Replaced
Loan Asset, and the Purchaser shall be deemed to represent and warrant that it
has the company authority and has taken all necessary company action to
accomplish such transfer, but without any other representation and warranty,
express or implied.

 

Section 6.3.                                   Repurchase Limitations.  The
Seller and the Purchaser agree that the Seller and any Affiliate of the Seller
may repurchase any Sale Portfolio from the Purchaser only in the case of a
repurchase or Substitution of any Sale Portfolio pursuant to Sections 6.1 or
6.2.

 

ARTICLE VII.

 

ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE SALE PORTFOLIO

 

Section 7.1.                                   Rights of the Purchaser.

 

(a)                                  After the occurrence or declaration of the
Facility Maturity Date, the Seller hereby authorizes the Purchaser, the
Servicer, the Collateral Agent, the Administrative Agent, the Lender and/or
their respective designees or assignees to take any and all steps in Seller’s
name and on behalf of the Seller that the Purchaser, the Servicer, the
Collateral Agent, the Administrative Agent, the Lender and/or their respective
designees or assignees determine are reasonably necessary or appropriate to
collect all amounts due under any and all Sale Portfolio and to enforce or
protect the Purchaser’s, the Collateral Agent’s, the Administrative Agent’s and
the Lender’s rights under this Agreement, including endorsing the name of the
Seller on checks and other instruments representing Interest Collections and
Principal Collections and enforcing such Sale Portfolio.

 

(b)                                 Except as set forth in Sections 6.1 and 6.2
with respect to the repurchase or Substitution of certain Loan Assets, the
Purchaser shall have no obligation to account for, replace, substitute or return
any Sale Portfolio to the Seller.  The Purchaser shall have no obligation to
account for or to return Interest Collections or Principal Collections, or any
interest or other finance charge collected pursuant thereto, to the Seller,
irrespective of whether such Interest Collections and Principal Collections and
charges are in excess of the Purchase Price for such Sale Portfolio.

 

(c)                                  The Purchaser shall have the right to
further assign, transfer, deliver, hypothecate, subdivide or otherwise deal with
the Sale Portfolio and all of the Purchaser’s right, title and interest in, to
and under this Agreement or the Loan and Servicing Agreement.

 

(d)                                 The Purchaser shall have the sole right to
retain any gains or profits created by buying, selling or holding the Sale
Portfolio and shall have the sole risk of and responsibility for losses or
damages created by such buying, selling or holding.

 

39

--------------------------------------------------------------------------------

 

Section 7.2.                                   Rights With Respect to Loan Asset
Files.

 

At any time when a Servicer other than Ares has been designated pursuant to
Article VI of the Loan and Servicing Agreement, the Seller shall, at the
Purchaser’s, the Collateral Agent’s, the Collateral Custodian’s or the
Administrative Agent’s request, assemble all of the Loan Asset Files which
evidence the Sale Portfolio originated by the Seller, or which are otherwise
necessary or desirable to collect such Sale Portfolio, and make the same
available to the Purchaser, the Collateral Agent, the Collateral Custodian or
the Administrative Agent at a place selected by the Purchaser, the Collateral
Agent, the Collateral Custodian, the Administrative Agent or their designee.

 

Section 7.3.                                   Notice to Collateral Agent and
Administrative Agent.

 

The Seller agrees that, concurrently with its delivery to the Purchaser, copies
of all notices, reports, documents and other information required to be
delivered by the Seller to the Purchaser hereunder shall be delivered by the
Seller to the Collateral Agent and the Administrative Agent.

 

ARTICLE VIII.

 

SELLER TERMINATION EVENTS

 

Section 8.1.                                   Seller Termination Events.

 

(a)                                  If any of the following events (each a
“Seller Termination Event”) shall have occurred:

 

(i)                                     the Seller shall fail to pay (A) any
amount due pursuant to Section 6.1 in accordance with the provisions thereof and
such failure shall continue unremedied for a period of five Business Days from
the earlier of (1) the date any Responsible Officer of the Seller obtains
knowledge of such failure and (2) the date the Seller receives notice of such
failure from the Purchaser, the Servicer, the Collateral Agent or the
Administrative Agent or (B) any other amount required to be paid by the Seller
hereunder within two Business Days of the date when due; or

 

(ii)                                  the Seller shall fail to observe or
perform in any material respect any covenant or agreement applicable to it
contained herein (other than as specified in paragraph (i) of this Section 8.1);
and such failure shall continue unremedied for a period of 30 days (if such
failure can be remedied) after the earlier to occur of (i) the date on which
written notice of such failure requiring the same to be remedied shall have been
given to the Seller by the Administrative Agent, the Collateral Agent (at the
direction of the Administrative Agent) or the Purchaser and (ii) the date on
which a Responsible Officer of the Seller acquires knowledge thereof; or

 

(iii)                               any representation, warranty or
certification made by the Seller in this Agreement or in any statement, record,
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect when made, which has a Material
Adverse Effect on the Purchaser, the Administrative Agent or

 

40

--------------------------------------------------------------------------------

 

any of the other Secured Parties and continues to be unremedied for a period of
30 days after the earlier to occur of (i) the date on which written notice of
such incorrectness requiring the same to be remedied shall have been given to
the Seller by the Administrative Agent, the Servicer, the Collateral Agent (at
the direction of the Administrative Agent) or the Purchaser and (ii) the date on
which a Responsible Officer of the Seller acquires knowledge thereof; provided
that a Seller Termination Event shall not be deemed to have occurred under this
paragraph (iii) based upon a Seller Purchase Event if the Seller shall have
complied with the provisions of Section 6.1 in respect thereof; or

 

(iv)                              (A) a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the Seller in an
involuntary case under the Bankruptcy Code or any other Bankruptcy Laws, which
decree or order is not stayed or any other similar relief shall be granted under
any applicable federal or state law now or hereafter in effect and shall not be
stayed; (B) (1) any involuntary case is commenced against the Seller under any
Bankruptcy Law now or hereafter in effect, a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over the
Seller, or over all or a substantial part of the property of the Seller, shall
have been entered, an interim receiver, trustee or other custodian of the Seller
for all or a substantial part of the property of the Seller is involuntarily
appointed, a warrant of attachment, execution or similar process is issued
against any substantial part of the property of the Seller, and (2) any event
referred to in clause (B)(1) above continues for 60 days unless dismissed,
bonded or disclosed; (C) the Seller shall at its request have a decree or an
order for relief entered with respect to it or commence a voluntary case under
any Bankruptcy Law now or hereafter in effect, or shall consent to the entry of
a decree or an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such Bankruptcy Law, or
consent to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; (D) the making by
the Seller of any general assignment for the benefit of creditors; (E) the
inability or failure of the Seller generally to remain Solvent or pay its debts
as such debts become due; or (F) the board of directors of the Seller authorizes
action to approve any of the foregoing; or

 

(v)                                 the occurrence of (A) an Event of Default
set forth in Section 7.01 of the Loan and Servicing Agreement (past any
applicable notice or cure period provided in the definition thereof) or (B) the
Facility Maturity Date; or

 

(vi)                              the Seller has been terminated as Servicer
following a Servicer Termination Event with respect to the Servicer under the
Loan and Servicing Agreement; or

 

(vii)                           a notice of Lien shall have been filed by the
Pension Benefit Guaranty Corporation against the Seller under Section 430(k) of
the Code or Section 303(k) of ERISA for a failure to make a required installment
or other payment to a plan to which Section 430(k) of the Code or
Section 303(k) of ERISA applies unless there shall have been delivered to the
Administrative Agent proof of release of such Lien; or

 

41

--------------------------------------------------------------------------------

 

(viii)                        any Lien in an amount equal to or greater than
$25,000,000 has been asserted against or imposed on, any real or personal
property of the Seller pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9607(1), or any equivalent or
comparable state law, relating to or arising from the costs of, response to, or
investigation, remediation or monitoring of, any environmental contamination
resulting from the current or past operations of the Seller; or

 

(ix)                                a Federal tax notice of Lien, in an amount
equal to or greater than $25,000,000, shall have been filed against the Seller
unless there shall have been delivered to the Administrative Agent proof of
release of such Lien;

 

then, (A) in the case of any Seller Termination Event described in paragraph
(iv), (v)(A), (vi), (vii), (viii) or (ix) above, the obligation of the Purchaser
to Purchase Sale Portfolio from the Seller shall thereupon automatically
terminate without further notice of any kind, the receipt of which by the Seller
is hereby waived by the Seller, (B) in the case of any Seller Termination Event
described in paragraph (v)(B) above, the obligation of the Purchaser to Purchase
Sale Portfolio from the Seller shall thereupon terminate without notice of any
kind, which is hereby waived by the Seller unless both the Purchaser and the
Seller agree in writing that such event shall not trigger an Early Termination
(as hereinafter defined) hereunder, and (C) in the case of any other Seller
Termination Event, so long as such Seller Termination Event shall be continuing,
the Purchaser or the Administrative Agent may terminate the Purchaser’s
obligation to Purchase Sale Portfolio from the Seller by written notice to the
Seller (any termination pursuant to clause (A), (B) or (C) of this Article VIII
is herein called an “Early Termination”); provided that, in the event of any
involuntary petition or proceeding as described in paragraphs (iv)(A) and
(iv)(B) above, the Purchaser shall not Purchase Sale Portfolio from the Seller
unless such involuntary petition or proceeding is dismissed, bonded or
discharged prior to such Purchase and within 60 days of the filing of such
petition or the commencement of such proceeding.

 

Section 8.2.                                   Remedies.

 

(a)                                  If a Seller Termination Event has occurred,
the Purchaser (and its assignees) shall have, in addition to all other rights
and remedies under this Agreement or otherwise all of the rights and remedies
provided to a secured creditor under the UCC of each applicable jurisdiction and
other Applicable Law in respect thereto, which rights shall be cumulative.

 

(b)                                 The Seller agrees that, upon the occurrence
of a Seller Termination Event under Section 8.1(a)(iv) or
Section 8.1(a)(v)(A) the Purchaser, the Collateral Agent or the Administrative
Agent shall have the right to:

 

(i)                                     require the Seller to, and the Seller
hereby agrees that it will at the Seller’s expense and upon request of the
Purchaser, the Collateral Agent or the Administrative Agent forthwith, assemble
all or any part of the Sale Portfolio as directed by the Purchaser, the
Collateral Agent or the Administrative Agent and make the same

 

42

--------------------------------------------------------------------------------

 

available at a place to be designated by the Purchaser, the Collateral Agent or
the Administrative Agent; and

 

(ii)                                  without notice except as specified below,
sell the Sale Portfolio or any part thereof in one or more parcels at a public
or private sale, at any of the Collateral Agent’s, the Purchaser’s or the
Administrative Agent’s offices or elsewhere, for cash, or credit or for future
delivery, and upon such other terms as the Purchaser, the Collateral Agent or
the Administrative Agent may deem commercially reasonable.  The Seller agrees
that, to the extent notice of sale shall be required by law, at least ten days’
notice to the Seller of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification. 
The Purchaser, the Collateral Agent or the Administrative Agent shall not be
obligated to make any sale of Sale Portfolio regardless of notice of sale having
been given.  The Purchaser, the Collateral Agent or the Administrative Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.

 

Section 8.3.                                   Survival of Certain Provisions.

 

Notwithstanding any provision contained herein to the contrary, the Seller’s and
the Purchaser’s representations, covenants and obligations set forth in Articles
IV, V, VI, and VII, as applicable, create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Collection Date; provided, that the rights
and remedies with respect to any breach of any representation and warranty made
or deemed made by the Seller pursuant to Articles III and IV and the provisions
of Sections 6.1 and 6.2, the rights and obligations under Article VII, the
indemnification provisions of Article IX and the provisions of Sections 5.1,
10.2, 10.8, 10.9, 10.10, 10.12, 10.13, 10.14 and 10.17 shall be continuing and
shall survive any termination of this Agreement. For the avoidance of doubt, in
the event that a Seller Termination Event has occurred but has been waived
unconditionally and in its entirety in accordance with the terms hereof, such
Seller Termination Event shall be deemed to have not “occurred” and references
to “after the occurrence of a Seller Termination Event” shall be inapplicable
for all purposes in this Agreement or any of the Transaction Documents, except
to the extent otherwise provided for in the relevant waiver; provided that any
waiver which by its terms becomes effective upon certain conditions precedent
being met will not be considered a conditional waiver solely due to the
existence of such conditions precedent if all such conditions precedent to
effectiveness have been satisfied.

 

43

--------------------------------------------------------------------------------

 

ARTICLE IX.

 

INDEMNIFICATION

 

Section 9.1.                                   Indemnification by the Seller.

 

(a)                                  Without limiting any other rights which the
Purchaser, any assignee of the Purchaser or any such Persons’ respective
shareholders, officers, employees, agents, or Affiliates (each an “Indemnified
Party”) may have hereunder or under Applicable Law, the Seller hereby agrees to
indemnify any Indemnified Party from and against any and all costs, expenses,
losses, damages, claims, and liabilities, including reasonable attorneys’ fees
and disbursements (all of the foregoing, being collectively referred to as,
“Indemnified Amounts”), awarded against or incurred by such Indemnified Party or
other non-monetary damages of any such Indemnified Party or any of them arising
out of or as a result of this Agreement excluding, however, any such amounts
resulting solely from (x) any gross negligence, bad faith or willful misconduct
on the part of the applicable Indemnified Party or (y) the uncollectability of
any Loan Asset due to the Obligor’s failure to pay any amounts due under the
applicable Loan Agreement in accordance with its terms.  Without limiting the
foregoing, the Seller shall indemnify each Indemnified Party for Indemnified
Amounts relating to or resulting from any of the following (to the extent not
resulting from the conditions set forth in (x) or (y) above) in relation to such
Indemnified Party:

 

(i)                                     any Person’s use, ownership or operation
of any Underlying Collateral to the extent that such use, ownership or operation
took place prior to the Purchase Date with respect to the related Sale
Portfolio;

 

(ii)                                  any action taken by the Seller, other than
in accordance with this Agreement, in respect of any portion of the Sale
Portfolio;

 

(iii)                               any Taxes (other than Taxes based upon the
net or gross income of an Indemnified Party and Taxes that would constitute
Excluded Amounts) that may at any time be asserted against any Indemnified Party
with respect to the transactions contemplated in this Agreement, including,
without limitation, any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege, stamp or license Taxes and costs and
expenses in defending against the same, arising by reason of the acts to be
performed by the Seller under this Agreement and imposed against such
Indemnified Party.  Without limiting the foregoing, in the event that the
Purchaser, the Collateral Agent, the Collateral Custodian, the Bank, the
Servicer, the Lender or the Administrative Agent receives actual notice of any
Transfer Taxes arising out of the Sale of any Sale Portfolio from the Seller to
the Purchaser under this Agreement, on written demand by such party, or upon the
Seller otherwise being given notice thereof, the Seller shall pay, and otherwise
indemnify and hold the Purchaser, the Collateral Agent, the Collateral
Custodian, the Bank, the Servicer, the Lender and the Administrative Agent
harmless, on an after-tax basis, from and against any and all such Transfer
Taxes (it being understood that the Purchaser, the Collateral Agent, the
Collateral Custodian, the Bank, the Servicer, the Lender and the Administrative
Agent shall have no contractual obligation to pay such Transfer Taxes);

 

44

--------------------------------------------------------------------------------

 

(iv)                              the failure by the Seller to pay when due any
Taxes due by the Seller for which the Seller is liable, including without
limitation, sales, excise or personal property taxes payable in connection with
the Sale Portfolio;

 

(v)                                 the gross negligence, willful misconduct or
bad faith of the Seller in the performance of its duties under this Agreement or
by reason of reckless disregard of the Seller’s obligations and duties under
this Agreement;

 

(vi)                              any failure of the Seller to perform its
duties or obligations in accordance with the provisions of this Agreement or any
of the other Transaction Documents to which it is a party or any failure by the
Seller or any Affiliate thereof to perform its respective duties in respect of
any Sale Portfolio;

 

(vii)                           any Loan Asset treated as or represented by the
Seller to be an Eligible Loan Asset which is not at the applicable time an
Eligible Loan Asset, or the purchase by any party or origination of any Loan
Asset which violates Applicable Law as of its Purchase Date;

 

(viii)                        the failure by the Seller to comply with all
requirements of Section 6.1 hereof;

 

(ix)                                the failure by the Seller to comply with any
material term, provision or covenant contained in this Agreement or any
agreement executed in connection with this Agreement, any Transaction Document
or with any Applicable Law with respect to any item of Sale Portfolio, or the
nonconformity of any item of Sale Portfolio with any such Applicable Law;

 

(x)                                   the reliance on any representation or
warranty made or deemed made by the Seller, or any of its officers, under or in
connection with this Agreement or any other Transaction Document, which shall
have been false, incorrect or misleading in any material respect when made or
deemed made or delivered;

 

(xi)                                the failure to vest and maintain vested in
the Purchaser an undivided ownership interest in the Sale Portfolio, together
with all Interest Collections and Principal Collections, free and clear of any
Lien (other than Permitted Liens) whether existing at the time of any Purchase
or at any time thereafter;

 

(xii)                             the failure to file, or any delay in filing,
UCC financing statements, continuation statements or other similar instruments
or documents under the UCC of any applicable jurisdiction or other Applicable
Law with respect to any Sale Portfolio, whether at the time of any Purchase or
at any subsequent time;

 

(xiii)                          any dispute, claim, offset or defense (other
than the discharge in bankruptcy of an Obligor) to the payment of any Loan Asset
in the Sale Portfolio (including, without limitation, a defense based on such
Loan Asset (or the Loan Agreement evidencing such Loan Asset) not being a legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim

 

45

--------------------------------------------------------------------------------

 

resulting from the merchandise or services related to such Sale Portfolio or the
furnishing or failure to furnish such merchandise or services;

 

(xiv)                         any inability to obtain any judgment in, or
utilize the court or other adjudication system of, any state in which an Obligor
may be located as a result of the failure of the Purchaser or the Seller to
qualify to do business or file any notice or business activity report or any
similar report;

 

(xv)                            any action taken by the Seller in the
enforcement or collection of any Sale Portfolio, which results in any claim,
suit or action of any kind pertaining to the Sale Portfolio or which reduces or
impairs the rights of the Purchaser with respect to any Loan Asset or the value
of any such Loan Asset;

 

(xvi)                         any products liability claim or personal injury or
property damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with the Underlying Collateral or services
that are the subject of any Sale Portfolio;

 

(xvii)                      any claim, suit or action of any kind arising out of
or in connection with Environmental Laws, including without limitation any
vicarious liability;

 

(xviii)                   the commingling of Interest Collections and Principal
Collections on the Sale Portfolio at any time with other funds of the Seller;

 

(xix)                           any investigation, litigation or proceeding
related to this Agreement (or the other Transaction Documents) or the use of
proceeds or the Sale Portfolio, the administration of the Loan Assets by the
Seller or the security interest in the Sale Portfolio granted hereunder;

 

(xx)                              any failure by the Purchaser to give
reasonably equivalent value to the Seller in consideration for the transfer by
the Seller to the Purchaser of any item of the Sale Portfolio or any attempt by
any Person to void or otherwise avoid any such transfer under any statutory
provision or common law or equitable action, including, without limitation, any
provision of the Bankruptcy Code;

 

(xxi)                           the failure of the Seller or any of its agents
or representatives to remit to the Collection Account within two Business Days
of receipt, payments and collections with respect to the Sale Portfolio remitted
to the Seller or any such agent or representative as provided in this Agreement;
or

 

(xxii)                        failure or delay in assisting a successor Servicer
in assuming each and all of the Servicer’s obligations to service and administer
the Sale Portfolio in accordance with the Loan and Servicing Agreement, or
failure or delay in complying with instructions from the Administrative Agent
with respect thereto.

 

(b)                                 Any amounts subject to the indemnification
provisions of this Section 9.1 shall be paid by the Seller to the Administrative
Agent on behalf of the applicable Indemnified Party within five Business Days
following receipt by the Seller of the Administrative Agent’s

 

46

--------------------------------------------------------------------------------

 

written demand therefor on behalf of the applicable Indemnified Party (and the
Administrative Agent shall pay such amounts to the applicable Indemnified Party
promptly after the receipt by the Administrative Agent of such amounts). The
Administrative Agent, on behalf of any Indemnified Party making a request for
indemnification under this Section 9.1, shall submit to the Purchaser (who shall
promptly forward such submission to the Seller) a certificate setting forth in
reasonable detail the basis for and the computations of the Indemnified Amounts
with respect to which such indemnification is requested, which certificate shall
be conclusive absent demonstrable error.

 

(c)                                  If for any reason the indemnification
provided above in this Section 9.1 is unavailable to the Indemnified Party or is
insufficient to hold an Indemnified Party harmless in respect of any losses,
claims, damages or liabilities, then the Seller shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect not only
the relative benefits received by such Indemnified Party on the one hand and the
Seller on the other hand but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations.

 

(d)                                 If the Seller has made any payments in
respect of Indemnified Amounts to the Administrative Agent on behalf of an
Indemnified Party pursuant to this Section 9.1 and such Indemnified Party
thereafter collects any of such amounts from others, such Indemnified Party will
promptly repay such amounts collected to the Seller in an amount equal to the
amount it has collected from others in respect of such Indemnified Amounts,
without interest.

 

(e)                                  Indemnification under this Section 9.1
shall be in an amount necessary to make the Indemnified Party whole after taking
into account any Tax consequences to the Indemnified Party of the receipt of the
indemnity provided hereunder, including the effect of such Tax or refund on the
amount of Tax measured by net income or profits that is or was payable by the
Indemnified Party.

 

(f)                                    The obligations of the Seller under this
Section 9.1 shall survive the termination of this Agreement.

 

Section 9.2.                                   Assignment of Indemnities.

 

The Seller acknowledges that, pursuant to the Loan and Servicing Agreement, the
Purchaser shall assign its rights of indemnity granted hereunder to the
Collateral Agent, for the benefit of the Secured Parties.  Upon such assignment,
(a) the Collateral Agent, for the benefit of the Secured Parties, shall have all
rights of the Purchaser hereunder and may in turn assign such rights, and
(b) the obligations of the Seller under this Article IX shall inure to the
Collateral Agent, for the benefit of the Secured Parties.  The Seller agrees
that, upon such assignment, the Collateral Agent, for the benefit of the Secured
Parties, may enforce directly, without joinder of the Purchaser, the indemnities
set forth in this Article IX.

 

47

--------------------------------------------------------------------------------

 

ARTICLE X.

 

MISCELLANEOUS

 

Section 10.1.                             Liability of the Seller.  The Seller
shall be liable in accordance herewith only to the extent of the obligations in
this Agreement specifically undertaken by the Seller and with respect to its
representations and warranties expressly set forth hereunder.

 

Section 10.2.                             Limitation on Liability.  No claim may
be made by the Seller or any other Person against the Lender, the Collateral
Agent, the Collateral Custodian, the Administrative Agent or any other Secured
Party or their respective Affiliates, directors, officers, employees, attorneys
or agents for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement, or
any act, omission or event occurring in connection therewith; and the Seller
hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

 

Section 10.3.                             Amendments; Limited Agency.  Except as
provided in this Section 10.3, no amendment, waiver or other modification of any
provision of this Agreement shall be effective unless signed by the Purchaser
and the Seller and consented to in writing by the Administrative Agent, the
Required Lenders and the Collateral Agent; provided that any amendment,
modification or waiver to correct any inconsistency or cure any ambiguity or
error in this Agreement may be entered into with the written consent only of the
Purchaser, the Seller and the Administrative Agent.  The Purchaser shall provide
not less than ten Business Days’ prior written notice of any such amendment to
the Administrative Agent and the Collateral Agent.

 

Section 10.4.                             Waivers; Cumulative Remedies.  No
failure or delay on the part of the Purchaser (or any assignee thereof) or the
Seller, in exercising any power, right, privilege or remedy under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right, privilege or remedy preclude any other or future exercise
thereof or the exercise of any other power, right, privilege or remedy.  The
powers, rights, privileges and remedies herein provided are cumulative and not
exhaustive of any powers, rights, privileges and remedies provided by law.  Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which it is given.

 

Section 10.5.                             Notices.  All demands, notices and
other communications hereunder shall, unless otherwise stated herein, be in
writing (which shall include facsimile communication and communication by e-mail
in portable document format (.pdf)) and faxed, e-mailed or delivered, to each
party hereto, at its address set forth under its name below or at such other
address as shall be designated by such party in a written notice to the other
parties hereto:

 

48

--------------------------------------------------------------------------------

 

If to Purchaser:

 

Ares Capital JB Funding LLC

245 Park Avenue, 44th Floor

New York, New York 10167

Attention: General Counsel and Chief Financial Officer

Facsimile No.: (212) 750-1777

Confirmation No.: (212) 750-7300

 

and in each case:

 

Ares Capital JB Funding LLC

2000 Avenue of the Stars, 12th Floor

Los Angeles, California 90067

Attention: Chief Accounting Officer

Facsimile No.:  (310) 201-4197

Confirmation No.: (310) 201-4205

 

with a copy to:

 

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, California 90071

Attention: Dominic Yoong

Facsimile No.:  (213) 891-8763

 

If to Seller:

 

Ares Capital Corporation

245 Park Avenue, 44th Floor

New York, New York 10167

Attention: General Counsel and Chief Financial Officer

Facsimile No.: (212) 750-1777

Confirmation No.: (212) 750-7300

 

and in each case:

 

Ares Capital Corporation

c/o Ares Management LLC

2000 Avenue of the Stars, 12th Floor

Los Angeles, California 90067

Attention: Chief Accounting Officer

Facsimile No.: (310) 201-4197

Confirmation No.: (310) 201-4205

 

49

--------------------------------------------------------------------------------

 

with a copy to:

 

Latham & Watkins LLP

355 South Grand Avenue

Los Angeles, California 90071

Attention: Dominic Yoong

Facsimile No.:  (213) 891-8763

 

Notices and communications by facsimile and e-mail shall be effective when sent,
and notices and communications sent by other means shall be effective when
received.

 

Section 10.6.                             Merger and Integration.  Except as
specifically stated otherwise herein, this Agreement, the Loan and Servicing
Agreement and the other Transaction Documents set forth the entire understanding
of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement, the Loan and
Servicing Agreement and the Transaction Documents.  This Agreement may not be
modified, amended, waived or supplemented except as provided herein.

 

Section 10.7.                             Severability of Provisions.  If any
one or more of the covenants, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, provisions or terms
shall be deemed severable from the remaining covenants, provisions or terms of
this Agreement and shall in no way affect the validity or enforceability of the
other provisions of this Agreement.

 

Section 10.8.                             GOVERNING LAW; JURY WAIVER.  THIS
AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. 
EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING
DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.

 

Section 10.9.                             Consent to Jurisdiction; Service of
Process.

 

(a)                                  Each party hereto hereby irrevocably
submits to the non-exclusive jurisdiction of any New York State or Federal court
sitting in the Borough of Manhattan in New York City in any action or proceeding
arising out of or relating to this Agreement, and each party hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State court or, to the extent permitted
by law, in such Federal court.  The parties hereto hereby irrevocably waive, to
the fullest extent they may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding.  The parties hereto agree
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.

 

50

--------------------------------------------------------------------------------

 

(b)                                 Each of the Seller and the Purchaser agrees
that service of process may be effected by mailing a copy thereof by registered
or certified mail, postage prepaid, to the Seller or the Purchaser, as
applicable, at its address specified in Section 10.5.  Nothing in this
Section 10.9 shall affect the right of the Seller or the Purchaser to serve
legal process in any other manner permitted by law.

 

Section 10.10.                       Costs, Expenses and Taxes.

 

(a)                                  In addition to the rights of
indemnification granted to the Purchaser and its Affiliates and officers,
directors, employees and agents thereof under Article IX hereof, the Seller
agrees to pay on demand all reasonable out-of-pocket costs and expenses of the
Purchaser or its assignees incurred in connection with the preparation,
execution, delivery, enforcement, administration (including periodic auditing),
renewal, amendment or modification of, or any waiver or consent issued in
connection with, this Agreement and the other documents to be delivered
hereunder or in connection herewith, including, without limitation, the
reasonable fees and out–of–pocket expenses of counsel with respect thereto and
with respect to advising the Purchaser or its assignees as to its rights and
remedies under this Agreement and the other documents to be delivered hereunder
or in connection herewith, and all out-of-pocket costs and expenses, if any
(including reasonable counsel fees and expenses), incurred by the Purchaser or
its assignees in connection with such Person’s enforcement, and after the
occurrence of an Event of Default, such Person’s potential enforcement, of this
Agreement, the Transaction Documents and the other documents to be delivered
hereunder or in connection herewith.

 

(b)                                 The Seller shall pay on demand any and all
stamp, sales, excise and other taxes and fees payable or determined to be
payable to any Governmental Authority in connection with the execution,
delivery, filing and recording of this Agreement and the other documents to be
delivered hereunder.

 

(c)                                  The Seller shall pay on demand all other
reasonable out-of-pocket costs, expenses and Taxes (excluding Taxes imposed on
or measured by net income) incurred by the Purchaser or its assignees in
connection with the execution, delivery, filing and recording of this Agreement
and the other documents to be delivered hereunder, including, without
limitation, all costs and expenses incurred by the Purchaser or its assignees in
connection with periodic audits of the Seller’s books and records, including
without limitation the Records.

 

(d)                                 For the avoidance of doubt, costs and
expenses to be paid pursuant to this Section 10.10 shall exclude all allocable
overhead costs and expenses.

 

Section 10.11.                       Counterparts.  For the purpose of
facilitating the execution of this Agreement and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.  Delivery of an
executed counterpart of a signature page to this Agreement by facsimile or
e-mail in portable document format (.pdf) shall be effective as delivery of a
manually executed counterpart of this Agreement.

 

51

--------------------------------------------------------------------------------

 

Section 10.12.                       Bankruptcy Non-Petition and Limited
Recourse; Claims.  The Seller hereby agrees that it will not institute against,
or join any other Person in instituting against, the Purchaser any Bankruptcy
Proceeding so long as there shall not have elapsed one year (or such longer
preference period as shall then be in effect) and one day since the Collection
Date.  The Seller hereby acknowledges that (i) the Purchaser has no assets other
than the Sale Portfolio and rights and interests in the Transaction Documents
and rights incidental thereto, (ii) the Purchaser shall, immediately upon
Purchase hereunder, grant a security interest in the Sale Portfolio to the
Collateral Agent, for the benefit of the Secured Parties, pursuant to the Loan
and Servicing Agreement, and (iii) Available Collections generated by the Sale
Portfolio will be applied to payment of the Purchaser’s obligations under the
Loan and Servicing Agreement.  In addition, the Seller shall have no recourse
for any amounts payable or any other obligations arising under this Agreement
against any officer, member, director, employee, partner, Affiliate or security
holder of the Purchaser or any of its successors or assigns.

 

The provisions of this Section 10.12 are a material inducement for the Purchaser
to enter into this Agreement and the transactions contemplated hereby and for
the Administrative Agent and the Secured Parties to enter into the Loan and
Servicing Agreement and the transactions contemplated thereby and are an
essential term hereof.  The Purchaser may seek and obtain specific performance
of such provisions (including injunctive relief), including, without limitation,
in any bankruptcy, reorganization, arrangement, winding-up, insolvency,
moratorium or liquidation proceedings, or other proceedings under United States
federal or state bankruptcy laws or any similar laws.

 

Section 10.13.                       Binding Effect; Assignability.

 

(a)                                  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

 

(b)                                 Notwithstanding anything to the contrary
contained herein, this Agreement may not be assigned by the Purchaser or the
Seller except as permitted by this Section 10.13 or the Loan and Servicing
Agreement.  Simultaneously with the execution and delivery of this Agreement,
the Purchaser will assign all of its right, title and interest in this Agreement
to the Collateral Agent, for the benefit of the Secured Parties, to which
assignment the Seller hereby expressly consents.  Upon assignment, the Seller
agrees to perform its obligations hereunder for the benefit of the Collateral
Agent, for the benefit of the Secured Parties, under the Loan and Servicing
Agreement and the Collateral Agent, in such capacity, shall be a third party
beneficiary hereof.  The Collateral Agent, for the benefit of the Secured
Parties, under the Loan and Servicing Agreement upon such assignment may enforce
the provisions of this Agreement, exercise the rights of the Purchaser and
enforce the obligations of the Seller hereunder without joinder of the
Purchaser.

 

(c)                                  The Administrative Agent, the Lender, the
Collateral Custodian, the Collateral Agent and the other Secured Parties shall
be third-party beneficiaries of this Agreement.

 

52

--------------------------------------------------------------------------------

 

Section 10.14.                       Waiver of Setoff.

 

(a)                                  The Seller’s obligations under this
Agreement shall not be affected by any right of setoff, counterclaim,
recoupment, defense or other right the Seller might have against the Purchaser,
the Administrative Agent, the Lender, the Collateral Agent, the Collateral
Custodian, the other Secured Parties or any assignee of such Persons, all of
which rights are hereby waived by the Seller.

 

(b)                                 The Purchaser shall have the right to
set–off against the Seller any amounts to which the Seller may be entitled
hereunder and to apply such amounts to any claims the Purchaser may have against
the Seller from time to time under this Agreement.  Upon any such set–off, the
Purchaser shall give notice of the amount thereof and the reasons therefor to
the Seller.

 

Section 10.15.                       Headings and Exhibits.  The headings herein
are for purposes of references only and shall not otherwise affect the meaning
or interpretation of any provision hereof.  The schedules and exhibits attached
hereto and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.

 

Section 10.16.                       Rights of Inspection.  At the discretion of
the Purchaser and the Administrative Agent, the Seller shall allow the Purchaser
and the Administrative Agent (during normal office hours and upon reasonable
advance notice) to review the Seller’s compliance with its obligations under
this Agreement and any other Transaction Document to which it is a party, and to
conduct an audit of the Sale Portfolio and Required Loan Documents in
conjunction with such a review.  Such review shall be reasonable in scope and
shall be completed in a reasonable period of time; provided that, at the
Seller’s expense, (i) prior to the occurrence of a Seller Termination Event, the
Purchaser and the Administrative Agent shall each be entitled to one (1) such
audit during each calendar year and, (ii) after the occurrence of a Seller
Termination Event, the Purchaser and Administrative Agent shall be entitled to
such number of audits per annum and at such times as it shall require in its
reasonable discretion.  The Purchaser and the Administrative Agent and their
representatives and successors and assigns acknowledge that in exercising the
rights and privileges conferred in this Section 10.16, the Purchaser and the
Administrative Agent and their representatives or assigns may, from time to
time, obtain knowledge of information, practices, books, correspondence and
records of a confidential nature and in which the Seller has a proprietary
interest.  The Purchaser and the Administrative Agent and their representatives
and successors and assigns each agree that (i) each shall retain in strict
confidence and shall use commercially reasonable efforts to ensure that its
representatives retain in strict confidence and will not disclose without the
prior written consent of the Seller any or all of such information, practices,
books, correspondence and records furnished to them and (ii) that they will not,
and will use commercially reasonable efforts to ensure that its representatives
and assigns will not, make any use whatsoever (other than for the purposes
contemplated by this Agreement) of any of such information, practices, books,
correspondence and records without the prior written consent of the Seller,
unless such information is generally available to the public or is required by
law to be disclosed.

 

53

--------------------------------------------------------------------------------

 

Section 10.17.                       Subordination.  After giving effect to any
payment relating to any indebtedness, obligation or claim the Seller may from
time to time hold or otherwise have against the Purchaser or any assets or
properties of the Purchaser, whether arising hereunder or otherwise existing,
the Borrowing Base at such time must exceed the Obligations owed by the
Purchaser to the Secured Parties under the Loan and Servicing Agreement.  The
Seller hereby agrees that at any time during which the condition set forth in
the preceding sentence shall not be satisfied, the Seller shall be subordinate
in right of payment to the prior payment of any indebtedness or obligation of
the Purchaser owing to the Lender, the Collateral Agent, the Collateral
Custodian, the Administrative Agent or any other Secured Party under the Loan
and Servicing Agreement.

 

Section 10.18.                       Breaches of Representations, Warranties and
Covenants.  For the avoidance of doubt, no breach or default of any
representation, warranty or covenant contained in Sections 4.1, 4.2, 4.3, 5.1,
5.2 or 5.3 that does not constitute an “Unmatured Event of Default” under the
Loan and Servicing Agreement, “Event of Default” under the Loan and Servicing
Agreement or Seller Termination Event under this Agreement shall be deemed to be
a breach or default hereunder; provided that the foregoing shall not affect the
definition of “Seller Purchase Event”, Sections 2.1(n), 2.3(c), 3.2(a), 4.1(ll),
4.1(mm), 5.2(j)(iii), 6.2(b), 8.3, 9.1 and the schedules and exhibits hereto.

 

Section 10.19.                       Confidentiality.  Each of the parties
hereto hereby agrees with the confidentiality provisions set forth in Sections
11.13 and 11.14 of the Loan and Servicing Agreement.

 

[Signature pages to follow.]

 

54

--------------------------------------------------------------------------------

 

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

 

 

ARES CAPITAL JB FUNDING LLC, as the Purchaser

 

 

 

 

 

By:

/s/ Penni F. Roll

 

 

Name:

Penni F. Roll

 

 

Title:

Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

ARES CAPITAL CORPORATION, as the Seller

 

 

 

 

 

By:

/s/ Penni F. Roll

 

 

Name:

Penni F. Roll

 

 

Title:

Authorized Signatory

 

--------------------------------------------------------------------------------