Exhibit 10.3

 

EXECUTION VERSION

 

SECOND TIER PURCHASE AND SALE AGREEMENT

 

among

 

ARES CAPITAL CP FUNDING II LLC,

 

as the Purchaser

 

 

and

 

ARES CAPITAL CP FUNDING HOLDINGS II LLC,

 

as the Seller

 

Dated as of July 21, 2009

 

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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

11

 

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

12

 

 

Section 4.1.

Representations and Warranties of the Seller

12

Section 4.2.

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

20

Section 4.3.

Representations and Warranties of the Purchaser

21

 

 

ARTICLE V.

COVENANTS OF THE SELLER

23

 

 

Section 5.1.

Protection of Title of the Purchaser

23

Section 5.2.

Affirmative Covenants of the Seller

25

Section 5.3.

Negative Covenants of the Seller

29

 

 

ARTICLE VI.

REPURCHASES AND SUBSTITUTION BY THE SELLER

31

 

 

Section 6.1.

Repurchase of Loan Assets

31

Section 6.2.

Substitution of Loan Assets

32

Section 6.3.

Repurchase Limitations

33

 

 

ARTICLE VII.

ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE SALE PORTFOLIO

33

 

 

Section 7.1.

Rights of the Purchaser

33

Section 7.2.

Notice to Trustee, Agent and Note Purchaser

34

 

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TABLE OF CONTENTS

(cont’d)

 

 

 

Page

ARTICLE VIII.

SELLER TERMINATION EVENTS

34

 

 

 

Section 8.1.

Seller Termination Events

34

Section 8.2.

Remedies

36

Section 8.3.

Survival of Certain Provisions

37

 

 

 

ARTICLE IX.

INDEMNIFICATION

37

 

 

 

Section 9.1.

Indemnification by the Seller

37

Section 9.2.

Assignment of Indemnities

40

 

 

 

ARTICLE X.

MISCELLANEOUS

41

 

 

 

Section 10.1.

Liability of the Seller

41

Section 10.2.

Limitation on Liability

41

Section 10.3.

Amendments; Limited Agency

41

Section 10.4.

Waivers; Cumulative Remedies

41

Section 10.5.

Notices

41

Section 10.6.

Merger and Integration

41

Section 10.7.

Severability of Provisions

42

Section 10.8.

GOVERNING LAW; JURY WAIVER

42

Section 10.9.

Consent to Jurisdiction; Service of Process

42

Section 10.10.

Costs, Expenses and Taxes

42

Section 10.11.

Counterparts

43

Section 10.12.

Bankruptcy Non-Petition and Limited Recourse; Claims

43

Section 10.13.

Binding Effect; Assignability

43

Section 10.14.

Waiver of Setoff

44

Section 10.15.

Headings and Exhibits

44

Section 10.16.

Rights of Inspection

44

Section 10.17.

Subordination

45

Section 10.18.

Breaches of Representations, Warranties and Covenants

45

Section 10.19.

Confidentiality

45

Section 10.20.

Assignments of Loan Assets

45

 

SCHEDULES AND EXHIBITS

 

Schedule I

-

Sale Portfolio List

 

 

 

Exhibit A

-

Form of Second Tier Loan Assignment

Exhibit B

-

Form of Officer’s Purchase Date Certificate

Exhibit C

-

Form of Power of Attorney for Seller

 

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SECOND TIER PURCHASE AND SALE AGREEMENT

 

THIS SECOND TIER PURCHASE AND SALE AGREEMENT, dated as of July 21, 2009, among
ARES CAPITAL CP FUNDING HOLDINGS II LLC, a Delaware limited liability company,
as the seller (the “Seller”) and ARES CAPITAL CP FUNDING II LLC, a Delaware
limited liability company, as the purchaser (the “Purchaser”).

 

W I T N E S S E T H:

 

WHEREAS, the Seller acquired certain Loan Assets and Portfolio Assets (in each
case, as hereinafter defined) related thereto pursuant to the terms of that
certain First Tier Purchase and Sale Agreement, dated as of the date hereof, by
and between, the Seller, as the purchaser and Ares Capital Corporation, as the
seller (such agreement as amended, modified, waived, supplemented or restated
from time to time, the “First Tier Purchase and Sale Agreement”);

 

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 related thereto on the terms set forth herein;

 

WHEREAS, it is contemplated that the Loan Assets and Portfolio Assets Purchased
hereunder may be Pledged by the Purchaser pursuant to the Note Purchase
Agreement (as defined herein) and the related Transaction Documents, to the
Trustee, for the benefit of the Secured Parties; 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 Note Purchase
Agreement (as hereinafter defined).  References herein to Persons include their
successors and assigns permitted hereunder or under the Note Purchase
Agreement.  The terms “include” or “including” mean “include without limitation”
or “including without limitation”.  The words “herein”, “hereof” and

 

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“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. 
Capitalized terms used herein but not defined herein shall have the respective
meanings assigned to such terms in the Note Purchase Agreement, provided that,
if, within such definition in the Note Purchase 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 Second Tier 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(iv).

 

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

 

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

 

“Loan Asset” means any Eligible Loan Asset listed on Schedule I hereto, as the
same may be amended, supplemented, restated or replaced from time to time.

 

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

 

“Note Purchase Agreement” means that certain Note Purchase Agreement, dated as
of the Closing Date, by and among the Purchaser, as the Borrower, Ares Capital
Corporation, as the Servicer and the Transferor, Ares Capital CP Funding LLC, as
the Guarantor, Wachovia Bank, National Association, as the Note Purchaser and as
the Agent, U.S. Bank National Association, as the Trustee and as the Bank and
Wells Fargo Bank, National Association, as the Collateral Custodian, as such may
be amended, restated, supplemented or otherwise modified from time to time
pursuant to the terms thereof.

 

“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;

 

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(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.

 

“Purchaser Restricted Junior Payment” means (i) 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; (ii) 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, (iii) 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 (iv) any payment of management fees by the Purchaser (except
for reasonable management fees to the Transferor or its Affiliates in
reimbursement of actual management services performed).

 

“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, 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.

 

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“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 (i) through (iv) and all accounts, cash and
currency, chattel paper, tangible chattel paper, electronic chattel paper,
copyrights, copyright licenses, equipment, fixtures, contract rights, general
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):

 

(i)            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, but excluding any related Attached
Equity;

 

(ii)           the Portfolio Assets with respect to the Loan Assets referred to
in clause (i);

 

(iii)          all the Seller’s rights under the First Tier Purchase and Sale
Agreement; and

 

(iv)          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 Second Tier Loan Assignment,
and incorporated herein by reference, as such schedule may be supplemented and
amended from time to time pursuant to the terms 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 Note Purchase Agreement.

 

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

 

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

 

“Seller Purchase Event” means the occurrence of a breach of the Seller’s
representations and warranties under Section 4.2.

 

“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).

 

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“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 UCC in the State of New York, 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”.

 

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.

 

(a)           Subject to the terms and conditions of this Agreement, on and
after the Closing Date, 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 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 or prior to any Business Day prior to a Seller
Termination Event (each a “Purchase Date”) execute and deliver to the Purchaser
a proposed Second Tier 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 Second
Tier Loan Assignment shall be deemed to be listed on Schedule I hereto and
constitute part of the  Sale Portfolio hereunder.

 

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(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)            Neither the Purchaser nor any assignee of the Purchaser
(including the Secured Parties) shall 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 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). No such
obligation or liability is intended to be assumed by the Purchaser or any
assignee of the Purchaser (including 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 any assignee of the Purchaser
(including the Secured Parties), of any obligation of the Seller, as lead agent,
collateral agent or paying agent under any Agented Note.

 

(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 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 if any Loan Assets are closed in escrow, a
certificate (in the form of Exhibit K to the Note Purchase Agreement) from the
closing attorneys of such Loan Assets certifying the possession of the Required
Loan Documents; provided that, notwithstanding the foregoing, 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 Note Purchase Agreement, certain documents
relating to 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.

 

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

 

(j)            In connection with each Purchase of Sale Portfolio hereunder, the
Seller hereby grants to each of the Purchaser and its assigns, the Agent, the
Note Purchaser, the Trustee, 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 Agent, the Note Purchaser, the Collateral
Custodian or the Trustee, the Seller shall use its best 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 (i) shall take
such action reasonably requested by the Purchaser or the Agent, from time to
time hereafter, that may be necessary or appropriate to ensure that the
Purchaser and its assigns under the Note Purchase Agreement have an enforceable
ownership or security interest, as applicable, in the Sale Portfolio Purchased
by the Purchaser as contemplated by this Agreement, and (ii) shall use its
commercially reasonable efforts to ensure that each of the Purchaser (and its
assignees), the Agent, the Note Purchaser, the Trustee, 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.

 

(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 Second
Tier 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 in connection with
Revolving Loan Assets and Delayed Draw Loan

 

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Assets, as applicable) 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 of the
Seller in Article V hereof, will run to and be for the benefit of the Purchaser
and the Trustee (on behalf of the Secured Parties) and the Trustee (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 and
covenants 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 fair
market value of such Loan Asset as determined from time to time by the Seller
and the Purchaser. Each of the Purchaser and the Seller hereby agree that the
fair market value of each Loan Asset Sold hereunder as of the related Purchase
Date shall not be less than the Advance Date Assigned Value thereof on the
related Purchase Date multiplied by the principal balance of such Loan Asset
(exclusive of Accreted Interest).

 

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 proceeds the Purchaser expects to receive pursuant to the Advances
under the Note Purchase Agreement), by means of a capital contribution by the
Seller to the Purchaser.

 

(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 Second Tier 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 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

 

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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 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; (iii) the possession by the
Purchaser (or the Collateral Custodian on behalf of the Trustee, 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) 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.

 

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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:

 

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

 

(ii)           a certificate of the Secretary or Assistant Secretary of the
Seller, dated the Closing Date, certifying (A) the names and true signatures of
the incumbent officers of the Seller authorized to sign on behalf of the Seller
this Agreement, the Second Tier 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 the Seller, a revised
certificate meeting the requirements of this Section 3.1(ii)), (B) that the copy
of the certificate of formation of the Seller is a complete and correct copy and
that such certificate of formation has not been amended, modified or
supplemented and is in full force and effect, (C) that the copy of the amended
and restated limited liability company agreement of the Seller is a complete and
correct copy, and that such amended and restated limited liability company
agreement has not been amended, modified or supplemented and is in full force
and effect, and (D) the resolutions of the board of directors of the Seller
approving and authorizing the execution, delivery and performance by the Seller
of this Agreement, the Second Tier Loan Assignments and all other documents to
be executed by the Seller hereunder or in connection herewith;

 

(iii)          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 formation;

 

(iv)          filed, original copies of proper financing statements (the
“Facility Financing Statements”) describing the Sale Portfolio, and naming the
Seller as the “Debtor/Seller” and the Purchaser as “Secured Party/Buyer”, 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;

 

(v)           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;

 

(vi)          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

 

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assigns), dated a date reasonably near to the Closing Date, and with respect to
such requests for information or UCC searches, listing all effective financing
statements which name the Seller (under its present name and any previous name)
as debtor and which are filed in the State of Delaware, together with copies of
such financing statements (none of which shall cover any Sale Portfolio);

 

(vii)         all instruments in connection with the transactions contemplated
by this Agreement shall be satisfactory in form and substance to the Purchaser
and the Agent, and the Purchaser and the 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 Agent may have reasonably
requested;

 

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

 

(ix)           the Seller shall have paid all fees required to be paid by it on
the Closing Date; and

 

(x)            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.  The Purchase to
take place on the initial Purchase Date and each Purchase to take place on a
subsequent Purchase 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 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 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; and

 

(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.

 

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(b)           The Purchaser shall have received a duly executed and completed
Second Tier Loan Assignment along with a Schedule I that is true, accurate and
complete in all 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 Documents and the Loan Asset Checklist of any of
the Eligible 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 (subject to Section 10.20) and a
valid and perfected ownership interest 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 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).

 

(e)           The Seller shall have received a copy of an Approval Notice
executed by the Agent evidencing the approval of the 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 Second Tier 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 Note Purchase Agreement. As
of each Purchase Date, 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 limited liability company in good
standing under the laws of the State of Delaware (subject to Section 5.1(f)),
with all requisite limited liability company power and authority to own or lease
its properties and to conduct its business as such business is presently
conducted, 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.

 

(b)           Due Qualification.  The Seller is duly qualified to do business
and has obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease

 

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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 Seller (i) has all necessary power, authority and legal right to (a) execute
and deliver this Agreement, each Second Tier Loan Assignment and the other
Transaction Documents to which it is a party and (b) carry out the terms of this
Agreement, each Second Tier Loan Assignment and the other Transaction Documents
to which it is a party and (ii) has duly authorized by all necessary limited
liability company action the execution, delivery and performance of this
Agreement, each Second Tier 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 Second Tier 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
Second Tier Loan Assignment and the Transaction Documents to which the Seller is
party have been and, in the case of each Second Tier Loan Assignment delivered
after the Closing Date, will be, duly executed and delivered by the Seller, and
this Agreement, together with the applicable Second Tier 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 Second
Tier 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 execution, delivery and performance of this
Agreement, each Second Tier Loan Assignment and all other agreements and
instruments executed and delivered or to be executed and delivered by the Seller
pursuant hereto or thereto in connection with the Sale of the Sale Portfolio
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 certificate of formation or limited liability
company agreement 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, or (iii) violate any Applicable Law.

 

(f)            No Proceedings.  There is no litigation, 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 Second Tier 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 Second Tier 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.

 

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(g)           No Consents.  The Seller is not required to obtain the consent or
approval of any other party or any consent, license, approval or authorization,
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or any Second Tier Loan Assignment, except
those which 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 formation; 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 on the
signature pages hereto.  The Seller’s only jurisdiction of formation is
Delaware, and, except as permitted hereunder, Seller has not changed its
jurisdiction of formation.

 

(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 Seller is solvent and will not become
insolvent after giving effect to the transactions contemplated by this Agreement
and the other Transaction Documents.  The Seller, after giving effect to the
transactions contemplated by this Agreement and the other Transaction Documents,
will have an adequate amount of capital to conduct its business in the
foreseeable future.

 

(k)           Selection Procedures.  No procedures believed by the Seller to be
adverse to the interests of the Purchaser were utilized by the Seller in
identifying and/or selecting the Eligible Loan Assets included in the Sale
Portfolio.

 

(l)            Compliance with Laws.  The Seller has complied in all material
respects with all Applicable Law to which it may be subject, and no Sale
Portfolio contravenes any Applicable Law.

 

(m)          Taxes.  The Seller has filed or caused to be filed all tax returns
that are required to be filed by it.  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 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

 

14

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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)           Second Tier Loan Assignments.  Each Second Tier Loan Assignment is
accurate in all 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, limited liability company 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 (subject to Section 10.20) 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 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
Trustee as “Secured Party” or “Assignee”, in each case, for the benefit of the
Secured Parties pursuant to the Note Purchase 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 or any transaction contemplated hereby is true
and complete and does not omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading; provided that, solely with respect to written or
electronic information furnished by the Seller which was provided to the Seller
from an Obligor with respect to a Loan Asset, such information need only be
accurate, true and correct 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 benefits vested under
all Pension Plans 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).  No prohibited transactions, 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 Benefit Plan other than a
Multiemployer Plan, withdrawals or reportable events have occurred with respect
to any Pension Plans 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, nor has any Pension Plan been terminated under
Section 4041(f) of ERISA, nor has the Pension Benefit Guaranty Corporation
instituted proceedings to terminate, or appoint a trustee to administer, a
Pension Plan and no

 

15

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event has occurred or condition exists that might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan.

 

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

 

(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 reasonably equivalent value
from the Purchaser in exchange for the Sale of such Sale Portfolio Sold
hereunder. No such Sale has been made for or on account of an antecedent debt
owed by 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 (other than the Guarantor), and the Seller hereby
acknowledges that the Agent, the Note Purchaser, the Trustee and the other
Secured Parties are entering into the transactions contemplated by the Note
Purchase 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
(other than the Guarantor).  Therefore, from and after the date of execution and
delivery of this Agreement, the Seller shall take all reasonable steps,
including, without limitation, all steps that the Agent, the Note Purchaser and
the Trustee 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 (other than the
Guarantor) and not just a division of the Seller or any such other Affiliate
(other than the Guarantor) (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 operating agreement and Sections
5.01(a), 5.01(b), 5.02(a) and 5.02(b) of the Note Purchase Agreement.

 

(y)           Sale Agreement.  This Agreement and the Second Tier Loan
Assignments contemplated herein are the only agreements or arrangements pursuant
to which the Seller Sells the Sale Portfolio Sold by it to the Purchaser.

 

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(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, constitute either a “general intangible,” an “instrument,” an
“account,” “securities entitlement,” “tangible chattel paper”, “certificated
security,” “uncertificated security,” “supporting obligation,” 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 the Sale Portfolio (subject to Section 10.20) 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;

 

(v)                                 the Seller has caused the filing of all
appropriate 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 filing granted hereunder to the Purchaser;  provided that filings in respect
of real property shall not be required;

 

(vi)                              other than (i) as expressly permitted by the
terms of this Agreement and the Note Purchase Agreement and (ii) the security
interest granted to the Purchaser, 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 financing
statements against the Seller that include a description of collateral covering
the Sale Portfolio other than any 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
Note Purchase Agreement or (C) that has been terminated and/or fully and validly
assigned to the Trustee 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

 

17

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bailee of the Trustee, is holding the underlying promissory notes that
constitute or evidence the Loan Assets solely on behalf of and for the Trustee,
for the benefit of the Secured Parties; provided that the acknowledgement of the
Collateral Custodian set forth in Section 13.11 of the Note Purchase Agreement
may serve as such acknowledgement;

 

(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 Trustee, 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 specifically Indorsed to the Trustee, for the
benefit of the Secured Parties, or in blank by an effective Indorsement or has
been registered in the name of the Trustee, for the benefit of the Secured
Parties, upon original issue or registration or transfer by the Purchaser of
such certificated security; and

 

(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 Trustee, on behalf of the
Secured Parties, as the registered owner of such uncertificated security.

 

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

 

(bb)                          Notice to Agents and Obligors.  The Seller has
directed any agent, administrative agent or Obligor for any Loan Asset to remit
all 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 all Interest Collections and Principal Collections received by
it or its Affiliates with respect to the Sale Portfolio Purchased by the
Purchaser as contemplated by this Agreement 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 Note Purchase 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 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 for amendments, extensions or modifications to such Sale
Portfolio otherwise permitted under Section 6.04(a) of the Note Purchase
Agreement and in accordance with the Credit Policy and the Servicing Standard.

 

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(ee)                            Full Payment.  As of the related 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 or indirectly, 100% of the membership interests of the Purchaser,
free and clear of any Lien (other than liens pursuant to the Pledge Agreement). 
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 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 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 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 as previously
disclosed to the Agent as such).

 

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(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 and correct in all material respects.

 

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

 

(mm)                      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 Agent,
the Note Purchaser and the Trustee 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) and the grant of a first priority perfected security interest
in, to and under the Sale Portfolio pursuant to the Note Purchase 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 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 Note Purchase Agreement. As of each Purchase
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 Second Tier 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 financing
statements shall be a first priority perfected security interest in all Sale
Portfolio, 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 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 Loan Assets.  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 Sale Portfolio and the amounts
owing thereunder is true and correct as of the related Cut–Off Date, (ii) each
item of the Sale

 

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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.

 

(c)                                  No Fraud.  Each Eligible Loan Asset was
originated 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 Note Purchase Agreement by the
Purchaser and (z) the termination of this Agreement, the First Tier Purchase and
Sale Agreement and the Note Purchase 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 Agent immediately upon obtaining knowledge of
such breach.

 

Section 4.3.                                   Representations and Warranties of
the Purchaser.  The Purchaser makes the following representations and
warranties, on which the Seller relies in selling Sale Portfolio to the
Purchaser hereunder.  Such representations are made as of the execution and
delivery of this Agreement, but shall survive until the Collection Date, the
Sale of Sale Portfolio hereunder, and the grant of a security interest in such
Sale Portfolio by the Purchaser to the Trustee, on behalf of the Secured
Parties, under the Note Purchase Agreement.

 

(a)                                  Organization and Good Standing.  The
Purchaser has been duly organized and is validly existing and in good standing
as a limited liability company under the laws of the State of Delaware or such
other jurisdiction as permitted under the terms of the Transaction Documents,
with the power and authority to own or lease its properties and to conduct its
business as such properties are currently owned and such business is currently
conducted, and had at all relevant times, and has, all necessary power,
authority and legal right to acquire and own the Sale Portfolio.

 

(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 all necessary power, authority and
legal right to execute and deliver this Agreement and to carry out the terms
hereof and to acquire the Sale Portfolio; and the execution, delivery and
performance of this Agreement and all of the documents required pursuant hereto
have been duly authorized by the Purchaser by all necessary limited liability
company action.

 

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(d)                                 No Consent Required.  The Purchaser is not
required to obtain the consent of any other Person, or any consent, license,
approval or authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement, each Second Tier Loan Assignment and the
Transaction Documents to which it is a party, except for such as have been
obtained, effected or made.

 

(e)                                  Binding Obligation.  This Agreement
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, subject, as to
enforceability, to applicable Bankruptcy Laws and general principles of equity.

 

(f)                                    No Violation.  The consummation of the
transactions contemplated by this Agreement, each Second Tier Loan Assignment
and the other Transaction Documents to which it 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, or (iii) violate any
Applicable Law.

 

(g)                                 Value Given.  The Purchaser has given
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 Seller and no such transfer is or may be voidable or
subject to avoidance under any section of the Bankruptcy Code.

 

(h)                                 No Proceedings.  No litigation or
administrative proceeding of or before any court, tribunal or governmental body
is presently pending or, to the knowledge of the Purchaser, threatened against
the Purchaser or any properties of the Purchaser or with respect to this
Agreement, any Second Tier Loan Assignment or any other Transaction Document to
which the Purchaser is a party, which, if adversely determined, could have a
material adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement, any Second Tier Loan Assignment or any
Transaction Document to which the Purchaser is a party or any of the other
applicable documents forming part of the Sale Portfolio.

 

(i)                                     Sale Agreement.  This Agreement and the
Second Tier Loan Assignments 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 Sale Portfolio contravenes any Applicable Law.

 

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

 

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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-1 financing statements, naming the
Seller as “Debtor/Seller”, naming the Purchaser as “Secured Party/Buyer”, and
naming the Trustee, 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 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 Trustee for the benefit of the
Secured Parties under the Note Purchase 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 Trustee, the Collateral Custodian, the Servicer, the Note Purchaser and the
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 Trustee or the 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 Trustee,
the 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 (subject to
Section 10.20) 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 Trustee, 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
Trustee’s first 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

 

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payments to be made to the Seller or the Servicer or payments to be made to the
Collection Account, unless the Purchaser and the Agent have consented to such
change.  The Seller shall ensure that only funds constituting payments and
collections relating to Sale Portfolio 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 and Principal
Collections 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 Trustee or the
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 Trustee or the 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 financing statement referred to in Section 3.1 or any
other 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 financing statement; and

 

(ii)                                  deliver or cause to be delivered to the
Purchaser, the Trustee and the Agent an opinion of the counsel for Seller, in
form and substance reasonably satisfactory to the Purchaser, the Trustee and the
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.

 

(f)                                    The Seller shall not change the
jurisdiction of its formation, make any change to its corporate name or use any
tradenames, fictitious names, assumed names, “doing business as” names or other
names unless, prior to the effective date of any such change in the jurisdiction
of its formation, name change or use, the Seller receives prior written consent
from the Agent of such change and delivers to the Purchaser and the Agent such
financing statements as the Agent may request to reflect such name change or
use, together with such Opinions of Counsel and other documents and instruments
as the Agent may request in connection therewith.  The Seller will not change
the location of its chief executive office unless prior to the effective date of
any such change of location, the Seller notifies the Purchaser and the Agent of
such change of location in writing. The Seller will not move, or consent to the
Collateral Custodian or the Servicer moving, the Required Loan Documents and
Loan Asset Files from the location

 

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required under the Transaction Documents, unless 30 days prior to the effective
date of any such move, the Seller notifies the Purchaser and the Agent of such
move in writing.

 

(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 mark its master data
processing 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 Trustee for the benefit of the Secured
Parties under the Note Purchase Agreement, the Seller’s master data processing
records (including archives) that refer to such Sale Portfolio shall indicate
clearly that such Sale Portfolio has been Purchased by the Purchaser hereunder
and Pledged by the Purchaser to the Trustee, on behalf of the Secured Parties,
under the Note Purchase Agreement.  Indication of the Trustee’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) purchased
or substituted by the Seller in accordance with Section 6.1 or 6.2 hereof or
(iii) released by the Trustee pursuant to Section 2.16 of the Note Purchase
Agreement.

 

(i)                                     If the Seller fails to perform any of
its obligations hereunder, the Purchaser, the Trustee or the Agent may (but
shall not be required to) perform, or cause performance of, such obligation; and
the Purchaser’s, the Trustee’s or the 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 the Purchaser, the Trustee or the Agent at any
time and from time to time at the Purchaser’s, the Trustee’s or the Agent’s sole
discretion and appoints the Purchaser, the Trustee and the Agent as its
attorney—in—fact pursuant to a Power of Attorney substantially in the form of
Exhibit C to act on behalf of the Seller (i) to file financing statements on
behalf of the Seller, as debtor, necessary or desirable in the Purchaser’s, the
Trustee’s or the Agent’s sole discretion to perfect and to maintain the
perfection and priority of the interest of the Purchaser or the Trustee in the
Sale Portfolio and (ii) to file a carbon, photographic or other reproduction of
this Agreement or any financing statement with respect to the Sale Portfolio as
a financing statement in such offices as the Purchaser, the Trustee or the 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 Trustee in
the Sale Portfolio.  This appointment is coupled with an interest and is
irrevocable.

 

Section 5.2.                                   Affirmative Covenants of the
Seller.

 

From the date hereof 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 limited liability company existence,
rights, franchises and privileges in the jurisdiction of its formation, and
qualify and remain qualified in good standing as a limited

 

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liability company 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)                                  Performance and Compliance with Sale
Portfolio.  The Seller will, at its expense, timely and fully perform and comply
in all material respects with all provisions, covenants and other promises
required to be observed by it under the Sale Portfolio and all other agreements
related to such 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 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 or any portion of the Sale
Portfolio.

 

(e)                                  Separate Identity.  The Seller acknowledges
that the Agent, the Trustee, the Note Purchaser and the other Secured Parties
are entering into the transactions contemplated by this Agreement, the Note
Purchase 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 (other than the Guarantor).  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 Agent,
the Trustee, the Note Purchaser and 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 (other
than the Guarantor) 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 the Guarantor)(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:

 

(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 Note Purchase 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 (other than the Guarantor);

 

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(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; and

 

(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.

 

(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 Trustee, the Agent and the Note
Purchaser, 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.

 

(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 Trustee, the Agent and the Note Purchaser:

 

(i)                                     Income Tax Liability.  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 Ares or any “affiliated group”
(within the meaning of Section 1504(a)(l) of the Code) of which Ares is a member
in an amount equal to or greater than $10,000,000 in the aggregate, or (ii) to
the

 

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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)                                  Auditors’ Management Letters.  Promptly
after the receipt thereof, any auditors’ management letters that are received by
the Seller or by its accountants;

 

(iii)                               Representations and Covenants.  The Seller
shall promptly, upon receipt of notice or discovery thereof, notify the
Purchaser, the Trustee, the Agent and the Note Purchaser (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 Trustee, the Agent and the Note Purchaser 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 Trustee, the Agent and the Note Purchaser 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)                              ERISA.  Promptly after receiving notice of any
“reportable event” (as defined in Title IV of ERISA, other than an event for
which the reporting requirements have been waived by regulations) with respect
to the Seller (or any Affiliate thereof), a copy of such notice;

 

(v)                                 Proceedings. 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
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 Trustee’s,
for the benefit of the Secured Parties, interest in the Sale Portfolio, or the
Purchaser, the Servicer, the Seller or the Transferor or any of their
Affiliates. For purposes of this Section 5.2(j), (i) any settlement, judgment,
labor controversy, litigation, action, suit or proceeding affecting the Sale
Portfolio, the Transaction Documents, the Trustee’s, for the benefit of the
Secured Parties, interest in the Sale Portfolio, or the Purchaser or the Seller
in excess of $1,000,000 shall be deemed to be material and (ii) any settlement,
judgment, labor controversy, litigation, action, suit or proceeding affecting
the Servicer or the Transferor or any of their Affiliates (other than the
Purchaser or the Seller) in excess of $5,000,000 shall be deemed to be material;

 

(vi)                              Material Events.  Promptly upon becoming aware
thereof, of any event or other circumstance that is reasonably likely to have a
Material Adverse Effect;

 

(vii)                           Events of Default.  The Seller will provide the
Purchaser, the Agent, the Trustee and the Note Purchaser with immediate written
notice of the

 

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occurrence of each Event of Default and each Unmatured Event of Default of which
the Seller has knowledge or has received notice.  In addition, no later than two
Business Days following the Seller’s knowledge or notice of the occurrence of
any Event of Default or Unmatured Event of Default, the Seller will provide to
the Purchaser, the Trustee, the Agent and the Note Purchaser 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; and

 

(viii)                        Seller Termination Event and Seller Purchase
Event. The Seller will provide the Purchaser, the Agent, the Trustee and the
Note Purchaser with immediate 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.

 

(k)                                  Other.  The Seller will furnish to the
Purchaser, the Trustee, the Agent and the Note Purchaser promptly, from time to
time such other information, documents, records or reports respecting the Sale
Portfolio or the condition or operations, financial or otherwise, of the Seller
as the Purchaser, the Trustee, the Agent and the Note Purchaser may from time to
time reasonably request in order to protect the interests of the Purchaser, the
Agent, the Trustee, the Note Purchaser 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)                               Annual Certificates.  On each anniversary of
the Closing Date, the Seller shall deliver an Officer’s Certificate, in form and
substance acceptable to the Purchaser and the Agent, providing (i) a
certification, based upon a review and summary of UCC search results reasonably
satisfactory to the Purchaser and the Agent, that there is no other interest in
the Sale Portfolio perfected by filing of a UCC financing statement other than
in favor of the Purchaser and the Trustee 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 Agent,
that there is no other interest in the Sale Portfolio based on any tax or
judgment lien.

 

(n)                                 Opinion.  The Seller will comply in all
material respects with any requirements for future action set forth in the
section heading “Assumptions” in the Non-Consolidation/True Sale Opinion, with
respect to the Transaction Documents.

 

Section 5.3.                                   Negative Covenants of the Seller.

 

From the date hereof until the Collection Date:

 

(a)                                  Other Business. Seller will not (i) engage
in any business other than the transactions contemplated by the Transaction
Documents, (ii) incur any Indebtedness, obligation, liability or contingent
obligation of any kind other than pursuant to the Transaction Documents, or
(iii) form any Subsidiary or make any investments in any other Person (other
than the Purchaser and the Sale Portfolio).

 

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(b)                                 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.

 

(c)                                  Security Interests.  Except as otherwise
permitted herein and in the Note Purchase 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, 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 Trustee, the Note Purchaser and the 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 Trustee, on behalf 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(c) shall prevent or be
deemed to prohibit the Seller from suffering to exist Permitted Liens upon any
of the Sale Portfolio.

 

(d)                                 Mergers, Acquisitions, Sales, Etc. The
Seller shall not change its organizational structure, enter into any transaction
of merger or consolidation or amalgamation, or asset sale (other than pursuant
to Section 2.07 of the Note Purchase Agreement), or liquidate, wind up or
dissolve itself (or suffer any liquidation, winding up or dissolution) without
the prior written consent of the Agent.

 

(e)                                  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 Agent and the delivery of an acceptable (in the Agent’s
reasonable discretion) non-consolidation opinion (except pursuant to the terms
of the Pledge Agreement).

 

(f)                                    Restricted Payments.  The Seller shall
not cause or permit the Purchaser to make any Purchaser Restricted Junior
Payment, except that, so long as no Event of Default has occurred or would
result therefrom and no 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.

 

(g)                                 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.

 

(h)                                 ERISA Matters.  The Seller will not
(a) engage, and will exercise its best efforts not to permit any ERISA Affiliate
to engage, in any prohibited transaction (within the meaning of ERISA
Section 406(a) or (b) or Code Section 4975) 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
Benefit Plan other than a Multiemployer Plan, (c) fail to make any payments to a
Multiemployer Plan that the Seller or any ERISA Affiliate may be

 

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required to make under the agreement relating to such Multiemployer Plan or any
law pertaining thereto, (d) terminate any Benefit 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 described in Title IV of ERISA with respect
to any Pension Plan other than an event for which the reporting requirements
have been waived by regulations.

 

(i)                                     Extension or Amendment of Sale
Portfolio.  The Seller will not, except as otherwise permitted in
Section 6.04(a) of the Note Purchase Agreement, extend, amend or otherwise
modify, or permit the Servicer to extend, amend or otherwise modify, the terms
of any Sale Portfolio.

 

(j)                                     Credit Policy.  The Seller will not
agree to or otherwise permit to occur any change in the Credit Policy that could
have a Material Adverse Effect without the prior written consent of the Agent;
provided that no consent shall be required from the Agent in connection with any
change mandated by Applicable Law or a Governmental Authority as evidenced by an
Opinion of Counsel to that effect delivered to the Agent.

 

(k)                                  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 (j) shall not prohibit the Seller from contributing Loan Assets to
the Purchaser as contemplated herein.

 

(l)                                     Organizational Documents.  The Seller
will not cause or permit the Purchaser to amend, modify, waive or terminate any
provision of the Purchaser’s operating agreement without the prior written
consent of the Agent.

 

(m)                               Tax Treatment.  The Seller shall not elect to
be treated as a corporation for U.S. federal income tax purposes and shall take
all reasonable steps necessary to avoid being treated as a corporation for U. S.
federal income tax purposes.

 

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, provided that the excess if any of the Repurchase Price of such Loan
Asset over the amount equal to the Advance Date Assigned Value of such Loan
Asset multiplied by the principal balance of such Loan Asset (exclusive of
Accreted Interest) as of the date of repurchase shall be paid to the Purchaser
as otherwise directed by the Purchaser) the Repurchase Price of such Loan Asset
as of the date of the purchase thereof from the Purchaser or (ii) subject to the
satisfaction of the conditions in 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

 

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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
(and shall request the Trustee to), at the sole expense of the Seller,  take
such steps as may be reasonably requested by the Seller in order to Sell to the
Seller all of the Purchaser’s and the Trustee’s right, title and interest in and
to such Loan Asset, 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 Trustee.  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 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 Agent (with a copy to the Trustee 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 the Seller may effect a Substitution as necessary to facilitate a
cure of a Borrowing Base Deficiency (and any Unmatured Event of Default arising
therefrom) so long as the Agent shall approve of such sale and 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;

 

(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 Outstanding Balances of such Substitute Eligible Loan Assets shall be
equal or greater than the sum of the Advance Date Assigned Value of the Replaced
Loan Assets multiplied by the principal balance thereof (exclusive of Accreted
Interest);

 

(v)                                 all representations and warranties contained
in Sections 4.1 and 4.2 shall be true 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);

 

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(vi)                              no selection procedures adverse to the
interests of the Purchaser, the Agent, the Note Purchaser 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;

 

(vii)                           the Outstanding Balance of all Loan Assets
subject to clauses (ii), (iv) or (vi) of the definition of “Value Adjustment
Event” which were dividended from the Purchaser to the Seller in accordance with
Section 2.07(d) of the Note Purchase Agreement or substituted pursuant to this
Section 6.2, in each case during the 12-month period immediately preceding the
proposed date of such Substitution does not exceed 10% of the highest aggregate
Outstanding Balance of any month during such 12-month period (or such lesser
number of months as shall have elapsed as of such date);

 

(viii)                        the Outstanding Balance of all Loan Assets (other
than Warranty Loan Assets), sold pursuant to Section 2.07(b) of the Note
Purchase Agreement, sold without the consent of the Agent in accordance with
Section 2.07(c) of the Note Purchase Agreement (in each case, other than Loan
Assets subject to clauses (ii), (iv) or (vi) of the definition of “Value
Adjustment Event”), substituted pursuant to this Section 6.2 or dividended from
the Purchaser to the Seller in accordance with Section 2.07(d) of the Note
Purchase Agreement during the 12-month period immediately preceding the proposed
date of Substitution does not exceed 20% of the highest aggregate Outstanding
Balance of any month during such 12-month period (or such lesser number of
months as shall have elapsed as of such date);;

 

(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; and

 

(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.

 

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 only from the Purchaser 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 Trustee, the Agent, the Note Purchaser 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 Trustee, the Agent, the Note
Purchaser 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

 

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Purchaser’s, the Trustee’s, the Agent’s and the Note Purchaser’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, pursuant to the Second Tier Purchase and Sale
Agreement or the Note Purchase 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.

 

Section 7.2.                                   Notice to Trustee, Agent and Note
Purchaser.

 

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 Trustee, the Agent and the Note Purchaser.

 

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 Trustee or the 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);
provided that no such failure shall constitute a Seller

 

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Termination Event under this paragraph (ii) unless 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
Agent, the Trustee or the Purchaser and (ii) the date on which 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 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 Agent, the Servicer, the Trustee 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, 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 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 Note Purchase Agreement or (B) the Facility
Maturity Date; or

 

(vi)                              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 

 

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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 Agent proof of release of such
Lien; or

 

(vii)                           any Lien in an amount equal to or greater than
$1,000,000 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

 

(viii)                        a Federal tax notice of Lien, in an amount equal
to or greater than $1,000,000, shall have been filed against the Seller unless
there shall have been delivered to the 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) or (viii) above, the obligation of the Purchaser to
Purchase Sale Portfolio from the Seller shall thereupon automatically terminate
without further notice of any kind, which 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 Agent may terminate
its 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 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 Trustee or the 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 Trustee or the Agent forthwith, assemble all or any part of the
Sale Portfolio as directed by the Purchaser, the Trustee or

 

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the Agent and make the same available at a place to be designated by the
Purchaser, the Trustee or the 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 Trustee’s, the Purchaser’s or the Agent’s offices
or elsewhere, for cash, or credit or for future delivery, and upon such other
terms as the Purchaser, the Trustee or the 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 Trustee or the Agent
shall not be obligated to make any sale of Sale Portfolio regardless of notice
of sale having been given.  The Purchaser, the Trustee or the 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.

 

ARTICLE IX.

INDEMNIFICATION.

 

Section 9.1.                                   Indemnification by the Seller.

 

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,

 

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damages, claims, and liabilities, including 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, (a) any such amounts
resulting solely from any gross negligence, bad faith or willful misconduct on
the part of the applicable Indemnified Party or (b) Loan Assets that are
uncollectible due to the Obligor’s financial inability to pay. 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 (a) or (b) above):

 

(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 Trustee, the Collateral Custodian, the Bank, the Servicer, the
Note Purchaser or the 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 Trustee, the Collateral Custodian,  the Bank, the
Servicer, the Note Purchaser and the Agent harmless, on an after-tax basis, from
and against any and all such Transfer Taxes (it being understood that the
Purchaser, the Trustee, the Collateral Custodian, the Bank, the Servicer, the
Note Purchaser and the Agent shall have no contractual obligation to pay such
Transfer Taxes);

 

(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 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 under any Sale
Portfolio;

 

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(vii)                           the failure of any Sale Portfolio to comply with
all requirements of 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
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;

 

(x)                                   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,
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 the Obligor) of the Obligor to the payment
with respect to any Sale Portfolio (including, without limitation, a defense
based on the Sale Portfolio not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms);

 

(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 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;

 

(xvi)                         any claim, suit or action of any kind arising out
of or in connection with Environmental Laws including any vicarious liability;

 

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

 

(xviii)                   any investigation, litigation or proceeding related to
this Agreement or the use of proceeds by the Seller or the security interest in
the Sale Portfolio granted hereunder;

 

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(xix)                           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; or

 

(xx)                              the failure of the Seller or any of its agents
or representatives to remit to the Purchaser Interest Collections and Principal
Collections on the Sale Portfolio remitted to the Seller or any such agent or
representative as provided in this Agreement.

 

(A)                          Any amounts subject to the indemnification
provisions of this Section 9.1 shall be paid by the Seller to the Indemnified
Party within five Business Days following such Person’s demand therefor.

 

(B)                            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, then the Seller shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage or liability 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 as the case may be, on the other hand but also the
relative fault of such Indemnified Party as well as any other relevant equitable
considerations.

 

(C)                            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.

 

(D)                           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 Note Purchase Agreement, the
Purchaser shall assign its rights of indemnity hereunder to the Trustee, on
behalf of the Secured Parties.  Upon such assignment, (a) the Trustee, on behalf
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
Section 9.2 shall inure to the Trustee, on behalf of the Secured Parties.  The
Seller agrees that, upon such assignment, the Trustee, on behalf of the Secured
Parties, may enforce directly, without joinder of the Purchaser, the indemnities
set forth in this Article IX.

 

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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.  Except with
respect to any claim arising solely out of the willful misconduct or gross
negligence of the Note Purchaser, the Trustee, the Agent or any other Secured
Party, no claim may be made by the Seller or any other Person against the Note
Purchaser, the Trustee, the 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 Agent and the Trustee. The
Purchaser shall provide not less than ten Business Days’ prior written notice of
any such amendment to the Agent, the Trustee and the Note Purchaser.

 

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 or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other or future exercise thereof or the
exercise of any other power, right or remedy. The powers, rights and remedies
herein provided are cumulative and not exhaustive of any powers, rights 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 on the signature
pages hereto or at such other address as shall be designated by such party in a
written notice to the other parties hereto.  Notices and communications by
facsimile and e-mail shall be effective when sent (and shall be followed by hard
copy sent by regular mail), 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 Note Purchase
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 Note
Purchase Agreement

 

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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 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.

 

(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 Section 9.1 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

 

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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 the
enforcement of this Agreement 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 income taxes)
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.

 

(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.

 

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 and one day (or such
longer preference period as shall then be in effect) since the Collection Date.
The Seller hereby acknowledges that (i) the Purchaser has no assets other than
the Sale Portfolio, (ii) the Purchaser shall, immediately upon Purchase
hereunder, grant a security interest in the Sale Portfolio to the Trustee, on
behalf of the Secured Parties, pursuant to the Note Purchase Agreement, and
(iii) Available Collections generated by the Sale Portfolio will be applied to
payment of the Purchaser’s obligations under the Note Purchase 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.

 

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, the First Tier Purchase and
Sale Agreement or the Note Purchase Agreement. 

 

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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
Trustee, 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 Trustee, for the benefit of the
Secured Parties, under the Note Purchase Agreement and the Trustee, in such
capacity, shall be a third party beneficiary hereof.  The Trustee, for the
benefit of the Secured Parties, under the Note Purchase 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.

 

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 Agent, the Note Purchaser, the Trustee, 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.  The Purchaser and
its representatives and assigns may conduct at any reasonable time, with
reasonable notice, and from time to time, and the Seller will fully cooperate
with, a reasonable number of field examinations and audits of the inventory, the
Loan Assets and business affairs of the Seller each calendar year.  Each such
inspection shall be at the sole expense of the Seller.  The Purchaser and its
representatives and successors and assigns acknowledge that in exercising the
rights and privileges conferred in this Section 10.16, it or its 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 its representatives and
successors and assigns agree that (i) they shall retain in strict confidence and
shall use their best efforts to ensure that their 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 their best
efforts to ensure that their 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.

 

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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 Note Purchase 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 Note Purchaser, the Trustee, the Collateral Custodian,
the Agent or any other Secured Party under the Note Purchase 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
Note Purchase Agreement,  “Event of Default” under the Note Purchase 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 Note Purchase Agreement.

 

Section 10.20.                       Assignments of Loan Assets.

 

(a)                                   Notwithstanding anything to the contrary
herein, solely for administrative convenience and solely in the case of Third
Party Acquired Loan Assets, (i) for purposes of clause (a)(i) of the definition
of “Required Loan Documents” in the Note Purchase Agreement, the chain of
endorsements required therein by the third party to the Transferor, the
Transferor to the Seller and the Seller to the Purchaser may be satisfied by a
direct endorsement from the applicable third party to the Purchaser or
(ii) delivery of the transfer documents or instruments required by clause
(a)(ii) of the definition of “Required Loan Documents” may be satisfied by
delivery of transfer documents or instruments evidencing the assignment of such
Loan Asset by the applicable third party directly to the Purchaser (and by the
Purchaser either to the Trustee or in blank).

 

(b)                                  Nothing in this Section 10.20 shall limit
any requirement that all Loan Assets treated as or represented to be Eligible
Loan Assets hereunder or in any Transaction Document be purchased by the
Purchaser from the Seller pursuant to this Agreement and by the Seller from the
Transferor pursuant to the First Tier Purchase and Sale Agreement (as evidenced
by the Assignments applicable to each Purchase and Sale Agreement) or any
representations or warranties with respect to Loan Assets so purchased or the
liabilities or recourse of the Seller or Purchaser, as applicable, pertaining to
such sales.

 

[Signature pages to follow.]

 

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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 CP FUNDING II LLC, as the Purchaser

 

 

 

 

 

 

 

 

 

 

By:

/s/ Richard S. Davis

 

 

 

Name:

Richard S. Davis

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

Ares Capital CP Funding II LLC

 

 

2000 Avenue of the Stars, 12th Floor

 

 

Los Angeles, California 90067

 

 

Attention: General Counsel and Chief Financial Officer

 

 

Facsimile No.: (310) 201-4197

 

 

Confirmation No.: (310) 201-4205

 

 

 

 

 

and

 

 

 

 

 

Ares Capital CP Funding II LLC

 

 

280 Park Avenue, 22nd Floor East

 

 

New York, New York 10017

 

 

Attention: General Counsel and Chief Financial Officer

 

 

Facsimile No.: (212) 750-1777

 

 

Confirmation No.: (212) 750-7300

 

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ARES CAPITAL CP FUNDING HOLDINGS II LLC, as the Seller

 

 

 

 

 

 

 

 

 

 

By:

/s/ Richard S. Davis

 

 

 

Name:

Richard S. Davis

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

Ares Capital CP Funding Holdings II LLC

 

 

2000 Avenue of the Stars, 12th Floor

 

 

Los Angeles, California 90067

 

 

Attention: General Counsel and Chief Financial Officer

 

 

Facsimile No.: (310) 201-4197

 

 

Confirmation No.: (310) 201-4205

 

 

 

 

 

and

 

 

 

 

 

Ares Capital CP Funding Holdings II LLC

 

 

280 Park Avenue, 22nd Floor East

 

 

New York, New York 10017

 

 

Attention: General Counsel and Chief Financial Officer

 

 

Facsimile No.: (212) 750-1777

 

 

Confirmation No.: (212) 750-7300

 

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