Exhibit 10.4
SALE AND PARTICIPATION AGREEMENT
This Sale Agreement, dated as of June 27, 2014 (this “Agreement”), is among
American Capital, Ltd. (the “Assignor”) and ACAS Funding I, LLC (the “Assignee”)
(each a “Party” and together the “Parties”).
The Assignor wishes to sell, contribute, transfer and assign to the Assignee,
and the Assignee wishes to acquire and assume from the Assignor, all or a
portion of the Assignor’s right, title and interest in and to each loan
(collectively, the “Collateral Assets”), as set forth on Schedule I hereto from
time to time.
The Assignee is party to that certain Credit Agreement dated as of the date
hereof, among the Assignee, Bank of America, N.A., as administrative agent (in
such capacity, together with its successors and assigns, the “Administrative
Agent”), and the lenders from time to time party thereto (as amended,
supplemented, restated, amended and restated or otherwise modified from time to
time, the “Credit Agreement”). Capitalized terms used herein but not otherwise
defined shall have the meanings given to such terms in the Credit Agreement.
In consideration of the mutual covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the Parties, the Parties hereby agree as follows:

1.Sale and Contribution of the Assigned Interests.
(a)    In the case of each Collateral Asset added to Schedule I pursuant to
Section 1(d), the Assignor hereby absolutely and irrevocably sells, contributes,
transfers, assigns, sets over and otherwise conveys to the Assignee, and the
Assignee hereby accepts, acquires and assumes from the Assignor, as a
contribution of assets to the Assignee, all or a portion of the Assignor’s
present and future right, title and interest (such right, title and interest of
the Assignor is hereinafter referred to as the “Assigned Interests”):
(i)
each Collateral Asset; and

(ii)
to the extent related thereto,

(A)    the relevant credit documents, promissory notes, guarantees and other
supporting obligations, security agreements and any other agreement, document or
instrument pursuant to which the Assignor originated or acquired any Collateral
Asset or any rights or assets related thereto, as well as any intercreditor,
subordination, participation or assignment agreements or any similar agreements
related thereto (collectively, the “Credit Documents”);
(B)    all security interests, liens, guaranties, warranties, letters of credit,
accounts, securities accounts, deposit accounts or other bank accounts,
mortgages or other encumbrances and property subject thereto from time to time
purporting to secure payment of the Collateral Assets together with all UCC
financing statements or similar filings relating thereto;

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(C)    any and all claims (including “claims” as defined in paragraph 101(5) of
the Bankruptcy Code of the United States), suits, rights or causes of action the
Assignor now has or hereafter acquires against any person or entity (including,
without limitation, any attorney, accountant, broker or investment banker),
whether known or unknown, against the related obligors under the Collateral
Assets, or any of their respective Affiliates, agents, representatives,
contractors, advisors or any other Person that in any way is based upon, arises
out of or is related to any of the foregoing, including, to the extent permitted
to be assigned under law, all claims (including contract claims, tort claims,
malpractice claims and claims under any law governing the purchase and sale of,
or indentures for, securities), suits, causes of action and any other right of
the Assignor (whether individual or collective);

(D)    any property, whether real or personal, tangible or intangible, of
whatever kind and wherever located, whether or not owned or hereafter acquired
or created, in which a mortgage, security interest or other lien has been, or
has purported to have been, granted to or for the benefit of the relevant
lenders (as such term is defined under the relevant Credit Documents, “Lenders”
or a “Lender”), as the case may be, under or in connection with the Credit
Documents; and

(E)    all (or the relevant portion of any) payments, setoffs and recoupments,
received or effected by or for the account of the Assignor under the Collateral
Assets (whether for principal, interest, fees, reimbursement obligations or
otherwise) after the related settlement date, including all distributions
obtained by or through redemption consummation of a plan of reorganization,
restructuring, liquidation, or otherwise of any related obligor or the related
Credit Documents, and all cash, securities, interest, dividends, and other
property that may be exchanged for, or distributed or collected with respect to,
any of the foregoing, including unpaid payments of principal and all (or the
relevant portion of) accrued but unpaid interest, fees and other sums and all
(or the relevant portion of) such amounts accruing on and after the relevant
Purchase Date, in each case with respect to each Collateral Asset.

(b)    The failure of the Assignor and the Assignee to effect the assignment of
any Collateral Asset as of the Purchase Date pursuant to the applicable
underlying instruments shall not limit or otherwise affect the validity and
enforceability of the sale to the Assignee of the Collateral Assets included in
the Assigned Interests.
(c)    The purchase price (the “Purchase Price”) for each Assigned Interest
(and, pending the effectiveness of the assignment, the related Participation)
sold to the Assignee by Assignor under this Agreement shall be an amount equal
to the fair market value thereof, determined either (i) by reference to third
party pricing sources as of the applicable Trade Date or, if the Trade Date is
the same as the Purchase Date, the Purchase Date (or, if not available as of
such date, as of the most recent date for which prices from such third party
pricing sources are available), in each case, as agreed to by the Assignee and
the Assignor (save that in relation to the initial Purchase Date hereunder the
Purchase Price for any Collateral Asset shall be the price set forth on Schedule
I hereto (as updated from time to time)) or (ii) by the actual accreted cost of
such Assigned Interest on the books and records of the Assignee (as notified to
the Administrative Agent) if the

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Administrative Agent reasonably agrees that such accreted cost is approximately
the same as the fair market value thereof. The aggregate Purchase Price for each
Assigned Interest (and, pending the effectiveness of the assignment, the related
Participation) sold by any Assignor to the Assignee shall be paid in cash to the
Assignor by wire transfer to an account designated by the Assignor, from time to
time, on the Purchase Date for such Assigned Interest. If the Assignee does not
have sufficient funds to pay the full amount of such Purchase Price in cash, the
Assignor may elect in connection with such Purchase Date to have such Purchase
Price (or portion thereof) paid by means of a capital contribution by the
Assignor to the Assignee.
(d)    With respect to each Collateral Asset sold hereunder, (i) if the Assignor
and the Assignee have executed and delivered a trade confirmation or other
similar binding agreement of sale by the Assignor to the Assignee customary for
transactions of this type prior to the related Purchase Date (the date on which
the agreement for sale of such Collateral Asset was entered into, each, a “Trade
Date”), the Assignee shall deliver a copy of such trade confirmation or
agreement as required under the Credit Agreement and (ii) the Assignor and the
Assignee shall have executed and delivered to the applicable administrative
agent for such Collateral Asset on or prior to the settlement date for the sale
of such Collateral Asset (each, a “Purchase Date”) a written assignment, in the
form required under the underlying instrument, and shall have requested all
applicable consents to such assignment and delivered a copy thereof to the
Administrative Agent. From and after each Purchase Date, the applicable section
of Schedule I hereto shall be amended by the Assignor and the Assignee to
include the new Collateral Asset or Collateral Assets acquired on such Purchase
Date, and such Collateral Asset or Collateral Assets shall constitute part of
the Assigned Interests hereunder.
(e)    It is the express intention of the Parties that the conveyance of the
Assigned Interests from the Assignor to the Assignee as a sale and contribution
of assets to the Assignee as provided herein shall constitute an absolute and
irrevocable transfer conveying good title, free and clear of any lien and that
the Assigned Interests shall not be part of the bankruptcy estate of the
Assignor under Section 541 of the U.S. Bankruptcy Code or subject to the
automatic stay under Section 362 of the U.S. Bankruptcy Code in the event of the
filing of a bankruptcy petition by or against the Assignor under the U.S.
Bankruptcy Code or any other bankruptcy or similar law. It is not the intention
of the Parties that the contribution and conveyance of the Assigned Interests be
deemed a pledge of such Assigned Interests by the Assignor to the Assignee or
any assignee of the Assignee to secure a debt or other obligation of the
Assignor. The Parties agree that, upon execution of this Agreement and the
contribution and conveyance of the Assigned Interests by the Assignor to the
Assignee, the Assigned Interests are not intended to and will not be part of the
Assignor’s estate in the event of a filing of a bankruptcy petition or other
action by or against the Assignor under the U.S. Bankruptcy Code or any other
applicable bankruptcy or insolvency statutes.
(f)    In no event shall such assignment from the Assignor to the Assignee be
intended to be a loan or the grant of a security interest to secure a borrowing.
In the event, however, that notwithstanding such express intent and agreement by
the Parties, the contribution, assignment and conveyance hereunder is determined
not to be an absolute transfer and true contribution of the Assigned Interests,
the Assignor hereby grants to the Assignee a perfected first priority security
interest in the Assigned Interests and all income from and proceeds thereof, and
(i) this Agreement

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shall be deemed to be a “security agreement” within the meaning of Article 9 of
the UCC; (ii) the transfer of such Assigned Interests provided for in this
Agreement shall be deemed to be a grant by the Assignor to the Assignee of a
first priority security interest in all of the Assignor’s right, title and
interest in and to such Assigned Interests to secure all obligations of the
Assignor hereunder; (iii) the possession by the Assignee (or the Collateral
Administrator, for the benefit of the Assignee and the Lenders) of Assigned
Interests and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be, subject to clause (iv), deemed
to be possession 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 Assignee for the purpose of perfecting such security interest under
applicable law. The Assignee shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Assigned Interests,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of this Agreement. If this Agreement were deemed to create a security
interest in the Assigned Interests, the Assignee 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.
(g)    The Assignor, by execution and delivery of this Agreement, authorizes the
Assignee to file Uniform Commercial Code (“UCC”) financing statements naming the
Assignor as debtor and the Assignee as secured party in each jurisdiction that
the Assignee deems necessary in order to protect its security interests in the
Assigned Interests, and in such manner and in such jurisdictions as are
necessary or advisable to evidence the sale of such Assigned Interests and to
perfect, and maintain the perfection of, the sale of such Assigned Interests
from the Assignor to the Assignee (or the Administrative Agent as assignee of
the Assignee) on and after the applicable Purchase Date. In connection with the
sale of any Assigned Interests, the Assignor hereby authorizes the Assignee (or
the Administrative Agent as assignee of the Assignee), and the Assignee (or the
Administrative Agent as assignee of the Assignee) agrees to record and file, at
its own expense, any financing statements and assignments of financing
statements (and continuation statements with respect to such financing
statements when applicable), as the case may be, with respect to such Assigned
Interests, meeting the requirements of applicable law.
(h)    As expressly stated herein, the Parties intend the transactions hereunder
to constitute a true sale or contribution of the Assigned Interests by the
Assignor to the Assignee, providing the Assignee with the full risks and
benefits of ownership of the Assigned Interests.
(i)    The Assignee shall be entitled to all payments of principal, interest,
fees and other sums relating to the Assigned Interests accruing or received on
or after the relevant Purchase Date. The Assignor shall hold in trust for the
Assignee, and shall promptly remit to the Assignee, any payments on the Assigned
Interests received by the Assignor that belong to the Assignee under the terms
of this Agreement. The Assignee shall hold in trust for the Assignor and shall
promptly remit to the Assignor, any payments received by the Assignee on the
Collateral Assets that are not Assigned Interests and that belong to the
Assignor.

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2.    Representations and Warranties and Covenants by the Assignor and the
Assignee.
The representations in this Section 2 are hereby made by the applicable Party to
the other Party on and as of each applicable Trade Date and each applicable
Purchase Date solely in respect of the sale or transfer of the related Assigned
Interests on such date.
(a)    Assignor Representations and Warranties. The Assignor (i) represents and
warrants to the Assignee, (A) the Assignor is the sole legal and beneficial
owner of the Assigned Interests being contributed, assigned and transferred by
it hereunder to the Assignee, (B) the Assignor has good and marketable title,
free and clear of any lien, security interest, charge or adverse claim (as
defined in Section 8-102 of the UCC), to the Assigned Interests, (C) the
Assignor has not conveyed any interest in the Assigned Interests to any other
person or entity, and (D) the Assignee shall acquire from the Assignor the
Assigned Interests and good and marketable title thereto, free and clear of any
lien, security interest or adverse claim (as defined in Section 8-102 of the
UCC); (ii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Credit Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created in
connection with, the Credit Documents or any other instrument or document
furnished pursuant thereto; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any obligor
in respect of any Collateral Asset or the performance or observance by such
obligor of any of its obligations under any Credit Document or any other
instrument or document furnished pursuant thereto; and (iv) represents and
warrants to the Assignee and its assignees that (A) the Assignor is not
insolvent and is not the subject of any insolvency, bankruptcy, reorganization,
arrangement or other similar proceedings or general assignment for the benefit
of its creditors, and (B) the sale, contribution, transfer and assignment of the
Assigned Interests contemplated by Section 1 of this Agreement has been treated
in all respects as a true sale or contribution and transfer of title and
economic interest on the financial statements, books and records of the
Assignor, and the Assigned Interests have been removed from, and are not shown
as an asset on, the financial statements, books and records of the Assignor
(except that the Assigned Interests may be included on the consolidated
financial statements of the Assignor). The Assignor further represents and
warrants that there is no litigation, proceeding or investigation pending or, to
the knowledge of the Assignor, threatened against the Assignor, before any
Governmental Authority (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement or (iii) seeking any determination or ruling that would
reasonably be expected to have a material adverse effect on the Assigned
Interests or the ability of the Assignor to perform its obligations under this
Agreement.
(b)    Assignee Representations and Warranties. The Assignee hereby confirms and
agrees that (i) it has received a copy of the Credit Documents, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Agreement; (ii) it will, independently
and without reliance upon the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under any Credit
Document;

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and (iii) it will perform in accordance with their terms all of the obligations
that by the terms of any Credit Document are required to be performed by it as a
Lender with respect to any Assigned Interests.
(c)    Organization. Each Party represents and warrants that it has been duly
incorporated or formed, and is validly existing as a corporation, limited
partnership, limited liability company or exempted company incorporated with
limited liability under the laws of the jurisdiction of its incorporation or
formation, as the case may be, with all requisite power and authority to own or
lease its properties and conduct its business as such business is presently
conducted, and had at all relevant times, and now has all corporate or limited
liability company power and authority to acquire, own and sell the Assigned
Interests.
(d)    Due Qualification and Good Standing. Each Party represents and warrants
that it is duly qualified to do business and is in good standing as a
corporation, limited partnership, limited liability company or exempted company
organized with limited liability, as the case may be, and has obtained all
necessary qualifications, licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business requires such
qualifications, licenses or approvals, except where the failure to receive such
qualifications licenses and approvals or be in good standing would not be
reasonably expected to result in a material adverse effect on the Assigned
Interests or the ability of the Assignor to perform its obligations under this
Agreement.
(e)    Power and Authority; Due Authorization; Execution and Delivery. Each
Party hereby represents and warrants to the other Party that it has full power
and authority to enter into this Agreement and to perform its obligations under
this Agreement in accordance with the provisions of this Agreement, that this
Agreement has been duly authorized, executed and delivered by such Party and
that this Agreement constitutes a legal, valid and binding obligation of such
Party, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, moratorium or other
similar laws affecting creditors’ rights generally and by general equitable
principles.
(f)    No Violation. Each Party represents and warrants to the other Party that
the execution, delivery and performance by it of this Agreement do not and will
not (a) violate any law or regulation of the jurisdiction of its organization or
any other law or regulation applicable to it in any material respect, (b)
constitute (with or without notice or lapse of time or both) a default under the
Assignor’s Organizational Documents or any material Contractual Obligation of
the Assignor, or (c) result in the creation or imposition of any lien upon any
of the Assignor’s properties pursuant to the terms of any material Contractual
Obligation, other than this Agreement or Permitted Liens.
(g)    Consents. Each Party represents and warrants to the other Party that all
consents, licenses, approvals, authorizations, exemptions, registrations,
filings, opinions and declarations from or with any agency, department,
administrative authority, statutory corporation, third party or judicial entity
necessary for the validity or enforceability of its obligations under this
Agreement have been obtained, and no governmental or third party authorizations
other than any already obtained are required in connection with its execution,
delivery and performance of this Agreement except those which would not be
reasonably expected to have a material adverse effect

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on the financial or operational conditions of the relevant Party, or the
enforceability of its obligations hereunder.
(h)    No Inconsistent Actions; Third Party Inquiries. The Assignor agrees that,
upon and after the contribution of the Assigned Interests to the Assignee in
accordance with the terms hereunder, (i) it will not take any action that is
inconsistent with the Assignee’s ownership of the Assigned Interests and (ii) if
a third party makes any inquiry regarding the Assigned Interests, it will
promptly indicate that the Assigned Interests have been contributed and
transferred to the Assignee.
(i)    Value Given. Each Party represents to the other Party that the Assignee
has given reasonably equivalent value as consideration for the transfer to the
Assignee of the Assigned Interests as contemplated by this Agreement, no such
transfer has been made for or on account of an antecedent debt owed by the
Assignor to the Assignee, and no such transfer is or may be voidable or subject
to avoidance as to the Assignor under any section of the U.S. Bankruptcy Code.
(j)    No Conditions or Restrictions. The Assignor represents that each Assigned
Interest is not subject to any condition to or restriction on the ability of the
holder thereof to sell, pledge, assign, or otherwise transfer such Assigned
Interest or to exercise or enforce the provisions thereof or of any document
related thereto whether set forth in such Assigned Interest itself or in any
document related thereto, other than borrower or agent consents on customary
terms (including without limitation that borrower consent may be unnecessary
when certain events of default exist under the related loan documents) and
disqualified lender lists.
(k)    Location of Offices. The Assignor represents that Assignor’s location
(within the meaning of Article 9 of the UCC) is set forth opposite the
Assignor’s name on Schedule II hereto, as may be supplemented from time to time.
The Assignor has not changed its name (whether by amendment of its certificate
of formation, by reorganization or otherwise) or its jurisdiction of
organization and has not changed its location for purposes of the UCC within the
four months preceding such Purchase Date.
(l)    Affiliates. The Assignor represents that prior to the sale by the
Assignor of any Assigned Interests hereunder (or the contribution of any loan,
bond or security by Assignor to the Assignee), if such loan, bond or security
was obtained by the Assignor from an Affiliate of the Assignor, such loan, bond
or security was obtained on an arm’s length basis and in compliance with any
applicable restrictions applicable to transactions between the Assignor and its
Affiliates under the Investment Company Act of 1940, as amended, or the rules
and regulations thereunder.
3.    Covenants of Assignor
From the date hereof until the earlier of the Maturity Date or the date the
Obligations are paid in full (other than unasserted contingent obligations that
survive the termination of the Credit Agreement), the Assignor hereby covenants
and agrees as follows:
(a)    Protection of Interest in Assigned Interests; Further Assurances. The
Assignor hereby authorizes the Assignee, and shall take reasonable efforts to
assist the Assignee,

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to (i) take all action necessary to perfect, protect and more fully evidence the
Assignee’s ownership of the Assigned Interests free and clear of any Lien other
than Permitted Liens or in favor of the Assignee, including, without limitation,
maintaining effective financing statements in all necessary or appropriate
filing offices (including any amendments thereto or assignments thereof), (ii)
execute or cause to be executed such other instruments, documents or notices as
may be necessary or appropriate to perfect, protect or more fully evidence the
purchase of the Assigned Interests hereunder, or to enable the Assignee or the
Investment Adviser, on behalf of the Assignee, to exercise and enforce their
rights and remedies in respect of any Assigned Interests, and (iii) take all
additional action that the Assignee may reasonably request to perfect, protect
and more fully evidence the Assignee’s ownership of the Assigned Interests.
(b)    Collections. If the Assignor receives any Collections, then it shall
receive such Collections in trust for the Assignee and deliver the same to or at
the direction of the Assignee promptly (but in no event later than two (2)
Business Days after receipt) in the same form as received with such endorsement
as requested by the Assignee. After the effectiveness of the assignment of any
related Participations, the Assignor shall not deposit any Collections into its
own accounts or otherwise commingle any Collections with its own assets. For
this purposes of this Agreement, “Collections” mean all funds and property
received on and after the related Purchase Date in respect of the Assigned
Interests sold hereunder, including (i) all proceeds received from the
disposition of any Assigned Interest (excluding the disposition of the Assigned
Interests hereunder) and (ii) all interest proceeds and principal proceeds in
respect of any Assigned Interest.
(c)    Separate Identity. The Assignor acknowledges that Administrative Agent
and the Lenders are entering into the transactions contemplated by this
Agreement, the Credit Agreement and the other Loan Documents in reliance upon
the identity of the Assignee as a legal entity that is separate from the
Assignor and each other Affiliate of the Assignor. Therefore, from and after the
date of execution and delivery of this Agreement, the Assignor will take all
reasonable steps including, without limitation, all steps that the Assignee and
the Investment Adviser may from time to time reasonably request to maintain the
identity of the Assignee as a legal entity that is separate from the Assignor
and each other Affiliate of the Assignor, and to make it manifest to third
parties that the Assignee is an entity with assets and liabilities distinct from
those of the Assignor and each other Affiliate thereof and not just a division
of the Assignor or any such other Affiliate. Without limiting the generality of
the foregoing and in addition to the other covenants set forth herein, the
Assignor acknowledges the Assignees obligations under the Annex D of the Credit
Agreement and represents, warrants and agrees that:
(i)    the Assignor has maintained and shall maintain corporate records and
books of account separate from those of the Assignee;

(ii)    the Assignor has maintained and shall maintain an arm’s-length
relationship with the Assignee and has not nor will it hold itself out as being
liable for the debts or obligations of the Assignee;

(iii)    the Assignor has kept and shall keep its assets and its liabilities
wholly separate from those of the Assignee;

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(iv)    the Assignor has avoided and will avoid the appearance, and has promptly
corrected and will promptly correct any known misperception of any of the
Assignor’s creditors, that the assets of the Assignee are available to pay the
obligations and debts of the Assignor; and

(v)    the Assignor has taken or refrained from taking, as applicable, each of
the activities specified in the “non-consolidation” and “true sale” opinions of
Winston & Strawn LLP, dated as of the date hereof, upon which the conclusions
expressed therein are based.

4.    Actions Pending Completion of Assignments of Assigned Interests.
(a)    Pending the receipt of any required consents to, and the effectiveness
of, the assignment of each of the Collateral Assets from the Assignor to the
Assignee in accordance with the applicable underlying instrument, the Assignor
hereby sells to the Assignee a 100% participation in such Collateral Asset and
the related Assigned Interests (each, a “Participation”). The Participations
will not include any rights that are not permitted to be participated pursuant
to the terms of the underlying instruments. Such sale of the Participations
shall be without recourse to the Assignor (including, without limitation, with
regard to collectability), except as otherwise expressly provided in the
representations and warranties set forth in Section 2 hereof, and shall
constitute an absolute sale of each such Participation. Each of the
Participations has the following characteristics: (i) the Participation
represents an undivided participating interest in 100% of the underlying
Collateral Asset and its proceeds (including Collections); (ii) the Assignor
does not provide any guaranty of payments to the holder of the Participation or
other form of recourse (except as otherwise expressly provided in the
representations and warranties set forth in Section 2 hereof) or credit support;
and (iii) the Participation represents a pass through of all of the payments
made on the Collateral Asset (including the Collections) and will last for the
same length of time as such Collateral Asset. For the avoidance of doubt, each
Participation will terminate automatically upon the settlement of the assignment
of the underlying Assigned Interests.
(b)    On or promptly after the applicable Purchase Date, the Assignor shall
direct the underlying administrative agent for each Assigned Interest to remit
all Collections in respect of such Assigned Interest that are due and payable on
or after the applicable Purchase Date to the Collateral Account.
(c)    Each Party shall use commercially reasonable efforts to, as soon as
reasonably practicable after the Trade Date therefor, cause the Assignee to
become a lender under the underlying instrument with respect to the Assignor’s
interest in the applicable Assigned Interest and take such action as shall be
mutually agreeable in connection therewith and in accordance with the terms and
conditions of the underlying instrument and consistent with the terms of this
Agreement.
(d)    Pending settlement of the assignment of an Assigned Interest in
accordance with the applicable underlying instruments, the Assignor shall comply
with any written instructions provided to the Assignor by or on behalf of the
Assignee with respect to voting rights to be exercised by holders of the
applicable Assigned Interest, other than with respect to any voting rights that
are not permitted to be participated pursuant to the terms of the applicable
underlying instrument (and such restrictions, requirements or prohibitions are
hereby incorporated by reference as if set forth herein).

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5.    Limitations of Repurchase.
(a)    The sum of (i) the outstanding principal balances of all Impaired
Collateral Assets previously conveyed by the Assignor (or any Relevant
Affiliate) hereunder that have been re-acquired by the Assignor (or any Relevant
Affiliate) during the 12 month period preceding the proposed date of
re-acquisition (or such lesser number of months as shall have elapsed since the
Closing Date as of such date) plus (ii) the aggregate outstanding principal
balances of all Impaired Collateral Assets purchased by an Affiliate of the
Assignee that were previously conveyed by the Assignor (or any Relevant
Affiliate) hereunder during such period shall not exceed an amount equal to 10%
of the highest outstanding principal balances of all Collateral Assets sold by
the Assignor (or any Relevant Affiliate) to the Assignee during the 12 month
period preceding the proposed date of acquisition (or such lesser number of
months as shall have elapsed since the Closing Date as of such date).
(b)    The sum of (i) the outstanding principal balances of all Collateral
Assets (whether or not Impaired Collateral Assets) previously conveyed by the
Assignor (or any Relevant Affiliate) hereunder that have been re-acquired by the
Assignor (or any Relevant Affiliate) during the 12 month period preceding the
proposed date of re-acquisition (or such lesser number of months as shall have
elapsed since the Closing Date as of such date) plus (ii) the aggregate
outstanding principal balances of all Collateral Assets (whether or not Impaired
Collateral Assets) purchased by an Affiliate of the Assignee that were
previously conveyed by the Assignor (or any Relevant Affiliate) hereunder during
such period shall not exceed an amount equal to 20% of the highest outstanding
principal balances of all Collateral Assets sold by the Assignor (or any
Relevant Affiliate) to the Assignee during the 12 month period preceding the
proposed date of acquisition (or such lesser number of months as shall have
elapsed since the Closing Date as of such date).
“Impaired Collateral Assets” means Collateral Assets that are Defaulted
Obligations, experienced a material diminution in creditworthiness following
acquisition by the Assignee hereunder, or are otherwise sold for credit-related
reasons.
6.    Miscellaneous.
(a)    Party to Credit Documents. Subject to the terms of the Credit Documents,
upon consummation of the sale, contribution and transfer of the Assigned
Interests, (i) the Assignee shall, as to each Assigned Interest, be a party to
the relevant Credit Documents and, to the extent provided in this Agreement and
the relevant Credit Documents, have the rights and obligations of a Lender
thereunder, and (ii) the Assignor shall, to the extent provided in this
Agreement and the relevant Credit Documents, relinquish its rights and be
released from its obligations, as to each Assigned Interest, under the Credit
Documents.
(b)    Notices. All notices and other communications in respect of this
Agreement (including, without limitation, any modifications of, or requests,
waivers or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) at its “Address for Notices”
specified below its name on Schedule III hereto; or, as to the Assignor or the
Assignee, at such other address as shall be designated by such Party in a notice
to the other Parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have

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been duly given when transmitted by telecopier, electronic mail or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
(c)    Binding Effect; Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Parties hereto and their respective
successors and assigns.
(d)    Further Assurances. Each Party agrees to execute and deliver, or to cause
to be executed and delivered, all such instruments, and to take all such action
as any other Party may reasonably request in order to effectuate the intent and
purposes of, and to carry out the terms of, this Agreement.
(e)    Captions and Headings. The captions and headings in this Agreement are
for convenience only and are not intended to be full or accurate descriptions of
the contents thereof. They shall not be deemed to be part of this Agreement and
in no way define, limit, extend or describe the scope or intent of any
provisions hereof.
(f)    Severability. If any provision of this Agreement or any other agreement
or document delivered in connection with this Agreement, if any, is partially or
completely invalid or unenforceable in any jurisdiction, then that provision
shall be ineffective in that jurisdiction to the extent of its invalidity or
unenforceability, but the invalidity or unenforceability of that provision shall
not affect the validity or enforceability of any other provision of this
Agreement, all of which shall be construed and enforced as if that invalid or
unenforceable provision were omitted, nor shall the invalidity or
unenforceability of that provision in one jurisdiction affect its validity or
enforceability in any other jurisdiction.
(g)    Submission to Jurisdiction. With respect to any suit, action or
proceeding relating to this Agreement (“Proceedings”), each Party irrevocably
(i) submits to the non-exclusive jurisdiction of the courts of the State of New
York and the United States District Court located in the Borough of Manhattan in
New York City and (ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such proceedings, that such court
does not have any jurisdiction over such Party. Nothing in this Agreement
precludes any Party from bringing Proceedings in any other jurisdiction, nor
will the bringing of Proceedings in any one or more jurisdictions preclude the
bringing of Proceedings in any other jurisdiction.
(h)    Waiver of Setoff. The Assignor hereby waives any right of setoff or other
claim it may have or to which it may be entitled under this Agreement from time
to time against the Assignee or any assignee of the Assignor or the Assignee, or
any of their assets.
(i)    Assignments. Notwithstanding anything to the contrary contained herein,
this Agreement may not be assigned by the Assignee or any Assignor without the
other’s prior written consent; provided that the Assignor acknowledges that the
Assignee shall pledge its interest in the Assigned Interests to the
Administrative Agent, for the benefit of the Lenders, pursuant to the Security
Agreement.

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(j)    WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THIS
ASSIGNMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(k)    Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
(l)    No-Petition Covenant. The Assignor hereby agrees not to commence, or join
in the commencement of, any proceedings in any jurisdiction for the bankruptcy,
winding-up or liquidation of the Assignee or any similar proceedings, in each
case prior to the date that is one year and one day (or if longer, any
applicable preference period plus one day) after the payment in full of all
amounts owing to the parties under the Credit Agreement. The foregoing
restrictions are a material inducement for the parties hereto to enter into this
Agreement and are an essential term of this Agreement.
(m)    Counterpart Execution. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(n)    Amendments. Schedule I hereto may be updated to add additional Collateral
Assets thereto from time to time by the Parties in connection with the inclusion
of such Collateral Asset in the Borrowing Base under the Credit Agreement. No
other amendment, waiver or other modification of any provision of this Agreement
shall be effective without the written agreement of the Assignee and the
Assignor and, to the extent required pursuant to Section 7.12 of the Credit
Agreement, with the consent of the Administrative Agent in writing (such consent
not to be unreasonably withheld, delayed or conditioned). Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(o)    Indemnification. The Assignor agrees to reimburse, indemnify and hold
harmless the Assignee from and against any and all losses, liabilities, claims,
fines, penalties, damages and out-of-pocket costs and expenses (including
reasonable and documented out-of-pocket fees and expenses of one external
counsel and costs and expenses of investigation) suffered by the Assignee
arising from or resulting from any (i) breach of the representations and
warranties of the Assignor under Section 2(a) hereof and (ii) claim or
allegation in connection with the JPM Facility Documents that the sale and
contribution of the Assigned Interests to the Assignee hereunder is a breach or
default by Assignor under the JPM Facility Documents, that any release of the
Assigned Interests provided under the Collateral Agency and Intercreditor
Agreement included in the JPM Facility Documents is invalid or ineffective, or
that any Assigned Interest is otherwise subject to any security interest or lien
under the JPM Facility Documents following the sale and contribution to the
Assignee hereunder.

[signature page follows]

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IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement
as of the date first above written.
AMERICAN CAPITAL, LTD.

By /s/ Samuel A. Flax                
Name: Samuel A. Flax
Title: Executive Vice President, General Counsel and Secretary

ACAS FUNDING I, LLC
By:    American Capital Leveraged Finance Management, LLC, its designated
manager

By /s/ Samuel A. Flax                
Name: Samuel A. Flax
Title: Executive Vice President and Secretary

 

Signature Page to Sale and Participation Agreement

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SCHEDULE I
Collateral Assets
None

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SCHEDULE II
Location of Assignor
Delaware

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SCHEDULE III
Notice Addresses

ACAS Funding I, LLC
2 Bethesda Metro Center, 12th Floor
Bethesda, MD 20814
T:
F:
Attn: Secretary

American Capital, Ltd.
2 Bethesda Metro Center, 12th Floor
Bethesda, MD 20814
T:
F:
Attn: Secretary