Exhibit 10.2

 

Execution Version

 

SALE, CONTRIBUTION AND MASTER PARTICIPATION AGREEMENT

 

by and between

 

OXFORD SQUARE FUNDING 2018, LLC,

as the Buyer

 

and

 

OXFORD SQUARE CAPITAL CORP.,

as the Seller

 

June 21, 2018

 

 

 

 

TABLE OF CONTENTS

 

  Page     Article I GENERAL 1 Section 1.1 Defined Terms. 1 Section 1.2 Other
Terms. 3 Section 1.3 Computation of Time Periods. 3 Section 1.4 Interpretation.
3       Article II SALE, TRANSFER AND ASSIGNMENT 4 Section 2.1 Sale, Transfer
and Assignment. 4 Section 2.2 Purchase Price. 7 Section 2.3 Payment of Purchase
Price. 7 Section 2.4 Actions Pending Completion of Assignments of Collateral
Loans. 8       Article III CONDITIONS PRECEDENT 8 Section 3.1 Condition
Precedent to Closing and Purchase. 8       Article IV REPRESENTATIONS AND
WARRANTIES 9 Section 4.1 Seller’s Representations and Warranties. 9 Section 4.2
Representations and Warranties of the Seller Relating to the Agreement and the
Transferred Assets. 14 Section 4.3 Representations and Warranties of the Buyer.
15       Article V COVENANTS 17 Section 5.1 Affirmative Covenants of the Seller.
17 Section 5.2 Negative Covenants of the Seller. 20       Article VI REMOVAL OR
REPLACEMENT OF WARRANTY COLLATERAL LOANS 21       Article VII ADDITIONAL RIGHTS
AND OBLIGATIONS IN RESPECT OF THE TRANSFERRED ASSETS 22 Section 7.1 Rights of
the Buyer. 22 Section 7.2 Responsibilities of the Seller. 23 Section 7.3 Rights
With Respect to Loan Files. 23 Section 7.4 Notice to Administrative Agent and
Collateral Agent. 23       Article VIII SURVIVAL 23 Section 8.1 Survival of
Certain Provisions. 23       Article IX INDEMNIFICATION 24 Section 9.1
Indemnification by the Seller. 24 Section 9.2 Assignment of Indemnities. 26

 

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TABLE OF CONTENTS

 

  Page     Article X MISCELLANEOUS 26 Section 10.1 Amendments and Waivers. 26
Section 10.2 Notices, Etc. 26 Section 10.3 Binding Effect; Benefit of Agreement.
28 Section 10.4 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO
VENUE. 28 Section 10.5 WAIVER OF JURY TRIAL. 28 Section 10.6 Costs, Expenses and
Taxes. 28 Section 10.7 No Proceedings. 29 Section 10.8 Recourse Against Certain
Parties. 29 Section 10.9 Protection of Right, Title and Interest in the
Transferred Assets; Further Action Evidencing Purchases. 30 Section 10.10
Execution in Counterparts; Severability; Integration. 31 Section 10.11 Waiver of
Setoff. 31 Section 10.12 Heading and Exhibits. 31 Section 10.13 Rights of
Inspection. 32 Section 10.14 Assignment. 32 Section 10.15 No Waiver; Cumulative
Remedies. 32

 

SCHEDULES

 

SCHEDULE I Loan List SCHEDULE II Closing Date Participations

 

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THIS SALE, CONTRIBUTION AND MASTER PARTICIPATION AGREEMENT (such agreement as
amended, modified, supplemented or restated from time to time, the “Agreement”)
is dated as of June 21, 2018 (the “Purchase Date”), by and between OXFORD SQUARE
CAPITAL CORP., a Maryland corporation, as the seller (in such capacity, the
“Seller”) and OXFORD SQUARE FUNDING 2018, LLC, a Delaware limited liability
company, as the buyer (in such capacity, the “Buyer”).

 

WITNESSETH:

 

WHEREAS, the Buyer desires to purchase from the Seller and the Seller desires to
sell to the Buyer certain assets originated, purchased or underwritten by the
Seller in its normal course of business, together with, among other things, the
related rights of payment thereunder and the interest of the Seller in the
Underlying Assets and other interests securing the payments to be made under
such loans.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:

 

Article I

 

GENERAL

 

Section 1.1           Defined Terms.

 

Capitalized terms used but not defined herein have the meanings provided in the
Credit and Security Agreement (as defined below). As used herein, the following
terms have the meanings provided below.

 

“Agreement”: Defined in the Preamble.

 

“Buyer”: Defined in the Preamble.

 

“Collateral Loan”: A commercial loan or a Participation with respect to a
commercial loan purchased by the Buyer pursuant to this Agreement.

 

“Credit and Security Agreement”: The Credit and Security Agreement, dated as of
June 21, 2018 among Buyer, as the borrower, the Seller, as the collateral
manager, each of the Lenders from time to time party thereto, Citibank, N.A., as
the administrative agent, The Bank of New York Mellon Trust Company, National
Association, as the collateral agent and custodian, and Oxford Square Capital
Corp., as the equityholder, as amended, restated, supplemented or otherwise
modified from time to time.

 

“Early Termination”: Defined in Section 8.1.

 

 

 

 

“Insolvency Laws”: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or similar debtor relief
laws from time to time in effect affecting the rights of creditors generally.

 

“Insolvency Proceeding”: Any case, action or proceeding before any court or
other Governmental Authority relating to any Insolvency Event.

 

“Loan List”: The list of Collateral Loans provided by the Seller to the Buyer on
the Purchase Date and incorporated as Schedule I to this Agreement by reference.

 

“Material Adverse Effect”: (a) With respect to the Seller, a material adverse
effect on (i) the business, assets, financial condition, operations, performance
or properties of the Seller, (ii) the validity, enforceability or collectability
of this Agreement against Seller, (iii) the rights and remedies of Buyer with
respect to matters arising under this Agreement, (iv) the ability of Seller to
perform its obligations under this Agreement, or (v) the status, existence,
perfection, priority or enforceability of Buyer’s interest in the Transferred
Assets and (b) with respect to the Buyer, a material adverse effect on (i) the
business, assets, financial condition, operations, performance or properties of
the Buyer, (ii) the validity, enforceability or collectability of this Agreement
against Buyer, (iii) the rights and remedies of Seller with respect to matters
arising under this Agreement and (iv) the ability of Buyer to perform its
obligations under this Agreement.

 

“Participation”: Defined in Section 2.4(a).

 

“Purchase”: The purchase by the Buyer of Transferred Assets from the Seller
pursuant to Section 2.1.

 

“Purchase Date”: Defined in the Preamble.

 

“Purchase Price”: Defined in Section 2.2.

 

“Repurchase Amount”: For any Warranty Collateral Loan for which a payment or
substitution is being made pursuant to this Agreement, as of any time of
determination, the sum of (i) the greater of (a) an amount equal to the Purchase
Price paid by the Buyer for such Collateral Loan (excluding purchased accrued
interest and original issue discount) less all payments of principal received in
connection with such Warranty Collateral Loan since the date it became a
Transferred Asset and (b) the Asset Value of such Warranty Collateral Loan, and
(ii) any accrued and unpaid interest thereon since the last Payment Date;
provided, however, that the Seller and/or the Buyer may elect to designate a
portion of the Repurchase Amount for such Warranty Collateral Loan in an amount
not to exceed the Returned Portion Limit as a return of capital to the Seller,
in its capacity as the sole member of the Buyer, and, in such event, the
Repurchase Amount payable with respect to such Warranty Collateral Loan shall be
reduced by that portion of the Repurchase Amount of such Warranty Collateral
that was so returned.

 

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“Returned Portion Limit”: For any Warranty Collateral Loan for which a payment
or substitution is being made pursuant to this Agreement, (a) the Principal
Balance of such Warranty Collateral Loan less (b) the result of (i) the Asset
Value for such Warranty Collateral Loan multiplied by (ii) the Advance Rate as
of the date it became a Transferred Asset.

 

“Seller”: Defined in the Preamble.

 

“Substituted Collateral Loan”: Any Warranty Collateral Loan with respect to
which the Seller has substituted in a replacement Collateral Loan pursuant to
Article VI.

 

“Transferred Assets”: Defined in Section 2.1(a).

 

“Underlying Assets”: With respect to a Collateral Loan, any property or other
assets designated and pledged as collateral to secure repayment of such
Collateral Loan, including, without limitation, to the extent provided for in
the relevant Underlying Loan Agreement, a pledge of the stock, membership or
other ownership interests in the related Obligor and all Proceeds from any sale
or other disposition of such property or other assets.

 

“Warranty Event”: As to any Collateral Loan, (a) a breach of any representation
or warranty relating to such Collateral Loan under this Agreement (other than
any representation or warranty that the Collateral Loan satisfies the criteria
of the definition of Eligible Loan) and the failure of the Buyer to cure such
breach, or cause the same to be cured, within thirty (30) days after the earlier
to occur of the Buyer’s receipt of notice thereof from the Administrative Agent
or the Buyer becoming aware thereof or (b) in the case of a Participation, such
Participation is not elevated to a full assignment under Section 2.4 within 45
days of the Purchase Date.

 

“Warranty Collateral Loan”: Any Collateral Loan (a) that fails to satisfy any
criteria set forth in clause (B) of the definition of Eligible Loan as of the
date of acquisition of such Loan, or (b) with respect to which a Warranty Event
has occurred.

 

Section 1.2          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 1.3          Computation of Time Periods.

 

Unless otherwise stated in this Agreement, in the computation of a period of
time from a specified date to a later specified date, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding.”

 

Section 1.4          Interpretation.

 

In this Agreement, unless a contrary intention appears:

 

(i)          the singular number includes the plural number and vice versa;

 

(ii)         reference to any Person includes such Person’s successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement;

 

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(iii)        reference to any gender includes each other gender;

 

(iv)        reference to day or days without further qualification mean calendar
days;

 

(v)         reference to any time means New York City, New York time;

 

(vi)        reference to any agreement (including any Facility Document),
document or instrument means such agreement, document or instrument as amended,
modified, supplemented, restated or replaced and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms of the other
Facility Documents, and reference to any promissory note includes any promissory
note that is an extension or renewal thereof or a substitute or replacement
therefor;

 

(vii)       reference to any delivery or transfer to the Custodian with respect
to the Collateral in this Agreement means delivery or transfer to the Custodian
for the benefit of the Collateral Agent on behalf of the Secured Parties;

 

(viii)      reference to “including” means “including, without limitation”; and

 

(ix)         reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated
thereunder, and reference to any Section or other provision of any Applicable
Law means that provision of such Applicable Law from time to time in effect and
constituting the substantive amendment, modification, codification, replacement
or reenactment of such Section or other provision.

 

Article II

 

SALE, TRANSFER AND ASSIGNMENT

 

Section 2.1          Sale, Transfer and Assignment.

 

(a)          On the terms and subject to the conditions set forth in this
Agreement (including the conditions to Purchase set forth in Article III), on
the Purchase Date, the Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Buyer, and the Buyer hereby purchases and takes from
the Seller, in its capacity as lender of record, all right, title and interest
(whether now existing, owned or hereafter acquired or arising and wherever
located) of the Seller, in the property identified in clauses (i) through (iii)
below and other property consisting of, arising out of, or related to any of the
following (but excluding any such property constituting Excluded Amounts that
are for the account of Seller) (collectively, the “Transferred Assets”):

 

(i)          The Collateral Loans identified by the Seller and which are listed
on the Loan List attached hereto, including for the avoidance of doubt any
Participations of Collateral Loans which are listed on Schedule II attached
hereto (pending the effectiveness of the assignment thereof in accordance with
Section 2.4) and any Substituted Collateral Loans transferred to the Buyer in
connection with a Warranty Event, together with all monies due or to become due
in payment of such Collateral Loans on and after the Purchase Date, including
all Collections;

 

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(ii)         all Underlying Loan Agreements, Underlying Notes and Related
Documents (including, without limitation, any participation or assignment
agreements or any similar agreements related thereto) with respect to the
Collateral Loans (including for the avoidance of doubt any Participations)
referred to in clause (i) above;

 

(iii)        all Liens, property, guaranties, supporting obligations, insurance
and other agreements or arrangements of whatever character from time to time
supporting or securing payment of any of the foregoing; and

 

(iv)        all income and Proceeds of the foregoing.

 

Without limiting the foregoing, the term “Transferred Assets” (i) shall, for all
purposes of this Agreement, be deemed to include any Collateral Loan (including
for the avoidance of doubt any Participation with respect thereto) acquired by
the Buyer in a transaction in which the Buyer is the designee of the Seller
under the instruments of conveyance relating to the applicable Collateral Loan
(including for the avoidance of doubt any Participation with respect thereto),
subject in each case to the terms of this Agreement (including the
representations, warranties, covenants and indemnities of the Seller set forth
herein) and (ii) shall include only the rights and obligations of the Seller in
its capacity as lender of record and only with respect to the Collateral Loans
described on the Loan List (and shall exclude any rights or obligations (i) as
administrative agent for any Collateral Loan and (ii) as lender under any loan
not included in the Loan List).

 

(b)         The Seller shall be deemed to have certified, and hereby does
certify, with respect to the Transferred Assets to be purchased by the Buyer on
the Purchase Date, that its representations and warranties contained in Article
IV are true and correct on and as of the Purchase Date. The Seller and the Buyer
acknowledge that the representations and warranties of the Seller in Article IV
will run to and be for the benefit of the Collateral Agent on behalf of the
Secured Parties, and the Collateral Agent on behalf of the Secured Parties may
enforce, directly without joinder of the Buyer, the repurchase obligations of
the Seller with respect to breaches of certain of the representations and
warranties set forth herein.

 

(c)         Except as specifically provided in this Agreement, the sale and
purchase of Transferred Assets under this Agreement shall be without recourse to
the Seller; it being understood that the Seller shall be liable to the Buyer for
all representations, warranties, covenants and indemnities made by the Seller
pursuant to the terms of this Agreement.

 

(d)         Except for future funding obligations under any Transferred Assets,
the Buyer, the Collateral Agent, the Administrative Agent, each Lender and the
other Secured Parties shall not have any obligation or liability to any Obligor
(including any obligation to perform any of the obligations of the Seller
(including any obligation with respect to any other related agreements)). Except
as set forth in the immediately preceding sentence, no such obligation or
liability is intended to be assumed by the Buyer, the Collateral Agent, the
Administrative Agent, the Lenders or the Secured Parties, and any such
assumption is expressly disclaimed.

 

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(e)         In connection with the Purchase of Transferred Assets hereunder, the
Seller shall deliver, or cause to be delivered, to the Custodian no later than
12:00 noon on the Purchase Date (i) the related Document Checklist and (ii) each
of the other Required Loan Documents. Promptly after the Purchase of Transferred
Assets hereunder, the Seller shall deliver, or cause to be delivered, to the
Collateral Agent with a copy to the Custodian and the Administrative Agent a
properly completed Trade Confirmation, if any, on which the Custodian may
conclusively rely without further inquiry or investigation, and shall deliver to
the Custodian the Loan Files for the Transferred Assets.

 

(f)         In connection with the transfers contemplated by this Agreement, the
Seller hereby grants to each of the Buyer, the Collateral Agent and the
Collateral Manager an irrevocable, non–exclusive license to use, without royalty
or payment of any kind, all software used by the Seller to account for the
Transferred Assets, to the extent necessary to allow the Buyer, the Collateral
Agent or the Collateral Manager to administer the Transferred Assets, 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, the Seller hereby agrees that upon
the request of the Buyer or the Collateral Agent, the Seller will use its best
reasonable efforts to obtain the consent of such third–party licensor either
before the Closing Date or as soon as possible thereafter. The license granted
hereby shall be irrevocable until the Final Maturity Date and shall terminate on
the date this Agreement terminates in accordance with its terms. The Seller
shall take such action requested by the Buyer or the Collateral Agent, from time
to time hereafter, that may be necessary or appropriate to ensure that the Buyer
has an enforceable ownership interest and that Collateral Agent (and its
assigns), for the benefit of the Secured Parties, under the Credit and Security
Agreement have an enforceable security interest in the Transferred Assets
purchased by the Buyer as contemplated by this Agreement.

 

(g)         In connection with the Purchase by the Buyer of the Transferred
Assets as contemplated by this Agreement, the Seller shall, at its own expense,
indicate clearly and unambiguously in its computer files and its financial
statements, on or prior to the Purchase Date, that the Transferred Assets have
been purchased by the Buyer in accordance with this Agreement.

 

(h)         The Seller agrees to deliver to the Buyer, the Administrative Agent,
the Collateral Agent and the Custodian on or before the Purchase Date a computer
file containing a true, complete and correct Loan List of all Collateral Loans
to be sold or otherwise conveyed hereunder on the Purchase Date (which shall
contain the related Principal Balance, Loan number (if any) and Obligor name for
each Collateral Loan) as of the Purchase Date. Such file or list shall be
delivered to the Buyer as confidential and proprietary, and is automatically
incorporated into and made a part of this Agreement.

 

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(i)          It is the intention of the parties hereto that the conveyance of
all right, title and interest of the Seller in and to any Transferred Assets to
the Buyer as provided in this Section 2.1 shall constitute an absolute transfer
conveying good title, free and clear of any Lien (other than Permitted Liens)
and that the Transferred Assets shall not be part of the Seller’s bankruptcy
estate in the event of an Insolvency Event with respect to the Seller.
Furthermore, it is not intended that such conveyance be deemed a pledge of the
Collateral Loans and the other Transferred Assets to the Buyer to secure a debt
or other obligation of the Seller. If, however, notwithstanding the intention of
the parties, the conveyance provided for in this Section 2.1 is determined to be
a transfer for security, then this Agreement shall constitute a “security
agreement” within the meaning of Article 9 of the UCC and the Seller shall be
deemed to have granted (and hereby grants) to the Buyer a duly perfected, first
priority “security interest” within the meaning of Article 9 of the UCC in all
right, title and interest in and to the Transferred Assets, now existing and
hereafter created, to secure the prompt and complete payment of a loan deemed to
have been made in an amount equal to the aggregate Purchase Price of the
Transferred Assets together with all of the other obligations of the Seller
hereunder. The Seller and the Buyer shall file or cause to be filed a UCC-1
financing statement naming the Seller, as debtor, the Buyer, as secured party,
and the Collateral Agent, as assignee secured party, listing all of the
Transferred Assets pledged hereunder as collateral thereunder. The Buyer 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.

 

Section 2.2          Purchase Price.

 

The purchase price for each Transferred Asset sold to the Buyer by the Seller
under this Agreement shall be a dollar amount equal to the “cost” therefor, as
set forth on Schedule I attached hereto (the “Purchase Price”).

 

Section 2.3          Payment of Purchase Price.

 

(a)         The Purchase Price for the Transferred Assets sold by the Seller to
the Buyer on the Purchase Date shall be paid in a combination of (i) immediately
available funds and (ii) if the Buyer does not have sufficient funds to pay the
full amount of the Purchase Price, by means of a capital contribution by the
Seller to the Buyer.

 

(b)         Notwithstanding any provision herein to the contrary, the Seller may
on the Purchase Date elect to designate all or a portion of the Transferred
Assets proposed to be transferred to the Buyer on such date as a capital
contribution to the Buyer. In such event, the cash portion of the Purchase Price
payable with respect to such transfer shall be reduced by that portion of the
Purchase Price of the Transferred Assets that was so contributed; provided that
Transferred Assets contributed to the Buyer as capital shall constitute
Transferred Assets for all purposes of this Agreement and shall be subject to
all representations, warranties, covenants and indemnities hereunder relating to
the Transferred Assets.

 

(c)         Upon the payment of the Purchase Price for the Purchase, title to
the Transferred Assets included in the Purchase shall vest in the Buyer
(subject, in the case of any Participation, to the effectiveness of the
assignment of the related Collateral Loan in accordance with Section 2.4),
whether or not the conditions precedent to the Purchase and the other covenants
and agreements contained herein were in fact satisfied; provided that the Buyer
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.

 

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Section 2.4          Actions Pending Completion of Assignments of Collateral
Loans.

 

(a)         With respect to the Collateral Loans identified on Schedule II
hereto, pending the receipt of any required consents to, and the effectiveness
of, the assignment of each such Collateral Loan from the Seller to the Buyer in
accordance with the applicable underlying instrument, the Seller hereby sells to
the Buyer an undivided 100% participation in such Collateral Loan and the
related Transferred Assets (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. Except as specifically provided in this
Agreement, such sale of the Participations shall be without recourse to the
Seller (including, without limitation, with regard to collectability), 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 Loan and its proceeds (including Collections); (ii) the Seller does
not provide any guaranty of payments to the holder of the Participation or other
form of recourse (except as specifically provided in this Agreement) or credit
support; and (iii) the Participation represents a pass through of all of the
payments made on the Collateral Loan (including the Collections) and will last
for the same length of time as such Collateral Loan. For the avoidance of doubt,
each Participation will terminate automatically upon the settlement of the
assignment of the underlying Collateral Loan.

 

(b)         Each Party shall use commercially reasonable efforts to, as soon as
reasonably practicable after the Purchase Date, but in any event no later than
45 days after the Purchase Date, cause the Buyer to become a lender under the
underlying instrument with respect to the Seller’s interest in the applicable
Collateral Loan 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.

 

(c)         Pending settlement of the assignment of a Collateral Loan in
accordance with the applicable underlying instruments, the Seller shall comply
with any written instructions provided to the Seller by or on behalf of the
Buyer with respect to voting rights to be exercised by holders of the applicable
Collateral Loan, 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).

 

Article III

 

CONDITIONS PRECEDENT

 

Section 3.1          Condition Precedent to Closing and Purchase.

 

The closing and Purchase hereunder are subject to the satisfaction of the
following conditions precedent:

 

(a)         counterparts of this Agreement executed on behalf of the Seller
shall have been delivered to the Buyer.

 

(b)         all representations and warranties of the Seller contained in
Sections 4.1 and 4.2 shall be true and correct in all material respects on and
as of the Purchase Date;

 

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(c)         the Seller shall have delivered to the Buyer a Loan List that is
true, accurate and complete in all respects as of the Purchase Date and the
Buyer shall have consented to the Purchase of such Transferred Assets;

 

(d)         on and as of the Purchase Date, the Seller shall have performed all
of the covenants and agreements required to be performed by it on or prior to
such date pursuant to the provisions of this Agreement;

 

(e)         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 the Purchase by the
Buyer in accordance with the provisions hereof; and

 

(f)          the Seller shall have paid all fees, costs and expenses required to
be paid by it on the Purchase Date.

 

Article IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1          Seller’s Representations and Warranties.

 

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

 

(a)         Organization and Good Standing. The Seller has been duly organized,
and is validly existing as a corporation in good standing under the laws of the
State of Maryland, with all requisite corporate 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 necessary power,
authority and legal right to acquire, own, sell, underwrite, refer, designate
and grant interests in the Transferred Assets.

 

(b)         Due Qualification. The Seller 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
qualification, licenses or approvals, except where the failure to be so
qualified, licensed or approved would not have a Material Adverse Effect with
respect to the Seller.

 

(c)         Power and Authority; Due Authorization; Execution and Delivery. The
Seller (i) has all necessary corporate power, authority and legal right to (a)
execute and deliver this Agreement, (b) carry out the terms of this Agreement,
and (c) acquire, own, sell, underwrite, refer, designate and grant interests in
the Transferred Assets on the terms and conditions provided herein, and (ii) has
duly authorized by all necessary corporate action the execution, delivery and
performance of this Agreement and the acquisition, sale, underwriting, referral,
designation and grant of an interest in the Transferred Assets on the terms and
conditions herein provided. This Agreement has been duly executed and delivered
by the Seller.

 

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(d)         Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its respective terms, except as such enforceability may be limited by
Insolvency Laws and by general principles of equity (whether considered in a
suit at law or in equity).

 

(e)         No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof 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
Constituent Documents or any contractual obligation of the Seller, (ii) result
in the creation or imposition of any Lien 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 best knowledge of the Seller, threatened against the Seller,
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
could reasonably be expected to have a Material Adverse Effect with respect to
the Seller.

 

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

 

(h)         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.

 

(i)          Solvency. The Seller is not the subject of any Insolvency
Proceedings or Insolvency Event. The transactions under this Agreement do not
and will not render the Seller not Solvent.

 

(j)          Taxes. The Seller has filed or caused to be filed all tax returns
that are required to be filed by it and has timely paid all Taxes due.

 

(k)         Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein (including the use of the proceeds from the
sale of the Transferred Assets) will violate or result in a violation of Section
7 of the Exchange Act, or any regulations issued pursuant thereto, including
Regulations T, U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II. The Seller does not own or intend to carry or purchase,
and no proceeds from the sale of the Transferred Assets will be used to carry or
purchase, any “margin stock” within the meaning of Regulation U or to extend
“purpose credit” within the meaning of Regulation U.

 

(l)          Security Interest.

 

(i)          this Agreement creates a valid and continuing security interest (as
defined in the applicable UCC) in the Transferred Assets in favor of the Buyer
and the Collateral Agent, as assignee, for the benefit of the Secured Parties,
which security interest is prior to all other Liens, and is enforceable as such
against creditors of and purchasers from the Seller;

 

10

 

 

(ii)         the Transferred Assets constitute “instruments”, “general
intangibles”, “certificated securities”, “uncertificated securities”, “deposit
accounts”, “investment property,” “proceeds” (each as defined in the applicable
UCC) 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(l);

 

(iii)        the Seller owns and has good and marketable title to the
Transferred Assets purchased by the Buyer hereunder on the Purchase Date, and is
transferring such Transferred Assets to the Buyer free and clear of any Lien of
any Person (other than Permitted Liens);

 

(iv)        the Seller has received all consents and approvals required by the
terms of any Collateral Loan, if any, to the sale and granting of a security
interest in the Collateral Loans hereunder to the Buyer and the Collateral Agent
as assignee, on behalf of the Secured Parties;

 

(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 the Transferred
Assets granted hereunder to the Buyer and the Collateral Agent, as assignee, on
behalf of the Secured Parties;

 

(vi)        other than the security interest granted to the Buyer pursuant to
this Agreement and the Collateral Agent, as assignee, on behalf of the Secured
Parties, pursuant to the Credit and Security Agreement and other than security
interests that are released in connection with the transfer of Transferred
Assets to the Buyer, the Seller has not pledged, assigned, sold, granted a
security interest in or otherwise conveyed any of the Transferred Assets. The
Seller has not authorized the filing of and is not aware of any financing
statements against the Seller that include a collateral description covering the
Transferred Assets other than any financing statement (A) relating to the
security interest granted to the Buyer under this Agreement and the Collateral
Agent, as assignee, on behalf of the Secured Parties under the Credit and
Security Agreement, (B) that has been terminated or for which a release or
partial release (which releases at least any collateral constituting Transferred
Assets) has been filed and/or fully and validly assigned to the Buyer on or
prior to the Purchase Date or (C) relating to Permitted Liens. The Seller is not
aware of the filing of any judgment or tax lien filings against the Seller with
respect to, or that would attach to, any Transferred Assets;

 

(vii)       other than in the case of Noteless Loans and Participations (pending
the effectiveness of the assignment of the related Collateral Loans in
accordance with Section 2.4), all original executed copies of each underlying
promissory note (if any) that constitutes or evidences each Collateral Loan
included in the Transferred Assets that is evidenced by a promissory note has
been, or subject to the delivery requirements contained herein, will be
delivered to the Custodian or its bailee;

 

11

 

 

(viii)      none of the underlying promissory notes (if any) that constitute or
evidence the Collateral Loans included in the Transferred Assets has any marks
or notations indicating that they have been pledged, assigned or otherwise
conveyed to any Person other than the Buyer (and by the Buyer to the Collateral
Agent, on behalf of the Secured Parties);

 

(ix)         with respect to Transferred Assets that constitute a “certificated
security,” if any, (A) such certificated security has been delivered to the
Custodian registered in the name of the Collateral Agent or its affiliated
nominee or endorsed to the Collateral Agent or in blank, (B) the Seller has
caused the Custodian to agree to continuously identify on its books and records
that such certificated security is credited to the appropriate Covered Account
and (C) the Seller has caused the Custodian to agree to maintain continuous
possession of such certificated security; and

 

(x)          with respect to Transferred Assets that constitute an
“uncertificated security”, if any, the Seller has caused the issuer of such
uncertificated security to (A) register the Collateral Agent as the registered
owner of such uncertificated security or (B) to agree to comply with
instructions of the Collateral Agent without further consent of the Buyer, upon
original issue or registration of transfer by the issuer of such uncertificated
security;

 

(m)         Reports Accurate. All information, exhibits, financial statements,
documents, books, records or reports furnished or to be furnished by the Seller
to the Buyer in connection with this Agreement and the Transferred Assets are
true, complete and correct in all material respects.

 

(n)         Location of Offices. The Seller’s location (within the meaning of
Article 9 of the UCC) is Maryland. The office where the Seller keeps all the
Records is at the address of the Seller referred to in Section 10.2 hereof (or
at such other locations as to which the notice and other requirements specified
in Section 5.2(c) shall have been satisfied). The Seller’s principal place of
business is Connecticut.

 

(o)         Tradenames. The Seller has no trade names, fictitious names, assumed
names or “doing business as” names or other names under which it has done or is
doing business.

 

(p)         Sale Agreement. This Agreement together with the Required Loan
Documents are the only agreements pursuant to which the Seller sells or
otherwise transfers the Transferred Assets to the Buyer.

 

(q)         Value Given. The Buyer has given reasonably equivalent value to the
Seller in consideration for the transfer to the Buyer of the Transferred Assets
as contemplated by this Agreement (including for such purpose the portion of the
Purchase Price that is treated as a capital contribution from the Seller to the
Buyer), the Purchase has not been made for or on account of an antecedent debt
owed by the Seller to the Buyer, and no such transfer is or may be voidable or
subject to avoidance under any section of the Bankruptcy Code. The transfer of
such Transferred Assets by the Seller to the Buyer is on fair and reasonable
terms that are no less favorable than would be obtained in a comparable
arm’s-length transaction.

 

12

 

 

(r)          Accounting. The Seller accounts for the transfers to the Buyer from
the Seller of interests in Transferred Assets as sales of such Transferred
Assets for consolidated accounting purposes and for legal and, where relevant,
tax purposes on its books, records and financial statements, in each case
consistent with GAAP and with the requirements set forth herein, provided that
for federal income tax reporting purposes, the Buyer is treated as a
“disregarded entity” and, therefore, the transfer of Transferred Assets by the
Seller to the Buyer hereunder will not be recognized.

 

(s)         Special Purpose Entity. The Buyer is an entity with assets and
liabilities separate and distinct from those of the Seller and any Affiliates
thereof, and the Seller hereby acknowledges that the Collateral Agent, the
Administrative Agent, the Lenders and the other Secured Parties are entering
into the transactions contemplated by the Credit and Security Agreement in
reliance upon the Buyer’s identity as a legal entity that is separate from the
Seller and from each other Affiliate of the Seller. Therefore, from and after
the date of execution and delivery of this Agreement, the Seller shall take all
reasonable steps, including all steps that the Buyer or the Administrative Agent
may from time to time reasonably request, to maintain the Buyer’s identity as a
legal entity that is separate from the Seller and from each other Affiliate of
the Seller, and to make it manifest to third parties that the Buyer is an entity
with assets and liabilities distinct from those of the Seller and each other
Affiliate thereof and not just a division of the Seller or any such other
Affiliate. 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 Buyer has not and will not take, refrain from taking, or fail
to take (as applicable) any action described in Section 5.05 of the Credit and
Security Agreement.

 

(t)          Confirmation from the Seller. Each of the Buyer and the Seller is
aware that the filing of a voluntary petition under the Bankruptcy Code for the
purpose of making any Transferred Assets or any other assets of the Buyer
available to satisfy claims of the creditors of the Seller would not result in
making such assets available to satisfy such creditors under the Bankruptcy
Code. The Seller will not cause the Buyer to file a voluntary petition under the
Bankruptcy Code or Insolvency Laws.

 

(u)         ERISA. The Seller does not maintain, nor are any employees of the
Seller permitted to participate in, a Pension Plan.

 

(v)         Compliance with Law. The Seller has complied in all respects with
all Applicable Laws to which it may be subject, and no item of the Transferred
Assets contravenes any Applicable Laws.

 

(w)        Set–Off, etc. As of the Purchase Date for a Transferred Asset, such
Transferred Asset has not been compromised, adjusted, extended, satisfied,
subordinated, rescinded, set–off or modified by the Seller or by the Obligor
thereof, and such Transferred Asset is not 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 such Transferred
Assets or otherwise, by the Seller or by the Obligor with respect thereto,
except for amendments, extension and modifications, if any, to such Transferred
Asset otherwise permitted under the Facility Documents.

 

13

 

 

(x)         Full Payment. As of the Purchase Date, the Seller has no actual
knowledge of any fact which leads it to expect that any Transferred Assets will
not be paid in full.

 

(y)         Representations and Warranties for Benefit of the Buyer’s Assignees:
Each of the representations and warranties of the Seller contained in this
Agreement is true and correct in all material respects on the Purchase Date, and
the Seller hereby makes each such representation and warranty to, and for the
benefit of the Collateral Agent, the Administrative Agent, the Lenders and the
other Secured Parties.

 

(z)         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.

 

It is understood and agreed that the representations and warranties provided in
this Section 4.1 shall survive (x) the sale and assignment or contribution of
the Transferred Assets by the Seller to the Buyer and (y) any subsequent
transfer of the Transferred Assets by the Buyer (including its grant of a first
priority perfected security interest in, to and under the Transferred Assets
pursuant to the Credit and Security Agreement) and such representations and
warranties, may not be waived by any party hereto without the consent of the
Administrative Agent.

 

Section 4.2          Representations and Warranties of the Seller Relating to
the Agreement and the Transferred Assets.

 

The Seller hereby represents and warrants to the Buyer, as of the Purchase Date:

 

(a)         Binding Obligation, Valid Transfer and Security Interest. This
Agreement constitutes a valid transfer to the Buyer of all right, title and
interest of the Seller in, to and under all of the Transferred Assets, free and
clear of any Lien of any Person claiming through or under the Seller or its
Affiliates, except for Permitted Liens, and subject, in the case of any
Participation, to the effectiveness of the assignment of the related Collateral
Loan in accordance with Section 2.4. 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 of the Transferred Assets to
the Buyer which upon the delivery of the Required Loan Documents to the
Custodian, the crediting of Collateral Loans to the Covered Accounts and the
filing of the financing statements described in Section 2.1(i) and, in the case
of additional Collateral Loans on the Purchase Date, shall be a valid and
enforceable first priority perfected security interest in all Transferred
Assets, subject only to the security interest granted to the Collateral Agent,
on behalf of the Secured Parties, pursuant to the Credit and Security Agreement.
Neither the Seller nor any Person claiming through or under Seller shall have
any claim to or interest in any Covered Account and if this Agreement
constitutes the grant of a security interest in such property, except for the
interest of the Seller in such property as a debtor for purposes of the UCC.

 

14

 

 

(b)         Eligibility of Transferred Assets. As of the Purchase Date, (i)
Schedule I and Schedule II provide an accurate and complete listing of all the
Collateral Loans and other Transferred Assets hereunder as of the Purchase Date
and the information contained therein with respect to the identity of such
Collateral Loans and other Transferred Assets and the amounts owing thereunder
is true and correct as of the Purchase Date, (ii) each such Collateral Loan is
an Eligible Loan as of the Purchase Date, (iii) the Buyer owns all right, title
and interest in and to each such Transferred Asset, free and clear of any Lien
of any Person (other than Liens released in connection with the sale of such
Transferred Asset to the Buyer and the security interest granted to the
Collateral Agent, on behalf of the Secured Parties, pursuant to the Credit and
Security Agreement) and in compliance with all Applicable Laws, (iv) with
respect to each such Transferred Asset, 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 in connection with the
transfer of an ownership interest in such Transferred Asset to the Buyer have
been duly obtained, effected or given and are in full force and effect (other
than, in the case of any Participation, the effectiveness of the assignment of
the related Collateral Loan in accordance with Section 2.4), and (v) the
representations and warranties set forth in Section 4.2(a) are true and correct
with respect to each Transferred Asset.

 

(c)         No Fraud. Each Collateral Loan 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 and assignment or contribution of
the Transferred Assets by the Seller to the Buyer and (y) any subsequent
transfer of the Transferred Assets by the Buyer (including its grant of a
perfected security interest in, to and under the Transferred Assets pursuant to
the Credit and Security Agreement which, shall be a first priority security
interest) and such representations and warranties, may not be waived by any
party hereto without the consent of the Administrative Agent.

 

Section 4.3          Representations and Warranties of the Buyer.

 

The Buyer hereby represents and warrants to the Seller, as of the Purchase Date,
that:

 

(a)         Organization and Good Standing. The Buyer has been duly organized
and is validly existing as a limited liability company in good standing under
the laws of the State of Delaware, 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 necessary power,
authority and legal right to acquire and own the Transferred Assets.

 

(b)         Due Qualification. The Buyer is duly qualified to do business and is
in good standing as a limited liability company, 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 be so
qualified, licensed or approved would not have a Material Adverse Effect with
respect to the Buyer.

 

15

 

 

(c)         Power and Authority; Due Authorization; Execution and Delivery. The
Buyer (i) has all necessary limited liability company power, authority and legal
right to (a) execute and deliver this Agreement, (b) carry out the terms of this
Agreement, and (ii) has duly authorized by all necessary limited liability
company action the execution, delivery and performance of this Agreement and the
purchase of the Transferred Assets on the terms and conditions herein provided.
This Agreement has been duly executed and delivered by the Buyer.

 

(d)         Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Buyer enforceable against the Buyer in accordance with
its terms, except as such enforceability may be limited by Insolvency Laws and
by general principles of equity (whether considered in a suit at law or in
equity).

 

(e)         No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof 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 Buyer’s
Constituent Documents or any contractual obligation of the Buyer, (ii) result in
the creation or imposition of any Lien (other than the security interest granted
to the Buyer pursuant to this Agreement and the security interest granted to the
Collateral Agent, on behalf of the Secured Parties, pursuant to the Credit and
Security Agreement) upon any of the Buyer’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 best knowledge of the Buyer, threatened against the Buyer,
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
could reasonably be expected to have Material Adverse Effect with respect to the
Buyer.

 

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

 

(h)         Value Given. The Buyer has given reasonably equivalent value to the
Seller as consideration for the transfer to the Buyer of such Transferred Assets
as contemplated by this Agreement, no such transfer has been made for or on
account of an antecedent debt owed by the Seller or any such other Person to the
Buyer, and no such transfer is or may be voidable or subject to avoidance as to
the Buyer under any section of the Bankruptcy Code. The transfer of such
Transferred Assets by the Seller to the Buyer is on fair and reasonable terms
that are no less favorable than would be obtained in a comparable arm’s-length
transaction.

 

16

 

 

Article V

 

COVENANTS

 

Section 5.1          Affirmative Covenants of the Seller.

 

From the date hereof until the Final Maturity Date:

 

(a)         Compliance with Laws. The Seller will comply in all material
respects with all Applicable Laws, including those with respect to the
Transferred Assets or any part thereof, except for instances of non-compliance
that could not reasonably be expected to have a Material Adverse Effect with
respect to the Seller.

 

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

 

(c)         Performance and Compliance with Transferred Assets. The Seller will,
at its expense, timely and fully perform and comply with all provisions,
covenants and other promises required to be observed by it under the Transferred
Assets and all other agreements related to such Transferred Assets.

 

(d)         Protection of Interest in Transferred Assets. All Transferred Assets
acquired by the Buyer from the Seller will be acquired pursuant to and in
accordance with the terms of this Agreement and the Required Loan Documents and
the Seller will, (i) at its expense take all action necessary to perfect,
protect and more fully evidence the Buyer’s or its assignee’s ownership of or
security interest in such Transferred Assets free and clear of any Lien other
than Permitted Liens, including (A) filing and maintaining (at its expense)
effective financing statements against the Seller, in all necessary or
appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, and (B) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate, and (ii) take all additional action that the Buyer and the
Collateral Agent may reasonably request to perfect, protect and more fully
evidence the respective interests of the parties to this Agreement in the
Transferred Assets.

 

(e)         Deposit of Collections. The Seller will instruct the administrative
agent under each Transferred Asset or the applicable Obligors thereof if no
administrative agent exists to make all payments relating to all Transferred
Assets directly to the applicable Covered Account. In the event any payments
relating to any Transferred Assets are remitted directly to the Seller or any
Affiliate of the Seller, the Seller will remit such payments (or will cause all
such payments to be remitted) directly to the applicable Covered Account within
two (2) 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 Buyer and the
Secured Parties.

 

(f)          Taxes. The Seller will file and pay any and all Taxes required to
meet its obligations with respect thereto under this Agreement.

 

17

 

 

(g)         Adverse Claims. The Seller will not create, or participate in the
creation of, or permit to exist, any Liens in relation to the Collection
Account.

 

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

 

(i)          Representations and Warranties. Forthwith upon receiving knowledge
of the same, but in any event no later than 10 Business Days after receiving
such knowledge of the same, the Seller shall notify the Buyer, the Collateral
Agent and the Administrative Agent if any representation or warranty set forth
in Section 4.1 was incorrect at the time it was given or deemed to have been
given and at the same time deliver to the Buyer, the Collateral Agent and the
Administrative Agent a written notice setting forth in reasonable detail the
nature of such facts and circumstances. In particular, but without limiting the
foregoing, the Seller shall notify the Buyer, the Collateral Agent and the
Administrative Agent in the manner set forth in the preceding sentence before
the 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; and

 

(ii)         Notice of Material Events. Promptly upon becoming aware thereof,
but in any event no later than 10 Business Days after becoming aware thereof,
notice of any other event or circumstances that, in the reasonable judgment of
the Seller, is likely to have a Material Adverse Effect with respect to Seller.

 

(i)          Separate Identity. The Seller acknowledges that the Collateral
Agent, the Administrative Agent, the Lenders and the other Secured Parties are
entering into the transactions contemplated by this Agreement and the Credit and
Security Agreement in reliance upon the Buyer’s identity as a legal entity that
is separate from the Seller and each other Affiliate of the Seller. Accordingly,
from and after the date of execution and delivery of this Agreement, the Seller
will take all reasonable steps, including all steps that the Buyer, the
Collateral Agent or the Administrative Agent may from time to time reasonably
request, to maintain the Buyer’s identity as a legal entity that is separate
from the Seller and each other Affiliate of the Seller and to make it manifest
to third parties that the Buyer is an entity with assets and liabilities
distinct from those of the Seller and each other Affiliate thereof and not just
a division of the Seller or any such other Affiliate. 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 Buyer is at all times in compliance with Section 5.05 of the
Credit and Security Agreement;

 

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

 

(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 note that the assets of the Buyer,
including the Transferred Assets, are not available to pay creditors of the
Seller or any other Affiliate of the Seller;

 

18

 

 

(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
Buyer and will not hold itself out as being liable for the debts of the Buyer;

 

(vi)        the Seller shall keep its assets and its liabilities wholly separate
from those of the Buyer; 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 Buyer are
available to pay the obligations and debts of the Seller.

 

(j)          Cooperation with Requests for Information or Documents. The Seller
will cooperate fully with all reasonable requests of the Buyer 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 Buyer and its assignees to carry out their
responsibilities under the Facility Documents.

 

(k)         Payment Performance and Discharge of Obligations. The Seller will
pay, perform and discharge all of its obligations and liabilities, including all
taxes, assessments and governmental charges upon its income and properties, when
due, the non–payment, performance or discharge of which would reasonably be
expected to have a Material Adverse Effect with respect to the Seller, 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.

 

(l)          Copies of Other Information. The Seller will deliver to the Buyer,
the Collateral Agent and the Administrative Agent promptly, from time to time,
such other information, documents, records or reports respecting the Transferred
Assets or the conditions or operations, financial or otherwise, of the Seller as
the Buyer, the Collateral Agent or the Administrative Agent may from time to
time reasonably request in order to perform their obligations hereunder or under
any other Facility Document or to protect the interests of the Buyer, the
Administrative Agent, the Collateral Agent and the Secured Parties under or as
contemplated by this Agreement and the other Facility Documents.

 

(m)        Mergers, Acquisitions, Sales, etc.

 

(i)          Any Person into which the Seller may be merged or consolidated, or
any Person resulting from such merger or consolidation to which the Seller is a
party, or any Person succeeding by acquisition or transfer to substantially all
of the assets and the business of the Seller shall be the successor to the
Seller hereunder, without execution or filing of any paper or any further act on
the part of any of the parties hereto, notwithstanding anything herein to the
contrary.

 

19

 

 

(ii)         The merger or consolidation of the Seller or transfer of
substantially all of its assets and its business as described in this Section
5.1(m), shall not be effected unless the Seller shall have provided 30 days’
prior written notice thereof to the Administrative Agent, the Collateral Agent
and the Custodian and the Administrative Agent shall have consented thereto in
accordance with Section 14.07 of the Credit and Security Agreement.

 

Section 5.2          Negative Covenants of the Seller.

 

From the date hereof until the Final Maturity Date:

 

(a)         Loans Not to be Evidenced by Instruments. The Seller will take no
action (and will not cause Collateral Manager to take any action) to cause any
Collateral Loan that is not, as of the related Purchase Date, evidenced by an
Instrument, to be so evidenced except in connection with the enforcement or
collection of such Collateral Loan or unless such Instrument is promptly
delivered to the Custodian, together with an Indorsement in blank, as collateral
security for such Collateral Loan.

 

(b)         Security Interests. Except as otherwise permitted herein, and in the
Credit and Security Agreement, the Seller will not and will not cause or permit
the Buyer to sell, pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on any Transferred Assets,
whether now existing or hereafter acquired or any interest, therein. The Seller
will promptly notify the Buyer, the Collateral Agent, the Administrative Agent
and the Custodian of the existence of any Lien other than as permitted in the
immediately preceding sentence on any Transferred Assets and the Seller shall
defend the right, title and interest of the Buyer, and the Collateral Agent for
the benefit of the Secured Parties, in, to and under the Transferred Assets
against all claims of third parties; provided that nothing in this Section
5.2(b) shall prevent or be deemed to prohibit the Seller from suffering to exist
Permitted Liens upon any of the Transferred Assets and Liens permitted in the
immediately preceding sentence.

 

(c)         Change of Name or Location of Loan Files. The Seller shall not
change its name, move the location of its principal place of business and chief
executive office, change the offices where it keeps the records from the
location referred to in Section 10.2, or change the jurisdiction of its
incorporation, unless the Seller has given at least 30 days’ prior written
notice to the Buyer, the Custodian, the Collateral Agent and the Administrative
Agent and has taken all actions required under the UCC of each relevant
jurisdiction in order to continue the first priority perfected security interest
of the Buyer and the Collateral Agent, for the benefit of the Secured Parties,
in the Transferred Assets.

 

(d)         Accounting of Purchases. 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 or contribution of the Transferred
Assets by the Seller to the Buyer; provided that for federal income tax
reporting purposes, the Buyer is treated as a “disregarded entity” and,
therefore, the transfer of Transferred Assets by the Seller to the Buyer
hereunder will not be recognized; and provided, further, that nothing shall
prevent Seller from showing the Transferred Assets as consolidated assets of the
Seller and its consolidated subsidiaries on Seller’s consolidated financial
statements.

 

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(e)         Constituent Documents. The Seller will not cause or permit the Buyer
to amend, modify, waive or terminate any provision the Buyer’s Constituent
Documents except in accordance with the Credit and Security Agreement.

 

(f)          Changes in Payment Instructions to Obligors. The Seller will not
add or terminate any Covered Account or make any change in its instructions to
the administrative agent under each Transferred Asset or the applicable Obligors
thereof if no administrative agent exists, regarding payments to be made with
respect to the Transferred Assets to any Covered Account, unless the
Administrative Agent has consented to such addition, termination or change
(which consent shall not be unreasonably withheld).

 

(g)         Extension or Amendment of Transferred Assets. Except as otherwise
permitted under the Credit and Security Agreement, the Seller will not extend,
amend or otherwise modify the terms of any Transferred Assets (including the
Underlying Assets).

 

Article VI

 

REMOVAL OR REPLACEMENT OF WARRANTY COLLATERAL LOANS

 

If on any day a Collateral Loan is (or becomes) a Warranty Collateral Loan, no
later than five (5) Business Days following the earlier of knowledge by the
Seller of such Collateral Loan becoming a Warranty Collateral Loan or receipt by
the Seller from the Buyer of written notice thereof, the Seller shall either:
(a) make a deposit to the Collection Account in immediately available funds in
an amount equal to the sum of (i) the Repurchase Amount of such Collateral Loan
at such time, (ii) any expenses or fees with respect to such Collateral Loan and
(iii) costs and damages incurred by the Administrative Agent or by any Lender in
connection with any violation by such Collateral Loan of any Applicable Law; or
(b) substitute for such Warranty Collateral Loan a Substituted Collateral Loan
so long as, in each case, (1) no Event of Default has occurred and is continuing
and, immediately after giving effect to such substitution, no Default or Event
of Default shall have occurred, (2) such Substituted Collateral Loan is an
Eligible Loan, (3) all applicable conditions precedent set forth in Section 3.1
have been satisfied with respect to each Substituted Collateral Loan to be
acquired by the Borrower in connection with such substitution, and (4) the
Borrowing Base Test shall be satisfied immediately after giving effect to such
substitution. In either of the foregoing instances, the Seller may (in its
discretion) accept retransfer of each such Warranty Collateral Loan and any
related Underlying Assets. Upon the transfer of each Warranty Collateral Loan,
the Buyer shall (if and when the Seller elects to accept the retransfer of such
Warranty Collateral Loan or directs the Buyer to transfer such Collateral Loan
to a third party) automatically and without further action be deemed to
transfer, assign and set-over to or at the direction of the Seller, without
recourse, representation or warranty, all the right, title and interest of the
Buyer in, to and under such Warranty Collateral Loan and all future monies due
or to become due with respect thereto, the Underlying Assets, all Proceeds of
such Warranty Collateral Loan, all rights to security for any such Warranty
Collateral Loan, and all Proceeds and products of the foregoing. The Buyer shall
(if and when the Seller elects to accept the retransfer of such Warranty
Collateral Loan or directs the Buyer to transfer such Collateral Loan to a third
party), at the request and sole expense of the Seller, execute such documents
and instruments of transfer, assignment and release as may be prepared by the
Seller and take other such actions as shall reasonably be requested by the
Seller to effect the transfer of such Warranty Collateral Loan pursuant to this
Article VI. It is understood and agreed that, with respect to a Warranty
Collateral Loan, repurchase of such Warranty Collateral Loan by the Seller (or a
third party) or substitution by the Seller of a Substitute Collateral Loan for
such Warranty Collateral Loan shall be the sole remedies available to the Buyer
and its assignees hereunder and any other beneficiary of the Buyer’s rights
hereunder (but shall not limit any claims under Section 9.1 in respect of any
Indemnified Amounts).

 

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Article VII

 

ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE TRANSFERRED ASSETS

 

Section 7.1          Rights of the Buyer.

 

(a)         The Seller hereby authorizes the Buyer, the Collateral Manager, the
Collateral Agent and the Administrative Agent, on behalf of the Secured Parties,
and/or their respective designees or assignees to each take any and all steps in
the Seller’s name and on behalf of the Seller that the Buyer, the Collateral
Manager, the Collateral Agent and/or the Administrative Agent, on behalf of the
Secured Parties, and/or their respective designees or assignees determine are
reasonably necessary or appropriate to collect all amounts due under any and all
Transferred Assets and to enforce or protect the Buyer’s, the Administrative
Agent’s and the Collateral Agent’s, on behalf of the Secured Parties, rights
under this Agreement, including endorsing the name of the Seller on checks and
other instruments representing Collections and enforcing such Transferred
Assets.

 

(b)         Except as set forth in the Credit and Security Agreement, the Buyer
shall have no obligation to account for, replace, substitute or return any
Transferred Assets to the Seller.

 

(c)          The Buyer shall have the unrestricted right to further assign,
transfer, deliver, hypothecate, subdivide or otherwise deal with the Transferred
Assets and all of the Buyer’s right, title and interest in, to and under this
Agreement, on whatever terms the Buyer shall determine, subject to the Credit
and Security Agreement.

 

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

 

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Section 7.2          Responsibilities of the Seller.

 

Notwithstanding anything to the contrary contained herein, the Seller agrees to
deliver directly to the Custodian (for the Buyer’s account), within two (2)
Business Days after receipt thereof, any Collections that it receives, in the
form so received, and agrees that all such Collections shall be deemed to be
received in trust for the Buyer and shall be maintained and segregated separate
and apart from all other funds and monies of the Seller until delivery of such
Collections to the applicable Covered Account.

 

Section 7.3          Rights With Respect to Loan Files.

 

At any time when a Collateral Manager other than Oxford Square Capital Corp. has
been designated a Collateral Manager pursuant to Section 14.07 or 14.08 of the
Credit and Security Agreement, the Seller shall, at the request of the Buyer and
the Collateral Agent, assemble copies of all of the Loan Files in its possession
which evidence the Transferred Assets originated by the Seller, or which are
otherwise necessary or desirable to collect such Transferred Assets, and make
the same available to the Buyer or the Collateral Agent at a place selected by
the Collateral Agent.

 

Section 7.4          Notice to Administrative Agent and Collateral Agent.

 

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

 

Article VIII

 

SURVIVAL

 

Section 8.1          Survival of Certain Provisions.

 

Notwithstanding any provision contained herein to the contrary, the Seller’s
representations, covenants and obligations set forth in Articles IV, V, VI and
VII 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
Final Maturity 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 Article IV and the provisions of Article VI, the indemnification and
payment provisions of Article IX and the provisions of Sections 9.1, 10.3, 10.6,
10.7, 10.8 and 10.16 shall be continuing and shall survive any termination of
this Agreement.

 

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Article IX

 

INDEMNIFICATION

 

Section 9.1          Indemnification by the Seller.

 

(a)         Without limiting any other rights that the Buyer, any assignee of
the Buyer or any of 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 each Indemnified Party
from and against any and all damages, losses, claims, liabilities and related
costs and expenses, including reasonable attorneys’ fees and disbursements (all
of the foregoing being collectively referred to as “Indemnified Amounts”),
awarded against or incurred by such Indemnified Party or any of them as a result
of any of the Indemnified Matters (as defined below), excluding, however, (a)
Indemnified Amounts to the extent resulting from the gross negligence, bad faith
or willful misconduct on the part of the applicable Indemnified Party, and (b)
Indemnified Amounts that have the effect of recourse for non–payment of the
Transferred Assets due to credit problems of the Obligors (including bankruptcy
or insolvency). If the Seller has made any indemnity payment pursuant to this
Section 9.1 and such payment fully indemnified the recipient thereof and the
recipient thereafter collects any payments from others in respect of such
Indemnified Amounts, then the recipient shall repay to the Seller an amount
equal to the amount it has collected from others in respect of such indemnified
amounts. As used herein, “Indemnified Matters” means:

 

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

 

(ii)         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, or with any Applicable Law, with respect to any Transferred
Assets or the nonconformity of any Transferred Assets with any such Applicable
Law, or any breach by the Seller of its contractual obligations with respect to
any Transferred Assets;

 

(iii)        the failure to vest and maintain vested in the Buyer, an ownership
interest in the Transferred Assets, together with all Collections, free and
clear of any Lien (other than Permitted Liens or other Liens to which the
Administrative Agent has consented in its sole discretion) whether existing at
the time of the Purchase or at any time thereafter;

 

(iv)        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 Laws with respect to any
Transferred Assets, whether at the time of the Purchase or at any subsequent
time which are required by this Agreement or the other Facility Documents;

 

(v)         at the time of conveyance of a Transferred Asset, the existence of
any dispute, claim, offset or defense (other than the discharge in bankruptcy of
an Obligor) of an Obligor to the payment with respect to any Transferred Assets
(including a defense based on the Transferred Assets not being a legal, valid
and binding obligation of such Obligor enforceable against it in accordance with
its terms);

 

(vi)        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;

 

(vii)       any action taken by the Seller in the enforcement or collection of
any Transferred Assets;

 

(viii)      any claim, suit or action of any kind arising out of or in
connection with Environmental Laws that arose prior to the date any Transferred
Asset was sold or otherwise transferred to Buyer, including any vicarious
liability resulting from any act or omission of the Seller;

 

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(ix)         the failure by Seller to pay when due any Taxes for which the
Seller is liable, including sales, excise or personal property taxes payable in
connection with the Transferred Assets;

 

(x)          any repayment by the Indemnified Party of any amount previously
distributed hereunder or under any Facility Document to the Seller, in each case
which amount the Indemnified Party believes in good faith is required to be
repaid;

 

(xi)         the comingling of Collections on the Transferred Assets at any time
with other funds of the Seller;

 

(xii)        any investigation, litigation or proceeding related to this
Agreement arising from any act or omission of the Seller or the Seller’s use of
proceeds of Purchases or the security interest in the Transferred Assets;

 

(xiii)       the failure of the Seller or any of its agents or representatives
to remit to the Buyer Collections on the Transferred Assets remitted to the
Seller or any such agent or representative as provided in this Agreement; or

 

(xiv)      any attempt by the Seller, any creditor of Seller or any trustee or
debtor-in-possession for the Seller to void the purchases made hereunder under
statutory provisions or common law or equitable action.

 

(b)         Any amounts subject to the indemnification provisions of this
Section 9.1 shall be paid by the Seller to the Indemnified Party within five (5)
Business Days following such Person’s demand therefor.

 

(c)         If for any reason the indemnification provided above in this Section
9.1 is unavailable to the Indemnified Party or is insufficient to hold an
Indemnified Party harmless, 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, on
the other hand, but also the relative fault of such Indemnified Party as well as
any other relevant equitable considerations; provided that the Seller shall have
no contribution obligation under this Section 9.1(c) if the payment of any such
amounts would have the effect of recourse for nonpayment of the Collateral Loans
included in the Transferred Assets due to credit problems of the related
Obligors.

 

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

 

(e)         Indemnification under 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.

 

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Section 9.2          Assignment of Indemnities.

 

The Seller acknowledges that, pursuant to the Credit and Security Agreement, the
Buyer shall assign its rights of indemnity granted hereunder to the Collateral
Agent, for the benefit of the Secured Parties. Upon such assignment, (i) the
Collateral Agent, on behalf of the Secured Parties, shall have all rights of the
Buyer hereunder and may in turn assign such rights as permitted under the Credit
and Security Agreement, and (ii) the obligations of the Seller under this
Article IX shall inure to the Collateral Agent. The Seller agrees that, upon
such assignment, the Lenders, the other Secured Parties, and the Collateral
Agent or the assignee of any such Person, as applicable, may enforce directly,
without joinder of the Buyer, the indemnities set forth in this Article IX.

 

Article X

 

MISCELLANEOUS

 

Section 10.1       Amendments and Waivers.

 

Except as provided in this Section 10.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective unless signed
by the Buyer and Seller and consented to in writing by the Administrative Agent,
other than an amendment to this Agreement to incorporate by reference a Loan
List on the related Purchase Date. The Buyer shall provide not less than ten
(10) Business Days’ prior written notice of any such amendment to the
Administrative Agent.

 

Section 10.2       Notices, Etc.

 

All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including communication by facsimile
copy or electronic mail) and mailed, e-mailed, transmitted or delivered, as to
each party hereto, at its address set forth below or at such other address as
shall be designated by such party in a written notice to the other parties
hereto.

 

To the Seller:

 

Oxford Square Capital Corp.

8 Sound Shore Drive, Suite 255

Greenwich, CT 06830

Attention: Saul Rosenthal

Tel: (203) 983-5275

Fax: (203) 983-5290

 

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To the Buyer:

 

Oxford Square Funding 2018, LLC

c/o Oxford Square Capital Corp.

8 Sound Shore Drive, Suite 255

Greenwich, CT 06830

Attention: Saul Rosenthal

Tel: (203) 983-5275

Fax: (203) 983-5290

 

With a copy to:

 

Oxford Square Capital Corp.

8 Sound Shore Drive, Suite 255

Greenwich, CT 06830

Attention: Saul Rosenthal

Tel: (203) 983-5275

Fax: (203) 983-5290

 

To the Administrative Agent:

 

Citibank, N.A.

390 Greenwich Street, 4th Floor

New York, New York 10013

Attention: Victoria Chant

Tel: (212) 723-6078

Fax: (646) 291-5779

 

To the Collateral Agent:

 

The Bank of New York Mellon Trust Company, National Association

601 Travis Street, 16th Floor

Houston, TX 77002

Attention: Global Corporate Trust – Oxford Square Funding 2018, LLC

Tel: (713) 483-6000

Fax: (713) 483-6001

 

To the Collateral Manager:

 

Oxford Square Capital Corp.

8 Sound Shore Drive, Suite 255

Greenwich, CT 06830

Attention: Saul Rosenthal

Tel: (203) 983-5275

Fax: (203) 983-5290

 

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All such notices and communications shall be effective, upon receipt, or in the
case of (a) notice by mail, five (5) days after being deposited in the United
States mail, first class postage prepaid, (b) notice by e-mail, when verbal
communication of receipt is obtained, or (c) notice by facsimile copy, when
verbal communication of receipt is obtained.

 

Section 10.3       Binding Effect; Benefit of Agreement.

 

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. The Collateral
Agent, the Administrative Agent, the Lenders and the other Secured Parties shall
be third-party beneficiaries of this Agreement.

 

Section 10.4       GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION
TO VENUE.

 

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY AGREES TO THE
NON–EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW
YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY
OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

 

Section 10.5       WAIVER OF JURY TRIAL.

 

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF
THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.

 

Section 10.6       Costs, Expenses and Taxes.

 

(a)         In addition to the rights of indemnification granted under Article
IX hereof, the Seller agrees to pay on demand all reasonable costs and expenses
of the Buyer or its assignees incurred in connection with the preparation,
execution, delivery, 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 the reasonable fees and out–of–pocket expenses of
counsel with respect thereto and with respect to advising the Buyer or its
assignees as to its rights and remedies under this Agreement and the other
documents to be delivered hereunder or in connection herewith, and all
reasonable costs and expenses, if any (including reasonable counsel fees and
expenses), incurred by the Buyer or its assignees in connection with the
enforcement of this Agreement and the other documents to be delivered hereunder
or in connection herewith.

 

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(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 costs, expenses
and Taxes (excluding income taxes) incurred by the Buyer or its assignees under
or in connection with this Agreement.

 

Section 10.7       No Proceedings.

 

The Seller hereby agrees that it will not institute against, or join any other
Person in instituting against, the Buyer any Insolvency Proceeding so long as
there shall not have elapsed one year and one day since the Final Maturity Date.

 

Section 10.8       Recourse Against Certain Parties.

 

(a)         No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of the Seller as contained in this Agreement or any other
agreement, instrument or document entered into by it pursuant hereto or in
connection herewith shall be had against any partner, stockholder, incorporator,
authorized representative, officer, employee or director of the Seller by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue
of any statute or otherwise it being expressly agreed and understood that the
agreements of the Seller contained in this Agreement and all of the other
agreements, instruments and documents entered into by it pursuant hereto or in
connection herewith are, in each case, solely the corporate obligations of the
Seller, and that no personal liability whatsoever shall attach to or be incurred
by any partner, stockholder, incorporator, authorized representative, officer,
employee or director of the Seller, or any of them, under or by reason of any of
the obligations, covenants or agreements of the Seller contained in this
Agreement or in any other such instruments, documents or agreements, or which
are implied therefrom, and that any and all personal liability of each partner,
stockholder, incorporator, authorized representative, officer, employee or
director of the Seller, or any of them, for breaches by the Seller of any such
obligations, covenants or agreements, which liability may arise either at common
law or at equity, by statute or constitution, or otherwise, is hereby expressly
waived as a condition of and in consideration for the execution of this
Agreement. The provisions of this Section 10.8(a) shall survive the termination
of this Agreement.

 

29

 

 

(b)         No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of the Buyer as contained in this Agreement or any other agreement,
instrument or document entered into by it pursuant hereto or in connection
herewith shall be had against any member, manager, authorized representative,
officer, employee or director of the Buyer by the enforcement of any assessment
or by any legal or equitable proceeding, by virtue of any statute or otherwise
it being expressly agreed and understood that the agreements of the Buyer
contained in this Agreement and all of the other agreements, instruments and
documents entered into by it pursuant hereto or in connection herewith are, in
each case, solely the limited liability company obligations of the Buyer, and
that no personal liability whatsoever shall attach to or be incurred by any
authorized representative, member, manager, officer, employee or director of the
Buyer or any of them, under or by reason of any of the obligations, covenants or
agreements of the Buyer contained in this Agreement or in any other such
instruments, documents or agreements, or which are implied therefrom, and that
any and all personal liability of each authorized representative, member,
manager, officer, employee or director of the Buyer, or any of them, for
breaches by the Buyer of any such obligations, covenants or agreements, which
liability may arise either at common law or at equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement. The provisions of this
Section 10.8(b) shall survive the termination of this Agreement.

 

Section 10.9       Protection of Right, Title and Interest in the Transferred
Assets; Further Action Evidencing Purchases.

 

(a)         The Seller shall cause this Agreement, all amendments hereto and/or
all financing statements and continuation statements and any other necessary
documents covering the Buyer’s right, title and interest to the Transferred
Assets to be promptly recorded, registered and filed, and at all times to be
kept recorded, registered and filed, all in such manner and in such places as
may be required by law fully to preserve and protect the right, title and
interest of the Buyer hereunder to all property comprising the Transferred
Assets. The Seller shall deliver to the Buyer the file–stamped copies of, or
filing receipts for, any document recorded, registered or filed as provided
above, as soon as available following such recording, registration or filing.
The Seller shall cooperate fully with the Buyer in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 10.9(a).

 

(b)         The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that the Buyer, the Collateral Agent, on behalf of the Secured Parties,
may reasonably request in order to perfect, protect or more fully evidence the
Purchases hereunder and the security and/or interest granted in the Transferred
Assets, or to enable the Buyer or the Collateral Agent, as applicable, to
exercise and enforce their rights and remedies hereunder or under any Facility
Document. At any time the Buyer or the Collateral Agent may direct the Seller or
any Collateral Manager to notify each administrative agent under each
Transferred Asset or the applicable Obligors thereof if no administrative agent
exists, at the Seller’s expense, of the interest of the Buyer and the interest
of the Collateral Agent for the benefit of the Secured Parties in the
Transferred Assets under this Agreement and may direct that payments of all
amounts due or that become due under any or all of the Transferred Assets be
made directly to the Buyer or the Collateral Agent, on behalf of the Secured
Parties.

 

30

 

 

(c)         If the Seller fails to perform any of its obligations hereunder, the
Buyer or the Collateral Agent may (but shall not be required to) perform, or
cause performance of, such obligation; and the Buyer’s or the Collateral Agent’s
costs and expenses incurred in connection therewith shall be payable by the
Seller as provided in Article IX. The Seller irrevocably authorizes the Buyer or
the Collateral Agent at any time and from time to time at the Buyer’s or the
Collateral Agent’s sole discretion and appoints the Collateral Agent as its
attorney–in–fact to act on behalf of the Seller (i) to execute on behalf of the
Seller and to file financing statements on behalf of the Seller, as debtor,
necessary or desirable in the Collateral Agent’s sole discretion to perfect and
to maintain the perfection and priority of the interest of the Buyer (and its
assignees) in the Transferred Assets and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to
the Transferred Assets as a financing statement in such offices as the
Collateral Agent in its sole discretion deems necessary or desirable to perfect
and to maintain the perfection and priority of the interests of the Buyer (and
its assignees) in the Transferred Assets. This appointment is coupled with an
interest and is irrevocable.

 

Section 10.10     Execution in Counterparts; Severability; Integration.

 

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts (including by facsimile), each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. In case any provision in
or obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement and any agreements or letters (including fee letters) executed in
connection herewith contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, superseding all prior oral or written understandings.

 

Section 10.11     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 Buyer, the Collateral Agent, the Lenders, the
other Secured Parties or any assignee of such Persons, all of which rights are
hereby waived by the Seller.

 

(b)         The Buyer 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 Buyer may have against the Seller from time to time under this
Agreement. Upon any such set–off, the Buyer shall give notice of the amount
thereof and the reasons therefor to the Seller.

 

Section 10.12     Heading 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.

 

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Section 10.13     Rights of Inspection.

 

Prior to the Closing Date and periodically thereafter at the discretion of the
Buyer, the Seller will permit the Buyer to review the Collateral Manager’s
collection and administration of the Transferred Assets in order to assess
compliance by the Collateral Manager with the Credit and Collection Policy, as
well as with this Agreement and may conduct an audit of the Transferred Assets
and Required Loan Documents in conjunction with such a review. Such review shall
be reasonable in scope and shall be completed in a reasonable period of time.
The Seller shall be required to bear the expense of no more than two such
reviews within any 12-month period and any additional reviews shall be at the
expense of the Buyer. Without limiting the foregoing provisions of this Section
10.13, from time to time on request of the Buyer, the Seller shall permit
certified public accountants or other auditors acceptable to the Buyer to
conduct, at the Seller’s expense, a review of the Required Loan Documents and
all other documentation regarding the Transferred Assets.

 

Section 10.14     Assignment.

 

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

 

Section 10.15     No Waiver; Cumulative Remedies.

 

No failure to exercise and no delay in exercising, on the part of the Buyer or
the Seller, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.

 

[Signatures appear on following page.]

 

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

 

  BUYER:       OXFORD SQUARE FUNDING 2018, LLC         By:       Jonathan H.
Cohen     Manager       SELLER:       OXFORD SQUARE CAPITAL CORP.            By:
      Saul Rosenthal     President