Exhibit 10.1

 

 

PURCHASE AND SALE AGREEMENT

 

 

by and between

 

 

ARES CAPITAL CORPORATION,

as the Seller

 

 

and

 

 

ARES CAPITAL CP FUNDING LLC,

as the Buyer

 

 

Dated as of November 3, 2004

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I.

GENERAL

 

 

 

 

Section 1.1.

Defined Terms

 

Section 1.2.

Other Terms

 

Section 1.3.

Computation of Time Periods

 

Section 1.4.

Interpretation

 

 

 

 

ARTICLE II.

SALE, TRANSFER AND ASSIGNMENT

 

 

 

 

Section 2.1.

Sale, Transfer and Assignment

 

Section 2.2.

Purchase Price

 

Section 2.3.

Payment of Purchase Price

 

 

 

 

ARTICLE III.

CONDITIONS PRECEDENT

 

 

 

 

Section 3.1.

Conditions Precedent to Closing and Initial Purchase

 

Section 3.2.

Conditions Precedent to all Purchases

 

 

 

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

 

 

 

 

Section 4.1.

Seller’s Representations and Warranties

 

Section 4.2.

Representations and Warranties of the Seller Relating to the Agreement and the
Purchased Collateral and Contributed Collateral

 

Section 4.3.

Representations and Warranties of the Buyer

 

 

 

 

ARTICLE V.

COVENANTS

 

 

 

 

Section 5.1.

Affirmative Covenants of the Seller

 

Section 5.2.

Negative Covenants of Seller

 

 

 

 

ARTICLE VI.

REPURCHASE OBLIGATION

 

 

 

 

Section 6.1.

Retransfer of Purchased Collateral and Contributed Collateral

 

Section 6.2.

Substitution of Loans

 

Section 6.3.

Repurchase Limitations

 

 

 

 

ARTICLE VII.

ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE PURCHASED COLLATERAL AND
CONTRIBUTED COLLATERAL

 

 

 

 

Section 7.1.

Rights of the Buyer

 

Section 7.2.

[Reserved]

 

Section 7.3.

Rights With Respect to Loan Files

 

 

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Section 7.4.

Notice to Administrative Agent and each Purchaser Agent

 

 

 

 

ARTICLE VIII.

TERM AND TERMINATION

 

 

 

 

Section 8.1.

Purchase Termination Events

 

Section 8.2.

Remedies

 

Section 8.3.

Survival of Certain Provisions

 

 

 

 

ARTICLE IX.

INDEMNIFICATION

 

 

 

 

Section 9.1.

Indemnification by the Seller

 

Section 9.2.

Assignment of Indemnities

 

 

 

 

ARTICLE X.

MISCELLANEOUS

 

 

 

 

Section 10.1.

Amendments and Waivers

 

Section 10.2.

Notices, Etc

 

Section 10.3.

Limitation of Liability

 

Section 10.4.

Binding Effect; Benefit of Agreement

 

Section 10.5.

GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE

 

Section 10.6.

WAIVER OF JURY TRIAL

 

Section 10.7.

Costs, Expenses and Taxes

 

Section 10.8.

No Proceedings

 

Section 10.9.

Recourse Against Certain Parties

 

Section 10.10.

Protection of Right, Title and Interest in the Purchased Collateral and
Contributed Collateral; Further Action Evidencing Purchases

 

Section 10.11.

Execution in Counterparts; Severability; Integration

 

Section 10.12.

Waiver of Setoff

 

Section 10.13.

Heading and Exhibits

 

Section 10.14.

Rights of Inspection

 

Section 10.15.

Assignment

 

Section 10.16.

No Waiver; Cumulative Remedies

 

Section 10.17.

Subordination

 

Section 10.18.

Revolving Loan Payments

 

 

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SCHEDULES

 

 

 

 

SCHEDULE I

Collateral List

 

SCHEDULE II

Concentration Bank and Concentration Account

 

 

 

 

EXHIBITS

 

 

 

EXHIBIT A

Form of Loan Assignment

 

EXHIBIT B

Form of Officer’s Certificate

 

 

 

 

APPENDICES

 

 

 

APPENDIX A

Condition Precedent Documents

 

 

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THIS PURCHASE AND SALE (such agreement as amended, modified, supplemented or
restated from time to time, the “Agreement”) is dated as of November 3, 2004, by
and between ARES CAPITAL CORPORATION, a Maryland corporation, as the seller (in
such capacity, the “Seller”), and ARES CAPITAL CP FUNDING LLC, a Delaware
limited liability company, as the buyer (in such capacity, the “Buyer”).

 

W I T N E S S E T H:

 

WHEREAS, the Buyer is a wholly-owned affiliate of the Seller and the Seller
desires to capitalize the Buyer with a capital contribution in-kind of certain
Loans and Related Security on or about the date hereof;

 

WHEREAS, the Buyer desires to purchase from the Seller and the Seller desires to
sell to the Buyer certain Loans and Related Security originated or acquired by
the Seller in the ordinary course of its business, together with, among other
things, certain related security and rights of payment thereunder;

 

WHEREAS, the Seller and the Buyer acknowledge that a lien and security interest
in the Loans and Related Security sold, contributed or otherwise conveyed by the
Seller to the Buyer hereunder will be granted and assigned by the Buyer pursuant
to the Sale and Servicing Agreement (as defined herein) and the related
Transaction Documents, to the Trustee, for the benefit of the Secured Parties,
under the Sale and Servicing Agreement; and

 

WHEREAS, the Seller may also underwrite certain assets to be purchased directly
from third parties by the Buyer in accordance with the eligibility criteria
described in Section 4.2(b), which assets will conform in all respects to the
representations and warranties with respect to the Collateral purchased
hereunder and will have the benefit of all covenants and agreements of the
Seller hereunder with respect to such Collateral as if such assets were
purchased directly by the Buyer from the Seller hereunder.

 

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 ascribed to such
terms in the Sale and Servicing Agreement (as defined below).

 

“Agreement”:  Defined in the Preamble.

 

“Buyer”:  Defined in the Preamble.

 

“Contributed Collateral”:  Defined in Section 2.1(a).

 

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“Early Termination”:  Defined in Section 8.1.

 

“Faxed Documents”:  Defined in Section 2.1(f).

 

“Loan Assignment”:  Defined in Section 2.1(b).

 

“Loans”:  The loans listed on Schedule I hereto, as the same may be amended,
supplemented, restated or replaced from time to time.

 

“Purchase”:  A purchase by the Buyer of Collateral pursuant to Section 2.1.

 

“Purchase Date”:  Each Business Day on which any Purchased Collateral or
Contributed Collateral is acquired by the Buyer pursuant to the terms of this
Agreement, including any Substitution Date, as set forth in the related Loan
Assignment.

 

“Purchase Price”:  Defined in Section 2.2.

 

“Purchase Termination Events”:  Defined in Section 8.1.

 

“Purchased Collateral”:  Defined in Section 2.1(a).

 

“Sale and Servicing Agreement”:  The Sale and Servicing Agreement, dated as of
November 3, 2004, among the Seller, as the originator and as the servicer, the
Buyer, as the borrower, each of the Conduit Purchasers and Institutional
Purchasers from time to time party thereto, each of the Purchaser Agents from
time to time party thereto, Wachovia Capital Markets, LLC, as the administrative
agent, U.S. Bank National Association., as the trustee, and Lyon Financial
Services, Inc. d/b/a U.S. Portfolio Services, as the backup servicer, as the
same may be amended, supplemented, restated or replaced from time to time.

 

 “Schedule I”:  The schedule of all Purchased Collateral that is sold,
transferred and assigned by the Seller to the Buyer on a Purchase Date, as
supplemented on any subsequent Purchase Date by the “Schedule I” attached to the
applicable Loan Assignment, and incorporated herein by reference, as such
schedule may be supplemented and amended from time to time pursuant to the terms
hereof, which schedule shall, together with all supplements and amendments
thereto, be included in and made part of the Loan List attached to the Sale and
Servicing Agreement.

 

“Seller”:  Defined in the Preamble.

 

“Substitution Date”:  Any date on which the Seller transfers a Substitute Loan
to the Buyer.

 

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.

 

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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 each Transaction Document, 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 the Transaction Documents;

 

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

 

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

 

(v)                         reference to any time means Charlotte, North
Carolina time;

 

(vi)                      reference to any agreement (including any Transaction
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 Transaction Documents, and reference to any promissory note includes
any promissory note that is an extension or renewal thereof or a substitute or
replacement therefor; and

 

(vii)                   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 each Purchase Date, (x) with respect to items of Collateral
conveyed by the Seller hereunder, the Seller hereby sells, contributes,
transfers, assigns, sets over and otherwise conveys to the Buyer, and the Buyer
hereby Purchases

 

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and takes from the Seller all right, title and interest (whether now owned or
hereafter acquired or arising and wherever located) of the Seller, and (y) in
all other cases, with respect to items of Collateral purchased by or contributed
to the Buyer hereunder, the Buyer hereby purchases or takes all right, title and
interest (whether now owned or hereafter acquired or arising and wherever
located), in the property identified in clauses (i) - (iii) below and all
accounts, cash and currency, chattel paper, tangible chattel paper, electronic
chattel paper, copyrights, copyright licenses, equipment, fixtures, contract
rights, general intangibles, instruments, certificates of deposit, certificated
securities, uncertificated securities, financial assets, securities
entitlements, commercial tort claims, deposit accounts, inventory, investment
property, letter-of-credit rights, software, supporting obligations, accessions,
and other property consisting of, arising out of, or related to any of the
following, property, whether now owned or existing or hereafter created, arising
or acquired and wherever located (in each case excluding the Retained Interest
and the Excluded Amounts) (collectively, the “Purchased Collateral,” in the case
of collateral purchased by the Buyer hereunder, and the “Contributed
Collateral,” in the case of collateral contributed to the Buyer hereunder, as
applicable):

 

(i)                             the Loans identified by the Seller as of the
initial Cut-Off Date which are listed on Schedule I hereto as being purchased by
or contributed to the Buyer, and the Loans identified by the Seller as of any
subsequent Cut-Off Date which are listed on Schedule I to the related Loan
Assignment as being purchased by or contributed to the Buyer, together with all
monies due or to become due in payment under such Loans on and after the related
Cut-Off Date, including but not limited to all Collections, but excluding any
Attached Equity;

 

(ii)                          all Related Security with respect to the Loans
referred to in clause (i) above; and

 

(iii)                       all income and Proceeds of the foregoing.

 

For the avoidance of doubt, and without limiting the foregoing, the term
“Collateral” shall, for all purposes of this Agreement, be deemed to include any
Asset (other than Attached Equity) acquired directly by the Buyer from a third
party in a transaction arranged and underwritten by the Seller or any Asset
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 Asset.

 

(b)                                 The Seller shall on or prior to any Purchase
Date execute and deliver to the Buyer a certificate of assignment (each, a “Loan
Assignment”) in the form of Exhibit A hereto.  From and after such Purchase
Date, the Purchased Collateral and/or Contributed Collateral listed on Schedule
I to the related Loan Assignment shall be deemed to be Purchased Collateral or
Contributed Collateral, as the case may be, hereunder.

 

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

 

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(d)                                 Except as specifically provided in this
Agreement, the sale and purchase of Purchased Collateral 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, all of
which obligations are limited so as not to constitute recourse to the Seller for
the credit risk of the Obligors.

 

(e)                                  The Buyer, the Administrative Agent, each
Purchaser Agent, each Purchaser, the other Secured Parties, the Backup Servicer
and the Trustee shall not have any obligation or liability to any Obligor or
client of the Seller, including any obligation to perform any of the obligations
of the Seller (including any obligation with respect to any other related
agreements).  No such obligation or liability is intended to be assumed by the
Buyer, the Administrative Agent, any Purchaser Agent, the Purchasers, the
Secured Parties, the Backup Servicer, or the Trustee, and any such assumption is
expressly disclaimed.

 

(f)                                    In connection with each Purchase of
Purchased Collateral and each contribution of Contributed Collateral hereunder,
the Seller shall deliver to the Trustee (A) the Required Loan Documents with
respect thereto on or prior to the Closing Date (except for any UCCs, which
shall be in the possession of the Trustee within two Business Days after the
Closing Date) as to any Existing Loans, and (B) the duly executed original
promissory note and the duly executed faxed copies of the other documents
included in the Required Loan Documents (the “Faxed Documents”) on or prior to
the related Purchase Date (and, if prior to the related Purchase Date, such
promissory note and Faxed Documents shall be held by the Trustee on behalf of
the Purchasers in escrow until such Purchase shall occur on the related Purchase
Date); provided that, with respect to any Loan closed in escrow, the Seller
shall deliver to the Administrative Agent a certificate in the form of Exhibit L
to the Sale and Servicing Agreement with respect to such Loan on or prior to the
related Purchase Date; and provided, further, that each related set of Required
Loan Documents and each related Servicing File shall be in the possession of the
Trustee and the Servicer, respectively, within two Business Days after the
related Purchase Date.

 

(g)                                 In connection with each Purchase of
Purchased Collateral and each contribution of Contributed Collateral hereunder,
the Seller hereby grants to each of the Buyer, the Administrative Agent, the
Trustee and the Servicer and the Backup Servicer an irrevocable, non-exclusive
license to use, without royalty or payment of any kind, all software used by the
Seller to account for the Purchased Collateral and Contributed Collateral, to
the extent necessary to administer the Purchased Collateral and Contributed
Collateral, whether such software is owned by the Seller or is owned by others
and used by the Seller under license agreements with respect thereto; provided
that, should the consent of any licensor of such software be required for the
grant of the license described herein to be effective or for the Buyer to assign
such licenses to the Servicer, the Backup Servicer or any other Successor
Servicer, the Seller hereby agrees that upon the request of the Buyer, the
Administrative Agent or the Trustee, the Seller shall use its best efforts to
obtain the consent of such third-party licensor.  The license granted hereby
shall be irrevocable until the Collection Date and shall terminate on the date
this Agreement terminates in accordance with its terms.  The Seller (i) shall
take such action requested by the Buyer, the Administrative Agent or the
Trustee, from time to time hereafter, that may be necessary or appropriate to
ensure that the Buyer and its assigns under the Sale and Servicing Agreement
have an enforceable ownership interest in the Collateral purchased by the Buyer
or contributed to the

 

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Buyer as contemplated by this Agreement, and (ii) shall use its best efforts to
ensure that each of the Buyer, the Administrative Agent, the Trustee and the
Servicer (or the Backup Servicer and any Successor Servicer) has an enforceable
right (whether by license or sublicense or otherwise) to use all of the computer
software used to account for the Purchased Collateral and Contributed Collateral
and/or to recreate the related Loan Files.

 

(h)                                 In connection with the purchase by the Buyer
of Collateral and the contribution of Collateral by the Seller to the Buyer as
contemplated by this Agreement, the Seller further agrees that it shall, at its
own expense, indicate clearly and unambiguously in its computer files on or
prior to each Purchase Date, and its financial statements, that such Purchased
Collateral has been purchased by the Buyer and such Contributed Collateral has
been contributed to the Buyer in accordance with this Agreement.

 

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

 

(j)                                     It is the intention of the parties
hereto that the conveyance of all right, title and interest in and to the
Purchased Collateral and Contributed Collateral as provided in Section 2.1 shall
constitute an absolute transfer conveying good title, free and clear of any Lien
(other than Permitted Liens) and that the Purchased Collateral and Contributed
Collateral 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 Loans and the other Purchased
Collateral and Contributed Collateral 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 also be deemed to be, and
hereby is, a “security agreement” within the meaning of Article 9 of the UCC and
the Seller 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, to and under the Purchased Collateral and Contributed Collateral,
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 Purchased Collateral together with all of the other obligations of
the Seller hereunder.  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 item of Purchased Collateral sold to the Buyer by
the Seller under this Agreement (the “Purchase Price”) shall be a dollar amount
equal to the Outstanding Loan Balance thereof, to be determined as of the
related Cut-Off Date, and to be paid in accordance with Section 2.3.

 

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Section 2.3.                                Payment of Purchase Price.

 

(a)                                  The Purchase Price for any Purchased
Collateral sold by the Seller to the Buyer on any Purchase Date shall be paid in
immediately available funds; provided that, if the Buyer does not have
sufficient funds to pay the full amount of the Purchase Price, the excess of the
Purchaser Price over such amount of immediately available funds shall be a
capital contribution by the Seller to the Buyer.

 

(b)                                 The Purchase Price for any Collateral
purchased by the Buyer directly from a third party on any Purchase Date shall be
paid in immediately available funds, which may comprise, if the Buyer does not
have sufficient funds to pay the full amount of the Purchase Price (after taking
into account the proceeds the Buyer expects to receive pursuant to the Sale and
Servicing Agreement), amounts contributed by the Seller to the Buyer.

 

(c)                                  Notwithstanding Section 2.3(b) or any other
provision herein to the contrary, the Seller may on any Purchase Date elect to
designate all or a portion of the Collateral proposed to be transferred to the
Buyer on such date as a capital contribution to the Buyer.  In such event, the
Purchase Price payable with respect to such transfer shall be reduced by that
portion of the Purchase Price of the Collateral that was so contributed;
provided, however, that Collateral contributed to the Buyer as capital shall
constitute Collateral for all purposes of this Agreement.

 

(d)                                 The Seller in connection with each delivery
of a Loan Assignment hereunder relating to any Collateral shall be deemed to
have certified, with respect to the Purchased Collateral to be purchased by the
Buyer and the Contributed Collateral to be contributed to the Buyer on such day,
that its representations and warranties contained in Article IV are true and
correct on and as of such day, with the same effect as though made on and as of
such day, and that no Termination Event or Unmatured Termination Event has
occurred.

 

(e)                                  Upon each Purchase of Purchased Collateral
and each contribution of Contributed Collateral hereunder, title to such
Collateral shall rest in the Buyer, whether or not the conditions precedent to
such Purchase and the other covenants and agreements contained herein were in
fact satisfied; provided, however, that 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.

 

ARTICLE III.

CONDITIONS PRECEDENT

 

Section 3.1.                                Conditions Precedent to Closing and
Initial Purchase.

 

The closing and initial Purchase hereunder are subject to the conditions
precedent that (i) each of the conditions precedent to the execution, delivery
and effectiveness of each other Transaction Document (other than a condition
precedent in any such other Transaction Document relating to the effectiveness
of this Agreement) shall have been fulfilled, and (ii) on or prior to the
Closing Date, the Seller shall have delivered to the Buyer each of the items
specified on Appendix A hereto in form and substance satisfactory to the Buyer.

 

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Section 3.2.                                Conditions Precedent to all
Purchases.

 

The obligations of the Buyer to Purchase the Purchased Collateral as
contemplated by this Agreement on any Purchase Date (including the initial
Purchase Date) shall be subject to the satisfaction of the following conditions
precedent that:

 

(a)                                  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 such date as though made on and as of such date
and shall be deemed to have been made on and as of such day;

 

(b)                                 the Seller shall have delivered to the
Buyer, a duly executed and completed Loan Assignment along with a Schedule I
that is true, accurate and complete in all respects as of the related Cut-Off
Date;

 

(c)                                  on and as of such 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;

 

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

 

(e)                                  the Termination Date shall not have
occurred;

 

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

 

(g)                                 in the case of the initial Purchase, the
Buyer, the Administrative Agent and the Purchaser Agents shall be in receipt of
UCC, tax and judgment lien searches relating to the Seller;

 

(h)                                 in the case of the initial Purchase, the
Buyer, the Administrative Agent and the Purchaser Agents shall be in receipt of
UCC financing statements per paragraph (iv) of Appendix A;

 

(i)                                     in the case of the initial Purchase, the
Buyer, the Administrative Agent and the Purchaser Agents shall be in receipt of
opinions of counsel satisfactory to such Persons;

 

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

 

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(k)                                  the Seller shall have paid all fees
required to be paid by it on the Closing Date, and shall have reimbursed the
Buyer and its assignees for all fees, costs and expenses of closing the
transactions contemplated hereunder and under the other Transaction Documents.

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

 

Section 4.1.                                Seller’s Representations and
Warranties.

 

As of each 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 to conduct its business
as such business is presently conducted, and had at all relevant times, and now
has, all necessary power, authority and legal right to acquire, own and sell or
contribute the Purchased Collateral and Contributed Collateral.

 

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

 

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

 

(d)                                 Binding Obligation.  This Agreement and each
other Transaction Document to which the Seller is a party 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 other Transaction Documents
to which it is a party and the fulfillment of the terms hereof and thereof will
not (i) conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a default
under, the Seller’s articles of incorporation or by-laws or any Contractual
Obligation of the Seller, (ii) result in the creation or imposition of any Lien
(other than Permitted Liens) upon any of the Seller’s

 

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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 or any other Transaction Document to which the
Seller is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document to
which the Seller is a party or (iii) seeking any determination or ruling that
could reasonably be expected to have Material Adverse Effect.

 

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

 

(h)                                 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 and any other Transaction Document to which the Seller is a party do
not and will not render the Seller not Solvent.

 

(j)                                     Selection Procedures.  No procedures
believed by the Seller to be adverse to the interests of the Buyer were utilized
by the Seller in identifying and/or selecting the Loans included in the
Purchased Collateral and Contributed Collateral.

 

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

 

(l)                                     Exchange Act Compliance; Regulations T,
U and X.  None of the transactions contemplated herein or in the other
Transaction Documents (including, without limitation, the use of the proceeds
from the sale of the Purchased Collateral) will violate or result in a violation
of Section 7 of the Exchange Act, or any regulations issued pursuant thereto,
including, without limitation, Regulations T, U and X of the Board of Governors
of the Federal Reserve 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 Purchased
Collateral 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.

 

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(m)                               Security Interest.

 

(i)                                     This Agreement creates a valid and
continuing security interest (as defined in the applicable UCC) in the Purchased
Collateral and Contributed Collateral in favor of the Buyer and the Trustee, on
behalf of the Secured Parties, which security interest is prior to all other
Liens (except for Permitted Liens), and is enforceable as such against creditors
of and purchasers from the Seller;

 

(ii)                                  the Loans, along with the related Loan
Files, constitute either a “general intangible,” an “instrument,” an “account,”
“investment property,” “chattel paper,” or “securities entitlement” in each case
within the meaning of Article 8 or Article 9 of the UCC of all applicable
jurisdictions;

 

(iii)                               the Seller owns and has good and marketable
title to the Purchased Collateral and Contributed Collateral sold and/or
contributed by it to the Buyer hereunder on such Purchase Date, free and clear
of any Lien (other than Permitted Liens) of any Person;

 

(iv)                              the Seller has received all consents and
approvals required by the terms of any Loan, to the granting of a security
interest in the Loans hereunder to the Buyer and the Trustee, 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
that portion of the Purchased Collateral and Contributed Collateral in which a
security interest may be perfected by filing granted hereunder to the Buyer and
the Trustee, on behalf of the Secured Parties;

 

(vi)                              other than the security interest granted to
the Buyer and the Trustee, on behalf of the Secured Parties, the Seller has not
pledged, assigned, sold, granted a security interest in or otherwise conveyed
any of the Purchased Collateral and Contributed Collateral.  The Seller has not
authorized the filing of and is not aware of any financing statements against
the Seller that include a description of collateral covering the Purchased
Collateral and Contributed Collateral other than any financing statement (A)
relating to the security interest granted to the Buyer under this Agreement and
to the Secured Parties under the Sale and Servicing Agreement, or (B) that has
been terminated.  The Seller is not aware of the filing of any judgment or tax
lien filings against the Seller;

 

(vii)                           all original executed copies of the Required
Loan Documents that constitute or evidence each Loan have been, or subject to
the delivery requirements contained herein, will be delivered to the Trustee;

 

(viii)                        other than in the case of Noteless Loans, the
Seller has received, or subject to the delivery requirements contained herein
will receive, a written acknowledgement from the Trustee that the Trustee or its
bailee is holding the underlying promissory notes (if any), the copies of the
Loan Registers that constitute or evidence the Loans solely on behalf of and for
the benefit of the Secured Parties; and

 

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

 

(n)                                 Reports Accurate.  All Servicing Reports (to
the extent that information contained therein is supplied by the Seller),
information, exhibits, schedules, financial statements, documents, books,
records or reports furnished by the Seller to the Buyer in connection with this
Agreement are, as of their date, true, complete and correct.

 

(o)                                 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(g) shall have been satisfied).

 

(p)                                 Concentration Account.  The name and address
of the Concentration Account Bank, together with the account number of the
Concentration Account of Ares Capital CP Funding LLC at such Concentration
Account Bank is specified in Schedule II.  The Concentration Account is the only
account to which Obligors send Collections on the Purchased Collateral and
Contributed Collateral sold or contributed by the Seller.  Except as
contemplated by the Intercreditor Agreement, the Borrower has not granted any
Person other than the Administrative Agent and the Trustee an interest in the
Concentration Account.

 

(q)                                 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.

 

(r)                                    Sale Agreement.  This Agreement is the
only agreement or arrangement pursuant to which the Seller sells the Purchased
Collateral sold by it to the Buyer.

 

(s)                                  Value Given.  The Buyer has given
reasonably equivalent value to the Seller or to any applicable third party from
which the Buyer has acquired any Collateral in consideration for the transfer to
the Buyer of the Purchased Collateral 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 third party to the Buyer, and no such transfer is or may be
voidable or subject to avoidance under any section of the Bankruptcy Code.

 

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

 

(u)                                 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
Administrative Agent, the Trustee, each Purchaser Agent, the Purchasers and the
other Secured Parties are entering into the transactions contemplated by the
Sale and Servicing 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,

 

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without limitation, all steps that the Administrative Agent, the Trustee, each
Purchaser Agent, any Purchaser, or any other Secured Party may from time to time
reasonably request, to maintain the Buyer’s identity as a separate legal entity
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 4.1(u) of the Sale and Servicing
Agreement.

 

(v)                                 [Reserved].

 

(w)                               ERISA.  The present value of all benefits
vested under all “employee pension benefit plans,” as such term is defined in
Section 3 of ERISA, maintained by the Seller, or in which employees of the
Seller are entitled to participate, as from time to time in effect (herein
called the “Pension Plans”), does not exceed the value of the assets of the
Pension Plan allocable to such vested benefits (based on the value of such
assets as of the last annual valuation date).  No prohibited transactions,
accumulated funding deficiencies, withdrawals or reportable events have occurred
with respect to any Pension Plans that, in the aggregate, could subject the
Seller to any material tax, penalty or other liability.  No notice of intent to
terminate a Pension Plan has been filed, nor has any Pension Plan been
terminated under Section 4041(f) of ERISA, nor has the Pension Benefit Guaranty
Corporation instituted proceedings to terminate, or appoint a trustee to
administer a Pension Plan and no event has occurred or condition exists that
might constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan.

 

(x)                                   PUHCA.  The Seller is not a “holding
company” or a “subsidiary holding company” of a “holding company” within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or any
successor statute.

 

(y)                                 Compliance with Law.  The Seller has
complied in all respects with all Applicable Law to which it may be subject, and
no Purchased Collateral or Contributed Collateral contravenes any Applicable Law
(including, without limitation, all Applicable Laws relating to predatory and
abusive lending and all laws, rules and regulations relating to licensing, truth
in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices, and privacy).

 

(z)                                   Credit Policy.  The Seller has complied in
all material respects with the Credit Policy with respect to all of the
Purchased Collateral and Contributed Collateral.

 

(aa)                            Collections.  The Seller acknowledges that all
Collections received by it or its Affiliates with respect to the Purchased
Collateral and Contributed Collateral purchased by or contributed to the Buyer
as contemplated by this Agreement are held and shall be held in trust for the
benefit of the Buyer (or its assignees) until deposited into the Collection
Account as required by the Sale and Servicing Agreement.

 

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(bb)                          Set-Off, etc.  No Purchased Collateral or
Contributed Collateral has been compromised, adjusted, extended, satisfied,
subordinated (other than Senior Subordinated Loans and Junior Subordinated
Loans, and solely to the extent provided for in the definition thereof),
rescinded, set-off or modified by the Seller or the Obligor thereof, and no
Purchased Collateral or Contributed Collateral is subject to compromise,
adjustment, extension, satisfaction, subordination, rescission, set-off,
counterclaim, defense, abatement, suspension, deferment, deduction, reduction,
termination or modification, whether arising out of transactions concerning the
Purchased Collateral and Contributed Collateral or otherwise, by the Seller or
the Obligor with respect thereto, except for amendments, extensions or
modifications to such Purchased Collateral and Contributed Collateral otherwise
permitted under the Transaction Documents and in accordance with the Credit
Policy and the Servicing Standard.

 

(cc)                            Full Payment.  As of the related Purchase Date
thereof, the Seller has no knowledge of any fact which should lead it to expect
that any Purchased Collateral or Contributed Collateral will not be paid in
full.

 

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

 

(ee)                            Representations and Warranties for Benefit of
the Buyer’s Assignees.  Each of the representations and warranties of the Seller
contained in this Agreement and the other Transaction Documents to which it is a
party and that have been executed and delivered on or prior to such Purchase
Date is true and correct in all material respects on the date it was made, and
the Seller hereby makes each such representation and warranty to, and for the
benefit of the Administrative Agent, the Trustee, each Purchaser Agent, the
Purchasers and the other Secured Parties as if the same were set forth in full
herein.

 

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

 

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

 

(hh)                          Environmental.

 

(i)                             With respect to each item of Related Property as
of the Cut-Off Date for the Loan related to such Related Property, to the actual
knowledge of a Responsible Officer of the Seller (a) the related Obligor’s
operations comply in all material respects with all applicable Environmental
Laws; (b) none of the related Obligor’s operations is the subject of a Federal
or state investigation evaluating whether any remedial action, involving
expenditures, is needed to respond to a release of any Hazardous Materials into
the environment; and (c) the related Obligor does not have any material
contingent

 

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liability in connection with any release of any Hazardous Materials into the
environment.

 

(ii)                          As of the Cut-Off Date for the Loan related to
such Related Property, the Seller has not received any written or verbal notice
of, or inquiry from any Governmental Authority regarding, any violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Related Property, nor does the Seller have knowledge or reason to believe
that any such notice will be received or is being threatened.

 

(ii)                                  USA PATRIOT Act.  Neither the Seller nor
any Affiliate of the Seller is (i) a country, territory, organization, person or
entity named on an Office of Foreign Asset Control (OFAC) list, (ii) a Person
that resides or has a place of business in a country or territory named on such
lists or which is designated as a “Non-Cooperative Jurisdiction” by the
Financial Action Task Force on Money Laundering, or whose subscription funds are
transferred from or through such a jurisdiction; (iii) a “Foreign Shell Bank”
within the meaning of the USA PATRIOT Act, i.e., a foreign bank that does not
have a physical presence in any country and that is not affiliated with a bank
that has a physical presence and an acceptable level of regulation and
supervision; or (iv) a person or entity that resides in or is organized under
the laws of a jurisdiction designated by the United States Secretary of the
Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting special
measures due to money laundering concerns.

 

(jj)                                  Covenants.  All covenants, agreements and
undertakings of the Seller hereunder have been fully performed.

 

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 Purchased Collateral and Contributed Collateral to the Buyer and (y) any
subsequent transfer of the Purchased Collateral and Contributed Collateral by
the Buyer (including its grant of a first priority perfected security interest
in, to and under the Purchased Collateral and Contributed Collateral pursuant to
the Sale and Servicing Agreement).  Upon discovery by the Seller or the Buyer of
a breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice thereof to the other
and to the Administrative Agent and each Purchaser Agent immediately upon
obtaining knowledge of such breach.

 

Section 4.2.                                Representations and Warranties of
the Seller Relating to the Agreement and the Purchased Collateral and
Contributed Collateral.

 

The Seller hereby represents and warrants to the Buyer, as of the Closing Date
and as of each 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 in, to and under all Purchased Collateral and
Contributed Collateral, free and clear of any Lien of any Person claiming
through or under the Seller or its Affiliates, except for Permitted Liens.  If
the conveyances contemplated by this Agreement are determined to be a transfer
for security, then

 

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this Agreement constitutes a grant of a security interest in all Purchased
Collateral and Contributed Collateral to the Buyer which upon the delivery of
the Required Loan Documents to the Trustee and the filing of the financing
statements described in Section 4.1(n) and, in the case of Additional Loans on
the applicable Purchase Date, shall be a first priority perfected security
interest in all Purchased Collateral and Contributed Collateral, subject only to
Permitted Liens.  Neither the Seller nor any Person claiming through or under
the Seller shall have any claim to or interest in the Collection 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.

 

(b)                                 Eligibility of Purchased Collateral and
Contributed Collateral.  As of each Purchase Date, (i) Schedule I is an accurate
and complete listing of all the Purchased Collateral and Contributed Collateral
as of the related Cut-Off Date and the information contained therein with
respect to the identity of such Purchased Collateral and Contributed Collateral
and the amounts owing thereunder is true and correct as of the related Cut-Off
Date, (ii) each item of Purchased Collateral and Contributed Collateral
purchased by the Buyer hereunder is an Eligible Loan, (iii) with respect to each
item of Purchased Collateral and Contributed Collateral, all consents, licenses,
approvals or authorizations of or registrations or declarations of any
Governmental Authority or any Person required to be obtained, effected or given
by the Seller in connection with the transfer of an ownership interest or
security interest in each item of Purchased Collateral and Contributed
Collateral to the Buyer have been duly obtained, effected or given and are in
full force and effect, and (v) the representations and warranties set forth in
Section 4.2(a) are true and correct with respect to each item of Purchased
Collateral and Contributed Collateral.

 

(c)                                  No Fraud.  Each 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 Purchased Collateral and Contributed Collateral to the Buyer, (y) any
subsequent transfer of the Purchased Collateral or Contributed Capital by the
Buyer (including its grant of a perfected security interest in, to and under the
Purchased Collateral and Contributed Collateral pursuant to the Sale and
Servicing Agreement, which shall be a first priority security interest) and (z)
the termination of this Agreement and the Sale and Servicing Agreement.  Upon
discovery by the Seller or the Buyer of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice thereof to the other and to the Administrative Agent and
each Purchaser Agent immediately upon obtaining knowledge of such breach.

 

Section 4.3.                                Representations and Warranties of
the Buyer.

 

The Buyer hereby represents and warrants to the Seller, as of the Closing Date
and each 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

 

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Delaware, with all requisite limited liability company 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 Purchased Collateral and
Contributed Collateral.

 

(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.

 

(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 and the other Transaction Documents to which it is a party, (b) carry
out the terms of this Agreement and the other Transaction Documents to which it
is a party, and (ii) has duly authorized by all necessary limited liability
company action the execution, delivery and performance of this Agreement and the
other Transaction Documents to which it is a party and the purchase of the
Purchased Collateral on the terms and conditions herein provided.  This
Agreement and each other Transaction Document to which the Buyer is a party have
been duly executed and delivered by the Buyer.

 

(d)                                 Binding Obligation.  This Agreement and each
other Transaction Document to which the Buyer is a party constitutes a legal,
valid and binding obligation of the Buyer enforceable against the Buyer 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 other Transaction Documents
to which it is a party and the fulfillment of the terms hereof and thereof will
not (i) conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a default
under, the Buyer’s certificate of formation, operating agreement or any
Contractual Obligation of the Buyer, (ii) result in the creation or imposition
of any Lien (other than Permitted Liens) 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 or any other Transaction Document to which the
Buyer is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Document to
which the Buyer is a party or (iii) seeking any determination or ruling that
could reasonably be expected to have Material Adverse Effect.

 

(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 and any other Transaction Document to
which the Buyer is a party have been obtained.

 

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(h)                                 Investment Company Act. The Buyer is exempt
from the provisions of the 1940 Act.

 

ARTICLE V.

COVENANTS

 

Section 5.1.                                Affirmative Covenants of the Seller.

 

From the date hereof until the Collection Date:

 

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

 

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

 

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

 

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

 

(e)                                  Protection of Interest in Purchased
Collateral and Contributed Collateral.  With respect to the Purchased Collateral
and Contributed Collateral sold and contributed to the Buyer, the Seller will
(i) if sold by the Seller, sell such Purchased Collateral pursuant to and in
accordance with the terms of this Agreement, (ii) (at the Seller’s expense) take
all action necessary to perfect, protect and more fully evidence the Buyer’s or
its assignee’s ownership or security interest in such Purchased Collateral and
such Contributed Collateral free and clear of any Lien other than the Lien
created hereunder and Permitted Liens, including, without limitation, (a) if
sold by the Seller, with respect to the Loans and that portion of the Purchased
Collateral in which a security interest may be perfected by filing, by filing
and maintaining (at the Seller’s expense), effective financing statements
against the Seller in all necessary or appropriate filing offices (including any
amendments thereto or assignments thereof), and filing continuation statements,
amendments or assignments with respect thereto in such filing offices (including
any amendments thereto or assignments thereof), and (b) executing or causing to
be executed such other instruments or notices as may be necessary or
appropriate, (iii) permit the

 

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Buyer or the Administrative Agent or their respective agents or representatives
to visit the offices of the Seller during normal office hours and upon
reasonable notice examine and make copies of all documents, books, records and
other information concerning the Purchased Collateral and Contributed Collateral
and discuss matters related thereto with any of the officers or employees of the
Seller having knowledge of such matters, and (iv) take all additional action
that the Buyer and the Administrative Agent may reasonably request to perfect,
protect and more fully evidence the respective interests of the parties to this
Agreement in the Purchased Collateral and Contributed Collateral.

 

(f)                                    Deposit of Collections.  The Seller will
cause (1) all Collections to be directly deposited by the Concentration Bank
into the Concentration Account and (2) the Concentration Account to be subject
at all times to the Intercreditor Agreement that is in full force and effect as
of the date hereof.  In the event any payments relating to any Purchased
Collateral or Contributed Collateral are remitted directly to the Seller or any
Affiliate of the Seller, the Seller will remit (or will cause all such payments
to be remitted) directly to the Collection Account within two Business Days
following receipt thereof, and, at all times prior to such remittance, the
Seller will itself hold or, if applicable, will cause such payments to be held
in trust for the exclusive benefit of the Buyer, the Administrative Agent, the
Trustee, each Purchaser Agent and the Purchasers.  The Seller will maintain
exclusive ownership, dominion and control (subject to the terms of this
Agreement) of the Concentration Account and shall not grant the right to take
dominion and control of the Concentration Account to any Person, except to the
Administrative Agent and each Purchaser Agent as contemplated by the Sale and
Servicing Agreement.  Until so deposited, all such Collections shall be held in
trust for the Buyer or its assignees by the Seller.

 

(g)                                 Separate Identity.  The Seller acknowledges
that the Administrative Agent, the Trustee, each Purchaser Agent, the Purchasers
and the other Secured Parties are entering into the transactions contemplated by
this Agreement, the Sale and Servicing Agreement and the other Transaction
Documents in reliance upon the Buyer’s identity as a legal entity that is
separate from the Seller and each other Affiliate of the Seller.  Therefore,
from and after the date of execution and delivery of this Agreement, the Seller
will take all reasonable steps including, without limitation, all steps that the
Administrative Agent, the Trustee, each Purchaser Agent, the Purchasers and the
other Secured Parties 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 the
criteria and the restrictions set forth in Section 4.1(u) of the Sale and
Servicing 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

 

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of the Seller shall not reflect in any way that the assets of the Buyer,
including, without limitation, the Purchased Collateral and Contributed
Collateral, could be available to pay creditors of the Seller or any other
Affiliate of the Seller;

 

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

 

(v)                         the Seller shall maintain an arm’s-length
relationship with the 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;

 

(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; and

 

(viii)                to the extent that the Seller services the Loans and
performs other services on the Buyer’s behalf, the Seller will clearly identify
itself as an agent for the Buyer in the performance of such duties; provided,
however, that the Seller will not be required to so identify itself when
communicating with the Obligors.

 

(h)                                 Credit Policy.  The Seller will (a) comply
in all material respects with the Credit Policy in regard to the Purchased
Collateral and Contributed Collateral, and (b) furnish to the Buyer, the
Trustee, the Administrative Agent and each Purchaser Agent, prior to its
effective date, prompt written notice of any changes in the Credit Policy.  The
Seller will not agree to or otherwise permit to occur any change in the Credit
Policy that could reasonably be expected to have a Material Adverse Effect
without the prior written consent of the Buyer and the Administrative Agent
(which consent will not be unreasonably withheld); provided that no consent
shall be required from the Buyer or the Administrative Agent in connection with
any change mandated by Applicable Law or a Governmental Authority as evidenced
by an Opinion of Counsel to that effect delivered to the Buyer and the
Administrative Agent

 

(i)                                     Termination Events.  The Seller will
provide the Buyer, the Administrative Agent, the Trustee and each Purchaser
Agent with immediate written notice of the occurrence of each Termination Event
and each Unmatured Termination Event of which the Seller has knowledge or has
received notice.  In addition, no later than two Business Days following the
Seller’s knowledge or notice of the occurrence of any Termination Event or
Unmatured Termination Event, the Seller will provide to the Buyer, the Trustee,
the Administrative Agent and each Purchaser Agent a written statement of a
Responsible Officer of the Seller setting forth the details of such event and
the action that the Seller proposes to take with respect thereto.

 

(j)                                     Taxes.  The Seller will file its tax
returns and pay any and all Taxes imposed on it or its property as required by
the Transaction Documents.

 

(k)                                  Cooperation with Requests for Information
or Documents.  The Seller will cooperate fully with all reasonable requests of
the Buyer regarding the provision of any

 

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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 Transaction Documents.

 

(l)                                     Obligor Notification Forms.  The Seller
shall furnish the Buyer, the Trustee, the Administrative Agent or any Purchaser
Agent with an appropriate power of attorney to send (at the Buyer’s, the
Trustee’s, the Administrative Agent’s or any Purchaser Agent’s discretion after
the occurrence of a Termination Event) Obligor notification forms to give notice
to the Obligors of the Trustee’s, for the benefit of the Secured Parties,
interest in the Purchased Collateral and Contributed Collateral and the
obligation to make payments as directed by the Buyer, the Trustee, the
Administrative Agent or any Purchaser Agent.

 

(m)                               Adverse Claims.  The Seller will not create,
or participate in the creation of, or permit to exist, any Liens in relation to
the Concentration Account other than in accordance with the terms of the
Intercreditor Agreement.

 

(n)                                 Payment, Performance and Discharge of
Obligations.  The Seller will pay, perform and discharge all of its obligations
and liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties, when due, the non-payment,
performance or discharge of which would reasonably be expected to have a
Material Adverse Effect, 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.

 

(o)                                 Notices.  The Seller will furnish to the
Buyer, the Trustee, the Administrative Agent and each Purchaser Agent:

 

(i)                             Income Tax Liability.  Within ten Business Days
after the receipt of revenue agent reports or other written proposals,
determinations or assessments of the Internal Revenue Service or any other
taxing authority which propose, determine or otherwise set forth positive
adjustments to the Tax liability of any “affiliated group” (within the meaning
of the Code) which equal or exceed $1,000,000 in the aggregate, telephonic or
facsimile notice (confirmed in writing within five Business Days) specifying the
nature of the items giving rise to such adjustments and the amounts thereof;

 

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

 

(iii)                       Representations.  Forthwith upon receiving knowledge
of same, the Seller shall notify the Buyer, the Trustee, the Administrative
Agent and each Purchaser Agent if any representation or warranty set forth in
Section 4.1 or Section 4.2 was incorrect at the time it was given or deemed to
have been given and at the same time deliver to the Buyer, the Trustee, the
Administrative Agent and each Purchaser Agent a written notice setting forth in
reasonable detail the nature of such facts and

 

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circumstances.  In particular, but without limiting the foregoing, the Seller
shall notify the Buyer, the Trustee, the Administrative Agent and each Purchaser
Agent in the manner set forth in the preceding sentence before any Purchase Date
of any facts or circumstances within the knowledge of the Seller which would
render any of the said representations and warranties untrue at the date when
such representations and warranties were made or deemed to have been made;

 

(iv)                      ERISA.  Promptly after receiving notice of any
“reportable event” (as defined in Title IV of ERISA) with respect to the Seller
(or any Affiliate thereof), a copy of such notice;

 

(v)                         Proceedings Related to the Seller, the Buyer and the
Transaction Documents.  As soon as possible and in any event within three
Business Days after the Seller receives notice or obtains knowledge thereof,
notice of any settlement of, judgment (including a judgment with respect to the
liability phase of a bifurcated trial) in or commencement of any labor
controversy, litigation, action, suit or proceeding before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that could reasonably be expected to have a Material
Adverse Effect on the Seller or the Buyer (or any of their Affiliates) or the
Transaction Documents; provided, however, that, notwithstanding the foregoing,
any settlement, judgment, labor controversy, litigation, action, suit or
proceeding affecting the Transaction Documents, the Seller or the Buyer (or any
of its Affiliates) in excess of $2,500,000 or more shall be deemed to be
expected to have such a Material Adverse Effect for purposes of this Section
5.1(o);

 

(vi)                      Notice of Material Events.  Promptly upon becoming
aware thereof, notice of any other event or circumstances that, in the
reasonable judgment of the Seller, is reasonably likely to have a Material
Adverse Effect; and

 

(vii)                   Proceedings Related to the Collateral.  As soon as
possible and in any event within three Business Days after a Responsible Officer
of the Seller receives notice or has actual knowledge of any settlement of,
judgment (including a judgment with respect to the liability phase of a
bifurcated trial) in or commencement of any labor controversy, litigation,
action, suit or proceeding before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that
could reasonably be expected to have a Material Adverse Effect on the interest
of the Trustee, for the benefit of the Secured Parties, in, to and under the
Purchased Collateral and Contributed Collateral; provided, however, that,
notwithstanding the foregoing, any settlement, judgment, labor controversy,
litigation, action, suit or proceeding affecting the Purchased Collateral or
Contributed Collateral, the Buyer’s or the Trustee’s, for the benefit of the
Secured Parties, interest in the Purchased Collateral or Contributed Collateral
in excess of $2,500,000 or more shall be deemed to be expected to have such a
Material Adverse Effect for purposes of this Section 5.1(o).

 

(p)                                 Other.  The Seller will furnish to the
Buyer, the Trustee, the Administrative Agent and each Purchaser Agent promptly,
from time to time such other information, documents, records or reports
respecting the Purchased Collateral and Contributed Collateral or the condition

 

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or operations, financial or otherwise, of the Seller as the Buyer, the Trustee,
the Administrative Agent and each Purchaser Agent may from time to time
reasonably request in order to protect the interests of the Administrative
Agent, the Trustee, each Purchaser Agent or the Secured Parties under or as
contemplated by this Agreement and the Sale and Servicing Agreement.

 

(q)                                 Copies of Other Information.  The Seller
will deliver to the Buyer, the Trustee, the Administrative Agent and each
Purchaser Agent:

 

(i)                             promptly, but in any event within ten Business
Days after the filing thereof, a copy of (a) each report or other filing made by
the Seller or any of its Affiliates with the Securities and Exchange Commission
(the “SEC”) and required by the SEC to be delivered to the shareholders of the
Seller or any such Affiliate, and (b) each report and final registration
statement of the Seller or any Affiliate filed with the SEC; and

 

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

 

Section 5.2.                                Negative Covenants of Seller.

 

From the date hereof until the Collection Date:

 

(a)                                  [Reserved].

 

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

 

(c)                                  Security Interests.  Except as otherwise
permitted herein and in respect of any Optional Sale in connection with a
Permitted Securitization or Permitted Refinancing, Defaulted Loan Sale, RIC/BDC
Sale or Replaced Loan, the Seller will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any Lien on
any Purchased Collateral or Contributed Collateral, whether now existing or
hereafter transferred hereunder, or any interest, therein, and the Seller will
not sell, pledge, assign or suffer to exist any Lien (except for Permitted
Liens) on its interest in the Purchased Collateral or Contributed Collateral. 
The Seller will promptly notify the Buyer, the Administrative Agent and each
Purchaser Agent of the existence of any Lien on any Purchased Collateral or
Contributed Collateral and the Seller shall defend the right, title and interest
of the Buyer, the Administrative Agent and each Purchaser Agent in, to and under
the Purchased Collateral and Contributed Collateral against all claims of

 

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third parties; provided, however, that nothing in this Section 5.2(g) shall
prevent or be deemed to prohibit the Seller from suffering to exist Permitted
Liens upon any of the Purchased Collateral or Contributed Collateral.

 

(d)                                 Mergers, Acquisitions, Sales, etc.  The
Seller will not be a party to any merger or consolidation, or purchase or
otherwise acquire any of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or sell, transfer,
convey or lease any of its assets, or sell or assign with or without recourse
any Purchased Collateral or Contributed Collateral or any interest therein
(other than as permitted pursuant to this Agreement or the Sale and Servicing
Agreement).

 

(e)                                  Deposits to Special Accounts.  Except as
otherwise contemplated by the Intercreditor Agreement, the Seller will not
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to the Concentration Account cash or cash proceeds other than Collections in
respect of Purchased Collateral and Contributed Collateral.

 

(f)                                    Restricted Payments.  The Seller shall
not cause or permit the Buyer to make any Restricted Junior Payment, except
that, so long as no Termination Event or Unmatured Termination Event has
occurred or would result therefrom, the Buyer may declare and make distributions
to its members on their membership interests.

 

(g)                                 Change of Name or Location of Loan Files. 
The Seller shall not (x) change its name, move the location of its principal
place of business and chief executive office, change the offices where it keeps
the records from the location referred to in Section 10.2 or change its
jurisdiction of organization or (y) move, or consent to the Trustee or Servicer
moving, the Required Loan Documents and the Loan Files from the location
required under the Sale and Servicing Agreement, unless the Seller has given at
least 30 days’ written notice to the Buyer, the Trustee, the Administrative
Agent and each Purchaser 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, the Trustee, for the benefit of the Secured
Parties and each Purchaser Agent in the Purchased Collateral and Contributed
Collateral.

 

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

 

(i)                                     ERISA Matters.  The Seller will not (a)
engage or permit any ERISA Affiliate to engage in any prohibited transaction for
which an exemption is not available or has not previously been obtained from the
United States Department of Labor, (b) permit to exist any accumulated funding
deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of the
Code, or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan, (c) fail to make any payments to a Multiemployer Plan that
the Seller or any ERISA Affiliate may be required to make under the agreement
relating to such Multiemployer Plan or any law pertaining thereto, (d) terminate
any Benefit Plan so as to result in any liability, or (e) permit to exist any
occurrence of any reportable event described in Title IV of ERISA.

 

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(j)                                     Organizational Documents.  The Seller
will not cause or permit the Buyer to amend, modify, waive or terminate any
provision of Sections 9(j), 10, 24 or 31 of the Buyer’s operating agreement
without the prior written consent of the Administrative Agent and each Purchaser
Agent.

 

(k)                                  Changes in Payment Instructions to
Obligors.  The Seller will not add or terminate the Concentration Account Bank
or the Concentration Account listed in Schedule II or make any change, or permit
the Servicer to make any change, in its instructions to Obligors regarding
payments to be made to Seller or Servicer or payments to be made to any
Concentration Account Bank, unless the Buyer, the Administrative Agent and each
Purchaser Agent have consented to such addition, termination or change (which
consent shall not be unreasonably withheld) and has received duly executed
copies the Intercreditor Agreement (including appropriate amendments) with each
new Concentration Account Bank being a party thereto.

 

(l)                                     Extension or Amendment of Purchased
Collateral and Contributed Collateral.  The Seller will not, except as otherwise
permitted in Section 6.4(a) of the Sale and Servicing Agreement, extend, amend
or otherwise modify, or permit the Servicer to extend, amend or otherwise
modify, the terms of any Purchased Collateral or Contributed Collateral
(including the Related Security).

 

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

 

ARTICLE VI.

REPURCHASE OBLIGATION

 

Section 6.1.                                Retransfer of Purchased Collateral
and Contributed Collateral.

 

If on any day a Loan is (or becomes) a Warranty Loan, no later than the earlier
of the Seller obtaining actual knowledge of such Loan becoming a Warranty Loan
or receipt by the Seller from the Buyer of written notice thereof, the Seller
shall within ten Business Days either:

 

(a)                                  make a deposit to the Collection Account
(for application pursuant to Section 2.9 or Section 2.10, as applicable, of the
Sale and Servicing Agreement) in immediately available funds in an amount equal
to the Retransfer Price with respect to such Loan; or

 

(b)                                 subject to the satisfaction of the
conditions in Section 6.2, substitute for such Warranty Loan, a Substitute Loan.

 

In either of the foregoing instances, the Seller may (in its discretion) accept
retransfer of each such Warranty Loan and any Related Property.  Upon
confirmation of the deposit of such Retransfer Price into the Collection Account
or the delivery by the Seller of a Substitute Loan

 

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(the date of such confirmation or delivery, the “Retransfer Date”) for each
Warranty Loan the Buyer shall, automatically and without further action be
deemed to transfer, assign and set-over to the Seller, without recourse,
representation or warranty, all the right, title and interest of the Buyer in,
to and under such Warranty Loan and all future monies due or to become due with
respect thereto, the Related Property, all Proceeds of such Warranty Loan and
Recoveries and Insurance Proceeds relating thereto, all rights to security for
any such Warranty Loan and all Proceeds and products of the foregoing.  The
Buyer shall, at the sole expense of the Seller, execute such documents and
instruments of transfer 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 Loan pursuant to this Section 6.1.

 

Section 6.2.                                Substitution of Loans.

 

On any day prior to the occurrence of a Termination Event (and after the
Termination Date, at the sole discretion of the Administrative Agent), the
Seller may, subject to the conditions set forth in this Section 6.2 and subject
to the other restrictions contained herein, replace any Loan previously acquired
by the Buyer hereunder with one or more Eligible Loans (each, a “Substitute
Loan”); provided that, no such replacement shall occur unless each of the
following conditions is satisfied as of the date of such replacement and
substitution:

 

(a)                                  the Seller has recommended to the Buyer
(with a copy to the Trustee) in writing that the Loan to be replaced should be
replaced (each, a “Replaced Loan”);

 

(b)                                 each Substitute Loan is an Eligible Loan on
the date of substitution;

 

(c)                                  after giving effect to any such
substitution, the Availability is greater than or equal to $0;

 

(d)                                 solely in the case of substitutions pursuant
to Section 6.2 undertaken because a Loan has become a Warranty Loan, the sum of
the Outstanding Loan Balances of such Substitute Loans shall be equal to or
greater than the sum of the Outstanding Loan Balances of the Replaced Loan;

 

(e)                                  solely in the case of substitutions
pursuant to Section 6.2 undertaken because a Loan has become a Warranty Loan,
such Substitute Loans, at the time of substitution by the Seller, shall not
cause the Weighted Average Life of the Loans included in the Borrowing Base to
increase by more that .25 years;

 

(f)                                    all representations and warranties of the
Seller contained in Sections 4.1 and 4.2 shall be true and correct as of the
date of substitution of any such Substitute Loan;

 

(g)                                 the substitution of any Substitute Loan does
not cause a Termination Event or Unmatured Termination Event to occur;

 

(h)                                 [Reserved];

 

(i)                                     [Reserved];

 

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(j)                                     the Seller shall deliver to the Buyer on
the date of such substitution a certificate of a Responsible Officer certifying
that each of the foregoing is true and correct as of such date;

 

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

 

(l)                                     no selection procedure adverse to the
interests of the Administrative Agent, the Purchaser Agents or the Secured
Parties was utilized by the Seller in the selection of the Loan to be replaced
or the Substitute Loan.

 

In addition, in connection with such substitution, the Trustee shall deliver or
cause to be delivered to the Trustee the related Required Loan Documents.  On
the date any such substitution is completed, the Buyer shall, automatically and
without further action, release and shall transfer to the Seller, free and clear
of any Lien created pursuant to this Agreement, all of the right, title and
interest of the Buyer in, to and under such Replaced Loan, and the Buyer shall
be deemed to represent and warrant that it has the company authority and has
taken all necessary company action to accomplish such transfer, but without any
other representation and warranty, express or implied.

 

Section 6.3.                                Repurchase Limitations.

 

The Seller and Buyer agree that the Seller and any Affiliate of the Seller may
repurchase any Purchased Collateral or Contributed Collateral only from the
Buyer in the case of (a) an Optional Sale or (b) a repurchase or retransfer of
any Purchased Collateral or Contributed Collateral pursuant to Section 6.1 or
Section 6.2.

 

ARTICLE VII.

ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE PURCHASED COLLATERAL AND CONTRIBUTED COLLATERAL

 

Section 7.1.                                Rights of the Buyer.

 

(a)                                  After the occurrence of a Termination
Event, the Seller hereby authorizes the Buyer, the Servicer, the Trustee and the
Administrative Agent and each Purchaser Agent and/or their respective designees
or assignees to take any and all steps in Seller’s name and on behalf of the
Seller that the Buyer, the Servicer, the Trustee and/or the Administrative Agent
and each Purchaser Agent and/or their respective designees or assignees
determine are reasonably necessary or appropriate to collect all amounts due
under any and all Purchased Collateral and Contributed Collateral and to enforce
or protect the Buyer’s, the Trustee’s and the Administrative Agent’s rights
under this Agreement, including endorsing the name of the Seller on checks and
other instruments representing Collections and enforcing such Purchased
Collateral and Contributed Collateral.

 

(b)                                 Except as set forth in Sections 6.1 and 6.2
with respect the retransfer or substitution of certain Loans, the Buyer shall
have no obligation to account for, replace, substitute or return any Purchased
Collateral or Contributed Collateral to Seller.  The Buyer shall have no
obligation to account for or to return Collections, or any interest or other
finance charge

 

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collected pursuant thereto, to Seller, irrespective of whether such Collections
and charges are in excess of the Purchase Price for such Purchased Collateral.

 

(c)                                  The Buyer shall have the unrestricted right
to further assign, transfer, deliver, hypothecate, subdivide or otherwise deal
with the Purchased Collateral and Contributed Collateral and all of the Buyer’s
right, title and interest in, to and under this Agreement, on whatever terms the
Buyer shall determine, pursuant to the Sale and Servicing Agreement or
otherwise.

 

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

 

Section 7.2.                                [Reserved].

 

Section 7.3.                                Rights With Respect to Loan Files.

 

At any time when a Servicer other than Ares Capital Corporation has been
designated pursuant to Section 6.16 of the Sale and Servicing Agreement, the
Seller shall, at the Buyer’s, the Trustee’s, the Administrative Agent’s or any
Purchaser Agent’s request, assemble all of the Loan Files which evidence the
Purchased Collateral and Contributed Collateral originated by the Seller, or
which are otherwise necessary or desirable to collect such Purchased Collateral
and Contributed Collateral, and make the same available to the Buyer, the
Trustee, the Administrative Agent or any Purchaser Agent at a place selected by
the Trustee, the Administrative Agent or any Purchaser Agent or their designee.

 

Section 7.4.                                Notice to Administrative Agent and
each Purchaser 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
Trustee, the Administrative Agent and each Purchaser Agent.

 

ARTICLE VIII.

TERM AND TERMINATION

 

Section 8.1.                                Purchase Termination Events.

 

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

 

(i)                                     the Seller shall fail to pay (i) any
amount due pursuant to Section 6.1 in accordance with the provisions thereof and
such failure shall continue unremedied for a period of five Business Days from
the earlier of (A) the date any Responsible Officer of the Seller obtains
knowledge of such failure and (B) the date the Seller receives notice of such
failure from the Buyer, the Servicer, the Trustee, the Administrative Agent or
any

 

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Purchaser Agent or (ii) any other amount required to be paid by the Seller
hereunder within two Business Days of the date when due; or

 

(ii)                                  the Seller shall fail to observe or
perform any covenant or agreement applicable to it contained herein (other than
as specified in paragraph (i) of this Section 8.1); provided that no such
failure shall constitute a Purchase Termination Event under this paragraph (ii)
unless such failure shall continue unremedied for a period of 30 consecutive
days from the date the Seller receives notice of such failure from the Buyer,
the Servicer, the Trustee, the Administrative Agent or any Purchaser Agent; or

 

(iii)                               any representation, warranty, certification
or statement made or deemed made by the Seller in this Agreement or in any
statement, record, certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect in a material
respect when made or deemed made and shall not have been corrected within 5
Business Days of the Seller becoming aware of such incorrectness; provided that
a Purchase Termination Event shall not be deemed to have occurred under this
paragraph (iii) based upon a breach of any representation or warranty set forth
in Section 6.1 if the Seller shall have complied with the provisions of Section
6.1 in respect thereof; or

 

(iv)                              (A) a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the Seller in an
involuntary case under the Bankruptcy Code or any other Insolvency Laws, which
decree or order is not stayed or any other similar relief shall be granted under
any applicable federal or state law no now or hereafter in effect and shall not
be stayed; (B) (I) any involuntary case is commenced against the Seller under
any Insolvency Law now or hereafter in effect, a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over the Seller, or over all or a substantial part of the property of the
Seller, shall have been entered, an interim receiver, trustee or other custodian
of the Seller for all or a substantial part of the property of the Seller is
involuntarily appointed, a warrant of attachment, execution or similar process
is issued against any substantial part of the property of the Seller, and (II)
any event referred to in clause (B)(I) above continues for 60 days unless
dismissed, bonded or disclosed; (C) the Seller shall at its request have a
decree or an order for relief entered with respect to it or commence a voluntary
case under any Insolvency Law now or hereafter in effect, or shall consent to
the entry of a decree or an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such Insolvency
Law, consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property; (D) the making
by the Seller of any general assignment for the benefit of creditors; (E) the
inability or failure of the Seller generally to pay its debts as such debts
become due; or (F) the board of directors of the Seller authorizes action to
approve any of the foregoing; or

 

(v)                                 there shall have occurred (A) a Termination
Event set forth in Section 10.1 of the Sale and Servicing Agreement or (B) the
Amortization Period shall have commenced; or

 

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

 

(vii)                           a notice of Lien shall have been filed by the
Pension Benefit Guaranty Corporation against the Seller under Section 412(n) of
the Code or Section 302(f) of ERISA for a failure to make a required installment
or other payment to a plan to which Section 412(n) of the Code or Section 302(f)
of ERISA applies unless there shall have been delivered to the Administrative
Agent and each Purchaser Agent proof of release of such Lien; or

 

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

 

(ix)                                a Federal tax notice of Lien, in an amount
equal to or greater than $1,000,000, shall have been filed against the Seller
unless there shall have been delivered to the Administrative Agent and each
Purchaser Agent proof of release of such Lien

 

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

 

Section 8.2.                                Remedies.

 

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

 

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

 

(i)                                     require the Seller to, and the Seller
hereby agrees that it will at the Seller’s expense and upon request of the
Buyer, the Trustee, the Administrative Agent or any Purchaser Agent forthwith,
assemble all or any part of the Purchased Collateral and Contributed Collateral
as directed by the Buyer, the Trustee, the Administrative Agent or any Purchaser
Agent and make the same available at a place to be designated by the Buyer, the
Trustee, the Administrative Agent or any Purchaser Agent; and

 

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

 

Section 8.3.                                Survival of Certain Provisions.

 

Notwithstanding any provision contained herein to the contrary, the Seller’s and
the Buyer’s representations, covenants and obligations set forth in Articles IV,
V, VI, and VII, as applicable, create and constitute the continuing obligation
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until the Collection Date; provided, however, that the rights
and remedies with respect to any breach of any representation and warranty made
or deemed made by the Seller pursuant to Articles III and IV and the provisions
of Sections 6.1 and 6.2, the rights and obligations under Article VII, the
indemnification provisions of Article IX and the provisions of Sections 10.3,
10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.12, 10.15 and 10.17 shall be
continuing and shall survive any termination of this Agreement.

 

ARTICLE IX.

INDEMNIFICATION

 

Section 9.1.                                Indemnification by the Seller.

 

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

 

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“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
attorneys’ fees and disbursements (all of the foregoing being collectively
referred to as, “Indemnified Amounts”), awarded against or incurred by such
Indemnified Party or other non-monetary damages of any such Indemnified Party or
any of them arising out of or as a result of this Agreement excluding, however,
(a) Indemnified Amounts to the extent resulting from the gross negligence or
willful misconduct on the part of the applicable Indemnified Party, and (b)
Indemnified Amounts to the extent they include losses in respect of Purchased
Assets that are late, delinquent or uncollectible on account of bankruptcy,
insolvency, payment behavior or lack of creditworthiness of the Obligors. 
Without limiting the foregoing, the Seller shall indemnify each Indemnified
Party for Indemnified Amounts relating to or resulting from:

 

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

 

(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 Purchased Collateral or Contributed Collateral or the
nonconformity of any Purchased Collateral or Contributed Collateral with any
such Applicable Law;

 

(iii)                               the failure to vest and maintain vested in
the Buyer an undivided ownership interest in the Purchased Collateral and
Contributed Collateral, together with all Collections, free and clear of any
Lien (other than Permitted Liens) whether existing at the time of any Purchase
or contribution 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 Law
with respect to any Purchased Collateral or Contributed Collateral, whether at
the time of any Purchase or contribution or at any subsequent time;

 

(v)                                 any dispute, claim, offset or defense (other
than the discharge in bankruptcy of the Obligor) of the Obligor to the payment
with respect to any Purchased Collateral or Contributed Collateral (including,
without limitation, a defense based on the Purchased Collateral or Contributed
Collateral not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms);

 

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

 

(vii)                           [Reserved];

 

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(viii)                        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;

 

(ix)                                any action taken by the Seller in the
enforcement or collection of any Purchased Collateral or Contributed Collateral;

 

(x)                                   [Reserved];

 

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

 

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

 

(xiii)                          [Reserved];

 

(xiv)                         except with respect to funds held in the
Concentration Account, the commingling of Collections on the Purchased
Collateral and Contributed Collateral at any time with other funds of the
Seller;

 

(xv)                            any investigation, litigation or proceeding
related to this Agreement or the use of proceeds by the Seller or the security
interest in the Purchased Collateral and Contributed Collateral granted
hereunder;

 

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

 

(xvii)                      the failure of the Seller or any of its agents or
representatives to remit to the Buyer Collections on the Purchased Collateral
and Contributed Collateral remitted to the Seller or any such agent or
representative as provided in this Agreement.

 

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

 

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

 

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

 

(d)                                 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.

 

Section 9.2.                                Assignment of Indemnities.

 

The Seller acknowledges that, pursuant to the Sale and Servicing Agreement, the
Buyer will assign its rights of indemnity granted hereunder to the
Administrative Agent, each Purchaser Agent, the Purchasers, the other Secured
Parties, the Backup Servicer and the Trustee.  Upon such assignment, (i) the
Administrative Agent, each Purchaser Agent, the Purchasers, the other Secured
Parties, the Backup Servicer and the Trustee, as applicable, shall have all
rights of the Buyer hereunder and may in turn assign such rights, and (ii) the
obligations of the Seller under this Article IX shall inure to the
Administrative Agent, each Purchaser Agent, the Backup Servicer or the Trustee. 
The Seller agrees that, upon such assignment, the Administrative Agent, each
Purchaser Agent, the Purchasers, the other Secured Parties, the Backup Servicer
and the Trustee 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 the Seller and consented to in writing by the Administrative
Agent, the Trustee, and each Purchaser Agent.  The Buyer shall provide not less
than ten Business Days’ prior written notice of any such amendment to the
Administrative Agent, the Trustee and each Purchaser 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) and mailed, faxed, transmitted or delivered, as to each party hereto, at
its address set forth on Annex A hereto or at such other address as shall be
designated by such party in a written notice to the other parties hereto.  All
such notices and communications shall be effective upon receipt, or in the case
of (a) notice by mail, five days after being deposited in the United States
mail, first class postage prepaid, or (b) notice by facsimile copy, when verbal
communication of receipt is obtained.

 

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Section 10.3.                         Limitation of Liability.

 

Except with respect to any claim arising out of the willful misconduct or gross
negligence of the Purchasers, the Trustee, the Administrative Agent, each
Purchaser Agent or any other Secured Party, no claim may be made by the Seller
or any other Person against the Purchasers, the Administrative Agent, each
Purchaser Agent or any other Secured Party or their respective Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event occurring in
connection therewith; and the Seller hereby waives, releases and agrees not to
sue upon any claim for any such damages, whether or not accrued and whether or
not known or suspected to exist in its favor.

 

Section 10.4.                         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
Administrative Agent, each Purchaser Agent, the Purchasers, the other Secured
Parties, the Trustee and the Backup Servicer shall be third-party beneficiaries
of this Agreement.

 

Section 10.5.                         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 10.6.                         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 10.7.                         Costs, Expenses and Taxes.

 

(a)                                  In addition to the rights of
indemnification granted to the Buyer and its Affiliates and officers, directors,
employees and agents thereof under Article IX hereof, the Seller agrees to

 

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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,
without limitation, 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 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.

 

(b)                                 The Seller shall pay on demand any and all
stamp, sales, excise and other taxes and fees payable or determined to be
payable 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 in connection with the execution, delivery, filing and
recording of this Agreement and the other documents to be delivered hereunder
(“Other Costs”), including, without limitation, all costs and expenses incurred
by the Buyer or its assignees in connection with periodic audits of the Seller’s
books and records.

 

Section 10.8.                         No Proceedings.

 

(a)                                  Each of the parties hereto hereby agrees
that it will not institute against, or join any other Person in instituting
against, VFCC or any other Conduit Purchaser, the Administrative Agent or any
Liquidity Banks any Insolvency Proceeding so long as any commercial paper issued
by VFCC or any other Conduit Purchaser shall be outstanding and there shall not
have elapsed one year and one day (or such longer preference period as shall
then be in effect) since the last day on which any such commercial paper shall
have been outstanding.

 

(b)                                 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 (or such longer preference period as shall then be in effect) since the
Collection Date.

 

Section 10.9.                         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 the Seller or any
incorporator, officer, employee or director of the Seller, as such, 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 incorporator, officer, employee or

 

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director of the Seller, as such, 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
incorporator, 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 10.9(a) shall survive the termination of this Agreement.

 

(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 incorporator, officer,
employee or director of the Buyer, as such, 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 corporate obligations of the Buyer, and that no personal
liability whatsoever shall attach to or be incurred by any incorporator,
officer, employee or director of the Buyer, as such, 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
incorporator, 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 10.9 (b) shall survive the termination of this Agreement.

 

Section 10.10.                  Protection of Right, Title and Interest in the
Purchased Collateral and Contributed Collateral; 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 Purchased Collateral and Contributed Collateral 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 Purchased Collateral and Contributed Collateral.  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 10.10(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 Trustee, the Administrative Agent or
any Purchaser Agent may reasonably request in order to perfect, protect or more
fully evidence the Purchases hereunder and the security and/or interest granted
in the

 

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Purchased Collateral and Contributed Collateral, or to enable the Buyer, the
Trustee, the Administrative Agent or the Secured Parties to exercise and enforce
their rights and remedies hereunder or under any Transaction Document.  At any
time the Buyer, the Trustee, the Administrative Agent or any Purchaser Agent may
direct the Seller or any Servicer to notify the Obligors, at Seller’s expense,
of the Buyer’s or the Secured Parties’ interest in the Purchased Collateral and
Contributed Collateral under this Agreement and may direct that payments of all
amounts due or that become due under any or all of the Purchased Collateral and
Contributed Collateral be made directly to the Buyer, the Trustee, the
Administrative Agent or any Purchaser Agent.

 

(c)                                  If the Seller fails to perform any of its
obligations hereunder, the Buyer, the Trustee, the Administrative Agent or any
Purchaser Agent may (but shall not be required to) perform, or cause performance
of, such obligation; and the Buyer’s, the Trustee’s, the Administrative Agent’s
or any Purchaser 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, the Trustee, the Administrative Agent or any
Purchaser Agent at any time and from time to time at the Buyer’s, the Trustee’s,
the Administrative Agent’s or any Purchaser Agent’s sole discretion and appoints
the Buyer, the Trustee, the Administrative Agent and any Purchaser Agent as its
attorney-in-fact to act on behalf of the Seller (i) to file financing statements
on behalf of the Seller, as debtor, necessary or desirable in the Buyer’s, the
Trustee’s, the Administrative Agent’s or any Purchaser Agent’s sole discretion
to perfect and to maintain the perfection and priority of the interest of the
Buyer, the Trustee, the Administrative Agent or any Purchaser Agent in the
Purchased Collateral and Contributed Collateral and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement
with respect to the Purchased Collateral and Contributed Collateral as a
financing statement in such offices as the Buyer, the Trustee, the
Administrative Agent or any Purchaser Agent in their sole discretion deem
necessary or desirable to perfect and to maintain the perfection and priority of
the interests of the Buyer, the Trustee, the Administrative Agent or any
Purchaser Agent in the Purchased Collateral and Contributed Collateral.  This
appointment is coupled with an interest and is irrevocable.

 

(d)                                 Without limiting the generality of the
foregoing, the Seller shall, not earlier than six months and not later than
three months prior to the fifth anniversary of the date of filing of the
financing statement referred to in Sections 3.1 or 3.2 or any other financing
statement filed pursuant to this Agreement or in connection with any Purchase
hereunder, unless the Collection Date shall have occurred:

 

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

 

(ii)                                  deliver or cause to be delivered to the
Buyer, the Trustee, the Administrative Agent and each Purchaser Agent an opinion
of the counsel for Seller, in form and substance reasonably satisfactory to the
Buyer, the Trustee, the Administrative Agent and each Purchaser Agent,
confirming and updating the opinion delivered pursuant to Sections 3.1 or 3.2
with respect to perfection and otherwise to the effect that the security
interest hereunder continues to be an enforceable and perfected security
interest, subject to no other Liens of record except as provided herein or
otherwise permitted

 

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hereunder, which opinion may contain usual and customary assumptions,
limitations and exceptions.

 

Section 10.11.                  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 10.12.                  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
Administrative Agent, each Purchaser Agent, the Purchasers, the other Secured
Parties, the Backup Servicer, the Trustee 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 10.13.                  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.

 

Section 10.14.                  Rights of Inspection.

 

The Buyer and its representatives and assigns may conduct at any reasonable
time, with reasonable notice, and from time to time, and the Seller will fully
cooperate with, a reasonable number of field examinations and audits of the
inventory, the Loans and business affairs of the Seller each calendar year. 
Each such inspection shall be at the sole expense of the Seller.  The Buyer and
its representatives and successors and assigns acknowledge that in exercising
the rights and privileges conferred in this Section 10.14, it or its
representatives or assigns may, from time to time, obtain knowledge of
information, practices, books, correspondence and records of a confidential
nature and in which the Seller has a proprietary interest.  The Buyer and its
representatives and successors and assigns agree that (i) they shall retain in
strict confidence and

 

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shall use their best efforts to ensure that their representatives retain in
strict confidence and will not disclose without the prior written consent of the
Seller any or all of such information, practices, books, correspondence and
records furnished to them and (ii) that they will not, and will use their best
efforts to ensure that their representatives and assigns will not, make any use
whatsoever (other than for the purposes contemplated by this Agreement) of any
of such information, practices, books, correspondence and records without the
prior written consent of the Seller, unless such information is generally
available to the public or is required by law to be disclosed.

 

Section 10.15.                  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
10.15 or by the Sale and Servicing Agreement.  Simultaneously with the execution
and delivery of this Agreement, the Buyer will, pursuant to the Sale and
Servicing Agreement, assign all of its right, title and interest in this
Agreement to the Trustee, for the benefit of the Secured Parties, and each
Purchaser Agent as agent for the respective Purchasers under the Sale and
Servicing Agreement, to which assignment the Seller hereby expressly consents. 
Upon assignment, the Seller agrees to perform its obligations hereunder for the
benefit of the Trustee, for the benefit of the Secured Parties, and each
Purchaser Agent as agent for the respective Purchaser under the Sale and
Servicing Agreement and the Trustee and each Purchaser Agent, in such capacity,
shall be a third party beneficiary hereof.  The Trustee, for the benefit of the
Secured Parties, and each Purchaser Agent as agent for the respective Purchaser
under the Sale and Servicing 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 10.16.                  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.

 

Section 10.17.                  Subordination.

 

The Seller shall have the right to receive, and the Buyer shall make, any and
all payments relating to any indebtedness, obligation or claim the Seller may
from time to time hold or otherwise have against the Buyer or any assets or
properties of the Buyer, whether arising hereunder or otherwise existing;
provided, that, after giving effect to any such payment, the Aggregate
Outstanding Loan Balance of the Purchased Collateral and Contributed Collateral
owned by the Buyer at such time exceeds the Aggregate Unpaids under the Sale and
Servicing Agreement.  The Seller hereby agrees that at any time during which the
condition set forth in the proviso of the preceding sentence shall not be
satisfied, the Seller shall be subordinate in right of payment to the prior
payment of any indebtedness or obligation of the Buyer owing to the

 

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Purchasers, the Trustee, the Administrative Agent, each Purchaser Agent or any
other Secured Party under the Sale and Servicing Agreement.

 

Section 10.18.                  Revolving Loan Payments.

 

(a)                                  With respect to each Revolving Loan
included as part of the Purchased Collateral or Contributed Collateral, as of
any date of determination prior to the occurrence of a Termination Event or
Unmatured Termination Event, Collections from the Obligor on such Revolving Loan
shall be shared and applied proportionately as between any balance outstanding
in connection with the Retained Interest and the Outstanding Loan Balance of
such Revolving Loan purchased by the Buyer under and in accordance with Section
2.1 hereof in accordance with the percentages determined as follows:  (a) in the
case of the Seller, by dividing (i) the outstanding principal amount of the
advances made in connection with the Retained Interest by (ii) the sum of all
advances previously made in connection with the Revolving Loan; and (b) in the
case of the Buyer, by dividing (i) the Outstanding Loan Balance of such
Revolving Loan by (ii) the sum of all advances previously made in connection
with the Revolving Loan.

 

(b)                                 Notwithstanding the foregoing or anything to
the contrary contained herein or any Transaction Document, any payments made by
any Hedge Counterparty pursuant to the terms of the Hedging Agreements shall be
solely for the benefit of the Trustee, for the benefit of the Secured Parties,
and shall not be subject to the pro rata sharing provisions of this Section
10.18.  In furtherance of the foregoing clause of this paragraph, the Seller
hereby releases any right, title, or interest it may have in or to any payment
made or to be made at any time by any Hedge Counterparty pursuant to the terms
of any Hedging Agreement.

 

[Remainder of Page Intentionally Left Blank.]

 

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

 

 

ARES CAPITAL CORPORATON, as the Seller

 

 

 

By:

/s/ Michael J. Arougheti

 

 

Name:

Michael J. Arougheti

 

 

Title:

President

 

 

 

 

ARES CAPITAL CP FUNDING LLC, as the Buyer

 

 

 

By:

/s/ Michael J. Arougheti

 

 

Name:

Michael J. Arougheti

 

 

Title:

President

 

 

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