Exhibit 10.3

EXECUTION VERSION

HERCULES CAPITAL FUNDING TRUST 2018-1 NOTES

U.S.$200,000,000 OF 4.605% SERIES 2018-1 FIXED RATE SENIOR NOTES

NOTE PURCHASE AGREEMENT

October 25, 2018

Guggenheim Securities, LLC,

as Initial Purchaser (the “Initial Purchaser”)

330 Madison Avenue

New York, New York 10017

Ladies and Gentlemen:

Section 1.    Authorization of Notes.

Hercules Capital, Inc., a Maryland corporation (the “Originator”), as the sole
member of Hercules Capital Funding 2018-1 LLC, a Delaware limited liability
company (the “Trust Depositor”), which is the sole holder of the trust
certificate of Hercules Capital Funding Trust 2018-1, a Delaware statutory trust
(the “Issuer”), has authorized the sale by the Issuer of the 4.605% Series
2018-1 Fixed Rate Notes (the “Notes”) of the Issuer. The Notes will be issued by
the Issuer in an aggregate principal amount of $200,000,000. The Notes will be
offered by the Issuer pursuant to the Memoranda (as defined below). The Issuer
was formed pursuant to (i) a Trust Agreement, dated as of June 11, 2018, as
amended and restated as of the Closing Date (as defined below) (the “Trust
Agreement”) between the Trust Depositor, Wilmington Trust, National Association,
as the owner trustee (the “Owner Trustee”), and (ii) a Certificate of Trust
filed with the Secretary of State of the State of Delaware on June 11, 2018. In
addition to the Notes, the Issuer is issuing a trust certificate (the
“Certificate”). The Certificate will represent a fractional undivided beneficial
interest in the Issuer. The Certificate will be issued pursuant to the Trust
Agreement. The Notes will be issued pursuant to an Indenture, to be dated as of
the Closing Date (the “Indenture”), between the Issuer and U.S. Bank National
Association, as the trustee (the “Trustee”). The Notes will be secured by the
assets of the Issuer. The primary assets of the Issuer will be a pool of senior
secured loans made to life sciences companies and technology companies
(including participations therein) and secured by security interests in certain
assets of those companies, originated by the Originator or its affiliates
(collectively, the “Loans”). The Trust Depositor will acquire Loans from the
Originator pursuant to a Sale and Contribution Agreement, to be dated as of the
Closing Date (the “Sale and Contribution Agreement”) between the Originator and
the Trust Depositor. Pursuant to a Sale and Servicing Agreement, to be dated as
of the Closing Date (the “Sale and Servicing Agreement”), among the Issuer,
Hercules Capital, Inc., as the seller and as the servicer (the “Servicer”), the
Trust Depositor, and the Trustee, the Trust Depositor will sell, transfer and
convey to the Issuer, without recourse, all of its right, title and interest in
the Loans in consideration for the Issuer’s payment of a portion of the proceeds
of the Notes and the issuance of the Certificate to the Trust Depositor.
Pursuant to the Indenture, as security for the indebtedness represented by the
Notes,

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the Issuer will pledge and grant to the Trustee a security interest in the
Loans, and its rights under the Sale and Contribution Agreement and the Sale and
Servicing Agreement. This Note Purchase Agreement (the “Agreement”), the Trust
Agreement, the Sale and Contribution Agreement, the Sale and Servicing
Agreement, and the Indenture are referred to collectively herein as the
“Transaction Documents.” For purposes of the Credit Risk Retention Rules (as
defined below), the Originator is also the sponsor of the securitization
transaction being undertaken by the Issuer pursuant to the Transaction
Documents.

Capitalized terms used herein but not otherwise defined shall have the meanings
set forth in the Sale and Servicing Agreement.

The Notes are to be offered without being registered under the Securities Act of
1933, as amended (the “Securities Act”), to “qualified institutional buyers” in
compliance with the exemption from registration provided by Rule 144A under the
Securities Act (“QIBs”) and in offshore transactions to non-U.S. persons in
reliance on Regulation S under the Securities Act (“Regulation S”).

In connection with the sale of the Notes, the Originator has prepared a
preliminary offering memorandum dated October 18, 2018 (including any exhibits,
amendments or supplements thereto and all information incorporated therein by
reference, the “Preliminary Memorandum”), and a final offering memorandum dated
on or about October 26, 2018 (including any exhibits, amendments or supplements
thereto and all information incorporated therein by reference, the “Final
Memorandum”, and each of the Preliminary Memorandum and the Final Memorandum, a
“Memorandum” or together the “Memoranda”) including a description of the terms
of the Notes, the terms of the offering, and the Issuer. The Originator has also
posted information relating to the performance of the Loans, one or more
marketing books, and certain additional information and documents concerning the
Notes, the Loans and the Originator to a password protected Internet site
accessible by potential investors (such information the “Additional Offering
Materials”). It is understood and agreed that 10:14 a.m. New York time on
October 25, 2018 constitutes the time of the contract of sale of the Notes for
purposes of Rule 159 under the Securities Act (the “Time of Sale”). It is
further understood and agreed that the Preliminary Offering Memorandum and the
Additional Offering Materials as of the Time of Sale shall be the entirety of
the information conveyed to investors as of the Time of Sale, and that “Time of
Sale Information” shall refer exclusively to such information, in either case in
such form that has not been superseded by any amendment or supplement thereto.

It is understood and agreed that nothing in this Agreement shall prevent the
Initial Purchaser from entering into any agency agreements, underwriting
agreements or other similar agreements governing the offer and sale of
securities with any issuer or issuers of securities, and nothing contained
herein shall be construed in any way as precluding or restricting the Initial
Purchaser’s right to sell or offer for sale any securities issued by any person,
including securities similar to, or competing with, the Notes.

 

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Each of the Issuer, the Originator, the Servicer and the Trust Depositor, as
applicable, hereby agrees with you, the Initial Purchaser, as follows:

Section 2.    Purchase and Sale of Notes.

(a) Subject to the terms and conditions and in reliance upon the representations
and warranties set forth herein, the Issuer agrees to sell to the Initial
Purchaser, and the Initial Purchaser agrees to use commercially reasonable
efforts to place, the aggregate principal amount of Notes set forth on Schedule
I hereto with investors on a private placement basis in accordance with the
terms hereof. The Notes will be purchased at a price equal to $ 197,996,640.00.
It is understood and agreed that the Initial Purchaser is not acquiring and has
no obligation to acquire the Certificate and the Certificate will be acquired by
the Trust Depositor on the Closing Date pursuant to the Trust Agreement. It is
further understood and agreed that the Initial Purchaser may retain the Notes,
purchase the Notes for its own account, or sell the Notes to its affiliates or
to any other investor in accordance with the applicable provisions hereof and of
the Indenture. The Notes sold hereby shall be issued and sold free from all
liens, charges and encumbrances, equities and other third party rights of any
nature whatsoever, together with all rights of any nature whatsoever attaching
or accruing to them now or after the date of this Agreement. The Initial
Purchaser shall have the right to reject, in whole or in part, any offer
received by it to purchase Notes and any such rejection by the Initial Purchaser
shall not be deemed a breach of the agreements contained herein.

(b) In addition, whether or not the transactions contemplated hereby shall be
consummated, the Originator agrees to pay (or cause to be paid by the Issuer)
certain costs and expenses incidental to the performance by the Originator of
its obligations hereunder and under the documents to be executed and delivered
in connection with the offering, issuance, sale, exchange and delivery of the
Notes (the “Documents”), including, without duplication, (i) the reasonable and
documented out-of-pocket fees and disbursements of counsel to the Originator;
(ii) the reasonable and documented out-of-pocket fees and expenses of any
trustees or custodian due to such trustees’ or custodian’s initial expenses
incurred in connection with the issuance of the Notes and their or its counsel,
as applicable; (iii) the reasonable and documented out-of-pocket fees and
expenses of any bank establishing and maintaining accounts on behalf of the
holders of the Notes in accordance with the Sale and Servicing Agreement;
(iv) the reasonable and documented out-of-pocket fees and expenses of the
accountants for the Originator, including the fees for the “comfort letters” or
“agreed-upon procedures letters” required by the Initial Purchaser, and in
connection with the valuation of the Retention Interest (as defined below) in
satisfaction of the Credit Risk Retention Rules, any rating agency or any
purchaser in connection with the offering, sale, issuance and delivery of the
Notes; (v) the reasonable and documented out-of-pocket expenses incurred in
connection with the preparation and distribution of each Memorandum, the
Additional Offering Materials, the third party due diligence reports described
in Section 4(a)(xli) hereof, the marketing roadshow and all expenses incurred in
connection with the preparation and distribution of the Transaction Documents;
(vi) the fees charged by any securities rating agency for rating the Notes;
(vii) the reasonable and documented out-of-pocket fees for any securities
identification service for any CUSIP or similar identification number required
by the purchasers or requested by the Initial Purchaser; (viii) all reasonable
and documented out-of-pocket fees and disbursements of counsel to the Initial
Purchaser; (ix) the reasonable and documented out-of-pocket expenses in
connection with the qualification of the

 

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Notes for offering and sale under state securities laws, including the
reasonable and documented out-of-pocket fees and disbursements of counsel and,
if necessary in the reasonable judgment of the Initial Purchaser, the cost of
the preparation and reproduction of any “blue sky” or legal investment
memoranda; (x) any federal, state or local taxes, registration or filing fees
(including Uniform Commercial Code financing statements) or other similar
payments to any federal, state or local governmental authority in connection
with the offering, sale, issuance and delivery of the Notes; and (xi) the
reasonable and documented out-of-pocket fees and expenses of any special counsel
or other experts required to be retained by the Initial Purchaser to provide
advice, opinions or assistance in connection with the offering, issuance, sale
and delivery of the Notes. For the avoidance of doubt, the Initial Purchaser
shall not be responsible for any such expenses. Notwithstanding the foregoing,
none of the Originator, the Trust Depositor, the Servicer or the Issuer shall be
liable to the Initial Purchaser for loss of anticipated profits from the
transactions covered by this Agreement.

Section 3.    Delivery.

Delivery of the Notes shall be made in the form of one or more global
certificates delivered to The Depository Trust Company or its designated agent
at 12:00 p.m. New York, New York time, on November 1, 2018 or such other place,
time or date as may be mutually agreed upon by the Initial Purchaser and the
Originator (the “Closing Date”). Subject to the foregoing, the Notes will be
registered in such names and such denominations as the Initial Purchaser shall
specify in writing to the Originator, the Issuer, and the Trustee. The
Certificate shall be delivered to the Trust Depositor on the Closing Date in
fully registered, certificated form in the permitted denominations and the
required proportions as set forth in the Final Memorandum.

Section 4.    Representations and Warranties of the Originator, the Trust
Depositor, the Servicer and the Issuer.

(a) Each of the Originator, the Trust Depositor, the Servicer and the Issuer,
with respect to itself, hereby represents and warrants to the Initial Purchaser,
as of the date hereof (other than with respect to clauses (xvi) and (xix) below)
and as of the Closing Date, that:

(i) The Final Memorandum and any additional information and documents concerning
the Notes, including but not limited to the Additional Offering Materials, did
not, as of their respective date or dates on which such statements contained
therein were made, and the Final Memorandum and the Additional Offering
Materials and any amendment or supplement thereto, will not, each as of their
respective date or dates on which such statements contained therein were made
and as of the Closing Date, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements in each,
in light of the circumstances under which they were made, not misleading;
provided that no representation or warranty is made regarding the Initial
Purchaser Information (as defined in Section 8(e) below).

 

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(ii) The Time of Sale Information, as of the Time of Sale, did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that no representation or
warranty is made regarding the Initial Purchaser Information.

(iii) Each of the Originator, the Trust Depositor, the Servicer and the Issuer
has been duly organized and is validly existing as a Maryland corporation, a
Delaware limited liability company or a Delaware statutory trust, as applicable,
in good standing under the laws of its jurisdiction of organization. The
Originator, the Trust Depositor, the Servicer and the Issuer each has all
corporate, trust or limited liability company, as applicable, power and
authority necessary to own or hold its properties and conduct its business in
which it is engaged as described in each Memorandum and has all licenses
necessary (and has not received any notice of proceedings relating to the
revocation or modification of any such licenses) to carry on its business as it
is now being conducted and is licensed and qualified in each jurisdiction in
which the conduct of its business (including, without limitation, the
origination, acquisition and servicing, as applicable, of Loans and Related
Property and performing its obligations hereunder and under the other
Transaction Documents) requires such licensing or qualification and in which the
failure so to qualify would have a material adverse effect on (i) the business,
operations, properties, assets, liabilities, or shareholders’ equity, earnings,
financial condition or results of operations of the Originator and its
subsidiaries, considered as one enterprise, or (ii) the ability of the
Originator, the Trust Depositor, the Servicer and the Issuer to perform their
respective obligations hereunder or under the other Transaction Documents.

(iv) This Agreement has been duly authorized, executed and delivered by the
Originator, the Trust Depositor, the Servicer and the Issuer and, assuming due
authorization, execution and delivery thereof by the other parties hereto,
constitutes a valid and legally binding obligation of the Originator, the Trust
Depositor, the Servicer and the Issuer enforceable against the Originator, the
Trust Depositor, the Servicer and the Issuer in accordance with its terms,
subject, as to enforcement only, to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally or the application of equitable principles in any
proceeding, whether at law or in equity.

(v) On the Closing Date, each of the Transaction Documents to which the
Originator, the Trust Depositor, the Servicer or the Issuer is a party will have
been duly authorized, executed and delivered by the Originator, the Trust
Depositor, the Servicer and the Issuer, as applicable, and, assuming due
authorization, execution and delivery thereof by the other parties thereto, will
constitute valid and binding agreements of the Originator, enforceable against
the Originator, the Trust Depositor, the Servicer and the Issuer, as applicable,
in accordance with their respective terms, subject, as to enforcement only, to
the effect of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors’ rights generally or the
application of equitable principles in any proceeding, whether at law or in
equity.

 

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(vi) On the Closing Date, the Notes will have been duly authorized, and when
executed and authenticated in accordance with the Indenture and delivered to and
paid for by the Initial Purchaser in accordance with this Agreement, the Notes
will constitute valid and binding obligations of the Issuer, enforceable against
the Issuer in accordance with their terms, subject, as to enforcement only, to
the effect of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors’ rights generally or the
application of equitable principles in any proceeding, whether at law or in
equity, and will be entitled to the benefits of the Indenture.

(vii) Other than as set forth in or contemplated by each Memorandum, there are
no legal or governmental proceedings pending to which the Originator, the Trust
Depositor, the Servicer or the Issuer is a party or of which any property or
assets of the Originator, the Trust Depositor, the Servicer and the Issuer are
the subject of which could reasonably be expected to have a material adverse
effect on (i) the business, operations, properties, assets, liabilities,
shareholders’ equity, earnings, financial condition or results of operations of
the Originator and its subsidiaries, considered as one enterprise, or (ii) the
ability of the Originator, the Trust Depositor, the Servicer and the Issuer to
perform their respective obligations hereunder or under the other Transaction
Documents; and to the knowledge of the Originator, the Trust Depositor, the
Servicer and the Issuer, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.

(viii) The execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party and the consummation by each of the
Originator, the Trust Depositor, the Servicer and the Issuer of the transactions
contemplated herein and therein and in all documents relating to the Notes will
not result in any breach or violation of, or constitute a default under, any
agreement or instrument to which the Originator, the Trust Depositor, the
Servicer or the Issuer is a party or to which any of its properties or assets
are subject, except for such of the foregoing as to which relevant waivers,
consents or amendments have been obtained and are in full force and effect or
which would not reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, liabilities, shareholders’ equity,
earnings, financial condition or results of operations of the Originator and its
subsidiaries, considered as one enterprise, on the ability of the Originator,
the Trust Depositor, the Servicer or the Issuer to perform their respective
obligations hereunder or under the other Transaction Documents, nor will any
such action result in a violation of the amended trust agreement or limited
liability company agreement, as applicable, of the Originator, the Trust
Depositor, the Servicer or the Issuer or any applicable law.

(ix) (i) None of the Trust Depositor, the Issuer or the pool of Loans is, or
after giving effect to the transactions contemplated by the Transaction
Documents will be, (a)

 

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required to be registered as an “investment company” under the 1940 Act or
(b) required to register under the Commodity Exchange Act of 1922, as amended,
as a “commodity pool” and (ii) neither the Trust Depositor nor the Issuer is
“controlled” by an investment company within the meaning of the 1940 Act. The
Issuer will rely on an exemption from the definition of “investment company”
under the 1940 Act contained in Rule 3a-7 thereunder, although there may be
additional exclusions or exemptions available to the Issuer. The Issuer is being
structured so as not to constitute a “covered fund” for purposes of the
regulations adopted to implement Section 619 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (such statutory provision together with such
implementing regulations, the “Volcker Rule”).

(x) Assuming the Initial Purchaser’s representations herein are true and
accurate, it is not necessary in connection with the offer, sale or exchange and
delivery of the Notes in the manner contemplated by this Agreement and each
Memorandum to register the Notes under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.

(xi) The Notes satisfy the requirements set forth in Rule 144A(d)(3) under the
Securities Act. As of the Closing Date, the Notes will not be (i) of the same
class as securities listed on a national securities exchange in the United
States that is registered under Section 6 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or (ii) quoted in any “automated
inter-dealer quotation system” (as such term is used in the Exchange Act) in the
United States.

(xii) At the time of execution and delivery of the Sale and Contribution
Agreement, the Originator owned the Loans to be conveyed by it on the Closing
Date free and clear of all liens, encumbrances, adverse claims or security
interests (“Liens”) other than Liens permitted by the Transaction Documents and
the Originator had the power and authority to transfer such loans to the Trust
Depositor. At the time of execution and delivery of the Sale and Servicing
Agreement, the Trust Depositor owned the Loans to be conveyed by it on the
Closing Date free and clear of all Liens other than Liens permitted by the
Transaction Documents and the Trust Depositor had the power and authority to
transfer such Loans to the Issuer.

(xiii) Upon the execution and delivery of the Transaction Documents, delivery to
the Issuer of the Loans and delivery to, or upon the order of, the Trust
Depositor of the net proceeds of the Notes and the Certificate, the Issuer will
own the Loans conveyed to it on the Closing Date and the Trust Depositor will
acquire title to the Certificate, in each case free of Liens except such Liens
as may be permitted in the Transaction Documents. Upon the execution and
delivery of the Transaction Documents, payment by the Initial Purchaser for the
Notes and delivery to the Initial Purchaser of the Notes, the Initial Purchaser
will acquire title to the Notes, free and clear of Liens except such Liens as
may be granted or created by the Initial Purchaser and those permitted in the
Transaction Documents.

 

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(xiv) No consent, authorization or order of, or filing or registration with, any
court or governmental agency is required for the issuance and sale of the Notes
by the Issuer to the Initial Purchaser or the execution, delivery and
performance by the Issuer of this Agreement or the other Transaction Documents
to which it is a party, except such consents, approvals, authorizations,
registrations or qualifications as have been obtained or as may be required
under state securities or blue sky laws in connection with the sale or exchange
and delivery of the Notes in the manner contemplated herein.

(xv) The Loans in all material respects have the characteristics described in
the Time of Sale Information and the Final Memorandum.

(xvi) Each of the representations and warranties of the Originator, the Trust
Depositor, the Servicer and the Issuer set forth in each of the other
Transaction Documents is true and correct in all material respects.

(xvii) With respect to any Notes subject to the provisions of Regulation S of
the Securities Act, none of the Originator, the Servicer, the Trust Depositor
nor the Issuer has offered or sold such Notes during the Distribution Compliance
Period to a person (other than the Initial Purchaser) who is within the United
States or its possessions or to a United States person. For this purpose, the
term “Distribution Compliance Period” is defined as such term is defined in
Regulation S and the terms “United States or its possessions” and “United States
person” are defined as such terms are defined for purposes of Treas. Reg. §
1.163-5(c)(2)(i)(D).

(xviii) Since the date of the latest audited financial statements of the
Originator, there has been no change nor any development or event involving a
prospective change which has had or could reasonably be expected to have a
material adverse effect on (i) the business, operations, properties, assets,
liabilities, shareholders’ equity, earnings, financial condition or results of
operations of the Originator and its subsidiaries, considered as one enterprise,
or (ii) the ability of the Originator, the Trust Depositor, the Servicer or the
Issuer to perform their respective obligations hereunder or under the other
Transaction Documents.

(xix) The Notes, the Certificate and the Transaction Documents conform in all
material respects to the descriptions thereof in the Final Memorandum.

(xx) Any taxes, fees, and other governmental charges in connection with the
offering of the Notes, the execution and delivery of this Agreement and the
other Transaction Documents, the execution, delivery and transfer of the
Certificate and the execution, delivery, and sale or exchange of the Notes have
been or will be paid by or on behalf of the Originator, the Trust Depositor, the
Servicer or the Issuer at or before the Closing Date.

(xxi) None of the Originator, the Trust Depositor, the Servicer, the Issuer or
any Person acting on its behalf has taken, and none of them will take, any
action that might cause this Agreement or the issuance, sale or exchange of the
Notes to violate Regulation T, Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System.

 

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(xxii) No proceeds received by the Originator, the Trust Depositor, the Servicer
or the Issuer in respect of the Notes will be used by the Originator, the Trust
Depositor, the Servicer, or the Issuer to acquire any security in any
transaction which is subject to Section 13 or 14 of the Exchange Act.

(xxiii) (i) Each of the Originator, the Trust Depositor, the Servicer, the
Issuer and their respective ERISA Affiliates is in compliance in all material
respects with ERISA unless any failure to so comply could not reasonably be
expected to have a material adverse effect on (A) the business, operations,
properties, assets, liabilities, shareholders’ equity, earnings, financial
condition or results of operations of the Originator and its subsidiaries,
considered as one enterprise, or (B) the ability of the Originator, the Trust
Depositor, the Servicer or the Issuer to perform their respective obligations
hereunder or under the other Transaction Documents and (ii) no lien under
Section 303(k) of ERISA or Section 430(k) of the Code exists on any of the
Collateral. As used in this paragraph, the term “ERISA Affiliate” means, with
respect to any Person, a corporation, trade or business that is, along with such
Person, a member of a controlled group (as described in Section 414 of the Code
or Section 4001 of ERISA).

(xxiv) None of the Originator, the Trust Depositor, the Servicer, the Issuer nor
any of their respective properties or assets has any immunity from the
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) under the laws of its jurisdiction of organization.

(xxv) None of the Originator, the Trust Depositor, the Servicer or the Issuer,
has paid or agreed to pay to any person any compensation for soliciting another
to purchase or exchange any of the Notes (except as contemplated by this
Agreement and the engagement letter (the “Engagement Letter”) dated September 1,
2016, between the Originator and the Initial Purchaser, as amended).

(xxvi) No event has occurred which, had the Notes already been issued, might
(whether or not with the giving of notice and/or the passage of time and/or the
fulfillment of any other requirement) constitute an event of default or such
other similar term howsoever used or defined in any Transaction Document.

(xxvii) None of the Originator, the Trust Depositor, the Servicer or the Issuer
has taken, directly or indirectly, any action designed to cause or to result in,
or that has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any Note or to facilitate the sale
or resale of the Notes.

 

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(xxviii) (A) The purchase and sale of the Notes pursuant to this Agreement,
including the determination of the offering price of the Notes and any related
discounts and commissions, is an arm’s-length commercial transaction between the
Originator, the Trust Depositor, the Servicer and the Issuer, on the one hand,
and the Initial Purchaser, on the other hand, and each of the Originator, the
Trust Depositor, the Servicer and the Issuer is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement; (B) in connection with each
transaction contemplated hereby, none of the Originator, the Trust Depositor,
the Servicer, or the Issuer is relying on the Initial Purchaser as the financial
advisor, agent (except to the extent provided in this Agreement) or fiduciary of
the Originator or any of its affiliates, stockholders, creditors or employees or
any other party; (C) the Initial Purchaser has no obligation to any of the
Originator, the Trust Depositor, the Servicer or the Issuer with respect to the
offering contemplated hereby except the obligations expressly set forth in this
Agreement; (D) each of the Originator, the Trust Depositor, the Servicer and the
Issuer acknowledge that the Initial Purchaser and its affiliates may be engaged
in a broad range of transactions that involve interests that differ from those
of the Originator, the Trust Depositor, the Servicer and the Issuer, and the
Initial Purchaser has no obligation to disclose any of such interests by virtue
of any advisory or fiduciary relationship; and (E) each of the Originator, the
Trust Depositor, the Servicer and the Issuer and has consulted its own legal,
accounting, regulatory and tax advisors to the extent it deemed appropriate and
is not relying on the Initial Purchaser for any legal, accounting, regulatory or
tax advice with respect to the offering contemplated hereby.

(xxix) On and immediately after the Closing Date, each of the Originator, the
Trust Depositor, the Servicer and the Issuer (after giving effect to the
issuance of the Notes and to the other transactions related thereto as described
in the Time of Sale Information and the Final Memorandum) will be Solvent. As
used in this paragraph, the term “Solvent” means, with respect to a particular
date and any Person, that on such date (A) the present fair market value (or
present fair saleable value) of the assets of such Person is not less than the
total amount required to pay the probable liabilities of such Person on its
total existing debts and liabilities (including contingent liabilities) as they
become absolute and matured, (B) such Person is able to realize upon its assets
and pay its debts and other liabilities, contingent obligations and commitments
as they mature and become due in the normal course of business, (C) assuming the
sale or exchange of the Notes as contemplated by this Agreement, the Time of
Sale Information and the Final Memorandum, such Person is not incurring debts or
liabilities beyond its ability to pay as such debts and liabilities mature and
(D) such Person is not engaged in any business or transaction, and is not about
to engage in any business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of such contingent liabilities at any time, it is intended
that such liabilities will be computed at the amount that, in the light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.

 

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(xxx) The Originator has provided a written representation (the “17g5
Representation”) to Kroll Bond Rating Agency, Inc. (the “Hired NRSRO”), which
satisfies the requirements of paragraph Rule 17g-5(a)(3)(iii) of the Exchange
Act (“Rule 17g5”) and a copy of which has been delivered to the Initial
Purchaser. The Originator has complied with the representations, certifications
and covenants made to the Hired NRSRO in connection with the 17g5
Representation.

(xxxi) The Originator has not taken, nor will it take, directly or indirectly,
any action prohibited by Regulation M under the Exchange Act in connection with
the offering of the Notes.

(xxxii) No forward looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the Preliminary
Memorandum or the Final Memorandum has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.

(xxxiii) Each of the Originator, the Servicer and the Trust Depositor represents
and warrants that there are no contracts, agreements or understandings between
the Issuer and any person granting such person the right to require the Issuer
to file a registration statement under the Securities Act with respect to any
Notes owned or to be owned by such person or to include any Notes in any
securities registered pursuant to any registration statement filed by the Issuer
under the Securities Act.

(xxxiv) No action has been taken by any governmental agency or body and no
statute, rule or regulation or order has been enacted, adopted or issued by any
governmental agency or body which prevents the issuance of the Notes or suspends
the sale or exchange of the Notes in any jurisdiction; no injunction,
restraining order or order of any nature by a Federal or state court of
competent jurisdiction has been issued with respect to the Originator that would
prevent or suspend the issuance, sale or exchange of the Notes, or the use of
any of the Preliminary Memorandum, the Final Memorandum or the Additional
Offering Materials in any jurisdiction; no action, suit or proceeding is pending
against or, to the best of the knowledge of the Originator, threatened against
or affecting the Originator, the Trust Depositor, the Servicer or the Issuer
before any court or arbitrator or any governmental body, agency or official,
domestic or foreign, that could reasonably be expected to interfere with or
adversely affect the issuance or exchange of the Notes or in any manner draw
into question the validity of the Notes, any related agreement or this Agreement
or any action taken or to be taken pursuant hereto or thereto.

(xxxv) The Originator has complied, and is the appropriate entity to comply,
with all requirements imposed on the “sponsor of a securitization transaction”
in accordance with the final rules contained in Regulation RR, 17 C.F.R. §246.1,
et seq. (as such may

 

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be amended from time to time, and subject to such clarification and
interpretation as have been provided by the Department of Treasury, the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Federal Housing
Finance Agency, the Securities and Exchange Commission and the Department of
Housing and Urban Development in the adopting release (79 F.R. 77601 et seq.) or
by the staff of any such agency from time to time, the “Credit Risk Retention
Rules”), in each case directly or (to the extent permitted by the Credit Risk
Retention Rules) through a “majority-owned affiliate” (as defined in the Credit
Risk Retention Rules, a “Majority-Owned Affiliate”). On the Closing Date, the
Originator or a Majority-Owned Affiliate of the Originator will retain an
“eligible horizontal residual interest” (as defined in the Credit Risk Retention
Rules) equal to at least 5% of the fair value (determined using a fair value
measurement framework under United States generally accepted accounting
principles) of all the “ABS interests” (as defined in the Credit Risk Retention
Rules) in the Issuer issued as part of the transactions contemplated by the
Transaction Documents (such interest, the “Retained Interest”). The Originator
has determined such fair value of the Retained Interest based on its own
valuation methodology, inputs and assumptions and is solely responsible
therefor. The Preliminary Memorandum contains and the Final Memorandum will
contain, as applicable, all of the required disclosures under 17 C.F.R.
§246.4(c)(1).

(xxxvi) None of the Originator nor any of its affiliates has entered into or
contemplates entering into, directly or indirectly, any hedging, financing or
transfer of the Retention Interest in contravention of the Credit Risk Retention
Rules or the Transaction Documents.

(xxxvii) Third Party Due Diligence Reports.

(1) The Issuer has not obtained (and, through and including the Closing Date,
will not obtain) any third party due diligence report contemplated by Rule
15Ga-2 under the Exchange Act (“Due Diligence Report”) in connection with the
transactions contemplated by this Agreement and the Memoranda other than the
agreed-upon procedures report (the “Accountants’ Due Diligence Report”), in form
and substance reasonably satisfactory to the Initial Purchaser, obtained from
the accounting firm engaged to provide procedures involving a comparison of
information in loan files for the Loans to information on a data tape relating
to the Loans (the “Accountants”), a copy of which has been furnished to the
Initial Purchaser, at the request of the Issuer; and, except for the Accountants
with respect to the Accountants’ Due Diligence Report, the Issuer has not
employed (and, through and including the Closing Date, will not employ) any
third party to engage in any activity that constitutes “due diligence services”
within the meaning of Rule 17g-10 under the Exchange Act (“Due Diligence
Services”) in connection with the transactions contemplated by this Agreement
and the Memoranda. The Accountants have consented to the use of the Accountants’
Due Diligence Report in the preparation of a Form 15G (as defined below)
furnished on EDGAR as required by Rule 15Ga-2 under the Exchange Act (“Rule
15Ga-2”);

 

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(2) Any certification on Form ABS Due Diligence-15E (a “Form 15E”) received by
the Issuer from the Accountants in connection with the Due Diligence Services
provided by the Accounting Firm was promptly posted, after receipt, as required
by Rule 17g-5 under the Exchange Act on the Rule 17g-5 website established by or
on behalf of the Issuer, and the Issuer has not received any other Form 15E from
any party;

(3) The Issuer (A) prepared one or more reports on Form ABS-15G (each, a “Form
15G”) containing the findings and conclusions of the Accountants’ Due Diligence
Report and meeting all other requirements of that Form 15G, Rule 15Ga-2, any
other rules and regulations of the United States Securities and Exchange
Commission and the Exchange Act; and (B) furnished each such Form 15G to the
United States Securities and Exchange Commission on EDGAR at least five
(5) Business Days before the first sale in the offering contemplated by the
Memoranda as required by Rule 15Ga-2; and

(4) No portion of any Form 15G contains any names, addresses, other personal
identifiers or zip codes with respect to any individuals, or any other
personally identifiable or other information that would be associated with an
individual, including without limitation any “nonpublic personal information”
within the meaning of Title V of the Gramm-Leach-Bliley Financial Services
Modernization Act of 1999.

Section 5.     Sale of the Notes to the Initial Purchaser.

The sale of the Notes to the Initial Purchaser will be made without registration
of the Notes under the Securities Act, in reliance upon the exemption therefrom
provided by Section 4(2) of the Securities Act.

(a) The Originator, the Initial Purchaser, the Trust Depositor, the Servicer and
the Issuer hereby agree that the Notes will be offered and sold only in
transactions exempt from registration under the Securities Act. The Originator,
the Initial Purchaser, the Trust Depositor, the Servicer and Issuer will each
reasonably believe at the Time of Sale and the initial resale of the Notes by
the Initial Purchaser (i) that either (A) each purchaser of the Notes is an
institutional investor that is a QIB who is a Qualified Purchaser purchasing for
its own account (or for the accounts of QIBs who are Qualified Purchasers to
whom notice has been given that the sale is being made in reliance on Rule 144A)
in transactions meeting the requirements of Rule 144A, or (B) each purchaser
that is a non-U.S. person is acquiring the Notes in an offshore transaction
meeting the requirements of Regulation S and is a Qualified Purchaser, and
(ii) that the offering of the Notes will be made in a manner that will enable
the offer and sale of the Notes to be exempt from registration under state
securities or Blue Sky laws; and each such party understands that no action has
been taken to permit a public offering in any jurisdiction where

 

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action would be required for such purpose. The Originator, the Initial
Purchaser, the Trust Depositor, the Servicer and the Issuer each further agrees
not to engage (and represents that it has not engaged) in any activity that
would constitute a public offering of the Notes within the meaning of
Section 4(2) of the Securities Act.

(b) The Initial Purchaser hereby represents and warrants to and agrees with the
Originator, that (i) it will offer the Notes only (A) to persons who it
reasonably believes are QIBs who are Qualified Purchasers in transactions
meeting the requirements of Rule 144A, or (B) to non-United States persons it
reasonably believes are Qualified Purchasers in offshore transactions in
accordance with Regulation S. The Initial Purchaser further agrees that it will
deliver to each purchaser of the Notes, at or prior to the Time of Sale, a copy
of the Time of Sale Information, as then amended or supplemented; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services and Markets Act 2000, as amended (the “FSMA”) with respect to anything
done by it in relation to the Notes in, from or otherwise involving the United
Kingdom; and (iii) it has only communicated or caused to be communicated and it
will only communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of Section 21 of the FSMA)
received by it in connection with the issue or sale of any of the Notes in
circumstances in which Section 21(1) of the FSMA does not apply to the Issuer.

(c) The Initial Purchaser hereby represents and agrees that all offers and sales
of the Notes by it to non-United States persons, prior to the expiration of the
Distribution Compliance Period, will be made only in accordance with the
provisions of Rule 903 or Rule 904 of Regulation S (except to the extent of any
beneficial owners thereof who acquired an interest therein pursuant to another
exemption from registration under the Securities Act and who will take delivery
of a beneficial ownership interest in a Global Note, as contemplated in the
Indenture) and only upon receipt of certification of beneficial ownership of the
securities by a non-United States person in the form provided in the Indenture.
For this purpose, the term “Distribution Compliance Period” is defined as such
term is defined in Regulation S and the term “United States person” is defined
as such term is defined for purposes of Treas. Reg. §1.163-5(c)(2)(i)(D).

(d) The Initial Purchaser represents and agrees that (a) it has not delivered,
and will not deliver, any Rating Information to the Hired NRSRO without the
prior consent of a designated representative of the Originator and (b) it has
not participated, and will not participate, in any oral communication regarding
Rating Information with the Hired NRSRO unless a designated representative from
the Originator consents to or participates in such communication; provided,
however, that if an Initial Purchaser receives an oral communication from the
Hired NRSRO, such Initial Purchaser is authorized to inform the Hired NRSRO that
it will respond to the oral communication with a designated representative from
the Originator. For purposes of this paragraph, “Rating Information” means any
information that could reasonably be determined to be relevant to:
(i) determining an initial credit rating for the Notes (as contemplated by Rule
17g-5(a)(3)(iii)(C)) or (ii) undertaking credit rating surveillance for the
Notes (as contemplated by Rule 17g-5(a)(3)(iii)(D)).

 

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(e) The Initial Purchaser hereby represents that it is duly authorized and
possesses the requisite limited liability company power to enter into this
Agreement.

Section 6.     Certain Agreements of the Originator, the Trust Depositor, the
Servicer and the Issuer.

The Originator, the Trust Depositor, the Servicer and the Issuer, each with
respect to itself, covenants and agrees with the Initial Purchaser as follows:

(a) If, at any time prior to the completion of distribution of the Notes (as
determined by the Initial Purchaser), any event involving the Originator, the
Servicer, the Trust Depositor or the Issuer shall occur as a result of which the
Final Memorandum (as then amended or supplemented) would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the Originator will promptly notify the Initial Purchaser
and prepare and furnish to the Initial Purchaser an amendment or supplement to
the Final Memorandum that will correct such statement or omission. None of the
Originator, the Trust Depositor, the Servicer or the Issuer will at any time
amend or supplement the Final Memorandum (i) prior to having furnished the
Initial Purchaser with a copy of the proposed form of the amendment or
supplement and giving the Initial Purchaser a reasonable opportunity to review
the same or (ii) in a manner to which the Initial Purchaser or its counsel shall
object. The Initial Purchaser’s consent to or its delivery to prospective
investors of such amendment or supplement shall not constitute a waiver of any
of the conditions set forth in Section 7 hereof. In the event that the Initial
Purchaser shall incur any costs in connection with the reformation of a contract
of sale with any investor that received the Time of Sale Information that
contained an untrue statement of a material fact or failed to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the Originator, the
Servicer, the Trust Depositor and the Issuer jointly and severally agree to
reimburse the Initial Purchaser for such costs, provided that the untrue
statement or omission in the Time of Sale Information did not relate solely to
Initial Purchaser Information.

(b) During the period referred to in Section 6(a), the Originator will furnish
to the Initial Purchaser, without charge, copies of the Final Memorandum
(including all exhibits and documents incorporated by reference therein), the
Transaction Documents and all amendments or supplements to such documents, in
each case, as soon as reasonably available and in such quantities as the Initial
Purchaser may from time to time reasonably request.

(c) During the period referred to in Section 6(a), the Originator shall promptly
prepare, upon the reasonable request of the Initial Purchaser, any amendments of
or supplements to the Final Memorandum that in the opinion of the Initial
Purchaser may be reasonably necessary to enable the Initial Purchaser to
continue to sell the Notes, subject to the approval of the Initial Purchaser’s
counsel.

(d) At all times during the period referenced in Section 6(a), (i) the
Originator will make available to each offeree the Additional Offering Materials
subject to such offeree’s

 

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acceptance of the confidentiality requirements with respect thereto and such
information concerning any other relevant matters as it or any of its affiliates
possess or can acquire without unreasonable effort or expense, as determined in
good faith by it or such affiliate, as applicable, (ii) the Originator will
provide each offeree the opportunity to ask questions of, and receive answers
from, it concerning the terms and conditions of the offering and to obtain any
additional information, to the extent it or any of its affiliates possess such
information or can acquire it without unreasonable effort or expense (as
determined in good faith by it or such affiliate, as applicable), necessary to
verify the accuracy of the information furnished to the offeree, (iii) none of
the Originator, the Trust Depositor, the Servicer or the Issuer will publish or
disseminate any material in connection with the offering of the Notes except as
contemplated herein or as consented to by the Initial Purchaser or in connection
with the Originator’s disclosure obligations under the Exchange Act, provided
that no such disclosure under the Exchange Act would result in a requirement
that the offering of the Notes be registered under §5 of the Securities Act,
(iv) the Originator will take such action as the Initial Purchaser may
reasonably request to obtain an exemption from registration requirements or to
qualify the Notes for offering and sale under the state securities laws of such
jurisdictions in the United States of America, its territories and possessions,
as the Initial Purchaser may request, (v) the Originator, the Trust Depositor,
the Servicer and the Issuer will advise the Initial Purchaser promptly of the
receipt by any of them of any communication from the SEC or any state securities
authority concerning the offering, sale or exchange of the Notes, (vi) the
Originator, the Trust Depositor, the Servicer and the Issuer will advise the
Initial Purchaser promptly of the commencement of any lawsuit or proceeding to
which the Originator, the Trust Depositor, the Servicer and the Issuer is a
party relating to the offering, sale or exchange of the Notes, and (vii) the
Originator will advise the Initial Purchaser of the suspension of the
qualification of the Notes for offering, sale or exchange in any jurisdiction,
or the initiation or threat of any procedure for any such purpose.

(e) The Originator will furnish, upon the written request of any Noteholder or
of any owner of a beneficial interest in a Note, such information as is
specified in paragraph (d)(4) of Rule 144A under the Securities Act (i) to such
Noteholder or beneficial owner, (ii) to a prospective purchaser of a Note or
interest therein who is a QIB and a Qualified Purchaser designated by such
Noteholder or beneficial owner, or (iii) to the Trustee for delivery to such
Noteholder, beneficial owner or prospective purchaser, in order to permit
compliance by such Noteholder or beneficial owner with Rule 144A in connection
with the resale of such Note or beneficial interest therein by such holder or
beneficial owner in reliance on Rule 144A unless, at the time of such request,
the Issuer is subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act or is exempt from such reporting requirements pursuant to and
in compliance with Rule 12g3-2(b).

(f) Except as otherwise provided in the Indenture, each Note will contain a
legend to the effect set forth in the Final Memorandum.

(g) The Originator, the Trust Depositor, the Servicer and the Issuer the agree
that no future offer and sale of Notes of the Issuer will be made if, as a
result of the doctrine of “integration” referred to in Rule 502 under the
Securities Act, such offer and sale would require the registration under the
Securities Act of the offering contemplated by the Time of Sale Information and
the Final Memorandum.

 

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(h) None of the Originator, the Trust Depositor, the Servicer or the Issuer will
take or permit, or cause any of their affiliates to take, any action whatsoever
which would have the effect of requiring the registration under the Securities
Act of the offering or sale of the Notes contemplated by the Time of Sale
Information and the Final Memorandum. The Originator, the Trust Depositor, the
Servicer or the Issuer will cause the filing of such statements and reports as
may be required under the Securities Act or the Exchange Act.

(i) None of the Originator, the Trust Depositor, the Servicer or the Issuer, or
any Person acting on their behalf shall engage in any form of general
solicitation or general advertising with respect to the Notes or in any directed
selling efforts (as that term is defined in Regulation S) with respect to the
Notes, and the Originator, the Trust Depositor, the Servicer, the Issuer and
each Person acting on their behalf shall comply with the applicable offering
restrictions requirements of Regulation S.

(j) None of the Originator, the Trust Depositor, the Servicer nor the Issuer
shall solicit any offer to buy from or offer to sell or sell to any Person any
Notes, except through the Initial Purchaser or with the consent of the Initial
Purchaser and/or as otherwise specified in the Indenture at any time prior to
the Closing Date; on or prior to the Closing Date, none of the Originator, the
Trust Depositor, the Servicer nor the Issuer shall publish or disseminate any
material other than the Additional Offering Materials consented to by the
Initial Purchaser, the Time of Sale Information and the Final Memorandum in
connection with the offer or sale of the Notes as contemplated by this
Agreement, unless the Initial Purchaser shall have consented to the use thereof;
if the Originator, the Trust Depositor, the Servicer or the Issuer makes any
press release including “tombstone” announcements, in connection with the
Transaction Documents, it shall permit the Initial Purchaser to review and
approve such release in advance.

(k) None of the Originator, the Trust Depositor, the Servicer or the Issuer
shall take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the price of any
Note to facilitate the sale, resale or exchange of the Notes.

(l) The Originator, the Trust Depositor, the Servicer and the Issuer shall each
cooperate with the Initial Purchaser and use its best efforts to permit the
Notes to be eligible for clearance and settlement through the facilities of The
Depository Trust Company (“DTC”).

(m) The Originator, the Trust Depositor, the Servicer and the Issuer shall each
apply the net proceeds from the sale of the Notes as set forth in the Final
Memorandum under the heading “Use of Proceeds”.

(n) So long as any of the Notes are outstanding, the Originator, the Servicer,
the Trust Depositor or the Issuer will furnish to the Initial Purchaser, by
first-class mail, facsimile, email or such other method of delivery agreed to in
writing by the Initial Purchaser, as soon as

 

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practicable: (i) all documents required to be distributed to the Holders of
Notes; (ii) annual statements of compliance, annual independent certified public
accountants’ reports (so long as the Initial Purchaser has executed an
acknowledgment letter in favor of such accountants) and annual opinions of
counsel furnished to the Trustee or the Owner Trustee pursuant to the
Transaction Documents, following the date as such statements, reports and
opinions are furnished to the Trustee or the Owner Trustee, as the case may be
and (iii) from time to time, such other information concerning the Originator,
the Trust Depositor, the Servicer, the Issuer, the Notes or the Certificate as
the Initial Purchaser may reasonably request.

(o) The Originator and the Servicer will extend to all prospective investors the
opportunity to ask questions of, and receive answers from, the Originator and
the Servicer concerning the Notes and the terms and conditions of the offering
thereof and to obtain such information as such prospective investors may
consider necessary in making an informed investment decision or to verify the
accuracy of the information set forth in the Memoranda, to the extent the
Originator or the Servicer possesses the same or can acquire it without
unreasonable effort or expense, provided that the Originator and the Servicer
shall be under no obligation to divulge information that is proprietary or
confidential.

(p) The Issuer, the Originator and the Trust Depositor shall not, for a period
of one-hundred eighty (180) days from the date of the Final Memorandum, among
other things, directly or indirectly, offer for sale, sell, or otherwise dispose
of any securities of the Issuer substantially similar to the Notes or securities
convertible into or exchangeable for such similar securities of the Issuer, in
each case without the prior written consent of the Initial Purchaser.

(q) The Originator will comply, and will cause each of its affiliates, including
any Majority-Owned Affiliate that owns an interest in the Retained Interest, to
comply, with all applicable requirements under the Credit Risk Retention Rules
for so long as those requirements are applicable, including holding the Retained
Interest for the duration required in the Credit Risk Retention Rules without
any hedging, transfer or financing of the Retained Interest that would
contravene the Credit Risk Retention Rules or the Transaction Documents. The
Originator is and will be solely responsible for compliance with the disclosure
requirements of the Credit Risk Retention Rules, including the contents of all
such disclosures and ensuring that any required post-closing disclosures are
timely provided to investors by an appropriate method that does not require any
involvement of the Initial Purchaser or the Co-Managers. Any hedging, transfer
or financing of the Retained Interest that would contravene the Credit Risk
Retention Rules or the Transaction Documents shall be void ab initio and of no
effect.

Section 7.     Conditions of the Initial Purchaser Obligations.

The obligation of the Initial Purchaser to purchase the Notes on the Closing
Date will be subject to the accuracy, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), of the representations and warranties of each of the Originator, the
Trust Depositor, the Servicer and the Issuer, as applicable, herein and the
other Transaction Documents, to the performance, in all material respects
(except that such materiality qualifier

 

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shall not be applicable to the performance of any obligations that already are
qualified or modified by materiality in the text thereof), by each of the
Originator, the Trust Depositor, the Servicer and the Issuer, as applicable, of
its obligations hereunder and the other Transaction Documents and to the
following additional conditions precedent:

(a) The Originator, the Trust Depositor, the Servicer and the Issuer shall have
obtained all governmental authorizations (if any) required in connection with
the issuance and sale or exchange of the Notes and the performance of its
obligations hereunder and under the other Transaction Documents to which it is a
party.

(b) The Notes shall have been duly authorized, executed, authenticated,
delivered and issued, the Transaction Documents shall have been duly authorized,
executed and delivered by the respective parties thereto and shall be in full
force and effect, and the Required Loan Documents in respect of the Loans shall
have been delivered to the Trustee pursuant to and as required by the Sale and
Servicing Agreement.

(c) The Initial Purchaser shall have received a certificate, dated as of the
Closing Date, on behalf of the Originator to the effect that the party executing
such certificate has carefully examined this Agreement, the Final Memorandum and
the Transaction Documents and that, to the best of such party’s knowledge
(i) since the date information is given in the Final Memorandum, there has not
been any material adverse change in (A) the business, operations, properties,
assets, liabilities, shareholders’ equity, earnings, financial condition or
results of operations of the Originator and its subsidiaries, considered as one
enterprise, (B) the ability of the Originator, the Trust Depositor, the Servicer
or the Issuer to perform their respective obligations hereunder or under the
other Transaction Documents, or (C) except as contemplated by the Final
Memorandum, the characteristics of the Loans, (ii) the representations and
warranties of each of the Originator, the Trust Depositor, the Servicer and the
Issuer as set forth herein and in the other Transaction Documents are true and
correct in all material respects as of the Closing Date (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as though such representations and warranties had been made on and as
of such date, (iii) each of the Originator, the Trust Depositor, the Servicer
and the Issuer has complied in all material respects with all agreements and
satisfied all conditions on its part to be performed or satisfied, under this
Agreement and the other Transaction Documents, at or prior to the Closing Date,
(except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof) and (iv) nothing has come to the attention of
such officer that would lead such officer to believe that (A) the Time of Sale
Information, as of the Time of Sale, contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (B) the Final Memorandum, as of its date and as of the
Closing Date, or any Additional Offering Material, as of its respective date,
contained or contains an untrue statement of a material fact or omitted or omits
to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.

 

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(d) The shall have been rated no less than “A(sf)” by the Hired NRSRO, such
rating shall not have been rescinded, and no public announcement shall have been
made by Hired NRSRO that such rating of the Notes has been placed under review.

(e) Ernst & Young LLP shall have furnished to the Initial Purchaser “agreed upon
procedures” letters, dated the date of delivery thereof, in form and substance
satisfactory to the Initial Purchaser, with respect to certain financial and
statistical information contained in the static pool reports, the Preliminary
Memorandum and the Final Memorandum.

(f) The Initial Purchaser shall have received an opinion, dated the Closing
Date, of Nixon Peabody LLP counsel to the Trustee, in form and substance
satisfactory to the Initial Purchaser.

(g) The Initial Purchaser shall have received legal opinions of Dechert LLP,
counsel to the Originator, the Trust Depositor, the Servicer and the Issuer,
(i) with respect to certain corporate, enforceability, noncontravention of
material agreements (including organizational documents and material debt
documents), federal tax, perfection and priority of security interest,
securities law, investment company matters, and other customary matters, in form
and substance satisfactory to the Initial Purchaser, (ii) with respect to
certain “true sale” issues in form and substance satisfactory to the Initial
Purchaser and (iii) with respect to certain “non-consolidation” issues, in each
case, in form and substance satisfactory to the Initial Purchaser. Dechert LLP
shall also provide a customary “negative assurances” letter, dated as of the
Closing Date, addressed to the Initial Purchaser and in form and substance
reasonably satisfactory to its counsel, containing customary exceptions and
limitations, to the effect that such counsel has no reason to believe that the
Preliminary Memorandum, at the Time of Sale, or the Final Memorandum, as of its
date and on the Closing Date, included or includes any untrue statement of a
material fact or omitted or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading (in each case, other than the financial statements and
other information of a statistical, accounting or financial nature included in
the Preliminary Memorandum and the Final Memorandum).

(h) The Initial Purchaser shall have received opinions of Richards, Layton &
Finger, PA, counsel to the Owner Trustee and special Delaware counsel to the
Trust Depositor and the Issuer, with respect to (i) certain corporate and
enforceability matters regarding the Owner Trustee, (ii) certain Delaware
limited liability company matters, (iii) certain Delaware statutory trust
matters, (iv) certain corporate, perfection and priority issues and (v) whether
Delaware law, and not federal law, would govern the determination of what
persons or entities have the authority to file a voluntary bankruptcy petition
on behalf of the Trust Depositor, in each case, in form and substance
satisfactory to the Initial Purchaser.

(i) The Initial Purchaser shall have received from the Trustee a certificate
signed by one or more duly authorized officers of the Trustee, dated the Closing
Date, in customary form.

 

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(j) The Initial Purchaser shall have received from the Owner Trustee, a
certificate signed by one or more duly authorized officers of the Owner Trustee,
dated the Closing Date, in customary form.

(k) The Originator shall have furnished to the Initial Purchaser and its counsel
such further information, certificates and documents as the Initial Purchaser
and its counsel may reasonably have requested, and all proceedings in connection
with the transactions contemplated by this Agreement, the other Transaction
Documents and all documents incidental hereto shall be in all material respects
reasonably satisfactory in form and substance to the Initial Purchaser and its
counsel.

(l) The Initial Purchaser shall have received from Winston & Strawn LLP, its
counsel, a “negative assurance” letter, dated as of the Closing Date, in form
and substance reasonably satisfactory to the Initial Purchaser; and the
Originator shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass on all matters
contained therein.

(m) The Issuer shall have (or shall cause to be) delivered to DTC (or an
approved custodian therefor) the Notes, in each case in global form and as
described in Section 3(b) above, duly executed by the Issuer and authenticated
by the Trustee. The Issuer shall have issued the Certificate.

(n) The Issuer shall have executed and delivered to the DTC a standard “letter
of representations” sufficient to cause DTC to qualify the Notes issued in
global form for inclusion in DTC’s book-entry registration and transfer system.

(o) Each of the Collection Account, the Principal Reinvestment Account, the
Reserve Account and the Distribution Account shall have been established in
accordance with the terms of the Transaction Documents.

(p) All other documents incidental hereto, to the other Transaction Documents
shall be reasonably satisfactory in form and substance to the Initial Purchaser
and its counsel.

If any of the conditions specified in this Section 7 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above shall not be in all
material respects reasonably satisfactory in form and substance to the Initial
Purchaser, this Agreement and all of the Initial Purchaser’s obligations
hereunder may be canceled by the Initial Purchaser at or prior to delivery of
and payment for the Notes. Notice of such cancellation shall be given to the
Originator in writing, or by telephone or facsimile confirmed in writing.

Section 8.     Indemnification and Contribution.

(a) Each of the Originator, the Trust Depositor, the Servicer and the Issuer,
shall, jointly and severally, indemnify and hold harmless the Initial Purchaser
and its affiliates,

 

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directors, officers, employees, agents and each Person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, an “Indemnified Party”), against any and
all losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys’ fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained (A) in the Preliminary Memorandum, the Time of Sale Information, the
Final Memorandum or any Additional Offering Materials or in any amendment or
supplement thereto, or (B) in any “blue sky” application or other document
prepared or executed by the Originator, the Trust Depositor, the Servicer or the
Issuer (or based upon any written information furnished by the Originator, the
Trust Depositor, the Servicer or the Issuer) specifically for the purpose of
qualifying any or all of the Notes under the securities laws of any state or
other jurisdiction (any such application, document or information being
hereinafter called a “Blue Sky Application”), (ii) the omission or alleged
omission to state in the Preliminary Memorandum, Time of Sale Information, the
Final Memorandum or Additional Offering Materials, or in any amendment or
supplement thereto, or in any Blue Sky Application, any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, (iii) any act or failure to act or any
alleged act or failure to act by the Initial Purchaser in connection with, or
relating in any manner to, matters covered by clause (i) or (ii) above,
excluding, however, any such act or failure to act or any such alleged act or
failure to act by the Initial Purchaser that is the result of willful misconduct
or gross negligence on the part of the Initial Purchaser, or (iv) the violation
of any securities laws (including without limitation the anti-fraud provision
thereof) of any foreign jurisdiction in which the Notes are offered; provided,
however, that the Originator, the Trust Depositor, the Servicer and the Issuer
will not be liable in any such case to the extent but only to the extent that it
is determined in a final and unappealable judgment by a court of competent
jurisdiction that any such loss, liability, claim, damage or expense arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Originator, the Trust Depositor, the
Servicer or the Issuer by or on behalf of the Initial Purchaser expressly for
use in such Preliminary Memorandum, Time of Sale Information, the Final
Memorandum, Blue Sky Application or any Additional Offering Materials (as the
case may be); provided, further, that the foregoing indemnity shall not inure to
the benefit of any Indemnified Party from whom the person asserting any such
loss, claim, damage, liability or expense purchased the Notes which are the
subject thereof on the Closing Date if the Indemnified Party sold Notes to or
placed Notes with the person alleging such loss, claim, damage or liability
without sending or giving a copy of the Time of Sale Information at or prior to
the confirmation of the sale of the Notes, if the Originator shall have
previously furnished copies thereof to such Indemnified Party and the loss,
claim, damage or liability of such person results from an untrue statement or
omission of a material fact contained in the Preliminary Memorandum which was
corrected in the Time of Sale Information. The parties agree that such
information provided by or on behalf

 

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of the Initial Purchaser consists solely of the Initial Purchaser Information
(with respect to the Initial Purchaser and its affiliates, officers, employees,
agents and each Person, if any, that controls the Initial Purchaser).

Each of the Originator, the Servicer, the Trust Depositor and the Issuer hereby
agrees, jointly and severally, to indemnify and hold harmless the Indemnified
Parties, against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys’ fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
website maintained in compliance with Rule 17g-5 under the Exchange Act by or on
behalf of any of the Originator, the Trust Depositor, the Servicer or the Issuer
in connection with the marketing of the offering of the Notes and the posting of
information thereon pursuant to Rule 17g-5, (ii) the contents of any Form 15G
furnished by the Issuer to the Securities Exchange Commission, or (iii) the
entering into and performance of this Agreement and any other Transaction
Document by any of the Indemnified Parties, except, in the case of this clause
(iii), to the extent any such loss, liability, claim, damage or expense results
from the gross negligence, willful misconduct or bad faith of such Indemnified
Party, as determined in a final and unappealable judgment by a court of
competent jurisdiction.

Each of the Originator, the Trust Depositor, the Servicer and the Issuer agrees
that it shall, jointly and severally, reimburse each Indemnified Party promptly
upon demand for any documented, out-of-pocket legal or other expenses reasonably
incurred by that Indemnified Party in connection with investigating or defending
or preparing to defend against any losses, liabilities, claims, damages for
which indemnity is being provided pursuant to this Section 8(a) as such expenses
are incurred.

The foregoing indemnity agreement will be in addition to any liability which the
Originator, the Trust Depositor, the Servicer and the Issuer may otherwise have,
including but not limited to other liability under this Agreement.

(b) The Initial Purchaser shall indemnify and hold harmless the Originator, the
Trust Depositor, the Servicer and the Issuer, their respective officers,
directors and employees, and each other person, if any, who controls any of the
Originator, the Trust Depositor, the Servicer or the Issuer, as applicable,
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys’ fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in the Preliminary Memorandum,

 

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Time of Sale Information, the Final Memorandum, Additional Offering Materials or
in any amendment or supplement thereto, or (B) in any Blue Sky Application, or
(ii) the omission or alleged omission to state in any Preliminary Memorandum,
Time of Sale Information, Additional Offering Materials or the Final Memorandum,
or in any amendment or supplement thereto, or in any Blue Sky Application any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Originator, the Trust Depositor, the
Servicer or the Issuer by or on behalf of the Initial Purchaser expressly for
use in such Preliminary Memorandum, Time or Sale Information, Final Memorandum,
Additional Offering Materials, amendment or supplement thereto, or Blue Sky
Application (which information is limited to the Initial Purchaser Information);
provided, however, that in no case shall the Initial Purchaser be liable or
responsible for any amount in excess of the discount applicable to the Notes to
be purchased by the Initial Purchaser under this Agreement.

The foregoing indemnity agreement will be in addition to any liability which the
Initial Purchaser may otherwise have, including but not limited to other
liability under this Agreement.

(c) Promptly after receipt by an indemnified party under subsection (a) or (b)
above of notice of any claims or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
the indemnifying party from any liability which it may have under this Section 8
to the extent that it is not materially prejudiced due to the forfeiture of
substantive rights or defenses as a result thereof or otherwise has notice of
any such action, and in any event shall not relieve it from any liability that
such indemnifying party may have otherwise than on account of the indemnity
agreement hereunder). In case any such claim or action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate, at its own
expense in the defense of such action, and it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
satisfactory to such indemnified party; provided however, that counsel to the
indemnifying party shall not (except with the written consent of the indemnified
party) also be counsel to the indemnified party. Notwithstanding the foregoing,
the indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel reasonably satisfactory to such
indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, (iii) the
indemnifying party does not diligently defend the action after assumption of the
defense, (iv) such indemnified party or

 

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parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to one or
all of the indemnifying parties or (v) the named parties in any such proceeding
(including any impleaded parties) include an Indemnified Party, on the one hand,
and any of the Originator, the Trust Depositor, the Servicer or the Issuer, on
the other hand, and representation of both sets of parties by the same counsel
would present a conflict due to actual or potential differing interests between
them, in any of which events (i) through (v) such fees and expenses shall be
borne by the indemnifying parties (and the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties). No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 8 (whether or not the indemnified party is an actual or potential party
thereto), unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such claim, investigation, action or proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or any failure to act, by
or on behalf of the indemnified party.

(d) In order to provide for contribution in circumstances in which the
indemnification provided for in Section 8(a) through (c) is for any reason held
to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Originator, the Trust Depositor,
the Servicer, the Issuer and the Initial Purchaser shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Originator, the Trust Depositor, the Servicer and the Issuer,
any contribution received by the Originator, the Trust Depositor, the Servicer
and the Issuer from persons, other than the Initial Purchaser, who may also be
liable for contribution, including their directors, officers, employees and
persons who control the Originator, the Trust Depositor, the Servicer or the
Issuer within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) as incurred to which the Originator, the Trust Depositor, the
Servicer, the Issuer, the Initial Purchaser may be subject, in such proportions
as is appropriate to reflect the relative benefits received by the Originator,
the Trust Depositor, the Servicer and the Issuer, on the one hand, and the
Initial Purchaser, on the other hand, from the offering and sale of the Notes
under this Agreement or, if such allocation is not permitted by applicable law,
in such proportions as are appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Originator, the Servicer,
the Trust Depositor and the Issuer, on the one hand, and the Initial Purchaser,
on the other hand, in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. For purposes of this Section 8(d), the
relative benefits received by the Originator, the Servicer, the Trust Depositor,
and the Issuer, on the one hand, and the Initial Purchaser, on the other hand,
shall be deemed to be in the same proportion as the total proceeds from the
offering and sale of the Notes under this Agreement (net of discounts,
commissions and

 

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fees but before deducting expenses) received by the Originator, the Servicer,
the Trust Depositor and the Issuer or their affiliates under this Agreement, on
the one hand, and the discounts, commissions or fees received by the Initial
Purchaser under this Agreement, on the other hand, bear to the aggregate
offering price to investors of the Notes purchased under this Agreement, as set
forth on the cover of the Final Memorandum. The relative fault of each of the
Originator, the Servicer, the Trust Depositor and the Issuer, on the one hand,
and of the Initial Purchaser, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Originator, the Servicer, the Trust
Depositor and the Issuer or their affiliates or the Initial Purchaser and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Originator, the Servicer, the
Trust Depositor, the Issuer and the Initial Purchaser each agrees that it would
not be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to above in this
Section 8(d). The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this
Section 8(d) shall be deemed to include any documented, out-of-pocket legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any judicial, regulatory or other legal or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8(d), (i) the Initial Purchaser
shall not be required to contribute any amount in excess of the amount by which
the discounts and commissions applicable to the Notes resold by it under this
Agreement exceeds the amount of any damages which the Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8(d),
(A) each of the Indemnified Parties other than the Initial Purchaser shall have
the same rights to contribution as the Initial Purchaser, and (B) each director,
officer or employee of the Originator, the Trust Depositor, the Servicer or the
Issuer and each person, if any, who controls the Originator, the Trust
Depositor, the Servicer or the Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Originator, the Trust Depositor, the Servicer or the Issuer,
subject in each case of (A) and (B) to clauses (i) and (ii) of the immediately
preceding sentence. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8(d) or otherwise. The obligations of the
Originator, the Trust Depositor, the Servicer or the Issuer to contribute
pursuant to this Section 8(d) shall be joint and several.

 

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(e) The Initial Purchaser confirms and the Originator, the Trust Depositor, the
Servicer and the Issuer acknowledge and agree that the term “Initial Purchaser
Information” shall mean (i) the statements with respect to the offering of the
Notes by the Initial Purchaser set forth in the second paragraph of the section
entitled “Plan of Distribution” in the Preliminary Memorandum and the Final
Memorandum, (ii) the information set forth in the risk factor entitled “The
Issuer will be subject to various conflicts of interest involving the Initial
Purchaser and its affiliates” in the Preliminary Memorandum and the Final
Memorandum and (iii) the name of the Initial Purchaser set forth on the front
and back cover page of the Preliminary Memorandum and the Final Memorandum.

Section 9.     Termination.

The Initial Purchaser shall have the right to terminate this Agreement at any
time prior to the Closing Date, if, at or after the Time of Sale, any of the
following shall occur, which remains outstanding or the effects of which remain
outstanding: (i) any domestic or international event or act or occurrence has
materially disrupted, or in the reasonable opinion of the Initial Purchaser will
in the immediate future materially disrupt, the market for the Originator’s
securities or securities in general; or (ii) trading on the NYSE or NASDAQ shall
have been suspended or been made subject to material limitations, or minimum
prices for trading shall have been fixed, on the NYSE or NASDAQ or by order of
the United States Securities and Exchange Commission or any other governmental
authority having jurisdiction; or (iii) a banking moratorium has been declared
by any New York State or federal authority or any material disruption in
commercial banking or securities settlement or clearance services shall have
occurred; or (iv) (A) there shall have occurred any significant outbreak or
escalation of hostilities or significant acts of terrorism involving the United
States or there is a declaration of a national emergency or war by the United
States or (B) there shall have been any other significant calamity or crisis or
any significant change in political, financial or economic conditions if the
effect of any such event in (A) or (B), in the reasonable judgment of the
Initial Purchaser, is sufficiently material and adverse so as to make it
impracticable or inadvisable to proceed with the offering, sale and delivery of
the Notes, on the terms and in the manner contemplated by the Memoranda; or
(v) the Initial Purchaser shall decline to purchase the Notes for any reason
permitted under this Agreement. Any notice of termination pursuant to this
Section 9 shall be in writing.

Section 10.     Severability Clause.

Any part, provision, representation, or warranty of this Agreement which is
prohibited or is held to be void or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.

Section 11.     Notices.

All demands, notices and communications hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered at or mailed by
overnight mail, certified mail or registered mail, postage prepaid and effective
only upon receipt and (a) if sent to the

 

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Initial Purchaser, will be delivered to Guggenheim Securities, LLC, 330 Madison
Avenue, New York, New York 10017, Attention: Robert Horowitz (Banking) / John
Robinson (General Counsel), Re: Hercules Capital Funding Trust 2018-1; or (b) if
sent to the Originator, the Trust Depositor or the Issuer will be delivered to
such party c/o Hercules Capital, Inc., 400 Hamilton Avenue, Suite 310, Palo
Alto, California 94301, Attention: David Lund, or in each case at any other
address previously furnished in writing to the other parties hereto by such
Person.

Section 12.     Representations and Indemnities to Survive.

The respective agreements, representations, warranties, indemnities and other
statements of the Originator, the Trust Depositor, the Servicer, the Issuer and
their respective officers and of the Initial Purchaser set forth in or made
pursuant to this Agreement shall remain in full force and effect (in the case of
the Originator, regardless of any investigation or any statements as to the
results thereof made by or on behalf of the Initial Purchaser, the Originator,
the Trust Depositor, the Issuer or indemnified party or any officer, director,
employee or controlling person of the Initial Purchaser, the Originator, the
Trust Depositor, the Issuer or indemnified party), regardless of the completion
of the arrangements for the purchase and issuance of the Notes or any
investigation made by or on behalf of the Initial Purchaser, the Originator, the
Trust Depositor, the Issuer or indemnified party. The provisions of Sections
(2)(b), 8, 14, and 17 of this Agreement shall survive the termination or
cancellation of this Agreement. For the avoidance of doubt, the Engagement
Letter shall remain in full force and effect in accordance with its terms,
notwithstanding the entry into and effectiveness of this Agreement.

Section 13.     Successors.

This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors by merger, consolidation or acquisition
of their assets substantially as an entity and each indemnified party referred
to in Section 8 of this Agreement and, except as specifically set forth herein,
no other person will have any right or obligation hereunder.

Section 14.     Applicable Law.

(a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES).

(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
REQUIREMENTS OF LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT. EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE

 

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THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14(b).

(c) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT
IN THE COURTS OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH SUCH PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO.

Section 15.     Counterparts, Etc.

This Agreement supersedes all prior or contemporaneous agreements and
understandings relating to the subject matter hereof. Neither this Agreement nor
any term hereof may be amended, modified, changed, waived, discharged or
terminated except by a writing signed by the party against whom enforcement of
such change, waiver, discharge or termination is sought. This Agreement may be
signed in any number of counterparts each of which shall be deemed an original,
which taken together shall constitute one and the same instrument.

Section 16.     No Petition; Limited Recourse.

(a) The Initial Purchaser hereby covenants and agrees that, prior to the date
that is one year and one day (or such longer preference period as shall then be
in effect) after the payment in full of the Notes rated by Hired NRSRO, it will
not institute against the Issuer or the Trust Depositor or join any other Person
in instituting against the Issuer or the Trust Depositor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States.

(b) Notwithstanding anything to the contrary herein, the obligations of the
Issuer hereunder are limited recourse obligations of the Issuer payable solely
from the Collateral securing the Notes and all other assets of the Issuer and
following the exhaustion of such Collateral and such other assets, any claims of
the Initial Purchaser hereunder against the Issuer shall be extinguished. All
payments by the Issuer to the Initial Purchaser hereunder shall be made subject
to and in accordance with the Priority of Payments set forth in Section 7.06 of
the Sale and Servicing Agreement.

Section 17.     USA Patriot Act Notice. The Initial Purchaser hereby notifies
the Originator, the Trust Depositor, the Servicer and the Issuer that pursuant
to the requirements of

 

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the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”), it is required to obtain, verify and record
information that identifies the Originator, the Trust Depositor, the Servicer
and the Issuer, such information includes the name and address of each of the
Originator, the Trust Depositor, the Servicer and the Issuer and other
information that will allow the Initial Purchaser to identify each other party
in accordance with the Patriot Act.

Section 18.     Arm’s-Length Transaction; Other Transactions.

(a) Each of the Originator, the Trust Depositor, the Servicer and the Issuer
acknowledges and agrees that (i) the purchase and sale of the Notes pursuant to
this Agreement, including the determination of the offering price of the Notes
and any related discounts, commissions and fees, is an arm’s-length commercial
transaction between the Issuer, on the one hand, and the Initial Purchaser, on
the other hand, (ii) in connection with the offering contemplated hereby and the
process leading to such transaction, each of the Initial Purchaser is and has
been acting solely as a principal and is not an agent or fiduciary of the
Originator, the Trust Depositor, the Servicer or the Issuer or any of their
respective equity holders, creditors, employees or any other party, (iii) the
Initial Purchaser has not assumed nor will it assume an advisory or fiduciary
responsibility in favor of the Originator, the Trust Depositor, the Servicer or
the Issuer, with respect to the offering contemplated hereby or the process
leading thereto (irrespective of whether the Initial Purchaser has advised or is
currently advising any of the Originator, the Trust Depositor, the Servicer or
Issuer on other matters) and the Initial Purchaser has no obligation to any of
the Originator, the Trust Depositor, the Servicer or the Issuer with respect to
the offering contemplated hereby, except the obligations expressly set forth in
this Agreement, and (iv) the Initial Purchaser has not provided any legal,
accounting, regulatory or tax advice with respect to the offering contemplated
hereby and each of the Originator, the Trust Depositor, the Servicer and the
Issuer has consulted its own legal, accounting, regulatory and tax advisors to
the extent it deemed appropriate.

(b) Each of the Originator, the Trust Depositor, the Servicer and the Issuer
acknowledges and agrees that the Initial Purchaser and its affiliates may
presently have and may in the future have investment and commercial banking,
trust and other relationships with parties other than the Originator, the Trust
Depositor, the Servicer and the Issuer, which parties may have interests with
respect to the purchase and sale or exchange of the Notes. Although the Initial
Purchaser in the course of such other relationships may acquire information
about the purchase and sale or exchange of the Notes, potential purchasers of
the Notes or such other parties, the Initial Purchaser shall not have any
obligation to disclose such information to any of the Originator, the Trust
Depositor, the Servicer or the Issuer. Furthermore, each of the Originator, the
Trust Depositor, the Servicer and the Issuer acknowledges that the Initial
Purchaser may have fiduciary or other relationships whereby the Initial
Purchaser may exercise voting power over securities of various persons, which
securities may from time to time include securities of any of the Originator,
the Trust Depositor, the Servicer or the Issuer or their respective affiliates
or of potential purchasers. Each of the Originator, the Trust Depositor, the
Servicer and the Issuer acknowledges that the Initial Purchaser may exercise
such powers and otherwise perform any functions in connection with such
fiduciary or other relationships without regard to its relationship to the
Originator, the Trust Depositor, the Servicer or the Issuer hereunder.

 

30

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31

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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the undersigned a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Originator, the Trust Depositor, the Servicer, the Issuer, and the Initial
Purchaser.

 

Very truly yours, HERCULES CAPITAL, INC., as Originator and as Servicer By:  

/s/ Melanie Grace

Name:   Melanie Grace Title:   General Counsel HERCULES CAPITAL FUNDING 2018-1
LLC, as Trust Depositor By:  

/s/ Melanie Grace

Name:   Melanie Grace Title:   General Counsel HERCULES CAPITAL FUNDING TRUST
2018-1, as Issuer By:  

/s/ Melanie Grace

Name:   Melanie Grace Title:   General Counsel

 

S-1

Hercules Capital Funding Trust 2018-1

Note Purchase Agreement

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The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.

GUGGENHEIM SECURITIES, LLC

as the Initial Purchaser

By:  

/s/ Cory Wishengrad

Name:   Cory Wishengrad Title:   Senior Managing Director

 

S-2

Hercules Capital Funding Trust 2018-1

Note Purchase Agreement

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SCHEDULE I

Principal Amount

Hercules Capital Funding Trust 2018-1 Fixed Rate Senior Notes: $200,000,000

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SCHEDULE II

TIME OF SALE INFORMATION

Hercules Capital Funding Trust 2018-1 Fixed Rate Senior Notes

**Priced** 144A/Reg S

 

Note Type

  

SIZE

  

RATING

  

COUPON

  

PRICE

Rule 144A

   $199,500,000    A(sf)    4.605%    99.99832%

Reg S

   $500,000    A(sf)    4.605%    99.99832%